NOVA Chemicals: Improvement Heading into Second Quarter; Expanded JV for STYRENIX



    PITTSBURGH, April 25 /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 net income of $44
million ($0.53 per share) for the first quarter of 2007. The results include
an unrealized gain on feedstock derivatives totaling $17 million after-tax
($0.20 per share) and a negative impact of $8 million after-tax ($0.10 per
share) related to the Canadian National rail strike. Net income in the quarter
improved due to strengthening margins and the impact of recent cost reductions
and restructuring.

    Net income for the first quarter compares to a net loss of $781 million
($9.46 per share loss) for the fourth quarter of 2006, which included 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. In the first quarter
of 2006, a net loss of $4 million ($0.05 per share loss) was reported.

    During the quarter, NOVA Chemicals announced that it plans to expand its
existing European joint venture with INEOS to include North American styrene
and solid polystyrene assets. The preliminary target for new synergies is $40
million per year for the joint venture.

    NOVA Chemicals also signed a letter of intent with Aux Sable Canada Ltd.
to develop a new ethane extraction plant in Alberta that is expected to
increase ethane feedstock supply to the Joffre, Alberta site by approximately
25% by 2010. The new ethane supply is intended to increase NOVA Chemicals'
utilization of the Alberta Advantage.

    "With the expansion of the joint venture with INEOS, we look forward to
building upon our success in Europe to rapidly remove costs and continue to
expand the positive operating income from the North American business," said
Jeff Lipton, NOVA Chemicals' President and CEO.

    "We saw a sharp improvement in overall business results in March which we
expect to carry over into a strong second quarter," Mr. Lipton added.

    First quarter operating income from the businesses was $120 million
versus $36 million in the fourth quarter of 2006.

    
                Operating Income                 First         Fourth
              from the Businesses               Quarter        Quarter
                ($U.S. millions)                 2007           2006

    Olefins/Polyolefins                          $116           $92
    Performance Styrenics                        (11)           (19)
    STYRENIX                                      15            (37)
                                             ------------- ---------------
    Operating Income from the Businesses         $120           $36
    

    NOVA Chemicals will host a conference call today, Wednesday, April 25,
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. 3207766). 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 2006 Annual Report.

                                                   Three Months Ended
                                              ----------------------------
                                              Mar. 31  Dec. 31   Mar. 31
                                                2007     2006    2006 (1)
                                              -------- -------- ----------
    Revenue                                    $1,506   $1,635     $1,553
    Adjusted EBITDA (2)                          $155      $98       $124

    Operating income (loss)
    Olefins/Polyolefins
        Joffre Olefins                            $95     $119       $149
        Corunna Olefins                            27      (11)         8
        Polyethylene                                6      (24)        (2)
        Eliminations                              (12)       8        (11)
                                              -------- -------- ----------
      Olefins/Polyolefins Total                   116       92        144

    Performance Styrenics                         (11)     (19)        (4)

    STYRENIX
        Styrene Monomer                             8      (18)       (15)
        North American Solid Polystyrene           (7)     (16)       (10)
        European JV                                14       (4)       (12)
        Eliminations                                -        1          -
                                              -------- -------- ----------
      STYRENIX Total                               15      (37)       (37)

    Corporate (3)                                 (19)    (873)       (66)
                                              -------- -------- ----------

    Operating income (loss)                      $101    $(837)       $37
                                              -------- -------- ----------


    Net income (loss)                             $44    $(781)       $(4)

    Net income (loss) per common share
      - basic                                   $0.53   $(9.46)    $(0.05)
      - diluted                                 $0.53   $(9.46)    $(0.05)

    Weighted-average common shares
    Outstanding (millions) (4) (5)
      - basic                                      83       83         82
      - diluted                                    83       83         82

    (1) See Note 2 on page 80 of the 2006 Consolidated Financial
     Statements within the Annual Report for a discussion of the prior
     period restatement related to stock-based compensation for employees
     eligible to retire before the vesting date (EIC 162). The impact to
     net loss for the three months ended Mar. 31, 2006 was a $1 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 Income (Loss) on
     page 17 and Supplemental Measures on page 11).
    (3) See tables on page 11 for a description of all Corporate Items.
    (4) Weighted-average number of common shares outstanding during the
     period used to calculate the net income (loss) per share (see Note 6,
     page 24).
    (5) 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.
    

    
    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 2006 Annual Report.

                                                     Three Months Ended
                                                  ------------------------
                                                  Mar. 31 Dec. 31  Mar. 31
                                                   2007     2006    2006
                                                  ------- -------- -------
    Depreciation and amortization expense
      Olefins/Polyolefins                            $43      $44     $41
      Performance Styrenics                            5        3       3
      STYRENIX                                         4       26      26
      Corporate                                        2        2       2
                                                  ------- -------- -------
                                                     $54      $75     $72

    Capital expenditures
      Olefins/Polyolefins                            $30      $24     $19
      Performance Styrenics                            2       14      20
      STYRENIX                                         5        8       2
                                                  ------- -------- -------
                                                     $37      $46     $41


    After-tax return (loss) on capital employed
     (1)                                             9.5%  (88.0)%    3.0%

    Average capital employed (2)

      NOVA Chemicals                              $3,009   $3,407  $3,579
      Olefins/Polyolefins                         $2,325   $2,358  $2,314
      Performance Styrenics                         $273     $265    $216
      STYRENIX (3)                                  $398     $870  $1,134


    Funds from operations (4)                        $62      $60     $71
    Cash from operations                              $2      $88     $15


    Return (loss) on average common equity (5)      31.5% (286.1)%  (1.3)%

    (1) 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 11).
    (2) 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 11).
    (3) 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.
    (4) See Supplemental Measures on page 11.
    (5) Return (loss) on average common equity equals annualized net
     income (loss) divided by average common equity.
    

    Update on NOVA Chemicals' Strategic Activities

    Expansion of Joint Venture with INEOS for STYRENIX

    On Mar. 22, 2007, NOVA Chemicals announced plans to expand its existing
European joint venture with INEOS to include North American assets. The
expanded 50:50 venture will include NOVA Chemicals' North American styrene and
solid polystyrene (PS) assets as well as its solid PS-based Performance
Products: NAS(R), ZYLAR(R), and DYLARK(R) resins. The venture will also
include INEOS' North American styrene and solid PS assets and its AVANTRA(R)
specialty products.

    The deal is expected to close by the third quarter of 2007. Upon
completion, the expanded joint venture is expected to have annual revenues of
approximately $3.5 billion and will be the largest styrene and solid PS
producer in North America and the largest solid PS and expandable polystyrene
(EPS) producer in Europe.

    The newly expanded joint venture is expected to build upon the recent
success of the European joint venture with INEOS. NOVA Chemicals expects the
European Joint Venture to achieve cost savings of $74 million in 2007 and $82
million in 2008, more than double the initial target. The newly expanded joint
venture is initially targeting an additional $40 million per year of cost
reductions.

    On Apr. 24, 2007, NOVA Chemicals and INEOS announced the nomination of
the first three senior officers of the proposed, expanded joint venture. The
new management team will decide the specific actions to be undertaken to best
achieve synergies.

    Aux Sable Ethane Extraction Plant

    On Mar. 21, 2007, NOVA Chemicals announced it had signed a letter of
intent with Aux Sable Canada Ltd. (ASC) to jointly develop an ethane
extraction plant in Fort Saskatchewan, Alberta. The ethane extraction plant
will have the capacity to produce approximately 40,000 barrels per day of
ethane from natural gas currently leaving Alberta via the Alliance Pipeline.
The plant will be owned and operated by ASC and is projected to start up by
mid-2010. NOVA Chemicals does not expect to provide any capital for this
facility and would sign a long-term ethane supply contract for production from
this plant.

    The new ethane extraction plant would increase current Alberta ethane
supply by approximately 15% and bolster NOVA Chemicals' feedstock for ethylene
production at the Joffre, Alberta site by approximately 25%. The additional
ethane is intended to help maintain and extend the Alberta Advantage by
allowing NOVA Chemicals to move ahead with low cost expansions of the Joffre,
Alberta ethylene/polyethylene production site and to consider building another
polyethylene plant at the site.

