CIBC NA Energy Economy Too - Much.of.a.good - Thing Full - Report

Institutional Equity Research Industry Update
August 15, 2012

Sector Weighting: Market Weight
Oil & Gas - Large Cap
Too Much Of A Good Thing...

A Deep Dive Into The North American Energy Renaissance
All figures in Canadian dollars, unless otherwise stated.
12-117784 2012
Andrew Potter, CFA 1 (403) 221-5700

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Jeremy Kaliel 1 (403) 260-8657

Jeremy.Kaliel@cibc.ca
Nick Lupick 1 (403) 221-5049

Nick.Lupick@cibc.ca
Kyle Balaux 1 (403) 216-3401

Kyle.Balaux@cibc.ca
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Serhiy Petrenko 1 (403) 221-5047

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Shahzaib Merwat 1 (403) 216-8518

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Too Much Of A Good Thing... - August 15, 2012
Table Of Contents
Executive Summary.................................................................................. 3 The Future Of North American Energy.Too Much Of A Good Thing Is Bad...... 12 Bottoms UpIntroducing The New CIBC Bottoms-Up Shale Model ............ 12 The U.S. Energy Renaissance ................................................................... 14 Background & Recent Trends................................................................. 14 Astonishing Shale Growth ................................................................ 14 Non-resource Play Production In Steep Decline ..................................... 18 Resource Play Trends ........................................................................ 20 Key U.S. Growth Plays ......................................................................... 23 The Eagle Soars.. ........................................................................... 25 Hayneville A Has Been? ..................................................................... 31 Marcellus The Beast In The East: Activity Moderating Somewhat But Still Going Hard ...................................................................................... 36 Bakken Booming ............................................................................ 41 Other Plays ...................................................................................... 45 Lots Of Activity On Emerging Resource Plays ........................................ 47 Allocating Capital Comparative Economics ............................................ 50 Where To From Here U.S. Resource Play Growth Forecasts ..................... 52 Scenario 1 Growth & Current Rig Counts ........................................... 53 Impact Of Emerging Plays, Long-term Fleet Expansion & Efficiency Gains.. 55 Scenario 3 Introducing Volatility & Pricing Impact With Monte Carlo Simulation ....................................................................................... 58 Key Takeaways ................................................................................... 62 GOM Shelf Declines But Deep Production Should Rebound In 2014-16 Time Frame................................................................................................ 65 Canadian Resource Play Growth............................................................. 67 Resource Play Development Canadian Style ....................................... 67 Canadian Tight Oil Through Inflection Point .......................................... 68 Canadian Natural Gas A Different Picture.............................................. 70 Canada Vs. The U.S. ......................................................................... 72 Allocating Capital Where Does The Canadian Resource Play Dollar Go?... 75 New Plays Could Lead To Eagle Ford-esque NGL Boom ........................... 76 Six Key Plays In Canada To Watch ...................................................... 76 Where To From Here Canadian Resource Play Growth ............................ 83 Key Takeaways For Canadian Resource Plays ........................................ 83 Oil Sands Vast Resource But Can It Compete?....................................... 86 Growth Plans Vs. Pipeline Constraints .................................................. 86 Labor Pains ...................................................................................... 88 Prices/Costs & Pipelines Will Rationalize DevelopmentIt Is Only A Matter Of How Far .......................................................................................... 89 Oil Sands Higher Cost Projects The First To Fall In A Competitive North American Market .............................................................................. 91 Oil Sands Are Down But Not Out Technology Optionality Is Still Large.... 92 Conclusions/Takeaways On Oil Sands Growth ....................................... 92 Impact Of North American Tight Oil Renaissance On Global Supply Demand Balances ............................................................................................ 94 High North American Growth Likely To Loosen Medium-term Oil Balances . 94 Impact Of Crude Renaissance On North American Regional Pricing.............. 97 Crude Glut Means Canada + PADD 2 Crudes Will See Excess Volatility & Periodic Discounting Through 2014...................................................... 98 Discounting Of North American Crudes Likely To Remain Long Term But Discounting Shifts To LLS Vs. Brent ................................................... 100 Canada Will Need Big Pipe Build To Escape Long-term Discounting......... 105 Oil Supply/Demand Balances Key Takeaways...................................... 114 North American Natural Gas Supply/Demand Balances............................ 116 Demand Drivers ............................................................................. 116 Supply/Demand Balances Tighter Markets Ahead .............................. 122 Takeaways From Natural Gas Supply Demand Balances........................ 125 Investment Conclusions...................................................................... 126
Executive Summary
We believe this is one of the most detailed reports of this kind, analyzing trends from 57,000 wells across 28 different North American resource plays.
In an effort to better forecast North American natural gas, natural gas liquids (NGL) and oil supply, we are introducing the CIBC Bottoms-Up North American Resource Play Model. Our analysis, as the name implies, is a bottoms-up approach looking at each of the major U.S. and Canadian resource plays (resource plays includes shales/tight resource plays and oil sands). We believe this is one of the most detailed reports of this kind, analyzing trends from 57,000 wells across 28 different North American resource plays. This model is a powerful tool for forecasting North American oil and natural gas deliverability.
U.S. Resource Plays Key Takeaways

U.S. Onshore Oil Production Can Grow 500,000-700,000 Bbls/d Per Year Through 2016: We have conducted a number of scenarios ranging from status quo drilling (current rig counts held flat) to a very detailed Monte Carlo simulation. While the results vary considerably by scenario, the general takeaway is that U.S. onshore oil growth is capable of big growth for a long period of time. Our lowest growth scenario (current rig counts with a 20% reduction in IPs) would yield oil resource play growth of 460,000 Bbls/d per year, which, after deducting declines on non-resource play production, would yield onshore U.S. growth of 350,000 Bbls/d per year through 2016. Our highest growth scenario, which incorporates moderate rig fleet expansion and cycle time improvements, would yield resource play growth of 830,000 Bbls/d per year through 2016. After deducting non-resource play declines, this would leave onshore production growth in the 700,000 Bbls/d per year range through 2016. Our base case view is U.S. resource play production growing in the 650,000 Bbls/d per year range yielding annual onshore oil growth of approximately 530,000 Bbls/d per year through 2016. We note that these outcomes reflect liquids only from the well head; we expect NGL production from gas plants to also grow ~200,000 Bbls/d per year through 2016. Gas Is Not Sustainable At Current Rig Counts: Our current rig count scenario clearly depicts how unsustainable the current gas rig count is. At current rig counts, we see production from gas resource plays growing only 1.7 Bcf/d per year through 2016, a stark contrast to the 4-6 Bcf/d per year growth seen from 2009-2012. Layering in anticipated declines of ~0.8 Bcf/d per year from non-resource play production along with anticipated extraction losses for increasing NGL output, leaves U.S. dry gas production flat with current levels. To believe this outcome is sustainable assumes no growth in demand which we do not believe is realistic. At What Price Do Rigs Move Back To Dry Gas?: On average, we expect natural gas demand growth to average 0.5-1.5 Bcf/d per year through 2016 and 1.5-2.5 Bcf/d per year post 2016 as we incorporate LNG exports. For supply to meet projected demand growth through 2016, we need to see gas prices signals strong enough to attract another ~100 rigs back towards dry natural gas drilling or see another ~150 rigs allocated towards liquids-rich drilling. For either of these scenarios to unfold, substantially higher natural gas prices are required to pull rigs away from tight oil drilling. This conclusion arises from two considerations; 1) most dry natural gas plays do not compete with the big tight oil plays (with oil in a US$85/Bbl range) until gas is in the ~US$5/Mcf range; and 2) most gas-weighted producers need prices in the US$4-US$5/Mcf range to have sufficient cash flow to drill sufficient gas wells.
Industry Cant Support Gas AND Oil Boom At Same Time: What has become abundantly clear through this report is that the U.S. industry has been running at very close to full utilization over the past 12 months. Within the full utilization, there has been a clear shift from gas to oil. However, what this also implies is that there is no way the industry can either fund or logistically support a boom in natural gas AND oil drilling when services are running at near full utilization, rigs will be allocated on the basis of returns and strategic value (primarily land retention). Liquids Lands25,000-40,000 Wells Needed To Hold New Oil Lands Leaves Little Flexibility To Move Rigs: Using an assumption of 1.0-1.5 wells to hold a section of land, implies the need to drill over 26,000-39,000 wells on new liquids plays to meet land commitments (generally within a three- to fiveyear time frame) an aggressive requirement. Overall, we believe the U.S. is in the early innings of a new land retention driven boom, this time focused on new liquids plays. What this means for gas prices is that, even if gas prices rise, producers are more likely to use the incremental cash flows to accelerate drilling on liquids plays (to meet commitments) rather than accelerate on dry gas plays where they already hold the majority of their lands. US E&Ps Addicted To Spending; More JVs Necessary To Meet Obligations: The Top 40 U.S. E&Ps that we track have outspent cash flow by $55 billion since the start of 2008. The gap has been funded by equity, debt and JVs. Since the start of 2008, we have seen $32 billion of JV announcements ($14 billion of upfront carry delivered). With current consensus capex for the U.S. Top 40 exceeding cash flow estimates by $26 billion (for 2012 and 2013), it is clear we will need to see substantial JV announcements to keep the party going. Recent JV announcements indicate the market is still open to such transactions but this could be at risk if macro conditions deteriorate. Warning To Regulators Changes In Frac Legislation Would Send U.S. Energy Renaissance Back To The Dark Ages: The biggest risk (albeit still quite remote) that we see to the development of unconventional resources is harsh changes to fraccing rules. We calculate declines on U.S. resource plays to be running in the 36% range, implying ~10 Bcfe/d of production additions per year just to offset declines. With high drilling activity, there will no problem keeping ahead of this curve, however, if there were any major changes to fraccing legislation (which would drop activity levels meaningfully), the U.S. energy renaissance would quickly return to the dark ages.
Canadian Resource Plays Key Takeaways

Canadian Tight Oil Through Inflection Point & Capable Of Growing ~100,000 Bbls/d Per Year: Based on our bottoms-up analysis of all major Canadian tight oil plays, we expect Canadian conventional oil production to grow by an average of ~10% per year from 2011 to 2016 (~100,000 Bbls/d per year, compared to CAPPs estimate of about 40,000 Bbls/d per year) and 8% per year from 2016 to 2020. In this scenario, total Canadian conventional oil production would be 1,650,000 Bbls/d by 2020. Natural Gas Growth Largely Driven By LNG: We expect Canadian drilling activity to continue to focus heavily on liquids-rich and tight oil, at the expense of natural gas. The one big exception will be for companies drilling gas to supply planned LNG facilities. Overall on the natural gas side, we see Canadian gas production growing ~2% per year from 2011 to 2016 (~300 MMcf/d per year) and 4% per year from 2016 to 2020 and natural gas would be 19 Bcf/d by 2020.
Key Canadian liquids plays we believe will drive growth include the Cardium, Tight Carbonates, and the Duvernay, while key Canadian natural gas plays to drive growth include the Montney, Deep Basin, and the Horn River. Canadian resource play economics are competitive with U.S. plays, as is the depth of Canadian development opportunities. Canadian dry gas plays are pretty far down the value chainbut LNG will still yield meaningful development. We expect that labor and services capacity in Canada will continue to be periodic bottlenecks, with the most notable required infrastructure builds including LNG export capacity on the West Coast as well as the Northern Gateway oil pipeline. We believe differences in land tenure are one of the reasons why development has been slower in Canada compared to the U.S. At least on the oil side of the equation, much of the rights to prospective tight oil acreage was already held by production when horizontal multi-stage fraccing rejuvenated the sector (i.e., operators producing from either the same zone or deeper zones were already holding the rights of emerging resource plays). With rights held by production in many cases (and in other cases held on five-year tenure with the government) operators in Canada have been able to afford a more measured pace of development compared to the U.S. As has already begun, we expect foreign capital will continue to flow into Canada to help fill the funding deficit faced in the development of and attractive set of resource play opportunities. This is a necessary factor for accelerated development in Canada, as for many Canadian operators capital is less accessible than it is for their American peers.
Oil Sands Key Takeaways

Overall, the oil sands has almost unlimited resource potential but the real question once again boils down to how much can (or should) get built in an environment that has substantial competition, particularly for labor and pipeline access. A Wide Range Of Growth Outcomes: The sum of company forecasts implies oil sands growth of 380,000 Bbls/d per year through 2020 whereas on the other end of the spectrum is CAPP with forecasts of 180,000 Bbls/d per year growth through 2020. We believe that company forecasts are wildly optimistic as, in such a scenario, even if every pipeline currently being planned was built (Keystone XL, Alberta Clipper expansion, TMX Expansion, Gateway and TransCanadas gas pipeline conversion), there would still not be enough capacity to meet company targets! On the other hand, we believe CAPPs forecasts are conservative. Our base case view is for ~270,000 Bbls/d per year of oil sands growth through 2020, but note that this is entirely dependant on pipelines being built. Company Growth Plans Will Need To Be Rationalized: No company voluntarily gives up the quest for growth. This leaves the onus on market forces to rationalize that growth. The main market drivers will either be hyper inflation, regulatory delays and/or lower pricing either due to lower global benchmark pricing or localized discounting due to insufficient pipeline capacity. The most likely outcome is some combination of all these factors but our biggest concern at the moment is pipeline access. Pipelines Will Likely Be The Biggest Factor To Dictate The Pace Of Oil Sands Growth. We continue to believe Keystone XL (the full line) will get built but one cant deny there is still a level of risk to that. The Enbridge (ENB-SO) Alberta Clipper expansion and Line 9 reversals are also clear go-aheads in our view. Access to the West Coast, either through the proposed TMX expansion or Northern Gateway, is looking riskier by the day as provincial governments squabble over revenue sharing and broad based political support in B.C. appears
very low. If neither of these lines go ahead, oil sands growth targets for 2020 (company forecasts) would have to be rationalized approximately 1.7 MMBbls/d from current levels. Lower Cost SAGD Projects Competitive With Tight Oil: Oil sands resource quality is by no means homogenous. We calculate supply costs for higher-quality (lower-cost) SAGD projects to be in the $50-$60/Bbl range and very competitive with many North American tight oil opportunities. The only disadvantage is the bigger upfront investment (a typical SAGD project is a $1 billion decision vs. being able to manage capital well by well), which means operators need to be that much more confident in the macro environment. We continue to believe that we will see aggressive development of low-cost SAGD resources. Higher Cost SAGD & Mining Projects Likely First To Be Rationalized: In a market that is oversaturated with oil, there will no doubt be rationalization and the first projects to get squeezed will be those with higher supply costs and a riskier capital profile. Mining projects and lower-quality SAGD projects have supply costs in the $70-$90/Bbl range vs. most tight oil plays in the $50$70/Bbl range, leaving these project types as the first to be rationalized in a competitive market. Technology Impact Could Still Make Oil Sands More Competitive: There is unprecedented R&D going on in the oil sands, aimed at improving the economics and environmental footprint. Technologies range from evolutionary to revolutionary and any success could have a meaningful impact on supply costs similar to how frac technology changed the game for tight oil. Oil sands continue to offer a significant free option on technology. Oil Sands Transaction Parameters Will Reflect Riskier Outlook: Back in the 2005-2008 time frame, typical deals for long-dated oil sands resource were about US$1/Bbl. Despite higher oil prices, transaction parameters have actually been declining as risks (inflation/pipe) weigh on the outlook for resource and there is more competition for oil capital (tight oil vs. oil sands). Overall, we believe there is still room for oil sands M&A but likely continuing the recent trend of sub US$1/Bbl parameters.
Oil Supply/Demand Balances Key Takeaways

We See North American Oil Growth In the 800,000-900,000 Bbls/d Per Year Range Through 2016: Overall we see approximately 530,000 Bbls/d per year growth coming from U.S. onshore (resource play driven), ~45,000 Bbls/d per year from the U.S. GOM, ~100,000 Bbls/d per year from Canadian conventional (tight oil driven) and oil sands growth of ~230,000 Bbls/d per year. Any way you cut it, that is a lot of oil. North Am Growth Takes Some Pressure Off Global Balances: Consensus forecasts are for North Am oil growth of ~340,000 Bbls/d per year through 2015 vs. our forecasts of closer to 800,000-900,000 Bbls/d per year. Incorporating our estimates into consensus supply demand balances would imply a relatively flat call on OPEC through 2015 (typically corresponds to flat prices). Additionally, spare capacity would grow meaningfully, which could take some of the risk premium out of oil prices. Oil Renaissance Will Continue To Have Big Impact On Regional Price Discounts: The biggest impact of the North American oil renaissance is the impact on regional price discounts and flows. We are already seeing this in PADD 2 and Canada where crudes have been extra volatile and often selling at large discounts vs. benchmarks. This trend will continue long term but the pinchpoints will change over time.
Canada & PADD 2 Discounts To Remain Through 2014: We continue to believe Canadian and PADD 2 crudes will remain very susceptible to discounting through the 2014/15 time frame (when both the full Keystone XL and Flanagan/Seaway is built). PADD 2, and pipe within PADD 2, are at capacity meaning any pipeline curtailment or refinery outage will lead to meaningful discounts. Once the aforementioned pipes are built, we should see Canadian crudes settle into a transportation discount vs. WTI and Louisiana Light Sweet (LLS). PADD 2 Problems Will Soon Turn To PADD 3 Problems: PADD 3 is already nearly awash in light sweet crude (Eagle Ford, etc.). When Seaway and the south portion of Keystone XL come on-stream, PADD 2 will be sending over 1 MMBbls/d of crude into this market (a good portion of that being light) fully saturating the market. As it is prohibited by law to export crude oil from the U.S., this means that PADD 3 will become a trapped market for light oil and will soon lead to discounting of LLS to Brent. We Estimate WTI-Brent In US$10/Bbl Range Long Term: We recently changed our oil price forecasts to reflect a US$10/Bbl discount of WTI vs. Brent from 2014 onward, which consists of a US$5/Bbl discount for LLS-Brent plus ~US$5/Bbl transport differential back to Cushing. Downstream Remains Key: Our view that WTI-Brent differentials will remain long term in the $10/Bbl range also implies that inland North American refiners, and even Gulf Coast refiners, will see sustainably high crack spreads. We believe most investors are still treating current crack spreads (in the $30/Bbl range) as supernormal and will revert back to the $10/Bbl range in 2014+. If we are correct in our view on differentials, investors will gradually begin to place greater value on downstream assets to recognize the higher sustainable cash flows and strategic value of these assets. No Crude Is Untouched By This Theme: Generally speaking, there will be strong desire for Canadian heavy crudes by PADD 3 refiners, but this by no means is meant to imply that WCS has a reserved spot in the PADD 3 refinery system. Complex heavy refiners can (and will) take light oil over heavy for the right price leading to competition for this coveted refinery space. Directionally we believe WCS pricing is less impacted by this theme, but still impacted nonetheless as it is weighed down to a certain degree by pricing on the light complex. Canadian Crudes Should Be Transportation Discounts - But Only If Pipe Is Built: If adequate pipeline capacity is built, Canadian crudes should trade at transportation costs vs. U.S. equivalent crudes (SCO vs. WTI and WCS vs. Maya with slight quality adjustment). If pipeline capacity is not built, then Canadian prices will move to discounts large enough to eliminate much of the anticipated demand growth a disastrous scenario for Canadian producers. Whats The TAN Man? How Western Canada Select (WCS) or Access Western Blend (AWB)/Christina Lake Blend (CLB) gets priced vs. Maya is still a bit of a question mark. WCS and AWB are very similar in terms of API and sulphur content but have much higher TAN, particularly AWB. Globally, higher TAN can have a big impact on pricing, which may mean WCS and AWB get slightly bigger discounts than many investors presume. Our modeling suggests the quality differentials vs. Maya could be in the $4.75/Bbl range for WCS and up to $8/Bbl for AWB/CLB. Canadian Pipeline Pinch-point Closer Than Many Think: Pipeline capacity out of Western Canada is the biggest risk to Western Canadian producers in the medium and long term. We believe pipeline capacity could effectively be full in the 2014 time frame, highlighting that there is no room for error/politicking in bringing on new pipeline capacity.
Time To Smoke The Peace Pipe: There are currently ~2.9 MMBbls/d of longhaul pipeline proposals on the table (out of Western Canada). That sounds like a lot until one considers that two of the largest (the proposed 525,000 Bbls/d Gateway and 450,000 Bbls/d TMX expansion through B.C.) face ever-increasing political risk and we assign no better than 50/50 odds that these pipes are built before the end of the decade. The proposed TransCanada Mainline conversion (estimated ~600,000 Bbls/d) is compelling but very early stage and could also provoke some political backlash in Quebec. We also note that the 2.9 MMBbls/d proposed capacity gets used up quickly given our view of 100,000 Bbls/d per year growth in Canadian conventional oil and 230,000 Bbls/d per year growth in oil sands (or ~300,000 Bbls/d when blended). Overall, Canada needs pipe and lots of it to avoid the opportunity cost of stranding over a million barrels a day of potential crude oil growth. Rail Offers Good Insurance Policy: Railing oil today from Canada or PADD 2 offers a meaningful improvement in netbacks due to the premium of LLS to WTI. If our view of differentials is correct (i.e., that WTI-LLS closes to transportation differentials) but that LLS discounts vs. Brent, the economic advantage to railing will dissipate by the 2014 time frame if pipelines are built. Given the big risk on pipeline builds, we expect producers to maintain rail optionality even if the economic uplift is mitigated. If PADD 3 pricing significantly discounts vs. Brent (i.e., over $5/Bbl), we could see railed volumes focus more towards PADD 1 from the current focus of PADD 3.
Natural Gas Supply/Demand Balances Key Takeaways

LNG Becoming A Reality We believe LNG is well on its way to reality. There are well over 20 Bcf/d of export projects on the table. Our risked view is that approximately 8 Bcf/d is built by 2020, with approximately 3 Bcf/d of capacity in Western Canada and the remainder in the U.S. (centered in the GOM). Demand Should Grow By 1 Bcf/d Per Year Through 2016 And 1.5 Bcf/d Per Year From 2016-2020: We expect U.S. natural gas demand to grow on average approximately 1 Bcf/d per year through 2016 driven primarily by higher demand for power consumption due to coal retirements. We expect demand to pick up in the latter half of the decade as LNG exports are added into the mix. Surplus WC Gas Flat In Best Case And Meaningful Declines In Worst Case: We expect Canadian supply to be down modestly in 2012 and 2013, and settling into a modest growth profile thereafter, with most of the growth wedge allocated to planned LNG facilities. Demand for gas in Western Canada will increase ~ 0.2-0.4 Bcf/d per year through 2016 and 0.2-0.6 Bcf/d per year through 2020 due primarily to higher demand for natural gas out of oil sands projects. We expect LNG exports out of Western Canada to be up to 3.0 Bcf/d by 2020 (2-3 facilities). Overall, gas available for movement to Eastern Canada or the U.S. will likely remain flat in the growth scenario ranging down 6 Bcf/d by 2020 in a low price scenario (limited gas drilling). Shale Growth Decelerating: We expect shale gas growth to decelerate massively from the high growth rates seen in 2008-2010. At current rig counts, shales would only grow ~1.7 Bcf/d per year through 2016 vs. the ~4 Bcf/d per year growth seen previously. Adding in extraction losses and declines in nonshale production would see U.S. dry gas production grow by only 0.5 Bcf/d per year through 2016. We also note that our modeling suggests that overall dry gas production is flat to modestly down in 2013/14 before beginning to ramp up again post 2014.
2013-14 Nat Gas Balances Look Quite Tight: We expect Western Canadian gas exports to decline ~0.5 Bcf/d in 2013 and ~0.3 Bcf/d in 2014. Meanwhile, U.S. dry gas production should be relatively flat in 2013/14 (the first time in many years). This lower supply outlook points to a much tighter gas market in 2013/14. However, the one cautionary point is that if prices rise much above $4/Mcf in 2013, we may give back a meaningful portion of the ~4.5 Bcf/d Y/Y demand increase for natural gas for coal substitution. The other wild card is whether or not a rally back to the $4/Mcf range attracts a big increase in dry gas drilling. We believe producers will be relatively slow to return to natural gas drilling due to a combination of land retention drilling commitments on new liquids plays and skepticism over sustainability of any price increase. Gas Prices Unsustainably Low: The clear takeaway from our modeling (both the linear models and the simulation models) indicates that the current natural gas rig count and prices are unsustainably low. However, finding equilibrium remains a real balancing act. Based on our Monte Carlo simulation, at gas prices below $4/Mcf vs. oil in the $85-$95/Bbl range, we see insufficient gas growth to meet base case demand growth. On the other hand, above $6/Mcf triggers too much growth (unless oil prices are substantially higher as well). Overall, prices in the $4-$4.50/Mcf range seem sustainable in the pre-LNG era (i.e., up to 2015) with prices in the $5/Mcf in the LNG era.
Investment Conclusions
Global Investors Likely To Remain Luke Warm On Canada Due To Pricing/Infrastructure Risk: Global investors have generally been moving away from Canadian oil & gas exposure for many reasons. Generally speaking this decision is driven by a combination of macro fears (Greece, Spain, China slowing) along with fears regarding short-term differential risk for Canadian oil producers. With the dismal stock performance YTD in the Canadian large caps, one could argue that much of our macro thesis is already discounted in stock prices which is generally true. However, the general negative backdrop with increasingly limited growth visibility and rising pipeline/differential risk means that global investors are unlikely to flock back to Canadian oil and gas exposure anytime soon unless we see the recent flurry of M&A turn into a full blown wave (possible). Some Big Players May Adjust Strategies: If our macro view pans out, it will (or should) impact investment decisions by producers. The most likely adjustment will be to those planning mega projects such as upgraders or mining oil sands projects. We expect operators to move more cautiously on these projects, with a high chance of outright cancellation. On the one hand, lower growth is a negative. However, we believe investors have compressed valuations on many of these stocks due to concerns regarding low return investment. On balance, we actually believe investors would react favorably to large-cap producers moving to lower growth, but higher returning and higher free cash flow yielding strategies. For example, we can make a case that Suncor (SU-SO) would be worth 40%-50% more if it moved to a slower and more SAGD-oriented strategy and paid out excess free cash. Negative Backdrop For Long-dated Oil Sands: Much of our macro thesis is very bearish for the value of long-dated bitumen assets. As we highlighted, producer growth forecasts are wildly optimistic and we believe there will be big competition for pipe access and resources to build projects which leaves the longer-dated more fringe resources at a distinct disadvantage. Additionally, investors will likely remain much more cautious on providing the necessary capital for those growth ambitions, meaning that early-stage oil sands companies will face far more execution risk than better financed players. Value can still be obtained/recognized for long-dated resource, but this depends more on M&A or JV activity.
Downstream Value Becomes Very Apparent: Our macro view clearly favors companies with downstream assets. In Canada, there are no pure refiners so this by default means that integrated energy companies [Suncor, Cenovus (CVESO), Husky (HSE-SP) and Imperial Oil (IMO-SU)] are best positioned. The rationale is that in-land refineries capture much of the value of lower upstream pricing. We have seen the integrateds outperform PADD 2 exposed names YTD indicating that some of this theme is already reflected in share prices. However, we believe investor expectations are still generally that current downstream cash flows are supernormal and will revert to low levels again in 2014+. We believe that downstream cash flows will remain robust over the long term and that is not reflected in share prices. We highlight Suncor and Cenovus as two of the best positioned integrateds. Good Opportunity Still In Quality Gas Producers: For the first time in many years, the outlook for natural gas prices looks quite attractive. With tightening storage balances in 2013/14 and a rig count that will likely be slow to return to gas drilling, gas prices should move into the US$4/Mcf range in 2013. We note that some gas players like Encana (ECA-SP) are already reflecting ~US$4.50/Mcf natural gas so much of the upside is already built in. However, we still see good upside in some of the smaller-/mid-cap gas names. Among the dividend-paying corps, our top two ways to play natural gas include Trilogy (TET-SO) and Peyto (PEY-SO) with Trilogy as the more defensive gas play (due to its 45% liquids weighting) and Peyto as a higher torque gas pick (88% weighted to gas). In the junior/intermediate space, Celtic (CLT-SO) and Painted Pony (PPY-SO) are our top gas-weighted names. Both companies offer investor meaningful torque to gas prices as they control substantial resource potential from large contiguous land positions. We also highlight NuVista (NVA-SO) as another gasweighted pick for its undervalued asset base with 500 drilling locations identified in the Wapiti Montney liquids-rich gas play that is a strong M&A candidate. In addition, we believe the companys shares are trading inexpensively relative to its natural gas peers as measured by Core NAV (P+P reserves value). Light Oil Players Will See Lower-than-expected Pricing But Low-cost Players Will Still Make Very Strong Returns: Our thesis of lower light oil pricing will take some of the shine off domestic light oil producers. However, we note that producers with low costs and high-quality resources will continue to prosper (although consensus numbers may be overstated if our macro view holds). Light oil companies with high cost structures and high capital obligations such as Canadian Oil Sands (COS-SU) (opex in US$40/Bbl range with sustaining capex in the ~US$30/Bbl range through 2014) will see many challenges in this environment.
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Top Picks
Large Caps: Among the large caps, we continue to focus on Brent-focused producers and integrateds as our top picks. In order of preference, we highlight Suncor (inexpensive with high-quality downstream), Cenovus (highest quality oil sands and well positioned with downstream) and Talisman (TLM-SO) (turnaround story, gas assets will get re-rated if prices recover and enough Brent-priced growth projects in Colombia and Asia that will interest investors). Small- To Mid-cap Oil Sands: From a macro perspective, it is more challenging to get excited about the small- to mid-cap oil sands producers, however, we continue to highlight MEG Energy (MEG-SO) (innovative and one of lowest cost resources bases) and Athabasca Oil (ATH-SO). We remain positive on ATH primarily because we see it reducing oil sands exposure and believe the light oil assets will drive remaining value in short term. Dividend-paying Corps: Our top picks in this space include our highest netback domestic light oil producers such as PetroBakken (PBN-SO) (whose margins are better protected in a downside scenario in which crude oil sees pressure). We would also highlight Trilogy as a top pick owing to its strong growth profile and its ability to fund its development (and pay its dividend) within cash flow. Small And Mid Caps: Our top pick is Angle Energy (NGL-SO) as it offers exposure to a high netback Cardium oil play at Harmattan, which has become the largest focus area for the company. We highlight that the corporate liquids have increased from 39% at the end of 2010 to 46% projected for Q4/12. We also expect large year-end reserve growth associated with the active drilling program in Harmattan and area. International Producers: Our two top picks in the international producer space are Coastal Energy (CEN-SO) and Gran Tierra Energy (GTE-SO). Both companies produce over 90% high netback oil that track to Brent pricing. CEN has a strong balance sheet, good free cash flow generation from its producing properties and significant upside potential with booked P3, 2C and prospective resources. GTE trades at a 20% discount to its 2P NAV but has a surplus of cash on its balance sheet, is expected to generate free cash flow in 2013 and has an active H2/12 planned with potential for significant catalysts.
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The Future Of North American Energy.Too Much Of A Good Thing Is Bad

Bottoms UpIntroducing The New CIBC Bottoms-Up Shale Model
In an effort to better forecast North American natural gas, natural gas liquids (NGL) and oil supply, we are introducing the CIBC Bottoms-Up North American Resource Play Model. Our analysis, as the name implies, is a bottoms-up approach looking at each of the major U.S. and Canadian resource plays (resource plays includes shales/tight resource plays and oil sands). As the North American shale picture can change rapidly, due to changes in technology and gas-liquids pricing relationships, we intend to update this analysis at least semi-annually to keep a solid pulse on rapidly changing North American oil and natural gas fundamentals.
A Quick Word On Methodology & Data Quality

Our model assimilates data from over 57,000 wells on 28 different North American resource plays.
While some competitors provide play-by-play forecasts for resource plays, our approach is differentiated by the level of detail rather than simply basing our forecasts on anticipated type curve results, our models have been back calibrated through Q1/08 (the start of the shale boom) and carried forward, ensuring we have accurate type curve trends, drilling times, etc. rather than just using unrisked company forecasts. Our model assimilates data from over 57,000 wells on 28 different North American resource plays. There are many ways to portray type curves. Our approach is centered around taking actual reported calendar day production rates for the ENTIRE play rather than relying on company disclosures from a few select companies. As we compare our results to company disclosures, there are sometimes quite meaningful differences which we chalk up to several factors: Instantaneous IPs Vs. 30-day IPs: Many companies are guilty of disclosing instantaneous IPs (24-hour test rates for instance). These are sometimes meaningful, but more often than not quite distorted numbers. Our IPs are based on 30-day calendar averages. The one shortfall of our approach is that if a well is brought on later in a month, the first recorded month of production is low on a calendar day average and the peak month ends up being month 2. This is only meaningful in terms of optics; it does not impact EUR or our longer-term forecasted performance. Producing Day Vs. Calendar Day: We calculate type curves based on actual calendar day rates (total monthly production divided by calendar days in the month) vs. producing days (only recording production for days the well is on stream). Producing day rates can be meaningful in terms of showing what a well is capable of unconstrained but it is not how a producer reports volumes or achieves cash flow. Depending on the play, the difference between producing day and calendar day rates can be meaningful.
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Play Averages Vs. Select Producer Averages: In most U.S. plays, there are a large number of companies participating. Our data reflects the average of all wells drilled, not just a few select producers. In the appendices to this report, we break out factors such as IP by operator and by county so investors can see the variations. In most cases, the top operators (by size) typically do have meaningfully higher IP rates than the play average. Data Quality Varies: With any primary analysis such as this, you are at the mercy of data quality and data quality varies considerably by province or state. Overall, Canadian data quality is very high and very timely. Of the bigger plays in the U.S., we find data from North Dakota, Texas, Louisiana to be very high quality (covering Bakken, Eagle Ford, Haynesville, Permian plays, etc.). On the weaker end of the spectrum lies Oklahoma (Anadarko plays, parts of the Mississippi lime). On the scale of inexcusably bad lies Pennsylvania, where data is released only once every six months for the Marcellus and even then only for a cumulative basis (i.e., no monthly production). Given the importance of the Marcellus, we were forced to take a different tact and rely on overall Marcellus gas production from Bentek, and back into type curves base on rates and wells completed.
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The U.S. Energy Renaissance

Background & Recent Trends
Astonishing Shale Growth
Production from the main US resource plays increased from 6.3 Bcfe/d in 2008 to 35 Bcfe/d by yearend 2011 astonishing growth.
The North American shale revolution is well documented, but one last review wont hurt! Exhibit 1 depicts the almost unbelievable growth in gas and oil resource play development over the past three years. 2008 was clearly the dawn of the unconventional age, with key resource plays producing approximately 6.3 Bcfe/d, consisting of 5.5 Bcf/d of marketable gas production and 135,000 Bbls/d of oil production (note: this analysis includes only horizontal production from Anadarko and Permian). Importantly, the only one big play in 2008 was the Barnett shale. By year-end 2011, production from these plays had grown to an astonishing 35 Bcfe/d, consisting of ~28 Bcf/d of marketable gas and 1.2 MMBbls/d of oil production spread across over nine different resource plays. Importantly, there are still new resource opportunities popping up so these incredible growth rates are by no means over. Exhibits 1-3 provide an overview of the key growth drivers behind gas production and oil production as well as on an MMcfe/d basis. As is quite obvious, the early part of the resource play boom was absolutely dominated by natural gas-weighted development, but weakening prices for natural gas meant a move towards oil and liquids-rich resource plays over the past few years.
Exhibit 1. Key Resource Play Growth Q1/08-Q1/12 (MMcfe/d)

60,000
50,000
40,000
30,000
Anadarko Basin Permian Mississippi Lime US Bakken Emerging Plays Woodford Barnett Fayetteville Haynesville Marcellus PA Eagleford
20,000
10,000
Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12
Source: HPDI and CIBC World Markets Inc.
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Exhibit 2. Key Resource Play Growth Marketable Gas Production (MMcf/d)

50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Anadarko Basin Permian Mississippi Lime US Bakken Emerging Plays Woodford Barnett Fayetteville Haynesville Marcellus PA Eagleford
Exhibit 3. Key Resource Play Growth Oil Production (Bbls/d)

3,000,000
2,500,000
2,000,000
1,500,000
Anadarko Basin Permian Mississippi Lime US Bakken Emerging Plays Woodford Barnett Fayetteville Haynesville Marcellus PA Eagleford
1,000,000
500,000
Source for Exhibits 2 and 3: HPDI and CIBC World Markets Inc.
Gas growth from 2008-2011 was led by the Haynesville & Marcellus. However, Haynesville growth is now giving way to the Eagle Ford as the other main gas driver. Oil growth has come from a renewed focus on the Permian basin as well as major growth from the Eagle Ford and Bakken.
As depicted above, the shale gas game changes quickly. In Q1/11, the Haynesville dethroned the Barnett as the largest producing shale in North America astonishing given the Haynesville was really only commercialized in 2008. However, Haynesville growth is stalling out as of late as the industry shifts rigs from this prolific but very dry (i.e., low liquids content) plays to higher returning liquids plays such as the Eagle Ford. The charts in Exhibits 4 and 5 depict Y/Y growth trends out of the key U.S. shales. As depicted, the Haynesville has been THE dominant growth driver in U.S. shales but the pace of growth is decelerating rapidly with newer plays such at the Eagle Ford, which by no coincidence enjoys a very high liquids content, picking up the slack. The Marcellus has been a consistent growth driver for a sustained period of time. On the oil side, growth has been more diverse, actually lead by the Permian basin, where production was up 737,000 Bbls/d from Q1/08-Q1/12, followed by the Bakken with production up 509,000 Bbls/d from Q1/08 to Q1/12) and the Eagle Ford where oil and condensate production
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increased 422,000 Bbls/d from Q1/08 to Q1/12 (note that other NGLs are accounted for in extraction losses from marketable gas production). We note, however, that Eagle Ford activity started later than the Bakken, and therefore has accounted for a bigger proportion of the more recent growth. Exhibit 4. Y/Y Changes In Marketable Gas Production By Play
10,000 8,750 7,500 6,250 5,000
Mmcf/d
3,750 2,500 1,250 (1,250) (2,500)

Q1 /09 Q2 /09 Q3 /09 Q4 /09 Q1 /10 Q2 /10 Q3 /10 Q4 /10 Q1 /11 Q3 /11 Q4 /11
1
Q2 /11
Eagleford Barnett Mississippi Lime
Marcellus PA Woodford Permian
Haynesville Emerging Liquids Plays Anadarko Basin
Fayetteville US Bakken Total Production
Exhibit 5. Y/Y Changes In Oil Production By Play

1,000,000 900,000 800,000 700,000 600,000 Bbls/d 500,000 400,000 300,000 200,000 100,000 (100,000)
9 0 0 1 1 9 9 9 0 0 1 Q1 /1 Q3 /1 Q3 /0 Q1 /1 Q4 /0 Q2 /1 Q2 /0 Q4 /1 Q3 /1 Q4 /1 Q1 /0 Q2 /1 Q1 /1 2
Eagleford Barnett Mississippi Lime
Marcellus PA Woodford Permian
Haynesville US Bakken Anadarko Basin
Fayetteville Emerging Liquids Plays
Source for Exhibits 4 and 5: HPDI and CIBC World Markets Inc.
NGL GrowthAnother Example Of Too Much Of A Good Thing

Any discussion of North American resource play production cannot avoid reference to the production of NGLs. For investors wanting a general background on NGLs and how they fit into the North American energy mix, please refer to Appendix page 132. Generally speaking, NGL production growth is closely tied to natural gas production growth. When liquids prices are higher than natural gas prices on a btu basis (less processing costs), producers will move to extract as much of the liquids as possible from the gas stream and sell them as separate products. In the event that liquids prices are less than gas (not seen for many years now), producers can leave certain amounts of liquids in the stream and sell the product as higher heat content gas.
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Q1 /12
With the initial stage of the resource play revolution focusing on dry gas plays such as the Haynesville, the natural gas market was quickly overwhelmed and natural gas prices plummeted. The focus over the past two years has gradually moved to liquids-rich gas plays as well as tight oil plays. The big focus on liquids-rich plays, particularly the Eagle Ford in Texas, has led to a boom in U.S. NGL production. As depicted in the following chart, U.S. gas plant production of NGLs (note: some gas liquids such as condensate are typically stripped out at the wellhead and are typically reported as part of the oil production stream above while other NGLs are extracted at natural gas plants) increased 120,000 Bbls/d (7%) in 2009, 164,000 Bbls/d (9%) in 2010 and 110,000 Bbls/d (5%) in 2011 substantial growth. There has been no meaningful shift in the composition of NGLs, with typical gas plant output being ~14% pentanes plus, 41% ethane, 29% propane and 17% butane and isobutene. From a regional perspective, NGL growth has been largest out of PADD 3 driven by the explosion of the Eagle Ford (high liquids content), which has accounted for ~42% of growth from Q1/08-Q1/12. The balance of growth is roughly evenly split from PADD 2 and PADD 3 production. Exhibit 6. U.S. NGL Production By Product
U.S. NGL Production By Type
3,000 2,750 2,500 2,250 2,000 ('000 Bbl/d)
('000 Bbls/d)
U.S. NGL Production By Area

3,000
Detail On LPG Propane and Propylene Isobutane-Isobutylene
Pentanes Plus Ethane-Ethylene Normal Butane-Butylene
2,750 2,500 2,250 2,000 1,750 1,500 1,250 1,000 750 500 250 0
PADD 1 PADD 3 PADD 5
PADD 2 PADD 4
1,750 1,500 1,250 1,000 750 500 250 Q1 /08 Q2 /08 Q3 /08 Q4 /08 Q1 /09 Q2 /09 Q3 /09 Q4 /09 Q1 /10 Q2 /10 Q3 /10 Q4 /10 Q1 /11 Q2 /11 Q3 /11 Q4 /11 Q1 /12
Source: EIA and CIBC World Markets Inc.
The big boom in drilling liquids rich gas plays are starting to put very material pressure on NGL processing margins.
Once again, the market is showing efficiency as the big boom in drilling liquids rich gas plays are starting to put very material pressure on NGL processing margins. Despite the recent weakness in NGL prices, we are not yet seeing any slowdown in activity on liquids-rich plays just yet. We expect the U.S. NGL basket to remain weak (i.e., in the 45% range vs. WTI) for the foreseeable future. The specific issues vary by component of the NGL basket but the one commonality is clearly that the rapid growth has overwhelmed local demand and infrastructure. With the exception of ethane, the rest of the NGL basket is increasingly reliant on being exported into the global market as supply growth far eclipses domestic demand growth. Margins for ethane are at rejection levels (where ethane remains in the gas stream) reflecting the lack ethane demand. There is a large backlog of fractionation plants to be built and also for steam crackers (which are the main demand driver to turn ethane into ethylene for chemical uses) but these will only come on-stream progressively. Propane demand remains highly weather dependent and therefore is suffering from the same overhang of a warm winter that is depressing natural gas prices. We expect propane prices to increase seasonally but remain generally weaker than historical ranges given the limited domestic structural growth and continued supply pressures.
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Q1 / 08 Q2 / 08 Q3 /08 Q4 / 08 Q1 /09 Q2 / 09 Q3 / 09 Q4 /09 Q1 / 10 Q2 /10 Q3 / 10 Q4 /10 Q1 /11 Q2 / 11 Q3 /11 Q4 / 11 Q1 /12 Q2 /12
For a more detailed discussion on NGLs, please refer to Appendix page 132. Exhibit 7. NGL Prices U.S. And Canada
$24.00 $22.00 $20.00 $18.00 $16.00 $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 ($2.00)
Ethane at Mt. Belvieu Butane at Mt. Belvieu Natural Gasoline at Mt. Belvieu Propane at Mt. Belvieu Isobutane at Mt. Belvieu US Basket Price
$24.00 $22.00 $20.00 $18.00 $16.00 $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 ($2.00)
Mixed Butane Edmonton Mixed Propane Edmonton Condensate
US$/Mcf
C$/Mcf
Ja n1 Fe 1 b1 Ma 1 r-1 Ap 1 r-1 Ma 1 y-1 Ju 1 n11 Ju l-1 Au 1 g1 Se 1 p1 Oc 1 t-1 No 1 v- 1 De 1 c- 1 Ja 1 n1 Fe 2 b1 Ma 2 r-1 Ap 2 r-1 Ma 2 y-1 Ju 2 n12 Ju l-1 Au 2 g12
Source: Bloomberg and CIBC World Markets Inc.
Canadian NGL margins, primarily for Butane and Condensate, have generally remained stronger than U.S. margins as Canada has several unique uses for NGLs.
One interesting point on NGLs is that although prices are linked between Canada and the U.S., they can still vary by significant margins. As depicted in the chart above, Canadian NGL margins have generally remained stronger than U.S. margins as Canada has several unique uses for NGLs. The primary difference is the demand within Alberta for condensate to dilute bitumen to pipeline specifications and for butane use as a recovery solvent in the oil sands. The big drivers for these NGLs mean that Alberta still imports large amounts of condensate from the U.S., which typically means that Alberta condensate is priced at a transportation premium to U.S. hubs (and the transportation premiums are large right now). Given the robust growth in outlook for oil sands, we see no change to the trend of increasing condensate and butane demand. In fact, with more producers experimenting with solvent assisted SAGD (SAP or SAGD+ and various other acronyms) butane demand could accelerate well beyond its historical growth. Overall, Canadian NGL pricing has come under pressure but is likely to remain elevated vs. U.S. margins.
Non-resource Play Production In Steep Decline

The North American E&P industry has clearly proved its ability to quickly reallocate capital to the highest return and highest growth opportunities. Unsurprisingly, as the industry shifted its emphasis from conventional drilling to gas resource plays and more recently liquids-rich and oil resource plays, conventional (or non-resource play production) for both natural gas and oil has declined consistently, but not nearly enough to offset the tremendous strides being made elsewhere. After years of declining production, overall U.S. marketable gas production grew 1.3 Bcf/d in 2009, 1.8 Bcf/d in 2010 and 3.3 Bcf/d in 2011. As discussed previously, the large increases were driven by resource play production that grew 2.7 Bcf/d in 2009, 3.9 Bcf/d in 2010 and an astonishing 6.4 Bcf/d in 2011. What these numbers imply is that not all of the shale growth has been incremental. Clearly the aggressive spending on shales has cannibalized spending on other conventional opportunities, mitigating somewhat the overall rate of U.S. supply growth somewhat (albeit U.S. gas production growth has been impressive). The following chart depicts the trends in U.S. resource play vs. non-resource play production. As depicted, non-shale volumes declined 1.1 Bcf/d in 2009 (3%), 1.8 Bcf/d in 2010 (5%) and approximately 1.6 Bcf/d (4.5% in) in 2011. With virtually no rigs currently targeting conventional natural gas targets, there is little doubt this trend will continue or even accelerate.
Non-shale gas volumes declined 1.1 Bcf/d in 2009 (3%), 1.8 Bcf/d in 2010 (5%) and approximately 1.6 Bcf/d (4.5% in) in 2011. With virtually no rigs drilling conventional gas this trend will continue (or accelerate).
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n11 Fe b11 Ma r-1 1 Ap r-1 1 Ma y-1 1 Ju n11 Ju l-1 1 Au g11 Se p11 Oc t-1 1 No v- 1 1 De c- 1 1 Ja n12 Fe b12 Ma r-1 2 Ap r-1 2 Ma y-1 2 Ju n12 Ju l-1 2 Au g12
Ja
Exhibit 8. U.S. Natural Gas Shale Vs. Non-Shale (MMcf/d)

80,000 70,000 60,000 50,000 Mmcf/d 40,000 30,000 20,000 10,000 Q1 /08 Q2 /08 Q3 /08 Q4 /08 Q1 /09 Q2 /09 Q3 /09 Q4 /09 Q1 /10 Q2 /10 Q3 /10 Q4 /10 Q1 /11 Q2 /11 Q3 /11 Q4 /11 Q1 /12
Non Resource Play Gas Production
Resource Play Gas Production
Non-resource play oil production in the U.S. has been declining approximately 6%/year (~150,000 Bbls/d per year) since 2008.
The oil side of the equation looks very similar to natural gas, albeit with a slightly later starting point. Overall U.S. oil production increased 290,000 Bbls/d in 2009, 292,000 Bbls/d in 200 and a whopping 535,000 Bbls/d in 2011. The recent ramp-up towards 500,000 Bbls/d+ growth is very likely to continue given the continued high growth in oil-weighted rig counts (discussed in more detail in later sections). As highlighted previously, the key driver behind these large oil growth numbers is the boom in resource play production. Resource play production increased 216,000 Bbls/d (25%) in 2009, 354,000 Bbls/d (32%) in 2010 and 610,000 Bbls/d (42%) in 2011, while non-resource play production in the U.S. has been declining approximately 6%/year (~150,000 Bbls/d per year) since 2008.
Exhibit 9. U.S. Oil Resource Play Vs. Non-resource Play Production (Bbls/d)
5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 Bbl/d 2,500,000 2,000,000 1,500,000 1,000,000 500,000 -
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Q1 /08 Q2 /08 Q3 /08 Q4 /08 Q1 /09 Q2 /09 Q3 /09 Q4 /09 Q1 /10 Q2 /10 Q3 /10 Q4 /10 Q1 /11 Q2 /11 Q3 /11 Q4 /11 Q1 /12
Non Resource Play Oil Production
Resource Play Oil Production
Resource Play Trends

IPs Stabilizing After Step Change Improvements In 20082010
The early days of the resource boom seemed to be marked by continuous step changes in IP rates as producers experimented with longer and longer reach wells with ever increasing frac segments. Based on the IP trends in the plays we have been observing recently we have seen stabilizing trends in IP rates, indicating that much of the easy gains are behind us, or that incremental gains are being disguised by more marginal reservoir. In either case, going forward we do not expect to see dramatic industry wide IP rate improvements the way we saw in the first three years of the resource boom. Exhibit 10. Weighted Average IP (U.S. Plays)
3.0 2.5 2.0 Mmcfe/d 1.5 1.0 0.5 0.0
Q1 /0 8 Q2 /0 8 Q3 / 08 Q4 /0 8 Q1 /0 9 Q2 /0 9 Q3 /0 9 Q4 /0 9 Q1 /1 0 Q2 /1 0 Q3 /10 Q4 /1 0 Q1 /11 Q2 /11 Q3 /11 Q4 /11 Q1 /12
Gas Liquids
The other key takeaway from Exhibit 10 is the big increase in liquids yield as a proportion of the weighted average industry IP rate. With the big uplift in pricing available in liquids, it is no surprise that industry moved aggressively to harness this value so much so that liquids prices have recently come under significant pressure. However, even with the weakness in NGL pricing, the uplift is still meaningful enough for producers to continue to focus on liquids-rich plays.
Cycle Times Still Lots Of Room To Improve

Cycle times are the number of days between when a well is spud and when it is placed on-stream (or the time to drill, complete and tie-in a well). We have based our analysis on drilling and licensing records. The data is not available for every well (in a consistent manner) but for all plays we were able to gather a sample of over 1,000 wells with seemingly accurate data. Many companies talk about new records being set for time to drill a well or time to complete a well, but the reality is that the data seems to indicate on average that industry cycle times are still quite high. Our approach to quantifying this is to look at each play and take the calculated days between reported spud date and on-stream date. The following charts depict the cycle times for the Eagle Ford, Haynesville, Bakken and Marcellus. As depicted, the Haynesville in recent months has actually seen quite a meaningful declining trend in cycle times, which seems to mirror the maturity of this play (i.e., with rig counts dropping over the past year, the completion/infrastructure backlog is subsiding making it easier/quicker to tie-in wells). Additionally, the improvement is also likely due to operators having more flexibility to move to more efficient pad drilling now that land retention drilling is largely complete.
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Exhibit 11. Resource Play Cycle Times

Eagle Ford Cycle Times (Days)
200
Bakken Cycle Times (Days)

200
180
180
160
160
140
140
120
120
100
100
80
80
60
60
40
40
20
20
Haynesville Cycle Times (Days)

200
Marcellus Cycle Times (Days)

200
180
180
160
160
140
140
120
120
100
100
80
80
60
60
40
40
20
20
Cycle times in the Haynesville (in recent months) and Eagle Ford are starting to show improvement but still have considerable room to improve on average. Bakken and Marcellus cycle times are actually getting longer, likely reflecting the intense (and climbing) activity levels. Based on depth and average completion designs, we believe in an unconstrained market, cycle times for these plays should be able to get down to ~40 days on average an important point to consider as we forecast production growth from these plays.
Excess Capacity Still Exists

There is no doubt that substantial productive capacity exists in many emerging resource plays. In some plays, like the Haynesville and Barnett, where activity has slowed meaningfully, the inventory of drilled but non-completed wells has decreased as completion/tie-ins have finally caught up with drilling activity. However, in hot plays like the Bakken, Eagle Ford and Marcellus, this is clearly not the case the only question is how much excess capacity exists? Unfortunately, it is almost impossible to quantify the backlog of drilled but noncompleted wells. There is plenty of speculation that there are over 1,000 wells in the Marcellus yet to come on, ~800 in the U.S. Bakken and nearly 1,500 in the Eagle Ford. However, as we dig into the methodology behind those estimates, it is apparent that they are based on very high level statistics. Directionally they are likely correct but one should not rely too heavily on these estimates.
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One interesting way to gauge the magnitude of excess capacity is to look at the differences in producing day production for the main plays vs. recorded actual calendar day averages. The difference is not necessarily all production that could be sustained if bottlenecks didnt exist, but it does provide an indication of how much production is being held back by infrastructure bottlenecks, etc. The following chart looks at the producing day vs. calendar day production data for the Eagle Ford and Bakken. As depicted, we have seen a steady increase in producing day production in both plays vs. calendar day, implying that infrastructure bottlenecks are weighing on production up to 100,000 Boe/d or approximately 8% on just these two plays alone.
Exhibit 12. Producing Day Vs. Calendar Day For Bakken & Eagle Ford Indicates ~100,000 Boe/d Held Back
1,400,000 1,300,000 1,200,000 1,100,000 Boe/d 1,000,000 900,000 800,000 700,000 600,000 500,000
Producing Day Calendar Day
1 Au g11 Se p11
Ap r-1 1 Ma y-1 1
1 No v-1 1 De c-1 1
-1 1 Fe b11
-1 2 Fe b12
r-1 1
Ju l-1
Oc t-1
Ja n
Ju n
Ja n
Declines On Resource Play Production Running 36% A Big Curve To Keep In Front Of
We forecast resource play decline rates at ~36% for 2012, implying the need for ~10 Bcfe/d of production additions just to offset declines a large undertaking. With such a big decline rate, any harsh changes to fraccing rules would quickly put the US energy renaissance back to the dark ages.
With the big push into high decline horizontal wells, the overall U.S. decline rate remains at very high levels. We calculate actual aggregate declines from the main U.S. shales plays at 34% in 2011 (measured from Q4/10 to Q4/11) and we forecast declines in the 36% range for 2012 (measured from Q4/11 to Q4/12). This implies the need for a large 10 Bcfe/d of production additions just to offset declines from resource plays a large undertaking. Although U.S. declines are steep, the industry has shown that if it sustains high levels of drilling activity that it can still not only offset declines but also grow production in a meaningful way. Given our outlook for reasonably robust commodity prices, we see no imminent risks of drilling not offsetting declines. However, this does highlight the intense volatility that U.S. resource play production does have vs. changes in commodity prices or changes to regulations. The biggest risk to the production outlook in our view is any legislation that bans or imposes undue restriction on fraccing, which is the heart of the U.S. production renaissance. With a decline rate in the 36% range, the shale production profile would quickly turn from a picturesque renaissance to the dark ages.
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Ma
Ma
r-1 2
-1 1
Play IPs Are Variable But Some More Than Others

Through our studies, we have pulled data on over 57,000 wells across 28 plays and have assembled type curves based on each play. The notion of type curve is misleading to some investors as it carries the connotation that resource play well performance is quite homogenous. The reality is type curves are highly variable across plays and are meant to represent the statistical average of wells, not that every well will perform at the said type curve rates. While all resource plays see significant variability in type curve performance, we note that the magnitude of variability is bigger in some plays than others. To quantify this, we have calculated the co-efficient of variation (st-dev of IPs relative to the average IP) across all the different plays. The following chart ranks the plays according to this metric. As depicted, the Fayetteville and Haynesville are generally the most cohesive in terms of type curve performance moving down to the Mississippi Lime and Woodford. The Mississippi Limes high variability likely reflects the early stage of the play as opposed to an overall higher level of risk, whereas the Woodford and Marcellus are more mature and do represent genuine variability.
Exhibit 13. Coefficient Of Variation Of U.S. Resource Play IPs

3.0 2.8 2.5 2.3 2.0 1.8 1.5 1.3 1.0 0.8 0.5 0.3 0.0 1.43 1.22 1.15 1.13 0.80 0.68 0.65 2.70
0.54
0.49
ar ce l lu s
W oo df or d
Hz
Ba rn et t
Aa nd ar ko
US E&Ps Addicted To Spending

The Top 40 US E&Ps have collectively outspent cash flow by an amazing $55 billion since early 2008. Consensus forecasts are for capex to exceed cash flow by an additional $26 billion in 2012/13.
Any discussion of resource play trends would not be complete without highlighting how all of this activity is being fundedand whether or not this is sustainable. U.S. E&Ps are addicted to growth and addicted to spending. To illustrate this point, we highlight the capital spending vs. cash flow profiles of the Top 40 U.S. public E&Ps. As depicted, since the start of 2008 (the start of the unconventional boom), the Top 40 has spent an average of 115% of cash flow spending in line with cash flow only during the financial crisis. In total, over the past four years, the Top 40 have collectively outspent cash flow by an amazing $55 billion. Part of this massive capex gap was made up of external debt and equity but there is little doubt big JV activity has helped propagate this massive spending level. Based on current consensus expectations for the Top 40, this trend is expected to continue through 2012/13 with consensus expectations of capex outweighing cash flow by $26 billion clearly implying the need for massive external capital infusions with JVs once again being the primary source.
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Exhibit 14. U.S. Top 40 Capex / Cash Flow

$120,000 Capex & Cash Flow ($mm) $100,000 $80,000 $60,000 $40,000 $20,000 $0 2008 2009 Cash Flow
Source: Company reports and CIBC World Markets Inc.
130% 120% 110% 100% 90% 80% 70% 60% 50% 2010 Capex 2011 2012e Capex/Cash Flow 2013e Capex/Cash Flow
JVs Have Filled The Void But Will This Continue?

