Arctic Hunter Energy (TSX.V - AHU) Corporate Presentation


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The Company is a Canadian resource exploration and development Company that is involved in the acquisition, exploration and development of oil and gas properties in Canada and throughout North America. The Company is an Vancouver based, junior heavy oil producer with interests located in the Lloydminster area of west-central Saskatchewan.

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Arctic Hunter Energy (TSX.V - AHU) Corporate Presentation

  1. 1. “Exceptional Exploration and Exploitation Capability” Corporate Presentation – December 2012
  2. 2. About Arctic Hunter Energy Inc.The Company is a Canadian resource exploration, exploitation and development Company that is involved in theacquisition, exploration and development of oil and gas properties in North America. The Company is a Vancouverbased, junior heavy oil producer with interests located in the Lloydminster area of west-central Saskatchewan. TheCompany is currently producing in aggregate at an average rate of 100 bbls/d gross of heavy oil from its four wells (4) onits Landrose, Saskatchewan heavy oil property (30 bbls/d net after payout to the Company). The Company has plans tocontinue growing its current daily production base, and plans on maximizing future production growth, by implementing aseries of strategic property acquisitions and increasing its proposed exploration drilling activities proposed for 2013. TheCompany also intends to devote a large portion of its corporate efforts to reviewing the assessment and acquisition ofadditional oil and gas exploration properties domestically and internationally, which is expected to fuel the Company’scoming production growth plans and continued growth in the oil and gas sector 2013.The Company maintains a strong balance sheet and has a qualified management team in exploration drilling, welloperations and has access to the necessary manpower to develop its production properties. The Company and itsmanagement is committed to creating long term shareholder value, by increasing and selecting additional strategic oil andgas properties for exploration and development.
  3. 3. Market information – Arctic HunterExchange listings TSX VentureSymbol AHUShares Outstanding 14,985,000Fully Diluted 20,690,000Options 905,000Warrants 4,800,000Current Share Price $0.06 - $0.10Market Cap $974,025 Directors and Officers 30%Shareholder breakdown Retail 70%
  4. 4. Board of Directors & Officers Tim Coupland, President and CEO & Director Over 20 years of business experience with both public and private companies, Mr. Coupland has raised over CDN $80 million dollars in both debt and equity financings, He brings a wealth of expertise in raising equity capital, and assembling highly seasoned teams of professionals, consultants, financial consultants and oil & gas advisors who have proven track records in financing, negotiation and promotion required to secure and develop successful oil & gas projects. Robert Hall, Director, VP Corporate Development Acts as a director and officer of Arctic Hunter Energy Inc., Alberta Star Development Corp. Windfire Capital Corp., Touchdown Resources Inc. TSX Venture Exchange listed Companies, and Dynamic Gold Corp., a Company trading on the OTC Bulletin Board, Oversees exploration logistics, costing, human resources supervision, corporate development, institutional and retail investment. Gordon Steblin, CFO, B.Comm., CGA, Mr. Steblin obtained a Bachelor of Commerce degree in 1983 from the University of British Columbia (UBC), and in 1985 he became a Certified General Accountant. Mr. Steblin has over 20 years of financial experience in the junior mining/exploration sector Edward Burylo, Director Edward Burylo is a successful businessman with over 40 years of Public Market Experience. Mr Burylo is currently a director of Arctic Hunter Energy Inc., and Alberta Star Development Corp. a TSX Venture Exchange listed Company.
  5. 5. Board of Directors & Officers DB Finn, Director Mr. Finn is a Petroleum Consultant with over 30 years consulting experience in oil and gas property evaluations. He graduated from the British Columbia Institute of Technology with a Diploma in Natural Gas and Petroleum Technology in 1969 and upon graduation was employed by Amoco Canada Petroleum Company Ltd. From there he returned to University majoring in physical sciences, then re-entering the oil and gas industry with the British Columbia Petroleum Corporation where he monitored natural gas performance of northeastern British Columbia gas fields. In 1978 Mr. Finn began his career in the consulting business with the predecessor company of Gilbert Laustsen Jung Associates Ltd. In 1980 he co-established and was a partner in the Vancouver based oil and gas consulting firm, Esau Finn Associates Ltd. which until 1989 served the resource and financial community of Vancouver. The firm provided oil and gas technical reports in support of securities and banking requirements; acquisition/disposition appraisals; independent opinion of drilling prospects; and monitoring of oil and gas operations of junior oil and gas companies. Areas of exposure include continental U.S.A., the western Canadian sedimentary basin as well as limited offshore evaluations. In 1990 Mr. Finn became an independent oil and gas consultant, primarily contracting his services to Gilbert Laustsen Jung Associates Ltd. in Calgary, until returning to Vancouver in 2002, where he continues to provide his consulting services.