    OLEFINS/POLYOLEFINS BUSINESS UNIT

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

                                                     Three Months Ended
                                                   -----------------------
                                                   Mar. 31 Dec. 31 Mar. 31
                                                    2007    2006    2006
                                                   ------- ------- -------
    Revenue
    ----------------------------------------------
      Joffre Olefins (1)                             $411    $427    $501
      Corunna Olefins (1)                             397     515     418
      Polyethylene (1)                                423     455     467
      Eliminations                                   (297)   (348)   (378)
                                                   ------- ------- -------
        Total                                        $934  $1,049  $1,008


    EBITDA (2)
    ----------------------------------------------
      Joffre Olefins                                 $107    $132    $161
      Corunna Olefins                                  42       4      20
      Polyethylene                                     22      (8)     15
      Eliminations (3)                                (12)      8     (11)
                                                   ------- ------- -------
        Total                                        $159    $136    $185


    Operating income (loss)
    ----------------------------------------------
      Joffre Olefins                                  $95    $119    $149
      Corunna Olefins                                  27     (11)      8
      Polyethylene                                      6     (24)     (2)
      Eliminations (3)                                (12)      8     (11)
                                                   ------- ------- -------
        Total                                        $116     $92    $144

    Sales Volumes (millions of pounds)
    ----------------------------------------------
      Polyethylene (4)
        Standard Products                             683     722     615
        Performance Products                          118     143     122
                                                   ------- ------- -------
      Total                                           801     865     737

    (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 11).
    (3) Represents intersegment profit eliminations.
    (4) 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
                                                   -----------------------
                                                   Mar. 31 Dec. 31 Mar. 31
                                                    2007    2006    2006
                                                   ------- ------- -------
    Benchmark Principal Products:
    Ethylene (2)                                    $0.40   $0.45   $0.50
    Polyethylene - LLDPE butene liner (3)           $0.56   $0.58   $0.69
    Polyethylene - weighted-average benchmark (4)   $0.58   $0.61   $0.70

    Benchmark Raw Materials:
    AECO natural gas (dollars per mmBTU) (5)        $6.32   $6.07   $6.54
    NYMEX natural gas (dollars per mmBTU) (6)       $6.96   $6.62   $9.07
    WTI crude oil (dollars per barrel) (7)         $58.27  $60.21  $63.48

    (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 operating income of $116
million in the first quarter of 2007 compared with operating income of $92
million in the fourth quarter of 2006. The quarter-over-quarter increase in
operating income was primarily related to lower feedstock costs at the Corunna
Olefins flexi-cracker, in part due to gains from NOVA Chemicals' propane and
butane purchase program. Lower costs more than offset the impact of reduced
shipments caused by the Canadian National rail strike. The rail strike reduced
operating income by $12 million before-tax ($8 million after-tax) primarily
due to lower polyethylene sales volumes.

    Joffre Olefins

    First Quarter 2007 Versus Fourth Quarter 2006

    The Joffre Olefins segment reported operating income of $95 million in
the first quarter of 2007 compared with $119 million in the fourth quarter of
2006. The quarter-over-quarter decline in operating income was due to lower
ethylene selling prices and higher feedstock and energy costs.

    USGC ethylene benchmark prices averaged 40 cents per pound in the first
quarter of 2007 compared to 45 cents per pound in the fourth quarter of 2006.
Soft demand and lower feedstock and energy costs in the fourth quarter of 2006
and January 2007 led to four months of declines in the benchmark ethylene
price. After stabilizing in February, benchmark prices increased in March due
to improved ethylene demand and increasing feedstock costs.

    Alberta natural gas costs were higher in the first quarter than in the
prior quarter. Quarter over quarter, the average AECO natural gas price was up
4% while the average price of NYMEX contract natural gas was up 5%, due to
colder than usual weather in the U.S. and Canada during the second half of the
first quarter.

    The Alberta Advantage averaged 7 cents per pound of ethylene production
cash cost in the first quarter of 2007, unchanged from the fourth quarter of
2006. The Alberta Advantage increased to approximately 9 cents per pound in
April. NOVA Chemicals uses ethylene produced at its Joffre, Alberta, facility
to make approximately 65% of its polyethylene.

    First Quarter 2007 Versus First Quarter 2006

    The Joffre Olefins segment reported operating income of $95 million in
the first quarter of 2007 compared with $149 million in the first quarter of
2006. This decrease was primarily due to lower ethylene prices and was
partially offset by lower feedstock costs. The AECO cash natural gas price was
3% lower in the first quarter of 2007 versus the same quarter one year ago.
The Alberta Advantage was 7 cents per pound this quarter versus 5 cents per
pound in the same quarter of 2006.

    Corunna Olefins

    First Quarter 2007 Versus Fourth Quarter 2006

    The Corunna Olefins segment reported operating income of $27 million in
the first quarter of 2007 compared with an operating loss of $11 million in
the fourth quarter of 2006. The quarter-over-quarter improvement was primarily
due to lower feedstock costs, which more than offset the impact of lower
ethylene prices.

    While WTI crude oil price declined 3% quarter over quarter, NOVA
Chemicals' average crude oil costs declined 12% due to its use of FIFO
accounting. In addition, gains realized from NOVA Chemicals' feedstock
purchasing program contributed to lower average propane and butane feedstock
costs in the first quarter of 2007.

    First Quarter 2007 Versus First Quarter 2006

    The Corunna Olefins segment reported operating income of $27 million in
the first quarter of 2007 compared to operating income of $8 million in the
same period one year ago. Operating income improved in the first quarter of
2007 compared with the first quarter of 2006 due to improved operations at the
Corunna flexi-cracker and lower feedstock costs, which were partially offset
by lower selling prices. In the first quarter of 2006, the Corunna
flexi-cracker experienced a delayed re-start after its major maintenance
turnaround and modernization project.

    Polyethylene

    First Quarter 2007 Versus Fourth Quarter 2006

    The Polyethylene segment reported operating income of $6 million in the
first quarter of 2007 compared with an operating loss of $24 million in the
fourth quarter. The quarter-over-quarter improvement in operating income was
primarily due to lower feedstock costs, which more than offset the impact of
lower sales volume.

    The average butene liner benchmark polyethylene price in the first
quarter was 56 cents per pound, down 2 cents per pound from the fourth
quarter. In comparison, NOVA Chemicals' average selling price was roughly flat
quarter over quarter as a result of sales mix improvement.

    NOVA Chemicals' total polyethylene sales volume for the first quarter was
801 million pounds, down 7% from the record sales volume in the previous
quarter. Sales volumes were lower primarily due to reduced shipments related
to the Canadian National rail strike. NOVA Chemicals sold more than 300
million pounds of polyethylene in March, a sharp increase from January and
February.

    International sales represented approximately 17% of total sales in the
first quarter of 2007, roughly the same high level as in the fourth quarter of
2006. NOVA Chemicals continued to take advantage of opportunities for strong
netback margins, particularly on sales to China, and expects to do so in the
second quarter as well.

    American Plastics Council (APC) reported that North American polyethylene
producer sales were 1% higher in the first quarter of 2007 than in the fourth
quarter of 2006. APC also reported North American producer operating rates
averaged 93% in the first quarter, up from 89% in the fourth quarter of 2006.
Polyethylene demand improved quarter over quarter as North American producer
inventories fell, despite higher production rates. NOVA Chemicals finished the
first quarter with 21 days of polyethylene inventory, versus a historical
average of 24 days.

    In the first quarter, sales volumes of polyethylene manufactured using
Advanced SCLAIRTECH technology were down 12% from very strong volumes in the
fourth quarter, due in part to the impact of the Canadian National rail
strike. Margins improved during the quarter due to higher selling prices and
lower feedstock costs.

    NOVA Chemicals implemented a 6 cents per pound price increase starting in
February for most customers. The increase was fully implemented for all
customers by Apr. 1, 2007. NOVA Chemicals is currently implementing a revised
price increase of 7 cents per pound for higher performing hexene- and
octene-based grades, and 4 cents per pound for all other grades.

    On Apr. 24, 2007, NOVA Chemicals announced another polyethylene price
increase for 5 cents per pound, effective June 1.

    First Quarter 2007 Versus First Quarter 2006

    The Polyethylene segment reported operating income of $6 million in the
first quarter of 2007 compared with an operating loss of $2 million in the
first quarter of 2006. The improvement from the same quarter of 2006 was
primarily due to lower feedstock costs, which more than offset lower average
selling prices. Weighted-average benchmark polyethylene prices were 58 cents
per pound in the first quarter of 2007 compared to 70 cents per pound in the
first quarter of 2006.

    NOVA Chemicals' ability to implement announced price increases depends on
many factors that may be beyond its control. See Forward-Looking Information
on page 16.

    PERFORMANCE STYRENICS BUSINESS UNIT

    
    Financial Highlights
    (millions of U.S. Dollars except as noted)

                                                     Three Months Ended
                                                   -----------------------
                                                   Mar. 31 Dec. 31 Mar. 31
                                                    2007    2006    2006
                                                   ------- ------- -------
    Revenue                                          $100    $105     $99
    EBITDA (1)                                        $(6)   $(16)    $(1)
    Operating Loss                                   $(11)   $(19)    $(4)

    Sales Volumes (2) (millions of pounds)            105     116     100

    (1) Net loss before income taxes, other gains and losses, interest
     expense, depreciation and amortization (see Supplemental Measures on
     Page 11).
    (2) Third-party sales.
    

    
    Operating Highlights

    Average Benchmark Raw Material Prices (1)
    (U.S. dollars per pound)

                                                     Three Month Average
                                                   -----------------------
                                                   Mar. 31 Dec. 31 Mar. 31
                                                    2007    2006    2006
                                                   ------- ------- -------
    Styrene Monomer                                 $0.65   $0.67   $0.61

    (1) Source: CMAI Contract Market
    

    Review of Operations

    Performance Styrenics

    First Quarter 2007 Versus Fourth Quarter 2006

    The Performance Styrenics unit reported an operating loss of $11 million
in the first quarter of 2007 compared to an operating loss of $19 million in
the fourth quarter of 2006. The quarter-over-quarter improvement was due to
lower feedstock costs and higher selling prices for EPS, ARCEL(R) and ZYLAR(R)
resins.

    On Mar. 1, 2007, NOVA Chemicals announced a 4 cents per pound price
increase for EPS, of which 3 cents per pound on average was implemented.
Another 4 cents per pound price increase for certain grades of EPS was
announced on Apr. 5, 2007, of which 3 cents per pound was implemented.