JVs have played a big role in funding E&P growth with at least $32 billion of JV announcements (including $14 billion of up-front payment).
We have seen U.S. producers tap all types of externally capital over the past four years to sustain high growth including traditional debt and equity and a relatively new found preference for Joint Venture activity. The following chart depicts recent JV deals in Canada and the U.S. As depicted, we have seen at least $32 billion of JV announcements, importantly with at least $14 billion of this coming in the form of upfront payment or approximately 25% of the current external capital needs.
Exhibit 15. Joint Venture Activity

$4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0
(N ov -0 8) -1 0) as (M & ar Mi -1 ts 0) ub ish AT i( LS Ma & r-1 Re 0) PW lia T nc & e( Ch Ap in r-1 aI 0) nv .C XC o. O (M & ay BG -1 0) Gr ou p PX (J un D & eRe 10 ) lia nc PW e( T Ju & lyMi 10 ts ) ub Ca is h rri i( zo Au & gRe 10 lia ) nc e( Se pt TL -1 M 0) & ST O (O ct TL -1 M 0) & SS L CH (D ec K & -1 0) CN OO C (J an TL -1 M 1) & SS PR L Q (M & ar Pe -1 1) tro na s( Ju EC ne A -1 & 1) Ko Ga s( NX Oc Y t-1 & 1) IN PE X (N ov CH -1 K 1) & TO T DV (D N ec & -1 Si 1) no pe EC c( A Ja & nMi 12 ts ) ub ish i( Fe b12 ) & AP C Ko G (O ct -0 8) (M ay -0 9) g09 ) 09 ) (F eb -0 9) k( No v CH K & (J an EC
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We believe the JV market is getting riskier given the large number of assets on the market and less certain macro environment.
The key question mark in todays environment is whether or not the large JVs can be counted on for funding? There have been several recent deals [Devon (DVN-NYSE) and Comstock (CRK-NYSE)] still depicting strong desire from external partners to gain North American resource exposure. The risk in our view is that if commodity prices correct once again (it was only a month ago that WTI was in the low US$70s) that external JV partners will become more disciplined at a time when there are huge demands for capital. Such a scenario could have a large impact on drilling activity, particularly in the 2013 time frame given the big funding void that exists.
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Based on our regression of rig activity vs. oil and natural gas prices over the past few years, the current 2013 commodity strip of ~US$90/Bbl and US$3.75/Mcf natural gas would imply a rig count in the 1,700 range, down ~10% from current levels. Rig activity could remain in the current 1,900 range if sufficient external capital is tapped which is a reasonable assumption today given still robust prices. However, a drop in oil prices down to the US$80/Bbl range with no external capital would argue for a rig count in the 1,500 range.
Key U.S. Growth Plays

The Eagle Soars..
The sudden thirst for liquids (no pun intended) is leading to a profound shift in drilling activity. Nowhere is this more evident than in the dramatic switch in activity from the Haynesville (dry gas) to the Eagle Ford (liquids-rich). While the Haynesville was notable for its incredibly high IP rates, the Eagle Fords higher priced crude and NGL weighting has sucked massive resources away from the Haynesville. The Eagle Ford has now become the most active play in the U.S. Exhibit 16 depicts the rig and well counts for the Haynesville and Eagle Ford. As depicted, the Haynesville rig count has declined from its high of 207 rigs (monthly average) down to 45 rigs now whereas the Eagle Ford has picked up all the slack and is now running 258 rigs, the highest horizontal rig count of any major resource play ever. Additionally, anecdotal evidence suggests that Eagle Ford operators will continue to add rigs into the area, likely making this the biggest rig concentration ever seen in any North American shale play.
The Haynesville rig count has declined from its high of 207 rigs down to 45 rigs now whereas the Eagle Ford has picked up all the slack and is now running 258 rigs the highest rig count of any major resource play.
Exhibit 16. The Haynesville-Eagle Ford Switch

400 350 300 250 Rigs 200 150 100 50 0
Q1 /08 Q2 /08 Q3 /08 Q4 /08 Q1 /09 Q2 /09 Q3 /09 Q4 /09 Q1 /10 Q2 /10 Q3 /10 Q4 /10 Q1 /11 Q2 /11 Q3 /11 Q4 /11 Q1 /12 Q2 /12
Source: Smith Data and CIBC World Markets Inc.
Eagle Ford Haynesville
Despite really only ramping up in later 2009, it is remarkable that the Eagle Ford is now producing over 770,000 Boe/d (416,000 Bbls/d of oil and 2.1 Bcf/d of natural gas).
Despite really only ramping up in later 2009, it is remarkable that the Eagle Ford is now producing over 770,000 Boe/d (416,000 Bbls/d of oil and 2.1 Bcf/d of natural gas). The actual liquids weight will be higher than this as well data only includes liquids separated at the well head while other NGLs will be extracted at gas plants. As the rig count continues to grow, the overall growth rate will continue to rise as well, with output in Q1/12 estimate to have been up approximately 500,000 Boe/d vs. Q1/11 and 180,000 Boe/d sequentially.
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Exhibit 17. Eagle Ford Growth Q1/08-Q1/12

Vintage Quartlery Production
6,000 5,400 4,800 4,200 3,600 Mmcfe/d 3,000 2,400 1,800 1,200 600 Q1 /08 Q2 /08 Q3 /08 Q4 /08 Q1 /09 Q2 /09 Q3 /09 Q4 /09 Q1 /10 Q2 /10 Q3 /10 Q4 /10 Q1 /11 Q2 /11 Q3 /11 Q4 /11 Q1 /12
Q/Q Growth
1,000 900 800 700 600 Mboe/d Mmcfe/d 500 400 300 200 100 0 1,200 1,100 1,000 900 800 700 600 500 400 300 200 100 0
200 Gas Q/Q Production Liquids Q/Q Production 180 160 140 120 100 80 60 40 20 0 Boe/d
IP Trends & Dispersion

The Eagle Ford technically spans 25 counties but the vast majority of production and activity are focused in a few main areas. In Q1/12, the top 5 counties accounted for 75% of total production (top counties being Karnes at 20%, Webb at 18%, Dewitt at 15%, Lasalle at 11% and Gonzales at 10%). Additional background on the Eagle Ford play can be found on page 160 of our Appendix, including detailed information on results by operator and country. Our survey of approximately 2,700 Eagle Ford wells indicates an average 30-day IP (calendar day) during 2010 and 2011 of approximately 3.1 MMcfe/d with an average 50% liquids yield at the well head. We note that IPs from the top 5 largest operators in the play are in the 4.8 MMcf/d range (800 Boe/d). Overall IP trends have bounced around quarter to quarter (as illustrated in the chart below), characteristic of an early-stage play and likely reflecting some temporary infrastructure bottlenecks. Liquids yields in the play have changed quite considerably, ranging from the 30% range in early 2010 and climbing in recent quarters to approximately 62% - clearly reflecting an industry focus on the higher NGL and crude oil-weighted areas of the play. Top-quartile IPs average 1,420 Bbls/d while bottom-quartile IPs average 158 Bbls/d. We also see considerable difference in IP rates among the major Eagle Ford producers, with top operators such as GeoSouthern (private) and EOG (EOG-NYSE) achieving average IP rates of 1,000 Boe/d and 820 Boe/d, respectively, down to a low of 474 Boe/d for Chesapeake (CHK-NYSE) (of the top 20 operators by production there are many IP rates for the remaining 50 companies below Chesapeakes average). As with any play, IPs vary considerably by location (see Appendix 161 for more details on operator and county information) but on balance, we have seen the highest IPs in Dewitt county (1,041 Boe/d IP with 51% liquids), Gonzales (994 Boe/d with 88% liquids), Live Oak (894 Boe/d with 88% liquids) and Karnes county (878 Boe/d IP with 74% liquids).
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The following charts depict the average IP rates and dispersion of rates for the entire Eagle Ford play.
Exhibit 18. Eagle Ford IP Trends & IP Distribution

Quarterly IP
4.5 4.0 3.5 3.0 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q2/08 Q2/09 Q2/10 Q2/11 Q3/08 Q3/09 Q3/10 Q3/11 Q4/08 Q4/09 Q4/10 Q4/11 720 640 560 480
Peak IP Distribution (2008+)

800 700 600 500 Frequency Boe/d 400 300 200 100 0
MMcfe/d
2.5 2.0 1.5 1.0 0.5 0.0 00 03 06 09 12 15 18 21 24 27 30 33 36 39 42 Months on Production
400 320 240 160 80 0
10
80
50
90
60
20
30
00
40
10
70
80
50
20
90 6,2
37 0
74 0
1,1
1,8
2,9
1,4
3,7
2,2
2,5
4,8
3,3
5,5
4,0
4,4
5,1
5,9
Peak IP Rate (Boe/d)
The Eagle Ford is unique vs. many of the other shale plays in that the play has very large and very well defined windows for crude, liquids-rich gas and dry natural gas. The following map depicts the rough contour of each window based on observed liquids yields. While the bulk of activity has clearly been in the liquids window (68% of 2011 wells were drilled in oil window, 14% in liquidsrich or transitional window and 18% into the dry gas window see Appendix page 160), we are starting to see activity pick up in the liquids-rich part of the play as well.
Exhibit 19. Eagle Ford Where The Liquids Lie

Barnett
Permian
TEXAS
Gonzales
Atascosa
Wilson
Dewitt Karnes Dimmit La Salle
MEXICO
Webb McMullen
Live Oak
Major Producers
1 Dry Gas 2 Wet Gas 3 Crude Oil
Source: HPDI, Google Earth and CIBC World Markets Inc.
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6,6
60
Exhibit 20. Eagle Ford Drilling By Portion Of The Play (Eagle Ford Reconciliation)
100% 90% 80% Pct Of Wells Drilled 70% 60% 50% 40% 30% 20% 10% 0% Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Gas Window Q4/11
Oil Window
Liquids Window
Supply Costs
The following charts depict supply costs for the Eagle Ford at todays costs. As depicted, the average Eagle supply cost of US$60/Bbl with top-quartile wells breaking even at US$50/Bbl and lower-quartile results breaking even at US$70/Bbl. Break-evens vary as to whether or not a well is in the oil or liquidsrich gas windows. Liquids-rich wells hit break-even returns at approximately US$60/Bbl with a US$5/Mcf gas price (assuming NGL prices at 45% of WTI) or ~US$70/Bbl with a US$4.50/Mcf gas price. Exhibit 21. Eagle Ford Economics (All Wells)
100% 90% 80% 70% 60%
IRR - % 50%
40% 30% 20% 10% 0% $120 $110 $100 $90 $80 $4.00 $3.00 $2.00 $70 $60 $7.00 $6.00 $5.00
US$/Mcf
US$/Bbl
Source: CIBC World Markets Inc.
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Exhibit 22. Eagle Ford Crude Economics
120%
100%
80%
IRR - % 60%
40% $7.00 $6.00 20% $5.00 $4.00 0% $120 $110 $100 $90 $80 $3.00 $2.00 $70 $60
US$/Mcf
US$/Bbl
Exhibit 23. Eagle Ford Wet Gas Economics (NGLs 45% Of WTI)
50% 45% 40% 35% 30%
IRR - % 25%
20% 15% 10% 5% 0% $120 $110 $100 $90 $80 $4.00 $3.00 $2.00 $70 $60 $7.00 $6.00 $5.00
US$/Mcf
US$/Bbl
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Growth Projections
At current rig counts with static efficiencies we could see the Eagle Ford growing to the 2.0 MMBoe/d range (1.2 MMBbls/d of light oil and 4.8 Bcf/d of natural gas) by 2016 and 2.6 MMBoe/d (1.6 MMBbls/d of light oil and 6.1 Bcf/d of natural gas) by 2020.
The following charts depict growth scenarios out of the Eagle Ford. Our base case view is based on current rig counts while low and high scenarios vary rig counts up/down by 20% from current levels (alternatively, the low and high cases can be thought of as a 20% improvement/decrease in rig productivity/drilling efficiency). As depicted, at current rig counts with static efficiencies we could see the Eagle Ford growing to the 2.0 MMBoe/d range (1.2 MMBbls/d of light oil and 4.8 Bcf/d of natural gas) by 2016 and 2.6 MMBoe/d (1.6 MMBbls/d of light oil and 6.1 Bcf/d of natural gas) by 2020. With a 20% improvement in efficiency OR a 20% improvement rig count, we could see the Eagle Ford reach 2.3 MMBoe/d by 2016 and 3.1 MMBoe/d by 2020.
Exhibit 24. Eagle Ford Growth Model Rigs Running

350 300 250 Rigs Running 200 150 100 500 50 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E Wells Drilled 1,500 High Base Low
Wells Drilled
2,500 High Base Low
2,000
1,000
Total Base Production Forecast

20,000 18,000 16,000 14,000 Mmcfe/d 12,000 10,000 8,000 6,000 4,000 2,000 /11 Q4 /11 Q3 /12 E Q2 /1 3 E Q1 /1 4 E Q4 /14 E Q3 /15 E Q2 /1 6 E Q1 /1 7 E Q4 /17 E Q3 /18 E Q2 /1 9 E Q1 /20 E Q4 /20 E Q4 /08 /08 /10 /09 Q1 Q3 Q2 Q1
Actual Production & Forecast Cases

3,333 Liquids (Right) 3,000 2,667 2,333 Mmcfe/d 2,000 Mboe/d 1,667 1,333 1,000 667 333 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 /11 Q4 /11 Q3 /12 E Q2 /13 E Q1 /1 4 E Q4 /1 4 E Q3 /1 5 E Q2 /1 6 E Q1 /1 7 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E /08 /08 /09 Q1 Q4 Q3 Q2 Q1 /10
3,333 High Base Low 3,000 2,667 2,333 2,000 1,667 1,333 1,000 667 333 0 Mboe/d
Liquids Growth (Bbl/d)

350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E High Base Low
Gas Growth (Boe/d)

350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E High Base Low
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Hayneville A Has Been?

In what seems like eons ago, the Haynesville was the most active resource play in North American. Activity on the play really began in 2008 with the rig count quickly ramping up to 218 rigs, only to decline during the financial crisis down to 127 rigs, and back up to an all-time peak of 217 rigs in Q2/10. After Q2/10, a combination of land retention commitments having been largely met by industry and weak natural gas prices (and more importantly the belief that weak prices may persist) have led to rigs consistently being moved out of this prolific but dry gas play into other more liquids-oriented plays (as discussed previously in the Eagle Ford section). Production growth in the Haynesville has been astonishing. From a Q1/08 average of only ~130 MMcfe/d, the play averaged ~7,500 MMcfe/d in Q4/11, making up approximately 11% of total U.S. gas supply. Growth from the play was 1.14 Bcfe/d in 2009, and averaging 2.8 Bcf/d in each of 2010 and 2011, staggering growth, particularly given the rig count decline in 2011. We attribute a substantial amount of 2011 growth due to completion of previously drilled but not tied in wells, which we now believe is largely complete. We estimate that Q1/12 was the first quarter of declines in the Haynesville with our calculations indicating average output of 7.3 Bcfe/d, down approximately 0.3 Bcfe/d (3%) from Q4/11 although we note output is still up 1.2 Bcfe/d (20%) Y/Y. We believe the Haynesville has reached an important inflection point where it will continue to see declines in production (note there will be some noise in the short term due to some production shut-ins followed by reactivations).
From a Q1/08 average of only ~130 MMcfe/d, the play averaged ~7,500 MMcfe/d in Q4/11, making up approximately 11% of total U.S. gas supply.
We estimate that Q1/12 was the first quarter of declines in the Haynesville with our calculations indicating average output of 7.3 Bcfe/d, down approximately 0.3 Bcfe/d (3%) from Q4/11
Exhibit 25. Haynesville Production Growth Q1/08-Q1/12

Q/Q Growth
1,595 1,450 1,305 1,160 1,015 Mmcfe/d Mboe/d 870 725 580 435 290 145 0 1,200 1,100 1,000 900 800 700 600 500 400 300 200 100 0 -100 -200 -300

The Haynesville, which presently spans 50 counties across Texas and Louisiana, the top 5 counties account for approximately 77% of production for the play (top counties/parishes being De Soto LA at 44%, Red River LA at 13%, Caddo LA at 9%, Sabine LA at 7% and Nacogdoches (TX) at 5%). Additional background on the Haynesville play can be found on page 168 of our Appendix, including detailed information on results by operator and county.
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The key attraction of the Haynesville is its prolific initial productivity rates from the play. As depicted below, our survey of 2,759 Haynesville wells shows the average IP for a Haynesville well at approximately 8 MMcfe/d and has been relatively consistent in that range since mid-2009. IP rates in 2011 tailed off somewhat to 7.7 MMcfe/d, likely to a slight change in operator practices towards limiting initial rates somewhat to achieve more moderate declines. The high IP rates are partly attributable to the greater depth and pressure of the play, which also leads to another trade-off higher decline rates. Our observed 12-month decline rate on a typical Haynesville well is approximately 75%, versus most other shales in the ~60% range (calculated from one-month average rate). As depicted below, IP rates in the Hayneville appear to be reasonably dispersed vs. other plays. Top-quartile IPs average 14.1 MMcfe/d, while bottom-quarter IPs average 3 MMcfe/d. IP rates vary by operator (see Appendix page 169 for more operator-specific information) but of the top 10 producers, which account for 90% of production, we see IP rates range from a low of 6 MMcfe/d for XTO [ExxonMobil (XOM-NYSE)] to a high of 12 MMcfe/d for Encana.
Exhibit 26. Haynesville IP Trends & IP Distribution

Quarterly IP
9.0 8.0 7.0 6.0
MMcfe/d
1.5

900 800 700 600 Frequency
Boe/d
Q1/08 Q1/09 Q1/10 Q1/11 Q1/12
Q2/08 Q2/09 Q2/10 Q2/11
Q3/08 Q3/09 Q3/10 Q3/11
Q4/08 Q4/09 Q4/10 Q4/11
1.35 1.2 1.05 0.9 0.75
5.0 4.0
500 400 300 200 100 0 1 929 1,857 2,785 3,713 4,641 5,569 6,497 7,425 8,353 Peak IP Rate (Boe/d)
0.6
3.0 2.0 1.0 0.0 00 03 06 09 12 15 18 21 24 27 30 33 36 39 42

Months On Production
0.45 0.3 0.15 0
Supply Costs
The average Haynesville supply cost is ~US$4.00/Mcf with top-quartile wells breaking even at US$3.50/Mcf and lower-quartile results breaking even at US$4.50-US$5.00/Mcf.
Exhibit 27 depicts supply costs for the Haynesville at todays costs. As depicted, the average Haynesville supply cost is ~US$4.00/Mcf with top-quartile wells breaking even at US$3.50/Mcf and lower-quartile results breaking even at US$4.50-US$5.00/Mcf. In the early days, the Haynesville supply costs/breakeven costs were considered the lowest in the industry, however, while it is still low for a dry gas play, in the context of all plays (i.e., including tight oil and liquids-rich gas), the supply costs are uncompetitive. In general, we believe natural gas prices would have to get to the US$5.00/Mcf range for the Haynesville to begin pulling rigs back out of the Eagle Ford.
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Exhibit 27. Haynesville Economics
50% 45% 40% 35% 30%
IRR - % 25%
20% 15% 10% 5% 0% $120 $110 $100 $90 $80 $4.00 $3.00 $2.00 $70 $60 $7.00 $6.00 $5.00
US$/Mcf
US$/Bbl
Growth Projections
At current rig counts with static efficiencies, we expect to see the Haynesville declining until mid-2014.
Exhibit 28 depicts growth scenarios out of the Haynesville shale. Our base case view is based on current rig counts while low and high scenarios vary rig counts up/down by 20% from current levels (alternatively, the low and high cases can be thought of as a 20% improvement/decrease in rig productivity/drilling efficiency). As depicted, at current rig counts with static efficiencies, we expect to see the Haynesville continue to maintain a declining profile until mid-2014. After peaking in Q4/11 at 7.6 Bcfe/d, we expect production to drop to ~6.2 Bcfe/d by late 2012 and 5.7 Bcfe/d by late 2013. Production after this point will gradually moderate as the steep decline phase is largely complete. As declines stabilize, the current rig count could once again start to deliver moderate growth in the 2016-2020 time frame. With a 20% improvement in efficiency OR a 20% improvement rig count, we could see the Haynesville reach 5.6 Bcfe/d by 2016 and 6.2 Bcfe/d by 2020. The efficiency gain could be particularly important in the Louisiana portion of the Haynesville as current land regulations make it prohibitive to drill across section boundaries (i.e., limited to one-mile horizontals). The Louisiana state government is currently expecting to enact regulations to allow longer reach drilling, which could reduce cycle times meaningfully as producers move to bigger pads with longer reach wells characteristic of other resource plays.
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Exhibit 28. Haynesville Activity Levels & Growth Projections Rigs Running
250 High Base Low
Wells Drilled
1,200 High Base Low
200
1,000
800 Rigs Running Wells Drilled 150
600
100
400 50
200
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

8,000 7,000 6,000 5,000 Mmcfe/d 4,000 3,000 2,000 1,000 Q3 Q2 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E Q2 /1 0 Q1 /1 1 Q4 /08 Q3 /09 Q1 /0 8 Q4 /1 1 E /12 /13

Liquids 1,333 1,167 1,000 833 Mmcfe/d 667 500 333 167 0 Mboe/d 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 Q4 /1 1 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E Q2 /10 Q1 /1 1 Q4 /08 Q3 /09 Q1 /0 8
Low
Base
High
1,333 1,167 1,000 833 667 500 333 167 0 Mboe/d 2020E

600,000 500,000 400,000 300,000 200,000 100,000 0 -100,000 -200,000 -300,000 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E High Base Low
Gas Growth (Boe/d)

600,000 500,000 400,000 300,000 200,000 100,000 0 -100,000 -200,000 -300,000 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E High Base Low
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LNG Could Rekindle Interest In Haynesville

What was once hot has become cold as ice but interest level in the Haynesville could be rekindled in the not too distant future. Why? Proximity to LNG facilities. As discussed in our report, LNG: The Race Is On, we believe companies that have committed to the Sabine Pass LNG export terminal, or who are planning to commit volumes to other facilities pending DOE export approval, will want to be naturally hedged. The structure of Gulf Coast LNG is different than many regions in that so far, it is being done on a tolling basis. Under this structure, the terminal operator is essentially a utility that pulls gas off the grid, and under a long-term contract will liquefy the gas for the buyer who then takes delivery and can market it wherever it wants. Even though a buyer is not able to move its own molecule of gas through the facility, we believe many buyers will want to be naturally hedged against a potential rise in U.S. gas prices longer term (recalling that the contracts are 20 years+). From this perspective, the Haynesville is well positioned as it is a large producing asset that can be sustained for many years without a big increase in drilling, which is an ideal profile for many LNG buyers. Additionally, the Haynesville play is in close proximity to the export facilities, which eliminates basis risk from the producing region to where the gas is purchased from. We believe Asian buyers [Kogas (036460-KS), GAIL (GAIL-BO), etc.] who have committed for capacity from Sabine Pass (or more recently the Freeport project) will be highly motivated to obtain a natural hedge against spot price risk. The most logical place to obtain this hedge is the Haynesville, which could bring new interest to these assets that many regard as having little value in todays market.
We believe parties who have made large LNG commitments from Sabine Pass (and more recently Freeport) will be interested in obtaining a physical hedge against US spot price risk and Haynesville is well positioned for that Hedge.
Exhibit 29. Gulf Coast Facilities (Freeport, Sabine, Lake Charles)
Fayetteville Woodford Woodford-Carny Floyd-Neal Barnett
Haynesville-Bossier Tuscaloosa
Lake Charles LNG (TrunkLine LNG) Cameron LNG
71 Km Sabine Pass LNG FreePort LNG 160 Km
Eagle Ford
Source: CIBC World Markets Inc and Google Earth.
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Marcellus The Beast In The East: Activity Moderating Somewhat But Still Going Hard
The Marcellus is a monster. As with many shale plays, it started to get a lot of attention in early 2008 and activity has boomed since then. Unfortunately, the Marcellus earns the dubious distinction of having THE WORST data quality of any of the major shales, with data released only twice per year (which actually an improvement) and that data does not include month-by-month production as most states/plays report. This means that industry largely has to guess at overall production and well rate trends. Our approach to gauging Marcellus production has been to back the production out of regional pipeline flows. This approach is reasonable as there are no other major growth drivers in Pennsylvania. As depicted below, based on this approach, we estimate the Marcellus is producing approximately 6.2 Bcfe/d in Q1/12, which would make it the largest shale gas play in the U.S. The Marcellus grew ~1 Bcf/d in 2009/10 and an impressive 2.4 Bcf/d from 2010/11. Even if production held flat (unlikely as still many wells are still to come on-stream) from todays levels, it would still imply ~2.5 Bcf/d of growth in 2012 from 2011.
We estimate the Marcellus is producing approximately 6.2 Bcfe/d in Q1/12, which would make it the largest shale gas play in the U.S. The Marcellus grew ~1 Bcf/d in 2009/10 and an impressive 2.4 Bcf/d from 2010/11.
Exhibit 30. Marcellus Shale Production & Growth

7,200 6,600 6,000 5,400 4,800 Mmcfe/d 4,200 3,600 3,000 2,400 1,800 1,200 600 1,200 1,100 1,000 900 800 Mmcfe/d 700 600 500 400 300 200 100 Mboe/d
Q/Q Growth
1,200 1,100 1,000 900 800 700 600 500 400 300 200 100 0 -100
0 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12
Marcellus rig counts have declined ~33%, but even at current levels it would still generate meaningful growth.
Even the mighty Marcellus is starting to feel the pinch of low natural gas prices, albeit it is faring far better than any other gas play, reflecting its strong economic attributes. As depicted in Exhibit 29, overall rig counts in the Marcellus have finally started to roll over. From a high of approximately 150 rigs running in late 2011, the play is now down to approximately 100 rigs running. As depicted, there is a major difference between rig counts depending on the part of the play. In the dry gas counties (primarily the northern part of the play), rig counts have fallen from a peak of 104 down to 56 while activity levels in the wet gas counties (primarily the SW of the play), rig counts have stayed relatively stagnant at 45-50 rigs running.
36
Exhibit 31. Marcellus Rig Count Wet Gas Vs. Dry Gas Counties
180 Dry Gas Rig Count 160 Marcellus Wet Gas Rig Count
140
120
Rig Count
100
80
60
40
20
Source: Smith Data and CIBC World Markets Inc.
Supply Costs
The average Marcellus dry gas supply cost is US$3.00/Mcf. Due to the large liquids subsidies, the average wet gas supply cost is in the US$2.00/Mcf range assuming NGLs at 45% of WTI.
Exhibits 32-33 depict supply costs for the Marcellus shale at todays costs. We have subdivided the play into a dry gas (northern) type curve as well as a wet gas curve. As depicted, the average Marcellus dry gas supply cost is US$3.00/Mcf. Due to the large liquids subsidies, the average wet gas supply cost is in the US$2.00/Mcf range assuming NGLs at 45% of WTI. While the wet gas break-evens are very low, we note that the wet gas window is a relatively small portion of the entire Marcellus play (approximately 3 counties from the entire play) and should not be construed as a proxy for the entire play.
37
Ja nu a Fe ry-1 br ua 0 ry Ma -10 rch -1 Ap 0 ril1 Ma 0 y-1 Ju 0 ne -1 0 Ju lyA u 10 Se gus pte t-1 mb 0 e Oc r-1 tob 0 No er ve -10 m De ber ce -10 mb e Ja r-10 nu a Fe ry-1 br ua 1 ry Ma -11 rch -1 Ap 1 ril1 Ma 1 y-1 Ju 1 ne -1 1 Ju lyA u 11 gu Se pte st-1 mb 1 e Oc r-1 to 1 No ber ve -11 m De ber ce -11 mb e Ja r-11 nu a Fe ry-1 br ua 2 ry Ma -12 rch -1 Ap 2 ril1 Ma 2 y-1 Ju 2 ne -1 2
Exhibit 32. Marcellus Dry Gas Economics
90% 80% 70% 60% 50% 40% 30% $7.00 20% 10% 0% $120 $110 $100 $90 $80 $6.00 $5.00 $4.00 $3.00 $2.00 $70 $60
IRR - %
US$/Mcf
US$/Bbl
Exhibit 33. Marcellus Wet Gas Economics (NGLs 45% Of WTI)
140%
120%
100%
80%
IRR - %
60%
40% $5.00 $4.00 0% $120 $110 $100 $90 $80 $3.00 $2.00 $70 $60
$7.00 $6.00
20%
US$/Mcf
US$/Bbl
38
Growth Projections
At current rig counts with static efficiencies, we expect to see a significant deceleration in Marcellus growth. The play averaged approximately 6.2 Bcfe/d in Q1/12 and we expect that to grow to 7.5 Bcf/d by Q1/13.
The charts in Exhibit 34 depict growth scenarios out of the Marcellus shale. Our base case view is based on current rig counts while low and high scenarios vary rig counts up/down by 20% from current levels (alternatively, the low and high cases can be thought of as a 20% improvement/decrease in rig productivity/drilling efficiency). As depicted, at current rig counts with static efficiencies, we expect to see a significant deceleration in Marcellus growth. The play averaged approximately 6.2 Bcfe/d in Q1/12 and we expect that to grow to 7.5 Bcf/d by Q1/13. While this is still quite a meaningful growth rate, it is down significantly from the 3 Bcf/d the play grew from Q1/11 to Q1/12. There is no doubt the Beast From The East will continue to deliver big volume growth. Based on current rig counts (which are off ~30% from highs), volumes can reach ~10 Bcf/d by 2016 and over 12 Bcf/d by 2020. If we layer in some combination of 20% productivity assumptions, rig counts or cycle times, our growth projects would jump to ~12 Bcf/d by 2016 and over 14 Bcf/d by 2020.
Marcellus production could reach 10-12 Bcf/d by 2016 and 12-14 Bcf/d by 2020.
39
Exhibit 34. Marcellus Growth & Activity Outlook Rigs Running

350 300 250 Rigs Running 200 150 100 500 50 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E Wells Drilled 1,500 High Base Low
Wells Drilled
2,500 High Base Low
2,000
1,000

15,000 13,750 12,500 11,250 10,000 Mmcfe/d 8,750 7,500 6,250 5,000 3,750 2,500 1,250 Q1 /08 Q4 /0 8 Q3 /09 Q2 /1 0 Q1 /1 1 Q4 /11 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E

2,500 2,292 2,083 1,875 1,667 Mmcfe/d Mboe/d 1,458 1,250 1,042 833 625 417 208 15,000 13,750 12,500 11,250 10,000 8,750 7,500 6,250 5,000 3,750 2,500 1,250 Q1 /0 8 Q4 /0 8 Q3 /0 9 Q2 /10 Q1 /11 Q4 /11 Q3 /1 2 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /1 5 E Q2 /1 6 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /2 0 E Q4 /2 0 E
Liquids (Right)
2,500 2,292 2,083 1,875 1,667 1,250 1,042 833 625 417 208 0 Mboe/d 1,458 Low Base High

600,000 High Base Low
Gas Growth (Boe/d)

600,000 High Base Low 500,000
500,000
400,000
400,000
300,000
300,000
200,000
200,000
100,000
100,000
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
40
Bakken Booming
The Bakken (we include Three Forks in all of our Bakken analysis) has been an amazing growth story thus far, increasing from only ~90,000 Boe/d in 2008 to approximately 590,000 Boe/d in Q1/12 (510,000 Bbls/d of oil and 500 MMcf/d of natural gas). Equally impressive is that the growth momentum is not yet waning, with the rig count on the play recently reaching 230 horizontal rigs, a big uptick from the already high 180 rigs running through 2011 and 124 in 2010. Additional background on the Bakken play can be found on page 152 of our Appendix, including detailed information on results by operator and county.
Exhibit 35. Bakken Production Growth Q1/08-Q1/12

Q/Q Growth
1,000 900 800 700 600 Mboe/d Mmcfe/d 500 400 300 200 100 0 1,200 1,100 1,000 900 800 700 600 500 400 300 200 100 0

Although the Bakken play spans large areas of North Dakota and Montana, the bulk of activity has been focused in four counties of North Dakota (Dunn, McKenzie, Mountrail and Williams), which collectively account for 85% of Bakken production. Bakken IP trends bounce around modestly quarter to quarter but on balance have been quite stable for the past two years. Our survey of 3,400 Bakken wells drilled since early 2008 indicates an average IP of 423 Boe/d (30-day calendar day average) with an 86% light oil weighting. Top-quartile IPs average 925 Bbls/d, while bottom-quartile IPs average 160 Bbls/d. We also see considerable difference in IP rates among the major Bakken producers, with top operators such as Brigham Exploration [Statoil (STO-NYSE)] and Williams Partners (WPZ-NYSE) achieving average IPs of over 600 Bbls/d vs. XTO (Exxon) at approximately 300 Bbls/d. As with any play, IPs vary considerably by location (see Appendix page 153 for more details on operator and county information) but on balance we have seen the highest IPs in Mountrail county with rates of 571 Boe/d, followed not far behind by average rates in Mackenzie county of 483 Boe/d. The following charts depict IP trends and the dispersion of results.
Our survey of 3,400 Bakken wells drilled since early 2008 indicates an average IP of 423 Boe/d (30-day calendar day average) with an 86% light oil weighting.
41
Exhibit 36. Bakken IP Trends & IP Distribution

Quarterly IP
3.0 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q2/08 Q2/09 Q2/10 Q2/11 Q3/08 Q3/09 Q3/10 Q3/11 Q4/08 Q4/09 Q4/10 Q4/11 500

400 350
417
2.5
300
333
2.0 MMcfe/d
250 Frequency
Boe/d
1.5
250
200 150
1.0
167
100
0.5 83
50 0 0 250 500 750 1000 1250 1500 1750 2000 2250 2500 Peak IP Rate (Boe/d)
0.0 00 03 06 09 12 15 18 21 24 27 30 33 36 39 42
Supply Costs
The data table in Exhibit 37 depicts supply costs for the Bakken at todays costs. As depicted, the average Bakken supply cost of ~US$65-US$70/Bbl with topquartile wells breaking even at US$55-US$60/Bbl and lower-quartile results breaking even at US$70/Bbl+. We note that our analysis assumes Bakken Light pricing of approximately 5% discount to WTI over the long term, reflecting the more challenged market access vs. PADD 3 and many other light oil plays. This more conservative (arguably more realistic) view of pricing makes our estimated break-evens for the U.S. Bakken higher than is often suggested. Exhibit 37. Bakken Economics
45% 40% 35% 30% 25% 20% 15% $7.00 10% 5% 0% $120 $110 $100 $90 $80 $6.00 $5.00 $4.00 $3.00 $2.00 $70 $60
IRR - %
US$/Mcf
US$/Bbl
42
Growth Projections
At current rig counts with static efficiencies, we could see the Bakken growing to the 1.2 MMBoe/d range (1.1 MMBbls/d of light oil and 1.1 MMcf/d of natural gas) by 2016 and 1.6 MMBoe/d (1.4 MMBbls/d of light oil and 1.4 MMcf/d of natural gas) by 2020
The charts in Exhibit 38 depict growth scenarios out of the Bakken. Our base case view is based on current rig counts while low and high scenarios vary rig counts up/down by 20% from current levels (alternatively, the low and high cases can be thought of as a 20% improvement/decrease in rig productivity/drilling efficiency). As depicted, at current rig counts with static efficiencies, we could see the Bakken growing to the 1.2 MMBoe/d range (1.1 MMBbls/d of light oil and 1.1 MMcf/d of natural gas) by 2016 and 1.6 MMBoe/d (1.4 MMBbls/d of light oil and 1.4 MMcf/d of natural gas) by 2020. With a 20% improvement in efficiency OR a 20% improvement rig count, we could see the Bakken reach 1.5 MMBoe/d by 2016 and 1.9 Boe/d by 2020. We believe there is little risk as to whether or not the Bakken has the resource to support over 1 MMBbls/d of production. The bigger question is relative economics. The Bakken is one of the most active U.S. plays but discounted pricing and higher transport costs weigh on economics vs. many competing light oil plays, particularly those in PADD 3. As more new plays mature in PADD 3, we would not be surprised to see more rigs reallocated from the Bakken southward. From a macro perspective, this would reduce the aforementioned production targets for the Bakken but on an aggregate basis would not likely have any major impact as we would see higher-than-forecast production from these other liquids plays.
Price discounting in PADD 2 is weighing on Bakken economics, which could see activity moderate from current levels.but there are many other plays eager to pick up these rigs.
43
Exhibit 38. Bakken Activity Levels & Growth Projections Rigs Running
300 High Base Low
Wells Drilled
2,500 High Base Low
250
2,000
200 Rigs Running Wells Drilled 1,500
150
1,000
100 500
50
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

12,000 Liquids (Right) 10,000 8,000 Mmcfe/d 6,000 4,000 2,000 Q1 /08 Q4 /08 Q3 /09 Q2 /10 Q1 /11 Q4 /11 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E

2,000 1,667 1,333 Mmcfe/d Mboe/d 1,000 667 333 12,000 High 10,000 8,000 6,000 4,000 2,000 Q4 /11 Q3 /1 2 E Q2 /1 3 E Q1 /1 4 E Q4 /1 4 E Q3 /1 5 E Q2 /1 6 E Q1 /1 7 E Q4 /1 7 E Q3 /1 8 E Q2 /1 9 E Q1 /2 0 E Q4 /2 0 E /08 /08 /09 /10 Q1 Q3 Q4 Q1 Q2 /11
2,000 Base Low 1,667 1,333 1,000 667 333 0 Mboe/d

Gas Growth (Boe/d)

250,000
250,000
200,000
200,000
150,000
150,000
100,000
100,000
50,000
50,000
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
44
Other Plays
Thus far we have focused our attention on the Eagle Ford, Marcellus, Haynesville and Bakken with the rationale being that these are the fastest growing plays (Eagle Ford, Bakken, Marcellus) or the ones that have the potential to correct the most in the short term (Haynesville). However, the focus on these plays should not be taken to imply that they are the only plays that matter in the U.S. We have also done detailed models on the Permian Basin and Anadarko Basin plays aggregated within the respective basins but broken out into horizontal and vertical drilling as well as the Woodford/Cana Woodford and Fayetteville. We present a summary of each of these plays (IP rates in aggregate, by county and by operator, total production, etc.) in Appendix pages 148-186. As depicted in Exhibit 39, beyond the plays discussed above, aggressive development in the Permian Basin from both aggressive horizontal and vertical drilling has also led to very meaningful increase in oil production increase. Production in the Permian has grown by ~210,000 Bbls/d in 2010 and 2011 and seems to be on track to produce 1.5 MMBbls/d in 2012 (up 340,000 Bbls/d from 2011). The Permian is truly a variety of resource plays plus conventional targets with, in many cases, overlapping geologically making it difficult to separate out rig counts by play, etc. However, in many cases, the type curves arent wildly different so we have found it accurate enough to simply break out horizontal Permian vs. vertical Permian activity and build type curves around that. For the Anadarko Basin, we have broken out the Woodford and Cana Woodford separately and modeled all other Anadarko horizontal and vertical activity separately. Exhibit 39 shows the growth outlook by play for each of the other regions. For more details (IP trends, IP distributions, etc.), please refer to Appendix pages 148-186.
45
Exhibit 39. Growth Outlook

Rigs Running Anadarko (Horizontal)
200 180 160 140 Rigs Running Mmcfe/d Mboe/d Mboe/d Mboe/d Mboe/d 120 100 80 60 40 20 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2,500 2,000 1,500 Low 1,000 500 Q1 /11 Q4 /1 1 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E Q1 /0 8 Q3 /0 9 Q2 /10 Q4 /0 8
Production Forecasts Anadarko (Horizontal)

4,000 3,500 3,000 667 583 500 417 333 250 Base High 167 83 0
High Base Low
Rigs Running Fayetteville

45 40 35 30 Rigs Running 25 20 15 10 5 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E Low Base High
Production Forecasts Fayetteville

4,500 4,000 3,500 3,000 Mmcfe/d 2,500 2,000 1,500 1,000 500 /0 9 Q2 /10 Q1 /11 Q4 /1 1 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E /0 8 Q1 Q4 /0 Q3 8
750 667 583 500 417 Low Base High 333 250 167 83 0
Rigs Running Permian (Horizontal)

90 80 70 60 Rigs Running High Base Low
Production Forecasts Permian (Horizontal)

11,000 10,000 9,000 8,000 7,000 Mmcfe/d 6,000 5,000 4,000 3,000 2,000 1,000 Low Base High 1,833 1,667 1,500 1,333 1,167 1,000 833 667 500 333 167 0
50 40 30 20 10 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Rigs Running Woodford

120 100 High Base Low
Production Forecasts Woodford

1,750 Low 1,500 1,250 Base High 250 208 167 125 83 42 0
Q4 /1 1 Q3 /12 E Q2 /1 3 E Q1 /14 E Q4 /1 4 E Q3 /15 E Q2 /1 6 E Q1 /17 E Q4 /17 E Q3 /1 8 E Q2 /19 E Q1 /2 0 E Q4 /20 E Q4 /08 Q3 /0 9 Q2 /10 Q1 /11
Q1 /0 8 Q4 /0 8 Q3 /0 9 Q2 /1 0 Q1 /1 1 Q4 /11 Q3 /12 E Q2 /13 E Q1 /1 4 E Q4 /1 4 E Q3 /1 5 E Q2 /1 6 E Q1 /1 7 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E
292
80 Rigs Running 60 40 Mmcfe/d 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 1,000 750 500 250 0
Q1 /0 8
20
46
Lots Of Activity On Emerging Resource Plays

Even with gigantic successes like the Marcellus, Haynesville, Eagle Ford and Bakken, the industry continues to look for the next big thing.
U.S. resource play activity has not stood still. Even with gigantic successes like the Marcellus, Haynesville, Eagle Ford and Bakken, the industry continues to look for the next big thing. We highlight four early-stage resource plays but acknowledge that there are others and this list will change continuously. Of all the emerging plays, the Mississippi Lime seems to be the most active with industry now running 89 rigs on the play, up from ~30 in the year prior. As the play is quite new, historical data is sparse making it still difficult to gauge an accurate type curve based on official data so in this case we are more at the mercy of company disclosures. Recent results on the play suggest typical IPs of 200-300 Boe/d, primarily oil weighted. The most active operators targeting the Mississippi Lime are Sandridge (SD-NYSE), Chesapeake and Noble (NBL-NYSE). The Niobrara and Utica are also seeing meaningful activity with the Niobrara currently running approximately 38 rigs, relatively flat with last year (as the Niobrara overlays gas zones the true rig count targeting the Niobrara is harder to define vs. many other plays so last years number likely included some gas oriented rigs). Typical 30-day IPs from the Niobrara are approximately 300 Boe/d but, as with most plays, vary widely. Most active operators in the Niobrara are Encana with nine rigs running, Williams six rigs, Anadarko five rigs, and Noble with four rigs. The Utica is gaining steam very rapidly with 36 rigs now being run in the area vs. ~5 at this time last year. As the Utica is the youngest of emerging resource plays, there is virtually no verifiable public data so we are reliant on company disclosures, which are suggesting IPs in the 500 Boe/d range. The most active operator in the Utica is Chesapeake with 13 rigs running followed by Gulfport Energy (GPOR-NASDAQ) with two rigs. The Tuscaloosa Marine Shale is another play that is getting attention, however, it is approximately a year behind other emerging plays in terms of activity levels with only ~four rigs running. However, as seen with both the Utica and Mississippi Lime, if results warrant, we could see a very quick ramp-up in activity. Most active operators in the Tuscaloosa are Encana, Devon, Goodrich and Aldridge all with one rig currently running. In terms of forecasting production from the emerging resource plays, we have modeled the Mississippian separately but, for the time being, have grouped the other emerging plays together reflecting the greater uncertainty around these plays. As better data is available in terms of verifying type curves/economics, we will gradually split these plays into their own categories. The charts in Exhibits 40 and 41 depict growth potential from the Mississippi Lime and other emerging resource plays based on current rig counts with our typical +-20%, which can be interpreted as a +-20% change in drilling efficiencies or IP rates. We have also presented a scenario that follows the ramp up cycle of other plays in which rig counts continue to expand rapidly and drilling efficiencies (cycle times) improve. As depicted, these emerging resource plays will likely be an important growth driver going forward. Our base case modeling includes approximately 300,000 Boe/d of production (70% oil weighted) from these plays by 2016 and approximately 550,000 Boe/d by 2020. With a more aggressive ramp-up and improvements in cycle times, production could be more in the 700,000 Boe/d range by 2016 and ~1.2 MMBoe/d by 2020.
Our base case modeling includes approximately 300,000 Boe/d of production (70% oil weighted) from these emerging plays by 2016 and approximately 550,000 Boe/d by 2020. With a more aggressive rampup and improvements in cycle times production could be more in the 700,000 Boe/d range by 2016 and ~1.2 MMBoe/d by 2020.
47
Exhibit 40. Emerging Plays Growth Outlook

Rigs Running Mississippi Lime
120 High Base Low
Production Forecasts Mississippi Lime

2,500 2,250 2,000 1,750 High Base Low 417 375 333 292 250 208 167 125 83 42 0
Q1 /11 Q4 /11 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E Q2 /10 Q4 /08 Q3 /09
100
80 Mmcfe/d Rigs Running
1,500 1,250 1,000 750 500
60
40
20
250 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Q1 /08
Rigs Running Other Emerging Plays

100 90 80 70 High Base Low
Production Forecasts Other Emerging Plays

1,800 1,600 1,400 1,200 Mmcfe/d 1,000 800 600 400 200 High Base Low 300 267 233 200 Mboe/d 167 133 100 67 33 0
Q1 /11 Q4 /11 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E Q2 /10 Q4 /08 Q3 /09
Rigs Running
60 50 40 30 20 10 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
48
Q1 /08
Mboe/d
Exhibit 41. Emerging Plays Growth Outlook Improved Efficiencies & Continued Activity Expansion
Rigs Running Mississippi Lime
250 High Base Low
Production Forecasts Mississippi Lime

6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 High Low Base 1,000 917 833 750 667 500 417 333 250 167 83 0 Mboe/d 583
200
Rigs Running
100
50
2009
2010
2011
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
Rigs Running Other Emerging Plays

300 High Base
Production Forecasts Other Emerging Plays

9,000 8,000 7,000 6,000 Mmcfe/d 5,000 4,000 3,000 High Base 1,000 917 833 750 667 500 417 333 250 167 83 0 Mboe/d 583
250
200 Rigs Running
150
100
2,000 1,000 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
50
49
Q1 /08 Q4 /08 Q3 /09 Q2 /10 Q1 /11 Q4 /11 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E
Mmcfe/d
150
Allocating Capital Comparative Economics

As we have seen over the past few years, the industry has demonstrated an ability to shift capital quickly in response to price signals. The rapid pace with which capital can be reallocated from play to play in the U.S. makes it very important to understand the relative economics of various plays in order to get an understanding of where producers will favor oil plays vs. liquids-rich gas plays vs. dry gas plays. The charts in Exhibit 42 are a useful tool in understanding economic sensitivities and where producers will allocate capital for the main U.S. resource plays. Overall, based on todays type curve performance, we generally see the Eagle Ford as having some of the best returns regardless of gas price assumption. We see an average Eagle Ford well breaking even at approximately US$50US$60/Bbl, although if we subdivide this between liquids-rich wells and crude oil wells, there is quite a different story with crude oil wells breaking even closer to US$50/Bbl and liquids-rich wells in the US$70/Bbl range with a US$5/Mcf gas price (assuming NGL basked at 45% of WTI). Unsurprisingly, we also see strong returns from the Bakken but not as high as generally viewed as we forecast approximately a 10% variance in oil prices for PADD 2 and Canadian plays vs. plays producing in PADD 3 (our section on Crude oil explains the rationale). On average, we see break-evens for the Bakken at approximately US$60US$70/Bbl. On the natural gas side, the best returns of the dry gas plays comes from the Marcellus where we see typical wells breaking even at approximately US$3/Mcf. Noteworthy is the fact that the Marcellus wet gas wells (primarily in the SW part of the play) break even at US$2/Mcf (with oil at US$95/Bbl and NGL basket priced at 45% of WTI). With this backdrop, we fully expect the Marcellus (wet and dry) to remain one of the primary gas growth drivers. In other dry gas plays like the Haynesville we typically see break-even returns more in the US$4/Mcf range.
50
de ru -C s d or Ga e F rd et gl Fo W Ea gle us l ir Ea rcel zD Ma en H kk ko Ba ar a d rd An dfo s ir Ga oo W zD e t W nH ML mia rd r o Pe eF gl Ea a ic tt Ut e s rn Ba ellu le rc vil Ma es yn ille Ha ttev ye Fa de ru a s -C tG d or W e eF gl lus Ea rcel ord Dir z F Ma le koH g r Ea ada s lu An rcel rd Ma dfo s oo n Ga e W et kk -W Ba d or ir ML le F zD H g Ea ian e rm vill Pe tte ye t Fa et rn Ba Ut ica le vil es yn Ha
s Ga et e - W ru d us - C ell d rc F o r d Ma e or gl Ea le F us g l Ea rcel ille Dir v z s Ma ette oH Ga k y et Fa dar d r W a An dfo rd o oo W le F ille g v Ea nes y Ha
ML ken k r Ba ett Di rn Hz Ba ian rm Pe ica Ut
Comparative Economics @ $3.00/Mcf
0%
0%
10%
10%
20%
20%
30%
30%
40%
40%
50%
50%
60%
60%
70%
70%
80%
80%
90%
90%
100%
100%
110%
110%
120%
120%
130%
130%
130%
120%
110%
100%
90%
80%
70%
60%
50%
40%
30%
Exhibit 42. Comparative Returns
de ru -C s d or Ga e F rd et gl Fo W Ea gle us l ir Ea rcel zD Ma ken oH k k Ba ar a d rd An dfo s ir oo Ga W zD e t W nH ML mia rd r o Pe eF gl Ea a ic t Ut et le rn vil Ba es s yn Ha ellu e c l vil tte ye Fa r Ma
de ru a s -C tG d or W e eF gl lus Ea el d rc For ir Ma gle zD Ea ken oH k k s Ba ar ad rd Ga An odfo et o -W W d or ir ML le F zD H g ian Ea rm us Pe cell r Ma ica t Ut et ille rn Ba ttev e l ye vil Fa es yn Ha
s Ga et de - W ru us - C ell rd rc Fo Ma gle ord F Ea le us Dir g l z Ea rcel oH k Ma ar ad ord An df lle oo tevi W t s ye Ga Fa ken et k -W Ba d or ML e F gl r Ea ett Di rn nHz Ba ia le rm vil Pe es yn Ha ica Ut
20%
10%
0%

0% 0% 10% 10% 20% 20% 30% 30% 40% 40% 50% 50% 60% 60% 70% 70% 80% 80% 90% 90% 100% 100% 110% 110% 120% 120% 130% 130% 130% 120% 110% 100% 90% 80% 70% 60% 50% $120 $120
40%
30%
20%
10%
0%
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$60 $60 $60 $70 $70 $80 $80 $90 $90 $100 $100 $110 $110 $120
$60
$70
$70
$80
$80
$90
$90
$100
$100
$110
$110
$120
$120
$60 $60 $70 $70 $80 $80 $90 $90 $100 $100 $110 $110 $120
Natural gas prices generally need to be in the US$4-US$6/Mcf range for dry gas plays to compete vs. the main liquids plays.
Natural gas prices being above break-even levels on dry gas plays alone will not dictate a return to dry gas drilling. Rather, the real relevant factor is whether or not gas plays can generate a high enough rate of return to draw resources away from liquids-rich or tight oil-focused plays. The following chart depicts some of the swing dry gas plays and how they compete for capital vs. the Eagle Ford and Bakken two of the largest oil/liquids-focused plays. As depicted, gas prices generally need to be in the US$4-US$6/Mcf range for dry gas plays to compete vs. the main liquids plays. We note our return assumptions for the Bakken are generally slightly lower than consensus reflecting our view of discounting for PADD 2 and Northern plays. This analysis reinforces our view that rigs will be slow to return to dry gas plays unless we see a substantial uptick in gas prices. The one exception being the Marcellus where we are approaching a range where it competes with some oil weighted plays like the Bakken (but is still a long ways from Eagle Ford returns).
Exhibit 43. Dry Gas Returns Vs. Main Oil Plays At US$90/Bbl Oil
110% 90% 70% 50% IRR - % 30% 10% -10% -30% -50% $2.00 $3.00 $4.00 $/Mcf $5.00 $6.00 $7.00 Fayetteville Haynesville Marcellus Woodford Barnett Bakken Eagle Ford
Where To From Here U.S. Resource Play Growth Forecasts

There is no doubt that U.S. resource plays can deliver quite amazing growth. The question is what does that growth profile look like longer term? We have provided a number of different approaches to evaluating the long-term outlook for U.S. resource plays. Our scenario analysis begins with a look at deliverability using status quo assumptions (current rigs running and no changes to IP rates or drilling cycle times). Scenario 2 incorporates changes in the rig fleet and activity levels as well as cycle times. Scenario 3, which is the most complex, introduces variability and dynamic capital allocation using a Monte Carlo simulation. This approach is particularly powerful as it provides some insight into how, and when, producers allocate capital to natural gas plays vs. the current oil focus.
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Scenario 1 Growth & Current Rig Counts

Our first approach to forecasting overall industry growth is to assume a continuation of current rig counts and productivity assumptions on each of the individual plays. The following charts provide an overview of recent trends in U.S. rig counts along with the current break-out of rig counts by play.
Exhibit 44. Current U.S. Rig Counts

Rig Count Ramp Up - By Play
2,250 2,000 1,750 1,500 1,250 1,000 750 500 250 0 Eagleford Haynesville Barnett Emerging Liquids Plays Mississippi Lime Anadarko Basin Marcellus PA Fayetteville Woodford US Bakken Permian Eagleford Haynesville Barnett Emerging Liquids Plays Mississippi Lime Anadarko Basin Marcellus PA Fayetteville Woodford US Bakken Permian
Rig Count - By Play - Q4/20
/08
/09
/14
/08
/13
/10
/13
/15
/12
/14
/17
/09
/10
/16
/11
/19
/15
/17
/18
/18
/20
Q3
Q1
Q3
Q3
Q1
Q3
Q3
Q1
Q1
Q3
Q1
Q1
Q1
Q1
Q3
Q3
Q1
Q3
Q3
Q1
Q1
Q1
Q1
Q3
Q3
With current rig counts & efficiencies, total U.S. on-shore oil production would grow to ~6.6 MMBbls/d in 2016 (~485,000 bbl/d per year).
As depicted, in this scenario, we see oil production from resource plays growing by 2.9 MMBbls/d from 2011 to 2016 (~600,000 Bbls/d per year) and a further 1.1 MMBbls/d from 2016 to 2020 (~270,000 Bbls/d per year). After netting off anticipated declines in non-resource play production, total U.S. on-shore oil production would be grow to ~6.6 MMBbls/d in 2016 (~485,000 bbl/d per year) and 7.2 MMBbls/d by 2020 (an incremental 152,000 Bbls/d per year from 20162020).
Exhibit 45. U.S. Oil Production Growth Key Resource Plays

Oil Production (Bbls/d)
8,000,000 7,500,000 7,000,000 6,500,000 6,000,000 5,500,000 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 /0 8 Q3 /08 Q1 /09 Q3 /09 Q1 /1 0 Q3 /1 0 Q1 /1 1 Q3 /1 1 Q1 /12 Q3 /12 Q1 /13 Q3 /1 3 Q1 /1 4 Q3 /1 4 Q1 /1 5 Q3 /15 Q1 /16 Q3 /16 Q1 /1 7 Q3 /1 7 Q1 /1 8 Q3 /1 8 Q1 /19 Q3 /19 Q1 /2 0 Q3 /2 0 Q1
Eagleford Haynesville Barnett Emerging Liquids Plays Mississippi Lime Anadarko Basin High
Marcellus PA Fayetteville Woodford US Bakken Permian Low
Q3
Oil Production - YoY Chng By Play (Bbls/d)

1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 -100,000 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E Eagleford Haynesville Barnett Emerging Liquids Plays Mississippi Lime Anadarko Basin Marcellus PA Fayetteville Woodford US Bakken Permian
53
/20
/12
/16
/11
/19
Exhibit 46. Oil Scenario Summary