  6. 6. Board of Directors & OfficersRay Lee, P.L. Eng, DirectorHighlights• Over 30 years industry experience• Experience encompasses Start-Ups to Major Producers• Extensive knowledge of the Oil & Gas business, from A&D to field operations• Member of APEGGA, ASET and CAPLExperience2012 – Present - Senior Exploitation Engineer / Tundra Oil & Gas Partnership / Calgary, Alberta, Canada• Responsible to provide technical and business input to develop and grow area of responsibility, with drilling of horizontal oilwells in SW Manitoba.• Evaluate existing oil reservoir for EOR implementation2006 -2012 - President & Chief Executive Officer / Cayman Energy Inc. / Calgary, Alberta, Canada• Assembled current Cayman team; one of four founding members• Grew company to over 500 boepd2005-2006 - Chief Operating Officer / Vanquish Oil and Gas Corporation / Calgary, Alberta, Canada• Recruited and assembled operation/exploration team; grew company production from 80 boepd - 1,300+ boepd2004-2005 - Manager of Operations / Redsky Energy Ltd. / Calgary, Alberta, Canada• Managed all aspects of Oil and Gas Operations from surface land, drilling to production; sold to Trilogy Energy Trust withtwo years growth of 0 - 2,000+ boepd
  7. 7. Board of Directors & OfficersRay Lee, P.L. Eng, DirectorExperience ….. (Continued)1995-1999 - Exploitation/Production Group / Northstar Energy/Devon Canada / Calgary, Alberta, Canada• Optimized and maintained production and provided exploitation engineering support to maximize asset value in area of responsibilityPre-1995 - Amoco Canada, Dome Petroleum, Hudson’s Bay Oil & Gas• Exploitation area included Pembina and Drayton Valley area• Evaluated, prepared, and presented capital projects to management to maintain and grow area of responsibility• Provided economic and reserves evaluation to support projects and corporate requirements• Heavy oil field production engineering, steam projects and well workovers
  8. 8. Corporate Information Legal Counsel Morton & Company Vancouver, BC Auditor James Stafford Inc. Vancouver, BC Banker Bank of Montreal Vancouver, BCReserve Evaluator, 51-101 Reserve Report Petrotech Engineering Ltd Burnaby, BC
  9. 9. Profile and Strategy – Arctic HunterOperations A growth focused, Vancouver based, publicly traded oil and gas company with operational focus in central Alberta and Saskatchewan. Western Plains Petroleum Ltd. is a Lloydminster, Alberta based oil and gas Company that acts as operator for Arctic HunterStrategy Large Scale regional growth of recoverable Oil reserves through proven drilling techniques and exploration expertise. Acquisition and exploitation of high quality properties with long life oil reserves. Facilitate additional success through strategic joint ventures and strong industry partnerships.Production The company currently maintaining or exceeding 30 bbls/day of production ( Heavy Oil)Team Proven team and working interest partner and operator experienced in Canadian heavy Oil development and exploitation.