    In the first quarter, NOVA Chemicals received revenue, for the first
time, from the sale of cups made with IMx(TM) technology and newly developed
construction panel systems. Construction also began at Red Deer College in
Alberta utilizing NOVA Chemicals' insulated concrete forms. Customer response
to all new products has been very positive and we expect continued growth in
the new performance based applications and markets.

    First Quarter 2007 Versus First Quarter 2006

    The Performance Styrenics segment reported an operating loss of $11
million in the first quarter of 2007 compared with an operating loss of $4
million in the first quarter of 2006. Higher prices for EPS were more than
offset by higher feedstock costs.

    NOVA Chemicals' ability to implement announced price increases depends on
many factors that may be beyond its control. See Forward-Looking Information
on Page 16.

    STYRENIX BUSINESS UNIT

    
    Financial Highlights
    (millions of U.S. Dollars except as noted)

                                                     Three Months Ended
                                                   -----------------------
                                                   Mar. 31 Dec. 31 Mar. 31
                                                    2007    2006    2006
                                                   ------- ------- -------
    Revenue
    ----------------------------------------------
      Styrene Monomer (1)                            $464    $526    $440
      North American SPS (1)                          141     119     121
      European JV (1)                                 188     184     147
      Eliminations                                   (243)   (254)   (196)
                                                   ------- ------- -------
        Total                                        $550    $575    $512

    EBITDA (2)
    ----------------------------------------------
      Styrene Monomer                                 $10     $(5)    $(2)
      North American SPS                               (6)    (11)     (5)
      European JV                                      15       4      (4)
      Eliminations (3)                                  -       1       -
                                                   ------- ------- -------
        Total                                         $19    $(11)   $(11)

    Operating Income (Loss)
    ----------------------------------------------
      Styrene Monomer                                  $8    $(18)   $(15)
      North American SPS                               (7)    (16)    (10)
      European JV                                      14      (4)    (12)
      Eliminations (3)                                  -       1       -
                                                   ------- ------- -------
        Total                                         $15    $(37)   $(37)

    Sales Volumes (millions of pounds)
    ----------------------------------------------
      Styrene Monomer (4)                             379     503     446
      North American SPS                              210     169     181
      European JV                                     239     238     248
                                                   ------- ------- -------
        Total                                         828     910     875

    (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 11).
    (3) Represents intersegment profit eliminations.
    (4) Third-party sales, including purchased volumes resold. Excludes
     sales to the European JV.
    

    
    Operating Highlights

    Average Benchmark Prices (1)
    (U.S. dollars per pound, unless otherwise
     noted)

                                                     Three Month Average
                                                   -----------------------
                                                   Mar. 31 Dec. 31 Mar. 31
                                                    2007    2006    2006
                                                   ------- ------- -------
    Benchmark Principal Products:
    Styrene Monomer (2)                             $0.65   $0.67   $0.61
    Solid PS (3)
      North America                                 $0.94   $0.95   $0.86
      Europe                                        $0.76   $0.76   $0.59
    Benchmark Raw Materials:
    Benzene (dollars per gallon) (4)                $3.53   $3.64   $2.68

    (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 operating income of $15 million in
the first quarter of 2007, the first operating profit since the third quarter
of 2004. The first quarter results compare to an operating loss of $37 million
in the fourth quarter of 2006. The quarter-over-quarter improvement was
primarily due to lower fixed costs and depreciation expenses as a result of
restructuring actions, and lower feedstock costs.

    Styrene Monomer

    First Quarter 2007 Versus Fourth Quarter 2006

    The Styrene Monomer segment reported operating income of $8 million in
the first quarter compared to an operating loss of $18 million in the fourth
quarter. The improvement was primarily due to lower feedstock costs and lower
depreciation expense related to the STYRENIX asset write-down, partially
offset by lower styrene monomer selling prices. Benchmark styrene monomer
prices fell 3%, driven primarily by lower benzene and ethylene costs.

    Effective Dec. 31, 2006, the first of two styrene monomer purchase
contracts expired. NOVA Chemicals estimates that it will save $22 million per
year in fixed costs as a result, including approximately $6 million in the
first quarter. Third party styrene monomer sales volumes were 25% lower in the
first quarter, as a result of the contract expiry and fewer, profitable
opportunities to export styrene versus the prior quarter.

    First Quarter 2007 Versus First Quarter 2006

    The Styrene Monomer segment reported operating income of $8 million in
the first quarter of 2007 compared with an operating loss of $15 million in
the first quarter of 2006. The improvement was primarily due to higher average
selling prices and lower depreciation expense, as well as the expiration of
the styrene monomer purchase contract, and was partially offset by higher
feedstock costs.

    North American Solid PS

    First Quarter 2007 Versus Fourth Quarter 2006

    The North American solid PS segment reported an operating loss of $7
million in the first quarter of 2007 compared to an operating loss of $16
million in the fourth quarter of 2006. The improvement from the previous
quarter was due to lower styrene feedstock costs and lower depreciation
expense related to the STYRENIX asset write-down, which were partially offset
by lower average selling prices.

    North American solid PS sales volume increased by 24% in the first
quarter as demand improved from the seasonally slower fourth quarter of 2006.
North American benchmark solid PS prices decreased roughly 1 cents per pound
from the fourth quarter.

    First Quarter 2007 Versus First Quarter 2006

    The North American solid PS segment reported an operating loss of $7
million in the first quarter of 2007, compared with an operating loss of $10
million in the first quarter of 2006. The improvement from the same period one
year ago was due to higher polymer selling prices, lower fixed costs and lower
depreciation expense, which were partially offset by higher feedstock costs.

    European Joint Venture

    First Quarter 2007 Versus Fourth Quarter 2006

    The European JV segment, which includes NOVA Chemicals' 50% share of the
total European JV, recorded operating income of $14 million in the first
quarter of 2007, the strongest results since NOVA Chemicals commenced its
European styrenics operations in January 2000. First quarter results compare
to an operating loss of $4 million in the fourth quarter of 2006. The
improvement was due to lower depreciation expense related to the STYRENIX
asset write-down and improved polymer margins.

    For the first quarter, total polymer sales volumes for the European JV
were essentially the same as the fourth quarter. Favorable market conditions
allowed selling prices to increase even though feedstock costs decreased.

    First Quarter 2007 Versus First Quarter 2006

    The European JV segment reported operating income of $14 million in the
first quarter of 2007 compared to an operating loss of $12 million in the
first quarter of 2006. Results improved from the same period one year ago due
to higher selling prices, lower fixed costs and lower depreciation expense,
which more than offset higher feedstock costs.

    
    CORPORATE
    (millions of U.S. dollars)

                                                     Three Months Ended
                                                   -----------------------
                                                   Mar. 31 Dec. 31 Mar. 31
                                                    2007    2006    2006
                                                   ------- ------- -------
    Before-Tax Corporate Items:
    Corporate operating costs (1)                    $(27)   $(23)   $(26)
    Stock-based compensation and profit sharing
     (2),(3)                                          (18)      1      (1)
    Restructuring (4)                                   -    (860)    (15)
    Mark-to-market feedstock derivatives (5)           26       9     (24)
                                                   ------- ------- -------
                                                     $(19)  $(873)   $(66)
                                                   ------- ------- -------

    (1) Beginning in the first quarter of 2007, NOVA Chemicals no longer
     allocates interest, taxes or corporate operating costs to the
     business segments. Prior period comparative amounts have been revised
     to reflect this change.

    (2) 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 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.

    (3) In the first quarter of 2007, approximately $10 million of the $18
     million stock-based compensation charge is the result of the
     acceleration of the recognition of compensation cost for restricted
     share units granted in the first quarter based upon employees'
     retirement eligibility, in accordance with EIC (Emerging Issues
     Committee) 162, Stock-Based Compensation for Employees Eligible to
     Retire Before the Vesting Date. This charge, which was taken fully in
     the first quarter, would have been expensed equally over a three-year
     period under the former standards. This new Canadian GAAP accounting
     standard was implemented by NOVA Chemicals in the fourth quarter of
     2006. The remaining $8 million expense relates to profit sharing
     expense and stock-based compensation expense.

    (4) In the fourth quarter of 2006, NOVA Chemicals wrote-down the
     assets in the STYRENIX business unit by $860 million before-tax ($772
     million after-tax). 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.

    (5) See page 14 for description.
    

    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 13.

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

    --  Net current debt - defined on page 12.

    --  Net debt to total capitalization - defined on page 12.

    --  Operating income (loss) from the businesses - total operating income
(loss) from the Olefins/Polyolefins, Performance Styrenics and STYRENIX
business units, which equals NOVA Chemicals' operating income (loss) less
Corporate (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.

    --  Total capitalization - defined on page 12.