Oil Ramp Up - (Bbl/d) Low Case Base Case High Case Non Shale Production Decline Total On-Shore US Low Case Base Case High Case
2011 1,937,841 1,937,841 1,937,841 2,239,159 4,177,000 4,177,000 4,177,000
Total Production 2016 4,255,899 4,939,280 5,627,452 1,658,504 5,914,403 6,597,784 7,285,956
2020 5,049,138 6,007,644 6,974,215 1,200,421 6,249,559 7,208,065 8,174,636
'11-'16 463,612 600,288 737,922 (116,131) 347,481 484,157 621,791
Per Year Growth '16-'20 198,310 267,091 336,691 (114,521) 83,789 152,570 222,170
'11-'20 345,700 452,200 559,597 (115,415) 230,284 336,785 444,182
At current rig counts and efficiencies, dry gas production would only grow ~2.5 Bcf/d by 2016 or about 0.5 Bcf/d per year not sufficient to keep pace with demand growth.
With this scenarios big allocation of rigs towards liquids plays, there is no surprise that gas production growth decelerates massively from prior years. In this scenario, we expect dry gas production to be flat in 2013 as a decline in Haynesville production moderates increases from the Marcellus and gas from liquids-rich plays. As steep initial declines moderate though in the 2014 time frame, production from dry gas plays such as the Haynesville will likely return to moderate growth at current rig counts. At static rig counts, U.S. wet gas production from resource plays would grow 8.4 Bcf/d (1.7 Bcf/d per year) from 2011 to 2016 and 5.5 Bcf/d from 2016 to 2020 (1.4 Bcf/d per year). Production from non-resource plays would likely continue to decline approximately 4.4 Bcf/d (0.9 Bcf/d per year) by 2016 and extraction losses due to NGL would increase approximately 1.4 Bcf/d (0.3 Bcf/d per year) implying total dry gas production growth of 2.6 Bcf/d (0.5 Bcf/d per year) through 2016 and 0.4 Bcf/d per year through 2020.
Exhibit 47. U.S. Gas Production Growth

Natural Gas Production (MMcf/d)
60,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Eagleford Fayetteville Emerging Liquids Plays Permian High Marcellus PA Barnett US Bakken Anadarko Basin Haynesville Woodford Mississippi Lime Low
Natural Gas Production - YoY Chng By Play (MMcf/d)

10,000 8,750 7,500 6,250 5,000 3,750 2,500 1,250 0 -1,250 -2,500 -3,750 -5,000 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E Eagleford Haynesville Barnett Emerging Liquids Plays Mississippi Lime Anadarko Basin Marcellus PA Fayetteville Woodford US Bakken Permian
Q1 /08 Q3 /08 Q1 /09 Q3 /09 Q1 /10 Q3 /10 Q1 /11 Q3 /11 Q1 /12 Q3 /12 Q1 /13 Q3 /13 Q1 /14 Q3 /14 Q1 /15 Q3 /15 Q1 /16 Q3 /16 Q1 /17 Q3 /17 Q1 /18 Q3 /18 Q1 /19 Q3 /19 Q1 /20 Q3 /20
Exhibit 48. Gas Scenario Summary

Gas Ramp Up - (Mmcf/d) Low Case Base Case High Case Non Shale Production Decline Extraction Losses Total On-Shore US Low Case Base Case High Case
2011 31,775 31,775 31,775 34,429 3,203 63,002 63,002 63,002
Total Production 2016 2020 35,113 38,530 40,258 45,759 45,606 53,263 29,802 4,466 60,448 65,593 70,941 26,420 4,601 60,348 67,578 75,082
'11-'16 667 1,696 2,766 (925) 253 (511) 518 1,588
Per Year Growth '16-'20 854 1,375 1,914 (845) 34 (25) 496 1,035
'11-'20 750 1,554 2,388 (890) 155 (295) 508 1,342
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In the above scenarios, we have included a sensitivity of +-20%, which can be thought of as improvements in initial productivity rates and/or rig efficiency. If we saw some combination of 20% improvements in initial productivity rates or rig efficiency, U.S. tight oil production could grow to 5.6 MMBbls/d by 2016 or 740,000 Bbls/d per year instead of ~5 MMBbls/d or 600,000 Bbls/d as in our base case. On the downside, a decrease in IP rates and productivity (seemingly unlikely) would still see U.S. tight oil production grow to 4.3 MMBbls/d by 2016 or 460,000 Bbls/d per year still above pre-2011 grow rates.
Scenario 2 Impact Of Emerging Plays, Longterm Fleet Expansion & Efficiency Gains
This scenario expands on the base case output from Scenario 1 (which is labeled Scenario A in the following tables) by incorporating different assumptions around rig counts and cycle times. Scenario B begins by taking all the assumptions laid out in Scenario A, but assumes that emerging plays such as the Utica, Niobrara and Tuscaloosa continue to ramp up activity. We assume that these plays collectively ramp up from ~100 rigs today to ~300 rigs by end of 2014. Ramp-up times in new plays have been steadily decreasing as the industry gains experience and confidence in building out new resource plays and implementing the necessary supply chains to support them. As shown in Exhibit 51, Scenario C builds on B and also assumes gradual decreases in cycle times on the remaining plays, most notably the U.S. Bakken and Eagle Ford where we continue to measure cycle times in the 60- and 80-day range, which could theoretically be reduced by ~33%. Scenario D takes the previous two scenarios and also assumes the rig fleet continues to expand by ~5% per year from 2014 to 2020 a reasonable assumption given producer production would be growing in excess of 5% per year.
Exhibit 49. Eagle Ford & Bakken Calculated Cycle Times

Eagle Ford Cycle Times (Days)
200
Bakken Cycle Times (Days)

200
180
180
160
160
140
140
120
120
100
100
80
80
60
60
40
40
20
20
55
Incorporating rig fleet expansion, improved cycle times etc would see US resource play oil growth in the 670,000-832,000 Bbl/d per year range through 2016 (556,000-717,000 Bbl/d per year after deducting nonresource play declines).
As depicted, with these scenarios, we see a very wide range of outputs, which reflects the many moving parts in this type of exercise. In Scenario B, we would see oil production from resource plays increase ~670,000 Bbl/d per year from 2011-2016 (vs. ~600,000 Bbls/d per year from 2011 to 2016 under Scenario A). Scenario C, which adds in gradual cycle time improvements would see resource play growth jump to 758,000 Bbl/d per year from 2011-2016 and Scenario D, which incorporates long-term growth in the US rig fleet could deliver oil growth of 832,000 Bbl/d per year through 2016. From 2016-2020, oil production from resource plays would increase anywhere from 320,000 Bbls/d to 865,000 Bbls/d per year. The main cause for the wide variance in the 2016-2020 forecasts is whether or not one assumes that the U.S. rig fleet continuously expands. If no expansion is assumed, then the current rig fleet is spread over a larger production base and not able to deliver as much growth (although even the lower end numbers are still quite impressive) whereas if the assumption is made that the U.S. rig fleet gradually expands in line with industry production and cash flows (a reasonable assumption), the higher growth rates can be sustained for longer.
Exhibit 50. Oil Resource Play Growth

Oil Production (Bbls/d)
11,000,000 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000
400,000
Oil Production - YoY Chng By Play (Bbls/d)

1,000,000 900,000 800,000 700,000 600,000 500,000
Anadarko Basin Permian Mississippi Lime US Bakken Emerging Liquids Rich Plays Woodford Barnett Fayetteville Haynesville Marcellus PA Eagleford High Case Low Case
Anadarko Basin Permian Mississippi Lime US Bakken Emerging Liquids Rich Plays Woodford Barnett Fayetteville Haynesville Marcellus PA Eagleford
4,000,000 3,000,000 2,000,000 1,000,000 Q1 /08 Q3 /08 Q1 /09 Q3 /09 Q1 /10 Q3 /10 Q1 /11 Q3 /11 Q1 /12 Q3 /1 2 E Q1 /1 3 E Q3 /13 E Q1 /14 E Q3 /1 4 E Q1 /1 5 E Q3 /1 5 E Q1 /1 6 E Q3 /1 6 E Q1 /1 7 E Q3 /17 E Q1 /1 8 E Q3 /18 E Q1 /19 Q3 E /1 9 E Q1 /20 E Q3 /20 E
300,000 200,000 100,000 0 -100,000 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
The following table depicts overall onshore U.S. oil production after taking into account continued declines in other U.S. oil production. As depicted, after deducting declines from other production, we could see U.S. onshore production grow at a rate ranging from 557,000 Bbls/d to ~720,000 Bbls/d per year from 2011-2016 (2.8 MMBbls/d growth to 3.6 MMBbls/d growth). Growth in the 2016-2020 time frame slows in Scenario A, B & C as it largely reflects a static rig fleet on a significantly larger production base (lower ability to grow). In these scenarios, onshore growth would still average 85,000-285,000 Bbls/d per year. Scenario D, which assumes the U.S. rig fleet continues to expand at 5%/year beyond 2015, would be able to sustain growth in the 750,000 Bbls/d per year range.
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Exhibit 51. Oil Growth Scenarios

Oil Production From Resource Plays (Bbl/d) A) Scenario 1 Base Case Results B) A + Ramp Up In New Plays C) B + Efficiency Gains D) C + Rig Fleet Growth Non Resource Play Oil Production Total On Shore Oil Production Scenario A (Same as Scenario 1 Base Case in previous example) Scenario B Scenario C Scenario D
Total Production (bbl/d) 2011 2016 2020 1,937,841 4,939,280 6,007,644 1,937,841 5,303,505 6,578,417 1,937,841 5,729,262 7,322,741 1,937,841 6,103,513 9,571,809 2,239,159 1,658,504 1,200,421
Per Year Growth (bbl/d) '11-'16 '16-'20 '11-'20 600,288 267,091 452,200 673,133 318,728 515,620 758,284 398,370 598,322 833,134 867,074 848,219 (116,131) (114,521) (115,415)
4,177,000 4,177,000 4,177,000 4,177,000
6,597,784 6,962,009 7,387,765 7,762,017
7,208,065 7,778,838 8,523,162 10,772,230
484,157 557,002 642,153 717,003
152,570 204,207 283,849 752,553
336,785 400,204 482,907 732,803
Dry gas growth rates drop to only 0.5-1.4 Bcf/d per year from 20112016 in Scenarios A-C and 2 Bcf/d per year in Scenario D.
As emerging plays have meaningful amounts of associated gas or are liquids-rich in nature, the acceleration in rig count on these plays does impact natural gas growth, albeit not to the same extent as oil. In Scenarios A,B, & C, we see U.S. gas production from resource plays increasing ~1.7-2.5 Bcf/d per year through 2016 with rates slowing to a range of 0.5-1.3 Bcf/d per year from 2016-2020. Scenario D, which assumes expansion of the rig fleet, would see gas production accelerate significantly to 2.3 Bcf/d on average in the 2011-2016 time frame and 4.8 Bcf/d per year from 2016-2020. After layering in declines in nonresource play production and NGL extraction losses, dry gas growth rates drop to only 0.5-1.4 Bcf/d per year from 2011-2016 in Scenarios A-C and 2 Bcf/d per year in Scenario D.
Exhibit 52. Gas Resource Play Growth

Natural Gas Production (MMcf/d)
80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0
Natural Gas Production - YoY Chng By Play (MMcf/d)

10,000
Anadarko Basin Permian Mississippi Lime US Bakken Emerging Liquids Rich Plays Woodford Barnett Fayetteville Haynesville Marcellus PA Eagleford High Case Low Case
7,500
5,000
Anadarko Basin Permian Mississippi Lime US Bakken Emerging Liquids Rich Plays Woodford Barnett Fayetteville Haynesville Marcellus PA Eagleford
2,500
-2,500
Q1 /08 Q3 /08 Q1 /09 Q3 /09 Q1 /10 Q3 /10 Q1 /11 Q3 /11 Q1 /12 Q3 /12 E Q1 /13 E Q3 /13 E Q1 /14 E Q3 /14 E Q1 /15 E Q3 /15 E Q1 /16 E Q3 /16 E Q1 /17 E Q3 /17 E Q1 /18 E Q3 /18 E Q1 /19 E Q3 /19 E Q1 /20 E Q3 /20 E
-5,000 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
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Exhibit 53. Gas Growth Scenarios

Gas Production From Resource Plays (Mmcf/d) A) Scenario 1 Base Case Results B) A + Ramp Up In New Plays C) B + Efficiency Gains D) C + Rig Fleet Growth Non Resource Play Gas Production Total Wet Gas Production Scenario A (Same as Scenario 1 Base Case in previous example) Scenario B Scenario C Scenario D Extraction Losses Total US Dry Gas Production Scenario A (Same as Scenario 1 Base Case in previous example) Scenario B Scenario C Scenario D
2011 31,775 31,775 31,775 31,775 34,429
2016 40,258 42,628 44,662 47,689 29,802
2020 45,759 49,440 53,201 70,361 26,420
'11-'16 1,696 2,171 2,577 3,183 (925)
'16-'20 1,375 1,703 2,135 5,668 (845)
'11-'20 1,554 1,963 2,381 4,287 (890)
66,204 66,204 66,204 66,204 3,203
70,060 72,430 74,464 77,491 4,466
72,179 75,860 79,621 96,781 4,601
771 1,245 1,652 2,257 253
530 858 1,289 4,822 34
664 1,073 1,491 3,397 155
63,002 63,002 63,002 63,002
65,593 67,964 69,998 73,025
67,578 71,259 75,019 92,180
518 992 1,399 2,005
496 824 1,255 4,789
508 917 1,335 3,242
Scenario 3 Introducing Volatility & Pricing Impact With Monte Carlo Simulation
Our Monte Carlo simulation introduces the impact of price volatility and the dynamic reallocation of capital (gas vs. oil drilling) according to price signals.
The main shortfall of most industry growth forecasts (and the aforementioned examples) is that it ignores the impact of volatility and unpredictability/uncertainty and ignores the dynamic reallocation of rigs according to price signals (i.e., producers reallocating rigs to gas plays if gas prices rise sufficiently to make economics competitive with liquids-rich or tight oil). As an example, as recently as three years ago, the consensus view was that natural gas prices will be in the US$8/Mcf long term and that the U.S. would be short natural gas. Clearly that proved wrong. At least once a year for the past five years there has been some major political uncertainty leading to spikes in oil prices. None of these types of things can be captured by typical linear type forecasts. Additionally, most forecasts suffer immensely from adaptive expectations (i.e., where forecasters are overly influenced by todays environment in making long-term projections). To provide a different perspective, we have built a fairly sophisticated simulation tool that introduces a degree of randomness, volatility and then inter-relationship of rig allocation to changes in relative economics.
Methodology & Background

The Monte Carlo method is very suitable to this type of exercise and is the core of our simulation model. (The definition of Monte Carlo simulation is: A problem solving technique used to approximate the probability of certain outcomes by running multiple trial runs, called simulations, using random variables). We use the Monte Carlo method to generate independent prices for oil and natural gas. The importance of introducing volatility is significant as companies allocate capital according to the environment (with some lag typically). For instance, if prices decline significantly and producers cut capex and rig counts followed by a rebound and rise in prices and capex, production will still not make it back to the same level as would be achieved with a linear projection due to the impact of decline rates.
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Once both the oil and natural gas prices are determined for a period, we then apply a historical correlation of oil rigs vs. oil prices and gas rigs vs. gas prices to determine the overall rig count operating in the specific price scenario. Once the rig count has been determined from the Monte Carlo price simulation, the complexity is how to allocate rigs across different plays? For this we use the economic analysis discussed in the company sections to allocate rigs within certain constraints. For instance, in a scenario where the simulation generates an oil price of US$95/Bbl in a given quarter and a natural gas price of US$2/Mcf, the model would rank the plays according to the IRR generated at that price deck and allocate rigs accordingly. In the scenario of high oil and low gas prices, the model would clearly see a heavy allocation of rigs to oil plays and low allocation to gas plays. If we saw a scenario of US$85/Bbl oil and US$5/Mcf gas, our model would begin to move rigs out of more marginal oil plays into gas plays. To better simulate real world conditions, we assume that no play can handle more than 20% of total U.S. rigs (today that would be approximately 300 rigs and for context the Eagle Ford and Bakken seem to be peaking in the 275 and 240 range, respectively). We also assume that rigs are not perfectly mobile and only react to price signals if conditions have persisted for more than one quarter. Key inputs into the Monte Carlo analysis are the long-term direction of oil prices and the volatility around those prices. We have run three different baseline scenarios using flat prices of US$75, US$85 and US$95/Bbl along with gas price of US$3/Mcf, US$4/Mcf and US$5/Mcf. Volatility is also a key variable in the Monte Carlo simulation and for this we have used 35% volatility for natural gas and 28% for crude oil, both based on the implied volatility in the futures curve for both commodities.
Monte Carlo Simulation Results

At US$85/Bbl WTI average through 2016 and US$4/Mcf, we would expect U.S. oil resource play production to increase approximately 540,000 Bbls/d per year through 2016 and gas production from resource plays to increase approximately 2.7 Bcf/d per year.
The results of our 500 iteration Monte Carlo simulation are provided below. As depicted, the growth outcomes of oil vs. natural gas depend on the pricing dynamic between both commodities. Under the CIBC price forecast of ~US$85/Bbl WTI average through 2016 and average gas prices of approximately US$4/Mcf, we would expect U.S. oil resource play production to increase approximately 540,000 Bbls/d per year through 2016 and gas production from resource plays to increase approximately 2.7 Bcf/d per year. Under the futures curve, which currently stands at ~US$90/Bbl and US$4/Mcf through 2016, oil resource play growth would average 560,000 Bbls/d per year and wet gas production ~2.7 Bcf/d per year. After deducting non-resource play declines and processing losses on gas, the overall growth rate would be ~424,000 Bbls/d per year growth in oil production and ~1.5 Bcf/d per year for dry gas through 2016.
Exhibit 54. Monte Carlo Simulation Outputs

Oil (Bbls/d) 2011-2016 $ 75.00 $ 3.00 483,661 4.00 474,812 5.00 456,466 Gas (mmcf/d) 2011-2016 $ 3.00 4.00 5.00 85.00 $ 95.00 548,899 597,370 540,496 586,963 507,979 521,613 2016-2020 $ 75.00 $ 85.00 $ 95.00 3.00 301,780 330,804 322,387 304,411 335,283 328,741 4.00 311,870 303,705 338,819 5.00 2011-2020 $ 75.00 $ 85.00 $ 95.00 3.00 352,765 401,908 425,096 4.00 349,019 399,231 422,138 5.00 342,142 367,131 390,311
$ $ $
$ $ $
$ $ $
$ $ $
75.00 $ 1,287 2,392 3,940
85.00 $ 1,624 2,691 4,181
95.00 1,780 2,818 4,271
$ $ $
2016-2020 $ 3.00 4.00 5.00
75.00 $ 2,110 1,935 2,458
85.00 $ 2,301 2,200 2,481
95.00 2,225 2,215 2,753
$ $ $
2011-2020 $ 3.00 4.00 5.00
75.00 $ 1,174 1,710 2,802
85.00 $ 1,446 1,994 2,946
95.00 1,498 2,071 3,117
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As with the growth scenarios discussed in the previous sections, the Eagle Ford remains a dominant driver for both oil and natural gas growth and the Marcellus for natural gas. The one interesting observation is that the Bakken figures as a less prominent growth driver in this simulation, which uses economic returns to allocate rig activity. The key reason for this is our assumption that WTI remains ~US$5/Bbl discounted vs. PADD 3 plays with Bakken realizing approximately 95% of WTI reflecting transportation challenges. This lower price assumption has a significant impact on relative economics. From a macro forecasting perspective, the overall impact is relatively negligible as it implies that if activity slows in the Bakken due to weaker relative economics, we will see those rigs absorbed by other emerging resource plays in PADD 3 such as the various Permian and Anadarko plays (i.e., if Bakken oil growth forecasts decline, higher growth in other oil plays offsets leaving overall oil projections unchanged).
Exhibit 55. Growth Drivers By Play Through 2016 In Monte Carlo Simulation #1
Contribution to 2012 - 2016 Average Y/Y Gas Growth By Play (mmcf/d) Contribution to 2012 - 2016 Average Y/Y Oil Growth By Play (Bbls/d)
Mississippi Lime 186 US Bakken 61 Emerging Liquids Plays 47 Barnett 77 Fayetteville 9
Eagleford 534 Permian / Anadarko 167,379 Eagleford 158,745
Marcellus PA 1,202 Note: - Average Y/Y Haynesville production declines (32)mmcf/d during the given time period. - Average Y/Y Woodford production declines (97)mmcf/d during the given time period. - Average Y/Y Permian/Anadarko production declines (159)mmcf/d during the given time period.
Mississippi Lime 38,917
US Bakken 63,232
Marcellus PA 323 Barnett 12,136 Woodford 1,768 Emerging Liquids Plays 8,070
Note: - Average Y/Y Haynesville production declines (181)bbls/d during the given time period.
A key benefit of the Monte Carlo approach is to assess probabilities around a range of outcomes. The following charts depict the distribution of growth forecast outcomes from our 500 iteration Monte Carlo approach (based only on the US$85/Bbl and US$4/Mcf scenario. As depicted, high commodity price volatility and the ability to move rigs between plays as economics warrant leads to a wide degree of forecast variability for both oil and natural gas (wider for natural gas primarily reflecting the higher implied volatility in the commodity.
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Exhibit 56. Frequency Distribution Of Monte Carlo Simulation

Q1/12 - Q4/16 GAS
60 50
Q1/12 - Q4/16 OIL

45 40 35 30 25 20 15 10 5 0
30 20 10 0
Frequency Average Aggregate Change YoY (Mmcf/d)
Frequency
40
Monte Carlo Simulation With Efficiency Gains

As we highlighted in the previous section, it still appears that several key U.S. growth plays have plenty of room to improve efficiencies (the time to drill, complete and tie-in a well as calculated from spud date to first production date). The following table highlights the impact on the previous production scenarios but also incorporates approximately 15% improvements in well cycle times across the major resource plays. As we highlighted previously, we believe this is a very achievable target given that we calculate key plays such as the Eagle Ford and Bakken having average cycle times of approximately 60-80 days vs. optimal target ranges in the 40 day range. Overall, adding in 15% efficiency gains adds approximately 94,000 Bbls/d per and 0.6 MMcf/d per year growth to our forecasts. In this scenario, we would see average U.S. oil resource play growth of 644,000 Bbls/d per year from 2011-2016 and natural gas growth of 3.3 Bcf/d from 2011-2016 using CIBC forecast prices and approximately 675,000 Bbls/d per year and 3.4 MMcf/d per year using current strip prices through 2016.
Exhibit 57. Monte Carlo Simulation Outputs With Efficiency Gains

Oil (Bbls/d) 2011-2016 $ 75.00 $ 85.00 $ 95.00 3.00 571,037 644,641 699,181 4.00 561,462 635,861 688,118 5.00 541,121 615,053 666,512 Gas (mmcf/d) 2011-2016 $ 3.00 4.00 5.00 2016-2020 $ 75.00 $ 85.00 $ 95.00 3.00 388,648 424,845 416,317 391,399 429,387 423,908 4.00 399,877 433,269 425,536 5.00 2011-2020 $ 75.00 $ 85.00 $ 95.00 3.00 439,916 496,895 523,404 4.00 435,819 494,035 520,632 5.00 428,287 484,201 509,352
$ $ $
$ $ $
$ $ $
75.00 $ 1,815 2,980 4,615
85.00 $ 2,187 3,314 4,984
95.00 2,368 3,459 5,133
$ $ $
2016-2020 $ 3.00 4.00 5.00
75.00 $ 2,645 2,459 3,029
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86 8 ,1 8,1 50 50 -8 82 26 6,3 ,30 00 0 -7 78 84 4,4 ,4 5 50 0 -7 74 42 2,6 ,6 0 00 0 -7 70 00 0,7 ,75 50 0 -6 65 58 8,9 ,9 0 00 0 -6 61 17 7,0 ,05 50 0 -5 57 75 5,2 ,2 0 00 0 -5 53 33 3,3 ,3 5 50 0 -4 49 91 1,5 ,5 0 00 0 -4 44 49 9,6 ,6 5 50 0 -4 40 07 7,8 ,80 00 0 -3 36 65 5,9 ,9 5 50 0 -3 32 24 4,1 ,10 00 0 -2 28 82 2,2 ,25 50 0 -2 24 40 0,4 ,4 0 00 0 -1 19 98 8,5 ,55 50 0 -1 15 56 6,7 ,7 0 00 0 -1 14 ,85 0 <7 3,0 00 86
> 1 ,20 2,20 0 011 11 ,40 ,40 0 010 10 , ,60 600 09 9,8 ,80 0 00 -9 9,0 ,00 0 00 -8 8,2 ,20 0 00 -7 7,4 ,40 0 00 -6 6,6 ,60 0 00 -5 5,8 ,80 0 00 -5 5,0 ,00 0 00 -4 4,2 ,20 0 00 -3 3,4 ,40 0 00 -2 2,6 ,60 0 00 -1 1,8 ,80 0 00 -1 ,0 1 ,0 0 0 00 -2 00 20 0 (6 - (60 00 0) ) (1 - (1, ,40 40 0 0) -( ) 2 ,2 00 ) < (3 ,00 0)
12
>
Average Aggregate Change YoY (Bbls/d)
$ $ $
85.00 $ 2,866 2,770 3,371
95.00 2,790 2,790 3,352
$ $ $
2011-2020 $ 3.00 4.00 5.00
75.00 $ 1,705 2,269 3,431
85.00 $ 2,010 2,593 3,788
95.00 2,076 2,682 3,863
Key Takeaways
U.S. Onshore Oil Production Can Grow 500,000-700,000 Bbls/d Per Year Through 2016:
We have conducted a number of scenarios ranging from status quo drilling (current rig counts held flat) to a very detailed Monte Carlo simulation. While the results vary considerably by scenario, the general takeaway is that U.S. onshore oil growth is capable of big growth for a long period of time. Our lowest growth scenario (current rig counts with a 20% reduction in IPs) would yield oil resource play growth of 460,000 Bbls/d per year, which after deducting declines on nonresource play production, would yield onshore U.S. growth of 350,000 Bbls/d per year through 2016. Our highest growth scenario, which incorporates moderate rig fleet expansion and cycle time improvements, would yield resource play growth of 830,000 Bbls/d per year through 2016. After deducting non-resource play declines this would leave onshore production growth in the 700,000 Bbls/d per year range through 2016. Our base case view is U.S. resource play production growing in the 650,000 Bbls/d per year range yielding annual growth of approximately 530,000 Bbls/d per year through 2016. We note that these outcomes reflect liquids only from the well head; we expect NGL production from gas plants to also grow ~200,000 Bbls/d per year through 2016. Forecasts beyond 2016 start to involve an even greater level of uncertainty but generally speaking our scenario analysis yields growth ranges from 267,000 Bbls/d per year from 2016 to 2020 (assuming todays rig count simply held flat) to 867,000 Bbls/d if we continue to model gradual improvements in cycle times and rig fleet expansion in line with U.S. production growth rates. By this point, declines in non-resource play production will likely be in the 115,000 Bbls/d per year range (lower decline rates on a smaller base) bringing the 2016-2020 onshore U.S. oil growth rate to 152,000-750,000 Bbls/d per year (and an average of 336,000730,000 Bbls/d per year from 2011-2020). See Exhibit 51 for a full breakdown.
Permian, Eagle Ford & Bakken Remain The Growth Drivers

Much of the growth to date has been due to big growth out of the Permian plays (horizontal and vertical development) as well as the Bakken and more recently the Eagle Ford and we expect this to continue for the foreseeable future although increasingly contributions from other emerging plays (Mississippi Lime and many others) will play a role. With Bakken pricing discounts vs. WTI remaining relatively high, we view Bakken returns as reasonable but meaningfully disadvantaged vs. many of the emerging PADD 3 plays. This ultimately could mean that rigs migrate from the Bakken to PADD 3 plays thereby lowering Bakken growth forecasts potentially quite meaningfully. However, from a macro perspective, any rigs freed up will likely just migrate to other oil plays with reasonably similar deliverability (some potentially better) which would leave overall oil growth forecasts still within our identified ranges.
Gas Is Not Sustainable At Current Rig Counts

Our current rig count scenario clearly depicts how unsustainable the current gas rig count is. At current levels we see U.S. shale production largely holding flat in 2013 (after growing at a rate of 4-6 Bcf/d per year for the past three years). Flat resource play production, combined with an expected decline of approximately 1 Bcf/d in non-shale production, implies a significantly different macro environment for natural gas than we have seen anytime in the past four years. At current rig counts, we see production from gas resource plays growing only 1.7 Bcf/d per year through 2016, a stark contrast to the 4-6 Bcf/d per year growth seen from 2009-2012. Layering in anticipated declines of ~0.8 Bcf/d per
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year from non-resource play production along with anticipated extraction losses for increasing NGL output, leaves U.S. dry gas production relatively flat with current levels. To believe this outcome is sustainable assumes no growth in demand which we do not believe is realistic.
At What Price Do Rigs Move Back To Dry Gas?

On average, we expect natural gas demand growth to average 0.5-1.5 Bcf/d per year through 2016 and 1.5-2.5 Bcf/d per year post 2016 as we incorporate LNG exports. For supply to meet projected demand growth through 2016, we need to see gas prices signals strong enough to attract another ~100 rigs back towards natural dry gas drilling or see another ~150 rigs allocated towards liquids-rich drilling. For either of these scenarios to unfold, substantially higher natural gas prices are required to pull rigs away from tight oil drilling. This conclusion arises from two considerations: 1) most dry natural gas plays do not compete with the big tight oil plays (with oil in a US$85/Bbl range) until gas is in the ~US$5/Mcf range; and 2) most gas-weighted producers need prices in the US$4-US$5/Mcf range to have sufficient cash flow to drill sufficient gas wells.
Gas Growth Split Between Liquid-rich, Associated Gas And Marcellus

There are many factors at play in long-term gas forecasts. If we model on the basis of current rig counts, we see production from the dry gas plays pretty flat as big declines in the Haynesville are offset by continued gains from the Marcellus. The Eagle Ford will continue to deliver big growth in gas volumes both from associated gas in the crude oil window and liquids-rich gas in the transition window. On average, we expect to see gas production from the Eagle Ford grow ~0.8 Bcf/d per year through 2016. Associated gas production from the Bakken and Permian plays will average ~0.4 Bcf/d per year through 2016.
Sensitivity Of Growth Expectations To Price

There is always an inherent and somewhat circular reference in macro growth forecasts as price impacts pace of activity and pace of activity impacts price and there is no escaping this reality. Our forecasts for U.S. and Canadian production growth assume a domestic oil and natural gas price and what amount of rigs can be operated within those pricing constraints. Based on the historical relationship between oil prices and oil rigs and gas prices and gas rigs, at the current forward curve of ~US$90/Bbl and US$3.70/Mcf for 2013, statistically we would expect a rig count of ~1,714 rigs within 10% of the current actual rig count and right in line with average rig counts seen in 2011. A 10% swing in commodity prices in either direction would impact our rig count forecasts by ~11%.
Efficiency Gains Could Still Be Meaningful

With the rapid expansion in drilling on plays like the Eagle Ford, where the rig count has moved from nil to ~270 rigs in the course of three years, our analysis of cycle times still indicates we are a long ways from optimal levels. In the Eagle Ford, we calculate that average cycle times are still generally in the 60-day range, far below the optimal 40-day range. We see similar results out of the Bakken where measured cycle times are in the 80-day range vs. optimal expected ranges of 40 days. We believe the biggest challenge is for emerging drillers to adequately build out supply chains, secure takeaway capacity and move to full pad drilling. However, these issues will be rectified over time and further reductions in cycle times can mean a big impact on growth forecasts. For instance, in our scenario where we modeled improvements in cycle times, our growth forecast for oil production increased ~200,000 Bbls/d per year through the 2016 time frame.
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Industry Cant Support Gas Boom AND Oil Boom At Same Time
What has become abundantly clear through this report is that the U.S. industry has been running at quite close to full utilization over the past 12 months. Within this full utilization, there has been a clear shift from gas to oil. However, what this also implies is that there is no way the industry can either fund or logistically support a boom in natural gas and oil drilling simultaneously when services are running at near full utilization, rigs will be allocated on the basis of returns and strategic value (primarily land retention).
Liquids Lands; 25,000-40,000 Wells Needed To Hold New Oil Lands Leaving Little Flexibility To Move Rigs
A key factor that has exacerbated the natural gas price weakness over the past few years is the need for producers to drill wells to hold shale gas lands. This need prodded companies to drill wells that, in many cases, made no economic sense but had to be done to secure future opportunities. Fortunately, after three years of pain, we believe the land retention driven programs on most of the key dry gas-focused plays such as the Haynesville and Marcellus have largely been met by industry. A common view is that there is no upside in natural gas. This view supposes that as soon as natural gas prices rise, industry will react by locking in higher prices and quickly ramp up drilling, immediately re-exacerbating the supply problem. We have generally agreed with this view in the past, however, there are two new developments that could impact this thesis and make natural gas prices rebound to the US$5-US$6/Mcf range sustainably. These factors are: 1) the need for the new liquids-focused players to drill to meet land commitments on liquids plays; and 2) the fact that even at US$5/Mcf, most dry gas plays do not compete with the many of the newer liquids plays. The need for producers to maintain active levels in liquids plays, regardless of price, should not be underestimated. Producers have moved VERY aggressively over the past 18 months to lock up positions on oil or liquids-rich resource plays, many of which have the same short land tenure that the dry gas plays had. Based on our analysis of just the Bakken, Eagle Ford, Niobrara, Utica and Mississippi Lime, producers have locked up over 17 million acres (26,000 sections) of land. Using an assumption of 1.0-1.5 wells to hold a section of land, implies the need to drill over 26,000-39,000 wells on these plays to meet land commitments (generally within a three- to five-year time frame) an aggressive requirement. Overall, we believe we are on the cusp of a new land retention driven boom, this time focused on new liquids plays. What this means for gas prices is that, even if gas prices rise, producers are more likely to use the incremental cash flows to accelerate drilling on liquids plays (to meet commitments) rather than accelerate on dry gas plays where they already hold the majority of their lands.
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GOM Shelf Declines But Deep Production Should Rebound In 2014-16 Time Frame
Within North America, oil sands and tight oil are the main growth focal points. This is true particularly in the post-Macondo world, which put a multi-year delay in front of any big growth out of the U.S. GOM. However, it is important to not leave out the GOM as it does have important (albeit delayed) growth potential. The following chart depicts Wood Mackenzies outlook for U.S. GOM oil and natural gas production. We have sorted the data to reflect the profile from currently producing assets vs. future planned projects. While the base deep GOM profile moves to meaningful declines, it is important to make note of the large project inventory that lies behind it. Based on these forecasts, the Deep GOM is expected to grow from 980 MBbls/d in 2011 to 1.7 MMBbls/d in 2016 (150,000 Bbls/d per year) and relatively flat thereafter. Predictably, most of the focus in the GOM is towards oil but associated gas production will keep overall Deep GOM natural gas supply relatively flat from 2.3 Bcf/d in 2011 to 2.2 Bcf/d in 2016 but dropping to 1.5 Bcf/d by 2020.
Based on these forecasts, the Deep GOM is expected to grow from 980 MBbls/d in 2011 to 1.7 MMBbls/d in 2016 (150,000 Bbls/d per year). We assume 80,000 Bbl/d per year growth in our modelling.
Exhibit 58. Deep GOM Production Oil & Natural Gas

2,750 2,500 2,250 Oil Production (MBbl/d) 2,000 1,750 1,500 1,250 1,000 750 500 250 0 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Current Production Tiber St Malo Knotty Head Appomattox Lucius Hadrian Buckskin Big Foot Vito Gunflint
2,750 2,500 Natural Gas Production (Mmcf/d) 2,250 2,000 1,750 1,500 1,250 1,000 750 500 250 0 2011 2012E 2013E 2014E 2015E 2016E 2017E
Future Production Current Production
2018E
2019E
2020E
Source: CIBC World Markets Inc. and Wood Mackenzie
As depicted above, the growth in Deep GOM production is split between many projects with the biggest growth drivers through the 2016 time frame being the Hadrian field (operated by Exxon), Vito operated by Shell, Lucius operated by Anadarko (APC-NYSE), Jack/St. Malo operated by Chevron (CVX-NYSE), and Bucksin operated by Chevron. Of these projects, only Lucius and St. Malo is actually under construction today with the remainder likely to see sanction within the next 18 months. As with any unsanctioned growth, there is risk of deferral and, as such, in our GOM forecasts (incorporated into overall U.S. oil balances in a later section of the report), we generally risk growth projects in the 50% range leading to a growth rate more in the 80,000 Bbls/d per year range through 2016. As with any projects, growth depends on price and economics. The half cycle break-evens for Deep GOM average US$65/Bbl very competitive with onshore tight oil and generally better than Canadian oil sands costs. We note that the big exploration costs and very long cycle times for Deep GOM would weigh on full cycle costs more than other projects, however, the main point of this exercise is
65
to determine which projects at FID are most likely to proceed and from this perspective GOM developers (as with tight oil and oil sands developers) will focus primarily on the half cycle costs. Unsurprisingly, activity levels remain low in the shallow GOM. As depicted below, we expect reinvestment in the shallow GOM production to decline from ~266,000 Bbls/d in 2011 to 190,000 Bbls/d in 2016 (annual decline of 15,000 Bbls/d) and 77,000 Bbls/d by 2020 (annual decline of ~21,000 Bbls/d). The shallow GOM is more meaningful from a gas price perspective as it accounts for approximately 4% of total U.S. gas production (vs. shallow GOM that accounts for only 2% of U.S. oil production). Natural gas production in the shallow GOM is steep decline, and is expected to go from 2.6 Bcf/d in 2011 to 2.4 Bcf/d in 2016 and 1.1 Bcf/d in 2020.
Exhibit 59. Shallow GOM Production Oil & Natural Gas

300 250 Oil Production (MBbl/d) 200 150 100 50 0 2011
3,000 Natural Gas Production (Mmcf/d) 2,500 2,000 1,500 1,000 500 0 2011
2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E
2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E
Source: CIBC World Markets Inc. and Wood Mackenzie.
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Canadian Resource Play Growth

Resource Play Development Canadian Style
The U.S. and Canadian approaches to resource development are very different.
The U.S. and Canadian approaches to resource development are very different. With over 100 MMBbls of tight oil and over 2,000 Tcf of natural gas resources in Western Canada, there is no shortage of resource to develop. On the surface then, it is somewhat surprising that there is no Canadian equivalent to the magnitude of dramatic growth seen out of the U.S. plays such as the North Dakota Bakken or the Eagle Ford. To understand why this is the case, one must understand a few key differences between the oil and gas sectors in the U.S. and Canada. Perhaps the biggest difference is the considerably greater capital intensity possible in the U.S. due to the size of its oilfield services sector. In the Eagle Ford alone, 2012 saw the rig count exceed 270 drilling rigs. Such a pace of development in one play is simply impossible in Canada, as our total available deep drilling fleet sits at just 400. Other key differences include the fact that in Canada (at least on the oil side) much of the rights to prospective tight oil acreage was already held by production when horizontal multi-stage fraccing rejuvenated the sector (i.e., operators producing from either the same zone or deeper zones were already holding the rights of emerging resource plays). Most oil prone lands in Canada were largely regarded as mature opportunities, and, as such, were largely sold off by the big producers to royalty trusts in an earlier era (where these assets were a great fit to the trusts given their relatively low declines). What was obviously not known at the time of this asset transition was that assets that were thought to have limited development upside have now been found to have very significant upside indeed. With rights held by production in many cases (and in other cases held on five-year tenure with the government), operators in Canada have been able to afford a more measured pace of development compared to the U.S.
Canadian lands have much more generous tenure, leaving producers with more flexibility as to how and when they develop resources.
Exhibit 60. Production Growth In Canada Coming, But Not Quite As Fast As In The U.S.
1,800,000 1,600,000 1,400,000 1,200,000
Mmcf/d
Canadian Oil Production (On shore, Non-Oil Sands)
20,000 18,000
Canadian Natural Gas Production Historical Forecast
Historical
Forecast
16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 -
Bbl/d
1,000,000 800,000 600,000 400,000 200,000 09 10 11 E E E E E E E E 19 12 13 14 15 16 17 18 20 E 20 20 20 20 20 20 20 20 20 20 20 20
12 E
20 09
20 10
20 11
13 E
14 E
15 E
16 E
17 E
18 E
19 E 20

Source: geoSCOUT and CIBC World Markets Inc.
20
20
20
20
20
67
20
20
20
20 E
Canadian Tight Oil Through Inflection Point

Overall Canadian light oil production was up 35,000 Bbls/d in 2011 vs. 2010 and is was up ~70,000 Bbld on April data.
Although Canadian tight oil and shale gas resource development is proceeding slower than in the U.S., that doesnt mean its not happening. In fact, as depicted in the following chart, Canadian tight oil growth is starting to impact overall production in a meaningful way. Overall Canadian light oil production was up 35,000 Bbls/d in 2011 vs. 2010 as tight oil growth more than offset stagnant production in conventional light oil. Production will no doubt increase again in 2012 as April production is already 70,000 Bbls/d higher than last year and drilling activity remains strong (see Exhibit 61). Exhibit 61. Canadian Oil Production: Resource Play Vs. Non-resource Play
800,000 700,000 600,000 500,000 Bbl/d 400,000 300,000 200,000 100,000 -
Canadian Oil Production (On-shore, Non-Oil Sands)
Q2
Looking Back Saskatchewan Bakken & Cardium Have Shown The Biggest Growth
The Bakken has been supplanted by the Cardium as the fastest growing Canadian play.
As with development in the U.S., the drivers behind the resurgence in Canadian light oil production are easy to identify tight oil plays. As illustrated below in Exhibit 62 (which breaks down growth by play), growth has thus far been relatively widespread (i.e., many contributors as opposed to one dominant driver). The Saskatchewan Bakken stands out as having been the biggest grower in the past. However, we note that growth in the Bakken has plateaued in recent quarters and the Bakken has been supplanted by the Cardium as the fastest growing Canadian play.
Exhibit 62. Canadian Oil Production Growth By Resource Play To 2012

600,000 550,000 500,000 450,000 400,000 Bbls/d 350,000 300,000 250,000 200,000 150,000 100,000 50,000 Bakken Bbls/d Viking Cardium
Canadian Tight Oil Growth by Play (to 2012)

Carbonates Seal
/08 Q3 /08 Q4 /08 Q1 /09 Q2 /09 Q3 /09 Q4 /09 Q1 /10 Q2 /10 Q3 /10 Q4 /10 Q1 /11 Q2 /11 Q3 /11 Q4 /11 Q1 /12 Q2 /12
Non Resource Play Oil Production Resource Play Oil Production
140,000 120,000 100,000 80,000 60,000 40,000 20,000 (20,000) 2009 2010 2011 2012E Cardium Shaunavon Bakken Montney
Canadian Tight Oil Growth by Play (YOY Change to 2012)

Carbonates Seal Viking
Montney 0 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
Montney - Gas Duvernay Glauconite
Montney - Oil Shaunavon Nikanassin
Deep Basin Hz Cardium Pekisko
Horn River Viking Seal
Bakken Amaranth Carbonates
Montney - Oil Duvernay Viking Pekisko
Montney - Gas Bakken Amaranth Seal
Horn River Shaunavon Glauconite Carbonates
Deep Basin Hz Cardium Nikanassin Total Production Chng
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Looking Forward Cardium, Carbonates, And The Duvernay Likely The Biggest Sources Of Growth
Looking into the future as far as 2020, we expect the Cardium will continue to be one of the principal drivers of light oil growth in Canada. In addition, the Tight Carbonates (principally on the Alberta Swan Hills and Slave Point trends of Alberta) and the Duvernay are expected to be principal drivers of liquids growth. Honorable mention also goes to the Viking, which (while its individual wells have lower productivity) we also think will be a material contributor to growth in the Western Canadian Sedimentary Basin. Exhibit 63. Forecast Canadian Oil Production Growth By Resource Play To 2020
1,800,000 1,600,000 1,400,000 1,200,000 Bbls/d 1,000,000 800,000 600,000 400,000 200,000 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E Bakken Montney 2020E
Canadian Tight Oil Growth by Play (to 2020)

Historical Forecast
Carbonates
180,000 160,000 140,000 120,000 Viking Bbls/d Cardium Duvernay 100,000 80,000 60,000 40,000 20,000 (20,000) 2009
Canadian Tight Oil Growth by Play (YOY Change to 2020)
2010
2011
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
Montney - Oil Horn River Viking Pekisko
Montney - Gas Duvernay Amaranth Seal
Deep Basin Hz Shaunavon Glauconite Carbonates
Bakken Cardium Nikanassin Total Production Chng
CAPP Expectations For Canadian Light Oil Growth Likely Conservative

We see total Canadian light oil production growing by 550,000 Bbls/d from 2011 to 2016 (~100,000 Bbls/d per year) well above CAPP forecasts of ~40,000 Bbl/d per year.
As depicted in our aggregate base case scenario below in Exhibit 64, we see total Canadian light oil production growing by 550,000 Bbls/d from 2011 to 2016 (~100,000 Bbls/d per year). In this scenario, total Canadian light oil production would be over 1,200,000 Bbls/d in 2016 and 1,650,000 Bbls/d by 2020. We note that CAPPs forecasts are much more conservative than ours, as CAPP forecasts only 40,000 Bbls/d of light oil growth per year to 2016. Exhibit 64 also provides a status quo development scenario, which assumes no acceleration in the pace of development. Exhibit 64. Onshore Canadian Oil Production Set To Increase Materially
1,800,000 1,600,000 1,400,000 1,200,000 Bbl/d 1,000,000 800,000 600,000 400,000 200,000 -
Historical
Forecast
E 20 19
20 0
20 1
20 1
20 12
20 13
20 14
20 15
20 16
20 17
20 18
Non Resource Play Oil Production CAPP On Shore Production

Resource Play Oil Production Status Quo Production
69
20 20
Canadian Natural Gas A Different Picture

Canadian natural gas resource play has been a very different picture than the U.S. While U.S. production has been booming, total Canadian production has been declining as resource play drilling has not been sufficient to offset other declines. When the flood of U.S. gas supply sent North American natural gas prices plummeting, Canada was more affected due to its transportation differential. Many operators in Canada had less access to capital then their U.S. peers, so while Canadian natural gas resource play development has continued to creep forward, most operators have sought out more economic liquids prospects. Part of the rationale behind slower development is also that Canadian plays have much longer land tenure, which has meant that producers have had the luxury of drilling at a measured pace rather than having to externally finance aggressive gas drilling in a low price environment. So even cross border Canadian players such as Talisman and Encana (with relatively comparable economics on prospects on both sides of the border) strategically decided to focus much more on their U.S. opportunities to hold lands. Exhibit 65. Canadian Gas Production: Resource Play Vs. Non-resource Play
18,000 16,000 14,000 12,000 Mmcf/d 10,000 8,000 6,000 4,000 2,000 -
Canadian Natural Gas Production
Looking Back The Montney & Deep Basin Have Shown Biggest Growth
Most notable have been the Deep Basin and the Montney. In the Montney, growth has been nothing short of dramatic since 2008, with the play growing over 700% to 2.2 Bcf/d.
While total natural gas production in Canada has declined 8% overall since 2008, there have undoubtedly been bright spots from a number of gas resource plays. Most notable have been the Deep Basin and the Montney. In the Deep Basin, HZ multi-stage fraccing has seen the multi-zone play grow production by over 200% to 1.0 Bcf/d since 2008. In the Montney, growth has been nothing short of dramatic since 2008, with the play growing over 700% to 2.2 Bcf/d.
Exhibit 66. Canadian Natural Gas Production Growth By Resource Play To 2012
5,000 4,500 4,000 3,500 Glauc. Horn River Deep Basin Mmcf/d
Canadian Natural Gas Growth by Play (to 2012)
Mmcf/d
3,000 2,500 2,000 1,500 1,000 500 0 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11
Q2 /0 8 Q3 /0 8 Q4 /0 8 Q1 /0 9 Q2 /0 9 Q3 /0 9 Q4 /0 9 Q1 /1 0 Q2 /1 0 Q3 /1 0 Q4 /1 0 Q1 /1 1 Q2 /1 1 Q3 /1 1 Q4 /11 Q1 /12 Q2 /1 2
Non Resource Play Gas Production Resource Play Gas Production
1,600 1,400 1,200 1,000 800 600 400 Montney 200 (200) Q1/12 Q2/12 2009 2010 2011 2012E Montney Horn River Deep Basin
Canadian Natural Gas Growth by Play (YOY Change to 2012)
Montney - Oil Duvernay Cardium Pekisko
Montney - Gas Bakken Viking Seal
Deep Basin Hz Shaunavon Amaranth Carbonates
Horn River Glauconite Nikanassin Total Production Chng
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Looking Forward Duvernay And Horn River Also Potential Growth Drivers
As shown in Exhibit 67 below, we expect the Montney and the Deep Basin will continue to be the principal drivers of resource play natural gas growth in Canada. Beyond 2015, however, we note that we expect both the Duvernay and the Horn River will begin to be much bigger contributors to Canadian supply. Exhibit 67. Forecast Canadian Natural Gas Production Growth By Resource Play To 2020
18,000 16,000 14,000 12,000 Mmcf/d 10,000 8,000 6,000 4,000 2,000 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Montney
Canadian Natural Gas Growth by Play (to 2020)

Historical Forecast
Duvernay Mmcf/d Horn River Deep Basin
2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 (200) 2009 2010
Canadian Natural Gas Growth by Play (YOY Change to 2020)
2011
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
Montney - Oil Duvernay Glauconite
Montney - Gas Shaunavon Nikanassin
Montney - Oil Duvernay Viking Pekisko
Montney - Gas Bakken Amaranth Seal
Deep Basin Hz Shaunavon Glauconite Carbonates
Horn River Cardium Nikanassin Total Production Chng
Low Natural Gas Prices Weigh On Near Term, But Growth On The Horizon
We see Canadian natural gas production growing by 1.4 Bcf/d from 2011 to 2016 (~240 MMcf/d per year) but primarily driven by LNG development.
As depicted in our aggregate base case scenario below in Exhibit 68, we see total Canadian natural gas production growing by 1.4 Bcf/d from 2011 to 2016 (~240 MMcf/d per year). In this scenario, total Canadian natural gas production would be 16 Bcf/d in 2016 and 19 Bcf/d by 2020. We note that Exhibit 68 also provides a status quo development scenario, which assumes no acceleration in the pace of development. We note that the majority of natural gas growth is growth being developed for LNG export projects. Exhibit 68. Canadian Gas Production Flat In Near Term, But Growing Long Term
20,000 18,000 16,000 14,000 12,000 Mmcf/d 10,000 8,000 6,000 4,000 2,000 -
Canadian Natural Gas Production Historical Forecast
E 20 19
20 0
20 1
20 1
20 12
20 13
20 14
20 16
20 15
20 17
20 18
Non Resource Play Gas Production Status Quo Production

71
20 20
Canada Vs. The U.S.