  10. 10. Corporate StrategyA heavy oil focused producer with a strong team experienced in growing through both the drill bit and strategic acquisitions – Arctic Hunter is striving to achieve top quartile ROI • SHORT TERM : Build Stable Producing Base • $400,000 cash in the bank for 2013 Capital Program • Forecast production growth from 30 bbls/day to 300 bbls/day • 5 contingent heavy oil locations for drilling and further growth • LONG TERM : Increase Exposure to Exploration Prospects • In-house prospect generation • Targeted mergers and strategic acquisitions • Drill existing oil & gas prospects • International Exploration and Exploitation
  11. 11. Production - Heavy Oil FocusDIFFERENTIALSHeavy oil differentials have narrowed from 42% in 2007 in part due to:• Declining production from Mexico and Venezuela• OPEC heavy oil production cuts• Increased pipeline capacity to access markets• Increased upgrading capacity at the refining complex
  12. 12. Executive Summary • Arctic Hunter (“the Company”) is a Canadian resource exploration and development company that identifies, acquires and finances oil and natural gas assets in North America. The Company maintains a strong balance sheet and a qualified management team in exploration and Company Overview development of natural resources. The Company is committed to creating long term shareholder value through the domestic and international acquisition, exploration and development of petroleum and natural gas resources. • Near-term to Long-term plan is to be a mid-tier Oil and Gas producerExcellent Acreage position • Mature area with established infrastructure; close to major consumption hubs short on supply • Significant historical production using modern drilling and completion methods • Development friendly area Advanced Oil Play with • Company strategy of assessing a mature oil basin leads to the identification and exploration Significant Untapped drilling which leads to increase barrels Resource Potential • Current models of recoveries are excellent • Increased attention to new Oil exploration plays in Lloydminster, Alberta and Saskatchewan • Single oil well return profile is consistent with top resource plays in North America and Oil friendly Strong Return Profile jurisdictions • Board of Directors, Management, Technical team and field operations team with a proven and Strong Management Team exceptional track record of creating commercial successes from early stage play concepts
  13. 13. Arctic Hunter Oil & Gas Property Landrose, Saskatchewan
  14. 14. Lloydminster Heavy Oil – Production Properties & Area of Interest  Focus on heavy oil production  Large reserves of undiscovered Oil & Gas remaining in the region  Heavy Oil refining capacities are increasing  Increased pipeline capacity for Heavy Oil to all Canadian and US markets  Improved production technologies  Differentials narrowing  Very experienced Heavy Oil Field Personnel with Western Plains Petroleum Ltd. as the experienced operator of Property assets
  15. 15. Manville Group (Formations) 3D-Block Diagram 50% working interest and operated by Strategic working interest partner with heavy oil experience Year round access Multi-zone potential 11 – 15 API oil Shallow drill depths (400–700m) Low drilling and equipping costs Drill and Case $ 275,000 Complete $ 150,000 Equip $ 75,000 Total $ 500,000
  16. 16. Drilling Crew at work – Ensign Drilling Ltd.Drilling at Landrose, Saskatchewan
  17. 17. Arctic Hunter President & CEO, Tim Coupland “Our long term production to increasethrough exploration drilling and strategic property acquisitions” Tim Coupland, President & CEO
  18. 18. 100% Exploration success rate at Landrose, SaskatchewanLandrose, SaskatchewanLSD C-12SEC 6TWP 50RANGE 25 W3M
  19. 19. Strategic Partners Unlocking value through best in class heavy oil people Strategic Partnership Dave Forrest President & CEO – Western Plains Petroleum Ltd.Tim CouplandPresident & CEO – Arctic Hunter
  20. 20. C-11 Well - Landrose, SaskatchewanLSD C-11SEC 6TWP 50RANGE 25 W3M
  21. 21. Landrose, Saskatchewan – Heavy Oil Fields
  22. 22. Husky Oil – Lloydminster Upgrader