    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)

                                                   Mar. 31 Dec. 31 Mar. 31
                                                    2007    2006    2006
                                                   ------- ------- -------

    Current debt (1)(2)                              $303    $263    $302
    Less: restricted cash and other assets (3)        (65)    (72)    (72)
                                                   ------- ------- -------
       Net current debt (4)                           238     191     230
    Long-term debt (2) (3)                          1,585   1,582   1,740
    Less: cash and cash equivalents                   (87)    (75)    (94)
                                                   ------- ------- -------

    Total debt, net of cash, cash equivalents, and
     restricted cash and other assets               1,736   1,698   1,876

    Total common shareholders' equity (5) (6) (7)
     (8) (9)                                          614     546   1,219
                                                   ------- ------- -------

    Total capitalization (10)                      $2,350  $2,244  $3,095
                                                   ------- ------- -------

    Net debt to total capitalization (11)            73.9%   75.7%   60.6%


    (1) Current debt includes the $198 million preferred shares due Oct.
     31, 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 October 2007 to August 2028.
    (3) As a result of adopting new Canadian GAAP pronouncements, certain
     costs related to long-term debt are now presented as a reduction of
     the carrying value of the debt (See Note 1 to the Consolidated
     Financial Statements).
    (4) Net current debt equals current debt less restricted cash and
     other assets (see Supplemental Measures on page 11).
    (5) Common shares outstanding on Apr. 20, 2007 were 82,748,892 (Mar.
     31, 2007 - 82,748,892; Dec. 31, 2006 - 82,561,272; Mar. 31, 2006 -
     82,540,944).
    (6) A total of 5,367,897 stock options to purchase common shares of
     NOVA Chemicals were outstanding to officers and employees on Apr. 20,
     2007, and 5,368,097 were outstanding on Mar. 31, 2007. A total of
     2,122,635 common shares were reserved but unallocated at Mar. 31,
     2007. A total of 13 million common shares were initially reserved for
     issuance under the Option Plan.
    (7) A total of 47,800 shares were reserved for the Directors' Share
     Compensation Plan.
    (8) 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.
    (9) For the three months ended Mar. 31, 2007, a total of 187,620
     common shares were issued upon the exercise of stock options.
    (10) Total capitalization includes shareholders' equity and total debt
     net of cash, cash equivalents, and restricted cash and other assets
     (see Supplemental Measures on page 11).
    (11) 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 11).
    

    
    Senior Debt Ratings (1)

                                                  Senior Unsecured Debt
                                                --------------------------
    DBRS                                              BB (negative)
    Fitch Ratings                                      BB- (stable)
    Moody's                                     Ba3 (rating under review)
    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.
    

    
    Funds Flow and Changes in Cash and Debt
    (millions of U.S. dollars)

    The following table shows major sources and uses of cash.

                                                        Three Months Ended
                                                          Mar. 31, 2007
                                                        ------------------
    Operating income (1)                                            $ 101
    Depreciation and amortization                                      54
                                                        ------------------
    Adjusted EBITDA (1)                                               155
    Interest expense (net)                                            (42)
    Unrealized gain on derivatives                                    (26)
    Current tax expense                                               (25)
                                                        ------------------
    Funds from operations                                              62
    Operating working capital increase and other                      (60)
                                                        ------------------
    Cash flow from operating activities                                 2
    Capital expenditures (net of proceeds on sale of
     assets)                                                          (36)
    Turnaround costs                                                   (3)
    Dividends paid                                                     (7)
    Change in accounting policy for financial
     instruments                                                       13
                                                        ------------------
    Total change in cash and debt                                    $(31)
                                                        ------------------

    Increase in cash and cash equivalents                             $12
    Increase in debt (2)                                              (43)
                                                        ------------------
    Total change in cash and cash equivalents and debt               $(31)
                                                        ------------------

    (1) See Consolidated Statements of Net Income (Loss) on page 17 and
     Supplemental Measures on Page 11.
    (2) Includes foreign exchange changes and excludes reduction in
     carrying amount resulting from the application of new Canadian GAAP
     pronouncements (see Note 1 to the Consolidated Financial Statements).
    

    NOVA Chemicals' funds from operations were $62 million for the first
quarter of 2007, up from $60 million in the fourth quarter. Operating working
capital and other increased by $60 million, primarily as a result of the
increase in accounts receivable during the quarter.

    NOVA Chemicals measures the effectiveness of its working capital
management through Cash Flow Cycle Time (CFCT). See Supplemental Measures on
page 11. CFCT measures working capital from operations (excluding the European
JV) in terms of the number of day's 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 31 days as of Mar. 31, 2007, and 27 days as of Dec.
31, 2006. The increase was primarily due to the increase in accounts
receivable.

    Capital expenditures, net of proceeds on sale of assets, were $36 million
in the first quarter of 2007, compared to $45 million in the fourth quarter
and $39 million in the first quarter of 2006.

    Financing

    Following the STYRENIX asset write-down, NOVA Chemicals' revolving credit
facilities were reduced from $575 million to $525 million, effective Feb. 5,
2007. An additional $65 million unsecured facility was established on Mar. 2,
2007. As of Mar. 31, 2007, NOVA Chemicals had utilized $218 million of the
facilities, of which $50 million was in the form of letters of credit.

    The amounts and expiration dates of the revolving credit facilities are
as follows:

    --  $100 million on Dec. 31, 2007

    --  $ 65 million on Mar. 20, 2010

    --  $325 million on June 30, 2010, and

    --  $100 million on Mar. 20, 2011.

    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 54% at Mar.
31, 2007. NOVA Chemicals continues to comply with all financial covenants
under the applicable facilities.

    NOVA Chemicals also has $350 million accounts receivable securitization
programs that expire on June 30, 2010. As of Mar. 31, 2007, $267 million was
sold under the accounts receivable securitization programs.

    The European JV has a EUR 120 million accounts receivable securitization
program that expires in November 2011. As of Mar. 31, 2007, NOVA Chemicals'
50% share, $50 million, was sold under the accounts receivable securitization
program.

    The total return swap entered into in connection with the Series A
preferred stock of NOVA Chemicals' subsidiary, NOVA Chemicals Inc., was
scheduled to terminate on Mar. 15, 2007. However, in Feb. 2007, NOVA Chemicals
and the counterparty agreed to extend the term until Oct. 31, 2007. See page
61 of NOVA Chemicals' Annual Report for a more detailed discussion of the
total return swap.

    Feedstock Derivative Positions

    NOVA Chemicals maintains a derivatives program to manage risk associated
with feedstock purchases. In the first quarter, NOVA Chemicals recorded a net
after-tax gain of $18 million which reduced feedstock costs at Corunna,
excluding approximately $1 million related to benzene positions. The first
quarter gain compares to a net after-tax gain of $2 million in the fourth
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 first quarter mark-to-market earnings impact of NOVA Chemicals'
outstanding feedstock derivative portfolio was a $17 million after-tax gain,
compared to a $5 million after-tax gain the fourth 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 fourth
quarter 2006 feedstock purchases flowed through the Consolidated Statements of
Net Income (Loss) in the first quarter of 2007.

    NOVA Chemicals estimates that earnings would have been about $5 million
lower (after-tax) in the first quarter had it used the LIFO method of
accounting.

    NOVA Chemicals' share price on the New York Stock Exchange (NYSE) rose to
$30.96 at Mar. 31, 2007 from $27.90 at Dec. 31, 2006. NOVA Chemicals' share
value increased 11% for the quarter ending Mar. 31, 2007 on the NYSE and 10%
on the Toronto Stock Exchange (TSX). Peer chemical companies' share values
increased 6% on average and the S&P Chemicals Index increased 5%. The S&P/TSX
Composite Index was up 2% and the S&P 500 was flat in the first quarter of
2007 compared with the fourth quarter of 2006. As of Apr. 24, 2007, NOVA
Chemicals' share price was $30.02, down 3% from Mar. 31, 2007. The S&P
Chemicals Index was up 2% during the same period.

    In the first quarter, approximately 42% of trading in NOVA Chemicals'
shares took place on the TSX and 58% of trading took place on the NYSE and
other U.S. markets.

    
    First Quarter Trading       Millions of Shares % of Float % of Trading
     Volumes
    --------------------------- ------------------ ---------- ------------
    Toronto Stock Exchange                   23.9         29%          42%
    Consolidated U.S. Trading
     Volumes                                 33.1         40%          58%
                                ------------------ ---------- ------------
    Total                                    57.0         69%         100%
                                ------------------ ---------- ------------
    

    
                             INVESTOR INFORMATION

    For inquiries on stock-related
     matters including dividend
     payments, stock transfers and
     address changes, contact NOVA
     Chemicals toll-free at 1-800-661-
     8686 or e-mail to
     shareholders@novachem.com           Transfer Agent and Registrar
                                         CIBC Mellon Trust Company
                                         600 The Dome Tower, 333 Seventh
                                          Avenue S.W.
    Contact Information                  Calgary, Alberta, Canada T2P 2Z1
    Phone: (403) 750-3600 (Canada) or
     (412) 490-4000 (United States)
    Internet: www.novachemicals.com      Phone:    (403) 232-2400 /
    E-Mail: invest@novachem.com                    1-800-387-0825
                                         Fax:      (403) 264-2100
    NOVA Chemicals Corporation           Internet: www.cibcmellon.ca
    1000 Seventh Avenue S.W., P.O. Box   E-Mail:   inquiries@cibcmellon.ca
     2518
    Calgary, Alberta, Canada T2P 5C6
                                         Share Information
    If you would like to receive a       NOVA Chemicals' trading symbol on
     shareholder information package,     the New York and Toronto Stock
     please contact us at (403) 750-3600  Exchanges is NCX.
     or (412) 490-4000 or via e-mail at
     publications@novachem.com

    We file additional information
     relating to 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 SCLAIRTECH(TM) is a trademark of NOVA Chemicals.

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

    IMx(TM) is a trademark 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 autorissee.

    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.

    AVANTRA(R) is a registered trademark of INEOS Styrenics.