U.S. Production Growth Clearly Outstripping Canada
As shown in Exhibit 69, U.S. production growth has clearly been outstripping Canada in both light oil and natural gas. On the oil side, U.S. production has grown 38% to 4,800,000 Bbls/d since 2008, while in Canada production gas grown just 7% to 740,000 Bbls/d. On the natural gas side, U.S. production has grown 22% to 70 Bcf/d since 2008, while in Canada production gas actually declined 8% to 14.5 Bcf/d. Exhibit 69. Canadian Production Growth Lags U.S.
5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 Bbl/d 2,500,000 2,000,000 1,500,000 1,000,000 500,000 Q1 /08 Q2 /08 Q3 /08 Q4 /08 Q1 /09 Q2 /09 Q3 /09 Q4 /09 Q1 /10 Q2 /10 Q3 /10 Q4 /10 Q1 /11 Q2 /11 Q3 /11 Q4 /11 Q1 /12
U.S. Oil Production (On-Shore)
800,000 700,000 600,000 500,000 Bbl/d 400,000 300,000 200,000 100,000 -

80,000 70,000 60,000 50,000 Mmcf/d 40,000 30,000 20,000 10,000 -
U.S. Natural Gas Production
18,000 16,000 14,000 12,000 Mmcf/d 10,000 8,000 6,000 4,000 2,000 -
Why Has Growth Been Slower In Canada? Not Economics

Why has production growth been slower in Canada? To address this question first in the negative, we believe the reason is certainly not economics. As shown below in Exhibit 70, when we stack up Canadian and U.S. plays by profitability (using P/I index as a measure), Canadian and U.S. plays are very comparable. (We note that the P/I index is calculated by dividing a plays mid-cycle NPV per well by drilling costs, and 0.2x is considered a reasonable P/I hurdle rate). Exhibit 70. Economics Of Canadian Plays Comparable To U.S.
Midcycle PROFITABILITY
A-Tax Profit/Investment Ratio (P/I) (US$90/Bbl, US$3.50/Mcf, C$3.00/Mcf)
Seal Multi-Lateral (Cold) Montney Oil (Kaybob) Seal (Cold) Amaranth Bakken Pekisko Shaunavon Cardium Oil Viking Montney Oil (Base) Duvernay Shale Seal (Thermal) Cardium Gas Glauconite Tight Carbonates Oil (Swan Hills) Montney Gas (Liquids Rich) Tight Carbonates Oil (Slave Point) Tight Carbonates Gas Bluesky Wilrich Deep Basin VT Ellerslie Deep Basin HZ Nikanassin VT Notikewin Cadomin Montney Gas (Dry) Horn River Nikanassin HZ Colorado Shale
-0.5x 0.0x 0.5x 1.0x 1.5x
Eagle Ford (Crude) Marcellus (Wet Gas) Bakken (US) Mississippi Lime Eagle Ford (Wet Gas) Permian Hz Anadarko Hz Woodford Marcellus Barnett Fayetteville
Oil Plays Gas Plays

2.0x 2.5x 3.0x
Haynesville Eagle Ford (Dry Gas)

-0.5x 0.0x 0.5x 1.0x 1.5x
72
8 Q3 /08 Q4 /08 Q1 /09 Q2 /09 Q3 /09 Q4 /09 Q1 /10 Q2 /10 Q3 /10 Q4 /10 Q1 /11 Q2 /11 Q3 /11 Q4 /11 Q1 /12 Q2 /12
Non Resource Play Gas Production Resource Play Gas Production
Q2 /0
Non Resource Play Oil Production Resource Play Oil Production
Canadian Natural Gas Production
Midcycle PROFITABILITY
A-Tax Profit/Investment Ratio (P/I) (US$90/Bbl, US3.50/Mcf, C$3.00/Mcf)
Eagle Ford
Oil Plays Gas Plays

2.0x 2.5x 3.0x
Not Magnitude Of Attractive Prospects Either

If not profitability, are the number and size of tight oil and tight gas prospects in Canada just too small? Again, we argue that the answer is no. As illustrated in Exhibit 71, Canada is in fact opportunity rich when it comes to resource plays. If anything, we believe the Canada oil & gas sector doesnt have enough capital to pursue the opportunities currently in front of it. Exhibit 71. Size Of The Resource Play Prize In Canada Large And Growing
Oil Resource Plays

25 20 Barrels of Oil (Bln) 15 10 5 <1% 0 Duvernay Tight Carbonates Bakken (Alberta) Seal Cardium <1% <1%
Gas Resource Plays

600 500 Original GIP (Tcf) 400 300 200 100 0
Nikannassin Horn River Duvernay CBM Mnvl Notikewin Cordova Montney Colorado Shale Cardium Gas Deep Basin Utica Shale CBM HSC Doig 500
25.0 20.0 20.0
(Resource In Place)
Total Resource In Place (Bln barrels) Recovered-to-Date
15.0 15.0 7.5
28% 4% Viking 1% Bakken (SE Sask.)
(Resource In Place)
Optimistic Resource Estimate (Tcf) Conservative Resource Estimate (Tcf)
300 250 250 250 239
15.0
10.0
10.0
218
6.0
200
5.0
164 69 65 25 15
4.3
7% Lower Shaunavon
4.0
5% Pekisko
16%
2.5
2% Amaranth
2.5
2% Montney Oil
5
Glauconite
In Fact, We Would Argue That Canada Has An Ironic Advantage In Resource Play Quality
Rather then being disadvantaged on profitability and the number and size of quality resource play prospects, we believe Canada (on the contrary) is ironically advantaged on the liquids side by the fact that our conventional oil pools have had lower recoveries in the past. As such, we expect that there is a greater amount of low hanging fruit in Canada in the form of legacy redevelopments. Ironically, what once could be thought of as bad conventional pools, are now some of the very best prospects for development with horizontal multi-stage fraccing today. With tongue in cheek we like to say, Bad rock is good, and Canada has a lot of bad rock and that is Canadas ironic advantage in the resource play game. Below are 4 key points that we believe characterize the opportunity for brownfield redevelopment of our liquids plays in Canada:
1. Bad rock is good the ironic Canadian advantage: Compared to the
U.S., Canadian conventional reservoirs are generally tighter in nature, and ideally suited to multi-stage fraccing for the same reasons that the technology has worked so well in unconventional tight oil plays such as the Bakken play in southeast Saskatchewan.
2. Tight oil does not equal oil shale: In contrast to many of the shale oil
plays in the U.S. (such as the Niobrara or the Tuscloosa plays), most Canadian tight oil plays are tight sands rather than shales (and therefore have better reservoir characteristics).
3. Low geological risk: Resource is there, question is economics. Since
legacy pools have already been delineated with vertical wells and older technology, we already know where to find the resources, and geological uncertainty is minimal.
4. Expansion of legacy pool boundaries possible: Since the limits of many
pools were defined by economics in the past, we believe that many of Canadas legacy pools can now be expanded with more efficient technology, and resource in place estimates in many legacy pools are likely to increase.
73
Canadian Disadvantages More Related Services & Infrastructure Capacity, As Well As Access To Capital
We have summarized the key disadvantages that we believe have contributed to slower growth in Canada vs. the U.S. below:
1. Oilfield services capacity: Perhaps the biggest difference between
Canada and the U.S. is the far greater capital intensity possible in the U.S. due to the size of its oilfield services sector. In the Eagle Ford alone, 2012 saw the rig count exceed 270 drilling rigs. Such a pace of development in one play is simply impossible in Canada, as our total deep drilling fleet sits at just ~400.
2. Infrastructure constraints: In some cases, such as the Horn River shale
gas play in northeast B.C., while the resource is widely considered to be of high quality, infrastructure does not yet exist to economically bring production to market.
3. Access to capital: For many Canadian operators, capital is less accessible
than it is for American peers

4. Land tenure: While we dont believe land tenure issues are really a
Canadian disadvantage, they do explain why development has been slower in Canada. At least on the oil side of the equation, much of the rights to prospective tight oil acreage was already held by production when horizontal multi-stage fraccing rejuvenated the sector (i.e., operators producing from either the same zone or deeper zones were already holding the rights of emerging resource plays). With rights held by production in many cases (and in other cases held on five-year tenure with the government), operators in Canada have been able to afford a more measured pace of development compared to the U.S.
5. Seasonality: There is significant seasonality in Canadian drilling, with
many parts of the WCSB only accessible in the winter months and even those areas that do have summer drilling, they are still prone to long breakup periods that curtail activity. In contrast, most U.S. plays have very little seasonality allowing for much more efficient resource development by keeping crews fully employed year-around and allowing producers to keep ahead of decline curves. At root, we believe Canada has a large, attractive inventory of resource play opportunities; however, unlike the U.S. the rights to much of these resources were already held by legacy production and we have a smaller oil & gas sector and less access to capital with which to pursue these opportunities.
Production Growth In Canada Coming, But At A More Measured Pace

Weighing Canadas ironic advantages against its practical disadvantages, we believe growth in Canada will undoubtedly come, but at a more measured pace than in the U.S. We expect labor and services capacity will continue to be periodic bottlenecks, with the most notable required infrastructure builds including LNG export capacity on the west coast as well as the Northern Gateway oil pipeline. As has already begun, we expect foreign capital will continue to flow into Canada to help fill the funding deficit faced in the development of what we consider to be an attractive set of resource play opportunities.
74
Allocating Capital Where Does The Canadian Resource Play Dollar Go?
As discussed in the U.S. section, industry has demonstrated an ability to shift capital quickly in response to price signals. The rapid pace with which capital can be reallocated from play to play makes it very important to understand the relative economics of various plays to get an understanding of where producers will favor oil plays vs. liquids-rich gas plays vs. dry gas plays. Exhibit 72 below is a useful tool in understanding economic sensitivities and where producers will allocate capital for the main Canadian resource plays. We note that the size of the potential prize and repeatability are equally as important considerations as profitability when allocating capital. As depicted, the gap between oil plays and dry gas plays remains very wide. For plays such as the Horn River (which is far from infrastructure and has dry gas with high CO2 content), we would need to see natural gas prices of AECO $6.00/Mcf (roughly equivalent to US$5.50/Mcf NYMEX) to close the gap of returns. However, we note that Horn River is unique in that its development could still be secured depending primarily on the success of West Coast Canada LNG as key Horn River players such as Apache (APA-NYSE), EOG and Encana are partnered in the proposed 1.4 Bcf/d Kitimat LNG project, which would be fed from the Horn River. Exhibit 72. Potential Size Of The Prize Just As Important As Economics In Deciding The Allocation Of Capital
Oil Resource Plays

25 20 Barrels of Oil (Bln) 15 10 5 <1% 0 Duvernay Tight Carbonates Bakken (Alberta) Seal Cardium <1% <1%
Gas Resource Plays

600 500 Original GIP (Tcf) 400 300 200 100 0
Cardium Gas Nikannassin Horn River Duvernay CBM Mnvl Montney Deep Basin Utica Shale Cordova Colorado Shale CBM HSC Notikewin
3.0x
25.0 20.0 20.0
(Resource In Place)
15.0 15.0 7.5
28% 4% Viking 1% Bakken (SE Sask.)
(Resource In Place)
500

300 250 250 250 239
15.0
10.0
10.0
218
6.0
200
5.0
164 69 65 25 15
4.3
7% Lower Shaunavon
4.0
5% Pekisko
16%
2.5
2% Amaranth
2.5
2% Montney Oil
5
Glauconite
3.5x
A-Tax Profit/Investment Ratio2 (P/I) (LOW: US$65/Bbl, C$2.00/Mcf)

Seal Multi-Lateral (Cold) Seal (Cold) Montney Oil (Kaybob) Amaranth Bakken Pekisko Cardium Oil Shaunavon Montney Oil (Base) Viking Seal (Thermal) Duvernay Shale Tight Carbonates Oil (Swan Hills) Cardium Gas Glauconite Tight Carbonates Oil (Slave Point) Tight Carbonates Gas Montney Gas (Liquids Rich) Bluesky Deep Basin VT Wilrich Ellerslie Deep Basin HZ Nikanassin VT Notikewin Cadomin Montney Gas (Dry) Horn River Nikanassin HZ Colorado Shale
-1.0x -0.5x 0.0x
Midcycle1 PROFITABILITY
A-Tax Profit/Investment Ratio (P/I) (MID: US$90/Bbl, C$3.00/Mcf)
Seal Multi-Lateral (Cold) Montney Oil (Kaybob) Seal (Cold) Amaranth Bakken Pekisko Shaunavon Cardium Oil Viking Montney Oil (Base) Duvernay Shale Seal (Thermal) Cardium Gas Glauconite Tight Carbonates Oil (Swan Hills) Montney Gas (Liquids Rich) Tight Carbonates Oil (Slave Point) Tight Carbonates Gas Bluesky Wilrich Deep Basin VT Ellerslie Deep Basin HZ Nikanassin VT Notikewin Cadomin Montney Gas (Dry) Horn River Nikanassin HZ Colorado Shale
1.5x
-0.5x 0.0x 0.5x 1.0x 1.5x
A-Tax Profit/Investment Ratio2 (P/I) (HIGH GAS: US$100/Bbl, C$4.00/Mcf)

Seal Multi-Lateral Montney Oil (Kaybob) Seal (Cold) Amaranth Bakken Pekisko Shaunavon Viking Cardium Oil Glauconite Cardium Gas Montney Oil (Base) Duvernay Shale Seal (Thermal) Montney Gas Wilrich Tight Carbonates Oil Bluesky Tight Carbonates Oil Deep Basin HZ Deep Basin VT Ellerslie Tight Carbonates Nikanassin VT Notikewin Horn River Cadomin Montney Gas (Dry) Nikanassin HZ Colorado Shale
Oil Plays Gas Plays

0.5x 1.0x
Oil Plays Gas Plays

2.0x 2.5x 3.0x
Doig
Oil Plays Gas Plays

0.0x 0.5x 1.0x 1.5x 2.0x 2.5x
75
New Plays Could Lead To Eagle Ford-esque NGL Boom

The big wildcard for Western Canadian NGLs is the promise of the Duvernay shale which has been compared in some cases to the prolific Eagle Ford shale in Texas (recall the Eagle Ford has grown from 11 to 427 MBoe/d in only three years). While it is still early days for the Duvernay, initial results appear promising and appear to be indicating quite a high liquids yield. (See page 219 in the Appendix of this report for details on the Duvernay.) While there is no shortage of uncertainties in the Duvernay, we believe producers lust for liquids (in todays depressed natural gas environment) and the large potential resource prize will drive development in the play. With most available acreage in the Kaybob and Willesden/Pembina areas now held, we believe the industry is on the verge of a ramp-up in drilling activity. Our work suggests that industry has spud close to 50 Duvernay wells to date and we have 16 public data points for liquids levels, indicating a median liquids yield of ~125 Bbls/MMcf.
We estimate the size of the prize in the Duvernay could be over 150 Tcf of gas and 10 billion Bbls of liquids with a 20%50% recovery rate.
We estimate the size of the prize in the Duvernay could be over 150 Tcf of gas and 10 billion Bbls of liquids with a 20%50% recovery rate. Key risks in the Duvernay include, in our view, stabilization rates for new wells, breadth of productive liquids-rich window, prospectivity of the oil window, potential services constraints, and identity of land owners. While it would be nearly impossible for the Duvernay to be developed the same pace as the Eagle Ford where activity ramped up to over 250 rigs in three years, we do believe Duvernay development could proceed more aggressively than in many Canadian resource plays as this is one liquids play where big players (such as Encana, Talisman) are all major owners and which have big incentive to build out their liquids exposure. In addition to the Duvernay, we also have our eyes on the Northern Alberta Muskwa, which has many similar properties to the Duvernay. Recent land sale activity around Rainbow Lake in northern Alberta has shown growing interest in the Muskwa shale (the Duvernays northern equivalent). In November 2009, EOG brought a Muskwa well on production near Rainbow Lake. The Muskwa well was drilled for close to $12MM and was brought on production in November 2009 and has been producing at between 50 Bbls/d and 200 Bbls/d. Since then, land sale activity has begun to pick up in the area. While we consider the northern Rainbow Lake area to be at an earlier stage of development and in an area with limited infrastructure, we would highlight Rainbow Lake as an area to watch for future Muskwa/Duvernay development.
With these assumptions we see the Duvernay ramping to ~300 MMcfe/d in 2013, 750 MMcfe/d in 2014 and over 1 Bcfe/d in 2015 (all approximately half liquids) although we note the margin of error on these forecasts is quite high.
We have included quite aggressive growth forecasts for the Duvernay, reflecting our view that results have been encouraging enough to support accelerated development in 2013. We model Duvernay drilling (wells coming on stream) going from ~34 in 2012 to 100 in 2013 and 200 in 2014. Our Duvernay type curve is 7.5 MMcfe/d IP rates, with approximately 50% being crude and well head condensate with additional liquids being extracted downstream. With these assumptions, we see the Duvernay ramping to ~300 MMcfe/d in 2013, 750 MMcfe/d in 2014 and over 1 Bcfe/d in 2015 (all approximately half liquids).
Six Key Plays In Canada To Watch

In our opinion, the three key liquids plays to watch in Canada over the next five to 10 years will be the Cardium, the Tight Carbonates, and the Duvernay. The three key natural gas plays we would watch over the next five to 10 years include the Montney, the Horn River, and the Deep Basin. The next few pages summarize a few key considerations for each key play.
76
Key Canadian Liquids Play #1: The Cardium

With a known resource in place of over 10 billion barrels, which we believe has the potential to double in size, the Cardium represents the first Canadian legacy pool to see active redevelopment. While we estimate that the economics of the Cardium are not as attractive as other tight oil plays such as the Bakken or Montney oil at Kaybob, we believe the large size of the prize and the derisking of the play from legacy drilling will lead the Cardium to be one of the most actively developed tight oil plays in Canada in the coming years.
Exhibit 73. The Cardium

Cardium Oil - Area Map (Circa August, 2012) Cardium Oil - Resource Potential
25 25.0
20.0 20.0 20 15.0 15.0
Barrels of Oil (Bln)
15 15.0 10
10.0 10.0 7.5 6.0 5.0
5
<1% <1% 16% <1%
4.3
4.0 2.5 2.5

2%
28% 4% 1% 7% 5%
2%
0
Bakken (SE Sask.) Lower Shaunavon Amaranth Bakken (Alberta) Cardium Tight Carbonates Seal Duvernay Pekisko Viking
Source: GeoScout; CIBC World Markets Inc.
Cardium Oil - Area Production Growth

450 400 350
Cardium
Pre 2008 2012 2008 2013 2009 2014 2010 2015 2011 Liquids
Montney Oil
450 400 350 300
Liquids Production (MBoe/d)
Total Production (MBoe/d)
300
Actual
250 200 150 100 50 -
Forecast
250 200 150 100 50 0
Note: Map updated as of August 2012. Source: GeoScout; Company reports; Geological Atlas of Western Canada; The Edge; Canadian Discovery Digest; CIBC World Markets Inc.
Cardium Oil - Distribution By Peak I.P. Rates

1200 1100 1000 900 Peak I.P. Rate (Boe/d)
Cardium Oil - Land Position by Operator

500 450 400 350 300 250 200 150 100 50 0
1039
Distribution by Peak I.P. Rate HORIZONTAL Cardium Oil Wells

400 350 300 250 200 150 100 50 0 0
Cardium Land Holders
Distribution Curve
2009 (46 Wells) 2010 (405 Wells) 2011 (737 Wells) 2012 (156 Wells) Median Mean (Average) Top/Bottom Quartile
700 600 500 400 300 200 100 0
Count
800
(Boe/d)
1000
1050
1100
1150
1200
1250
1300
100
150
200
250
300
350
400
450
500
550
600
650
700
750
800
850
900
950
50
Well Count
Source: GeoScout and CIBC World Markets Inc.
Notes 1) 1 section = 640 acres; 2) Denotes private company. Land positions are approximations based on company disclosure and public data, and do not adjust for prospectivity. Source: Company reports; GeoScout; CIBC World Markets Inc.
77
Penn West Bonavista PetroBakken Pengrowth Angle ConocoPhillips NAL Vermilion ARC Whitecap Vero Bonterra Bellatrix Fairborne Sinopec NuVista Anderson Talisman Exxon/Imperial Compton Paramount Suncor TriOil TAQA North Spartan Crocotta Apache Devon Enerplus Perpetual KNOC(2) Crew Husky BP Delphi Equal
300 265 219 209 204 195 149 132 124 120 118 110 102 100 91 81 80 75 71 67 60 57 52 51 50 49 48 47 40 38 27 25 20 17 13
150
300
450
600
Net Sections (1)
2008 & Earlier (3 Wells)
Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15
Key Canadian Liquids Play #2: The Tight Carbonates

Like the Cardium, the Tight Carbonates (namely the Slave Point and Swan Hills trends) are partially derisked legacy developments with a large potential resource prize. In this case, we believe our estimate of 7.5 billion barrels in place has the potential to double. While the Carbonate play is somewhat less derisked than the tight sands reservoir of the Cardium and the completion techniques are slightly different (i.e., the carbonate reservoirs are typically fracced with acid instead of sand), we believe economies of scale and upside to completion techniques will contribute to the carbonates being a key driver of Canadian growth.
Exhibit 74. The Tight Carbonates: Slave Point And Swan Hills Trends
Tight Carbonates - Area Map (Circa August, 2012) Tight Carbonates - Resource Potential
25 25.0
20.0 20.0 20 15.0 15.0
15 15.0 10
10.0 10.0 7.5 6.0 5.0
5
<1% 16% <1% <1%
4.3
4.0
28% 4% 1% 7% 5%
2.5
2%
2.5
2%
0 Cardium Seal Bakken (SE Sask.) Lower Shaunavon Viking Pekisko Tight Carbonates Amaranth Duvernay Bakken (Alberta)
Tight Carbonates - Area Production Growth

175 Pre 2008 150 2012 2008 2013
Carbonates
2009 2014 2010 2015 2011 Liquids
125
Actual
Forecast
Montney Oil
175 150 125
100
100
75
75
50
50
25
25
Note: Map updated as of Aug. 2012. Source: GeoScout; Company reports; Geological Atlas of Western Canada; The Edge; Canadian Discovery Digest; Sherwin; CIBC World Markets Inc.
Tight Carbonates - Distribution By Peak I.P. Rates

Distribution by Peak 30-Day I.P. Rate
HORIZONTAL Tight Carbonates Wells
2,000 1,800
140 120 100 80 60 40 20 0 0
Tight Carbonates - Land Position by Operator

600 500
Net Sections (1)
545
Tight Carbonate Land Holders
Distribution Curve
Peak I.P. R ate (B oe/d)
C ount
1,600 1,400 1,200 1,000 800 600 400 200 0
200
400
600
800
2008 & Earlier (8 Wells) 2009 (12 Wells) 2010 (81 Wells) 2011 (241 Wells) 2012 (64 Wells) Median Mean (Average) Top/Bottom Quartile
400 300 200 100 0

Baytex Pengrowth Apache (3) Devon (3) KNOC/Harvest (2)(3) Lone Pine (2) Pinecrest (3) Second Wave Penn West Forest Oil Wild Stream Dolomite (2) Baytex Arcan Pace Pace ARC Coral Hill (2) Wild Stream
266 208 150 108 100 100 100 72 64 64 63 45
(Boe/d)
23
14
30
29
23
15
10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250 260 270 280 290 300 310 320 330 340 350 360 370 380 390 400
Well Count
1) 1 section = 640 acres; 2) Denotes private company; 3) Denotes CIBC/Geoscout Estimate. Note: Land positions include acreage accessible via farm-in agreements. Source: Company reports; GeoScout; CIBC World Markets Inc.
78
Key Canadian Liquids Play #3: The Duvernay

Different than the Cardium and the Tight Carbonates, the Duvernay is not a legacy redevelopment, and as such majors such as Encana and Talisman have been able to consolidate large land positions. While there is no shortage of uncertainties in the Duvernay, we believe the majors lust for liquids and the large potential resource prize will drive development in the play. We estimate the size of the prize in the Duvernay could be over 150 Tcf of gas and 10 billion Bbls of liquids with a 20%50% recovery rate. Our work suggests that industry has spud close to 50 Duvernay wells to date, and we have 16 public data points for liquids levels, indicating a median liquids yield of ~125 Bbls/MMcf.
Exhibit 75. The Duvernay

Duvernay - Area Map (Circa August, 2012) Duvernay - Liquids and Gas Resource Potential
25 Barrels of Oil (Bln) 20 15 10 5 0 Seal Cardium Bakken (SE Sask.) Lower Shaunavon Bakken (Alberta) Viking Duvernay Tight Carbonates 15.0 10.0 25.0 20.0 20.0 15.0 10.0 15.0 7.5
28% Total Resource In Place (Bln barrels) Recovered-to-Date
Yoho 14-16 Yoho 13-22 (~105Bbl/Mmcf) (109Bbl/Mmcf) Athabasca 07-18 (390Bbl/d oil & 1.5Mmcf/d gas) Shell 09-34 (+100Bbl/Mmcf) Celtic 13-36 (~80Bbl/Mmcf) Celtic 05-20 (~45Bbl/Mmcf) Trilogy 03-13 (80Bbl/Mmcf) Talisman 01-18 (~0Bbl/Mmcf)
6.0
4%
5.0
1%
4.3
7%
4.0
5%
<1%
<1%
<1%
16%
2.5
2%
2.5
2%
Amaranth 25 Nikannassin
Pekisko
Encana 11-08 (300Bbl/Mmcf) Encana 16-05 (200Bbl/Mmcf) Celtic 15-33 (75Bbl/Mmcf)
600 Original GIP (Tcf) 500 400 300 200 100 0
500 300
Optimistic Resource Estimate (Tcf)

Conservative Resource Estimate (Tcf)
250 250 250 239 218 200
164 69 65 Cardium Gas 15 Notikewin

0
18 12
CBM Mnvl
Horn River
CBM HSC
Montney
Duvernay
Deep Basin
Colorado Shale
Cordova
Doig
Utica Shale
Total Production (Mmcfe/d)
The million dollar question for the Duvernay is the extent of the prospective liquids window. Recent data points from Encana and Athabasca (in the oil window to the north) have added confidence to the liquids story of the play.
Duvernay - Area Production Growth

(+20-30Bbl/Mmcf)
Conoco 11-16
2,400 2,100 1,800 1,500 1,200 900 600 300 Pre 2008 2012 2008 2013
Duvernay
2009 2014 2010 2015 2011 Liquids
400 350
BXE 8-24 little liquids
Encana 13-17 (190Bbl/Mmcf) Bonavista 16-33 (75Bbl/Mmcf) Encana 13-05 (120Bbl/Mmcf)
300
Actual
Forecast
250 200 150 100 50
Note: Map updated as of June 2012. Source: GeoScout; Company reports; Geological Atlas of Western Canada; The Edge; Canadian Discovery Digest; CIBC World Markets Inc.
Duvernay - Company Activity

Company Ticker EnCana ECA Celtic CLT Trilogy TET Athabasca ATH Shell RDS.A-NYSE Husky HSE Yoho YO Talisman TLM Chevron CVX-NYSE Westfire WFE ConocoPhillips COP-NYSE Blaze PRIVATE Charger CHX Alta Enrg Prtnr PRIVATE Angle NGL Antelope PRIVATE Bellatrix BXE Bonavista BNP Mke MKE-ASX Taqa North TAQA-ADX Arriva PRIVATE Total (gross) Confidential TOTAL Producing Drilled/Spud TOTAL Locations Drilled or Wells Wells Drilled (Licensed) Licensed 6 13 2 4 7 6 5 11 1 12 3 4 7 1 8 1 4 5 3 8 1 3 4 3 7 5 5 1 6 5 5 1 6 4 6 1 3 2 1 1 2 3 1 1 2 3 1 1 2 2 1 1 1 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 51 78 12 39 27
Duvernay Play - Land Position by Operator

1000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Net Sections (1)
1,000 900 800 700 600 500 400 300 200 100 0
Duvernay Land Holders

625 623 563 400 313 225 195 172 156 156 145 141 125 123 113 86
86
79
79
73
70
59
58
43
43
31
23
Conoco Phillips
Bonavista
Talisman
Enerplus
Chevron
Bellatrix
Connacher
Longview
Athabasca
Birchcliff
Petrobakken
TAQA North
Penn West
Notes 1) 1 section = 640 acres; 2) Denotes private company. Land positions are approximations based on company disclosure and public data, and do not adjust for prospectivity. (3) Due to licensing data we believe Shell has acquired 42.6 sections from PetroBakken; however, we believe Shell likely has much more land. Source: Company reports; GeoScout; CIBC World Markets Inc.
79
Cequence
Westfire
Shell (3)
Delphi
Chinook
Trilogy
Sinopec
Encana
Husky
Celtic
Guide
Angle
Sonde
CNRL
Terra
Crew
Yoho
Vero
Glauconite
Montney Oil 5

?
Key Canadian Natural Gas Play #1: The Montney

As the first unconventional natural gas play in Canada to see active development with horizontal multi-stage fraccing, production from the Montney has already grown dramatically from close to 0.5 Bcf/d in 2006 to over 2.0 Bcf/d today. We estimate a resource in place in the Montney between 125 Tcf and 250 Tcf and believe the play will be the largest contributor to dry gas growth in Canada in the mid-term.
Exhibit 76. The Montney

Montney - Area Map (Circa August, 2012) Montney - Resource Potential
600 500 500
Original GIP (Tcf)
400 300 300 250 250 250 239 218
200 164
200
100
69
65 25 15 Notikewin
0
5 Glauconite
1,200 1,080 960
0 Colorado Shale Utica Shale Duvernay Montney CBM HSC Cardium Gas Deep Basin Cordova Doig Nikannassin Horn River CBM Mnvl
Montney - Area Production Growth

7,200 6,480 5,760
Montney Gas
Pre 2008 2012 2008 2013 2009 2014 2010 2015 2011 Liquids
5,040 4,320 3,600 2,880 2,160 1,440 720 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15
840
Actual Forecast
720 600 480 360 240 120
Montney - Distribution By Peak I.P. Rates

HORIZONTAL Montney Wells
15,000
300 270 240 210 180 150 120 90 60 30 0 0 2
Montney - Land Position by Operator

1,400 1281 1,200 1,000 Net Sections (1) 800 600 400 200 0 Paramount NuVista Advantage Tourmaline Painted Pony Cequence ConocoPhillips Bonavista Talisman Birchcliff EnCana ARC Sinopec Progress CNRL Guide Celtic Murphy Terra Crew Shell RMP 303 266 264 201 195 195 190 180 152 144 133 1083 1011 841 694 688
Montney Land Holders
Distribution Curve
12,000
Peak I.P. Rate (Mcfe/d)
9,000
10
12
14
(Mcfe/d/d)
6,000
16
Count
80 78 70 67 55
3,000
100
150
200
250
300
350
400
450
500
550
600
650
700
750
800
850
900
950
1000
1050
1100
1150
1200
1250
1300
1350
1400
Well Count
1450
50
80
Key Canadian Natural Gas Play #2: The Horn River

While the Horn River is generally regarded as one of the highest-quality shales in North America, the remoteness of the play and the dry gas nature of its production means that it will likely that the Horn River will have to wait until the post 2017 time frame to be a major contributor to Canadian supply. We note that Horn River is unique in that its development will likely be contingent on success of the development of West Coast Canada LNG as key Horn River players such as Apache, EOG and Encana are partnered in the proposed 1.4 Bcf/d Kitimat LNG project, which would be fed from the Horn River.
Exhibit 77. The Horn River

Horn River & Cordova Embayment - Area Map (Circa August 2012) Horn River/Cordova - Resource Potential
600 500 500
Original GIP (Tcf)
400 300 300 250 250 250 239 218
200 164
200
100
69
65 25 15 Notikewin 5 Glauconite
250 225 200 175
0 CBM HSC Cardium Gas Montney Duvernay Deep Basin Cordova Doig Utica Shale Colorado Shale Nikannassin Horn River CBM Mnvl
Horn River - Area Production Growth

1,500
Horn River
Pre 2008 2012 2008 2013 2009 2014 2010 2015 2011 Liquids
1,350
1,200
1,050
900
Actual
Forecast
150
750
125
600
100
450
75
300
50
150
25
Horn River - Distribution By Peak I.P. Rates 30,000 27,000 Peak I.P. Rate (Mcfe/d) 24,000 21,000 18,000 15,000 12,000 9,000 6,000 3,000 0 5 10 15 20 25 30 35 40 45 50 55 Well Count
25 20 15 10 5 0 0.0 1.5 Count
Horn River - Land Position By Operator

600 500 Net Sections (1) 400 300 200 100 0 Exxon/Imperial Quicksilver ConocoPhillips Suncor Storm Resources Pengrowth EnCana Devon CNRL Nexen Petrobakken Apache Penn West Crew EOG 531 450 313 266 245 203 156 148 139 141 138 116 113 84 15
Distribution by Peak I.P. Rate

HORIZONTAL Horn River Gas Wells
2008 & Earlier (17 Wells) Distribution Curve 2009 (13 Wells) 2010 (11 Wells) 2011 (21 Wells)
3.0 4.5 6.0 7.5 9.0 10.5
Horn River Land Holders
Median Mean (Average) Top/Bottom Quartile Bottom Quartile
(Mcfe/d/d)
60
81
Key Canadian Natural Gas Play #3: The Deep Basin

The multi-zone nature of the Deep Basin means that it is truly a number of plays (largely ranging from Cadomin to the Cardium) rather than one single play. The Deep Basin has seen active development in the past, but is now being developed much more economically with HZ multi-stage fraccing. In addition to its multizone potential, the Deep Basin is marked by the liquids-rich nature of many of its horizons.
Exhibit 78. The Deep Basin

Deep Basin - Area Map (Circa August, 2012)
7,800 7,200 6,600 Pre 2008 2012
Deep Basin Hz + Vt
2008 2013 2009 2014 2010 2015 2011 Liquids
1,300 1,200 1,100 1,000
6,000 5,400 4,800 4,200 3,600 3,000 2,400 1,800 1,200 600 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15
Actual
Forecast
900 800 700 600 500 400 300 200 100 0
Note: Map updated as of May 2012. Source: GeoScout, Sherwin Geoedges, Canadian Discovery Digest, The Edge, Geological Atlas of Western Canada, Core Laboratories, Company reports, CIBC World Markets
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Where To From Here Canadian Resource Play Growth

In summary, Canadian growth in both light oil and natural gas production is certainly on the horizon, even if it arrives at a slower pace than it does in the U.S. As summarized in Exhibit 79 below, we see Canadian light oil production growing by an average of ~10% per year from 2011 to 2016 (~100,000 Bbls/d per year, compared to CAPPs estimate of just 40,000 Bbls/d per year) and 8% per year from 2016 to 2020. On the natural gas side, we see Canadian gas production growing ~2% per year from 2011 to 2016 (~300 MMcf/d per year) and 4% per year from 2016 to 2020. In this scenario, total Canadian light oil production would be 1,650,000 Bbls/d by 2020 and natural gas would be 19 Bcf/d by 2020. Exhibit 79. Canadian Growth On The Horizon, Although At A Slower Pace Than In The U.S. 20,000 1,800,000 Canadian Natural Gas Production Canadian Oil Production (On-shore, Non-Oil Sands)
1,600,000 1,400,000 1,200,000
Historical
Forecast
18,000 16,000 14,000 12,000 Mmcf/d 10,000 8,000 6,000 4,000 2,000 -
Historica
Forecast
Bbl/d
1,000,000 800,000 600,000 400,000 200,000 -
09
10
11
20 16
20 15
20 17
20 12
20 18
E 20 19
20 13
20 14
20 20
20 12 E
20 13 E
20 15 E
20 16 E
20 17 E
20 14 E
20 18 E
20 19 E
Non Resource Play Oil Production CAPP On Shore Production

Resource Play Oil Production Status Quo Production
Non Resource Play Gas Production Status Quo Production
Key Takeaways For Canadian Resource Plays

Weighing Canadas ironic advantages against its practical disadvantages, we believe growth in Canada will come, but at a more measured pace than in the U.S. We expect labor and services capacity in Canada will continue to be periodic bottle necks, with the most notable required infrastructure build including the LNG export capacity on the west coast as well as the Northern Gateway oil pipeline. As has already begun, we expect foreign capital will continue to flow into Canada to help fill the funding deficit faced in the development of and attractive set of resource play opportunities. Canadian resource play economics are competitive with U.S. plays, as is the depth of development opportunities. Key Canadian liquids plays to drive growth include Cardium, Tight Carbonates, and the Duvernay. Key Canadian natural gas plays to drive growth include the Montney, Deep Basin, and the Horn River. Canadian light oil growth has already arrived and will continue to see capital in the near-term. We believe CAPP growth forecasts to be conservative. Canadian dry gas plays pretty far down the value chain.but LNG will still yield meaningful development.
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20 20 E
20 09
20 10
20 11
20
20
20
84
Exhibit 80. Forecasts For Individual Canadian Plays To 2015 LIQUIDS PLAYS
85
Exhibit 81. Forecasts For Individual Canadian Plays To 2015 NATURAL GAS PLAYS
Oil Sands Vast Resource But Can It Compete?

Only two years ago, the oil sands were regarded as the last major oil resource play. Technology has clearly reacted quickly to create significant competition for the oil sands, to the point where it is beginning to impact the growth outlook for this vast resource. In this section, we examine the outlook for oil sands growth in the context of competition from the many emerging domestic tight oil resource plays.
Growth Plans Vs. Pipeline Constraints

The key part of any oil sands growth projection is pipeline capacity vs. planned projects. Historically pipeline capacity has not been a major concern but in the past 12 months the environment has changed radically. The first fundamental change was the denial of the Keystone XL pipeline. While we still believe the pipeline ultimately gets approved, it clearly brings to the forefront the risk of anticipated pipeline capacity not being built. The second fundamental shift has been the explosion in output from the tight oil resource plays that is starting to choke off market access for oil sands. The combination of the U.S. Bakken growing at a rate of ~110,000 Bbls/d per year for the past two years (and likely to be 200,000+ Bbls/d in 2012) and Canadian tight oil growing (100,000 Bbls/d) has the PADD 2 refining market, which was the main anticipated near-medium term outlet for Canadian Crude, bursting at the seams. As depicted in the previous example, the sensitivity to incremental price discounting (a reflection of full PADD 2 markets) has a meaningful impact on economics/break-evens. The following charts depict oil sands growth scenarios for SAGD, mining and then for all oil sands rolled together. We present the following scenarios; 1) corporate unrisked this is the sum of each companys stated oil sands growth plans/project sequencing; 2) CAPP 2012 oil sands growth outlook; and 3) CIBC risked case in which we handicap projects from Scenario 1 based on our assessment of a companys regulatory status and ability to finance and execute. We have also layered on the overall regulatory status for these oil sands projects.
Exhibit 82. Mining Oil Sands Growth

2,000,000 1,800,000 1,600,000 Mining Production (bbls/d) 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Producing
Construction
Approved
Submitted
Disclosed
CAPP Mining (2012)
CIBC Estimates
Source: CAPP, company reports and CIBC World Markets Inc.
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Exhibit 83. SAGD Oil Sands Growth

3,500,000 3,000,000 SAGD Production (bbls/d) 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 2010
2011 Producing
2012E Construction
2013E
2014E Approved
2015E Submitted
2016E Disclosed
2017E
2018E
2019E CIBC Estimates
2020E
CAPP In-Situ Forecast (2012)
On an unrisked basis, oil sands would grow from 1.6 MMBbls/d in 2011 to 3.0 MMBbls/d by 2016 and to 5.0 MMBbls/d by 2020.
As depicted above, there is no shortage of oil sands growth projects competing for development. On an unrisked basis (i.e., if corporations collectively followed through with current plans), oil sands would grow from 1.6 MMBbls/d in 2011 to 3.0 MMBbls/d by 2016 (280,000 Bbls/d per year growth) and to 5.0 MMBbls/d by 2020 (380,000 Bbls/d per year growth). On the other end of the spectrum, CAPP foresees oil sands reaching a more conservative 2.5 MMBbls/d by 2016 (180,000 Bbls/d per year growth) and 3.2 MMBbls/d by 2020 (180,000 Bbls/d per year growth). When plotted against planned pipeline capacity, it becomes abundantly clear that not all company planned oil sands projects can proceed. Even if Keystone XL, TransMountain, Northern Gateway and the tentative TransCanada (TRP-SP) West Coast Line were all built, there would still not be enough pipeline capacity to handle planned growth through 2020! Layering in the very real risk that at least one of these pipelines (likely two) may not be built in this time frame implies the need for 1.5 MMBbls/d of projection rationalization/cannibalization from current company forecasts. Another way of looking at oil sands growth is maximum possible growth given pipeline capacity. If Keystone XL is built and Alberta Clipper is expanded, western Canadian oil production can grow ~1.2 MMBbls/d from current levels. This sounds like a lot but when one considers our forecast of Western Canadian light oil growth of ~100,000 Bbls/d per year and oil sands producers are aiming to grow by over 260,000 Bbls/d per year through 2016 (or ~340,000 Bbls/d including diluent), the capacity goes away quite quickly. From there, the main pipelines are West Coast options (Northern Gateway and TransMountain) both of which carry very high political risk and a very early-stage proposal from TransCanada to send crude east. IF these pipelines are not built, oil sands producers would have to rationalize their 2020 growth targets downward by 2.5 MMBbls/d.
When plotted against planned pipeline capacity, it becomes abundantly clear that not all company planned oil sands projects can proceed.
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Exhibit 84. Western Canadian Oil Growth Vs. Pipeline Capacity
9,000 8,000 7,000 6,000

Oil Exports (Mbbl/d)
5,000 4,000 3,000 2,000 1,000 0 2011 2012E 2013E 2014E CAPP Current Capacity Enbridge Northern Gateway Enbridged Mainline Expansion 2 2015E 2016E 2017E Company Forecasts TranscCanada Keystone XL TransCanada Eastern Canada 2018E 2019E 2020E CIBC Estimates Kinder Morgan TMX Enbridge Mainline Expansion 1
Labor Pains
The third major question mark for oil sands development is labor availability. The oil sands is a massively labor intensive project type. A typical 100,000 Bbls/d non-upgraded mine requires peak labor of approximately 5,000 workers. A typical upgraded mine can require anywhere from 5,000-10,000 peak labor force depending on pace of construction (historically peak was 10,000 but more companies are planning to stretch construction to have better work force control). SAGD is less labor intensive but, even still, a typical 35,000 Bbls/d SAGD project still requires a peak labor force of approximately 700 workers over a two- to three-year construction period (smaller projects at shorter end of scale) and with so many projects in the queue, the labor needs are still massive. There are no longer any good public sources for anticipated labor needs for the oil sands over the very long term. The Construction Owners Association of Alberta (COAA) publishes estimates that seem reasonably credible for the short term but lack needs for the planned projects post 2014. Given this limitation, we have constructed our own oil sands labor model incorporating COAA data historically along with calculated labor needs for future growth projects. While the margin of error is admittedly quite high, it still provides a useful idea of the real labor requirements that come along with current oil sands growth plans.
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To meet industry growth forecasts to the 2016/17 time frame, the available labor force in the oil sands would need to expand approximately 80% from 2012 levels
The following chart depicts the anticipated construction labor needs through 2020 to complete current operator growth forecasts (i.e., the unrisked sum of all individual company plans). The key takeaway is that to meet industry growth forecasts to the 2016/17 time frame, the available labor force in the oil sands would need to expand approximately 80% from 2012 levels. Clearly, at face value, these forecasts entail a massive external labor need and we note this does not include the potential for the North West upgrader (potentially another 5,000 people) or competing labor demands for LNG construction on the BC Coast or potential for GTL (admittedly a far less likely venture).
Exhibit 85. Oil Sands Construction Labor Needs
70,000 60,000 Construction Craft Personnel 50,000 40,000 30,000 20,000 10,000 0 2009 Additional Labour Needs (CIBCe) COAA Forecasts .
2010
2011
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
Source: COAA, company reports and CIBC World Markets Inc.
Prices/Costs & Pipelines Will Rationalize DevelopmentIt Is Only A Matter Of How Far
As discussed previously, there are a massive amount of projects on the planning board that cannot simply be taken at face value given the major development constraints such as pipeline capacity and labor. This implies a need for major projection rationalization/cannibalization that will be accomplished through some combination of accelerating inflation, lower prices or more stringent/discerning external capital. To first gauge what the price impact is on oil sands development, we must understand the approximate break-evens. Exhibit 86 depicts the break-even oil price at todays cost for a variety of in situ and mining oil sands projects. Recognizing that break-even costs are not a static figure, we also depict expected break-evens in five years assuming 5% per year cost inflation. As depicted, there is wide range of outcomes. At todays costs, high-quality SAGD (i.e., similar to Cenovus Foster Creek and Christina Lake) break even at ~US$40/Bbl while more marginal projects (i.e., SOR in the 3.5 range with lower productivity wells) require an oil price in the US$70/Bbl range. Non-upgraded mining projects (Kearl) require an oil price in the US$70/Bbl range to break even while upgraded mining projects require an oil price in the US$85/Bbl range.
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We also note that these break-evens are hyper sensitive to realized price discounts. For non-upgraded projects, the sensitivity relates to the light-heavy oil differentials. The aforementioned break-evens were assuming 20% WCS discount to WTI. If we increase the WCS discount to 25%, the break-evens increase to US$49/Bbl for a high-quality lease to as high as US$82/Bbl for lower-quality leases. For upgraded projects, the sensitivity relates to the SCOWTI discount. Historically, this has been zero but in the past six months we have seen it average ~7% reflecting the changing light oil balances in PADD 2. If we assume a 5% SCO discount to WTI long term, the break-even price increases to US$88/Bbl.
Exhibit 86. Oil Sands Break Even

$/Bbl Break Even Cost Low Cost SAGD Avg Cost SAGD High Cost SAGD Non-Upgraded Mining Upgraded Mining
15% WCS & 0% SCO Discount Today 5-Years $43.47 $56.02 $72.13 $66.96 $83.30 $47.95 $61.99 $79.60 $76.67 $95.58
If oil prices fell to US$70/Bbl, there would be over 1 MMBbls/d of planned production that would not justify proceeding.
In an efficient market, price or costs will rationalize the supply/demand balance and oil sands is no exception. As recently as the 2005-2008 cycle, we saw inflating costs substantially rationalize the pace of planned oil sands development and we will see that again. We need to see that again. The following chart depicts our aggregated oil sands growth forecasts (the unrisked sum of corporate forecasts), grouped by our assessment of supply costs. As depicted, to achieve all company growth targets would require long-term oil in the $100/Bbl range. As oil price assumptions drop, meaningful amounts of planned oil sands growth would be curtailed. For instance, if oil prices fell to US$70/Bbl, there would be over 1 MMBbls/d of planned production that would not justify proceeding.
Exhibit 87. Oil Sands In Situ Growth By Approximate Supply Cost

3,500,000 3,000,000 2,500,000 Production (bbls/d) 2,000,000 1,500,000 1,000,000 500,000 0 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Producing and Under Construction

$0 - $50 Supply Costs
90
Exhibit 88. Oil Sands Mining Growth By Approximate Supply Cost

2,000,000 1,800,000 1,600,000 Production (bbls/d) 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 2012E 2013E 2014E 2015E $0 - $50 Supply Costs 2016E $50 - $60 Supply Costs 2017E 2018E $60 - $70 Supply Costs 2019E $70 - $100 Supply Costs 2020E
Producing and Under Construction
Oil Sands Higher Cost Projects The First To Fall In A Competitive North American Market
In a market that is oversaturated with oil, there will no doubt be rationalization and the first projects to get squeezed will be those with higher supply costs and a riskier capital profile. Unfortunately, higher cost oil sands projects seem like the first to get rationalized.
The North American market is clearly saturated with oil resource development opportunities ranging from tight oil to deep Gulf development to oil sands. In a market that is oversaturated, there will no doubt be rationalization and the first projects to get squeezed will be those with higher supply costs and a riskier capital profile. Unfortunately, higher cost oil sands projects seem like the first to get rationalized. The oil sands fall short in terms of capital profile risk as operators have to make significant investments for three to five years before production is realized far different than a tight oil operator that can manage capital well by well and realizes cash flow very quickly. This means that oil sands operators, when approving a project, are making bigger and riskier decisions. Smaller projects cost half a billion dollars while bigger investment decisions will be approaching $10 billion in stark contrast to tight oil where capital can essentially be managed well by well. The different scale of investment decision means that operators must have a higher degree of confidence in the macro environment or a bigger economic cushion to feel comfortable making that spending commitment. From a supply cost perspective, oil sands cover a very wide spectrum and it is grossly misleading to group all the projects in one basket. Lower cost/higher quality oil sands projects can compete in terms of rate of return vs. tight oil development and will no doubt remain in the race to develop resource. Higher supply cost oil sands assets such as many mining projects and higher cost in situ assets will face a much more challenging time justifying investment as planned and will likely be the first projects to be rationalized.
91
Exhibit 89. Oil Sands Supply Costs vs. Tight Oil Supply Costs
$100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0
Vi kin g Oi l( Sw an Hi lls ) SA Ca GD rd iu -L m Ti ow gh Oi tC l Co ar st bo Pr na od te uc sO er il ( Sl av eP oi nt ) Am ar an th n isk o yO il ( Ka yb ob ) Pr od uc er Mi ni ng Sh au na Oi l( Ba s ro du c Ba kk e Mi ni n Pe k Se al er g vo n e)
US$/Bbl
Up gr ad ed
tP
Co st
Mo nt ne y
Co s
SA GD
SA GD
Source: Company reports and CIBC World Markets Inc.(SAGD & Mining based on 20% WCS Diff & 5% SCO Diff both Vs WTI)
Oil Sands Are Down But Not Out Technology Optionality Is Still Large
There is an unprecedented amount of R&D dollars flowing into oil sands looking at technologies.
Although much of our top-down macro view of the oil sands is quite bearish, there is one very real theme that needs to be highlighted the potential role of technology. We have just seen (and discussed) how completion technology has had a profound impact on opening up shale and tight resources. The oil sands share similarities to shales in that they are another big, discovered resource but where R&D efforts are still in the very early innings. There is an unprecedented amount of R&D dollars flowing into oil sands looking at technologies ranging from evolutionary (solvent assisted SAGD, in-fill drilling, non-condensable gas, etc.) to revolutionary (combustion technologies, pure solvent techniques, electrical conductive technologies, technologies to eliminate diluent, etc.). Importantly, we are just starting to see the impact of technology. Cenovus has had very good, quantifiable results with its in-fill wells and will soon be the first to roll out SAP on a commercial scale. MEG recently surprised the market with its emSAGP approach, which uses non-condensable gas injection with in-fill wells to dramatically lower the SOR and free up more steam to add low-cost production. The overall point is that current supply costs do not reflect the potential of technology to change the oil sands landscape. This is a dynamic theme that we will continue to monitor, which could have an impact on the competitiveness of oil sands vs. tight oil resources.
Technology could be instrumental in reducing oil sands supply costs to more competitive levels with tight oil.
Conclusions/Takeaways On Oil Sands Growth

Overall, the oil sands has almost unlimited resource potential but the real question once again boils down to how much can (or should) get built in an environment that has substantial competition, particularly for labor and pipeline access. There is no possible way the sum of company forecasts can be achieved. The sum of company forecasts implies oil sands growth of 380,000 Bbls/d per year through 2020. In such a scenario, even if every pipeline currently being planned was built (Keystone XL, Alberta Clipper expansion, TMX Expansion,
92
Ti
gh tC ar
bo na te s
Mo nt ne
-H ig h
-A vg
Gateway and TransCanadas gas pipeline conversion), there would still not be enough capacity to meet company targets! The obvious conclusion is that growth will need to be rationalized the only question is by how much? No company voluntarily gives up the quest for growthBut Some Will Have To. This leaves the onus on market forces to rationalize that growth. The main market drivers will either be hyper inflation, regulatory delays and/or lower pricing either due to lower global benchmark pricing or localized discounting due to insufficient pipeline capacity. The most likely outcome is some combination of all these factors but our biggest concern at the moment is pipeline access. Pipelines will likely be the biggest factor to dictate the pace of oil sands growth. We continue to believe that Keystone XL (the full line) will get built but one cant deny there is still a level of risk to that. The Enbridge Alberta Clipper and Line 9 reversals are also clear go-aheads in our view. Access to the West Coast, either through the proposed TMX expansion or Northern Gateway, is looking riskier by the day as provincial governments squabble over revenue sharing and broad based political support in B.C. appears very low. If neither of these lines go ahead, oil sands growth targets for 2020 (company forecasts) would have to be rationalized by approximately 1.7 MMBbls/d from current levels. TransCanadas idea (not yet formally proposed) of converting one of its natural gas pipelines to oil is gaining a lot of traction. This is loosely estimated to be capable of ~650,000 Bbls/d and could carry oil to Eastern Canada and could be put on ship in Quebec or in the Maritimes for export. This pipeline though is generally better for light oils as the Eastern Canada market or the Eastern U.S. or European market has little heavy oil coking capacity. In any case, moving more light oil east would effectively ease access for heavies into PADD 2 and 3, which would be still beneficial to oil sands. If this pipeline, as well as the West Coast pipelines, did not proceed, we would need to see oil sands growth rationalized 2.4 MMBbls/d from current planned activity levels. More Challenging Macro Environment For Oil Sands Likely To Continue To Impact M&A Parameters: Oil sands were once a hot focus for M&A activity. Back in the 2005-2008 time frame, typical deals for long-date oil sands resource were about US$1/Bbl. With higher prices in recent years, we have seen deal parameters steadily decrease particularly in recent months. The rationale behind this divergence is increasing awareness from prospective buyers of the pipeline takeaway uncertainty and cost inflation risk. Additionally, many of these same buyers have many opportunities to invest in tight oil resources, which have created more competition for M&A/JV dollars for the oil sands. This trend will likely continue although we note there are many factors that will impact transaction parameters in the oil sands such as scale of the resource for sale (smaller resources typically get less interest and lower value), quality and state of regulatory approval. Overall, we believe there is still room for oil sands M&A but likely continuing the recent trend of sub US$1/Bbl parameters.
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Impact Of North American Tight Oil Renaissance On Global Supply Demand Balances
High North American Growth Likely To Loosen Medium-term Oil Balances
As unconventional natural gas supply boomed, it took many years for investors to fully come to grips with the likelihood that North American natural gas would be severely pressured for the foreseeable future. The question now is: will the boom in North American tight and oil sands upset the global supply/demand balance the same way we saw North American gas prices react to the supply boom? There are certain parallels between the tight oil boom and the gas boom but there are many differences as well. The key difference is the size of the market. U.S. demand at the start of the shale boom was approximately 63 Bcf/d or, in oil terms, approximately 10.5 million Boe/d versus the current global oil market of 89.1 MMBbls/d of demand. This clearly implies a much larger market to absorb the impacts of booming North American supply versus what occurred in the North American gas market. However, while the global oil market is much larger than the U.S. gas market, that does not mean that the U.S. boom will not alter the global supply/demand equation. Rapidly growing North American oil production will have an impact the question is how big? As depicted in Exhibit 90, we believe tight oil growth can drive U.S. onshore production growth of ~500,000 Bbls/d per year through 2016, oil sands should grow ~230,000 Bbls/d per year while conventional Canadian production (driven by tight oil) should easily grow 100,000 Bbls/d per year and GOM production growth should be up ~40,000 Bbls/d per year on average. All told, it is not hard to get to a North American growth assumption in the 800,000-900,000 Bbls/d per year range through 2016.
We believe North American oil production can grow 800,000900,000 Bbls/d per year through 2016 well above current consensus of ~340,000 Bbls/d.
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Exhibit 90. North American Oil Growth Scenarios

Oil Ramp Up - (Bbl/d) On-Shore US Oil Low Case (Scenario A from Ex 51) Base Case High Case (Scenario D from Ex 51) US GOM Low Case Base Case High Case Oil Sands Low Case Base Case High Case Canadian Conv/Tight Oil Low Case Base Case High Case Total North American Oil Low Case Base Case High Case
2011
Total Production 2016
2020
'11-'16
Per Year Growth '16-'20
'11-'20
4,177,000 4,177,000 4,177,000
6,597,784 7,179,901 7,762,017
7,208,065 8,990,148 10,772,230
484,157 600,580 717,003
152,570 452,562 752,553
336,785 534,794 732,803
1,438,167 1,438,167 1,438,167
1,588,648 1,672,261 1,755,874
1,481,263 1,559,224 1,637,185
30,096 46,819 63,541
(26,846) (28,259) (29,672)
4,788 13,451 22,113
1,604,838 1,604,838 1,604,838
2,625,716 2,767,709 2,909,703
2,844,266 3,856,862 4,869,457
204,176 232,574 260,973
54,638 272,288 489,939
137,714 250,225 362,735
1,111,922 1,111,922 1,111,922
1,357,936 1,603,949 1,972,970
1,558,359 2,004,795 2,674,450
49,203 98,405 172,210
50,106 100,211 175,370
49,604 99,208 173,614
8,331,927 8,331,927 8,331,927
12,170,084 13,223,820 14,400,563
13,091,952 16,411,028 19,953,323
767,631 978,379 1,213,727
230,467 796,802 1,388,190
528,892 897,678 1,291,266
Exhibit 91 depicts the consensus view of medium-term call on OPEC. As depicted, the official consensus view is that North American oil production growth will average 343,000 Bbls/d per year through 2015 (note that not all the same forecasters are encapsulated in both estimates as disclosures and forecast horizons vary considerably). As mentioned above, we believe it is not hard to see a scenario where North American growth is more in the 800,000-900,000 Bbls/d per year range well above current consensus expectations. Even our low-case scenario of ~650,000 Bbls/d per year is well above current consensus forecasts. Exhibit 91. Consensus North American Production & Call On OPEC
Consensus Supply View (mbbl/d)
Canada US Total Canada + US Mexico Total North America Other Non-OPEC Growth Total Non-OPEC
2011
3,639 8,478 11,389 2,953 15,096 38,380 52,985
2015
4,261 9,442 12,851 2,576 16,490 39,122 55,208
Annual Growth
144 227 343 (88) 334 185 536
Consensus Demand View (mbbl/d)

Canada US Total Canada + US Mexico Total North America Other Demand China Demand Total World Oil Demand Consensus Call On OPEC Call On OPEC With CIBCe Low North American Growth Call On OPEC With CIBCe Base Case North American Growth Call On OPEC With CIBCe High North American Growth
2011
2,220 19,203 21,423 2,204 23,542 55,815 9,626 88,983 35,998 35,998 35,998 35,998
2015
2,203 19,027 21,230 2,274 23,526 58,500 11,753 93,779 38,572 37,312 36,392 35,596
Annual Growth
(5) (30) (35) 15 (0) 637 511 1,148 612 328 98 (101)
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Using our assumptions for North American supply growth would reduce the consensus call on OPEC through 2015/16 from 600,000 Bbls/d to 0-300,000 Bbls/d a very significant change.
Medium-term Spare Capacity Expands Should Take SOME Of The Political Premium Out Of Oil
If we extend the analysis to the implied call on OPEC (i.e., leaving all other parts of consensus unchanged but updating to reflect our range of North American deliverability), it becomes quite apparent that North American growth can have an impact on medium-term markets. Using our assumptions for North American supply growth would reduce the consensus call on OPEC through 2015/16 from 600,000 Bbls/d to 0-300,000 Bbls/d a very significant change. In our view, this change implies that as global forecasters move to more realistic North American supply growth assumptions that the consensus view of tightness in the market will also change with a slightly bearish undertone. These weaker medium-term balances are the key reason we recently trimmed our long-term Brent assumption from US$100/Bbl to US$95/Bbl. Political risk is always one of the most important variables in the global oil price equation. Obviously there is no way of predicting long-term political risk; however, we can reasonably estimate the OPEC spare capacity cushion and how that will change over the coming years. As discussed previously, we believe as major forecasters incorporate more realistic North American production growth over the next five years, the view of market tightness will change as the call on OPEC is reduced to 0-300,000 Bbls/d per year. In addition to this, OPEC will more than likely continue to reinvest in production capacity. As depicted in the chart below, if OPEC builds production capacity, as stated, combined with the lower call on OPEC, the spare capacity cushion builds quite meaningfully reaching ~8 MMBbls/d by 2015, which would be one of the widest levels in many years. This is not to say that the political premium, which is variable but ever-present in oil prices, will evaporate. After all, OPEC will still make up ~40% of global oil production through 2015 (i.e., OPEC remains extremely important) and, while unpredictable, odds are high that political turbulence in the Middle East is not going to disappear anytime soon.
If OPEC builds production capacity, as stated, combined with the lower call on OPEC, the spare capacity cushion builds quite meaningfully reaching ~8 MMBbls/d by 2015, which would be one of the widest levels in many years.
Higher NA growth will take pressure off OPEC but will by no means reduce OPEC to irrelevancy as it will still produce ~40% of global oil production through 2015
Exhibit 92. OPEC Spare Capacity Sensitivity To North American Growth Scenarios
Consensus OPEC Spare Capacity (mbbl/d) Consensus OPEC Production Capacity Consensus Spare Capacity Spare Capacity - % Of Global Demand Spare Capacity With CIBCe Low North American Growth Spare Capacity - % Of Global Demand Spare Capacity With CIBCe Base Case North American Growth Spare Capacity - % Of Global Demand Spare Capacity With CIBCe High North American Growth Spare Capacity - % Of Global Demand
2011 40,229 4,231 4.8% 4,231 4.8% 4,231 4.8% 4,231 4.8%
2015 45,446 6,875 7.3% 8,135 8.7% 9,055 9.7% 9,851 10.5%
Annual Growth 1,304 661 976 1,206 1,405
U.S. Reliance On Imports Lessens Considerably (But Pure Oil Independence Is Still A Long Ways Off)
We see U.S. required imports dropping from ~11 MMBbls/d in 2011 (and nearly 13 MMBbls/d in 2008) down to ~7.6 MMBbls/d by 2016 and 4-6 MMBbls/d by 2020
The recent boom in tight oil and liquids-rich resource play drilling has raised the possibility of the U.S. achieving oil independence or, at the very least, significantly reducing the need for imported oil. We generally agree with this thesis but not that the U.S. achieving pure energy independence is still a long ways off. Our base case view, which assumes relatively flat demand (in line with the EIA long-term energy outlook), we see U.S. required imports dropping from ~11 MMBbls/d in 2011 (and nearly 13 MMBbls/d in 2008) down to ~7.6 MMBbls/d by 2016 and 4-6 MMBbls/d by 2020 (depending on growth scenarios).
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Exhibit 93. U.S. Oil Production Vs. Imports

30,000 27,500 25,000 22,500 Oil ('000 bbl/d) 20,000 17,500 15,000 12,500 10,000 7,500 5,000 2,500 20 08 20 09 20 10 20 12 E 20 11 E E E E 20 17 E 20 18 E 20 19 E 20 20 E 20 13 20 14 20 15 20 16
US Oil Production Required Foreign Oil Imports Canadian Oil Imports US Oil Demand
Source: EIA, company reports and CIBC World Markets Inc.
The picture changes yet again when one considers the impact of Canadian production. As highlighted above, with Canadian based imports expected to grow meaningfully over the coming years, foreign oil imports (which we define as imports other than Canada) decline from 8.8 MMBbls/d to 2.1 MMBbls/d by 2020. We note that the Canadian wedge on this chart could be much larger if the U.S. government were to allow more unfettered access of Canadian crudes into the U.S. market. This highlights the often contradictory U.S. energy policy which wants to wean itself off foreign oil, yet at the same time is forcing Canadian producers to look to market oil into Asia.
Impact Of Crude Renaissance On North American Regional Pricing