  23. 23. Husky Oil – Lloydminster RegionHeavy Oil Husky has pioneered the development and production of heavy oil in Western Canada and remains a dominant player. Itsposition is enhanced by synergies with its heavy oil upgrader and asphalt refinery. The Company holds approximately 1.98million acres in the Lloydminster area straddling Alberta and Saskatchewan, of which approximately two-thirds is undeveloped.With daily production of nearly 100,000 barrels of oil, extensive midstream and downstream infrastructure, and significantadvances in enhanced oil recovery (EOR) technologies, Husky is a leader in heavy oil production. Heavy oil proved andprobable reserves are estimated at 255 million barrels (187 million barrels proved and 68 million barrels probable) as ofDecember 31, 2008. Husky currently has more than 3,000 producing wells in the area, and drilled 532 oil and gas wells there in2008, including 92 wells in thermal project expansions. Husky is increasing its heavy oil production utilizing its largeundeveloped land position with the application of improved technologies, reduced cost and increased upgrading capacity.Husky owns and operates 19 oil treating facilities tied into its pipeline system in the Lloydminster area.Production Technology Nearly 80 percent of the Company’s heavy oil production in the Lloydminster area utilizes primary “cold” production. Theremaining 20 percent comes from thermal recovery projects utilizing steam processes including steam assisted gravity drainage(SAGD). Cold production exploits reservoir characteristics unique to the area, and promotes the production of formation sandfrom the wells along with the oil. This sand production increases the productivity of the wells by creating a path of leastresistance for the oil to flow to the wellbore. The resulting production rates are much higher than would be expected in aconventional reservoir setting. This process has been a successful foundation for the growth of heavy oil production in theregion since the mid 1990s. Husky continues to build on its expertise in this area to optimize production and costs.Husky uses variations of steam injection in several projects in the Lloydminster area, including cyclic steam stimulation andSAGD. Husky has successful steam projects at Pikes Peak and Bolney Celtic. Engineering design work is progressing on anexpansion project at Pikes Peak South. The Company is active in piloting solvent-based recovery processes which may haveapplication in reservoirs which are not suited to steam based methods. The Company’s first solvent EOR pilot yielded excellenttechnical results and incremental recovery rates. A second pilot was commissioned in 2008. Husky will continue to pursuealternative recovery processes which offer potential for significant incremental production from its existing heavy oil resourcebase.
  24. 24. Husky Oil – Processing Facility
  25. 25. Operations TeamDavid Forrest – President & CEO, Western Plains Petroleum Ltd. Started in the oilfield doing construction and maintenance Attended Lakeland College’s Heavy Oil Operations Technology Course (HOOT’s) and obtained 4th class Power Engineering. Went to work for Baytex for a total of 5 years. Spent 3 years operating heavy oil wells and battery Promoted to Senior Operator with Baytex starting up their Hoosier field Promoted to Foreman after Baytex acquired Bellator wells. Responsible for overseeing a field with approx. 600 bbls/day and 25 field personnel at age 26. Lead Operator & Field Manager with a new private heavy oil company called BK Resources Ltd. and over 4 years helped build it to a 700bbls/day operation Started I.C. Energy Ltd. along with (2) partners and built the company from the floor up. Was instrumental in purchasing properties from Enermak and Baytex Grew production from 145 bbls/D to 800 bbls/D without drilling any new wells in just under (2) years. Sold IC Energy in 2005 to Arsenal Energy for $10M Started Brahma Resources Ltd. in 2005 and still own the company 100%. Brahma purchased 5 shut in wells in the Maidstone area from Murphy Oil’s Abandonment List and took production on them from zero to 200 bbls/D in two years before selling them to Saha Petroleum (now Western Plains) in 2007. Also purchased (2) shut in wells from Huron and (5) shut in wells from Provident in Alberta just west of Lloydminster and brought production from zero to 200 bbls/D in just over a year. Sold all (7) AB wells plus a disposal Brahma developed to Sterling Eagle Oil and Gas for $4.5M in 2009.
  26. 26. Operations TeamRon Anderson Has worked in the oilfield since 1985. Has an Honors Diploma in Petroleum Engineering Technology from NAIT Worked for Anderson Exploration in Fairview operating gas and sour oil wells. Then for Resman Oil and Gas in Sylvan Lake and later in the Stettler area. Returned to the Lloydminster area with Anderson Exploration (later Devon) and worked for 10 years as a production technologist primarily in heavy oil. Concentrated on optimizing production, salt water disposals, completing heavy oil wells and conserving vent gas. Was responsible for executing major capital programs while maintaining base production volumes. As a Heavy Oil foreman with Devon was responsible for managing a $70MM operating budget, maintaining production rates to 10,000 bbls per day and supervising 24 operations staff plus contract personnel.