    
    CHANGES IN NET INCOME (LOSS)
    (millions of U.S. dollars)

                                                               Q1 2007
                                                            Compared with
                                                           ---------------
                                                           Q4 2006 Q1 2006
                                                           ------- -------
    Higher operating margin (1)                               $72     $42
    Lower research and development                              1       -
    Higher selling, general and administrative                (16)    (11)
    Lower restructuring charges                               860      15
    Lower depreciation and amortization                        21      18
    Lower interest expense                                      1       -
    Higher (lower) other gains and losses                       1      (1)
    Higher income tax expense                                (115)    (15)
                                                           ------- -------
    Increase in net income                                   $825     $48
                                                           ------- -------

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

    Selling, general and administrative (SG&A) costs for the first quarter of
2007 were $16 million higher than in the fourth quarter of 2006 and $11
million higher than in the first quarter of 2006 due to higher stock-based
compensation expenses. Refer to Corporate on page 11.

    Refer to Note 3 on page 23 for details related to the restructuring
charges.

    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 materials 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' beliefs about its
proposed expanded joint venture with INEOS, including the assets that NOVA
Chemicals and INEOS will contribute to the expanded joint venture, NOVA
Chemicals' expectation that the expanded joint venture will build upon the
recent success of the European joint venture with INEOS to rapidly remove
costs and continue to expand the positive operating income from the North
American business, the target for new synergies, the expected closing date for
the transaction, the expected annual revenues of the expanded joint venture,
and the expected capacity rankings of the expanded joint venture; NOVA
Chemicals' expectation that cost savings of the European Joint Venture will be
$74 million in 2007 and $82 million in 2008; NOVA Chemicals' plans and beliefs
regarding the proposed jointly developed new ethane extraction plant with Aux
Sable, including the expected production capacity of the new plant, the
projected start-up date of the new plant; NOVA Chemicals' expectation that it
would not provide any capital but would sign a long-term ethane supply
contract for production from the plant, NOVA Chemicals' belief that the new
ethane plant would increase current Alberta ethane supply by approximately 15%
and bolster NOVA Chemicals' feedstock for ethylene production at its Joffre
site by approximately 25%, and NOVA Chemicals' expectation that the additional
ethane supply would help maintain and extend the Alberta Advantage by allowing
NOVA Chemicals to move ahead with low cost expansions of the Joffre, Alberta
ethylene/polyethylene production site and to consider building another
polyethylene plant at the site; and NOVA Chemicals' expectation that it will
have a strong second quarter. 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
                            ----------------------------------------------
                             2007                   2006
                            ------- -------------------------------------
                            Mar. 31 Dec. 31 Sept. 30   June 30   Mar. 31
                                            (restated (restated (restated
                                              - see     - see     - see
                                             Note 1)   Note 1)   Note 1)

    Revenue                 $1,506  $1,635     1,712     1,619     1,553
    Operating income (loss)   $101   $(837)       13       107        37
    Net income (loss)          $44   $(781)      (24)      106        (4)
    Net income (loss) per
     share
        - basic              $0.53  $(9.46)    (0.29)     1.28     (0.05)
        - diluted            $0.53  $(9.46)    (0.29)     1.27     (0.05)
    Weighted-average common
     shares outstanding
     (millions)
        - basic               82.7    82.6      82.6      82.5      82.5
        - diluted             83.5    82.6      82.6      83.2      82.5

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

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

    
    CONSOLIDATED FINANCIAL STATEMENTS

    Consolidated Statements of Net Income (Loss)
    (unaudited, millions of U.S. dollars except per share amounts)

                                                 Three Months Ended
                                           -------------------------------
                                            Mar. 31  Dec. 31    Mar. 31
                                             2007      2006       2006
                                           --------- -------- ------------
                                                              (restated -
                                                               see Note 1)
    Revenue                                  $1,506   $1,635       $1,553
                                           --------- -------- ------------

    Feedstock and operating costs             1,281    1,482        1,370
    Research and development                     12       13           12
    Selling, general and administrative          58       42           47
    Restructuring charges (Note 3)                -      860           15
    Depreciation and amortization                54       75           72
                                           --------- -------- ------------
                                              1,405    2,472        1,516
                                           --------- -------- ------------
    Operating income (loss)                     101     (837)          37
                                           --------- -------- ------------

    Interest expense (net) (Note 4)             (42)     (43)         (42)
    Other gains and losses (net)                  1        -            2
                                           --------- -------- ------------
                                                (41)     (43)         (40)
                                           --------- -------- ------------
    Income (loss) before income taxes            60     (880)          (3)
    Income tax (expense) recovery (Note 5)      (16)      99           (1)
                                           --------- -------- ------------
    Net income (loss)                           $44    $(781)         $(4)
                                           --------- -------- ------------

    Net income (loss) per share (Note 6)
      - basic                                 $0.53   $(9.46)      $(0.05)
      - diluted                               $0.53   $(9.46)      $(0.05)
    

    Notes to the Consolidated Financial Statements appear on pages 21 to 27.

    
    Consolidated Statements of Comprehensive Income (Loss)
    (unaudited, millions of U.S. dollars)

                                                     Three Months Ended
                                                   -----------------------
                                                   Mar. 31 Dec. 31 Mar. 31
                                                    2007    2006    2006
                                                   ------- ------- -------

    Net income (loss)                                 $44   $(781)    $(4)
    Other comprehensive income (loss):
      Unrealized gain (loss) on translation of
       self-sustaining foreign operations              26     (36)      7
                                                   ------- ------- -------
    Comprehensive income (loss)                       $70   $(817)     $3
                                                   ------- ------- -------
    

    
    Consolidated Balance Sheets
    (unaudited, millions of U.S. dollars)

                                               Mar. 31, 2007 Dec. 31, 2006
                                               ------------- -------------
    Assets
    Current assets
      Cash and cash equivalents                         $87           $75
      Restricted cash and other assets                   65            72
      Accounts receivable                               531           474
      Inventories                                       672           669
                                               ------------- -------------
                                                      1,355         1,290

    Investments and other assets                        111           113
    Plant, property and equipment, net                2,732         2,719
                                               ------------- -------------

                                                     $4,198        $4,122
                                               ------------- -------------

    Liabilities and Shareholders' Equity
    Current liabilities
      Bank loans                                         $1            $1
      Accounts payable and accrued liabilities          913           926
      Long-term debt due within one year                302           262
                                               ------------- -------------
                                                      1,216         1,189
    Long-term debt                                    1,585         1,582
    Future income taxes                                 421           435
    Deferred credits and long-term liabilities          362           370
                                               ------------- -------------
                                                      3,584         3,576
                                               ------------- -------------

    Shareholders' equity
      Common shares                                     500           497
      Contributed surplus                                27            25
      Accumulated other comprehensive income            404           378
      Deficit                                          (317)         (354)
                                               ------------- -------------
                                                        614           546
                                               ------------- -------------

                                                     $4,198        $4,122
                                               ------------- -------------
    

    Notes to the Consolidated Financial Statements appear on pages 21 to 27.

    
    Consolidated Statements of Changes in Shareholders' Equity
    (unaudited, millions of U.S. dollars except number of shares)




                                             Common Shares    Contributed
                                           ------------------
                                             Shares    Amount   Surplus
                                           ----------- ------ -----------

    Balance at Dec. 31, 2005               82,364,899   $494         $16

    Net loss                                        -      -           -
    Other comprehensive income
       Unrealized gain on translation of
        self-sustaining foreign operations          -      -           -
    Comprehensive income
    Issued for cash on exercise of stock
     options                                  176,045      2           -
    Stock option compensation cost                  -      -           7
    Common share dividends                          -      -           -
    Stock options retired for cash                  -      -           -
                                           ----------- ------ -----------

    Balance at Mar. 31, 2006               82,540,944   $496         $23
                                           ----------- ------ -----------


    Balance at Sep. 30, 2006               82,553,456   $497         $24

    Net loss                                        -      -           -
    Other comprehensive loss
       Unrealized loss on translation of
        self-sustaining foreign operations          -      -           -
    Comprehensive loss
    Issued for cash on exercise of stock
     options                                    7,816      -           -
    Stock option compensation cost                  -      -           1
    Common share dividends                          -      -           -
    Stock options retired for cash                  -      -           -
                                           ----------- ------ -----------

    Balance at Dec. 31, 2006               82,561,272   $497         $25
    Net income                                      -      -           -
    Other comprehensive income
       Unrealized gain on translation of
        self-sustaining foreign operations          -      -           -
    Comprehensive income
    Issued for cash on exercise of stock
     options                                  187,620      3           -
    Stock option compensation cost                  -      -           2
    Common share dividends                          -      -           -
    Stock options retired for cash                  -      -           -
                                           ----------- ------ -----------

    Balance at Mar. 31, 2007               82,748,892   $500         $27
                                           ----------- ------ -----------

                                           Accumulated
                                              Other     Reinvested
                                          Comprehensive  Earnings
                                             Income     (Deficit)   Total
                                          ------------- ---------- -------

    Balance at Dec. 31, 2005                      $324       $381  $1,215

    Net loss                                         -         (4)     (4)
    Other comprehensive income
       Unrealized gain on translation of
        self-sustaining foreign
        operations                                   7          -       7
                                                                   -------
    Comprehensive income                                                3
    Issued for cash on exercise of stock
     options                                         -          -       2
    Stock option compensation cost                   -          -       7
    Common share dividends                           -         (7)     (7)
    Stock options retired for cash                   -         (1)     (1)
                                          ------------- ---------- -------

    Balance at Mar. 31, 2006                      $331       $369  $1,219
                                          ------------- ---------- -------


    Balance at Sep. 30, 2006                      $414       $435  $1,370

    Net loss                                         -       (781)   (781)
    Other comprehensive loss
       Unrealized loss on translation of
        self-sustaining foreign
        operations                                 (36)         -     (36)
                                                                   -------
    Comprehensive loss                                               (817)
    Issued for cash on exercise of stock
     options                                         -          -       -
    Stock option compensation cost                   -          -       1
    Common share dividends                           -         (7)     (7)
    Stock options retired for cash                   -         (1)     (1)
                                          ------------- ---------- -------

    Balance at Dec. 31, 2006                      $378      $(354)   $546
    Net income                                       -         44      44
    Other comprehensive income
       Unrealized gain on translation of
        self-sustaining foreign
        operations                                  26          -      26
                                                                   -------
    Comprehensive income                                               70
    Issued for cash on exercise of stock
     options                                         -          -       3
    Stock option compensation cost                   -          -       2
    Common share dividends                           -         (7)     (7)
    Stock options retired for cash                   -          -       -
                                          ------------- ---------- -------

    Balance at Mar. 31, 2007                      $404      $(317)   $614
                                          ------------- ---------- -------
    

    Notes to the Consolidated Financial Statements appear on pages 21 to 27.