The biggest impact of the oil boom will be on regional North American pricing and basis differentials.
The explosion in U.S. and Canadian oil production will have an impact on a global level, but arguably the bigger impact is on regional North American pricing and basis differentials. The big discounting seen to date this year for Canadian and Bakken crudes gives a glimpse of what is at risk and how important these basis differentials can be. Oddly enough, few of the basis differentials are unresolvable as there is plenty of demand in the U.S. for imported crude oil (or movements across the U.S.). However, it takes considerable time to build new pipe (especially cross border pipe as seen by the Keystone XL debacle and the current debate around West Coast pipelines in Canada) and some of the key issues longer term are legislative such as the Jones Act and the impact on U.S. coastal movements of crude oil and the fact that exports of Crude oil are not allowed from the U.S. (refined products exports are). The following section delves into our views on Canada and U.S. basis differential risk in the short and long term.
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Crude Glut Means Canada + PADD 2 Crudes Will See Excess Volatility & Periodic Discounting Through 2014
In the short term, basis differential risk remains very high for Canadian and PADD 2 U.S. crudes (primarily Bakken). As we published in our report on March 6, The Double Discounting Of Canadian Crudes, we expect Canadian differentials versus WTI to remain exceptionally volatile through the 2014 time frame. As depicted in Exhibit 94, volatility has been extreme with three cycles of widening differentials over the past six months. There is little doubt in our minds that we will see several more cycles over the coming months as supply pressures mount and infrastructure scrambles to keep up. With PADD 2 pretty much at full capacity, every refinery hick-up (planned or unplanned) or pipeline restriction will result in discounting as depicted in the following charts:
Exhibit 94. Crude Pricing And Differentials

2011-2012 Crude Pricing (US$/Bbl)
$130 $120 $110 $100 $90 $80 $70 $60 $50
Why The Canadian Discount?: Reasons for last years widening of the BrentWTI differential are well documented, driven by Cushing inventories reaching very full levels in addition to the limited ability to move barrels out of Cushing into PADD III. A bigger question is: why have Canadian crudes started to discount relative to WTI? We believe there are a number of factors but the simplest explanation is that pipeline capacity into Cushing from other parts of PADD II is limited, which is backing up crudes further in the system and, consequently, discounting Canadian crude prices.
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Ja n11 Fe b11 Ma r-1 1 Ap r-1 1 Ma y11 Ju n11 Ju l-1 1 Au g11 Se p11 Oc t-1 1 No v11 De c11 Ja n12 Fe b12 Ma r-1 2 Ap r-1 2 Ma y12 Ju n12 Ju l-1 2
Ja n11 Fe b11 Ma r-1 1 Ap r-1 1 Ma y11 Ju n11 Ju l-1 1 Au g11 Se p11 Oc t-1 1 No v11 De c11 Ja n12 Fe b12 Ma r-1 2 Ap r-1 2 Ma y12 Ju n12 Ju l-1 2
US Bakken Light
WTI
Syncrude Blend
Dated Brent
WCS
2011-2012 Crude Differentials vs. WTI (US$/Bbl)

$40 $30 $20 $10 $0 ($10) ($20) ($30) ($40)
US Bakken Light
Syncrude Blend
Dated Brent
WCS
Volatility Highlights How Tight PADD 2 Is: The main triggers behind differentials widening or narrowing comes down mainly to refinery maintenance on the demand side and oil sands outages on the supply side. Year-to-date refinery throughput in PADD 2 & PADD 4 has averaged ~162,000 Bbls/d higher than last year. The difference is that even with higher throughput, every bit of refinery downtime is having significant pressure on PADD 2 & Canadian pricing. In our view, this provides a very clear look at how over saturated the PADD 2 market remains. Bakken & Oil Sands Production Pressures Continue To Mount: We believe U.S. Bakken production will continue growing at ~10,000 Bbls/d20,000 Bbls/d per month, with the natural market being PADD 2. SAGD oil sands volumes will likely continue to grow at ~7,000 Bbls/d per month in 2012 and close to 10,000 Bbls/d per month in 2013. Mining output will also receive a big boost in late 2012 with the start-up of the 110,000 Bbls/d Kearl oil sands mine. Overall, production from key plays where PADD 2 is the natural market could increase 550,000 Bbls/d750,000 Bbls/d from current levels by year-end 2013. PADD 2 Refinery Maintenance Will Be A Big Issue In 2012: PADD 2 refineries have been running at very robust rates to date in 2012. We are somewhat concerned by the high levels of planned maintenance in PADD 2, with current plans detailing 186,000 Bbls/d offline over the remainder of 2012 versus 85,000 Bbls/d last year and the five-year average of 131,000 Bbls/d. A similar story exists in PADD 4 where there are plans for 29,000 Bbls/d to be offline over the remainder of 2012 versus 12,000 Bbls/d last year and normal levels of ~16,000 Bbls/d. Exceptionally strong crack spreads may prompt refiners to defer maintenance as they did last year, but there are likely limits as to how far maintenance can safely be deferred. Changing Crude Diet In PADD 2 Solidifies The Balance Of Power For Refiners: Refinery demand within PADD 2 is just embarking on a major change. ConocoPhillips (COPNYSE) recently brought on the CORE refinery conversion project, adding ~160,000 Bbls/d of heavy capacity but displacing ~130,000 Bbls/d of light capacity. Over the next ~12 months, we will see an additional 310,000 Bbls/d of increased heavy capacity in PADD 2 at the expense of 300,000 Bbls/d of light oil capacity at a time when light oil production is rapidly increasing. However, refiners that have added this new heavy capacity can still move back to light crude oil slates if pricing warrants such a move. With refiners gaining greater flexibility with their crude slates, there is little doubt they will use this to create crude-on-crude competition and drive down prices for light streams, such as SCO and Bakken, and WCS. Seaway Provides Relief But Largely Playing Catch-up: Many investors believe that the Seaway pipeline reversal will fix the WTI-Brent disconnect and the more recent disconnect of Canadian pricing versus WTI. The more analysis we undertake, however, the more we believe this is not going to be the case. Seaway will provide some important relief but will largely be playing catch-up to existing supply pressures within PADD 2. Keystone XL South Should Alleviate Brent-WTI Diff But Canadian Discounting Could Last Until 2014: Overall, we believe the Brent-WTI differential should largely be resolved with the start-up of the southern portion of Keystone XL in H2/13 (likely in the mid to latter part of that range). Canadian prices would rise at least partially with WTI but could still face some discounting until 2014 when either Keystone XL or Flanagan South is built (there are still capacity constraints within PADD 2 to Cushing).
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There is no magic formula to determine the appropriate short-term discounts for WTI versus Brent and for Canadian Crudes versus WTI as this is largely uncharted territory. Directionally, we believe the market is still generally presuming 0% SCO differentials and ~20% differentials between WCS and WTI and the risk is clearly tilted toward wider differentials. We would not be surprised to see a scenario over the next 18 months whereby SCO/Bakken Light differentials bounce around a 0%15% discount versus WTI and where WCS resides around a 15%20% discount to SCO (i.e., a 15%30% discount versus WTI). Where in the range the crude slates trade depends on supply build versus timing of relief valves coming online (i.e., Seaway and southern portion of Keystone XL).
Discounting Of North American Crudes Likely To Remain Long Term But Discounting Shifts To LLS Vs. Brent
As we look deeper into North American oil balances post 2014, we now believe North American oil basis differentials will remain wide over the long term although manifesting in different ways than we are currently experiencing.
Our previous report (Double Discounting Of Canadian Crudes) examined the oversupply issue facing PADD 2 through the 2014/2015 time frame. Our general view at that time was that once there was sufficient infrastructure connecting PADD 2 to PADD 3 (south part of Keystone XL and full Seaway reversal) as well as better mobility within PADD 2 (full Keystone XL and Flanagan South) that the big discounts versus global benchmarks would dissipate. As we look deeper into North American oil balances post 2014, we now believe North American oil basis differentials will remain wide over the long term although manifesting in different ways than we are currently experiencing. We expect WTI to move towards transportation discounts versus LLS in the 2014 time frame (once Seaway and south part of Keystone XL are built) but we believe the new discount that will emerge is LLS starting to disconnect versus Brent oil. The basic issue that will emerge in PADD 3 is an influx of oil from PADD 2 (Bakken) and Canada (Tight oil and oil sands) plus dramatic growth out of PADD 3 plays such as the Eagle Ford, Permian, Mississippi Lime and potentially other emerging plays such as the Tuscaloosa. Basically, with U.S. oil production growing ~600,000 Bbls/d per year through 2016, coupled with severe export constraints, makes a massive wave of oil supply in a large but stagnant market.
When PADD 3 Stops Importing Light Oil (In Next 6-12 Months)The Natural Link Of LLS-Brent Dissipates
Canadian companies have long looked at PADD 3 access as the Holy Grail of the North American energy markets. However, by the time we get there, it will already be flooded with light oil.
Canadian companies have long looked at PADD 3 access as the Holy Grail of the North American energy markets. The appeal of PADD 3 is obvious in that it is a large refining market with 8.6 MMBbls/d of capacity, including about 3.2 MMBbls/d of heavy crude capacity. PADD 3 remains a very import driven market and the need for imports will not likely be completely eliminated through the 2020 time frame. However, the nature of the imports is changing very quickly and will start to have an impact on Gulf Coast pricing very soon. Exhibit 95 depicts the trend of oil imports into PADD 3 by type from Q1/08 to Q1/12. As depicted, not only have imports declined but the type of crude being imported is changing meaningfully.
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Exhibit 95. PADD 3 Crude Imports By Crude Type

PADD 3 Imports
3,000
PADD 3 Imports - Q1/12 12%
PADD 3 - Light Sweet PADD 3 - Light Sour PADD 3 - Med & Heavy
2,500
2,000
1,500
49%
1,000
39%
500
0
PADD 3 - Light Sweet PADD 3 - Light Sour PADD 3 - Med & Heavy
While most of the decline in PADD 3 imports to date has been because of smaller draws from PADD 2, this will change dramatically over the coming years as PADD 3 production booms and PADD 2 production begins being dumped into PADD 3 following the Seaway expansion and South Keystone XL (Historically PADD 2 took about 1 MMBbls/d from PADD 3 and this will soon be completely reversed). Exhibit 96 depicts the need for foreign oil imports into PADD 3 through 2020 based on our various scenario analyses. As depicted, within the next 12 months, there will be no need to import light sweet crude into PADD 3 (most recent monthly imports were already down to only ~532,000 Bbls/d). At this point, we believe there will start to be more pressure on LLS pricing to begin competing more aggressively with lower grade crudes that price at lower levels.
As depicted, within the next 12 months, there will be no need to import light sweet crude into PADD 3 (most recent monthly imports were already down to only ~532,000 Bbls/d). At this point, we believe there will start to be more pressure on LLS pricing
Exhibit 96. PADD 3 Foreign Oil Imports

Foreign Oil Imports Into PADD 3 (Bbls/d) 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 2008 2009 2010 2011 Light Sweet Base Case 2012 2013 2014 2015 2016 2017 2018 2019 2020 Light Sour Low Growth Case Medium & Heavy High Growth Case
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LLS Brent DifferentialsHow Wide Will They Go?

We believe a long-term Brent-LLS discount in the US$5/Bbl range is a reasonable assumption.
As we have now laid out, we believe the upcoming theme in the market will be the gradual decoupling of LLS versus Brent. As with any differential, identifying the magnitude is challenging. On the one hand, it can be argued that so long as crude is trapped in PADD 3 that we could ultimately see LLS-Brent discounts in the range of what we have seen Brent-WTI blow-out to over the past 18 months averaging US$15.86/Bbl and ranging from US$3/Bbl-US$30/Bbl. On the other hand, factors such as crude oil blending and potential ship borne movements from Gulf Coast to East Coast should moderate the level of discount. We believe a longterm Brent-LLS discount in the US$5/Bbl range is a reasonable assumption at this point, but note that there is a high degree of uncertainty around this call. We discuss some of the influencing factors on the Brent-LLS Spread now. LLS Will Compete Against Lower Grade Crudes: As mentioned previously, within the next six months, we will likely no longer see any requirement for light sweet imports into PADD 3, at which point, the natural link between Brent-LLS breaks (no longer need to import light sweet barrels but legislation keeps those barrels trapped in PADD 3). This implies that to a certain degree, LLS will start pricing against other lower crude slates. The following chart depicts the historic discounting of Light Sour crude (MARS) and heavy sour (Maya) in the Gulf Coast. As depicted, once light sweet is in surplus in PADD 3 (very soon), LLS will compete first against light sour imports, which historically priced ~US$4/Bbl lower than LLS. Imports of light sour would be required until roughly the 2014/2015 time frame in our base case production growth scenario but could be truncated to 2013/2014 if widespread light-heavy blending occurs (discussed below). Once light sour imports are knocked out, one can make the case for further pressure on LLS-Brent. Exhibit 97. Heavy And Light Sour Pricing Differential Vs. LLS (US$)
$5 $0 ($5) ($10) ($15) ($20) ($25) ($30) Maya vs. LLS Mars vs. LLS
Within the next six months, we will likely no longer see any requirement for light sweet imports into PADD 3, at which point, the natural link between Brent-LLS breaks
Once the Brent-LLS spread opens up, it will start to make sense to consider moving under priced PADD 3 crude oil into the U.S. East Coast (PADD 1) refinery system by ship or, alternatively, for Bakken producers to rail more volumes to PADD 1.
Shipping PADD 3 Light Oil To East Coast Refineries Or Railing U.S. Bakken Direct To PADD 1: Once the Brent-LLS spread opens up, it will start to make sense to consider moving under priced PADD 3 crude oil into the U.S. East Coast (PADD 1) refinery system by ship (i.e., from Gulf Coast to East Coast) or, alternatively, for Bakken producers to rail more volumes to PADD 1 from their current focus of railing into PADD 1. The biggest challenge to shipping from Gulf Coast to PADD 1 is the Jones Act. Under current regulations (the Jones Act), to move crude (or refined products) between U.S. ports it must done on a U.S. built, manned and flagged ship. Needless to say there are not very many of those in existence and many of those that are, are already serving other routes. The EIA estimates there are fewer than 40 tankers capable of the Gulf Coast-East Coast route, and many of those are in operation. Additionally, there are a few new Jones Act tankers coming on later this year but there are few plans and this point to invest in the fleet expansion.
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Au g0 No 7 v-0 Fe 7 b0 Ma 8 y-0 Au 8 g0 No 8 v-0 Fe 8 b0 Ma 9 y-0 Au 9 g0 No 9 v-0 Fe 9 b1 Ma 0 y-1 Au 0 g1 No 0 v-1 Fe 0 b1 Ma 1 y-1 Au 1 g1 No 1 v-1 Fe 1 b1 Ma 2 y-1 2
The only real viable way for the option of moving discounted PADD 3 crudes to the East Coast is if the U.S. government was to waive Jones Act shipping requirements for crude oil. This would make sense in that it would help ensure the viability of East Coast refineries (lower priced feedstock), which implies job sustainability, etc. However, our understanding is there is very limited will in Washington to push for a relaxation of the Jones Act. Overall, this remains a key factor to watch but it would only make sense to ship LLS priced crudes to the East Coast if they were at a discount to Brent. However, this would likely moderate the level of discounts that could otherwise be quite substantial. We have already seen an explosion in crude oil by rail, primarily from the U.S. Bakken into PADD 3 where producers can currently receive Brent (and LLS currently on par with Brent) type pricing. If LLS starts to discount meaningfully vs. Brent (which we expect), we will likely see more crude volumes by rail diverted directly to PADD 1 instead of the PADD 3 market. However, we believe the rail cost of going east is approximately $5/Bbl higher than going South into PADD 3 and to do this would require a build out of receiving terminals. Simple Refinery Runs To Re-label Crude As Product To Allow Exports: Another potential factor that could in theory mitigate a Brent-LLS spread, is the ability of refiners to do very simple crude runs to effectively be able to re-label crude oil as refined product, which is allowed to be exported from the U.S. (in fact the U.S. net-exports of refined product are 2.8 MMBbls/d). A simple refinery run would basically take crude through the distillation tower, just enough refining to be able to label it as refined product. The idea of PADD 3 refiners moving to simple runs to get around crude oil export restrictions is appealing, but likely only has limited opportunity in practicality as: 1) there are limits to excess refining capacity in PADD 3 as GOM refinery capacity is running about 88% of current capacity. While this still leaves ~1 MMBbls/d of notional capacity if PADD 3 refineries ran at 100%, but it is virtually impossible to achieve these kind of rates as a calendar day average (note that with all-time record crack spreads over the past 18 months in PADD 2, refiners have tried with utilization averaging 91%); and 2) the motivation of the refiner is not necessarily aligned with the motivation of the producer. The refiner is motivated to get as big a margin as possible, which, in all but the most dire of scenarios, would be for a refiner to take discounted PADD 3 light crude and run a full slate to export into the global market a full suite of refined product, rather than just running lower margin exports. Refinery Blending: Refineries routinely blend different types/grades of crude oil to maximize margin. The threshold to blending is driven by a complex mix of yields and price. Refinery blending is one factor that could limit the magnitude of Brent-LLS spread but we do not see this as a specific floor value. The logic is that if light sweet oil is over-abundant in PADD 3 (which it will be), once it becomes sufficiently discounted refiners will start to blend light sweet barrels with medium-heavy barrels to approximate light sour imports. Such a measure would generally be beneficial to light sweet pricing in the near term (next few years) but would actually accelerate the rate at which imports of light to medium sour crudes are imported, and over the longer term would mean that, in the baseness of any of the aforementioned factors materializing, LLS would lose any of its link to global light oil prices. The Refinery X-Factor & Balance Of Power: As highlighted before, quantifying price discounts is a complex matter. The logic is relatively straight forward when it is simply transportation and quality related. However, the third component is the most difficult to define, and that is what we term the refinery X factor. What we mean by this is that when a situation arises in which a product is oversupplied into a constrained market, the consumer (refineries in
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this case) have the balance of power. With hundreds of market participants all fighting for limited refinery capacity, discounting emerges and it is largely at the hands of the refiner as to where the magnitude of those discounts. A prime example of this today is the market conditions in PADD 2. There is no quality or transportation cost that can argue why SCO and Bakken Light have averaged 4% and 9% discounts YTD vs. WTI. They are generally quite comparable quality products. The challenge though is that there are very few options outside of this market to sell their oil, and with many different sellers representing many different product slates, refineries have the ability to play sellers against each other to the detriment of pricing. Unless the U.S. government were to allow U.S. light oil exports (or as a shorter-term issue waive Jones Act requirements to at least move more crude across U.S. ports), the same type of dynamic will emerge in PADD 3. We do note however that the PADD will not be as dire as the current PADD 2 situation as PADD 3 will still need to import crude oil through 2020 (just low amounts and increasingly weighted towards heavy). The Fight For Refinery Access In PADD 3, Lots Of Coking Capacity But Refiners Have Flexibility: PADD 3 is the largest Coking market in the world with approximately 3.2 MMBbls/d of heavy oil capacity. With this much installed capacity, it seems quite a natural fit for lower-quality Canadian crudes such as WCS or for continued intake of Maya. However, just because PADD 3 is home to significant coking capacity, doesnt mean it will all be used. Any refinery that has coking capacity can take a higher-quality crude oil slate (the opposite clearly doesnt hold true though). There are many tradeoffs involved in the equation but it basically boils down to margin. A high complexity coking refinery may opt to run at slightly lower rates by taking a higher slate of light oils. The decision will be governed almost entirely by their margin analysis, which would incorporate the higher yield typically obtained from a lighter barrel together with factors such as lower wear and tear on the refinery and fewer catalyst costs, etc. In our discussions with refiners, we have typically heard that heavier barrels like Maya could not sustain a differential vs. light barrels of anything beyond US$5US$9/Bbl. Indeed this seems to correlate with historical Maya vs. LLS differentials, which have averaged in the US$10/Bbl range. The overall point from this discussion is that there will be significant competition from not only WCS vs. Maya for access to the PADD 3 market, but also for light oil trying to get access to higher complexity refineries. As discussed previously, this multifaceted competition shifts the balance of power to the refiners which they will use to their advantage (as we have seen already in PADD 2).
There will be significant competition from not only WCS vs. Maya for access to the PADD 3 market, but also for light oil trying to get access to higher complexity refineries. A complex refiner will take light oilif the price is right.
WTI-LLS Differential Should Approximate Marginal Transportation Cost To Gulf Coast

As highlighted previously, we believe LLS-Brent will move from transportation equivalent pricing to LLS gradually moving to a ~US$5/Bbl discount versus Brent. As we move further inland, pricing will continue to be further discounted from a combination of pipeline tolls and potentially further discounts if pipeline capacity lags production growth. From a transportation standpoint, we believe there is little risk beyond 2014 in terms of capacity out of Cushing into the Gulf Coast. By this point, Seaway will be fully reversed and the south part of Keystone XL will be onstream. Furthermore, Seaway twinning will be well advanced and the market will have gotten over the surprise of Bakken growth and better able to accommodate growing pipeline needs from PADD 2 into PADD 3.
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WTI should be discounted in the US$4-US$5/Bbl range versus LLS reflecting pipeline tolls and bringing the long-term Brent-WTI differential to the ~US$10/Bbl range (~US$5/Bbl LLS plus ~US$5/Bbl transportation costs).
With this backdrop, WTI discounting to LLS should be relatively close to marginal pipeline shipping costs (i.e., what an uncontracted party would pay to ship on those pipelines). From this perspective, WTI should be discounted in the US$4/Bbl-US$5/Bbl range versus LLS reflecting pipeline tolls and bringing the long-term Brent-WTI differential to the ~US$10/Bbl range (~US$5/Bbl LLS plus ~US$5/Bbl transportation costs). In periods where production capacity has outpaced pipeline capacity start-ups, differentials will temporarily balloon to the US$15+/Bbl range (similar to what we have seen over the past 18 months).
Consensus Brent-WTI Diffs Likely Too Low

Current consensus long-term BrentWTI differentials are currently ~US$3/Bbl.
While much attention has recently been shone on the high growth out of U.S. oil plays, we believe the market impact is still in the early stages of being understood. We wont claim to be the first to postulate on the growing LLS-Brent and WTI versus LLS discounts but we are far from the last. Current consensus long-term Brent-WTI differentials are currently ~US$3/Bbl from Canadian brokers. Given our view of long-term Brent-WTI differentials sustaining more in the US$10/Bbl range (~US$5/Bbl Brent-LLS plus ~US$5/Bbl transport to Cushing), we clearly believe that over the coming months/years that consensus WTI and Canadian price expectations will consistently be revised down a death by a thousand cuts kind of theme. Consensus WTI forecasts declining by US$5/BblUS$10/Bbl has meaningful impacts on producer cash flows and profitability and may continue to hamper equity performance until fully embedded.
Consensus View Of Medium- To Long-term Refining Margins Likely To Widen

As much of our call for wider differentials is generally negative for upstream players, it is generally very bullish for downstream players (or relatively neutral for integrateds). There is no official consensus available for Mid-Continent or U.S. Gulf Coast refining margins, but generally we believe the street is modeling supernormal margins to continue in 2012 and 2013 but generally normalizing thereafter. For context, Mid-Continent spreads that are currently over US$30/Bbl would eventually come back to the ~US$12/Bbl range that they averaged pre2010. If Brent-WTI stays in the US$10/Bbl range long term as we are forecasting (US$5/Bbl for Brent-LLS plus US$5/Bbl for LLS-WTI), we are effectively arguing that mid-continent spreads will remain ~US$10/Bbl elevated vs. historical ranges and even Gulf Coast spreads will see meaningful improvement.
Canada Will Need Big Pipe Build To Escape Long-term Discounting

Before we can begin any discussion on longer-term Canadian discounts, we must emphasize a key point. Canada NEEDS pipe. U.S. pipe, West Coast Canada pipe, East Coast Canada pipe we need it all. If pipe is built, Canadian netback pricing can be reasonably estimated off anticipated transportation costs which we discuss in the following sections. If pipe is not built, Canadian crude prices will be sustained at very low pricing vs. WTI (which already expect to stay ~US$10/Bbl off Brent long term). In this scenario, pricing would have to go low enough to knock out much of the anticipated growth particularly from the oil sands.
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Time To Smoke The Peace Pipe Plenty Of Proposals On The Table But Political Risk Mounting
CIBCs pipelines analyst Paul Lechem published a very detailed report on longerterm pipeline initiatives in early March and will provide a more detailed follow-up in the not too distant future (reflecting TransCanadas emerging plans and recent Enbridge announcements). The general conclusion is that there are plenty of pipeline proposals on the table longer term but many of those proposals are facing increasing levels of political risk. The following table provides an overview of the main current export proposals.
Exhibit 98. Proposed Long-haul Pipeline New Build/Expansions

Pipeline Keystone XL Routing Hardisty, AB to Port Arthur, TX Capacity (Bbls/d) 830,000 Comments Presidential permit denied; will reapply upon re-routing in Nebraska. Potential in-service early 2015 Public/regulatory hearings begun Jan/12, regulatory decision expected late 2013; potential in-service 2017 Open season completed; regulatory decision expected late 2014; potential in-service late 2016 No new pipe required - additional pump capacity only; initial expansion of 120,000 Bbls/d underway; mid-2014 inservice date Analysis underway for potential partial conversion of existing gas Mainline to oil service. In-service 2016 (est.)
Northern Gateway
Bruderheim, AB to Kitimat, BC
525,000 (crude) 193,000 (diluent) 450,000
TMX
Edmonton, AB to Burnaby, BC
Alberta Clipper Expansion
Hardisty, AB to Superior, WI
350,000
TransCanada Mainline Conversion Total
Hardisty, AB to Montreal, PQ
600,000 (est.)
2,755,000 (crude) 193,000 (diluent)
Source: Company reports and CIBC World Markets Inc. (Paul Lechem)
Sadly, all but the Albert Clipper expansion remain mired in politics. Any decision on the main portion of Keystone XL is unlikely until early in 2013. Rhetoric towards both the West Coast pipelines is running rampant and at this point we would regard the West Coast pipelines as no better than 50/50 odds that they are built before the end of this decade. Even though the federal government ultimately maintains the right to push the projects through, we are not fully convinced the political will is lasting long term particularly if the B.C. provincial government opposes the pipeline. TransCanadas emerging plan to convert a portion of its West-East gas pipelines to oil service is appealing in many ways, but its still too early to gauge the risks/benefits for sure.
Pipeline Pinch-point Not That Far Off

Exhibit 99 depicts anticipated production growth versus proposed pipeline capacity. For production growth, we use CAPP forecasts as well as unrisked company expectations (i.e., the sum of individual company forecasts) in addition to our own outlook, which is roughly the midpoint between CAPP and unrisked forecasts. A key observation in the shorter term is that the pipeline pinch-point (i.e., when we run out of export capacity) that industry generally highlighted as being 2015/16 could arrive much sooner if the higher growth forecasts unfold. We estimate that the pipeline pressures really could hit in the 2014 time frame illustrating that there is NO room for further slippage of the Keystone XL build.
We estimate that the pipeline pressures really could hit in the 2014 time frame illustrating that there is NO room for further slippage of the Keystone XL build.
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From a longer-term perspective, the key observation is that it is virtually impossible for companies to execute the sum of their plans as even with every pipeline that is currently proposed is built, there would still not be enough capacity. Additionally, in our view, the two proposed West Coast pipelines still face considerable political and regulatory risk. TransCanadas East Coast pipeline (conversion of natural gas lines) is still at a very early stage and therefore more difficult to count on and could also face additional political risk particularly the element of exporting oil sands output from Quebec City. Overall, this once again highlights the need for rationalization of growth expectations down to available pipeline capacity. The only question is, does that mean industry growth expectations through 2020 need to be cut by 1 MMBbls/d or 3 MBbls/d (only Keystone XL gets built).
Exhibit 99. Canadian Oil Growth Scenarios Versus Pipeline Capacity

9,000 8,000 7,000 6,000
Oil Exports (Mbbl/d)
5,000 4,000 3,000 2,000 1,000 0 2011 2012E 2013E 2014E CAPP Current Capacity Enbridge Northern Gateway Enbridged Mainline Expansion 2 2015E 2016E 2017E Company Forecasts TranscCanada Keystone XL TransCanada Eastern Canada 2018E 2019E 2020E CIBC Estimates Kinder Morgan TMX Enbridge Mainline Expansion 1
Source: CAPP, Company reports and CIBC World Markets Inc.
The key takeaway from this analysis is that our current long-term forecasts of Canadian light oil discounting versus LLS of ~US$7/Bbl could face considerable risk if any of the aforementioned pipelines are cancelled or face long-term delays.
Canadian Light Should Price A Transportation Discount To Gulf Coast Or CushingIf Pipe Is Built
We assume Canadian crudes price at transportation discounts vs. U.S. long term, but this assumption is only valid if pipelines are built which is a bigger risk for Canadian crudes than for PADD 2 crudes.
We have already established the likely widening of Gulf Coast (LLS) pricing versus Global pricing (Brent) and further discounting of WTI versus LLS. What then for Canadian crudes? Western Canadian crudes will largely be tied to a combination of Cushing and Gulf Coast pricing. Transportation costs on Keystone XL are estimated at US$7/Bbl for light oil and approximately US$9/BblUS$10/Bbl for heavy oil and similar costs for the Enbridge Flanagan South and Seaway lines. Off LLS of US$90/Bbl (our current long-term assumption) this implies Canadian light oil pricing of US$83/Bbl range. However, we note that this assumption is only valid presuming pipeline growth keeps pace with production growth which is a bigger risk for Canadian crudes than for PADD 2 crudes.
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Exhibit 100. Light Oil Pricing Map
SCO In Asia Would Likely Sell At Brent: ~$95/Bbl Estimated Cost via VLCC to Asia ~$3/Bbl
Kitimat
($4.0 0-$5.0 0)
SCO Sold Into PADD 2: $86-$86.50/Bbl SCO Sold Into PADD 3: $82/Bbl SCO Sold Into Asia: $86-$87/Bbl SCO Sold Into California:$87-$88/Bbl SCO Sold Into East Coast US: $87/Bbl
.00 ($4
) .00 -$5
Estim ated C
osts T
o Eas
t Coa
st In
The ~
Estimated Cost via. VLCC From Kitimat to California: ~$1.00/Bbl Estimated Cost using Afromax From Vancouver to California: ~$1.50/Bbl
bl 0/ B $4.0 .50~$3 /Bbl 8 ing: us h GC : $ oC to Ed T om Ed m t Fro st Fr Cos ion Co t tion orta nsporta p a ans t Tr ight Tr L Ligh
$8/Bb
l Ran
ge
Chicago Flanagan
SCO Into California Would Likely Sell At Brent + Transport From Mid-East or Light oil From GC : ~$96-$97/Bbl Or Light
SCO in Cushing approximates WTI: ~$90/Bbl
Cushing
Light Transportation uth Cost ~$3-$5/Bbl (So Segment Only)
LLS ~$90 /Bbl Houston Brent @ $95/Bbl
WCSA More Complex Dynamic

Pricing out WCS is a more complex equation. On the positive side, as we noted in our report, Double Discounting Of Canadian Crudes, we expect heavy oil demand to increase in late 2012 as new coking projects come on-stream in PADD 2. As summarized in Exhibit 101, these projects will add an incremental 470,000 Bbls/d of potential demand for heavy crudes, while simultaneously displacing 430,000 Bbls/d of light crude oil demand. While this is directionally encouraging for heavy oil producers, we note that refiners are not obligated to take heavy oil when the cokers come on-stream and will instead optimize crude inputs for the best combination of price and yield. In effect, this implies that WCS differentials may narrow to the US$5/Bbl-US$9/Bbl range versus SCO or Bakken Light, but due the big pressure on these price streams WCS pricing will also find itself under pressure (i.e., WCS is less worse off than light streams but still not better than current consensus expectations).
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Exhibit 101. PADD 2 Coking Projects

Chg. In Light Capacity ('000 Bbl/d) (130) (70) (230) (430) Chg. In Heavy Capacity ('000 Bbl/d) 160 80 230 470 Overall Capacity Change ('000 Bbl/d) 30 10 0 40
Refinery Conoco - Wood River CORE Marathon - Detroit HOUP BP - Whiting Refinery Modernization Project Total
Timing Ramping up in Jan/Feb 12 Late 2012 H1/2013
Fundamentally, PADD 3 refiners have a strong desire to run WCS, which is bullish for light-heavy spreads. However, we believe that the pressure on light pricing will still result in lower WCS pricing than we had previously modelled.
The WCS environment changes once again as industry gains access to PADD 3. As discussed previously, PADD 3 is a natural market for WCS given the high amount of coking capacity that exist in that market and lack of heavy oil production. Fundamentally, PADD 3 refiners have a strong desire to run WCS (reasonably equivalent to Mayan crude). However, as we have seen in PADD 2, when one oil slate is in oversupply, it can bring pressure on the whole oil complex as refiners play crude slates against crude slates (see prior comment entitled Balance Of Power Impacts Pricing). In PADD 3, the emerging big pressure on LLS will likely also put some downward pressure on Maya. In general, we believe that Maya will not likely price better than US$5/BblUS$9/Bbl off LLS (this historical Brent-Maya differential is US$9/Bbl), which in our conversations with refiners we understand to be the rough half-cycle costs for a refiner with cokers electing to take a light oil crude slate. Given this relationship, we can infer that once Canadian producers get access to the PADD 3 market, they will get the Mayan price link they have long sought but unfortunately Maya will not be as high priced as it had been historically due to the big discounting of light oil in PADD 3. Our best estimate is that off Brent, LLS will price ~US$5/Bbl lower and Maya ~US$5-US$9/Bbl below LLS and transportation costs to Western Canada are approximately US$10/Bbl. In an unconstrained transportation environment, this would imply WCS US$71/BblUS$75/Bbl or 75%-77% of Brent and 83%-88% of WTI.
WCS Vs. Maya Quality Differentials A Question Mark

It has generally been assumed that WCS will price quite closely against Mayan crude once Canadian producers get their much needed access to the PADD 3 market. However, even this is open to interpretation and will not be fully answered until we see large deliveries into this market. On the surface, WCS and the newly introduced Christina Lake Blends [Access Western Blend (AWB) marketed by MEG and the Christina Lake Blend (CLB) marketed by Cenovus] are both quite similar to Maya as illustrated in the following table. Just looking solely on an API basis it would appear that Maya is slightly higher quality. However, when adding the sulphur content into the picture, and arguably more important the Total Acid Number [(TAN) measuring the crudes content of milligrams of KOH per gram of product], a question mark emerges on actual price comparability.
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Exhibit 102. Global Heavy Crude Oil Product Quality
Oriente Arab Heavy Djeno Vasconia Souedieh Maya Access Western Blend (AWB) Christina Dilbit Blend (CDP) Western Canada Select (WCS)
API (Degrees) 29.2 27.4 27.0 24.5 24.1 22.2 21.8 20.9 20.6
Sulphur (%) 0.88% 2.80% 0.47% 1.01% 3.90% 3.30% 3.94% 3.73% 3.49%
TAN (mg/g) 0.39 0.10 0.77 0.30 0.15 0.28 1.7 1.49 0.93
Avg Discount (USD) ($8.54) ($6.88) ($4.50) ($3.20) ($11.39) ($9.92) na na na
Applying the crude characteristics in the aforementioned table to WCS and AWB/CLB would imply discounting vs. Maya in the US$4.75/Bbl range for WCS and ~US$8/Bbl for AWB/CLB.
There are many factors at play in crude quality differentials, ranging from refinery yield and price/desire for those feedstocks vs. refinery wear and tear, etc. In our research, we found an interesting study taking a statistical approach to global crude oil discounts (ESMAP Technical Paper 081 Crude Oil Differentials and Differences in Oil Qualities), incorporating API, sulphur and TAN. We back-tested this against several grades of global heavy oil and found that the statistical relationships still hold strongly even though the study was conducted in 2005. Using this multiple regression, the predicted discount of Maya vs. Brent is ~US$10.60/Bbl vs. the US$10/Bbl actual. The same study applied to Arab Heavy implied a US$6/Bbl discount vs. Brent vs. the actual of approximately US$6.80/Bbl. Overall, we conclude that while not perfect, it is a reasonable basis for quality discount assumptions. Applying the crude characteristics in the aforementioned table to WCS and AWB/CLB would imply discounting vs. Maya in the US$4.75/Bbl range for WCS and ~US$8/Bbl for AWB/CLB. For purposes of our netback analysis, we have assumed US$2.40/Bbl for WCS (mid-point of zero discount and our calculated) and US$4/Bbl for AWB/CLB (mid-point of zero discount and US$8/Bbl calculated). The point of this analysis is to highlight that the comparability of Canadian heavy crudes vs. Maya does arguably carry more risk than the market recognizes. The pricing for WCS into Asian markets or California is somewhat of a question mark. One of the more transparent heavier crudes into Asia is Arab Heavy. Using the pricing relationship established previously, it would be reasonable to assume meaningful quality discounts for WCS or AWB/CLB vs. this blend reflecting the significantly higher sulphur content and higher TAN. Our best estimate is that WCS would price ~US$9/Bbl off Arab Heavy and that AWB/CLB would price up to US$12/Bbl off Arab Heavy. For the purposes of our netback analysis, we have assumed US$6.75/Bbl discount for WCS and US$9/Bbl for AWB/CLB.
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Exhibit 103. Heavy Oil Pricing Map

Arab Heavy $88/Bbl (~$7/Bbl Discount) WCS Would Likely Sell ~$4.50-$9.00/Bbl Quality Discount AWB/CLB Would Likely Sell ~$6-12/Bbl Quality Discount WCS ~ $73-77/Bbl AWB/CDB ~ $71-75/Bbl Estimated Cost via. VLCC to Asia ~$3/Bbl
Kitimat
Price (After Transport) Selling To: Cushing Or GC: $68-72/Bbl for WCS & $67-$71/Bbl for AWB To California: ~$75-79/Bbl fpr WCS & $72-$76/Bbl for AWB To Asia: ~$73-77/Bbl for WCS & ~$75-79/Bbl for AWB
$5.00 -$6.0 0
00 $6. 00$5.
Estimated Cost via. VLCC From Kitimat to California: ~$1.00/Bbl Estimated Cost using Afromax From Vancouver to California: ~$1.50/Bbl
Bbl 4-6/ l : ~$ b hing -$10/B Cus : $8 C d To m E Ed to G o t Fr Cos st From o tion orta tation C p rans por vy T ans Hea avy Tr e H
Chicago Flanagan
Priced Off: Arab Heavy $88/Bbl (~$7/Bbl Discount) or Maya + Transport ~$88/Bbl WCS Would Likely Sell ~$4.50-$9.00/Bbl Quality Discount AWB/CLB Would Likely Sell ~$6-12/Bbl Quality Discount WCS ~ $75-$79/Bbl AWB/CDB ~ $72-$76/Bbl
Maya in Cushing ~ $76-$82/Bbl WCS in Cushing ~$68-$72/Bbl (Slightly higher TAN) AWB or CDB ~$67-71/Bbl (Significantly higher TAN) Cushing
Heavy Transportation Cost ~$3-$5/Bbl
LLS ~$90 /Bbl LLS-Maya Discount - $5-$9/bbl Maya $81-$85/bbl
Houston Brent @ $95/Bbl
New Market Access (East Coast Canada Or West Coast) Keep Pricing From Blowing Out But Dont Lead To Big Upside
As depicted in the previous exhibits, opening up new market access whether it is through one or both of the proposed new West Coast lines, improved access to PADD 3 or even the newly proposed TransCanada East Coast line (converting gas pipeline to oil) are absolutely necessary for Canadian crudes. One generally held view is that this new market access will lead to substantial improvements in Canadian pricing. In our view, that is not necessarily the case as relatively high transportation costs on new build pipelines combined with some degree of quality discounting leads to acceptable pricing for Canadian crudes, but certainly not better than we have seen in recent history (other than the extremes we have seen thus far in 2012). No doubt this new market access will see improved prices or lower discounts than we are seeing today, but not necessarily significantly tighter discounting than we saw in 2010-2011. Overall, the big value of these new pipelines is ensuring that Canadian pricing doesnt turn into a complete disaster which would be the case if adequate pipelines are not built and producers were stuck competing for very limited access.
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What About Canadian Exports Through U.S. Ports?

The U.S. apparently has been very strict around the legalities of Canadian crudes transiting through U.S. territory
The U.S. has adequate pipelines to handle large-scale light oil exports if it were allowed by law. Canada allows oil exports, but lacks the pipelines to connect large scale volumes to deep water ports. What about exporting Canadian barrels through U.S. ports? This is an idea that is gaining some traction, but there are some real world limitations to implementation. First, the U.S. apparently has been very strict around the legalities of Canadian crudes transiting through U.S. territory, allowing exports only if shippers could guarantee that the Canadian crudes did not contact U.S. crudes in the shipping process almost an impossibility on a shared pipeline. If the U.S. government sticks to this view, large-scale exports via the U.S. are nearly impossible. Rail would be the one exception though where shippers can guarantee that Canadian oil has not come in contact with U.S. crudes. The limitation to this of course is rail availability on a large scale. Overall, we believe exports of Canadian crudes through U.S. ports will remain a niche play.
Rail Riding The Rails To Riches Or Just Riding?

Rail has emerged as an important piece of the North American oil transport puzzle. No published sources break out oil volumes by rail but total oil & products is available as depicted in the chart below. We can assume that most of the big increases since the start of 2011 are due to rising crude oil volumes (although there are likely more product movements too reflecting East Coast refinery closures). Overall, we would conclude that approximately 50,00075,000 Bbls/d is moving by rail in Canada and approximately 259,000 Bbls/d in the U.S. a large volume. The appeal of rail in the current environment is obvious. As a producer in PADD 2 (primarily Bakken) or in Canada, being able to circumvent Cushing and sell into higher priced markets like the Gulf Coast can lead to big pricing uplift. We see rail continuing to offer some degree of arbitrage into the 2013 time frame. However, if we are correct in our thesis and the Brent-LLS does start to widen out and LLS-WTI ultimately goes back to transportation differentials (still in the US$3-US$5/Bbl range), the value of rail is lessened as the high price Brent market is no longer available. LLS will still price US$3-US$5/Bbl vs. WTI but not likely a big enough gap to justify large rail costs, unless pricing North of Cushing (Bakken and Canada) are discounted due to lack of pipeline capacity which would be a factor if Keystone XL does not get built.
The appeal of rail in the current environment is obvious. If our call on differentials is correct, the economic advantage that we see from rail today will dissipatebut it still provides an important insurance policy against pipelines not getting built.
Exhibit 104. Oil & Petroleum Products Volumes By Rail

600,000 900,000 800,000 500,000 700,000 400,000 600,000 500,000 300,000 400,000 200,000
Canada - 2011 Car Loads - Bbls/d Canada - 2012 Car Loads - Bbls/d
300,000 200,000 100,000

USA - 2011 Car Loads - Bbls/d USA - 2012 Car Loads - Bbls/d
100,000
0
Ja n Ja n Fe b Fe b Ma r Ma r Ap r Ap r Ap r Ma y Ma y Ju n Ju n Ju l Ju l Au g Au g Se p Se p Se p Oc t Oc t No v No v De c De c
0
Ja n Ja n Fe b Fe b Ma r Ma r Ap r Ap r Ap r Ma y Ma y Ju n Ju n Ju l Ju l Au g Au g Se p Se p Se p Oc t Oc t No v No v De c De c
Source: Association of American Railroads and CIBC World Markets Inc.
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Although the rail financial arbitrage will likely dissipate, we believe there is a permanent role for rail in the North American transportation mix. The advantage that many producers have observed is having more flexibility to reach different markets and that is a key offering of rail vs. pipelines. Most likely once the Brent-LLS spread widens, we will see a shift of big Bakken volumes moving from the Bakken and Canada down to PADD 3 to a gradual focus to moving into PADD 1
Politics Can Improve Some Of The Potential DiscountingBut Dont Count On It

A clear takeaway from our discussions thus far is that at least some of the discounting for North American crudes can be solved by simple changes to U.S. government policy whether those changes be a relaxation of the Jones Act to facilitate shipping between U.S. ports, allowing exports of U.S. crudes or even easing restrictions surrounding exports of Canadian crudes through U.S. ports. The biggest area of impact to change in government policy would be on the potential for LLS vs. Brent disconnect, although we note that some discounting would still be required to prompt actual movement of barrels from PADD 3 to PADD 1, but likely more in the US$2-US$3/Bbl range vs. the US$5/Bbl range we are currently assuming. We note that this, or any other political decision, would not likely impact our view of LLS-WTI (transportation differential) or discounting back to Canada, which we have also modeled on the basis of transportation differentials.
Mexico & VenezuelaNo Threat To PADD 3 Market In Short Term But Not Necessarily Out Of The Picture
Declining production from Mexico, particularly for heavy oil, has created a bullish backdrop for heavy oil pricing in PADD 3. For Venezuela, the story is a bit different. Oil production (primarily heavy oil) is growing but increasingly, for political reasons, Venezuela is marketing its heavy oil to Asia (China in particular). While nobody is expecting a short-term rebound in Mexican or Venezuelan heavy deliveries into the Gulf Coast, one cannot remove them from the equation completely.
Exhibit 105. Mexico & Venezuela Production/Exports To U.S.

Mexico Production
3,000 2,500 2,000 1,500 1,000 500
0 Ma r-1 0 Ma y10 Ju l-1 0 Se p10 No v10 Ja n11 Ma r-1 1 Ma y11 Ju l-1 1 Se p11 No v11 Ja n12 Ma r-1 2 Ma y12 Ja n1
Exports To USA (Right) Heavy Light Total
Venezuela Production
3,000 2,500 2,000 1,500 1,000 500 2,500
Exports To USA (Right) Total
2,500
2,000 MBbls/d MBbls/d
2,000 MBbls/d
MBbls/d
1,500
1,500
1,000
1,000
500
0 Ma r-1 0 Ma y10 Ju l-1 0 Se p10 No v10 Ja n11 Ma r-1 1 Ma y11 Ju l-1 1 Se p11 No v11 Ja n12 Ma r-1 2 Ma y12 Ja n1
500
For Mexico, the issue on growing production is not a lack of resources as the country has an estimated 10.4 billion barrels of proved reserves with large unexplored potential. It is primarily funding issues surrounding Pemex combined with political squabbling. With a new government in Mexico, the factor to watch is whether or not there are any changes to funding/levels or more aggressive development plans. For Venezuela, the key issues are the next election and
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whether or not Chavez survives to that date. Recent headlines from opposition leaders suggest they would move to end Venezuelas preferential oil deals such as the deal they have to ship Venezuelan heavy crude to China. It remains to be seen if this is pure rhetoric or if this could mean the potential for more Venezuelan crude to be aimed at the U.S. market. PDVSA (Petroleos de Venezuela S.A.) estimates that 43% of its crude was marketed under these types of preferential deals that it is not paid directly for. In the short term, little is unlikely to change for either country as increasing production in any meaningful way is relatively long cycle time. However, over the medium to longer term though this is still a real risk that one or both countries finds its way back to growth. As the U.S. represents a whopping 55% of global coking capacity and the next largest market (other than Venezuela or Mexico) is Asia, which is 9,300 miles further away, this implies the U.S. GOM will remain THE destination of choice for Venezuelan, Mexican and Canadian heavy oil with all producers fighting for share of the same market (that is already over-saturated with light barrels).
Exhibit 106. Global Coking Capacity

Rest of World (113 Countries) 26%
Venezuela 3% Mexico 4% Japan 3% India 4% Brazil 2% China 3%

Source: Oil & Gas Journal.
US 55%
Oil Supply/Demand Balances Key Takeaways

North American Growth Takes Some Pressure Off Global Balances: Consensus forecasts are for North American oil growth of ~340,000 Bbls/d per year through 2015 vs. our forecasts of closer to 800,000-900,000 Bbls/d per year. Incorporating our estimates into consensus supply demand balances would imply a relatively flat call on OPEC through 2015 (typically corresponding to flat prices). Additionally, spare capacity would grow meaningfully which could take some of the risk premium out of oil prices. Oil Renaissance Will Continue To Have Big Impact On Regional Price Discounts: The biggest impact of the North American oil renaissance is the impact on regional price discounts and flows. We are already seeing this in PADD 2 and Canada where crudes have been extra volatile and often selling at large discounts vs. benchmarks. This trend will continue long term but the pinchpoints will change over time.
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Canada & PADD 2 Discounts To Remain Through 2014: We continue to believe that Canada and PADD 2 crudes will remain very susceptible to discounting through the 2014/15 time frame (when the full Keystone XL is built and Flanagan/Seaway). PADD 2 and pipe within PADD 2 are at capacity, meaning any pipeline curtailment or refinery outage will lead to meaningful discounts. Once the aforementioned pipes are built, we should see Canadian crudes settle into a transportation discount vs. WTI and LLS. PADD 2 Problems Will Soon Turn To PADD 3 Problems: PADD 3 is already nearly awash in light sweet crude (Eagle Ford, etc.). When Seaway and the south portion of Keystone XL are on-stream, PADD 2 will be sending over 1 MMBbls/d of crude into this market (a good portion of that being light) fully saturating the market. As it is prohibited by law to export crude oil from the U.S., this means that PADD 3 will become a trapped market for light oil and will soon lead to discounting of LLS to Brent. We Estimate WTI-Brent In US$10/Bbl Range Long Term: We recently changed our long-term oil price forecasts to reflect a US$10/Bbl discount of WTI vs. Brent, which consists of a US$5/Bbl discount for LLS-Brent plus ~US$5/Bbl transport differential back to Cushing. No Crude Is Untouched By This Theme: Generally speaking, there will be strong desire for Canadian heavy crudes by PADD 3 refiners, but this by no means WCS has a reserved spot in the PADD 3 refinery system. Complex heavy refiners can (and will) take light oil over heavy for the right price leading to competition for this coveted refinery space. Directionally we believe WCS pricing is less impacted by this theme, but still impacted nonetheless as it is weighed down to a certain degree by pricing on the light complex. Canadian Crudes Should Price A Transportation Discount; But Only If Pipe Is Built: If adequate pipeline capacity is built, Canadian crudes should trade at transportation costs vs. U.S. equivalent crudes (SCO vs. WTI and WCS vs. Maya with slight quality adjustment). If pipeline capacity is not built, then Canadian prices will move to discounts large enough to eliminate much of the anticipated demand growth a disastrous scenario for Canadian producers. Time To Smoke The Peace Pipe: There are adequate proposals being considered to move Western Canadian crudes to the U.S. and new markets such as Asia, California or the East Coast U.S. However, political risk and rhetoric is clearly ramping up, particularly against the crucial West Coast pipelines. We give only 50/50 odds (at best) of West Coast pipe being built before the end of the decade.
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North American Natural Gas Supply/Demand Balances

The natural gas market remains in a state of flux, transitioning from a period of hyper supply growth with limited demand growth. What comes next for natural gas? We believe the future looks more optimistic than we have seen in recent years as lower gas prices lead to a gradual structural shift in natural gas demand. In contrast to the North American oil story, where demand is expected to remain relatively flat, there are many more outcomes on the natural gas demand profile. Natural gas demand growth could range from modest to very large but depends on other macro variables (oil prices and coal prices to name a few). On the demand side of the equation, there are really three major swing factors that will impact the demand outlook through the 2020 time frame: 1) natural gas demand for oil sands; 2) natural gas demand for power generation; and 3) exports of North American gas via LNG. Natural gas demand for transportation remains a wild card but we believe this is still likely a bigger driver in the 2020+ time frame.
Demand Drivers
Oil Sands
Depending on the oil sands growth scenario, we can see natural gas demand for oil sands rising by 0.20.4 Bcf/d per year from 2011 to 2016 (1-1.6 Bcf/d growth in absolute terms) and 0.2-0.6 Bcf/d per year from 2016 to 2020 (0.8-2.4 Bcf/d in absolute terms).
Canadian natural gas production is expected to remain relatively stagnant as reinvestment remains primarily targeted towards tight oil and oil sands growth. On the demand side though, things are different. Oil sands growth will continue to drive significant demand for natural gas in Western Canada. As identified in the previous sections, the outlook for oil sands growth remains highly variable reflecting the higher cost structure vs. other North American oil growth and higher transportation costs and need for infrastructure build. Depending on the oil sands growth scenario, we can see natural gas demand for oil sands rising by 0.2-0.4 Bcf/d per year from 2011 to 2016 (1-1.6 Bcf/d growth in absolute terms) and 0.2-0.6 Bcf/d per year from 2016 to 2020 (0.8-2.4 Bcf/d in absolute terms). The low end of forecasts corresponds to oil sands growth being rationalized to CAPP forecast levels which are roughly equal to capacity if Keystone XL is built. The CIBC case is roughly the mid-point of these lower scenarios and company forecasts (which we present as the unrisked case).
Exhibit 107. Natural Gas Demand Growth For Oil Sands

6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2008 2009 2010 2011 2012e 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e CIBC Forecast CAPP Forecast
Gas Consumption (bcf/d)
Producer Forecast
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Power Generation Directionally Higher But Views Differ On Magnitude

We have seen recently just how big of a factor power generation can be to the natural gas market. Recent displacement of coal generation by natural gas has led to an impressive 5 Bcf/d (24%) increase in gas demand Y/Y over the past six months. These gains are extremely price sensitive and most of this market share will likely revert back as natural gas prices climb. However, it does highlight the importance of the power sector to natural gas and foreshadows the structural shift in natural gas demand that will continue to unfold over the long term. It is no secret that retirements of coal-fired power generation facilities are going to be quite meaningful over the coming years. However, some of this outlook depends on the upcoming U.S. election. An Obama victory would see the retirements happen on schedule while a Republican victory would likely see an easing of Environmental Protection Agency (EPA) requirements to retire coal fired facilities. The following chart from the EIA depicts what is currently scheduled to come offline over the coming years and, as depicted, there is approximately 18 GW of capacity schedule to come offline from 2013-2016 which would translate to approximately 1.7 Bcf/d of gas demand (if made up by higher gas generation which is a reasonable assumption).
Exhibit 108. Historical & Planned Retirements Of Coal-fired Generators
Source: EIA.
Natural gas will clearly make very meaningful in-roads into the US power mix over the coming years. But what does this actually mean for natural gas demand? Here is where the opinions vary quite considerably. Exhibit 109 depicts the outlook from both the EIA and from IHSCera. The EIA is projecting demand growth of 0.26 Bcf/d per year from 2011-2016 and relatively flat thereafter. On the more optimistic side, IHSCera is forecasting 0.9 Bcf/d per year growth from 2011 to 2016 and 1.2 Bcf/d per year from 2016 to 2020.
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Exhibit 109. Gas Demand For Power Generation Differing Views

35,000 30,000 25,000 Mmcf/d 20,000 15,000 Forecast Growth Varies from 0.1-1 Bcf/d Per Year 10,000 5,000 IHSCera EIA Long-Term Energy Outlook 2012 Historically - 0.6 Bcf/d Per Year Growth
Overall, we have based our forecasts on 0.6 Bcf/d per year demand growth from 2011 to 2020.
Overall, we have based our forecasts on 0.6 Bcf/d per year demand growth from 2011 to 2020, which is based on historical growth rates plus roughly mid-point between EIA and IHSCera forecasts. We note that one of the reasons for the more conservative EIA outlook is its view that renewables grow from 10% of the U.S. power mix to 14% by 2020. If renewables were maintained at 10% rather than growing to the 14% range as forecast by the EIA, the increment would most likely be made up by natural gas which would add ~3.5 Bcf/d (0.4 Bcf/d per year to their growth forecasts) for natural gas.
Exhibit 110. Electricity Generation By Fuel: 2010-2020
Source: EIA.
LNG The Race Is On

We believe North American LNG is going to emerge as a meaningful outlet for North American gas supply in the latter half of this decade. We have published two very detailed reports on LNG, with the most recent being published in January 2012 (LNG - The Race Is On). Our views and projections on LNG are summarized below.
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20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 E 20 13 E 20 14 E 20 15 E 20 16 E 20 17 E 20 18 E 20 19 E 20 20 E
As Expected; LNG Emerging As A Major Theme In 2012: We highlighted that a dominant theme in 2012 will be North American LNG moving from dream to reality. With the Sabine Pass facility recently just passing Final Investment Decision (FID), we now have one facility under construction. Kitimat has been delayed somewhat (from mid-2012 FID to tentative late 2012/early 2013), although we note site clearing and work has already begun. 20 Bcf/d+ Of North American Liquefaction Proposals On The Table: The following table highlights the potential for LNG exports that are currently on the table in North America. We have highlighted approved projects in green, projects that have currently entered the regulatory process in orange and preapplication projects in yellow. Overall, there are ~155 MMtpa (20.2 Bcf/d) of liquefaction facility proposals currently on the table with other proposals likely to emerge through 2012 [Nexen (NXY-SU)/Inpex (1605-T), Imperial/Exxon to name a few].
Exhibit 111. LNG Export Projects