  27. 27. Arctic Hunter & Western Plains Corporate Objectives 2012 Arctic Hunter To aggressively acquire Oil & Gas production Properties – Aggressive Property Acquisition and property stewardship To work in regions that have full Infrastructure / Operating Refineries and Paved roads Oil & Gas Reserves – Production Ready, NI 51-101 Compliant reports To obtain production barrels – to aggressively acquire through exploration drilling or property acquisition. To responsibly grow production Work effectively with seasoned Oil field Operators – Strategic working interest partner Implement Cash Flow Model that has positive cash flow, carry no debt Current Production – 30 Barrels a day Near term goals – Production and Exploration Acquisitions Long term goals – Increased Exploration and Exploitation
  28. 28. ARCTIC HUNTERCorporate Address and Contacts ARCTIC HUNTER Corporate AddressSuite 501 - 675 West Hastings St. Vancouver, BC, V6B 1N2, Canada Tel : (604) 488-0860 Fax : (604) 408-3884
  29. 29. Investor Advisory The Corporation may present petroleum and natural gas production and reserve volumes in barrel of oil equivalent (“boe”)amounts. For purposes of computing such units, a conversion rate of 6,000 cubic feet of natural gas to one barrel of oil equivalent(6:1) is used. The conversion ratio of 6:1 is based on an energy equivalency conversion method which is primarily applicable at theburner tip and does not represent value equivalence at the wellhead. Readers are cautioned that boe figures may be misleading,particularly if used in isolation. Certain statements included in this Presentation constitute forward-looking statements or forward-looking information underapplicable securities laws. Such forward-looking statements or information are provided for the purpose of providing informationabout managements current expectations and plans relating to the future. Readers are cautioned that reliance on such informationmay not be appropriate for other purposes, such as making investment decisions. Forward-looking statements or informationtypically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project",“may”, “will” or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements orinformation in this Presentation include, but are not limited to, statements or information with respect to: business strategy andobjectives; development plans; exploration plans; acquisition and disposition plans and the timing thereof; reserve quantities and thediscounted present value of future net cash flows from such reserves; future production levels; wells drilled (gross and net) and thetiming thereof; capital expenditures; commodity prices, revenues; cash flow; debt levels; operating and other costs; royalty rates andtaxes. Forward-looking statements or information are based on a number of factors and assumptions which have been used todevelop such statements and information, but which may prove to be incorrect. Although the Corporation believes that theexpectations and assumptions reflected in such forward-looking statements or information are reasonable, undue reliance shouldnot be placed on forward-looking statements because the Corporation can give no assurance that such expectations andassumptions will prove to be correct. In addition, forward-looking statements or information involve a number of risks anduncertainties which could cause actual results to differ materially from those anticipated by the Corporation and described in theforward-looking statements or information. The forward-looking statements or information contained in this Presentation are made as of the date hereof and theCorporation undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a resultof new information, future events or otherwise unless expressly required by applicable securities laws. Any financial outlook or future oriented financial information in this Presentation, as defined by applicable securities laws, hasbeen approved by management of the Corporation. Such financial outlook or future oriented financial information is provided for thepurpose of providing information about managements current expectations and plans relating to the future. Readers are cautionedthat reliance on such information may not be appropriate for other purposes.
  30. 30. Reader AdvisoryReader Advisory Certain statements contained in this Presentation constitute forward-looking statements. These statements relate to future events or the Company’s future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “forecast”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in, or incorporated by reference into, this Presentation should not be unduly relied upon. These statements speak only as of the date of this Presentation, as the case may be.Forward-looking statements are included throughout this Presentation. In particular, this Presentation contains forward-looking statements pertaining to the following:• the quantity and quality of reserves or resources;• the performance characteristics of the Company’s oil and gas properties;• oil and natural gas production levels;• capital expenditure programs and the timing and method of financing thereof;• future development and exploration activities and the timing thereof;• future land expiries;• estimated future contractual obligations and the amount expected to be incurred under our farm-in commitments;• realization of the anticipated benefits of acquisitions and dispositions;• future liquidity and financial capacity;• projections of market prices and costs;• supply and demand for oil and natural gas;• expectations regarding the Company’s ability to raise capital and to continually add to reserves through acquisitions and development;• expectations relating to the award of exploration permits by governmental authorities; and• treatment under government regulatory and taxation regimes.
