Pace Oil and Gas Investor Presentation

“BUILDING A TOP TIER ENERGY COMPANY,
BUILDING IN GROWTH, BUILDING UP VALUE.”
Investor Update | 2011 Year End | March 2012

An Intermediate-Sized
Real Growth Company
Oil Growth Drives Cash Flow

Forward Looking Statements
Forward-Looking Statements: This presentation contains certain forward-looking statements and forward-looking
information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian
securities laws. All statements other than statements of present or historical fact are forward-looking statements. In some
cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "believes", "expects",
"intends", "projects", "plans", "anticipates", “positions”, “potential”, “objective”, “continuous”, “ongoing”, "estimates" or
"contains" or similar words or the negative thereof. In particular, this presentation contains forward-looking statements
relating to: the estimated production of Pace Oil & Gas Ltd. (“Pace”), the estimated reserves of Pace Oil & Gas Ltd., the
estimated pro-forma funds from operation of Pace Oil & Gas Ltd., the expected credit facility available to Pace Oil & Gas
Ltd., the anticipated number of wells and completions to be carried out, the anticipated replacement production from our
new completions, the expected reserve additions, future plans and expenditures of Pace Oil & Gas Ltd., the forecasted
commodity prices.
These statements represent management's expectations or beliefs concerning, among other things, future capital
expenditures and future operating results and various components thereof or the economic performance of Pace and
include, without limitation, statements with respect to the future financial position, business strategy, budgets, projected
costs and plans, objectives of or involving Pace or any of its respective affiliates; access to credit facilities; capital taxes;
income taxes; commodity prices; administration costs; commodity price risk management activities; expectation of future
production rates and components of cash flow and earnings. Actual events or results may differ materially. The
projections, estimates and beliefs contained in such forward-looking statements are based on management's estimates,
opinions and assumptions at the time the statements were made including assumptions relating to the production
performance of Pace’s oil and gas assets, the cost and competition for services throughout the oil and gas industry in
2012 and beyond and the continuation of the current regulatory and tax regime in Canada, and necessarily involve known
and unknown risks and uncertainties which may cause actual performance and financial results in future periods to differ
materially from any projections of future performance or results expressed or implied by such forward-looking statements.
Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those
predicted. Pace does not undertake to update any forward-looking information contained in this presentation whether as
to new information, future events or otherwise except as required by securities rules and regulations. Barrels of Oil
Equivalency: Barrels of oil equivalent (BOE's) may be misleading, particularly if used in isolation. In accordance with NI
51-101, a BOE conversion ratio for natural gas of 6 Mcf:1 bbl has been used, which is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

PACE OIL & GAS | Q4 & YE UPDATE | MARCH 2012 2

Corporate Overview
 Strong Real Growth
 Top tier growth - oil weighted & cash flow per share
 Strong Performance Metrics
 High quality, long life, oil weighted assets
 Significant Upside
 Portfolio of top tier resource plays
 Multiple valued-added visible growth opportunities
 Significant upside potential/large scale catalysts

Continued Strong (Real) Growth –
Oil Weighted and Cash Flow per share
will deliver multiple expansion

Corporate Highlights
Current – December 31, 2011
Basic Shares Outstanding (mm) 47.2
FD Shares Outstanding (mm) 51.0
Bank Debt (mm) $151
Net Debt (mm) $186
Credit Facility (mm) (1) $275
Proved Reserves (mmboe) (2) 44.5
2P Reserves (mmboe) (2) ~50% Oil 69.6
2012 Outlook (3)
Est. Production (boe/d) 14,500 - 15,250
Oil & NGLs (bbls/d) 7,200 - 7,500
CapEx 2012 (mm) $90 - 100
Production -Mix BMO, BNS, HSBC, ATB – renewed December50% - 52% Oil
1. Banking syndicate CIBC, NBF, 2011
2. Reserves December 31, 2011 evaluated by McDaniels & Associates Consultants Ltd.
3. $95/bbl WTI, $3.00/mcf AECO