Project Sabine Pass Kitimat BC LNG Freeport Lake Charles Cove Point Jordon Cove Cameron LNG Shell Kitimat Freeport Expansion Gulf Coast LNG Progress/Petronas Oregon LNG Location GC NW BC NW BC GC GC EC NW US GC NW BC GC GC NW BC NW US Type BF GF GF BF BF BF GF BF GF BF GF GF GF Status Fully financed and recently achieved FID Approved, awaiting FID & contracts Approved, awaiting FID & contracts Expects all approvals by mid-2013 with start-up in mid-2015, signed preliminary contracts Pre-FERC filing, awaiting DOE non-FTA export approval Pre-FERC filing, awaiting DOE non-FTA export approval Partially FERC approved, will file for amendments and DOE non-FTA export approval soon Received FERC approval in 2011, awaiting non-FTA approval Applied For Export License Pre-FERC filing, awaiting DOE FTA and non-FTA export approval Pre-FERC filing, awaiting DOE FTA and non-FTA export approval Pre-Application Pre-Application 2015 0.2 LNG Export Capacity Anticipated At Year-End (Bcf/d) 2016 2017 2018 2019 1.2 0.7 0.6 1.8 0.7 0.1 0.6 1.0 0.8 1.7 2.4 1.4 0.2 1.2 1.0 1.0 0.8 1.7 2.4 1.4 0.2 1.8 1.0 1.0 1.6 1.7 0.8 0.6 2.8 1.0 1.3 2020 2.4 1.4 0.2 1.8 2.0 1.0 1.6 1.7 1.6 1.2 2.8 1.0 1.3
1.4 0.3 0.5 1.3
Approved Project
Total Fully Approved Projects Total In Regulatory Process Other Status Total Risked Canada Expectations Risked US Expectations Total Risked Expectations
In Regulatory Process
Pre-Application
0.0 0.0 0.0 0.0 0.0 0.2 0.2 0.7 0.6 0.0 1.3 0.6 1.7 2.2 0.8 4.1 0.3 5.2 0.8 2.9 3.7 1.6 7.1 1.8 10.5 1.7 4.4 6.1 1.6 11.3 3.1 15.2 2.4 5.1 7.5 1.6 13.7 3.9 17.6 2.9 5.6 8.5
We Believe ~8 Bcf/d Of LNG Exports By 2020: As depicted in Exhibit 111, we believe there is a reasonable likelihood of seeing approximately 62 MMtpa (8.5 Bcf/d) of export capacity by 2020, with 22 MMtpa (2.9 Bcf/d) likely from Western Canada, and 40 MMtpa (5.6 Bcf/d) from the U.S. (primarily Gulf Coast). Next DOE Non-FTA Export Approvals Rulings Will Be Major Milestone: The DOE surprised the market in early 2011 by granting approval to the proposed 18 MMtpa (2.4 Bcf/d) Sabine Pass facility, allowing LNG exports to non-free trade countries (a necessity for almost any U.S. LNG project). We are currently waiting on similar approvals for Freeport 14 MMtpa (1.8 Bcf/d), Lake Charles 15 MMtpa (2 Bcf/d), and Cove Point 7.6 MMtpa (1 Bcf/d). The DOEs primarily concern is security of supply, and with 2,543 Tcf of estimated resources in the U.S. representing 80 years at 2040 projected demand levels, we believe this will not be an issue. The DOE approval of Sabine Pass resulted in a meaningful move in long-term gas futures when it was announced and we could see a similar situation if and when further approvals are granted.
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We Expect To See 2-3 New Non-FTA Export Approvals In Early 2013: Price implications of LNG exports will also be a DOE concern and we believe the DOE is undergoing a substantial review, which it will use to base approval of proposed export facilities. We expect the review to depict similar results as other recent studies; essentially indicating that the price impact will be relatively modest, leaving gas prices at easily acceptable levels for consumers and industry. Overall, we believe there is a high chance the DOE approves 2-3 additional export facilities after the U.S. election in November (effectively early 2013 to announce approval). Most likely they will first grant approval to brownfield conversions of existing regas capacity in the GOM vs. greenfield developments. Asians VERY Interested In Opening North American LNG Markets: Skeptics continue to be proved wrong as Sabine Pass on the GOM has moved to FID. The project has signed contracts for 16 MMtpa (2.1 Bcf/d) of capacity with Asian consumers making big commitments, despite the very long shipping distance (approximately 11,000 miles). More recently, the proposed Freeport project announced tentative deals with Osaka Gas (9532-T) and Chubu Electric (9502-T) from Japan, once again highlighting the demand from Asian buyers for North American LNG. Tolling Model In GOM Pulling Some Interest From Canadian LNG But Price Difference Is Not Large: Cheniere (LNG-AMEX) surprised the market by selling out all of the capacity on its Sabine Pass export project. More recently, Freeport LNG announced tentative deals on its first Train with Japanese buyers lining up. Clearly buyers are attracted to the tolling model as an alternative to the traditional LNG oil linked pricing deal. However, we note that the long-term prices are not terribly different. Under current spot prices the gap is large as the cost to get cargoes back to Asia is $8.45 (US$3/Mcf gas plus tolls and shipping) vs. US$11- US$14/Mcf under oil linked pricing. However, on current strip prices, the cost through the tolling model is US$10.41/Mcf (US$4.70/Mcf gas plus tolls) US$11-US$14/Mcf under oil linked pricing (oil curve is relatively flat through 2017). Additionally, under the traditional model the buyer would also take an equity position which further reduces the apparent price gap. Overall, we continue to believe there will be oil linked pricing for Western Canadian LNG but potentially with a minor natural gas link.
Exhibit 112. Landed Natural Gas Price To Asia From GOM Under Tolling Model
Spot $3.00 $0.45 $3.45 $3.00 $2.00 $8.45 2017 Futures $4.70 $0.71 $5.41 $3.00 $2.00 $10.41
Gas Cost 2017 Futures Curve Contracted Premium (15% premium to NYMEX to cover Fuel Shrink & basis) Effective Gas Price @ Plant Gate Contracted Toll Shipping Cost (via Panama Canal post expansion - $3/Mcf currently) Landed Gas Price
Kitimat Behind Schedule But Will Likely Move To FID In Late 2012/Early 2013: Based on our analysis of Australian LNG costs, we believe liquefaction costs are likely in the $800-$1200 per MMtpa ($37,000-$55,000/Boe/d) range, well above original cost estimates. We also expect pipeline costs to have increased to $240-$280 per MMtpa ($11,000-$13,000/Boe/d) for an overall project cost of $1,040-$1,480 per MMtpa ($48,000-$68,000/Boe/d) for Phase 1. We still believe Kitimat may surprise the market by announcing an anchor partner for its full 1.4 Bcf/d of proposed capacity, not just the first 0.7 Bcf/d train. Even with higher
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costs, we still believe Kitimat will deliver reasonable returns with our mid-case modeling yielding $2.8 billion of NPV and a 15% IRR at US$100/Bbl and US$5/Mcf gas. If FID is declared in late 2012/early 2013, we should see first gas exports in the 2016-2017 time frame. Shell Unveils LNG Canada Plans: After much secrecy, Shell has finally unveiled its plans for LNG Canada in Kitimat. The project is initially envisioned as a 12 MMtpa (1.6 Bcf/d) facility with the intent to double to 24 MMtpa (3.2 Bcf/d). First gas from Train 1 is expected in 2019 with Train 2 on-stream likely six months after. Timing for Trains 3&4 have not been announced but we believe a likely scenario is to continue the pace and bring on these additional trains in about six months intervals. Petronas Demonstrates Commitment To LNG: While we never doubted Petronas (PGAS-KL) intent to develop LNG, following its $5.5 billion bid for Progress (PRQ-SP), there is little doubt it will continue to aggressively pursue LNG. Petronas announced in the spring that it has selected Prince Rupert as the location for its planned LNG facility with first gas still slated for the ~2018 time frame. Other Parties Still Assessing Canadian LNG: Progress highlighted in its recent information circular that it was approached several times by a party other than Petronas to acquire the firm. Petronas then went on to bid $20.45/share cash and then raised the offer again after the other party came back. In our view, this is a clear depiction that there is another large party wanting to get positioned for LNG exports and that desire likely has not gone away following their failed bid for Progress. Some of the parties still thought to be looking at B.C. LNG exports are BG [BG-L] (acquired a site in Prince Rupert but has no resource as of yet), Exxon/Imperial and Nexen [likely to be CNOOC (CEONYSE)]/Inpex. North American LNG Can Compete Effectively With Australian LNG: Greenfield Canadian liquefaction costs will likely be similar to Australia, shipping distances into Asia are only modestly longer (4,300 nautical miles from Canada vs. 3,100 - 4,300 from Australia) and upstream development costs are similar. We also believe that LNG buyers will see some value in diversifying markets away from Australia, which has become a very heated environment.
U.S. Demand Growth Expected To Average 1.4 Bcf/d Per Year Through 2016 And 2.0 Bcf/d Per Year From 20162020 As LNG Exports Begin
Overall, we estimate that U.S. demand for natural gas should increase approximately 1.4 Bcf/d per year through 2016 and 2.0 Bcf/d per year from 2016-2020 as LNG exports accelerate (1 Bcf/d excluding LNG exports). As discussed, the main growth drivers behind U.S. natural gas demand is power which we expect to grow ~0.6 Bcf/d per year with upside to the 1 Bcf/d per year range. We believe it is reasonable to assume 2-3 U.S. LNG export terminals in operation by the 2020 time frame with aggregate exports in the 4.5 Bcf/d range, representing a big incremental demand driver.
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Supply/Demand Balances Tighter Markets Ahead

Natural gas production from the main resource plays has averaged 4.5 Bcf/d per year from 2008-2011. Overall U.S. dry gas production growth is lower at 2.6 Bcf/d per year due to declines in non-resource play production and increasing NGL extraction losses, but still quite amazing growth. As discussed in our detailed discussions on forecasts for U.S. resource play production, we believe this momentum is finally waning and that there is no chance that the U.S. can sustain the prior growth rates without an increase in gas drilling which will only occur with a meaningful price increase. Exhibit 113 recaps our various natural gas production growth scenarios. As depicted, with current rig counts we would see U.S. dry gas production growth average only 0.5 Bcf/d per year through 2016 and similar rates through 2020. Other scenarios where we layer in efficiency improvements and expanding rig fleet lead to dry gas growth in the 1-1.3 Bcf/d per year range. In our view, the most meaningful forecast is the Monte Carlo simulation, which incorporates price volatility and dynamically re-allocates rigs to plays with higher rates of returns, so one can see the impact of prices on growth forecasts. To get dry gas growth into a range that approximates our 2011-2016 demand forecast of ~1 Bcf/d per year, we would need to see prices in the US$4/Mcf range if producers allocate rigs solely according to IRR. However, as we noted in previous sections, in the short term (next two years), we believe strategic decisions to meet land obligations will continue to keep rigs more weighted to oil/liquids and prices may stay higher than they otherwise would. In the 2016-2020 time frame when U.S. LNG exports begin to take hold, we believe prices would need to be in the US$4US$5/Mcf range to meet our ~2 Bcf/d per year growth forecast.
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Exhibit 113. Natural Gas Growth Scenario Summary

Gas Production From Resource Plays (Mmcf/d) A) Scenario 1 Base Case Results B) A + Ramp Up In New Plays C) B + Efficiency Gains D) C + Rig Fleet Growth E) Monte Carlo ($95 WTI, $4 NYMEX) F) E + Ramp Up In New Plays G) Monte Carlo ($95 WTI, $5 NYMEX) H) G + Ramp Up In New Plays Non Resource Play Gas Production Total Wet Gas Production Scenario A (Same as Scenario 1 Base Case in previous example) Scenario B Scenario C Scenario D Scenario E Scenario F Scenario G Scenario H Extraction Losses Total US Dry Gas Production Scenario A (Same as Scenario 1 Base Case in previous example) Scenario B Scenario C Scenario D Monte Carlo ($95 WTI, $4 NYMEX) Monte Carlo ($95 WTI, $4 NYMEX) + Ramp Up In New Plays Monte Carlo ($95 WTI, $5 NYMEX) Monte Carlo ($95 WTI, $5 NYMEX) + Ramp Up In New Plays
2011 31,775 31,775 31,775 31,775 31,775 31,775 31,775 31,775 34,429
2016 40,258 42,628 44,662 47,689 45,864 49,068 53,130 57,442 29,802
2020 45,759 49,440 53,201 70,361 54,723 60,227 64,143 70,851 26,420
'11-'16 1,696 2,171 2,577 3,183 2,818 3,459 4,271 5,133 (925)
'16-'20 1,375 1,703 2,135 5,668 2,215 2,790 2,753 3,352 (845)
'11-'20 1,554 1,963 2,381 4,287 2,550 3,161 3,596 4,342 (890)
66,204 66,204 66,204 66,204 66,204 66,204 66,204 66,204 3,203
70,060 72,430 74,464 77,491 75,666 78,870 82,932 87,244 4,466
72,179 75,860 79,621 96,781 81,143 86,647 90,563 97,271 4,601
771 1,245 1,652 2,257 1,892 2,533 3,345 4,208 253
530 858 1,289 4,822 1,369 1,944 1,908 2,507 34
664 1,073 1,491 3,397 1,660 2,271 2,707 3,452 155
63,002 63,002 63,002 63,002 63,002 63,002 63,002 63,002
65,593 67,964 69,998 73,025 71,199 74,404 78,465 82,778
67,578 71,259 75,019 92,180 76,542 82,045 85,962 92,670
518 992 1,399 2,005 1,640 2,280 3,093 3,955
496 824 1,255 4,789 1,336 1,910 1,874 2,473
508 917 1,335 3,242 1,504 2,116 2,551 3,296
Short-term Balances Looks Quite Encouraging

Short-term gas balances are looking surprisingly positive. Western Canada gas production less demand will be flat to down in 2013 (and likely 2014) and in the U.S., we see dry gas production being flat to down 0.5 Bcf/d in 2013. Price recovery in 2013 will be somewhat limited by demand losses (i.e. if prices rise too quickly we will see significant y/y demand declines from power generation).
While this report was primarily focused on the medium- to long-term outlook for oil and natural gas, we cannot help but point out what are increasingly bullish looking supply/demand balances in 2013. The starting point is our view that Western Canada gas production less demand will be flat to down in 2013 (and likely 2014). In the U.S., we see dry gas production being flat to down 0.5 Bcf/d for net dry gas supply in the U.S. and Canada being down 0-1 Bcf/d Y/Y the first annual decline in many years! The U.S. demand side of the equation is more complex. With a five-year average winter, we would see demand up approximately 1.4 Bcf/d on a Y/Y basis (on a calendar year basis would be much higher growth during heating season). The power side is more price dependant. If prices went back to the US$4/Mcf range, we would risk losing at least half of the 4.6 Bcf/d Y/Y demand gains but overall, we would still see a very tight supply-demand balance particularly in the early winter months. As discussed in a prior section, there is the risk that prices increase and gas drilling follows suit but we believe drillers will be reluctant to move rigs back to gas too quickly given past disappointments and the fact that so many producers have large land commitments to meet on liquids focused plays. For the first time in many years, it seems there could be real upside to short-term gas prices (if weather cooperates).
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Northeast Region Growing Marcellus Production Lessens Need For Canadian Imports
The Northeastern U.S. is still the largest consuming region of natural gas in the U.S., consuming ~35 Bcf/d in peak winter months. The region has always had a large supply deficit, which was filled from a combination of Canadian imports, Mid-Continent and U.S. Southwest movements (and some LNG imports). As depicted in the chart below, the growth in the Marcellus has been staggering but the region is still by far a large net consumer, even in the summer months.
Exhibit 114. U.S. Northeast Gas Consumption Vs. Production

50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12
NE Nat Gas Supply NE Nat Gas Demand
Source: Bentek and CIBC World Markets Inc.
Although the US NE is still a large net consumer of gas, the dramatic growth in the Marcellus is having an impact on inter-regional flowslessening the need for Canadian gas in Eastern markets.
Although the US NE is still a large net consumer of gas, the dramatic growth in the Marcellus is having an impact on inter-regional flows as the lower need for imports into the region is meaning that gas that would otherwise be destined for this market is finding a new home. Increasingly, we are starting to see bigger movements of U.S. natural gas into the Eastern Canada market effectively backing out some of the need for Western Canadian gas in this market. Importantly, this trend is not going away. At current rig counts (which are off 30% from their highs), we expect Marcellus production to grow from current levels of approximately 6.5 Bcf/d to ~9 Bcf/d by 2016 and in the 12 Bcf/d range by 2020. With a return to 2010-11 rig counts, we could be in the 12 Bcf/d range by 2016 and in the 17 Bcf/d range by 2020. While any of these scenarios still leave the US NE in a net consuming position, it would have a radical impact on intra-regional pipeline flows/market access.
Western Canada Looks Increasingly Isolated

The Western Canadian gas market is increasingly facing tougher competition in its historic export markets. The Northern California market has historically been an important market for Canadian gas, but that now sees more competition from the U.S. Rockies due to the start-up of the Ruby pipeline (completed in summer 2011). The Bison pipeline has connected U.S. Rockies supply to the Northern Border system for delivery into the Chicago area, which will also back out some Canadian gas demand. And of course, one of the bigger issues is the aforementioned discussion on diminishing need for Canadian gas in the US NE.
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To date, the impact on AECO-NYMEX differentials hasnt been as bad as one would think given this backdrop. Part of the issue is that Canadian gas production has been declining due to overall price weakness for natural gas, which has meant that the backed out gas, was essentially voluntarily backed out. The basis risk could become bigger though should overall gas prices increase to a level that prompts higher reinvestment in natural gas drilling in Western Canada, and there is an actual competition for market access. The following chart depicts our current outlook through 2020 for gas movements out of the Western Canadian gas market. As depicted, we expect only moderate growth in overall dry gas production which combined with potentially very meaningful growth in oil sands, leaves gas movements out of Western Canada declining through the 2016 time frame. The decline in gas movements out of Western Canada would accelerate should LNG exports come to pass (which we believe they will). Overall, we see continued competition for Canadian gas in traditional markets but a continued industry focus on oil, combined with opening of non-traditional markets should lead to AECO-NYMEX basis differentials remain in a reasonable range. In a scenario where gas prices remain sub US$4/Mcf, we could actually see Western Canada gradually emerge as a very independent market as supply would decline to a point where oil sands demand growth and LNG leave very little left to export to the U.S. or Eastern Canada.
Exhibit 115. Western Canadian Gas Available For Export To Eastern Canada/U.S.
Canadian Supply Growth Scenario
22,500 20,000 17,500 15,000 LNG Exports Other WC Gas Demand Oil Sands Gas Demand Gas Available For Export To Eastern Can or US
Flat Canadian Production Scenario

22,500 20,000 17,500 15,000 MMcf/d 12,500 10,000 7,500 5,000 2,500 -
MMcf/d
12,500 10,000 7,500 5,000 2,500 -
1E
2E
7E
6E
3E
4E
8E
9E
20 08
20 09
20 10
5E
0E
17 E
16 E
13 E
20 1
20 1
20 1
20 1
20 1
20 1
20 1
20 1
20 2
20 1
20 08
20 09
20 10
12 E
11 E
15 E
14 E
18 E
19 E 20
20
20
Takeaways From Natural Gas Supply Demand Balances

LNG Becoming A Reality: We believe LNG is well on its way to reality with well over 20 Bcf/d of export projects on the table. Our risked view is that approximately 8 Bcf/d is built by 2020, with approximately 3 Bcf/d of capacity in Western Canada and the remainder in the U.S. (centered in the GOM). Demand Should Grow By 1 Bcf/d Per Year Through 2016 And 1.5 Bcf/d Per Year From 2016-2020: We expect U.S. natural gas demand to grow on average approximately 1 Bcf/d per year through 2016 driving primarily by higher demand for power consumption due to coal retirements. We expect demand to pick up in the latter half of the decade as LNG exports are added into the mix.
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20
20
20
20
20
20
20
20 E
Surplus WC Gas Flat In Best Case And Meaningful Declines In Worst Case: We expect Canadian supply to be down modestly in 2012 and 2013 and settling into a modest growth profile thereafter, with most of the growth wedge allocated to planned LNG facilities. Demand for gas in Western Canada will increase ~ 0.2-0.4 Bcf/d per year through 2016 and 0.2-0.6 Bcf/d per year through 2020 due primarily to higher demand for natural gas for oil sands. We expect LNG exports out of Western Canada to be up to 3.0 Bcf/d by 2020 (2-3 facilities). Overall, gas available for movement to Eastern Canada or the U.S. will likely remain flat in the growth scenario and down 6 Bcf/d by 2020 in a low price scenario (limited gas drilling). Shales Decelerating: We expect shale gas growth to decelerate massively from the high growth rates seen in 2008-2010. At current rig counts, shales would only grow ~1.7 Bcf/d per year through 2016 vs. the ~4 Bcf/d per year growth seen previously. Adding in extraction losses and declines in non-shale production would see U.S. dry gas production growth of only 0.5 Bcf/d per year through 2016. We also note that our modeling suggests overall dry gas production flat to down modestly in 2013/14 before beginning to ramp up again. Tighter Balances: Given the combination of flat to declining Canadian production in 2012-14, combined with flat to declining U.S. dry gas production in 2013/14, and higher demand we clearly see significantly tighter balance for natural gas in the near future, which should continue price momentum. Prices Unsustainably Low: The clear takeaway from our modeling (both the linear models and the simulation models), indicates that the current rig count and prices are unsustainably low. However, finding equilibrium remains a real balancing act.
Investment Conclusions
Global Investors Likely To Remain Luke Warm On Canada Due To Pricing/Infrastructure Risk: Global investors have generally been moving away from Canadian oil & gas exposure for many reasons, but generally speaking a combination of macro fears (Greece, Spain, China slowing) along with fears regarding short-term differential risk for Canadian oil producers. With the dismal stock performance YTD for Canadian large caps, one could argue that much of our macro thesis is already discounted in stock prices which is generally true. However, the general negative backdrop with more limited growth visibility and rising pipeline/differential risk means that global investors are unlikely to flock back to Canadian oil and gas exposure anytime soon unless we see the recent flurry of M&A turn into a full blown wave (possible). Some Big Players May Adjust Strategies: If our macro view pans out, it will (or should) impact investment decisions by producers. The most likely adjustment will be to those planning mega-projects such as upgraders or mining oil sands projects. We expect operators to move more cautiously on these projects, with a high chance of outright cancellation. On the one hand, lower growth is a negative. However, we believe investors have compressed valuations on many of these stocks due to concerns about low return investment. On balance, we actually believe investors would react favorably to large-cap producers to moving to lower growth but higher returning and higher free cash yielding strategies. For example, we can make a case that Suncor would be worth 40%-50% more if it moved to a slower and more SAGD oriented strategy and paid out excess free cash.
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Negative Backdrop For Long-dated Oil Sands: Much of our macro thesis is very bearish for the value of long-dated bitumen assets. As we highlighted, producer growth forecasts are wildly optimistic and we believe there will be big competition for pipe access and resources to build projects which leaves the longer-date more fringe resources at a distinct disadvantage. Additionally, investors will likely remain much more cautious on providing the necessary capital for those growth ambitions, meaning that early stage oil sands companies will face far more execution risk than better financed players. Value can still be obtained/recognized for long-dated resource, but this depends more on M&A or JV activity. Downstream Value Becomes Very Apparent: Our macro view clearly favors companies with downstream assets. In Canada, there are no pure refiners so this by default means that integrated energy companies (Suncor, Cenovus, Husky and Imperial Oil) are best positioned. The rationale is that in-land refineries capture much of the value of lower upstream pricing. We have seen the integrateds outperform PADD 2 exposed names YTD indicating that some of this theme is already reflected in share prices. However, we believe investor expectations are still generally that current downstream cash flows are supernormal and will revert to low levels again in 2014+. We believe that downstream cash flows will remain robust over the long term and that is not reflected in share prices. We highlight Suncor and Cenovus as two of the best positioned integrateds.
Exhibit 116. PADD 2 Vs. Integrated Share Price Performance

120% 110% 100% 90% 80% 70% 60%
Ma r-1 4 Ma r-2 8 Ap r-1 1 Ap r-2 5 9 3 4 15 01 06 29 y0 y2 20 Ju l-0 Ju l-1 8 Au Ju nFe bFe bMa Ma Ju nFe bg0 1
US E&P CAD E&P Global Energy
US Integ CAD Integ PADD II Exposed Cdn E&P
Good Opportunity Still In Quality Gas Producers: For the first time in many years, the outlook for natural gas prices looks quite attractive. With tightening balances in 2013/14 and a rig count that will likely be slow to return to gas drilling gas prices should move into the US$4/Mcf range in 2013. We note that some gas players like Encana are already reflecting ~US$4.50/Mcf natural gas so much of the upside is already built in. However, we still see good upside in some of the smaller-/mid-cap gas names. Among the dividend-paying corps, our top two ways to play natural gas include Trilogy and Peyto with Trilogy as the more defensive gas play (due to its 45% liquids weighting) and Peyto as a higher torque gas pick (88% weighted to gas).
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In the junior/intermediate space, Celtic and Painted Pony are our top gasweighted names. Both companies offer investor meaningful torque to gas prices as they control substantial resource potential from large contiguous land positions. We also highlight NuVista as another gas-weighted pick for its undervalued asset base with 500 drilling locations identified in the Wapiti Montney liquids-rich gas play that is a strong M&A candidate. In addition, we believe the company's shares are trading inexpensively relative to its natural gas peers as measured by Core NAV (P+P reserves value). Light Oil Players Will See Lower-than-expected Pricing But Low-cost Players Will Still Make Very Strong Returns: Our thesis of lower light oil pricing will take some of the shine off domestic light oil producers. However, we note that producers with low costs and high-quality resources like Crescent Point will continue to prosper (although consensus numbers may be overstated if our macro view holds). Light oil companies with high cost structures and high capital obligations such as Canadian Oil Sands (opex in US$40/Bbl range with sustaining capex in the ~US$30/Bbl range through 2014) will see many challenges in this environment.
Top Picks
Large Caps: Among the large caps, we continue to focus on Brent-focused producers and integrateds as our top picks. In order of preference, we highlight Suncor (inexpensive with high-quality downstream), Cenovus (highest quality oil sands and well positioned with downstream) and Talisman (turnaround story, gas assets will get re-rated if prices recover and enough Brent-priced growth projects in Colombia and Asia that will interest investors). Small- To Mid-cap Oil Sands: From a macro perspective, it is more challenging to get excited about the small- to mid-cap oil sands producers, however, we continue to highlight MEG Energy (innovative and one of lowest cost resources bases) and Athabasca Oil. We remain positive on ATH primarily because we see it reducing oil sands exposure and believe the light oil assets will drive remaining value in short term. Dividend-paying Corps: Our top picks in this space include our highest netback domestic light oil producers, Crescent Point and PetroBakken (whose margins are better protected in a downside scenario in which crude oil sees pressure). We would also highlight Trilogy as a top pick owing to its strong growth profile and its ability to fund its development (and pay its dividend) within cash flow. Small And Mid Caps: Our top pick is Angle Energy as it offers exposure to a high netback Cardium oil play at Harmattan, which has become the largest focus area for the company. We highlight that the corporate liquids have increased from 39% at the end of 2010 to 46% projected for Q4/12. We also expect large year-end reserve growth associated with the active drilling program in Harmattan and area. International Producers Our two top picks in the International Producer space are Coastal Energy and Gran Tierra Energy. Both companies produce over 90% high netback oil that track to Brent pricing. CEN has a strong balance sheet, good free cash flow generation from its producing properties and significant upside potential with booked P3, 2C and prospective resources. GTE trades at a 20% discount to its 2P NAV but has a surplus of cash on its balance sheet, is expected to generate free cash flow in 2013 and has an active 2H12 planned with potential for significant catalysts.
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Appendix - Too Much Of A Good Thing... - August 15, 2012
Appendix
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Appendix Table Of Contents

U.S. NGL Market Dynamics .......................................................................................................................... 132 NGL Supply And Demand .......................................................................................................................... 133 Five NGL Industry Themes ........................................................................................................................ 140 U.S. Resource Plays .................................................................................................................................... 147 Anadarko................................................................................................................................................ 148 Bakken................................................................................................................................................... 152 Barnett................................................................................................................................................... 156 Eagle Ford .............................................................................................................................................. 160 Fayetteville ............................................................................................................................................. 164 Haynesville ............................................................................................................................................. 168 Marcellus ................................................................................................................................................ 172 Mississippi Lime ....................................................................................................................................... 176 Permian.................................................................................................................................................. 180 Woodford................................................................................................................................................ 184 Emerging Plays........................................................................................................................................ 188 Canadian Resource Plays ............................................................................................................................. 192 Amaranth ............................................................................................................................................... 194 Bakken (AB)............................................................................................................................................ 198 Bakken (SK)............................................................................................................................................ 200 Carbonates ............................................................................................................................................. 204 Cardium ................................................................................................................................................. 210 Deep Basin ............................................................................................................................................. 214 Duvernay................................................................................................................................................ 218 Glauconite .............................................................................................................................................. 222 Horn River .............................................................................................................................................. 224 Montney Gas ........................................................................................................................................... 226 Montney Oil............................................................................................................................................. 230 Nikanassin .............................................................................................................................................. 234 Pekisko................................................................................................................................................... 236 Seal ....................................................................................................................................................... 238 Shaunavon.............................................................................................................................................. 240 Viking Oil ................................................................................................................................................ 242 Comparative Valuations ............................................................................................................................... 250
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Resource Map
Bakken Cardium Cardium Gas Glauconite Horn River Mon tney

Source: Company reports; Geological Atlas of Western Canada; The Edge; Canadian Discovery Digest; CIBC World Markets Inc. 131
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The following section of our Appendix pertaining to Natural Gas Liquids (pages 132 to 146 inclusive) has been provided by CIBC World Markets analyst David Noseworthy, P.Eng, CFA.
NGLs
U.S. NGL Market Dynamics

In the past few years, liquids-rich U.S. gas production has increased dramatically due to the application of horizontal, multi-stage fractionation drilling technology (Exhibit 1).
Exhibit 1. U.S. Natural Gas Production (Historical And Forecast)
Cardium Cardium Gas Glauconite Horn River Mon tney VET

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Source: EIA.
Growing supply and pipeline capacity constraints have combined for particularly weak mid-continent NGL prices. The supply of NGLs from U.S. natural gas production has increased faster than demand for both ethane and propane (Exhibit 2), causing prices for both to collapse over the last three months. Compounding this issue, pipeline constraints out of the Midwest (PADD II) into the export-driven U.S. Gulf Coast (PADD III) have resulted in depressed midcontinent NGL pricing. We discuss NGL supply and demand by component and NGL pipeline constraint issues below.
Exhibit 2. U.S. Forecasted Ethane Oversupply And U.S. NGL Supply from U.S. Gas Production
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NGLs Cardium Cardium
Supply/Demand imbalance forecasted to 2015E
Source: LyondellBasell, En*Vantage, Markwest Energy Partners L.P. and CIBC World Markets Inc. (David Noseworthy).
NGL Supply And Demand

Gas
Ethane
We expect weak ethane prices relative to WTI to persist until demand increases.
Glauconite Horn River Mon tney
We expect weak relative prices to persist until several petrochemical plants complete planned expansions. Average Q3/12-to-date Mont Belvieu ethane is trading at 15% of WTI, below its five-year average relative value of 30% (see Exhibit 3). Significant expansions are not expected to come online until beyond 2013 (see Exhibit 4 and Exhibit 5). Near term, we do not expect any sustainable price catalysts for higher ethane prices, barring any fractionator outages. While there is limited intrinsic seasonality in ethane demand, most petrochemical plants on the U.S. Gulf Coast shut down for regular maintenance in Q3, while fractionator turnarounds are completed in Q2 and Q3 as economics are driven more by seasonal propane demand.
Exhibit 3. Quarterly Mont Belvieu Ethane Prices

70%
60%
Growing NGL production from liquidrich gas has depressed historical relationship between C2 and WTI
The decline of crude oil prices (~US$20/bbl) from early May levels have triggered price declines in 2012.
Q3 2012 ethane prices as a % of WTI decline to 15%.
Supply constraints tightened ethane prices in Q4/11.
50%
% of WTI
40%
30%
20%
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10%
0% 2005 2006 2007 2008 Q1 2009 2010 2011 2012 2005 2006 2007 2008 Q2 2009 2010 2011 2012 2005 2006 2007 2008 Q3 2009 2010 2011 2012 2005 2006 2007 2008 Q4 2009 2010 2011
Source: Company reports and CIBC World Markets Inc. (David Noseworthy).
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Exhibit 4. New Crackers / Restarts/ Debottleneck Projects

Current Ethylene Capacity (metric tonne/year) 390,000 ~1,134,000 - ethylene ~1,750,000 820,000 - ethylene 2,130,000 - co-products ~1,134,000 - ethylene 380,000 ~789,000 new new N/A new N/A N/A new new new new New/ Expansion Ethylene Capacity (metric tonne/year) N/A ~125,000 ~250,000 N/A ~125,000 N/A ~386,000 N/A N/A N/A TBD N/A N/A 800,000 olefins cracker 300,000 low density polyethylene resin plant 1,500,000 1,500,000 2 polyethylene plants each with a capacity of 500,000
NGLs
Proponent Dow Chemical (restart) Westlake Chemicals LyondellBasell NOVA Chemicals Westlake Chemicals NOVA Chemicals LyondellBasell NOVA Chemicals NOVA Chemicals Dow Chemical (upgrade) Royal Dutch Shell Dow Chemical (upgrade) Aither Chemicals Formosa Plastics Dow Chemical Chevron Phillips Chemical Chevron Phillips Chemical
Location St. Charles, LA Lake Charles, LA Channelview, TX Corunna, ON Lake Charles, LA Moore Township, ON LA Porte, TX Sarnia, ON Joffre, AB Plaquemine, LA Beaver County, PA TX US Northeast Point Comfort, TX Freeport, TX Baytown, TX near Old Ocean, TX
Feedstock Ethane Ethane Ethane Ethane Ethane Ethane natural gas Ethane Ethane Ethane Ethane Ethane Ethane natural gas Ethane Ethane Ethane
Estimated COD End of 2012 H2/2012 2012 Late 2013 H2/2014 N/A 2014 Late 2014 - 2017 Late 2014 - 2018 2014 Final investment decision anticipated to be made in 2015-2016. 2016 2016 2016 2017 2017 2017
Exhibit 5. U.S. Ethane Cracking Capability Due To Expansions Or New Build
Increases In C2 Cracking Capability (000 bbls/d) Year End 2013 2014 2015 2016 2016 2017 2018
Source: En*Vantage.
35 85 18 25 53 198 78
Expansion Expansion Expansion Expansion New Build New Build New Build
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Propane
Exhibit 6. Conway (LHS) And Mont Belvieu (RHS) Propane As A % Of WTI
140% 120% 100% 80% 60% 40% 20% 0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q3/12TD Avg: 27% / $25.03 8 Year Avg: 78% 140% 120% 100% 80% 60% 40% Q3/12TD Avg: 41% / $37.51 8 Year Average: 79%
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20% 0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Bloomberg and CIBC World Markets Inc. (David Noseworthy).
The single-largest determinant for propane demand in North America is winter temperatures. Propane is primarily used for residential and commercial cooking and space heating (40%-50%), petrochemical feedstock (25%-35%), and agricultural uses, including crop drying (5%-10%). We expect propane to trade at a discount to its historical relationship with WTI absent a colder-than-normal winter. Q3-to-date Conway propane is trading at 27% of WTI, below its five-year average relative value of 52%. We expect this weaker-than-normal relationship to persist as propane storage levels are high (Exhibit 7) following one of the warmest North American winters on record and North American propane demand lags growing supply from increasing U.S. natural gas shale production. However, we believe the current relative value of propane to WTI is overly depressed, even for the seasonally weak summertime, and will strengthen as we move into the fall and winter, assuming exports continue to increase (Exhibit 8) and normal winter weather. We forecast Conway propane to trade at 30%, 40%, 48%, and 48% of WTI in Q3/12E, Q4/12E, 2013E, and 2014E, respectively, below the five-year average of 57%.
Gas Glauconite Horn River Mon tney
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Exhibit 7. U.S. Propane Storage

US Propane Inventories At The End Of March 80 70 Highest inventory level reached in the past 12 years - 75.0 Mbbls
NGLs
60 000 bbls 50 40 30 20 10
March 2012 propane level: 45.0 Mbbls.
Five Year Average: 29.5 Mbbls
Mbbls/d

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0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: EIA.
Exhibit 8. U.S. Propane Storage

200 180 160 140 120 100 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD 2012 YTD US propane exports increased 22% from full year 2011 to 181 Mbbls/d
Source: EIA.
Butane
We expect that growing butane demand from the Alberta oil sands and the planned Cochin pipeline reversal in July 2014 should provide price support. Q3to-date Conway butane is trading at 48% of WTI, below its five year average relative value to WTI of 65%. We forecast butane to trade at 54%, 70%, 73%, and 73% of WTI in Q3/12E, Q4/12E, 2013E, and 2014E, respectively, in line with the five-year average of 71%.
Basin Differentials
There are significant basin differentials between the major North American NGL hubs of Mont Belvieu, Texas, Conway, Kansas, Edmonton, Alberta, and Sarnia, Ontario (see Exhibit 9). Differentials between Conway, Kansas, and Mont Belvieu, Texas are due to a combination of access to higher Brent priced markets at Mont Belvieu and NGL pipeline capacity constraints between Conway and Mont Belvieu.
We expect new NGL pipelines scheduled to be built in 2013 will largely remove these constraints and provide NGLs at Conway access to additional demand from waterborne export markets and, thus, reduce the differential. There have been a number of new NGL pipeline project announcements in recent months. For a full list, please refer to Exhibit 10; otherwise, we highlight four projects below, which we believe will benefit Conway NGL prices.
1. Kinder Morgan Energy Partners spent $30 million to upgrade its existing
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Cochin pipeline, which will move 13,000 Bbls/d of Conway-sourced E-P mix to Sarnia, Ontario. The project was expected to come online on April 1, but has been delayed due to permitting issues. Kinder Morgan signed a threeyear contract with Nova Chemicals. Nova Chemicals is in the midst of expanding its Corunna, Ontario facility.
2. DCP Midstream (DPMNYSE) is proceeding with the 150,000 Bbls/d
common carrier Southern Hills Pipeline between Conway, Kansas and Mont Belvieu, Texas. DCP will convert the Seaway Products Pipeline, which it bought from ConocoPhillips (COP-NYSE) on November 1, 2011, from a refined products pipeline to a NGL pipeline. Southern Hills Pipeline is targeting a mid-2013 in-service date.
3. Oneok Partners (OKSNYSE) is planning a 193,000 Bbls/d NGL pipeline
called Sterling III Pipeline between Medford, Oklahoma (just south of Conway, Kansas) and Mont Belvieu, Texas. Commercial operation is expected by late 2013, assuming construction starts in early 2013. As currently designed, the 16-inch Sterling III pipeline capacity can be expanded to 250,000 Bbls/d with additional pumping stations.
4. On January 3, 2012, Enterprise Products Partners L.P. (EPD-NYSE)
Gas Glauconite Horn River Mon tney
announced it had received sufficient commitment to develop its 1,230-mile Appalachia to Texas NGL pipeline, ATEX Express. ATEX Express, originating in Washington County, Pennsylvania, will have 190,000 Bbls/d of capacity and terminate in Mont Belvieu, Texas. ATEX Express is expected to begin commercial operations in Q1/14.
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Hor n Rive r
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Card ium
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Exhibit 9. North American NGL Infrastructure And Hub Differentials
1 1b 2 3 3b 4 5 6 7 8 9 10 11
Project Name Vantage Pipeline Cochin Reversal Baaken NGL Mariner West Mariner East ATEX Express Sand Hills West Texas Gateway NGL Sterling III Southern Hills Texas Express Front Range Cajon-Sibon Extension
7/13/2012 12.47 17.35 2.23 4.87 -10.25 -15.12 7/13/2012 18.94 -0.38 -14.66 -19.32 -33.60 -14.28
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Mt. Belvieu - Conway Propane Butane

All figures in US$/bbl
7/13/2012 12.47 18.94
7/6/2012 6/29/2012 13.36 11.34 19.03 17.51
1 1b
Southern Lights
3b 3
10 4
7/6/2012 6/29/2012 13.36 11.34 18.23 16.09 -0.25 0.13 4.87 4.87 -13.61 -11.21 -18.48 -15.96 7/6/2012 6/29/2012 19.03 17.51 -1.55 -3.49 -17.51 -19.03 -20.58 -3.49 -36.54 -36.54 -15.96 -15.54
Propane Differential Mt Belvieu - Conway Mt. Belvieu - Edmonton Mt. Belvieu - Sarnia Conway - Edmonton Conway - Sarnia Edmonton - Sarnia Butane Differential Mt. Belvieu - Conway Mt. Belvieu - Edmonton Mt. Belvieu - Sarnia Conway - Edmonton Conway - Sarnia Edmonton - Sarnia
All figures in US$/bbl
8 9
5 11
New / Proposed Pipeline
Note: Details of pipeline projects are in Exhibit 12. Source: Encana, Bloomberg and CIBC World Markets Inc. (David Noseworthy).
Exhibit 10. NGL Infrastructure Pipeline Projects - Announced, In Construction
1 1b. 2 3 3b 4 5 6 7 8 9
Project Name Vantage Pipeline Cochin Pipeline Reversal Bakken NGL Mariner West Mariner East ATEX Express Sand Hills West Texas Gateway NGL Sterling III Southern Hills (inc. conversion costs) Texas Express
Proponent Vantage Pipeline Canada ULC Kinder Morgan Energy Partners Oneok Partners MarkWest Liberty Midstream & Resources LLC and Sunoco Logistics LP MarkWest Liberty Midstream & Resources LLC and Sunoco Logistics LP Enterprise Products Partners LP DCP Midstream LLC Lone Star NGL LLC (JV of Energy Transfer Partners LP and Regency Energy Partners LP) Oneok Partners DCP Midstream LLC Enterprise Products Partners LP, Enbridge Energy Partners LP, Anadarko Petroleum Corp., DCP Midstream Partners (10%) Enterprise Products Partners LP, Enbridge Energy Partners LP and Anadarko Petroleum Corp. Crosstex Energy LP
Estimated Capacity (MBbls/d) 40, Expandable to 60 95 60, Expandable to 110 Initial 50, up to 75 TBD 125, Expandable to 190 200, Expandable to 350 130 193, Expandable to 250 150 280 150, Expandable to 230 70
Capex (US$mlns) 240 30 450 - 550 N/A TBD N/A N/A 700 610 - 810 780 - 850 1100
Est. COD Q4 / 2012 July 2014 2013 July 2013 TBD Q1 / 2014 Q3 / 2012 Q1 / 2013 Late 2013 Mid 2013 Q2 / 2013
To Near Empress, AB Fort Saskatchewan, AB Weld County, CO Sarnia, ON TBD Mont Belvieu, TX Mont Belvieu, TX Jackson County, TX Mont Belvieu, TX Mont Belvieu, TX Mont Belvieu, TX
From Tioga, ND Kankakee County, IL Sidney, MT Houston, PA TBD Washington County, PA Ector, TX Winkler, TX Medford, OK Conway, KS Carson County, TX
10 11
Front Range Cajon-Sibon Extension
TBD 230
Q4 / 2013 Q2 / 2013
Skellytown, TX Mont Belvieu, TX
Weld County, CO Eunice, LA
Source: Company reports, Oil And Gas Journal and CIBC World Markets Inc. (David Noseworthy).
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Card ium Gas
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Five NGL Industry Themes

Five major trends are shaping the NGL industry in Alberta:
1. Increasing oil sands production;
NGLs
2. Pipelines and differentials; 3. Declining natural gas export volumes; 4. Natural gas producer trends; and 5. Restructuring of the NGL extraction rights market.

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Increasing Oil Sands Production

Increased oil sands production has positive and negative effects on the NGL industry. First, increased oil sands production will increase condensate demand, which for Pembina may mean an increased demand for its condensate handling and storage services, as well as oil sands condensate supply pipeline opportunities. Second, increased oil sands production will require more natural gas for steam and electricity. This will, in our opinion, lead to declining natural gas export volumes and negatively impact the straddle plants in the area. We discuss both impacts below. Condensate demand is expected to increase with oil sands production. Condensate is used to dilute heavy oils, such as bitumen, for pipeline transportation. One barrel of condensate is required for every 2.53 barrels of bitumen. According to CAPPs June 2012 forecast, oil sands bitumen production is expected to increase by approximately 800,000 Bbls/d from 2011 to 2015 (Exhibit 11 Increasing Canadian Crude Oil Production). The increased bitumen production represents a potential increase in condensate demand of 266,000 Bbls/d. To put this in context, condensate production from Alberta and British Columbia in 2010 was about 252,000 Bbls/d. Exhibit 12 demonstrates the pentane plus or condensate supply from natural gas extraction and Alberta demand for condensate.
Exhibit 11. Increasing Canadian Crude Oil Production
Source: CAPP.
Exhibit 12. Alberta Condensate Supply And Demand

1000 800 bbl/d 600 400 200 0 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Cochin is currently expected to come into service July 2014. July 2010: Southern Lights is placed into service Rail opportunity
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NGLs
AB Demand (ex. solvent flood demand) AB Supply (ERCB Estimate) AB Supply Plus Potential Supply From Import Pipelines
Source: ERCB.
Cardium Cardium Gas Glauconite Horn River
We expect a significant portion of growing condensate demand to be satisfied by Enbridge Inc.s Southern Lights pipeline and Kinder Morgan Energy Partners L.P.s Cochin pipeline reversal. Southern Lights began operations in July 2010 with an initial capacity of 180,000 Bbls/d and incremental expansion capability to an ultimate capacity of 330,000 Bbls/d. Southern Lights delivers condensate from a variety of refineries and producers near Chicago, Illinois to Hardisty, and Edmonton, Alberta. Currently, two shippers have committed volumes of 77,000 Bbls/d. In 2011, average volumes transported were about 65,000 Bbls/d. The toll for committed volumes in 2011 was about $8.10/Bbl and $16.25/Bbl for committed and uncommitted volumes, respectively. This falls to about $2.20/Bbl and $14.60/Bbl for committed and uncommitted volumes, respectively, when the pipeline is operating at full capacity. Pembina has a direct pipeline connection to Southern Lights at its Pembina Nexus Terminal in Edmonton, but not at its Redwater facility. We believe an NGL pipeline connection between its PNT facility and Redwater facility could be one of the early integration projects as it would require a relatively short 20 km pipeline within an existing right-of-way between Namao and Edmonton as Pembina already has an NGL pipeline between Namao and Redwater.
On June 5, 2012, Kinder Morgan announced strong binding commercial support for the Cochin pipeline reversal project. The Cochin Reversal project, which is expected to be in-service by July 1, 2014, will allow shippers to move up to Mon 90,000 Bbls/d of mixed product from Kankakee County, Illinois to terminal tney facilities near Fort Saskatchewan, Alberta. Kinder Morgan will also connect the Cochin pipeline to the Explorer pipeline at Kankakee, Illinois. The Explorer pipeline transports finished products from Houston, Texas to just south of Chicago, Illinois and is owned by Chevron (CVXNYSE), American Capital Strategies Ltd. (ACASNASDAQ), ConocoPhillips, Marathon (MRONYSE), Sunoco Logistics (SXLNYSE), and Shell. This connection will allow shippers to access condensate in Mont Belvieu for transport to Alberta. Proposed tolls are US$4.95/Bbl for committed volumes and US$7.50/Bbl for uncommitted volumes. The Cochin pipeline terminates at Pembinas Redwater facility.
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We expect demand for NGL storage and logistics to benefit from increased condensate deliveries by pipeline. However, opportunities to import condensate to Pembinas 75,000 Bbls/d rail offloading terminal at Redwater, for example, may be limited as potentially cheaper pipeline line transportation displaces condensate transportation by rail, which costs about $6.50/Bbl from Chicago to Edmonton and about $15/Bbl from Mont Belvieu to Edmonton. In the case of the Cochin Reversal project, we expect there may be increased rail opportunities to transport propane volumes by rail that were previously transported to the U.S. and Sarnia by the Cochin pipeline. We also note other pipeline plans to transport condensate from the USGC to Alberta could negatively impact Some NGL rail transportation business. One such plan was recently announced by Plains All American during its Investor Day. Plains All American suggested the Capline pipeline could be used to allow condensate delivery into Enbridges Southern Lights system. The 1.2 MMBbls/d Capline is co-owned by Plains All American, Marathon, and BP and stretches from St. James, Louisiana to Patoka, Illinois. Finally, incremental diluent volumes from Southern Lights and the potential Cochin Reversal into the Redwater/Fort Saskatchewan NGL hub suggest the need for additional pipeline capacity from Redwater to the oil sands. We expect midstream companies to pursue this opportunity as part of a unique integrated diluent service offering to oil sands producers.
NGLs Cardium Cardium Gas Glauconite Horn River Mon tney VET
142
Pipelines And Differentials

In addition to the pipelines discussed above and their impact on condensate, there are several other proposed North American pipelines that we believe will act to compress differentials between the various North American NGL hubs. There are significant basin differentials between the major North American NGL hubs of Mont Belvieu, Texas, Conway, Kansas, Edmonton, Alberta, and Sarnia, Ontario. Differentials between Conway, Kansas and Mont Belvieu, Texas are due to a combination of access to higher Brent priced markets at Mont Belvieu and NGL pipeline capacity constraints between Conway and Mont Belvieu. We expect new NGL pipelines to be built in 2013 to largely remove these constraints and provide NGLs at Conway access to additional demand from waterborne export markets and, thus, reduce the differential (Exhibit 9 North American NGL Infrastructure And Hub Differentials). For more details of the projects, please see Exhibit 10 NGL Infrastructure Pipeline Projects - Announced, In Construction. We believe the impact of these new pipelines will be mixed. On the positive side, higher Conway propane pricing should result in higher Edmonton propane pricing. Conversely, tightening differentials will likely reduce the arbitrage opportunities typically captured by marketing groups through the use of railcar fleets. Sarnia is the premium liquefied petroleum gas (LPG) priced market in North America due to its large petrochemical industry demand and sole source NGL supply from Western Canada. We expect the 50,000 Bbls/d Mariner West ethane pipeline, a joint venture between Sunoco Logistics and MarkWest (MWEAMEX), to cause the propane and butane pricing in Sarnia to weaken substantially as NOVA Chemicals completes a $250 million upgrade to its facilities to allow it to accept lower-priced ethane feedstock. The Mariner West pipeline will transport ethane from the Marcellus to Sarnia and is expected to be in service July 2013.
Exhibit 13. Summary Of Recently Announced U.S. Propane Export Terminal Expansions
Additional Capacity Capex (MBbls/d) (US$ mlns.) 3.4 N/A 60 $250 N/A N/A Up to 100 N/A 120 N/A
Date 03-May-12 19-Sep-11 01-Sep-11 06-May-11 29-Mar-11
Company Enterprise Product Partners L.P. Targa Resources ConocoPhillips/Occidental/TransMontaigne Vitol Group Enterprise Product Partners L.P.
Location Houston, TX Houston, TX Houston, TX Beaumont, TX Houston, TX
COD Q2/2012 Q3/2013 N/A Q1/2013 H2/2012
Declining Natural Gas Exports

We expect WCSB natural gas exports to decline 29% between 2011 and 2015E. Increased Alberta oil sands production will require more natural gas for steam and electricity. Furthermore, we expect WCSB natural gas production to remain relatively flat through to 2015. Flat production and increased demand for natural gas within Alberta will, in our opinion, result in declining natural gas export volumes (Exhibit 14 WCSB Natural Gas Production And Uses). Lower natural gas export volumes will negatively affect Empress straddle plants.
Exhibit 14. WCSB Natural Gas Production And Uses

18.0 16.0 14.0 Production and Demand (Bcf/d) 12.0 10.0 50% 8.0 40% 6.0 4.0 2.0 0.0 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E Alberta Other 30% Alberta Commercial Demand 20% 10% 0% Alberta Residential Demand WCSB Gas Exports as % of Total (RHS) Natural Gas used in Oil Sands 100% 90% LNG Exports 80% WCSB Gas Exports 70% SK Total Demand 60% BC Total Demand
Horn River Mon tney
Source: NEB, ERCB, CAPP, TRP and CIBC World Markets Inc. (David Noseworthy).
143
NGLs Cardium Cardium Gas Glauconite
We expect weaker Sarnia pricing to negatively impact Midstream Companies who sell propane production at Empress into the Sarnia market. The extent of the impact will depend on which markets companies ultimately sell their supply into. We believe a business case could be made for a propane export terminal on the Canadian West Coast targeting Asian markets, similar in concept to the liquid natural gas and oil terminal proposals. Exhibit 13 summarizes recently announced U.S. propane export terminal expansions that provide an indication of potential capital costs.
A m ar an th
VET
A m ar an th
NGLs
Declining natural gas export volumes impact straddle plants in two ways: 1) decreased NGL extraction volumes; and, 2) increased NGL extraction fees paid to shippers as the various straddle plant owners compete to process the dwindling supply of available natural gas. For example, we estimate throughput declines at Pembinas Empress plants of 3%/year from 2011 to 2014. We calculate lower volumes negatively impact Empress gross margins for the company by about $2 million to $3 million per year. Extraction premiums have increased about 1,000% at Empress over the past six years. Extraction premiums are the fees Empress straddle plant owners pay shippers for the right to extract NGLs from the natural gas being transported on the TransCanada mainline. These fees are paid as a premium on the shrinkage natural gas purchased to replace the heat content of the NGLs extracted. In Q4/2011 Empress extraction premiums were near the mid-point of a $6/GJ to $9/GJ range, according to Provident, while in 2006 extraction premiums were about $0.66/GJ, according to disclosure in the NGL Extraction Inquiry. We believe lower straddle plant utilization and higher operating costs may prompt consolidation among the Empress straddle plants. Average annual natural gas throughput in 2011 on the TransCanada mainline was about 3.2 Bcf/d compared with the nearly 10 Bcf/d of straddle plant gas processing capacity at Empress. Consolidation will allow for the reduction of extraction capacity and more efficient utilization of the lower-cost plants. Pembinas position as 65% owner and operator of the deepest-cut, highest efficiency Empress straddle plant may position it as the natural consolidator or, conversely, the most attractive asset to purchase. We question whether the Empress plant fits Pembinas overall risk profile and strategic direction.

144
Producer Trends
Low gas prices and high NGL prices have resulted in several producer trends, such as: 1) fewer well completions; 2) focus on liquids-rich gas production; 3) a preference for deep-cut field gathering and processing plants in order to maximize the NGL volumes extracted; 4) a propensity among producers to pay for gas processing services under fee-for-service or cost-of-service arrangements, allowing producers to retain control over the NGLs; and, 5) a willingness among capital-conscious producers to outsource gas processing to midstream players. Canadian natural gas well completions have tapered off with the fall in AECO natural gas prices (Exhibit 15 Canadian Natural Gas Well Completions). We expect continued depressed gas prices to dampen production in the WCSB. However, historically strong NGL prices have caused natural gas producers to focus on liquids-rich gas production areas such as the Duvernay, Deep Basin, Swan Hills, and Montney formations. Producers have focused on controlling and maximizing the value of the entrained NGLs in the raw gas stream as NGLs become a more significant component of the producers netback. Producer preference for NGL extraction capability in the field has resulted in lower C3+ volumes at straddle plants (Exhibit 16 NGL Content Of Gas Processed At Alberta Straddle Plants). Reduced C3+ volumes will negatively impact operating margins at Pembinas Empress facilities as propane, butane, and condensate have higher margins than ethane. However, we believe Pembina is well positioned to benefit from producer demand for deep-cut NGL FG&P facilities, as it is uniquely situated to successfully buy, build, and own many of the incremental deep-cut facilities required by producers within the footprint of Pembinas NGL pipeline system. Pembinas integrated legacy asset base allows it to generate multiple revenues and, therefore, higher returns.
Exhibit 15. Canadian Natural Gas Well Completions

18,000 16,000 # of Well Completions 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2006 2007 2008 2009 2010 2011 2012TD Canadian well completions have tapered off with the fall in AECO natural gas prices $9.00 $8.00 $7.00
A m ar an th
NGLs
$6.00 $5.00 $4.00 $3.00 $2.00 CAD/GJ
Cardium Cardium
$1.00 $0.00
Gas Well Completions (LHS)
AECO Nat Gas (RHS)
Source: Bloomberg, Daily Oil Bulletin, and CIBC World Markets Inc. (David Noseworthy).
Exhibit 16. NGL Content Of Gas Processed At Alberta Straddle Plants

38.0 bbl of NGL/mmcf of Natural Gas 37.0 36.0 35.0 34.0 33.0 32.0 2006 2007 2008 C2+ (LHS) 2009 C3+ (RHS) 2010 2011 12 13 C2+ volumes increased as producers focus on liquids-rich plays since natural gas price fell in 2009. However, increased NGL extraction at FG&P plants has resulted in lower C3+ volumes at straddle plants. 15 bbl of NGL/mmcf of Natural Gas
Gas
14
Glauconite Horn River
Source: ERCB, and CIBC World Markets Inc. (David Noseworthy)
Restructuring Of The NGL Extraction Rights Market
Mon We believe the restructuring of the NGL extraction rights market as tney proposed under Nova Gas Transmission Ltd. s (NGTL) NEXT model will be a net negative for Alberta straddle plants operators because: 1) extraction premiums are likely to increase; and, (2) producers are unlikely to be compelled to place liquids-rich gas on the NGTL system if a deep-cut FG&P option is available. Therefore, incremental liquids-rich volumes due to the implementation of the NEXT model are unlikely to be significant. The NGL Extraction (NEXT) model is a mechanism that allocates extraction rights of the receipt customers (producers) on the Integrated Alberta System (ATCO and NGTL systems) based on proportionate value of NGLs delivered to the system by each producer, and enables customers to use extraction rights to direct gas to extraction plants. Eventual implementation of the NEXT model is a result of the Alberta Energy and Utility Board (AEUB) decision following the NGL Extraction Inquiry, which concluded in 2009.
VET
145
A m ar an th
NGLs
The AEUB decision recommended the current model be replaced with the NEXT model. The NEXT model would operate in the same way as the current convention, in that straddle plant owners pay shippers a premium on the shrinkage gas purchased, effectively sharing some of the value added from extracting NGLs from the gas stream. The NEXT model differs from the current convention because receipt shippers, rather than delivery shippers, will receive the premium. We believe implementation of the NEXT model is unlikely before 2014. Prior to May 25, 2012, NGTL proposed to implement the NEXT model on November 1, 2013, assuming timely National Energy Board (NEB) approval. On May 25, 2012, the NEB suspended proceedings pursuant to NGTLs request so that NGTL could explore new opportunities that have arisen as a result of falling natural gas prices and increased quantities of available NGLs. NGTL has committed to report back on the status of discussions no later than October 15, 2012. We expect the extraction rights market to become more liquid and transparent as proposed under the NEXT model, similar to the Natural Gas Exchange (NGX) and Nova Inventory Transfer (NIT) markets. Extraction rights available to a given straddle plant will no longer be restricted to the delivery point, but instead any receipt shipper can sell its extraction rights to any straddle plant. This means a given straddle plant will no longer be competing with only the other plants at its particular export point (e.g., Empress, Cochrane), but instead it will be able to bid for more extraction rights than are contained in the gas to be shipped downstream of that plant. We are uncertain as to how this will work operationally. In a transparent market we expect NGL extraction premiums to trend toward the economic rents of the marginal extraction plant or nominal new plant, whichever is lower. That is, extraction premiums will equal the NGL fractionation margins of the marginal straddle plant less the full cost of extraction including a return of and on capital. In our view, incremental liquids-rich volumes in the NGTL system are unlikely to be significant following the implementation of the NEXT model. Under the current NEXT proposal a producer would receive its pro rata share of the value of NGLs entrained in the gas that are extracted at an Alberta straddle plant. In 2011 only 53% of gas produced was processed at a straddle plant. Without the ability to selectively direct liquids-rich natural gas to the straddle plants a producer that contributed 100% of the NGLs on the NGTL system would only receive payments for 53% of these NGLs. With the ability to direct liquids-rich gas to straddle plants and dry gas to intra-Alberta demand this could improve, but we are uncertain as to how NGTL can prevent the co-mingling of rich and dry gas within its system.