  31. 31. Continued … Reader AdvisoryWith respect to forward-looking statements contained in the Presentation certain assumptions have been made including:• oil and natural gas production levels;• commodity prices;• future currency and interest rates;• future operating costs;• the Company’s ability to generate sufficient cash flow from operations and to access existing credit facilities and capital markets to meet its future obligations;• availability of labour and drilling equipment;• general economic and financial market conditions; and• government regulation in the areas of taxation, royalty rates and environmental protection.The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below:• volatility in market prices for oil and natural gas;• liabilities and risks inherent in oil and natural gas operations;• uncertainties associated with estimating oil and gas reserves;• competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel;• incorrect assessments of the value of acquisitions;• imprecision in estimating capital expenditures and operating expenses;• availability of sufficient financial resources to fund the Company’s capital expenditures;• the possibility that government policies or laws, including those related to the environment, may change or governmental approvals may be delayed or withheld;• stock market volatility and market valuation;• potential delays or changes with respect to exploration and development projects or capital expenditures;• geological, technical, drilling and processing problems;• fluctuations in foreign exchange or interest rates and stock market volatility;• general economic and business conditions;• changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry;• failure to obtain industry partner and other third party consents and approvals, as and when required;• failure to realize the anticipated benefits of acquisitions; and• the other factors identified in other documents incorporated herein by reference.
  32. 32. Continued … Reader Advisory• These factors should not be considered exhaustive. Statements relating to “reserves” or “resources” are deemed to be forward- looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the resources and reserves described can be profitably produced in the future. The forward-looking statements contained in this Presentation is expressly qualified by this cautionary statement. The Company does not undertake any obligation to publicly update or revise any forward-looking statements except as required by securities laws.• All oil and gas information contained in this Presentation, has been prepared and presented in accordance with National Instrument 51-101. The actual oil and gas reserves and future production will be greater than or less than the estimates provided herein. The estimated value of future net revenue from the production of the disclosed oil and gas reserves does not represent the fair market value of these reserves. There is no assurance that the forecast prices and costs or other assumptions made in connection with the reserves disclosed herein will be attained and variances could be material. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of revenue and future net revenue for all properties, due to the effects of aggregation.• The Company cautions that the foregoing list of material factors is not exhaustive, is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. When relying on the Company’s forward-looking information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking information to differ materially from actual results or events. The forward-looking statements contained in this Presentation are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
  33. 33. Definitions and AbbreviationsDefinitions“Developed Non-Producing” reserves are those reserves that either have not been on production, or have previously been onproduction, but are shut in, and the date of resumption of production is unknown.“Developed Producing” reserves are those reserves that are expected to be recovered from completion intervals open at the timeof the estimate. These reserves may be currently producing or, if shut in, they must have previously been on production, and thedate of resumption of production must be known with reasonable certainty.“Gross Reserves” are working interest (operating or non-operating) shares before deducting royalties and without including anyroyalty interests.“Net Reserves” are working interest (operating or non-operating) shares after deduction of royalty obligations, plus royaltyinterests in reserves.“Probable” reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likelythat the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probablereserves.“Proved” reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that theactual remaining quantities recovered will exceed the estimated proved reserves.“Undeveloped” reserves are those reserves expected to be recovered from known accumulations where a significant expenditure(e.g., when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet therequirements of the reserves classification (proved, probable, possible) to which they are assigned. ABBREVIATIONS Oil and Natural Gas Liquids Natural Gas Bbl barrel Mbbls thousand barrels MMcf million cubic feet MSTB thousands of Stock Tank Barrels MMBtu million British Thermal Units boe barrel of oil equivalent of natural gas and crude oil on the basis of 1 Bbl of crude oil for 6 Mcf of natural gas (this conversion factor is an industry accepted norm and is not based on either energy content or current prices)
  34. 34. Cautionary NoteNeither the TSX-Venture Exchange nor its Regulation Services Provider, (asthe term is defined in the Policies of the TSX Venture Exchange) acceptsresponsibility for the adequacy or accuracy of this Presentation.The calculation of barrels of oil equivalent (“boe”) are based on a conversion rateof six thousand cubic feet (“mcf”) of natural gas to one barrel of crude oil. Boe’smay be misleading, particularly if used in isolation. A boe conversion ratio of 6mcf:1 bbl is base on energy conversion method primarily applicable at the burnertip and does not represent a value equivalency at the wellhead.