Oil Growth Drives Production Increase
16,000
Gas (boe/d) 15,000
 Total production up
Oil+NGL (bbls/d)
14,141 14,262 14,205 over 53% from Q1
14,000
13,089
13,558
2010
12,403
12,000
 Oil production up over
10,000 9,808
10,271 104% from Q1 2010

8,000
 Oil production
increased to 7,200
6,000
8,000
bbls/d YE 2011 exit

4,000  Target exit for 2012
6,965
5,391 5,868 6,077 6,061 8,000 bbls/d
4,668
2,000
3,531 3,542
 Strong oil growth
-
(20%+ y/y) drives
production growth
Only 3% NGL in Oil Total

Steady paced oil growth trend

Decreasing Op Costs & Increasing Op Netback
Operating Costs/boe Operating Netbacks/boe

$24.11 $24.18

$20.77 $20.40
$19.68 $19.55

$17.24
$16.57
$15.21 $15.20
$14.99
$13.81 $13.51 $13.84
$13.20 $13.38

Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11

30% op cost reduction while increased oil weighting to 50%
Netback increasing in 2012


Pace Delivered Top Finding Costs
2011 2010

Proved Plus Proved Plus
$/boe Proved Proved
Probable Probable
E&D Capital $ 16.19 $ 15.81 $ 13.10 $ 12.91
Change in future capital (0.02) 1.23 (1.10) 4.29
F&D Costs $ 16.17 $ 17.04 $ 12.00 $ 17.20

A&D Capital $ 23.26 $ 7.36 $ 15.25 $ 10.05
A&D FDCs - - 4.79 4.87
A&D Costs $ 23.26 $ 7.36 $ 20.03 $ 14.93

Total Capital $ 16.11 $ 16.09 $ 14.65 $ 10.63
Change in future capital (0.02) 1.27 3.16 4.75
FD&A Costs $ 16.09 $ 17.36 $ 17.81 $ 15.39

% Reserve Adds by Product
Oil 75% 53% 62% 52%
NGLs 4% 7% 1% 1%
Natural Gas 21% 40% 37% 47%
100% 100% 100% 100%
Pace replaced 268% of oil & NGLs proven production – Over 2.1x recycle
ratio on weighted average netback by product


2011 Reserves Breakdown
Reserves by Product Reserves by Category Net Present Value by Product
(boe, P+P) ($, NPV 10% Disc) ($, P+P, 10% Disc)

NGL
NGL
28% Gas 2%
2%
Prob 23%

Gas
50% 9% 63%
PDNP PDP
Oil PUD Oil
48% 75%

Working Interest Reserves Oil NGL Natural Gas Total 10%
(mboe) (mboe) (mmcf) (mboe) ($mm)
Proved Developed Producing 18,456 564 82,169 32,715 530,440 63%
Proved Developed Non Producing 2,498 107 18,704 5,722 73,668
Proved Undeveloped 2,593 62 20,022 5,993 49,883
Total Proved FDC of $97mm 23,548 734 120,895 44,430 653,991 77%
Probables 10,100 534 87,403 25,201 193,462
Proved + Probables FDC of $191mm 33,647 1,268 208,298 69,632 847,454
1) Based on the December 31, 2011 McDaniel NI 51-101 compliant reserves evaluations
2) Columns may not add due to rounding


Pace Underlying Value
NGL
Gas 2%
23%

Proved PV10 $13.85 / share
Each common share owns
Probable PV10 4.10 / share 1.48 boe of reserves
2P PV10 $17.95 / share (0.71 bbl of oil)
Oil
75%

Total P
2011 Net Asset Value - ($mm) PDP
Oil
P+P

BT 10% reserve value (1) 530 534 $ 847
Less: net debt (186.1) (186.1) (186.1)
Add: undeveloped land value (354,000 acres @ $250/acre) (2) 88.5 88.5 88.5
Add: seismic and other assets 2.9 2.9 2.9
Net asset value $ 752.7
Shares outstanding (mm basic) 47.2 47.2 47.2
10 NAV/Share $9.22 $9.30 $ 15.95

(1) McDaniels & Associates Forecast Price & Costs (12/31/2011)
(2) Internal value estimate