146
U.S. Resource Plays
147
Card ium Gas
Card ium
Hor n Rive r
Montney
Glau coni te
Bak ken
Anadarko (Horizontal)
Exhibit 17. Anadarko (Horizontal) Map
Ellis Lipscomb Ochiltree
VET
Roberts Moore Potter Carson
Anadarko (Hz)
OKLAHOMA
Hemphill Wheeler
Grady
Woodford
Top 5 Producers
1 Chesapeake Energy 2 Mewbourne 3 Linn Energy 4 Devon Energy
Permian
Barnett
TEXAS
5 Newfield Exploration 6 Other
Exhibit 18. Anadarko (Horizontal) Economics (IRRs) Anadarko IRRs

AnadarkoHzDir $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $60.00 -2% -1% 0% 2% 3% 5% 6% 7% 9% 10% 11% $70.00 3% 4% 6% 7% 9% 10% 12% 13% 15% 16% 18% $80.00 9% 10% 12% 14% 15% 17% 18% 20% 21% 23% 25% $90.00 14% 16% 17% 19% 20% 22% 23% 25% 27% 28% 30% $100.00 21% 22% 24% 26% 28% 30% 31% 33% 35% 37% 39% $110.00 27% 29% 30% 32% 34% 36% 38% 40% 42% 44% 46% $120.00 33% 35% 37% 39% 41% 43% 45% 47% 49% 51% 54%
Anadarko Top Operators
Top Operators
1 2 3 4 5 6 Chesapeake Energy Apache Sandridge Mewbourne Oil Devon Energy Unit Petroluem Active Rigs 29 21 11 9 5 5
Source for Exhibits 17 and 18: HPDI, Google Earth and CIBC World Markets Inc.
Exhibit 19. Anadarko (Horizontal) Results by County and Operator

COMMON_OPER_NAME CHESAPEAKE ENERGY CORPORATION MEWBOURNE HOLDINGS INC LINN OPERATING, LLC DEVON ENERGY CORPORATION NEWFIELD EXPLORATION COMPANY APACHE CORPORATION HOLMES EXPLORATION, LLC UNIT CORPORATION EOG RESOURCES INCORPORATED SAMSON INVESTMENT COMPANY JONES ENERGY, LTD. SANGUINE GAS EXPLORATION, LLC PIONEER NATURAL RESOURCES COMPANY CORDILLERA ENERGY PRTNRS III,LLC GRANITE OPERATING COMPANY QEP ENERGY COMPANY CHEVRON, U.S.A., INC. BP AMERICA PRODUCTION COMPANY CHALKER OPERATING INC. CIMAREX ENERGY COMPANY Total Sum of Last Reported Total Prod (Boe/d) Total Average of Peak Well Rate (Boe/d) Data Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) 0 0 935 558 1,371 243 2,370 288 3,157 257 4,064 255 311 185 17,052 362 24,114 283 39,821 305 0 8 0 525 27 40 234 171 119 132 2,284 189 2,791 481 2,164 556 50,764 648 113,612 1,047 23 81 35 134 2,772 262 2,053 307 642 1,052 48 534 0 19 68 185 94 187 75 155 1,741 1,259 107 798 0 1,340 3,198 552 1,026 271 461 1,104 2,970 1,086 3,462 852 1,740 1,113 1 982 0 646 126 201 0 269 37 175 4,386 449 200 604 17 183 52 305 0 151 0 235 0 0 63 363 1,351 317 8,767 336 37 183 3,443 234 0 116 40 181 26 74 6,172 316 116 326 6,226 316 316 300 5,338 360 5,338 559 1,291 407 6,355 636 3,365 869 7,547 749 0 28 320 134 GRADY (OK) 1 694 CARSON (TX) 89 295 ELLIS (OK) 0 470 27 390 300 215 202 290 321 283 POTTER (TX) MOORE (TX) 98 316 ROBERTS (TX) 3,411 367 4,006 579 OCHILTREE (TX) 398 199 7,286 363 0 119 LIPSCOMB (TX) 3,659 305 9,709 482 0 0 HEMPHILL (TX) 7,429 789 4,946 680 1,906 1,104 11,180 956 0 102 280 320 21,086 1,072 12,355 1,390 18,710 911 13,226 1,104 WHEELER (TX) 27,821 1,191 Grand Total 43,046 670 26,049 468 24,469 534 23,906 979 18,776 854 14,952 692 14,938 326 12,118 459 9,906 255 9,036 603 6,847 267 6,667 634 5,275 269 4,368 690 4,137 684 3,737 642 3,484 656 2,801 210 2,791 481 2,483 362 261,220 442
Hor n Rive r
Montney
Card ium Gas
Card ium
Glau coni te
Bak ken
VET
Anadarko (Hz)
Anadarko (Hz)
Anadarko Play Profile (Horizontal)

Rigs Running
200 180 High Base Low
Wells Drilled
700 600 500
Wells Drilled
160 140
Rigs Running
High Base Low
Mmcfe/d
Mmcfe/d
Mboe/d
2,000 1,500 1,000 500 E E E E E E E E Q1 /08 Q4 /11 Q2 /10 Q1 /11 Q4 /08 Q3 /09 E E E E
333 250 167 83 /12 /13 /14 /14 /15 /16 /17 /17 /19 /18 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 /20 /20
2,000 1,500 Low 1,000 500 Q1 /11 Q4 /11 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E Q1 /08 Q3 /09 Q2 /10 Q4 /08
333 250 Base High 167 83 0

100,000 90,000 80,000 70,000 High Base Low
Gas Growth (Boe/d)

100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 High Base Low
Horn River
60,000 50,000 40,000 30,000 20,000 10,000
Mon tney
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
2009
2010
2011
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
Quarterly IP
5.0 4.5 4.0 3.5
MMcfe/d

833 750 667 583 Frequency 500

Boe/d
1600 1400 1200 1000 800 600 400 200 0 0 650 1,300 1,950 2,600 3,250 3,900 4,550 5,200 5,850 6,500 Peak IP Rate (Boe/d)
3.0 2.5 2.0 1.5 1.0 0.5 0.0

00 03 06 09 12 15 18 21 24 27 30 33 36 39 42
417 333 250 167 83 0
150
Mboe/d
Bakken Cardium Cardium Gas Glauconite VET
120 100 80 60 40 20 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
400 300 200 100 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

4,000 Liquids (Right) 3,500 3,000 2,500 583 500 417 667

4,000 3,500 3,000 2,500 667 583 500 417
Anadarko Play Profile (Vertical)

Rigs Running
45 40 35 30
Rigs Running
A m ar an th Wells Drilled
1,800 1,600 1,400 1,200
Wells Drilled
Anadarko (Vt)
High Base Low
High Base Low
25 20 15 10 5 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
1,000 800 600 400 200 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Cardium

6,000 Liquids (Right) 5,000 4,000
Mmcfe/d

996 830 664
Mmcfe/d Mboe/d
6,000 Low 5,000 4,000 3,000 2,000 1,000 Q1 /11 Q4 /11 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E Q1 /08 Q3 /09 Q2 /10 Q4 /08
996 Base High 830
Cardium Gas
664 498 332 166 0

Mboe/d
3,000 2,000 1,000 Q1 /11 Q4 /11 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E Q1 /08 Q3 /09 Q2 /10 Q4 /08
498 332 166 -
Glauconite

Gas Growth (Boe/d)

25,000
25,000
-25,000
-25,000
-50,000
-50,000
-75,000
-75,000
-100,000 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
-100,000 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Quarterly IP
1.0 0.9 0.8 0.7 0.6 MMcfe/d 0.5 0.4 0.3 0.2 0.1 0.0 00 03 06 09 12 15 18 21 24 27 30 33 36 39 42

167 150 133 117 100 83 67 50 33 17 0 Boe/d
5,000 4,500 4,000 3,500 Frequency 3,000 2,500 2,000 1,500 1,000 500 0 0 272 544 816 1,088 1,360 1,632 1,904 2,176 2,448 2,720 Peak IP Rate (Boe/d)
Horn River Mon tney
VET
151
Hor n Rive r
Montney
Card ium Gas
Glau coni te
VET
Bakken (US)
Bakken (US)
Amaranth
Bakken
Exhibit 20. Bakken Map
Divide Williams
Burke Mountrail
Roosevelt
Richland
McKenzie
Billings Stark Dunn
NORTH DAKOTA
Top 5 Producers
1 Continental Resources 2 Hess Corp. 3 Whiting Petroleum 4 EOG Resources 5 Brigham O&G 6 Other
MONTANA
SOUTH DAKOTA
Exhibit 21. Bakken Economics (IRRs) Bakken IRRs

Bakken $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $60.00 5% 5% 5% 6% 6% 6% 6% 7% 7% 7% 7% $70.00 10% 10% 11% 11% 11% 11% 12% 12% 12% 12% 13% $80.00 16% 16% 17% 17% 17% 17% 18% 18% 18% 19% 19% $90.00 21% 21% 21% 21% 22% 22% 22% 23% 23% 23% 24% $100.00 28% 28% 28% 29% 29% 29% 30% 30% 30% 31% 31% $110.00 34% 34% 34% 35% 35% 35% 36% 36% 36% 37% 37% $120.00 40% 41% 41% 41% 42% 42% 42% 43% 43% 44% 44%
Bakken Top Operators
Top Operators
1 2 3 4 5 6 Continental Resources Whiting O&G Hess Brigham Oil & Gas Petro Hunt Oasis Petroleum Active Rigs 25 21 18 16 12 10
Exhibit 22. Bakken Results by County and Operator

COMMON_OPER_NAME Data BILLINGS (ND) STARK (ND) ROOSEVELT (MT) BURKE (ND) DIVIDE (ND) RICHLAND (MT) WILLIAMS (ND) DUNN (ND) MCKENZIE (ND) MOUNTRAIL (ND) Grand Total
CONTINENTAL RESOURCES, INC. AMERADA HESS CORPORATION WHITING PETROLEUM CORPORATION EOG RESOURCES INCORPORATED BRIGHAM OIL & GAS, L.P. MARATHON OIL COMPANY SLAWSON EXPLORATION COMPANY, INC. CONOCOPHILLIPS COMPANY XTO ENERGY, INC. PETRO-HUNT CORPORATION OASIS PETROLEUM NORTH AMERICA LLC KODIAK OIL & GAS (USA) INC. DENBURY RESOURCES INC. ENERPLUS RESOURCES USA CORPORATION SM ENERGY COMPANY WPX ENERGY WILLISTON, LLC NEWFIELD EXPLORATION COMPANY OCCIDENTAL ENERGY COMPANY,INC. RRH CORPORATION (HUNT OIL COMPANY) MUREX PETROLEUM CORPORATION Total Sum of Last Reported Total Prod (Boe/d) Total Average of Peak Well Rate (Boe/d)
Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d)
275 167
177 267
256 138 68 187
8,187 374 0 116
9,560 346
17,263 473 12,461 493
16,848 489 7,796 459
16,623 538 8,956 684 2,365 408
1,043 469 32,472 434 42,752 622 38,973 599 8,071 845 12,586 495 21,912 624 0 10 429 383 502 294 4,479 491
70,498 418 61,800 476 52,816 504 48,583 551 32,481 700 29,949 330 27,285 505 25,856 396 25,402 328 21,971 431 19,102 454 18,938 506 17,520 422 16,558 350 12,750 322
2,886 255
3,494 387
114 146 918 302 881 304 554 246
217 200 1,544 322 998 399
432 204 3,993 432 12,270 627 1 1 14,720 290 838 243 4,855 327 7,448 312 2,860 297 7,685 442 6,956 541 8,191 567 2,132 352 7,387 603 3,961 494 2,685 597 759 584
1,841 589 10,261 800 920 322 1,452 255 18,917 485 6,195 337 12,920 547 3,592 750 3,667 439 15,007 486 147 236 7,162 362
0 54 0 139 362 287 0 38
285 197
2,557 368 2,076 363 94 123 25 154 6,888 313 459 258 15 147 123 113
241 187
63 266 2,852 379
2,481 391 480 238
55 322
0 0
214 426 9,025 306
75 511
15 165
4,556 486
946 230 4,258 619
3,696 590 9,291 700
4,571 741
12,526 646 10,848 437 10,641 332
107 117 115 188 1,304 205
833 199
232 382
386 344 9,221 375
0 8 6 19 4,072 196 4,092 322 5,206 310 6,834 220 21,656 289 35,624 306 4,558 421 85,859 435
3,289 581
430 206 801 344
6,167 546 3,251 779 187,533 572
9,886 527 8,616 508 586,060 423
90,416 416
139,252 483
Hor n Rive r
Montney
Card ium Gas
Glau coni te
VET
Bakken (US)
Bakken (US)
Amaranth
A m ar an th
Bakken Play Profile

Rigs Running Wells Drilled
2,500 High Base Low 300 High Base Low
Rigs Running
150
Wells Drilled
Ba kk en (U S)
250
2,000
200 1,500
1,000
100 500
Bakken (US)
50
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

12,000 Liquids (Right) 10,000 1,667 1,333 2,000

12,000 High 10,000 8,000 Mmcfe/d Mboe/d 6,000 4,000 2,000 Q4 /11 Q3 /1 2 E Q2 /1 3 E Q1 /1 4 E Q4 /1 4 E Q3 /1 5 E Q2 /1 6 E Q1 /1 7 E Q4 /1 7 E Q3 /1 8 E Q2 /1 9 E Q1 /2 0 E Q4 /2 0 E /08 /08 /09 /10 Q1 Q4 Q3 Q2 Q1 /11
2,000 Base Low 1,667 1,333 1,000 667 333 0 Mboe/d

Cardium Gas Glauconite Horn River VET
8,000 Mmcfe/d 6,000 4,000 2,000 -
1,000 667 333 -
Gas Growth (Boe/d)

250,000
250,000
200,000
200,000
150,000
150,000
100,000
100,000
50,000
50,000
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Mon tney Quarterly IP

3.0 2.5 2.0 MMcfe/d 1.5 1.0 0.5 0.0 00

Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q2/08 Q2/09 Q2/10 Q2/11 Q3/08 Q3/09 Q3/10 Q3/11 Q4/08 Q4/09 Q4/10 Q4/11 500 417 333
400 350 300 250 Frequency

Boe/d
250 167 83 0 03 06 09 12 15 18 21 24 27 30 33 36 39 42 Months On Production
200 150 100 50 0 0 250 500 750 1000 1250 1500 1750 2000 2250 2500 Peak IP Rate (Boe/d)
154
A m ar an th
Ba kk en (U S)
Bakken (US) Cardium Gas
Page Intentionally Left Blank

155
VET
Hor n Rive r
Montney
Glau coni te
VET
Barnett
Barnett
Bakken (US)
Amaranth
Barnett
Exhibit 23. Barnett Map
OKLAHOMA
Montague
Woodford
Cooke Palo Pinto Wise Denton Tarrant Parker Johnson Somervell Ellis Hill
ARKANSAS
Hood
Haynesville
MISSISSIPPI
Top 5 Producers
1 Devon Energy
TEXAS
Eagleford
LOUISIANA
2 Chesapeake Enegy 3 XTO Energy 4 EOG Resources 5 Quicksilver Resources 6 Other
Exhibit 24. Barnett Economics (IRRs) Barnett IRRs

Barnett $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $60.00 -9.28% -6% -2% 2% 6% 9% 13% 17% 21% 24% 28% $70.00 -7% -3% 1% 4% 8% 12% 15% 19% 23% 27% 30% $80.00 -4% -1% 3% 7% 10% 14% 18% 22% 25% 29% 33% $90.00 -1% 2% 6% 9% 13% 16% 20% 24% 27% 31% 35% $100.00 0% 4% 7% 11% 15% 19% 22% 26% 30% 34% 38% $110.00 3% 6% 10% 13% 17% 21% 25% 28% 32% 36% 40% $120.00 5% 8% 12% 16% 19% 23% 27% 31% 35% 38% 43%
Barnett Top Operators
Top Operators
1 2 3 4 5 6 Devon Energy EOG Resources XTO DTE Gas Resources Enervest Operating Aruba Petroleum Active Rigs 8 6 4 3 3 2
Exhibit 25. Barnett Results by County and Operator

COMMON_OPER_NAME DEVON ENERGY CORPORATION CHESAPEAKE ENERGY CORPORATION XTO ENERGY, INC. EOG RESOURCES INCORPORATED QUICKSILVER RESOURCES, INC. CARRIZO OIL & GAS, INC. PREMIER NATURAL RESOURCES II,LLC ENERVEST OPERATING, LLC LEGEND NATURAL GAS IV, LP CONOCOPHILLIPS COMPANY VANTAGE FORT WORTH ENERGY LLC Data Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) PIONEER NATURAL RESOURCES COMPANY Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) J-W OPERATING COMPANY TITAN OPERATING, LLC ARUBA PETROLEUM, LTD. EAGLERIDGE OPERATING, LLC TEXAS INTERNATIONAL OPER., LLC BARNETT SHALE OPERATING LLC ARP BARNETT, LLC HILLWOOD O & G OPERATING CO LP Total Sum of Last Reported Total Prod (Boe/d) Total Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) 16,098 276 1,097 383 597 334 1,947 316 102,352 198 3,512 296 8,939 174 25,134 173 209,123 354 42,144 238 3,056 137 39,923 160 4,637 152 361,823 364 105,998 179 221 121 0 96 79 60 0 0 1,877 136 2,613 938 851 426 1,564 389 174 150 8 147 0 10 15,505 329 10,008 427 892 252 5,484 252 271 200 1,936 239 6,971 148 1,193 138 291 139 3,626 190 1,025 204 99 390 0 71 627 309 223 113 0 24 971 256 2,783 431 0 6 268 205 1,451 162 496 186 2,137 135 1,921 264 337 305 COOKE (TX) DENTON (TX) 59,866 208 203 227 1,872 226 1,966 344 3 66 1,027 419 ELLIS (TX) HILL (TX) 962 184 24 165 0 16 4,051 218 1,972 160 18 164 16 128 0 122 753 158 HOOD (TX) 924 115 1,260 182 1,236 149 492 121 14,057 193 0 61 3,530 163 0 169 1,905 241 0 101 98 118 3,484 192 JOHNSON (TX) 46,876 319 66,388 352 29,218 400 51,333 415 1,711 185 17 118 5,084 341 0 488 2,247 299 63 199 0 5 0 68 13 103 935 171 212 84 36,448 279 2,122 286 MONTAGUE (TX) PALO PINTO (TX) PARKER (TX) 12,021 183 335 207 5,623 175 2,061 186 67 145 0 9 2,506 150 9,352 223 2,009 244 0 30 402 109 868 120 9,466 628 152 255 0 64 96 90 4,190 176 SOMERVELL (TX) 0 67 TARRANT (TX) 43,823 269 142,508 414 94,996 342 795 856 26,247 478 25,752 509 710 192 313 290 7,446 495 1,940 315 6,443 187 92 202 7,308 186 603 124 1,616 129 761 130 2,545 214 90 117 WISE (TX) 73,519 197 Grand Total 237,992 228 215,891 380 136,005 320 114,755 335 58,252 279 26,756 433 21,384 211 17,314 225 16,907 308 14,516 154 11,770 213 6,272 143 5,358 186 5,298 325 3,810 134 3,798 172 2,613 938 2,248 272 2,161 354 1,947 316 930,849 257
Hor n Rive r
Montney
Glau coni te
VET
Barnett
Barnett
Bakken (US)
Amaranth
A m ar an th
Barnett Play Profile

2,500 Low Base High 2,000 Low Base High 90 80 70 60
Rigs Running
Ba kk en (U S)
50 40 30
Wells Drilled
2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
1,500
1,000
Ba rn et t
20 10 0
500
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

8,000 Liquids (Right) 7,000 6,000 1,167 1,000 833 1,333

8,000 Low 7,000 6,000 5,000 Base High 1,167 1,000 833 667 500 333 167 0 1,333
Barnett
5,000
Mmcfe/d
Mboe/d
Mmcfe/d
4,000 3,000 2,000 1,000 -
667 500 333 167 -
4,000 3,000 2,000 1,000 -
Q1 /11 Q4 /11 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E
Q1 /08
Q3 /09 Q2 /10
Q4 /08

125,000 100,000 75,000 50,000 25,000 0 -25,000 -50,000 -75,000 -100,000 -125,000 -150,000 -175,000 -200,000 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E High Base Low
Gas Growth (Boe/d)

125,000 100,000 75,000 50,000 25,000 0 -25,000 -50,000 -75,000 -100,000 -125,000 -150,000 -175,000 -200,000 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E High Base Low
Horn River
Mon tney
Quarterly IP
2.3 2.0 1.8 1.5 Q1/08 Q4/08 Q3/09 Q2/10 Q1/11 Q4/11 Q2/08 Q1/09 Q4/09 Q3/10 Q2/11 Q1/12 Q3/08 Q2/09 Q1/10 Q4/10 Q3/11 375 333 292 250

200 180 160 140 Frequency 120 100 80 60 40 20 0 0 198 396 594 792 990 1,188 1,386 1,584 1,782 Peak IP Rate (Boe/d)
Boe/d
MMcfe/d
1.3 1.0 0.8 0.5 0.3 0.0
208 167 125 83 42 0
00
04
02
12
14
06
08
10
16
18
20
24
22
26
28
30
34
32
36
38
158
40
42
Q1 /11 Q4 /11 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E
Q4 /08 Q3 /09
Q1 /08
Q2 /10
Mboe/d
Glauconite VET
A m ar an th
Ba kk en (U S)
Ba rn et t
Barnett

159
VET
Hor n Rive r
Montney
VET
Eagle Ford
Eagleford
Barnett
Bakken (US)
Amaranth
Eagle Ford
Exhibit 26. Eagle Ford Map
Barnett
Permian
TEXAS
Gonzales
Atascosa
Wilson
Dewitt Karnes Dimmit La Salle
Major Producers
1 EOG Resources Live Oak McMullen 2 Geosouthern Energy 3 Anadarko Petroleum 4 ConocoPhillips 5 Talisman Energy 6 Other
MEXICO
Webb
Exhibit 27. Eagle Ford Economics (IRRs) Eagle Ford IRRs

Eagle Ford $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $60.00 17% 18% 19% 19% 20% 21% 22% 23% 24% 25% 26% $70.00 26% 27% 28% 29% 30% 31% 32% 33% 34% 35% 36% $80.00 37% 38% 39% 40% 41% 42% 43% 44% 45% 46% 47% $90.00 44% 46% 47% 48% 49% 50% 51% 52% 54% 55% 56% $100.00 58% 59% 60% 62% 63% 64% 65% 67% 68% 69% 70% $110.00 68% 70% 71% 73% 74% 75% 77% 78% 79% 81% 82% $120.00 80% 82% 83% 85% 86% 88% 89% 91% 92% 94% 95%
Eagle Ford Top Operators
Top Operators
1 2 3 4 5 6 Chesapeake Energy Marathon BHP-Billiton EOG Resources ConocoPhillips Pioneer Natural Active Rigs 26 23 22 19 11 11
Exhibit 28. Eagle Ford Results by County and Operator

COMMON_OPER_NAME EOG RESOURCES INCORPORATED GEOSOUTHERN ENERGY CORPORATION ANADARKO PETROLEUM CORPORATION CONOCOPHILLIPS COMPANY PIONEER NATURAL RESOURCES COMPANY CHESAPEAKE ENERGY CORPORATION ROSETTA RESOURCES INC. PETROHAWK ENERGY CORPORATION SM ENERGY COMPANY EL PASO CORPORATION LEWIS PETRO PROPERTIES, INC. MARATHON OIL EF LLC TALISMAN ENERGY USA INC. PLAINS EXPLORATION & PRODUCTION COMPANY MURPHY OIL CORPORATION CARRIZO OIL & GAS, INC. PENN VIRGINIA OIL & GAS CORPORATION PALOMA RESOURCES, LLC XTO ENERGY, INC. COMSTOCK RESOURCES Total Sum of Last Reported Total Prod (Boe/d) Total Average of Peak Well Rate (Boe/d) Data Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) 4,860 396 112 257 631 213 13,928 399 1,598 683 6,072 741 35,960 646 39,948 894 76,390 460 84,143 994 95,615 709 120,392 1,041 128,299 749 2,910 1,227 271 849 5,314 591 162 395 161,197 878 410 410 2,534 547 1,528 385 3,538 550 12,672 692 4,402 1,148 1,899 399 488 280 8,533 754 251 255 5,436 423 5,424 481 243 341 1,086 666 0 165 710 638 1,921 580 5,894 777 5,026 423 30,258 756 6,336 651 165 263 4,742 1,013 7,073 1,102 911 442 120 470 8,814 462 18,747 937 16,961 832 22,243 441 1,102 707 166 83 9,080 385 162 780 21,893 1,024 34,381 821 167 699 22,414 501 15,573 695 6,798 811 17,869 1,011 12,310 743 546 1,773 48,514 461 WILSON (TX) 4,609 427 ATASCOSA (TX) 3,893 366 MCMULLEN (TX) 1,794 488 LIVE OAK (TX) DIMMIT (TX) GONZALES (TX) 64,238 1,099 1,340 785 220 280 14,338 1,042 22,856 1,025 13,207 906 35,373 926 5,273 1,318 LASALLE (TX) 13,183 741 DEWITT (TX) 241 699 77,505 1,053 17,101 797 29,260 950 20,854 1,226 WEBB (TX) 342 350 KARNES (TX) 48,403 804 294 985 Grand Total 138,798 834 79,222 1,040 66,325 494 62,652 959 62,083 965 55,485 484 37,183 925 35,210 991 34,982 811 31,317 726 30,671 531 27,563 598 23,223 628 17,869 1,011 16,635 552 14,604 661 12,672 692 7,312 1,179 7,294 602 6,865 605 767,963 747
Hor n Rive r
Montney
VET
Eagle Ford
Eagleford
Barnett
Bakken (US)
Amaranth
A m ar an th
Eagle Ford Play Profile

2,500 High Base Low 350 300 250 High Base Low
Rigs Running
Ba kk en (U S)
2,000
200 150 100
Wells Drilled
1,500
1,000
Ba rn et t
500 50 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

20,000 3,333 Liquids (Right) 3,000 2,667 2,333

20,000 18,000 16,000 14,000 High Base Low 3,333 3,000 2,667 2,333 2,000 1,667 1,333 1,000 667 333 0
Ea gl ef or d
18,000 16,000 14,000
Mmcfe/d
Mmcfe/d
Mboe/d
10,000 8,000 6,000 4,000 2,000 -
1,667 1,333 1,000 667 333 -
10,000 8,000 6,000 4,000 2,000 -
Eagle Ford
/11 Q4 /11 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E

350,000 300,000 250,000 High Base Low
Gas Growth (Boe/d)

350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 High Base Low
Horn River
200,000 150,000 100,000 50,000 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Mon tney
/08 Q3 /09 Q2 /10 Q1 /11 Q4 /11 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E
Q4 /08
/08
/09
/10
Q1
Q3
Q2
Q1
Q1
Q4
/08
2009
2010
2011
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
Quarterly IP
4.5 4.0 3.5 3.0 Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q2/08 Q2/09 Q2/10 Q2/11 Q3/08 Q3/09 Q3/10 Q3/11 Q4/08 Q4/09 Q4/10 Q4/11 750 667 583 500 417 333 250 167

800 700 600 500 Frequency
Boe/d
MMcfe/d
2.5 2.0 1.5
400 300 200 100
1.0 0.5 0.0 00 03 06 09 12 15 18 21 24 27 30 33 36 39 42 Months on Production
83
0
74 0 37 0 10 50 80 20 60 30 90 10 40 00 80 70 50 20 90 1,1 2,5 1,8 2,9 2,2 1,4 3,3 4,8 5,1 3,7 4,0 5,5 4,4 5,9 6,2 6,6 60
0
162
Mboe/d
12,000
2,000
12,000
VET
A m ar an th
Ba kk en (U S)
Ba rn et t
Ea gl ef or d Page Intentionally Left Blank
Horn River Mon tney

163
Eagle Ford
VET
Montney
VET
Fayetteville
Fayetteville
Eagleford
Barnett
Bakken (US)
Amaranth
Fayetteville
Exhibit 29. Fayetteville Map
Jackson Pope
Van Buren Cleburne
Independence
OKLAHOMA
TENNESSEE
White Conway Faulkner
Woodford
MISSISSIPPI ARKANSAS TEXAS
Top 5 Producers
1 Southwestern Energy 2 XTO Energy 3 BHP Billiton 4 Arrington, David 5 Traton 6 Other
Exhibit 30. Fayetteville Economics (IRRs) Fayetteville IRRs

Fayetteville $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $60.00 -16% -10% -2% 6% 14% 21% 29% 37% 44% 52% 61% $70.00 -16% -10% -2% 6% 14% 21% 29% 37% 44% 52% 61% $80.00 -16% -10% -2% 6% 14% 21% 29% 37% 44% 52% 61% $90.00 -16% -10% -2% 6% 14% 21% 29% 37% 44% 52% 61% $100.00 -16% -10% -2% 6% 14% 21% 29% 37% 44% 52% 61% $110.00 -16% -10% -2% 6% 14% 21% 29% 37% 44% 52% 61% $120.00 -16% -10% -2% 6% 14% 21% 29% 37% 44% 52% 61%
Fayetteville Top Operators
Top Operators
1 2 3 4 5 6 Southwestern Energy BHP-Billiton XTO Active Rigs 11 5 5
Exhibit 31. Fayetteville Results by County and Operator

COMMON_OPER_NAME SOUTHWESTERN ENERGY COMPANY XTO ENERGY, INC. BHP BILLITON PETROLEUM (FAYETTEVILLE), LLC ARRINGTON,DAVID H. OIL & GAS,INC TRATON OPERATING COMPANY SH EXPLORATION, LLC FOUNDATION ENERGY MANAGEMENT, LLC WOLF EXPLORATION, INC. Total Sum of Last Reported Total Prod (Boe/d) Total Average of Peak Well Rate (Boe/d) Data Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) 808 136 932 130 5,608 228 29,876 313 70,676 352 101,113 328 102,875 370 125,160 369 8 16 320 147 489 137 JACKSON (AR) POPE (AR) 924 144 0 38 5,115 225 133 173 360 312 INDEPENDENCE (AR) FAULKNER (AR) 16,962 346 2,161 315 10,754 272 CLEBURNE (AR) 45,928 410 19,071 264 5,678 307 WHITE (AR) 41,033 377 28,728 307 31,352 306 CONWAY (AR) 96,314 374 1,548 208 5,012 399 0 0 VAN BUREN (AR) Grand Total 105,881 398 7,920 285 10,777 316 409 422 129 113 44 98 307,079 380 64,863 277 64,194 304 769 299 129 113 44 98 8 16 1 1 437,086 344
Montney
VET
Fayetteville
Fayetteville
Eagleford
Barnett
Bakken (US)
Amaranth
A m ar an th
Fayetteville Play Profile

Low 40 35 30 Base High 1,000 900 800 700 Low Base High 45
Rigs Running
Ba kk en (U S)
25 20 15
Wells Drilled
2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
600 500 400 300 200 100 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Ba rn et t
10 5 0

4,500 Liquids (Right) 750 667 583 500

4,500 4,000 3,500 3,000 750 667 583 500
Ea gl ef or d
4,000 3,500 3,000
Mmcfe/d
Mmcfe/d
Mboe/d
2,000 1,500 1,000 500
333 250 167 83 -
2,000 1,500 1,000 500 -
Low
Base
High
333 250 167 83 0
Fa ye tt ev ill e
Q4 /08 Q3 /09 Q2 /10 Q1 /11 Q4 /11 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E
Q3

150,000 125,000 100,000 75,000 Low Base High
Gas Growth (Boe/d)

150,000 125,000 100,000 75,000 50,000 25,000 0 -25,000 -50,000 -75,000 -100,000 Low Base High
Fayetteville
50,000 25,000 0 -25,000 -50,000 -75,000
Mon tney
-100,000 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
2009
2010
2011
2012E
Q1
2013E
2014E
Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E
/08
/09
/08
Q4 /0
Q2 /1
/11
/11
/12
Q1
Q3
Q1
Q1
Q4
Q2
Q4
/14
/13
/14
2015E
2016E
2017E
2018E
2019E
2020E
Quarterly IP
2.5 2.3 2.0 1.8 MMcfe/d 1.5 1.3 1.0 0.8 0.5 0.3 0.0 00 03 06 09 12 15 18 21 24 27 30 33 36 39 42 Months On Production Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q2/08 Q2/09 Q2/10 Q2/11 Q3/08 Q3/09 Q3/10 Q3/11 Q4/08 Q4/09 Q4/10 Q4/11 417 375 333 292 250

450 400 350 300
Frequency
Boe/d
208 167 125 83 42 0
250 200 150 100 50 0 2 120 238 356 474 592 710 828 946 1,064
166
Mboe/d
2,500
417
2,500
417
VET
A m ar an th
Ba kk en (U S)
Ba rn et t
Ea gl ef or d Page Intentionally Left Blank Fa ye tt ev ill e
Mon tney
Fayetteville
VET
167
VET
Haynesville
Haynesville
Fayetteville
Eagleford
Barnett
Bakken (US)
Amaranth
Haynesville
Exhibit 32. Haynesville Map
OKLAHOMA
Woodford
ARKANSAS MISSISSIPPI
Bossier De Soto
Caddo
Barnett
Panola
Bienville
Red River Shelby Nacogdoches San Augustine Sabine
Top 5 Producers
TEXAS
Eagleford
LOUISIANA
1 Chesapeake Energy 2 EXCO Resources 3 Petrohawk Energy 4 Encana Corp. 5 El Paso Corp. 6 Other
Exhibit 33. Haynesville Economics (IRRs) Haynesville IRRs

Haynesville $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $60.00 -9% -5% 0% 5% 11% 16% 22% 27% 32% 38% 45% $70.00 -9% -5% 0% 5% 11% 16% 22% 27% 32% 38% 45% $80.00 -9% -5% 0% 5% 11% 16% 22% 27% 32% 38% 45% $90.00 -9% -5% 0% 5% 11% 16% 22% 27% 32% 38% 45% $100.00 -9% -5% 0% 5% 11% 16% 22% 27% 32% 38% 45% $110.00 -9% -5% 0% 5% 11% 16% 22% 27% 32% 38% 45% $120.00 -9% -5% 0% 5% 11% 16% 22% 27% 32% 38% 45%
Haynesville Top Operators
Top Operators
1 2 3 4 5 6 Anadarko Exco Resources XTO Indigo Drilling Petrohawk Devon Energy Active Rigs 8 5 5 4 4 3
Exhibit 34. Haynesville Results by County and Operator

COMMON_OPER_NAME CHESAPEAKE ENERGY CORPORATION EXCO RESOURCES, INC. PETROHAWK ENERGY CORPORATION ENCANA CORPORATION XTO ENERGY, INC. RD SHELL EP ENERGY E&P COMPANY, LP QEP ENERGY COMPANY EOG RESOURCES INCORPORATED COMSTOCK RESOURCES SAMSON INVESTMENT COMPANY BEUSA ENERGY, LLC NFR ENERGY, LLC J-W OPERATING COMPANY ANADARKO PETROLEUM CORPORATION GMX RESOURCES, INC. GOODRICH PETROLEUM COMPANY EAGLECORP FOREST OIL CORPORATION DENBURY RESOURCES INC. Total Sum of Last Reported Total Prod (Boe/d) Total Average of Peak Well Rate (Boe/d) Data Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) 32,441 853 37,380 853 51,884 1,492 53,049 1,224 61,675 1,217 65,646 1,389 78,653 1,272 102,205 1,128 147,050 1,820 482,893 1,461 570 516 379 646 855 615 5,678 1,488 147 475 6,088 1,469 3,323 1,531 749 1,510 1,535 1,675 959 959 6,540 617 5,201 1,146 0 320 737 1,367 211 576 1,896 892 237 2,410 7,265 1,601 205 884 269 1,238 307 580 3,607 1,136 494 702 7,824 1,497 35,822 1,393 6,346 858 33,248 1,476 2,644 1,410 3,308 1,091 7,314 1,393 333 802 54 752 188 765 1,564 1,971 9,892 1,577 16,520 1,218 358 1,124 27,166 1,073 4,348 2,046 13,421 1,320 879 584 1,669 1,577 PANOLA (TX) SHELBY (TX) 4,235 625 468 1,255 SAN AUGUSTINE (TX) 3,054 961 18,656 1,637 10,260 956 36,033 1,693 BIENVILLE (LA) 5,351 1,298 BOSSIER (LA) 16,648 1,231 22,268 1,958 73 657 377 2,656 4,331 1,432 21,755 1,719 36,043 1,928 8,401 865 12,102 1,803 NACOGDOCHES (TX) SABINE (LA) 24,620 1,099 CADDO (LA) 47,977 1,215 3,193 896 36,284 1,283 42,276 1,621 42,461 1,980 RED RIVER (LA) 6,893 1,634 DE SOTO (LA) 124,846 1,240 159,846 1,857 27,378 1,394 19,570 1,827 4,028 1,592 10,015 1,306 67,202 1,728 1,393 1,755 6,941 1,360 35,587 1,140 3,908 1,280 11,786 667 Grand Total 238,006 1,206 204,785 1,781 161,871 1,433 79,447 1,902 71,739 1,057 67,812 1,719 67,202 1,728 60,766 1,384 51,484 1,411 40,184 1,100 12,497 846 12,125 666 11,514 604 10,346 1,326 10,011 814 7,808 778 7,777 979 6,636 1,440 6,301 779 4,163 9,698 1,165,187 1,138
VET
Haynesville
Haynesville
Fayetteville
Eagleford
Barnett
Bakken (US)
Amaranth
A m ar an th
Haynesville Profile
High Base Low 1,200 High Base Low 250
Rigs Running
Ba kk en (U S)
200
1,000
800
Wells Drilled
150
600
100
400
Ba rn et t
50
200
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

8,000 Liquids 1,333 1,167 1,000 833

8,000 7,000 6,000 5,000 Low Base High 1,333 1,167 1,000 833 667 500 333 167 0
Ea gl ef or d
7,000 6,000 5,000
Mmcfe/d
Mmcfe/d
4,000 3,000 2,000 1,000
667 500 333 167 0
Mboe/d
4,000 3,000 2,000 1,000 -
Fa ye tt ev ill e

500,000 400,000 High Base Low
Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E
Q3
Q2
Gas Growth (Boe/d)

500,000 400,000 300,000 200,000 100,000 0 -100,000 -200,000 -300,000 High Base Low
H ay ne sv ill e
300,000 200,000 100,000 0 -100,000 -200,000 -300,000 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
2009
2010
2011
Q4 /11 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E
Q2 /10 Q1 /11
Q4 /08 Q3 /09
Q1 /08
Q4 /11
Q2 /10 Q1 /11
Q4 /08 Q3 /09
Q1 /08
/12
/13
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
Haynesville
Quarterly IP
9.0 8.0 7.0 6.0
MMcfe/d

1,500 1,333 1,167 1,000
900 800 700 600 Frequency Boe/d 500 400 300 200 100 0 1 929 1,857 2,785 3,713 4,641 5,569 6,497 7,425 8,353 Peak IP Rate (Boe/d)
5.0 4.0 3.0
833 667 500 333 167 0
2.0 1.0 0.0 00 03 06 09 12 15 18 21 24 27 30 33 36 39 42

170
Mboe/d
VET
A m ar an th
Ba kk en (U S)
Ba rn et t
H ay ne sv ill e
Haynesville
VET
171
Marcellus
Marcellus
Haynesville
Fayetteville
Eagleford
Barnett
Bakken (US)
Amaranth
Marcellus
Exhibit 35. Marcellus Map
Tioga
Bradford Susquehanna
Wyoming
Washington Greene Westmoreland Fayette Clinton
Lycoming
Top 5 Producers
1 Chesapeake Energy 2 Talisman Energy 3 Cabot Oil & Gas Crop. 4 Range Resources 5 Anadarko Petroleum 6 Other
Exhibit 36. Marcellus Economics (IRRs) Marcellus IRRs

Marcellus $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $60.00 -10% -4% 6% 15% 24% 34% 43% 52% 62% 71% 85% $70.00 -10% -4% 6% 15% 25% 34% 43% 53% 62% 71% 85% $80.00 -10% -3% 6% 15% 25% 34% 43% 53% 62% 72% 85% $90.00 -10% -3% 6% 15% 25% 34% 44% 53% 62% 72% 86% $100.00 -10% -3% 6% 16% 25% 34% 44% 53% 63% 72% 86% $110.00 -10% -3% 6% 16% 25% 35% 44% 53% 63% 72% 86% $120.00 -9% -3% 6% 16% 25% 35% 44% 53% 63% 72% 86%
Marcellus Top Operators
Top Operators
1 2 3 4 5 6 Chesapeake Energy CNX Gas Co LLC Antero Resources Shell EQT Range Resources Active Rigs 22 9 8 8 7 7
Exhibit 37. Marcellus Results by County and Operator

COMMON_OPER_NAME CHESAPEAKE ENERGY CORPORATION TALISMAN ENERGY USA INC. CABOT OIL & GAS CORPORATION RANGE RESOURCES CORPORATION ANADARKO PETROLEUM CORPORATION EQT PRODUCTION LLC RD SHELL NATIONAL FUEL GAS COMPANY CNX GAS COMPANY, LLC SOUTHWESTERN ENERGY COMPANY CHEVRON APPALACHIA LLC EXCO RESOURCES, INC. WPX ENERGY APPALACHIA LLC ENERGY CORP OF AMER PA GEN ENERGY CORP EXCO RESOURCES PA LLC CITRUS ENERGY CORPORATION XTO ENERGY, INC. CHIEF OIL & GAS LLC PHILLIPS EXPLORATION INC Total Sum of Last Reported Total Prod (Boe/d) Total Average of Peak Well Rate (Boe/d) Data Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) 10,739 104 13,334 73 262 14 696 26 10,245 288 0 0 0 0 4,386 288 14,286 66 0 0 20,528 75 69,306 165 71,504 90 78,185 126 1,590 84 0 0 7,969 171 0 0 0 0 79,791 124 133,249 236 196,626 127 3,751 181 2,701 48 8,226 147 10,919 189 5,588 107 7,534 113 0 0 1,796 17 6,591 84 2,521 80 5,365 153 3,440 164 6,094 88 869 27 14,747 173 0 0 10,477 149 32,137 393 146 2 23,343 60 18,981 202 3,809 152 0 0 4,231 86 0 0 19,404 287 3 47 0 0 778 93 17,081 104 36,205 156 1,967 474 1,191 164 64,741 137 CLINTON (PA) WYOMING (PA) 2,393 22 FAYETTE (PA) 5 2 WESTMORELAND (PA) GREENE (PA) 0 0 TIOGA (PA) 0 0 22,188 235 LYCOMING (PA) 0 0 WASHINGTON (PA) 597 20 SUSQUEHANNA (PA) 38,129 237 0 0 87,533 394 0 0 BRADFORD (PA) 93,084 105 74,151 157 Grand Total 134,224 108 96,340 167 87,533 175 83,784 119 47,476 141 37,824 149 28,344 64 20,297 113 19,855 116 19,404 163 18,278 94 13,266 65 12,151 68 11,214 148 11,198 93 11,154 52 10,245 282 10,195 82 7,147 56 6,388 83 727,787 94
Marcellus
Marcellus
Haynesville
Fayetteville
Eagleford
Barnett
Bakken (US)
Amaranth
A m ar an th
Marcellus Play Profile

2,500 High Base Low 350 300 250 High Base Low
Rigs Running
Ba kk en (U S)
2,000
200 150 100
Wells Drilled
2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
1,500
1,000
Ba rn et t
500 50 0 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

15,000 Liquids (Right) 2,500 2,292 2,083 1,875 1,667 1,458 1,250 1,042 833 625 417 208 -

15,000 13,750 12,500 11,250 10,000 8,750 7,500 6,250 5,000 3,750 2,500 1,250 Low Base High 2,500 2,292 2,083 1,875 1,667 1,250 1,042 833 625 417 208 0 1,458
Ea gl ef or d
13,750 12,500 11,250 10,000 8,750 7,500 6,250 5,000 3,750 2,500 1,250 -
Mmcfe/d
Mmcfe/d
Fa ye tt ev ill e
Mboe/d

Gas Growth (Boe/d)

500,000
500,000
H ay ne sv ill e
400,000
400,000
300,000
300,000
200,000
200,000
100,000
100,000
M ar ce llu s
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Quarterly IP
7.0 6.0 5.0

Q1/08 Q1/09 Q1/10 Q1/11 Q2/08 Q2/09 Q2/10 Q2/11 Q3/08 Q3/09 Q3/10 Q3/11 Q4/08 Q4/09 Q4/10 Q4/11
1,167 1,000 833 667 500 333
1800 1500 1200 Frequency
MMcfe/d
Boe/d
4.0 3.0 2.0 1.0 0.0 00 03 06 09 12 15 18 21 24 27 30 33 36 39

900 600 300
Marcellus
167 0
0 0 400 800 1,200 1,600 2,000 2,400 2,800 3,200 3,600 Peak IP Rate (Boe/d)
174
Mboe/d
A m ar an th
Ba kk en (U S)
Ba rn et t
H ay ne sv ill e
M ar ce llu s
Marcellus
175
Card ium Gas
Card ium
Hor n Rive r
Montney
Glau coni te
Bak ken
Mississippi Lime
Exhibit 38. Mississippi Lime Map
VET
Woodward Major
Mississippi Lime
KANSAS
Woods
Alfalfa
Grant
Kay
Osage
Top 5 Producers
1 Sandridge Exploration Noble 2 Chesapeaske Energy 3 Eagle Energy Garfield 4 Range Resources Payne
Woodford
OKLAHOMA
5 Primexx 6 Other
Exhibit 39. Mississippi Lime Economics (IRRs) Mississippi Lime IRRs

ML $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $60.00 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 14% $70.00 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% $80.00 12% 14% 15% 16% 17% 18% 19% 20% 21% 23% 24% $90.00 17% 18% 19% 20% 21% 22% 23% 25% 26% 27% 28% $100.00 22% 23% 24% 26% 27% 28% 29% 30% 32% 33% 34% $110.00 27% 28% 29% 30% 32% 33% 34% 36% 37% 38% 39% $120.00 32% 33% 34% 36% 37% 38% 40% 41% 42% 44% 45%
Mississippi Lime Top Operators
Top Operators
1 2 3 4 5 6 Sandridge Chesapeake Energy Devon Energy Chaparral USA Energy Shell Longfellow Active Rigs 25 20 7 4 4 3
Exhibit 40. Mississippi Lime Results by County and Operator

COMMON_OPER_NAME SANDRIDGE ENERGY, INC. Data Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) CHESAPEAKE ENERGY CORPORAT Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) EAGLE ENERGY PRODUCTION LLC Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) RANGE RESOURCES CORPORATION Average of Peak Well Rate (Boe/d) PRIMEXX OPERATING CORPORATIOSum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) GOOD VAUGHN OIL COMPANY LLC Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) REDLAND RESOURCES, INC. Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) UNION VALLEY PETROLEUM CORPOSum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) JACK EXPLORATION, INC. CALYX ENERGY LLC Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) 125 102 160 27 197 33 180 86 199 57 323 77 363 50 600 53 1,498 86 4,061 308 4,196 122 Average of Peak Well Rate (Boe/d) Total Sum of Last Reported Total Prod (Boe/d) Total Average of Peak Well Rate (Boe/d) 219 120 202 70 113 57 5 39 521 73 410 72 353 86 237 142 WOODWARD (OK) 9 126 20 75 NOBLE (OK) GARFIELD (OK) 33 78 PAYNE (OK) MAJOR (OK) 28 30 46 94 OSAGE (OK) KAY (OK) GRANT (OK) 615 236 ALFALFA (OK) 3,053 264 619 99 310 1,852 WOODS (OK) 287 123 2,538 129 351 318 Grand Total 4,025 210 3,223 124 661 1,034 639 67 410 72 353 86 237 142 219 120 202 70 180 86 11,830 117
Hor n Rive r
Montney
Card ium Gas
Card ium
Glau coni te
Bak ken
VET
Mississippi Lime
Mississippi Lime
Mississippi Lime Play Profile

Rigs Running
120 High Base Low
Wells Drilled
900 800 700 600 High Base Low
100
Rigs Running
Wells Drilled
2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Mboe/d
Mmcfe/d
Mmcfe/d
1,000 750 500 250 -
167 125 83 42 -
1,000 750 500 250 -
167 125 83 42 0
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Q3

45,000 40,000 35,000 30,000 High Base Low
Q2
Q1
Q4
Gas Growth (Boe/d)

45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 High Base Low
Horn River
25,000 20,000 15,000 10,000 5,000
Mon tney
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
2009
2010
2011
Q4 /11 Q3 /12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E
Q1 /08
Q4 /11
Q2 /10 Q1 /11
Q4 /08 Q3 /09
Q2 /10 Q1 /11
Q4 /08 Q3 /09
Q1 /08
/12
/13
/14
/14
/15
/16
/17
/19
/20
/20
/17
/18
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
Quarterly IP
- Data Not Representative -
- Data Not Representative -
178
Mboe/d
80
500 400 300 200 100
60
40
20
0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

2,250 2,000 1,750 1,500 1,250 Liquids (Right) 375 333 292 250 208

2,250 High 2,000 1,750 1,500 1,250 Base Low 333 292 250 208 375
Mississippi Lime
Bakken Cardium Cardium Gas

179
VET
Hor n Rive r
Montney
Card ium Gas
Card ium
Glau coni te
Permian (Horizontal)
Exhibit 41. Permian (Horizontal) Map
VET
Permian (Hz)
Amaranth
NEW MEXICO
Lea Yoakum Eddy
Hockley
Woodford
Gaines
Scurry
Andrews
Barnett
Ward
Ector
TEXAS
Top 5 Producers
Pecos 1 Occidental Energy 2 Kinder Morgan 3 XTO Energy
MEXICO
Eagleford
4 Chevron 5 Concho Resources 6 Other
Exhibit 42. Permian (Horizontal) Economics (IRRs) Permian (Horizontal) IRRs

PermianHzDir $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $60.00 2% 2% 3% 3% 4% 5% 5% 6% 6% 7% 8% $70.00 6% 7% 7% 8% 8% 9% 10% 10% 11% 11% 12% $80.00 10% 11% 12% 12% 13% 14% 14% 15% 15% 16% 17% $90.00 15% 15% 16% 16% 17% 18% 18% 19% 19% 20% 21% $100.00 19% 20% 21% 21% 22% 23% 23% 24% 25% 25% 26% $110.00 24% 24% 25% 26% 26% 27% 28% 28% 29% 30% 30% $120.00 28% 29% 30% 30% 31% 32% 33% 33% 34% 35% 35%
Permian (Horizontal) Top Operators
Top Operators
1 2 3 4 5 6 Occidental Apache Chesapeake Energy Devon Energy Energen Resources Petrohawk Active Rigs 9 7 7 7 7 6
Exhibit 43. Permian (Horizontal) Results by County and Operator

COMMON_OPER_NAME OCCIDENTAL ENERGY COMPANY,INC. KINDER MORGAN INCORPORATED XTO ENERGY, INC. CHEVRON, U.S.A., INC. CONCHO RESOURCES INC. APACHE CORPORATION DEVON ENERGY CORPORATION AMERADA HESS CORPORATION CIMAREX ENERGY COMPANY CHESAPEAKE ENERGY CORPORATION PIONEER NATURAL RESOURCES COMPANY EOG RESOURCES INCORPORATED ENERGEN CORPORATION SANDRIDGE ENERGY, INC. ANADARKO PETROLEUM CORPORATION BOPCO, L.P. CONOCOPHILLIPS COMPANY WHITING PETROLEUM CORPORATION YATES CO INTERNATIONAL (YATES FAMILY) MEWBOURNE HOLDINGS INC Total Sum of Last Reported Total Prod (Boe/d) Total Average of Peak Well Rate (Boe/d) Data Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) 940 96 1,233 134 30,424 114 36,031 1,396 275 265 39,392 1,429 41,690 775 42,896 2,335 48,296 1,109 48,900 781 72,271 2,321 586 111 0 0 245 1,118 238 629 7,097 1,311 8 170 495 707 6,940 6,099 193 2,118 6,458 168 5,941 132 87,156 152 98,058 798 3,086 119 61 97 55 319 729 174 199 501 274 678 1,471 601 2,331 211 0 0 245 88 11,942 607 11,365 326 11 304 0 0 267 1,801 686 387 297 161 1,505 154 9,042 170 902 43 1,274 60 0 0 8,307 142 96 146 17 2,602 17 72 0 20 3,591 1,345 92 252 6,979 1,199 15,501 2,497 6,180 1,892 183 504 3,401 806 431 198 7,168 5,174 185 438 0 52 5,225 4,715 2,717 374 69 79 0 0 LEA (NM) 302 143 HOCKLEY (TX) 24,228 2,313 ANDREWS (TX) 10,266 6,741 ECTOR (TX) 11,116 751 SCURRY (TX) 0 0 40,931 4,302 5,927 1,378 4,183 1,004 86 160 175 196 212 360 24,277 19,898 4,012 543 9,154 676 0 1 531 1,087 4,749 599 10,600 247 8 175 6,323 100 1,388 137 0 63 2,952 94 0 112 30 206 138 1,500 243 1,171 3,576 939 3,604 2,888 722 747 2,367 1,207 159 185 4,863 2,164 0 0 871 304 1,498 129 22,925 145 266 115 9,690 129 513 1,233 0 86 GAINES (TX) 9,383 1,174 WARD (TX) 1,272 992 YOAKUM (TX) 62,498 3,508 EDDY (NM) 5,175 352 PECOS (TX) 1 130 82,143 2,931 443 1,767 843 1,303 Grand Total 170,502 1,539 124,941 3,320 47,130 1,282 39,607 645 37,498 170 31,574 604 26,893 241 24,277 14,213 23,250 171 19,647 309 19,528 1,361 18,772 300 16,915 513 16,835 298 16,592 318 12,890 451 10,294 580 8,834 1,095 7,721 150 7,619 138 762,126 495
Hor n Rive r
Montney
Card Card ium ium Gas
Card ium
Glau coni te te
Bak ken
VET VET
Permian (Hz)
Amaranth Permian (Hz)
A m ar an th
Permian (Horizontal) Play Profile

1,800 1,600 1,400 1,200 High Base Low 90 80 70 60 High Base Low
Permian (Hz)
Rigs Running
Wells Drilled
50 40 30 20 10 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
1,000 800 600 400 200 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Mmcfe/d
Mboe/d
Mmcfe/d
4,800 3,600 2,400 1,200 -
800 600 400 200 -
4,800 3,600 2,400 1,200 -
800 600 400 200 0

180,000 156,000 132,000 108,000 High Base Low
Gas Growth (Boe/d)

180,000 156,000 132,000 108,000 84,000 60,000 36,000 12,000 -12,000 -36,000 -60,000 High Base Low
Horn River
84,000 60,000 36,000 12,000 -12,000 -36,000
Mon tney
-60,000 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
2009
2010
2011
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
Quarterly IP
2.0 1.8 1.5 1.3 MMcfe/d 1.0 0.8

333 292 250
1000 900 800 700 Frequency 600 500 400 300 200 100 0 0 292 584 876 1,168 1,460 1,752 2,044 2,336 2,628 2,920 Peak IP Rate (Boe/d)
Boe/d
208 167 125 83 42 0
0.5 0.3 0.0 00 03 06 09 12 15 18 21 24 27 30 33 36 39 42