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

                                                  Three Months Ended
                                            ------------------------------
                                            Mar. 31  Dec. 31    Mar. 31
                                              2007     2006       2006
                                            -------- -------- ------------
    Operating activities                                      (restated -
                                                               see Note 1)
      Net income (loss)                         $44    $(781)         $(4)
      Depreciation and amortization              54       75           72
      Future income tax recovery                 (9)     (85)         (25)
      Unrealized (gain) loss on derivatives     (26)      (9)          24
      Asset writedowns (Note 3)                   -      860            -
      Other gains and losses                     (1)       -           (2)
      Stock option expense                        -        -            6
                                            -------- -------- ------------
      Funds from operations (1)                  62       60           71
      Changes in non-cash working capital       (54)      58          (64)
      Changes in operating non-current
       assets and liabilities                    (6)     (30)         (22)
                                            -------- -------- ------------
      Cash flow from (used in) operating
       activities                                 2       88          (15)
                                            -------- -------- ------------

    Investing activities
      Proceeds on asset sales and other
       capital transactions                       1        1            2
      Plant, property and equipment
       additions                                (37)     (46)         (41)
      Turnaround costs, long-term
       investments and other assets              (3)     (10)          (9)
      Changes in non-cash working capital         -        -           (6)
                                            -------- -------- ------------
                                                (39)     (55)         (54)
                                            -------- -------- ------------
    Financing activities
      Decrease in current bank loans              -        -           (1)
      Long-term debt additions                    -       34            4
      Long-term debt repayments                  (4)      (4)           -
      Long-term debt - increase (decrease)
       in revolving debt                         57      (95)          (1)
      Affiliate long-term notes                   -        3            -
      Options retired for cash                    -       (1)           -
      Common shares issued                        3        1            2
      Common share dividends                     (7)      (7)          (7)
      Changes in non-cash working capital         -        1            -
                                            -------- -------- ------------
                                                 49      (68)          (3)
                                            -------- -------- ------------

    Increase (decrease) in cash and cash
     equivalents                                 12      (35)         (72)
    Cash and cash equivalents, beginning of
     period                                      75      110          166
                                            -------- -------- ------------

    Cash and cash equivalents, end of
     period                                     $87      $75          $94
                                            -------- -------- ------------

    Cash tax payments                            $9      $12           $-
                                            -------- -------- ------------

    Cash interest payments                      $44      $40          $36
                                            -------- -------- ------------

    (1) See Supplemental Measures on page 11.
    

    Notes to the Consolidated Financial Statements appear on Pages 21 to 27.

    
    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, 2006.

    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,
2006 on pages 80 to 84 of the 2006 Annual Report, except as follows.

    On Jan. 1, 2007, NOVA Chemicals adopted the Canadian Institute of
Chartered Accountants (CICA) Handbook Section 1506, Accounting Changes. CICA
Section 1506 provides that 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. This new standard applies to fiscal years beginning on or after
Jan. 1, 2007.

    On Jan. 1, 2007, NOVA Chemicals adopted CICA Section 3855, Financial
Instruments - Recognition and Measurement; Section 3865, Hedges; Section 1530,
Comprehensive Income; Section 3251, Equity. These new standards apply to
fiscal years beginning on or after Oct. 1, 2006. In addition, NOVA Chemicals
has adopted the related disclosure and presentation changes as contained in
the existing CICA Section 3861, Financial Instruments - Disclosure and
Presentation.

    CICA Section 3855 establishes standards for recognizing and measuring
financial assets, financial liabilities and non-financial derivatives. Under
CICA Section 3855, all financial assets must be classified as either
held-for-trading, available for sale, held to maturity investments or loans
and receivables. All financial liabilities must be classified as
held-for-trading or other financial liabilities. All financial instruments,
including derivatives, are included on the Consolidated Balance Sheets and are
measured at fair value, except for held to maturity investments, loans and
receivables and other financial liabilities, which are measured at amortized
cost. Subsequent measurement and recognition of changes in fair value depend
on the instrument's initial classification. Held-for-trading financial
instruments are measured at fair value and all gains and losses are included
in net income in the period in which they arise. Available for sale financial
instruments are measured at fair value, determined by published market prices
in an active market, except for investments in equity instruments that do not
have quoted market prices in an active market which are measured at cost.
Changes in fair value are recorded in other comprehensive income until the
assets are removed from the balance sheet. Investments classified as available
for sale are written down to fair value through income whenever it is
necessary to reflect other-than-temporary impairment. Realized gains and
losses on the disposal of available for sale securities, are recognized in
other gains and losses. Also, transaction costs related to financial assets
and liabilities are added to the acquisition or issue cost, unless the
financial instrument is classified as held-for-trading, in which case the
transaction costs are recognized immediately in net income.

    CICA Section 3855 also requires financial and non-financial derivative
instruments to be measured at fair value and recorded as either assets or
liabilities, with the exception of non-financial derivative contracts that
were entered into and continue to be held for the purpose of receipt or
delivery of a non-financial item in accordance with NOVA Chemicals' expected
purchase, sale or usage requirements. Certain derivatives embedded in
non-derivative contracts must also be measured at fair value. Any changes in
the fair value of recognized derivatives are included in net income in the
period in which they arise, unless specific hedge accounting criteria are met,
as defined in CICA Section 3865. As a result, NOVA Chemicals has reflected an
unrealized gain of $26 million for the period ended Mar. 31, 2007, which is
included in feedstock and operating costs on the Consolidated Statements of
Income. Fair values for NOVA Chemicals' recognized commodity-based derivatives
are based on the forward prices of the associated market index. No
non-financial derivatives have been recognized as a result of the application
of this standard, as all of NOVA Chemicals' non-financial derivative contracts
have been designated and documented as meeting NOVA Chemicals' expected
purchase, sale or usage requirements.

    As a result of the adoption of CICA Section 3855, NOVA Chemicals has
classified, at Mar. 31, 2007, its financial instruments as follows: cash and
cash equivalents, derivative instruments (included in Accounts receivables,
Investments and other assets and Deferred credits and long-term liabilities on
the Consolidated Balance Sheets) as held-for-trading; trade accounts
receivable, advances receivable from affiliates and other receivables
(included in Accounts receivable on the Consolidated Balance Sheets) and
Restricted cash and other assets as loans and receivables; investments in
non-affiliated entities (included in Investments and other assets on the
Consolidated Balance Sheets) as available for sale; and trade accounts
payable, other accounts payable, certain accrued liabilities (included in
Accounts payable and accrued liabilities on the Consolidated Balance Sheets);
bank loans (line of credit); long-term liabilities (included in Deferred
credits and long-term liabilities on the Consolidated Balance Sheets); and
long-term debt as other financial liabilities.

    Under CICA Section 3855, long-term debt is required to be initially
measured at fair value and subsequently measured at amortized cost. As a
result, certain deferred debt discount and issuance costs that were previously
reported in Restricted cash and other assets and Investments and other assets
on the Consolidated Balance Sheets have been reclassified, on a prospective
basis, and are now reported as a reduction of the respective debt obligations.
In total, $17 million has been reclassified.

    As noted above, investments in non-affiliated entities classified as
available for sale are now measured at fair market value. Previously, these
investments were measured at cost. On Jan. 1, 2007, the impact of this change
was not material to the Consolidated Financial Statements. During the
three-month period ending Mar. 31, 2007, the change in fair value of these
investments was also not material to the Consolidated Financial Statements.
NOVA Chemicals' investments in non-affiliated entities that do not have a
quoted market price in an active market are measured at cost. As of Dec. 31,
2006 and Mar. 31, 2007 these investments totaled $13 million.