Increased Liquids Increases Netbacks/Cash Flow
90%
80% % Liquids
70%
60%
50%
40%  Steady increase in liquids
30%
20%
10%
compared to peers
0%

60
Operating Netback
 Operating netbacks
50
40
30
20
increase with more oil
10 production
0

60% CFPS Growth 11/10

40%  Top tier cash flow per
20%
share growth
0%

-20%

-40%
* All estimates based on FirstEnergy Research March 2, 2012
FE Price Deck $105/bbl WTI, $2.25/mcf AECO


Strong Comparative Growth & Strong Balance Sheet
1.4x Net Debt 11 Yr End/LOC
1.2x
1.0x
0.8x
0.6x
0.4x
 Financial flexibility within
0.2x existing
0.0x

2.5x
11 Cash Use to Cash Flow
2.0x
 Spent within means to
1.5x

1.0x
deliver excellent CFPS
0.5x
growth
0.0x

7.0x

 Strong balance sheet
6.0x Yr End '11 Net Debt/11' CF
5.0x

4.0x
with low amount drawn
3.0x

2.0x
on facility
1.0x

0.0x

FE Price Deck $105/bbl WTI, $2.25/mcf AECO


Strong Results & Exceptional Value
140,000
EV/2012 boe/d
120,000
100,000
80,000
60,000
40,000
 Pace trades at low
20,000 multiple compared to
-
peer group
14.0x
EV/2012 DACF
12.0x

10.0x

8.0x

6.0x
 At peer group average,
4.0x Pace shares equate to
2.0x

0.0x
$12 – $15

14.0x
Price/2012 CF
12.0x

10.0x  Solid oil (real) growth will
8.0x
drive multiple expansion
6.0x

4.0x

2.0x

0.0x
Pace closing price on March 2, 2012 - $5.67


Significant Upside & Visible Long Term Growth Areas
Key Attributes

 High Working Interest
 Operational Control
Play Type Project Gross Net Wells
Capital Operated
MM$ Wells

Southern Glauconite $35 – 40 24 18
Alberta Lithic
Pekisko
Waterflood

Dixonville Montney C $15 – 20 3 3
Waterflood

Red Earth Slave Point $15 – 20 2 2

Northwest Pekisko $10 4 4
Alberta
Total Oil $75 - 90 33 27

Deep Basin $5 - -

Land, $15 – 25
Seismic, G&A
other
Grand Total $90 - 100 33 27

 CapEx to match Cash Flow
 2012 CapEx directed towards oil program

Southern Alberta
Lithic Glauconite & Mannville Oil Plays
R20W4 R15W4 Key Attributes

 Current production: 4,500 boe/d (43% oil)
• 2,000 bbls/d oil
 Total Acreage
• Gross 488,000 - 763 sections
T15 • Net 302,000 - 472 sections
 2011 Program – Successful Oil Drilling
• Oil production up 30% from Q4 2010
 Large Repeatable Drilling & EOR Potential
• Waterfloods (59 mmbbls) DPIIP net
• Production enhancements through waterflood
potential plus ASP
T10 • Infill & delineation potential

 2012 Plan ($35-40 mm)
• Implement waterflood in NNN/BBB
• 24 (18.3 net) horizontal drills
• Other pool waterflood optimization
• Expand current inventory of 75 wells

High working interest with infrastructure


Southern Alberta - Economics
R19W4 R17W4
Play Type Curve

500
T14
400 Type Curve

300

BOE/D
200

100

0
0 12 24
Months
D,C, Equip $1.9 mm
T12 Production, boe/d (IP 30 day) 130
Reserves (mboe) 125
NPV 10%($mm/well) $2.0
Profit to Investment 1.05

 Successful 2011 drilling program drives oil growth Rate of Return 56%

 2012 Plan ($30 mm+/-) Reserve Cost ($/boe) $15.25
• 24 (18.3 net) horizontal drills Netback (1st year) ($/boe) $54.40
• Expand current inventory of 75 wells $97/bbl WTI, $3.50/mcf AECO


NNN & BBB Production Forecast
R18W4 R17W4 1000 5000
Retlaw Unit WF Forecast
Cal Day Oil
4000
800 Water Inj, bwpd

3000
T13 600

2000

400
1000

200
0
T12

0 -1000

2012 Plan ($5 mm net capital)
 Implement waterflood in NNN/BBB
• 400 bbl/d production adds forecasted
• 52% IRR, 1.5 mmbbls PDP additions
 Infill horizontals possible once pressures
restored
 Other pool waterflood optimization
 Additional ASP potential

Peace River Arch - Dixonville
Key Attributes

 Current production: 3,600 boe/d (88% oil)
R1W6 R25W5 • Netback over $43/boe*
 Total Acreage
T87
• Net 58,500 - 91 sections
 Montney “C” Oil Pool with expanding waterflood
• OOIP increased by 25% to 188 mmbbls – 30 API oil
• 100% Pace working interest
• Incremental 20,000 bbls/d fluid capacity
T86
• Tertiary potential – ASP in 2014
 2011 Program – Continued successful
waterflood
• Oil Production up 36% from Dec. 2010
 Large Reserve Upside
• 2P remaining reserves 23 mmboe (15% recovery)
• 2011 TP reserve adds 3.6 mmboe
Strong waterflood response  2012 Plan ($15-20 mm)
continues • Expand waterflood on remaining 1/3 of pool
to drive increased oil production • 16 injector conversions
• Continue well pump upsizes *$97/bbl WTI, $3.50/mcf AECO


Dixonville: Montney C Reservoir Simulation

3,200 bbls/d DIXONVILLE: MONTNEY C

REMAINING RECOVERABLE OIL (MMBBL)
70 35% 0.40

ULTIMATE RECOVERY OF OOIP (%)
60 0.35

0.30
50 Tertiary, 28.2
20% 0.25
40
15% Upside, 9.4 Upside, 9.4 0.20
30
2P, 7.0 2P, 7.0 2P, 7.0 0.15
20
0.10
1P, 16.2 1P, 16.2 1P, 16.2
10 0.05
Prod, 5.7 Prod, 5.7 Prod, 5.7
0 -
Base Case Waterflood EUR (SP)
Optimization
Prod 1P 2P Upside Total OOIP Rec.

Waterflood response exceeds base case (booked reserves) and current model

Peace River Arch - Red Earth Area
Key Attributes
R9W5 R7W5

 Current Production: 590 bbls/d (oil)
 Total Acreage
• Gross 72,800 - 114 sections Southern

T88 Alberta

• Net 51,800 – 81 sections

 Top Quality light oil property
• Netback > $60/boe*

 Slave Point Resource Play
• High industry activity
• Gross 42,800 (32,200 net) acres

T86  2012 Plan ($15-20 mm)
• Drill 2 Hz wells & test 4 wells
• Create Slave Point program for Q4 2012
• Current inventory of 50 wells & growing

*$97/bbl WTI, $3.50/mcf AECO


Peace River Arch - Red Earth Area - Economics
R10W5 R6W5 Play Type Curve

T89
100/1-9-88-8W5/0 Type Curve
1st Generation Wells
2011 Wells
Southern
Alberta

Oil Rate (bbl/d)
100/8-1-88-12W5/0

T87

0 1 2 3
Years
D,C, Equip $3.0 mm
T85
Production, boe/d (IP 30 day) 125 - 150

Reserves (mboe) 150
NPV 10%($mm/well) $2.1
Profit to Investment 0.7
Rate of Return 50%
Reserve Cost ($/boe) $20.00

Netback (1st year) ($/boe) $73.00
$97/bbl WTI, $3.50/mcf AECO


Northern Alberta: Rainbow/Haro – Resource play
R10W6 R6W6 R2W6
Key Attributes

T110  Current production: 3,800 boe/d (27% oil)
 Total Acreage
• Net 328,000 - 513 sections
 Stable, long term production
• Large low decline (5-7%/yr) Bluesky gas
• 925 bbl/d Muskeg & Keg River sweet crude
T105  Haro – early stage oil resource play
• 1.16 B bbls DPIIP, Net 71,000 acres – 111 sections
• 22º API with cold production
• Potential 4-8 wells per section
• 500 m depth – low capital cost per well
 2012 Plan ($10 mm)
T100 • 4 Pekisko oil horizontals with smaller fracs
• Establish non-stimulation base line
• Hold land 5 years
• ARC has licensed 4 Pekisko wells to be drilled this winter