    The recommendations of CICA Section 3865, Hedges, replaces and expands
the guidance in CICA Accounting Guideline 13 (AcG-13), Hedging Relationships
and the hedging guidance in CICA Section 1650, Foreign Currency Translation.
CICA Section 3865 establishes standards for when and how hedge accounting may
be applied as well as related disclosure requirements. Hedge accounting
ensures the recording, in the same period, of counterbalancing gains, losses,
revenues and expenses from designated derivative financial instruments as
those related to the hedged item. NOVA Chemicals has evaluated the impact of
CICA Section 3865 on its Consolidated Financial Statements, at Jan. 1, 2007
and Mar. 31, 2007, and has determined that a gain on settlement of a
derivative instrument that was previously designated as a hedge and deferred
on the Consolidated Balance Sheets should now be reported as an adjustment of
the previously hedged long-term debt instrument. As such, the deferred gain of
$4 million has been reclassified, on a prospective basis, from Accounts
payable and accrued liabilities and Deferred credits and long-term liabilities
to Long-term debt.

    CICA Section 1530, Comprehensive Income, establishes standards for
reporting and presentation of comprehensive income, which is defined as the
change in equity from transactions and other events and circumstances from
non-owner sources. As a result of adopting CICA Section 1530, two new
statements, Consolidated Statements of Changes in Shareholders' Equity and
Consolidated Statements of Comprehensive Income (Loss) have been presented.
Comprehensive income (loss) is composed of NOVA Chemicals' net income (loss)
and other comprehensive income (loss). Other comprehensive income (loss)
includes unrealized gains (losses) on available for sale financial assets,
foreign currency translation gains (losses) on the net investment in
self-sustaining foreign operations and changes in the fair market value of
derivative instruments designated as cash flow hedges, all net of income
taxes. The components of comprehensive income are disclosed in the
Consolidated Statements of Changes in Shareholders' Equity. As a result of the
adoption of CICA Section 1530, the cumulative translation adjustment, formerly
presented as a separate line item as part of Shareholders' equity in the
Consolidated Balance Sheets, of $378 million as of Dec. 31, 2006, has been
reclassified to Accumulated other comprehensive income.

    CICA Section 3251, Equity, establishes standards for the presentation of
equity and changes in equity during the reporting period. The requirements
under this Section have been effected in the presentation of the Consolidated
Statements of Changes in Shareholders' Equity.

    In the first quarter of 2007, NOVA Chemicals changed its accounting for
its interest in the European accounts receivable securitization program,
undertaken by the European Joint Venture. Accounts receivable securitization
transactions are recorded as sales of assets based on the transfer of control
to the purchaser as opposed to financing.

    Certain comparative figures have been restated to conform to the current
periods' presentation. In particular, Canadian GAAP implemented EIC (Emerging
Issues Committee) 162, Stock-Based Compensation for Employees Eligible to
Retire Before the Vesting Date, which resulted 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.

    There were no significant changes in internal controls during the first
quarter of 2007.

    2. Pensions and Other Post-Retirement Benefits

    
    Components of Net Periodic Benefit Cost for Defined Benefit Plans

                                      Three Months Ended
                     -----------------------------------------------------
                       Mar. 31, 2007     Dec. 31, 2006     Mar. 31, 2006
                     ----------------- ----------------- -----------------
                     Pension   Other   Pension   Other   Pension   Other
                     Benefits Benefits Benefits Benefits Benefits Benefits
                     -------- -------- -------- -------- -------- --------

    Current service
     cost                 $8       $1       $6      $(2)      $7       $1
    Interest cost on
     projected
     benefit
     obligations          10        1       16        2        9        1
    Actual gain on
     plan assets         (13)       -      (60)       -       (9)       -
    Actuarial loss
     on accrued
     obligation            2        -       28        -        -        -
                     -------- -------- -------- -------- -------- --------
    Costs arising in
     the period            7        2      (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           (1)       -       (3)       1       (1)       -
    Actuarial loss         -        -      (24)       1        2        -
    Past service and
     actual plan
     amendments            -        -        -       (1)       -        -
                     -------- -------- -------- -------- -------- --------
    Net defined
     benefit cost
     recognized            6        2        5        1        8        2
    Curtailment /
     special
     termination
     charge                -        -        4        1        -        -
    Settlement
     charge                -        -        3        -        -        -
                     -------- -------- -------- -------- -------- --------
    Total cost            $6       $2      $12       $2       $8       $2
                     -------- -------- -------- -------- -------- --------
    

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

    Employer Contributions

    NOVA Chemicals contributed $14 million, $15 million and $10 million
during the quarters ended Mar. 31, 2007, Dec. 31, 2006, and Mar. 31, 2006,
respectively, to its defined benefit pension plans. NOVA Chemicals contributed
$2 million for each of the quarters ended Mar. 31, 2007, Dec. 31, 2006, and
Mar. 31, 2006 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 approximately $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 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, $5 million of the severance
costs has been paid to employees.

    4. Interest Expense

    
    Components of interest expense                   Three Months Ended
                                                   -----------------------
                                                   Mar. 31 Dec. 31 Mar. 31
                                                    2007    2006    2006
                                                   ------- ------- -------
    Interest on long-term debt                        $35     $36     $38
    Interest on securitizations and other               9       9       5
                                                   ------- ------- -------
    Gross interest expense                             44      45      43
    Interest capitalized during plant construction     (1)     (1)     (1)
    Interest income                                    (1)     (1)      -
                                                   ------- ------- -------
    Interest expense (net)                            $42     $43     $42
                                                   ------- ------- -------
    

    5. Income Taxes

    
                                                     Three Months Ended
                                                   -----------------------
                                                   Mar. 31 Dec. 31 Mar. 31
                                                    2007    2006    2006
                                                   ------- ------- -------
    Loss before income taxes                          $60   $(880)    $(3)
    Statutory income tax rate                       32.49%  32.49%  33.62%
                                                   ------- ------- -------
    Computed income tax (expense) recovery           $(19)   $286      $1
    Decrease (increase) in taxes resulting from:
      Tax benefits not recognized on restructuring
       charges (1)                                      -    (220)      -
      Foreign tax rates                                 4      30       1
      Other                                            (1)      3      (3)
                                                   ------- ------- -------
    Income tax (expense) recovery                    $(16)    $99     $(1)
                                                   ------- ------- -------

    (1) Refer to Note 3 on page 23.
    

    6. Net Income (Loss) Per Share

    
    (shares in millions)                  Three Months Ended
                            ----------------------------------------------
                               Mar. 31         Dec. 31         Mar. 31
                                 2007           2006            2006
                            -------------- --------------- ---------------
                            Basic  Diluted  Basic  Diluted  Basic  Diluted

    Net income (loss)
     available to common
     shareholders            $ 44    $ 44  $ (781) $ (781)   $ (4)   $ (4)
                            ------ ------- ------- ------- ------- -------
    Weighted average common
     shares outstanding      82.7    82.7    82.6    82.6    82.5    82.5
    Add back effect of
     dilutive securities:
     Stock Options              -     0.8       -       -       -       -
                            ------ ------- ------- ------- ------- -------
    Weighted-average common
     share for EPS
     calculations            82.7    83.5    82.6    82.6    82.5    82.5
                            ------ ------- ------- ------- ------- -------
    Income (loss) per
     common share           $0.53   $0.53  $(9.46) $(9.46) $(0.05) $(0.05)
                            ------ ------- ------- ------- ------- -------

    3.3 million and 4.4 million stock options were excluded from the
     computation of diluted loss per share for the quarters ended Dec. 31,
     2006, and Mar. 31, 2006, respectively, because they were anti-
     dilutive. 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. As of Mar. 31, 2007, the
     fully diluted share count was 83.5 million.
    

    7. Segmented Information

    Refer to pages 104 and 105 of the Consolidated Financial Statements for
the year ended Dec. 31, 2006 for the description of each segment and
accounting policies for segment reporting.

    Beginning in the first quarter of 2007, NOVA Chemicals no longer
allocates interest, taxes or corporate operating costs to the business
segments. Prior period comparative amounts have been revised to reflect this
change.

    The following tables provide information for each segment.

    
                                                     Three Months Ended
                                                   -----------------------
                                                   Mar. 31 Dec. 31 Mar. 31
                                                    2007    2006    2006
                                                   ------- ------- -------
    Revenue
      Joffre Olefins                                 $411    $427    $501
      Corunna Olefins                                 397     515     418
      Polyethylene                                    423     455     467
      Performance Styrenics                           100     105      99
      Styrene Monomer                                 464     526     440
      North American SPS                              141     119     121
      European JV                                     188     184     147
      Eliminations                                   (618)   (696)   (640)
                                                   ------- ------- -------
                                                   $1,506  $1,635  $1,553
                                                   ------- ------- -------

    Adjusted EBITDA (1)
      Joffre Olefins                                 $107    $132    $161
      Corunna Olefins                                  42       4      20
      Polyethylene                                     22      (8)     15
      Performance Styrenics                            (6)    (16)     (1)
      Styrene Monomer                                  10      (5)     (2)
      North American SPS                               (6)    (11)     (5)
      European JV                                      15       4      (4)
      Corporate                                       (17)    (11)    (49)
      Eliminations                                    (12)      9     (11)
                                                   ------- ------- -------
                                                     $155     $98    $124
                                                   ------- ------- -------

    Operating income (loss)
      Joffre Olefins                                  $95    $119    $149
      Corunna Olefins                                  27     (11)      8
      Polyethylene                                      6     (24)     (2)
      Performance Styrenics                           (11)    (19)     (4)
      Styrene Monomer                                   8     (18)    (15)
      North American SPS                               (7)    (16)    (10)
      European JV                                      14      (4)    (12)
      Corporate                                       (19)   (873)    (66)
      Eliminations                                    (12)      9     (11)
                                                   ------- ------- -------
      Total operating income (loss)                  $101   $(837)    $37
      Interest expense (net)                          (42)    (43)    (42)
      Other gains and losses (net)                      1       -       2
      Income tax (expense) recovery                   (16)     99      (1)
                                                   ------- ------- -------
      Net income (loss)                               $44   $(781)    $(4)
                                                   ------- ------- -------