(1) Discovered petroleum initially-in-place


Haro Pekisko Encouragement
Unrisked 300 to 600 locations
R6W6 R3W6
200 2-36-101-5W6
175

Oil Rate (bbl/d)
150
125
100
T102
75
50
25
0
T100 0 12 Months
24 36
Type Curve 00/02-36

D,C, Equip $2.1 – 2.5 mm
T98 Production, boe/d (IP 30 day) 100 - 125
Reserves (mboe) 100 - 150
NPV 10%($mm/well) $2.0 – 2.4
Profit to Investment 0.8 – 1.1
Rate of Return 35 - 75%
Reserve Cost ($/boe) $14 - 25
Netback (1st year) ($/boe) $55 - 60

$97/bbl WTI, $3.50/mcf AECO


Large Repeatable Gas

Deep Basin Land Farrell Creek, BC
Area Gross Acres Net Acres
 Working interest: 75%-100%
Elmworth 5,800 3,500
(operated)
Chinook Ridge 27,000 16,300
 Net acreage: 19,300 acres (30.2
Red Rock 20,100 19,000
sections)
Bilbo 19,200 6,600
Total 72,100 45,400
Current Production: ~ 7.6 mmcf/d

Oil Focused Capital Budget 2012
Play Type Project Gross Net Wells 2012 Exit Adds
Capital MM$ Operated boe/d
Wells
Southern Alberta Glauconite $35 – 40 24 18 1,100 – 1,200
Lithic
Pekisko
Waterflood
Dixonville Montney C $15 – 20 3 3 600 – 800
Waterflood

Red Earth * Slave Point $15 – 20 2 2 300 – 500

Northwest Alberta Pekisko $10 4 4 200

Total Oil $75 - 90 33 27 2,400 – 2,700

Deep Basin $5 - - 300
Land, Seismic, G&A $15 – 25
other

Grand Total $90 - 100 33 27 2,700 – 3,000
* Red Earth – Drill 2 new wells, Complete & Equip 4 wells

 Targeting budget of $90 - $100 mm – Potential to Expand – staying inside cash flow
 2012 budget will be focused on high netback oil prospects