    Depreciation and amortization expense
      Joffre Olefins                                  $12     $13     $12
      Corunna Olefins                                  15      15      12
      Polyethylene                                     16      16      17
      Performance Styrenics                             5       3       3
      Styrene Monomer                                   2      13      13
      North American SPS                                1       5       5
      European JV                                       1       8       8
      Corporate                                         2       2       2
                                                   ------- ------- -------
                                                      $54     $75     $72
                                                   ------- ------- -------

    Capital expenditures
      Joffre Olefins                                   $4      $7      $4
      Corunna Olefins                                  24       6      12
      Polyethylene                                      2      11       3
      Performance Styrenics                             2      14      20
      Styrene Monomer                                   1       3       1
      North American SPS                                1       2       -
      European JV                                       3       3       1
                                                   ------- ------- -------
                                                      $37     $46     $41
                                                   ------- ------- -------

    (1) Net income (loss) before restructuring charges, income taxes,
     other gains and losses, interest expense and depreciation and
     amortization (see Consolidated Statements of Net Income (Loss) on
     page 17 and Supplemental Measures on page 11).
    

    
                                                           Mar. 31 Dec. 31
                                                            2007    2006
                                                           ------- -------
    Assets
      Joffre Olefins                                         $800    $743
      Corunna Olefins                                       1,087   1,092
      Polyethylene                                            985     946
      Performance Styrenics                                   430     429
      Styrene Monomer                                         316     334
      North American SPS                                      102      82
      European JV                                             173     183
      Corporate (1)                                           337     331
      Eliminations                                            (32)    (18)
                                                           ------- -------
                                                           $4,198  $4,122
                                                           ------- -------
    (1) Amounts include all cash and cash equivalents.
    

    8. Reconciliation to United States Generally Accepted Accounting
Principles

    
                                                     Three Months Ended
                                                   -----------------------
                                                   Mar. 31 Dec. 31 Mar. 31
                                                    2007    2006    2006
                                                   ------- ------- -------
    Net income (loss) in accordance with Canadian
     GAAP                                             $44   $(781)    $(4)
    Add (deduct) adjustments for:
       Start-up costs (1)                               1       1      (7)
       Derivative instruments and hedging activity
        (2)                                            (1)      -       -
       Inventory costing (3)                           (1)     (2)     (3)
       Stock-based compensation (4)                     1       -       -
       Restructuring (5)                                -      11
                                                   ------- ------- -------
    Net income (loss) in accordance with U.S. GAAP    $44   $(771)   $(14)
                                                   ------- ------- -------
    Earnings (loss) per share - basic               $0.53  $(9.34) $(0.17)
                                                   ------- ------- -------
    Earnings (loss) per share - diluted             $0.53  $(9.34) $(0.17)
                                                   ------- ------- -------

    Comprehensive income (loss) in accordance with
     Canadian GAAP                                    $70   $(817)     $3
    Add (deduct) adjustments to Canadian GAAP net
     income (loss) for:
       Start-up costs (1)                               1       1      (7)
       Derivative instruments and hedging activity
        (2)                                            (1)      -       -
       Inventory costing (3)                           (1)     (2)     (3)
       Stock-based compensation (4)                     1       -       -
       Restructuring (5)                                -      11
    Add adjustments to Canadian GAAP comprehensive
     income (loss) for:
       Pension liability adjustment (6)                 -       8       -
                                                   ------- ------- -------
    Comprehensive income (loss) in accordance with
     U.S. GAAP                                        $70   $(799)    $(7)
                                                   ------- ------- -------
    

    
                                                           Mar. 31 Dec. 31
                                                            2007    2006
                                                           ------- -------
    Accumulated other comprehensive income
      Unrealized gain on translation of self-sustaining
       foreign operations                                    $383    $357
      Pension liability adjustment (6)                        (82)    (82)
                                                           ------- -------
                                                             $301    $275
                                                           ------- -------
    Balance sheet in accordance with U.S. GAAP (8)
      Current assets (3)                                   $1,400  $1,337
      Investments and other assets (1), (6)                    83      82
      Plant, property and equipment, net (1), (5)           2,732   2,719
      Current liabilities (2), (7)                         (1,220) (1,186)
      Long-term debt (2)                                   (1,583) (1,584)
      Future income taxes (1), (2), (3), (4), (6), (7)       (350)   (397)
      Deferred credits and long-term liabilities (2), (4),
       (6), (7)                                              (530)   (501)
                                                           ------- -------
      Common shareholders' equity (6), (7)                   $532    $470
                                                           ------- -------
    

    
    (1) 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.

    (2) Derivative Instruments and Hedging Activities. CICA Section 3855
         harmonizes Canadian and U.S. GAAP by establishing standards for
         recognition and measurement of financial assets, liabilities and
         non-financial derivatives. CICA Section 3865 harmonizes Canadian
         GAAP with U.S. GAAP SFAS No. 133 by establishing standards for
         when and how hedge accounting may be applied and recorded. See
         Note 1 for further details. Certain differences that existed
         before the implementation of the above standards on Jan. 1, 2007,
         pertaining to the termination of interest rate swaps in 2002,
         continue to be reconciling items between Canadian GAAP and U.S.
         GAAP.

    (3) 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.

    (4) Stock-Based Compensation. 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 classified as liability instruments and are
         marked-to-market based on intrinsic value. U.S. GAAP, SFAS No.
         123(R), Share-Based Payment, 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. 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 for the periods prior to Dec. 31,
         2005 of $5 million after-tax, has been charged to reinvested
         earnings (deficit) at Jan. 1, 2006.

    (5) 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 was lower under U.S. GAAP.

    (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 SFAS Nos. 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 accumulated other
         comprehensive income. Accordingly, at Dec. 31, 2006, NOVA
         Chemicals recognized an additional pension and post-retirement
         liability of $124 million, resulting in a charge of $82 million
         (net of tax) to accumulated other comprehensive income. In 2006
         (prior to the adoption of SFAS No. 158), 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) Income Taxes. Beginning Jan. 1, 2007, FIN 48, Accounting for
         Uncertainty in Income Taxes, became effective for U.S. GAAP
         reporting. FIN 48 clarifies the accounting for uncertainty in
         income taxes by prescribing a minimum recognition threshold that
         a tax position is required to meet before being recognized. An
         entity is required to recognize the best estimate of a tax
         position if that position is more likely than not to be sustained
         upon examination, based solely on the technical merits of the
         position. NOVA Chemicals adopted the provisions of FIN 48 on Jan.
         1, 2007 at which time a FIN 48 liability of $36 million was
         recognized by reclassifying $34 million out of deferred tax
         liability and $4 million from the current tax liability. This
         resulted in a $6 million increase in the liability for
         unrecognized tax benefits, and was accounted for as a reduction
         to the Jan. 1, 2007, U.S. GAAP balance in reinvested earnings.
         Since implementation of FIN 48 on Jan. 1, 2007, no further
         changes to the FIN 48 liability have been necessary. Also, it is
         NOVA Chemicals policy to recognize interest and penalties accrued
         related to unrecognized tax benefits in income tax expense. At
         Jan, 1, 2007, NOVA Chemicals had approximately $6 million accrued
         for the payment of interest and penalties.

    (8) 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.
    

    9. New Accounting Pronouncements

    Canadian GAAP

    CICA 1535, Capital Disclosures, applicable to interim and annual periods
relating to fiscal years beginning on or after Oct. 1, 2007, specifies
disclosures of (1) information about the entity's objectives, policies, and
processes for managing capital structure; (2) quantitative data about what the
entity regards as capital; and (3) whether the entity has complied with
externally imposed capital requirements (for example bank covenants) and if it
has not complied, the consequences of such non-compliance. NOVA Chemicals is
currently evaluating the effect of adopting this standard.

    CICA 3862, Financial Instruments - Disclosure and CICA 3863, Financial
Instruments - Presentation, replace CICA 3861, Financial Instruments -
Disclosure and Presentation. These new standards revise and enhance the
disclosure requirements, and carry forward, substantially unchanged, the
presentation requirements. These new standards emphasize the significance of
financial instruments for the entity's financial position and performance, the
nature and extent of risks arising from financial instruments, and how these
risks are managed. These new standards are applicable to interim and annual
periods relating to fiscal years beginning on or after Oct. 1, 2007. NOVA
Chemicals is currently evaluating the effects of adopting these standards.

    U.S. GAAP

    SFAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities, including an amendment to SFAS No. 115, permits entities to
choose to measure many financial instruments and certain other items at fair
value. Most of the provisions of this Statement apply only to entities that
elect the fair value option. However, the amendment to SFAS No. 115,
Accounting for Certain Investments in Debt and Equity Securities, applies to
all entities with available for sale and held-for-trading securities. SFAS No.
159 is effective as of the beginning of an entity's first fiscal year that
begins after Nov. 15, 2007. NOVA Chemicals is currently evaluating the effects
of adopting this standard.




For further information:

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

Organization Profile

NOVA CHEMICALS CORPORATION

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890