Pace Oil Enhanced Recovery
Cum to Date Pace WI Reserves Pace
Estimated Gross Ultimate Recovery Total Gross EUR
Gross as of Dec. 31/2011 as of Dec. 31, 2011 Incr.
Recovery OOIP Production Recovery Total Proved Proved + Probable Upside Potential (2P + Upside) Pace WI TP 2P Upside
Area / Pool Mechanism (mmbbls) (mmbbls) (% OOIP) (% OOIP) (mmbbls) (% OOIP) (mmbbls) (% OOIP) (mmbbls) (mmbbls) (% OOIP) (%) (mmbbls) (mmbbls) (mmbbls)
Dixonville Montney C Waterflood 188.0 5.7 3.0% 11.7% 21.9 15.4% 28.9 5.0% 9.4 38.3 20.4% 100% 16.2 23.2 9.4
Polymer - SP 15.0% 28.2 66.5 35.4% 28.2
Retlaw Mannville BBB Primary/Waterflood 15.1 0.9 5.9% 14.7% 2.2 17.6% 2.7 5.0% 0.8 3.4 22.6% 62% 0.8 1.1 0.5
ASP 15.0% 2.3 5.7 37.6% 1.4
Retlaw Manville NNN Primary/Waterflood 8.7 1.0 10.9% 16.4% 1.4 18.4% 1.6 5.0% 0.4 2.0 23.4% 62% 0.3 0.4 0.3
ASP 15.0% 1.3 3.3 38.4% 0.8
Retlaw Mannville J8J Waterflood 8.8 0.5 5.4% 5.6% 0.5 5.7% 0.5 4.3% 0.4 0.9 10.0% 100% 0.0 0.0 0.4
Retlaw Mannville V Waterflood 12.1 3.5 28.8% 31.7% 3.8 32.9% 4.0 7.1% 0.9 4.8 40.0% 87% 0.3 0.4 0.7
Long Coulee Sunburst P Waterflood 17.7 2.2 12.4% 12.9% 2.3 13.1% 2.3 10.0% 1.8 4.1 23.1% 89% 0.1 0.1 1.6
Badger Glauc. Unit #1 Waterflood 5.2 2.5 47.7% 50.5% 2.6 51.0% 2.7 5.0% 0.3 2.9 56.0% 100% 0.1 0.2 0.3
Enchant Arcs Unit #3 Waterflood 23.1 4.0 17.4% 24.7% 5.7 27.3% 6.3 7.7% 1.8 8.1 35.0% 19% 0.3 0.4 0.3
Subtotal SAB Waterflood 90.6 14.5 16.0% 20.5% 18.6 22.1% 20 6.9% 6.2 26.2 29.0% 2.0 2.7 4.0
Total Waterflood 278.6 20.2 7.3% 14.5% 40.5 17.6% 48.9 5.6% 15.6 64.6 23.2% 18.2 25.9 13.4
Total Surfactant-Polymer 211.8 15.0% 31.8 75.6 35.7% 30.4
Total Conventional 278.6 20.2 7.3% 14.5% 40.5 17.6% 48.9 17.0% 47.4 140.1 50.3% 18.2 25.9 43.9
Haro Pekislo Resource Primary 1,160 5.0% 58.0 58.0 5.0% 100% 58.0
Solvent/Thermal
Stimulation 15.0% 174.0 174.0 15.0% 100% 174.0
Total - Haro Resource 1,160 20.0% 232.0 232.0 20.0% 232.0
Total Pace Upside 275.9

Potential to add significant barrels through enhanced recoveries

Key Investment Highlights
 Strong Real Growth
• Production up, oil weighting up and growing
• Cash flow up and top tier per share growth
 Excellent results and continued oil focused growth

 Solid Value
• Solid reserves, low decline, low risk
 Low cost reserves and very attractive trading multiple

 Significant Upside
• Identified portfolio of visible long term, low risk,
oil growth opportunities
 Oil weighted upside with large scale gas resource optionality

Oil Weighted Growth, Excellent Value,
Proven Team, Proven Results

Pace Corporate Information
Management Directors
Fred Woods Fred Woods Tom Simons
President & CEO Tom Buchanan Jeff Smith
Judy Stripling Peter Harrison Jay Squiers
Executive Vice President & CFO
Mike Shaikh David Tuer
Todd Brown
Vice President & COO Banking Syndicate

Volker Braun CIBC
Vice President, Exploration National Bank
Chad Kalmakoff Bank of Montreal
Vice President, Finance Bank of Nova Scotia
Colin Merrick Alberta Treasury Branches
Vice President, HR, IR & Administration HSBC Bank of Canada
Darrell Osinchuk Auditors
Vice President, Exploitation
PriceWaterhouse Coopers LLP
Martin Saizew
Vice President, Engineering Legal Counsel
Heenan Blaikie LLP
George Swerdan
Vice President, Production & Operations Evaluation Engineers
Andrew Weldon McDaniels & Associates Consultants Ltd.
Vice President, Business Development
Registrar & Transfer Agent
Address
Computershare Trust Company of Canada
Livingston Place, West Tower
Suite 1700, 250 – 2nd Avenue SW TSX Listing Symbol OTC Pinks Symbol
Calgary, Alberta, Canada T2P 0C1 PCE PACEF
Ph: 403-303-8500
Investor Relations Email: ir@paceoil.ca
Website: www.paceoil.ca

For Information Contact
Fred Woods President & CEO
Judy Stripling Executive VP & CFO
Chad Kalmakoff VP, Finance

Main: 403-303-8500
Investor Relations Email: ir@paceoil.ca
Website: www.paceoil.ca
TSX: PCE OTC: PACEF

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