182
Mboe/d
Cardium Cardium Gas Glauconite VET

10,800 9,600 8,400 7,200 6,000 Liquids (Right) 1,800 1,600 1,400 1,200 1,000

10,800 9,600 8,400 7,200 6,000 Low Base High 1,800 1,600 1,400 1,200 1,000
Permian (Vertical) Play Profile

Rigs Running
400 350 300 250 200 150 100 50 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E High Base Low
A m ar an th Wells Drilled
7,000 6,000 5,000 High Base Low
Rigs Running
Wells Drilled
Ba kk en (U S)
4,000 3,000 2,000
Permian (Vt)
1,000 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

14,000 Liquids (Right) 12,000 10,000 2,000 1,667 2,333

14,000 12,000 10,000 2,333 2,000
Cardium Gas
1,667
Mmcfe/d
Mmcfe/d
Mboe/d
Low 6,000 4,000 2,000 -
Base
High 1,000 667 333 0
6,000 4,000 2,000 -
1,000 667 333 -
Mboe/d
8,000
1,333
8,000
1,333
Glauconite

250,000 200,000 150,000 100,000 50,000 0 2009 -50,000 -100,000 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E High Base Low
Gas Growth (Boe/d)

250,000 200,000 150,000 High Base Low
50,000 0 -50,000 -100,000 -150,000
-150,000
2009
2010
2011
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
Quarterly IP
0.7 0.6 0.5 MMcfe/d 0.4 0.3 0.2 0.1 0.0 00 03 06 09 12 15 18 21 24 27 30 33 36 39 42

117 100 83 67 50 33
6,000 5,000 4,000 Frequency

Boe/d
3,000 2,000 1,000
Horn River Mon tney

0 0 100 200 300 400 500 600 700 800 900 1,000 Peak IP Rate (Boe/d)
100,000
VET
17 0
183
Hor n Rive r
Montney
Glau coni te
VET
Woodford
Barnett
Bakken (US)
Amaranth
Woodford
Exhibit 44. Woodford Map
MISSOURI
Blaine Dewey Canadian
OKLAHOMA
Hughes Caddo Grady Pittsburg
Fayetteville
Atoka Carter
TEXAS
Barnett
Coal
Top 5 Producers
ARKANSAS
1 Devon Energy 2 Newfield Exploration 3 BP 4 Petroquest Energy 5 Antero Resources 6 Other
Exhibit 45. Woodford Economics (IRRs) Woodford IRRs

Woodford $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $60.00 -13% -11% -9% -7% -5% -4% -2% 0% 2% 4% 6% $70.00 -5% -3% -2% 0% 2% 4% 6% 8% 9% 11% 13% $80.00 2% 4% 6% 8% 10% 11% 13% 15% 17% 19% 21% $90.00 10% 11% 13% 15% 17% 19% 21% 22% 24% 26% 28% $100.00 17% 19% 21% 23% 25% 26% 28% 30% 32% 34% 36% $110.00 24% 26% 28% 30% 32% 34% 36% 38% 40% 42% 44% $120.00 32% 34% 36% 38% 40% 42% 44% 46% 47% 49% 51%
Woodford Top Operators
Top Operators
1 2 3 4 5 6 Devon Energy XTO Energy Cimarex Energy Continental Resource Chesapeake Energy Eagle Rock Exploration Active Rigs 12 12 6 5 3 3
Exhibit 46. Woodford Results by County and Operator

COMMON_OPER_NAME DEVON ENERGY CORPORATION NEWFIELD EXPLORATION COMPANY BP AMERICA PRODUCTION COMPANY PETROQUEST ENERGY, L.L.C. ANTERO RESOURCES CORPORATION CIMAREX ENERGY COMPANY SM ENERGY COMPANY QEP ENERGY COMPANY PABLO ENERGY II, LLC CHESAPEAKE ENERGY CORPORATION CONTINENTAL RESOURCES, INC. KAISER-FRANCIS OIL COMPANY CHEVRON, U.S.A., INC. XTO ENERGY, INC. CORNERSTONE E & P COMPANY LP BNK PETROLEUM(US) INC RANGE RESOURCES CORPORATION WESTERN OIL AND GAS DEVELOPMENT CORP SAMSON INVESTMENT COMPANY W C T OPERATING LLC Total Sum of Last Reported Total Prod (Boe/d) Total Average of Peak Well Rate (Boe/d) Data Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) Sum of Last Reported Total Prod (Boe/d) Average of Peak Well Rate (Boe/d) 1,378 232 1,752 377 1,841 304 1,940 155 2,887 234 6,830 503 16,980 373 19,233 503 25,030 406 35,885 426 21 100 60 245 85 156 16 124 294 294 450 477 0 105 0 107 149 190 824 1,123 0 1 0 42 545 514 0 0 0 382 666 219 0 544 245 424 63 203 411 240 539 392 1,115 251 520 596 375 147 269 263 147 318 527 527 1 370 428 900 0 464 1,156 1,349 0 330 225 451 0 450 95 89 109 294 878 440 3,303 525 2,940 512 950 183 89 338 267 329 6,263 495 816 173 19 299 4,337 410 0 3 GRADY (OK) DEWEY (OK) 619 381 CADDO (OK) 1,616 578 1,308 507 145 167 CARTER (OK) ATOKA (OK) BLAINE (OK) 4,958 536 0 0 HUGHES (OK) 3,740 378 6,980 434 4,737 537 CANADIAN (OK) 8,404 582 COAL (OK) 5,905 349 6,776 395 3,808 881 PITTSBURG (OK) 73 330 4,902 341 9,976 500 12,637 539 6,357 423 223 467 Grand Total 25,315 444 19,966 395 18,666 540 12,637 539 8,390 294 7,033 412 4,446 400 4,210 501 3,315 372 2,679 210 1,618 358 1,584 963 824 197 790 434 666 202 541 1,145 515 373 471 326 461 175 337 11 116,295 330
Hor n Rive r
Montney
Card ium Gas
Card ium
Glau coni te te
Bak ken
VET VET
Woodford
Barnett
Bakken (US)
Amaranth Permian (Hz)
A m ar an th
Woodford Play Profile

400 350 300 High Base Low
Ba kk en (U S)
Rigs Running
120 100
High Base Low
80
Wells Drilled
250 200 150 100
60 40
Ba rn et t
20 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
50 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

1,750 1,500 Liquids (Right) 292 250 208

1,750 Low 1,500 1,250 Base High 250 208 292
Woodford
1,250
Mmcfe/d
Mmcfe/d
Mboe/d
750 500 250 -
125 83 42 -
750 500 250 -
125 83 42 0
/12 E Q2 /13 E Q1 /14 E Q4 /14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E
Q2 /10 Q1 /11
Q4 /08 Q3 /09
Q1 /08
Q4 /11
Q3
Q2

70,000 60,000 50,000 High Base Low
Gas Growth (Boe/d)

70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 High Base Low
Horn River
40,000 30,000 20,000 10,000 0 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Mon tney
2009
2010
2011
2012E
Q1
2013E
Q4
/14 E Q3 /15 E Q2 /16 E Q1 /17 E Q4 /17 E Q3 /18 E Q2 /19 E Q1 /20 E Q4 /20 E
Q1 /08
Q3 /09 Q2 /10
Q4 /08
Q1 /11
Q4 /11
/12
/13
Q3
/14
2014E
2015E
2016E
2017E
2018E
2019E
2020E
Quarterly IP
3.5 3.0 2.5 MMcfe/d 2.0 1.5 1.0 0.5 0.0 00 03 06 09 12 15 18 21 24 27 30 33 36 39 42 Months On Production Q1/08 Q1/09 Q1/10 Q1/11 Q1/12 Q2/08 Q2/09 Q2/10 Q2/11 Q3/08 Q3/09 Q3/10 Q3/11 Q4/08 Q4/09 Q4/10 Q4/11 583 500 417

450 400 350 300
Frequency
Boe/d
333 250 167 83 0
250 200 150 100 50 0 0 376 752 1,128 1,504 1,880 2,256 2,632 3,008
186
Mboe/d
1,000
167
1,000
167
Glauconite VET
A m ar an th
Ba kk en (U S)
Ba rn et t
Woodford

187
VET
Hor n Rive r
Montney
Emerging Plays
Exhibit 47. Eaglebine
Barnett
VET Exhibit 48. Niobrara

Haynesville
Emerging Plays
Eagleford
Barnett
Bakken (US)
Amaranth
TEXAS
Haynesville
Robertson Leon
Madison Burleson
Grimes Brazos
Tuscaloosa Top Permit Holders

1 Petromax 2 Apache 3 CML Exploration 4 Woodbine Acquisitions 5 Vess Oil Corp 6 Encana Corp
Eagleford
LOUISIANA
Campbell Johnson Niobrara
SOUTH DAKOTA
Converse
WYOMING
Goshen Platte Wilkinson Laramie Weld Larimer West Feliciana Morgan East Feliciana Saint Helena Amite
MISSISSIPPI NEBRASKA
TEXAS
Tanglpahoa
Top 5 Permit Holders

1 EOG Resources 2 Noble Energy 3 Chesapeake Energy 4 Kerr-Mcgee Oil & Gas 5 Bill Barrett Corp
COLORADO
LOUISIANA Boulder
KANSAS
Mississippi Lime
Source for Exhibits 47 and 48: GoogleEarth, HPDI and CIBC World Markets Inc.
Exhibit 49. San Juan Basin
COLORADO
Mississippi Lime
San Juan Rio Arriba
Sandoval
TEXAS
1 McElvain Oil & Gas 2 XTO Energy 3 Rosetta Resources 4 Encana Corp 5 Elm Ridge Exploration
NEW MEXICO
Exhibit 50. Tuscaloosa
Haynesville
MISSISSIPPI
Wilkinson Amite
TEXAS
West Feliciana East Feliciana Saint Helena
Tanglpahoa

1 Devon Energy 2 Goodrich Petroleum 3 Encore Operating 4 Encana 5 Enduro Operating
LOUISIANA
Source for Exhibits 49 and 50: GoogleEarth, HPDI and CIBC World Markets Inc.
Hor n Rive r
Montney
VET
Emerging Plays
Eagleford
Barnett
Bakken (US)
Amaranth
Hor n Rive r
Montney
VET
Emerging Plays
Eagleford
Barnett
Bakken (US)
Amaranth
Exhibit 51. Utica
New York
Madison
Haynesville
Chenango Broome
Utica
Trumbull Portage Mahoning Holmes Beaver Columbiana West Feliciana Jefferson Morgan Monroe East Feliciana Saint Helena Lawrence Butler Wilkinson Amite
MISSISSIPPI
Pennsylvania
Tanglpahoa
TEXAS
Ohio

1 Chesapeake Energy 2 HG Energy 3 Swepi LP 4 Anadarko Energy 5 Norse Energy
LOUISIANA
Source: GoogleEarth, HPDI and CIBC World Markets Inc.
191
Canadian Resource Plays
192
193
A m ar an th
Amaranth - Area Map (Circa August 2012)
Amaranth - Resource Potential

25
25.0 Total Resource In Place (Bln barrels) 20.0 20.0 Recovered-to-Date
Ba kk en (U S)
20 Barrels of Oil (Bln)

15.0
15
10.0
15.0
15.0
10
10.0 7.5 6.0 5.0 4.3 4.0 2.5 4% 1% 7% 5% 2% 2.5 2%
5
<1% <1% <1% 16%
28%
0 Cardium Seal Tight Carbonates Bakken (SE Sask.) Lower Shaunavon Duvernay Viking
Amaranth
Ba rn et t
Amaranth - Area Production Growth

60 55 50 45 Total Production (MBoe/d) 40 35 30 25 20 15 10 5
Bakken (Alberta)
Amaranth
Pre 2008 2012 2008 2013 2009 2014 2010 2015 2011 Liquids
Ea gl ef or d
Actual
Forecast
Fa ye tt ev ill e
Note: Map updated as of May 2012. Source: GeoScout; Company reports; Geological Atlas of Western Canada; The Edge; Canadian Discovery Digest; CIBC World Markets Inc.
Amaranth - Horizontal Well Operator Summary (Circa August 2012)

# Operated # Licensed Company Ticker Hz Wells Wells EOG Rsrcs Cda Inc EOG-NYSE 205 Penn West Petrl PWT 110 39 ARC Rsrcs Ltd ARX 23 1 Legacy O&G Inc LEG 45 6 Red Beds Rsrcs Ltd PRIVATE 14 5 Surge Enrg Inc SGY 5 Cdn Nat Rsrcs Lmtd CNQ 10 4 Petrobakken Enrg Ltd PBN 9 4 Legacy Oil & Gas Nd, Inc. LEG 3 Crescent Point Enrg Corp CPG 3 Westman Expl Ltd PRIVATE 3 Atikwa Rsrcs Inc ATK 2 618555 Sask Ltd PRIVATE 3 1 Renegade Petrls Ltd RPL 1 Harvest Oprtns Corp PRIVATE 1 Total Op./Lic. Wells 205 149 24 51 19 5 14 13 3 3 3 2 4 1 1 Gross Operated Hz Well Production Oil & Liquids Nat. Gas Nat. Gas (bbl/d) (mcf/d) (%) 3,558 1 0% 3,337 0 0% 710 0 0% 591 0 0% 493 0 0% 240 0 0% 206 0 0% 147 0 0% 108 4 1% 43 19 7% 44 0 0% 39 0 0% 39 0 0% 20 0 0% 2 0 0% Total (boe/d) 3,558 3,337 710 591 493 240 206 147 109 46 44 39 39 20 2 Average Production Per Hz Well Oil & Liquids Nat. Gas Total (bbl/d) (mcf/d) (boe/d) 17 0 17 30 0 30 31 0 31 13 0 13 35 0 35 48 0 48 21 0 21 16 0 16 36 1 36 14 6 15 15 0 15 20 0 20 13 0 13 20 0 20 2 0 2
Amaranth
Mon tney
Note: Quoted production is a gross estimate from public databases which may vary from actual production rates. Source: GeoScout; CIBC World Markets Inc.
Amaranth - Schematic Cross Section
Amaranth - Land Position by Operator

250 210 200 Net Sections (1) 150 100 55 50 0 Tundra (2) Antler River (2) Lodgepole (2) EOG White North (2) CNRL PetroBakken Surge Legacy Penn West ARC 54 22 11 9 8 2 1 124
Amaranth Land Holders
117
Source: The Edge; Canadian Discovery Digest; CIBC World Markets Inc.
194
Montney Oil
60 55 50 45 40 35 30 25 20 15 10 5 0 Liquids Production (MBoe/d)
Pekisko
VET
Amaranth - Generic Type Curves

250 200
Prod. Rate (boe/d)
Amaranth - Type Curve Well Economics (Mid Cycle)

Amaranth HZ Wells - Type Curves
High Case: 225 Boe/d IP, 175 MBoe recovery Mid Case: 125 Boe/d IP, 100 MBoe recovery
A m ar an th
NPV/well Sensitivity (+/- 20%)
Amaranth Type Curve Economics

Midcycle1 Well Economics: NPV (B-Tax) (C$,mlns) NPV (A-Tax) (C$,mlns) IRR (A-tax) (%) P/I Ratio2 (A-tax) Payback Period (yrs) NPV9 Breakeven Low Curve
150 100 50 0 0 3 6 9 12 15
Low Case: 50 Boe/d IP, 50 MBoe recovery
$0.6 $0.3 15% 0.2x 5.2
Mid High Curve Curve
Commodity Prices Productivity Capital Cost Operating Cost Royalties

(C$,mlns)
$3.0 $2.0 74% 1.4x 1.5 Mid
$5.6 $4.0 271% 2.6x 0.6 High
($US/bbl) $70.00 $41.00 $30.50 Assumptions
Low
$1.0
$0.5
$0.0
$0.5
$1.0
CIBC Base Commodity Price Assumption 2012 2013 2014

WTI (US$/bbl) FX ($US/$Cdn) Nat Gas (C$/mcf) $90.00 $0.99 $2.39 $87.50 $0.98 $3.43 $85.00 $0.98 $4.08
18
21
24
27
30
Well Cost (C$,mln): $1.5MM Op Costs (incl.trans): $10.00/Boe Discount Rate: 9%
1st yr Decline Rate: 65% 2nd yr Decline Rate: 25% Success Rate: 90%
Ba kk en (U S)
Months on Production
Note: We will be watching actual results to either validate or disprove these type curves, and plan to make adjustments on an on-going basis as dictated by empirical data. Source: GeoScout; Company reports; CIBC World Markets Inc.
Notes: 1) Midcycle Economics include dry hole costs, and a 10% capital cost gross up for infrastructure spending. Land costs are considered sunk costs. Economics assume crown royalties. 2) P/I ratios calculated as per well NPV (@ 9%) divided by initial capital invested, and can be thought of as the discounted % return for per dollar invested. Source: Company reports and CIBC World Markets Inc.
Amaranth - Variance of Results - All Time

250 200
Prod. Rate (Boe/d)
Amaranth - Variance of Results - 2011 to Present

250 200
Prod. Rate (Boe/d)
Variance to Mean - All Time

HORIZONTAL Amaranth Wells
Variance to Mean - 2011 to Present

HORIZONTAL Amaranth Wells
Ba rn et t
150 100 50 0
3 6 401 9 377 12 15 18 21
Mean (Average) Top Quartile Average Bottom Quartile Average
150 100 50 0
3 6 9
24
27 68
30 37
33 19
36 14
-50
# of We lls -100
430 430
Months on Production (Normalized) 299 229 147 113 84
# of We lls -100
-50
12 15 18 21 24 Months on Production (Normalized)
27
30
33
36
141 141
113
91
67
Amaranth - Distribution By Peak I.P. Rates

Distribution by Peak I.P. Rate HORIZONTAL Amaranth Wells
Distribution Curve
150 120 90
Amaranth - Top Wells

Rank Operator 1 EOG 2 Penn West 3 EOG 4 EOG 5 EOG 6 Penn West 7 EOG 8 EOG 9 EOG 10 EOG 11 EOG 12 EOG 13 EOG 14 Penn West 15 EOG 16 EOG 17 EOG 18 EOG 19 Penn West 20 EOG All Producers (402) Strike Area Waskada Waskada Waskada Waskada Waskada Waskada Waskada Waskada Waskada Waskada Waskada Waskada Waskada Waskada Waskada Waskada Waskada Waskada Waskada Waskada - Average UWI (Well Location) 16-05-001-24W1 14-36-001-26W1 01-08-001-24W1 05-15-001-25W1 01-08-001-24W1 14-36-001-26W1 02-08-001-24W1 05-15-001-25W1 07-08-001-24W1 14-05-001-24W1 11-08-001-24W1 05-27-001-25W1 08-03-002-25W1 09-36-001-26W1 07-15-001-25W1 06-08-001-24W1 08-03-002-25W1 05-09-001-25W1 09-35-001-26W1 05-34-001-25W1 Date On Mths Prod. (Boe/d) Stream On Peak I.P. Current 2009/01 36 358 4 2010/11 14 354 42 2008/07 42 343 2 2011/03 10 341 62 2009/09 28 323 5 2010/10 15 320 26 2009/08 29 317 8 2011/04 9 306 108 2009/08 29 299 7 2009/01 36 272 16 2010/08 17 271 31 2010/12 13 271 26 2010/10 15 270 36 2010/09 16 268 84 2010/06 19 267 21 2011/02 11 265 31 2010/09 16 264 14 2011/02 11 263 43 2011/02 11 260 11 2010/02 23 259 19 144 28 % Gas 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Depth (Meters) Msrd. Vt. 1,648 893 1,684 909 1,650 895 1,759 903 1,670 896 1,677 909 1,681 903 1,759 905 1,686 903 1,646 894 1,636 885 1,702 898 1,618 882 2,127 894 1,678 896 1,655 889 1,638 877 1,684 910 1,755 904 1,670 891 1,748 912
Ea gl ef or d
450 400
Peak I.P. Rate (Boe/d)
2008 & Earlier (13 Wells) 2009 (68 Wells)
350
Count
2010 (208 Wells) 2011 (141 Wells) Median Mean (Average)

150 300 0
300 250 200 150 100 50 0
60 30
0 (Boe/d)
Top/Bottom Quartile
Fa ye tt ev ill e
100
125
150
175
200
225
250
275
300
325
350
375
400
425
25
50
75
Well Count
Notes: Our Peak I.P. rate represents the maximum monthly producing-day rate in a wells first 8 months of production (note that we exclude months with less than 10 days of production). Current rate is a "calendar day" rate (i.e. last month's cumulative volumes divided by 30.5 days). Source: GeoScout; CIBC World Markets Inc.
Amaranth
Amaranth - YOY Actual Results ALL PRODUCERS

250 200
Production Rate (boe/d)
Amaranth - YOY Actual Results GOODLANDS

250
ALL Amaranth Hz Wells Average Per Well Production

2008 (13 Wells) 2010 (208 Wells) 2009 (68 Wells) 2011 (141 Wells)
GOODLANDS - Amaranth Hz Wells Average Per Well Production

200 150 100 50 0
150 100 50 0 0 3 6
2011 (25 Wells)
Mon tney
0 3 6 9 12 15 18 21 24
12
15
18
21
24
Months on Production (normalized)
Amaranth - YOY Actual Results WASKADA

250
Amaranth - YOY Actual Results Western Area

250
WASKADA - Amaranth Hz Wells Average Per Well Production

WESTERN AREA - Amaranth Hz Wells Average Per Well Production

2007 (1 Wells) 2009 (2 Wells) 2011 (16 Wells) 2008 (10 Wells) 2010 (35 Wells)
200
150
2011 (52 Wells)
200
150
VET
100
Waskada continues to be a focal point of development for EOG & Penn West.
100
but recent results at Pierson (western area) signal an extension of the play.
50
50
0 0 3 6 9 12 15 18 21 24
0 0 3 6 9 12 15 18 21 24
195
Montney
VET
Amaranth
Fayetteville
Eagleford
Barnett
Bakken (US)
Amaranth
197
A m ar an th
Ba kk en (U S)
Ba rn et t
Ea gl ef or d
Fa ye tt ev ill e
H ay ne sv ill e
Bakken (AB) VET

198
Alberta Bakken - Drilling / Licensing Activity - Data Available As Of MAY 25, 2012; Production Data Current To April 30, 2012 At Update
# Wells 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 Operator Antelope Argosy Argosy Argosy Argosy Argosy Copper Copper Copper Copper Crescent Point Crescent Point Crescent Point Crescent Point Crescent Point Crescent Point Crescent Point Crescent Point Crescent Point Crescent Point Crescent Point Crocotta Crocotta Deethree Deethree Deethree Deethree Deethree Deethree Deethree Deethree Deethree Deethree Deethree Deethree Deethree Legacy Murphy Murphy Murphy Murphy Murphy Murphy Murphy Murphy Murphy Murphy Murphy Murphy Murphy Murphy Murphy Murphy Nexen Nexen Nexen Nexen Shell Shell Shell Shell Shell Shell Shell Shell Shell Shell Shell Shell Timberrock Torc Torc Torc Torc Torc Torc Torc Torc Symbol PRIVATE GSY GSY GSY GSY GSY PRIVATE PRIVATE PRIVATE PRIVATE CPG CPG CPG CPG CPG CPG CPG CPG CPG CPG CPG CTA CTA DTX DTX DTX DTX DTX DTX DTX DTX DTX DTX DTX DTX DTX LEG MUR MUR MUR MUR MUR MUR MUR MUR MUR MUR MUR MUR MUR MUR MUR MUR NXY NXY NXY NXY RDS.A RDS.A RDS.A RDS.A RDS.A RDS.A RDS.A RDS.A RDS.A RDS.A RDS.A RDS.A PRIVATE PRIVATE PRIVATE PRIVATE PRIVATE PRIVATE PRIVATE PRIVATE PRIVATE Stike Area Stdoff Pearce Pearce Granum Granum Granum Reagan Reagan Reagan Reagan Sunburst Del Bonita Reagan Branch Reagan Del Bonita Reagan Warner Blood Barons Barons Stirling Stirling Reagan Reagan Reagan Ferguson Ferguson Ferguson Ferguson Ferguson Ferguson Ferguson Ferguson Ferguson Coaldale Springco Reagan Reagan Bonita Reagan Reagan Jensen Jensen Ninsto Blood Blood Blood Blood Ninsto Blood Blood Blood Keho Keho Keho Clares Del Bonita Del Bonita Del Bonita Del Bonita Del Bonita Del Bonita Del Bonita Del Bonita Del Bonita Del Bonita Woolfd Aetna Clares Pearce Pearce Pearce Amelia Keho Penny Amelia Amelia Well Location 05-30-007-25W4 04-16-009-24W4 01-21-009-24W4 03-31-010-25W4 13-35-010-26W4 01-24-011-26W4 01-06-001-19W4 13-01-001-20W4 01-23-001-20W4 14-23-001-20W4 03-08-001-18W4 14-07-001-21W4 15-01-002-20W4 13-11-002-20W4 01-09-002-21W4 14-23-002-21W4 13-24-002-21W4 16-10-004-19W4 01-05-007-21W4 01-15-012-24W4 16-35-012-24W4 03-10-007-19W4 14-10-007-19W4 07-03-002-20W4 12-03-002-20W4 16-03-002-20W4 03-19-003-16W4 08-19-003-16W4 16-19-003-16W4 05-22-003-17W4 13-22-003-17W4 07-25-003-17W4 11-31-003-17W4 04-32-003-17W4 11-12-003-18W4 01-36-008-20W4 02-36-003-23W4 16-04-001-20W4 08-16-001-20W4 08-21-001-22W4 14-02-002-21W4 14-11-002-21W4 06-10-003-21W4 14-24-003-21W4 09-29-004-25W4 02-18-005-23W4 07-10-005-24W4 14-21-005-24W4 01-35-005-24W4 09-07-005-25W4 06-32-006-23W4 08-09-006-24W4 13-36-006-24W4 01-06-011-24W4 12-06-011-24W4 11-28-011-24W4 01-12-012-25W4 10-20-001-22W4 14-25-001-22W4 06-33-001-22W4 05-23-001-23W4 13-23-001-23W4 02-28-001-23W4 13-14-001-24W4 14-32-001-24W4 14-04-002-22W4 04-13-002-22W4 16-02-002-24W4 16-24-002-25W4 06-36-013-25W4 03-08-009-24W4 02-17-009-24W4 03-13-009-25W4 03-26-009-27W4 14-10-010-22W4 16-02-010-24W4 04-22-010-26W4 01-29-010-27W4 Reported Formation Stettler Wabamun Wabamun Wabamun Wabamun Wabamun Stettler Stettler Bakken Bakken Wabamun Wabamun Wabamun Wabamun Wabamun Bakken Wabamun Wabamun Wabamun Wabamun Wabamun Big_Val Stettler Stettler Stettler Bakken Bakken Bakken Bakken Bakken Bakken Big_Val Stettler Livngstn Big_Val Stettler Stettler Wabamun Wabamun Wabamun Wabamun Wabamun Wabamun Wabamun Wabamun Wabamun Wabamun Wabamun Wabamun Wabamun Wabamun Wabamun Wabamun Wabamun Wabamun Wabamun Wabamun Big_Val Wabamun Exshaw Exshaw Wabamun Big_Val Big_Val Wabamun Wabamun Big_Val Wabamun Exshaw Banff Stettler Big_Val Big_Val Big_Val Stettler Banff_L Big_Val Big_Val Depth (M) Msrd. Vt. 2,825 2,825 3,765 2,536 3,956 3,456 1,495 1,540 1,548 2,896 3,167 3,020 2,969 3,436 3,209 3,114 1,655 2,161 3,413 2,623 1,481 1,902 2,961 2,629 2,386 2,528 2,601 2,289 1,540 1,548 1,420 1,949 1,590 1,548 1,813 1,674 1,654 2,161 2,086 1,452 1,481 1,545 1,553 1,533 Hz/Vt Well V V H V H H V V V V H H H H H H H V H V H H V H H H H H H H H H H V H V V H H H H H H V H H V V H H H V H V H H H H V V V H H H V V H V V V H H V H H V H V Date Licensed 9/7/2011 1/16/2012 12/6/2011 9/24/2010 12/21/2010 1/14/2011 1/4/2011 12/9/2010 11/26/2010 11/26/2010 9/23/2010 7/9/2010 11/5/2010 2/2/2012 9/20/2011 8/30/2011 3/1/2012 1/11/2012 3/7/2011 10/29/2010 11/18/2010 11/2/2011 9/1/2011 12/3/2010 12/3/2010 6/16/2011 4/18/2012 4/18/2012 3/22/2012 2/24/2012 3/15/2012 10/12/2011 3/11/2011 4/29/2009 5/15/2012 10/25/2011 3/11/2011 1/26/2011 4/6/2011 3/25/2011 1/21/2011 2/17/2011 6/8/2011 6/16/2011 6/16/2011 1/27/2012 11/25/2011 1/27/2012 6/29/2011 11/23/2011 3/1/2012 12/1/2011 2/29/2012 2/26/2011 2/26/2011 12/20/2010 3/31/2011 10/21/2010 6/29/2011 12/19/2011 12/22/2011 2/24/2012 11/17/2010 11/23/2010 8/23/2011 6/10/2011 11/2/2010 6/10/2011 8/5/2010 6/23/2011 3/26/2012 3/17/2011 12/29/2011 10/11/2011 5/8/2012 11/14/2011 4/27/2011 11/30/2011 Date On Spudded 9/17/2011 12/13/2011 9/29/2010 3/15/2011 1/21/2011 1/25/2011 12/28/2010 12/4/2010 10/3/2010 7/24/2010 11/11/2010 2/10/2012 10/17/2011 9/22/2011 3/13/2012 2/1/2012 12/7/2010 12/5/2010 11/6/2011 9/30/2011 12/6/2010 12/6/2010 7/8/2011 4/25/2012 3/30/2012 3/1/2012 3/24/2012 1/3/2012 5/7/2011 11/12/2009 Date Rig Released 11/15/2011 1/18/2012 10/19/2010 4/24/2011 3/12/2011 2/12/2011 1/17/2011 12/23/2010 10/29/2010 8/25/2010 12/2/2010 3/8/2012 11/14/2011 10/16/2011 2/9/2012 12/22/2010 1/6/2011 11/30/2011 10/18/2011 2/11/2011 2/11/2011 8/4/2011 Reported Date On Stream Mths On Cumulative Production Oil Gas Water % (Bbl) (Mcf) (Bbl) Water
A m ar an th
03/14/2012 02/26/2011 08/12/2011 06/07/2011
3 16 10 12
1,934 5,497 10,894 3,664
1,175 10,034 15,749 4,135
732 52
12% 1%
01/01/2011 11/01/2010 01/01/2011 12/01/2011 11/01/2011
17 19 17 6 7
905 1,617 912 5,314 8,443
224 1,484 916 7,613 10,322
1,286 1,634 3,797 6,293 4,173
59% 50% 81% 54% 33%
Ba kk en (U S)
07/01/2011
11
2,235
465
3,805
63%
08/16/2011 09/13/2011
10 9
12,893 4,709
37,858 14,513
947 1,841
7% 28%
Ba rn et t
3,038 2,860 3,749 2,380 2,134 1,065
1,281 1,280 1,286 1,272 1,364 1,065
4/19/2012 3/22/2012 4/14/2012 2/4/2012 6/5/2011 11/15/2009
03/25/2012 04/20/2012 02/08/2012
3 2 4
4,878 14,484
4 4,252
848 1,914
15% 12%
3,503 2,720 2,601 2,776 3,471 4,307
2,140 1,568 1,573 1,756 1,796 2,855
3/22/2011 3/7/2011 5/6/2011 1/29/2011 6/26/2011 8/30/2011
5/17/2011 4/8/2011 5/24/2011 3/5/2011 7/20/2011 10/21/2011
10/22/2011 05/01/2011
8 13
1,751 6,847
2,165 64,095
1,994 586
53% 8%
04/01/2011 09/28/2011 12/01/2011
14 9 6
2,504 3,223 20,333
8,646 13,488
378 762
13% 19% 49%
Ea gl ef or d
31,238 19,269
3,432 4,351
2,371 2,875
7/28/2011 2/18/2012
8/27/2011 4/2/2012
2,398 3,631 3,523 3,721 3,801
2,283 2,292 2,256 2,382 2,196
3/18/2011 3/18/2011 1/17/2011 5/21/2011 11/22/2010
5/1/2011 5/1/2011 3/11/2011 7/16/2011 1/30/2011
07/24/2011 05/23/2011 01/11/2012 03/01/2011
11 13 5 15
5,703 2,922 1,466 10,648
2,950 1,459 1,473 23,603
145
5%
Fa ye tt ev ill e
3,563 4,341
2,628
11/26/2011 5/11/2011
7/15/2011
01/01/2012
539
316
3,806 2,771 2,223 3,800 3,463 3,839 4,514 3,379 3,731 4,712
2,063 2,771 2,223 2,246 2,384 2,982 2,011 2,665 3,045
2/8/2011 8/17/2010 6/26/2011 4/11/2012 3/29/2011 1/10/2012 10/19/2011 11/21/2011 5/15/2011 2/17/2012
3/27/2011 9/8/2010 7/20/2011 5/8/2011 2/15/2012 1/1/2012 12/23/2011 7/5/2011 4/8/2012
06/01/2011
12
10,629
10,517
12/22/2011 11/01/2011 05/17/2012
6 7 1
940 28,254
667 13,165
08/01/2011
10
6,066
2,318
H ay ne sv ill e
Bakken (AB)
Alberta Bakken - Key Play Parameter vs. Other Tight Oil Plays
Alberta Bakken
(Southern Alberta) Gross OOIP (Bln Barrels) OOIP/section (MMBoe) Recovered to date (%) Est. Ult. Recovery Rate (%): Depth (metres) Capital Costs/well DCT ($MM) Total "AB. BAKKEN" Package Shale, Limestone, & Dolomite Package 2-12% 0.1 - +20 mD 10 - +35 m 32 - 38 API 15.0-25.0 Bln 12-15 MMBoe/sec <1.0% ? 2,000 - 2,800 m $3.0-4.0 MM EXSHAW (Bakken) Shale 4 - 8% 0.1 - 2 mD 4.5 - 11 m 36 API BIG VALLEY BANFF
Bakken
(SE Sask) 5.0 Bln 5 MMBoe/sec 1.0% 30-40% 1,600 m $1.5-2.0 MM
Cardium
(Central AB) 10.0 Bln 5-10 MMBoe/sec 16.0% 25-35% 1,200 - 2,000 m $2.0-3.0 MM
L. Shaunavon Carbonates
(Central AB) 4.3 Bln 5-10 MMBoe/sec <1.0% 10% 1,350 m $1.5-2.0 MM (Central AB)
Viking
(SE Sask)
7.5 Bln 6.0 Bln 5-20 Mmboe/sec 5-10 MMBoe/sec 28.0% <1.0% 50-60% 16% 2,650 m 700 m $2.0-4.0 MM $0.8-1.2 MM
VET
Rock Type Porosity (%) Permeability (millidarcies) Net Pay (metres) Oil Quality (API)
Limestone Limestone 2-12% 4 - 8% 0.1 - +20 mD 0.1 - 10 mD 0 - 15 m 5 - 10 m 32.5 API 32 - 38 API
Silty Sandstone 10% 0.1 - 2.0 mD 5m 42 API
Broad Marine Sandstone 12% 0.5 - 10 mD 5 - 12 m 40 API
Oolitic Limestone 15-18% 0.5-1.0 mD 5 - 10 m 23 API
Limestone (Reef Platform/Edges) 5-6% 0.5 - 3.0 mD 5m 43 API
Silty Sandstone 23% 1 - +50 mD 3 - 10 m 38 API
199
A m ar an th
Bakken - Area Map (Circa August, 2012)
Bakken - Resource Potential

25
25.0 Total Resource In Place (Bln barrels) 20.0 20.0 Recovered-to-Date
Ba kk en (U S)
20
15.0
15
10.0
15.0
15.0
10
10.0 7.5 6.0 5.0 4.3 4.0 2.5 4% 1% 7% 5% 2% 2.5 2%
5
<1% <1% <1% 16%
28%
Ba rn et t
Cardium
Seal
Tight Carbonates
Bakken (SE Sask.) Lower Shaunavon
Amaranth
Duvernay
Bakken - Area Production Growth

200 180 160 Pre 2008 2012 2008 2013
Bakken (Alberta)
Bakken
2009 2014 2010 2015 2011 Liquids
Ea gl ef or d
140 120 100 80 60 40 20 Actual Forecast
Fa ye tt ev ill e
Note: Map updated at May 2012. Source: Gvmnt. of Sask.; N. Dakota Geological Survey; Canadian Discovery Digest; GeoScout; Geological Atlas of Western Canada;CIBC World Markets Inc.
Bakken - Horizontal Well Operator Summary (Circa August, 2012)

Total Gross Operated Hz Well Production # Operated # Licensed Op./Lic. Oil & Liquids Nat. Gas Total Company Ticker Hz Wells Wells Wells (bbl/d) (mcf/d) (boe/d) 41,397 33,210 46,932 Crescent Point Enrg Corp CPG 1,098 303 1,401 Petrobakken Enrg Ltd PBN 747 277 1024 16,998 13,512 19,250 Legacy O&G Inc LEG 149 33 182 4,592 2,470 5,003 Husky Oil Oprtns Ltd HSE 12 10 22 1,407 1,443 1,647 Painted Pony Petrl Ltd PPY.A 72 17 89 1,151 1,587 1,416 Taqa North Ltd TAQA 30 8 38 1,025 947 1,183 Cenovus Enrg Inc CVE 16 16 32 931 838 1,071 Questerre Enrg Corp QEC 44 19 63 846 0 846 Tundra O&G Prtnshp PRIVATE 25 19 44 664 11 666 Penn West Petrl Ltd PWT 16 0 16 496 46 504 Rife Rsrcs Ltd PRIVATE 10 7 17 343 271 388 Highrock Enrg Ltd PRIVATE 9 2 11 335 81 348 Fairborne Enrg Ltd FEL 14 1 15 291 0 291 Midale Petrls Ltd PRIVATE 10 1 11 236 185 267 Openfield Enrg Ltd PRIVATE 5 0 5 171 257 214 Renegade Petrls Ltd RPL 11 8 19 181 187 212 Cdn Nat Rsrcs Lmtd CNQ 14 1 15 193 10 195 Aldon Oils Ltd PRIVATE 14 0 14 194 1 194 Arruga Rsrcs Ltd PRIVATE 6 0 6 184 12 186 Torquay Oil Corp TOC 7 2 9 93 180 123 Note: Quoted production is a gross estimate from public databases which may vary from actual production rates. Source: GeoScout; CIBC World Markets Inc. Nat. Gas (%) 12% 12% 8% 15% 19% 13% 13% 0% 0% 2% 12% 4% 0% 12% 20% 15% 1% 0% 1% 24% Average Production Per Hz Well Oil & Liquids Nat. Gas Total (bbl/d) (mcf/d) (boe/d) 38 30 43 23 18 26 31 17 34 117 120 137 16 22 20 34 32 39 58 52 67 19 0 19 27 0 27 31 3 31 34 27 39 37 9 39 21 0 21 24 18 27 34 51 43 16 17 19 14 1 14 14 0 14 31 2 31 13 26 18
H ay ne sv ill e
M ar ce llu s
Bakken - Schematic Cross Section
Bakken - Land Position by Operator

1,200 1,000 Net Sections (1) 800 600 400 200 0 Crescent Point (2) Painted Pony PetroBakken Tundra (3) Spartan Magnus (3) KNOC (3) Molopo CNRL Enerplus Cenovus Legacy Husky TriOil EOG NAL ARC 430 328 1,000
Bakken Land Holders
Bakken (SK)
219
200
172
100
97
90
86
82
77
68
53
45
35
Source: North Dakota Geological Survey; Canadian Discovery Digest; CIBC World Markets Inc.
Notes 1) 1 section = 640 acres; 2) Crescent Point's acreage includes only 90 net sections of Ryland's acreage 3) Denotes private company. Land positions are approximations based on company disclosure and public data, and do not adjust for prospectivity. Source: Company reports; GeoScout; CIBC World Markets Inc.
200
Montney Oil
200 180 160
Viking
Pekisko
140 120 100 80 60 40 20 0
31
Bakken - Generic Type Curves 300
Bakken - Type Curve Well Economics (Mid Cycle)
A m ar an th
Bakken HZ Wells - Type Curves

High Case: 275 Boe/d IP, 225 MBoe recovery Mid Case: 160 Boe/d IP, 150 MBoe recovery Low Case: 75 Boe/d IP, 70 MBoe recovery
Bakken Type Curve Economics

Midcycle1 Well Economics: NPV (B-Tax) (C$,mlns) NPV (A-Tax) (C$,mlns) IRR (A-tax) (%) P/I Ratio2 (A-tax) Payback Period (yrs)
NPV9 Breakeven
250
200
150
Low Curve $0.9 $0.5 16% 0.2x 4.8
Mid High Curve Curve Commodity Prices $3.9 $6.5 Productivity $2.7 $4.6 Capital Cost 59% 169% 1.3x 2.3x Royalties 1.8 0.8 Operating Cost Low Mid High
(C$,mlns)
Ba kk en (U S)
($US/bbl) $68.50 $40.00 $30.50
$1.5 $1.0 $0.5 $0.0 $0.5 $1.0 $1.5
100
Assumptions Well Cost (C$,mln): $2MM 1st yr Decline Rate: 65% Op Costs (incl.trans): $9.00/Boe 2nd yr Decline Rate: 25% Discount Rate: 9% Success Rate: 90%
CIBC Base Commodity Price Assumption

WTI (US$/bbl) FX ($US/$Cdn) Nat Gas (C$/mcf) 2012 $90.00 $0.99 $2.39 2013 $87.50 $0.98 $3.43 2014 $85.00 $0.98 $4.08
50
0 0 3 6 9 12 15 18 21 24 27 30
Ba rn et t
Bakken - Variance of Results - All Time 300 250 Production Rate (Boe/d) Mean (Average) 200 150 100 50 0 3 -50 6 9 12 15 18 21 24 27 30 33 36 Top Quartile Average Bottom Quartile Average
Bakken - Variance of Results - Since 2011 300 250 200 150 100 50 0 3 -50 # of
1074 984 876
Variance to Mean - All TIME

HORIZONTAL Bakken Wells
Production Rate (Boe/d)

Ea gl ef or d
Fa ye tt ev ill e
6 9 12 15 18 21 24 27 30 33 36 Months on Production (Normalized)
361 311 189 145
# of Wells -100
2355 2301 2146
Months on Production (Normalized)

2064 1919 1754 1608 1485 1355 1211
Wells -100
Bakken - Distribution By Peak I.P. Rates

700
Bakken - Top Wells

Rank Operator Strike Area 1 Cenovus Weyburn/Estevan 2 Legacy Weyburn/Estevan 3 Petrobakken Weyburn/Estevan 4 Petrobakken Weyburn/Estevan 5 Petrobakken Weyburn/Estevan 6 Crescent Point Weyburn/Estevan 7 Petrobakken Weyburn/Estevan 8 Crescent Point Weyburn/Estevan 9 Petrobakken Weyburn/Estevan 10 Crescent Point Weyburn/Estevan 11 Petrobakken Weyburn/Estevan 12 Legacy Weyburn/Estevan 13 Crescent Point Weyburn/Estevan 14 Crescent Point Weyburn/Estevan 15 Crescent Point Weyburn/Estevan 16 Petrobakken Weyburn/Estevan 17 Crescent Point Weyburn/Estevan 18 Petrobakken Weyburn/Estevan 19 Petrobakken Weyburn/Estevan 20 Husky Weyburn/Estevan 21 Petrobakken Weyburn/Estevan 22 Petrobakken Weyburn/Estevan 23 Legacy Weyburn/Estevan 24 Petrobakken Weyburn/Estevan 25 Penn West Weyburn/Estevan 26 Crescent Point Weyburn/Estevan 27 Husky Weyburn/Estevan 28 Petrobakken Weyburn/Estevan 29 Petrobakken Weyburn/Estevan 30 Petrobakken Weyburn/Estevan 31 Petrobakken Weyburn/Estevan 32 Petrobakken Weyburn/Estevan 33 Petrobakken Weyburn/Estevan 34 Crescent Point Weyburn/Estevan 35 Petrobakken Weyburn/Estevan 36 Petrobakken Weyburn/Estevan 37 Petrobakken Weyburn/Estevan 38 Crescent Point Weyburn/Estevan 39 Crescent Point Weyburn/Estevan 40 Petrobakken Weyburn/Estevan All Producers (2255) - Average UWI (Well Location) 13-35-001-07W2/00 16-15-001-06W2/00 13-07-008-06W2/00 14-13-008-08W2/00 09-26-008-10W2/00 01-14-009-07W2/00 06-16-008-06W2/00 12-18-008-09W2/00 01-35-008-10W2/00 12-09-008-10W2/00 04-24-008-07W2/00 05-36-001-07W2/00 13-28-008-09W2/00 04-10-008-08W2/00 02-12-008-08W2/00 04-14-008-07W2/00 01-12-007-11W2/00 01-04-010-07W2/00 05-33-007-09W2/00 12-36-001-13W2/00 01-36-007-11W2/00 10-23-008-06W2/00 04-36-001-07W2/00 02-30-009-09W2/00 04-03-009-09W2/00 13-26-008-08W2/00 04-27-001-13W2/00 12-36-008-07W2/00 03-35-007-11W2/00 13-13-008-07W2/00 03-35-008-10W2/00 03-24-007-11W2/00 03-17-008-07W2/00 01-29-008-07W2/00 03-34-008-10W2/00 05-25-008-07W2/00 02-05-009-08W2/00 03-01-009-09W2/00 15-31-008-08W2/00 16-06-008-05W2/00 Date On Mths Stream On 2011/02 11 2011/01 12 2008/11 38 2009/06 31 2009/01 36 2010/06 19 2009/01 36 2007/10 51 2009/03 34 2009/03 34 2008/02 47 2010/07 18 2009/07 30 2007/11 50 2010/12 13 2010/04 21 2008/07 42 2008/10 39 2007/11 50 2011/01 12 2008/04 45 2009/08 29 2010/09 16 2010/10 15 2009/03 34 2007/08 53 2010/08 17 2007/12 49 2009/12 25 2009/09 28 2008/08 41 2007/09 52 2008/09 40 2010/08 17 2007/12 49 2008/06 43 2009/02 35 2007/09 52 2010/02 23 2011/03 10 Prod. (Boe/d) Peak I.P. Current 1,211 293 651 122 618 39 535 61 526 49 520 104 509 25 494 20 487 26 463 19 462 89 454 49 453 19 452 23 448 159 445 21 443 39 440 20 439 56 422 215 421 31 420 14 417 67 413 128 413 75 408 7 408 98 395 43 394 26 394 139 392 41 392 33 392 8 391 145 390 17 388 84 388 16 384 14 382 83 378 84 152 35 % Gas 0% 0% 2% 11% 0% 8% 11% 0% 4% 7% 14% 11% 8% 0% 8% 12% 6% 0% 5% 9% 5% 8% 5% 1% 5% 1% 8% 0% 11% 14% 0% 0% 0% 7% 0% 0% 11% 0% 8% 14% 5% Depth (Meters) Msrd. Vt. 3,948 2,044 3,469 N/A 2,967 N/A 2,261 N/A 2,241 N/A 2,951 N/A 2,218 N/A 2,981 1,597 3,087 N/A 3,110 N/A 2,986 1,516 3,575 N/A 3,085 N/A 3,064 1,585 3,085 N/A 3,018 N/A 3,173 N/A 2,736 N/A 3,150 1,629 3,571 N/A 3,166 1,644 2,186 N/A 3,481 N/A 2,990 N/A 3,044 N/A 3,031 1,541 3,811 2,272 2,991 1,483 2,365 N/A 3,022 1,522 3,077 N/A 3,164 1,678 2,925 N/A 2,919 N/A 3,102 1,553 2,279 N/A 2,295 N/A 2,908 1,539 3,044 N/A 2,883 N/A 2,883 1,559

700 600 500
H ay ne sv ill e
600
Distribution Curve
2008 & Earlier (1077 Wells) 2009 (424 Wells) 2010 (493 Wells) 2011 (361 Wells) Median Mean (Average) Top/Bottom Quartile
400
300
Count
500
400 300 200 100 0 0 100 200 300 400 500
M ar ce llu s
(Boe/d)
200
600
Bakken (SK)
100
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
2000
2100
2200
0 Well Count
201
A m ar an th
Ba kk en (U S)
Ba rn et t
Ea gl ef or d
Fa ye tt ev ill e
H ay ne sv ill e
M ar ce llu s
Bakken (SK)
202
Bakken - YOY Actual Results VIEWFIELD CORE

300
Bakken - YOY Actual Results VIEWFIELD TIER 2

300
2007 (231 Wells)
A m ar an th
250 200 150 100 50 0 0 3 6
VIEWFIELD CORE - Bakken Hz Wells Average Per Well Production

Our mid-case type curve is largely derisked in the core area.
250
VIEWFIELD TIER 2 - Bakken Hz Wells Average Per Well Production

Results in the halo of the main pool have shown modest improvement in 2011.
200 150 100 50 0
Ba kk en (U S)
24
12
15
18
21
24
Source: GeoScout; Company reports.
12
15
18
21
Bakken - YOY Actual Results FLAT LAKE

350
Bakken - YOY Actual Results TAYLORTON/PINTO

300
300 250 200 150 100 50 0 0 3 6
FLAT LAKE - Bakken Hz Wells Average Per Well Production

Although still early days, the latest results at Flat Lake have shown material improvement. 2007 (1 Wells) 2008 (5 Wells) 2009 (3 Wells) 2010 (15 Wells) 2011 (10 Wells)
250 200 150 100 50 0
TAYLORTON/PINTO - Bakken Hz Wells Average Per Well Production

Results at Taylorton have also improved.
Ba rn et t
12
15
18
21
24
12
15
18
21
24
Bakken - YOY Actual Results WATERFLOOD Pilot #1

Pilot #1 - Combined Production - 4 HZ Wells Offsetting Injector

Pilot Combined Production - 4 HZ Wells Offsetting Injector #2 - Combined Production - 4 WTR Cut HZ Wells Offsetting Injector Percent:
Combined Production - 4 HZ Wells Offsetting Injector

Production (Boe/d) Percent: WTR Cut Percent:(Boe/d) Cut Production WTR
Waterflood Response Weather Impact
2009-01
2009-03
2009-05
2009-07 2009-09
2009-11 2009-09
2009-11
2010-01
2010-03
2010-05 2010-09
2010-11 2010-07
2010-09
2010-11
2011-01
2011-03 2011-09
2011-11 2011-05
2011-07
2007-01
2007-05 2007-07
2007-09
2008-01 2008-04
2008-07 2008-05
2008-09
2009-04 2009-01
2009-05
2009-09 2010-01
2010-01
2010-05 2010-10
2011-01 2010-09
2011-01
2011-10 2011-05
2011-09
2009-01
2009-03
2009-05
2009-07
2010-01
2010-03
2010-05
2010-07
2011-01
2011-03
2011-05
2011-07
2012-01
2012-03
2007-01
2007-04
2007-10
2008-01
2008-10
2009-01
2009-07
2009-10
2010-04
2010-07
2011-04
2011-07
2012-01
2012-04
Bakken - YOY Actual Results WATERFLOOD Pilot #3 100 90 2500 80 70 2000 60 50 1500 40 30 1000 20 10 500 0
0 2010-01
2012-05
2011-09
100 90 600 80 500 70 60 400 50 40 300 30 20 200 10 100 0
700
Injection Injection started Started First two HZs recompleted 2nd two HZs recompleted
First two HZs recompleted
2nd two HZs recompleted
700 90 60080 50070 40060 30050 20040 30 10020 0 10
100
100 500 90 450 80 70 400 60 350 50 300 40 250 30 200 20 150 10 100 0
50
Production (Boe/d) Water Cut (%)
Water Cut (%) Production (Boe/d)
Injection Started
Waterflood Response
Production (Boe/d)
Production (Boe/d)
Percent: WTR Cut
Injection started
First two HZs recompleted
Production appears to be recovering from flooding
500 100 450 90 400 350 80 300 70 250 60 200 50 150 40 100 50 30 0 20
10 0
Ea gl ef or d
Fa ye tt ev ill e
Water - 13 HZ Production (Boe/d) Pilot #3 - Combined Production - 13 HZ Wells Offsetting Injector Combined Production Cut (%) Wells Offsetting Injectors
2,500 2,000 90 1,500 70 1,000 50

60 80 100
Production (Boe/d)
Injection Started
Percent: WTR Weather Cut

Impact
Combined Production - 4 HZ Wells Offsetting Injectors

600 100 90 500 80 70 400 60 50 300 40 30 20 200 10 0 100

Injection Started
Percent: (Boe/d) Cut Production WTR
Water Cut (%)
We may be seeing the first signs of production response from CPG's 4th pilot.
90
Production (Boe/d)
500 80 400
70 60
Injection started
3rd pilot beginning to show response to water injection
500 30 0
20 10 0
40
Injection started
300 50 200
2010-03 2010-06 40 30
20 100
100 600
H ay ne sv ill e
2010-01
2010-03 2010-05
2010-05
2010-07
2010-09 2011-01
2010-11
2011-01
2011-03 2011-09
2011-05
2011-07
2012-05 2011-09
10 0 2012-05

Pilot #5 - Combined Production - 6 HZ Wells Offsetting Injector Combined Production - 5 HZ Wells Offsetting Injectors
800

M ar ce llu s
2009-10
2009-12
2010-02 2009-09
2010-04
2010-08 2010-07
2010-10
2011-01 2010-12
2011-02 2011-05
2011-04
2011-11 2011-06
Production (Boe/d)
Water Cut (%)
Percent: WTR Cut
Production(%) Water Cut (Boe/d)
90 700 80 70 60 500 50 400 40 30 300 20 200 10 100 0

600 0 2011-01
1400 100
Water Cut (%)
Production (Boe/d)
Production (Boe/d)
Water Cut (%)
1000
Still early days on 5th pilot, but we may already be seeing production response. Injection started
2011-01
2011-03 2011-03
2011-05 2011-05
2011-07
2011-09
2011-11
2011-12 2012-01
2012-03 2012-02
2012-05
2012-07
2012-09
2012-09 2012-11
2011-01 2011-02
2011-03
2011-05
2011-07
2011-09
2011-11 2011-11
2012-01 2012-01
2012-03 2012-03
2012-05
2012-07
2012-09
2012-11
Injection Started 2011-03
70 60 50 800 40 30 600 20 10 400 0

200 0 2011-01 2011-02 2011-04
70 60 50 40 30 20 10 0
Water Cut (%)
1200 80
90
Still early days on 6th pilot.
Injection started
1500 1300 1100 900 700 500 300 100

2012-04 2012-05 2012-06 2012-07 2012-08 2012-10 2012-11
90 80
Production (Boe/d)
100
Production (Boe/d)
800 90 700 80 600 70 500 60 400 50 300 40 200 30 100 20 0 10

0 2012-11
100
1600
Combined Production(Boe/d) Wells Offsetting Injectors Production - 7 HZ Percent: WTR Cut

Injection Started
2011-08 2012-03
2010-03
2010-07
2010-09
2010-11
2011-03
2011-05
2011-07
2011-11
2012-01
2012-03
2009-01
2009-03
2009-05
2009-07
2009-11
2010-01
2010-05
2010-09
2010-11
2011-03
2011-07
2011-09
2012-01
100
Bakken (SK)
2011-06
2011-07
2011-08
2011-09
2011-10
2011-11
2012-01
203
2012-03
2011-04
2011-05
2011-06
2011-07
2011-08
2011-09
2011-10
2011-12
2012-02
2012-04
2012-05
2012-06
2012-07
2012-08
2012-09
2012-10
Carbonates
Tight Carbonates - Area Map (Circa August, 2012)
Tight Carbonates - Resource Potential

25
25.0 Total Resource In Place (Bln barrels)
20
15.0
20.0
20.0
Recovered-to-Date
15
10.0
15.0
15.0
Amaranth
Cardium
Bakken (Alberta)
Pekisko
Viking
Duvernay
Tight Carbonates - Area Production Growth

175 Pre 2008 150 2012 2008 2013
Tight Carbonates
Carbonates
2009 2014 2010 2015 2011 Liquids
125
Actual
Forecast
100
75
50
25
Note: Map updated as of May 2012. Source: GeoScout; Company reports; Geological Atlas of Western Canada; The Edge; Canadian Discovery Digest; Sherwin; CIBC World Markets Inc.
Tight Carbonates - Horizontal Well Operator Summary (Circa August, 2012)

# Operated Hz Wells 48 17 43 41 29 63 17 20 44 11 3 6 4 2 3 3 2 4 3 1 # Licensed Wells 36 12 15 18 8 8 7 4 11 1 4 3 4 Total Op./Lic. Wells 84 29 58 59 37 71 24 24 55 11 3 7 4 2 7 6 2 8 3 1 Gross Operated Hz Well Production Oil & Liquids Nat. Gas Nat. Gas Nat. Gas (bbl/d) (boe/d) (mcf/d) (%) 4,727 326 1,954 6% 3319 745 4471 18% 3,461 410 2,457 11% 3,403 262 1,573 7% 2,731 62 370 2% 2,549 131 787 5% 2,313 327 1,959 12% 1392 107 640 7% 1,280 14 82 1% 746 70 420 9% 689 10 62 0 627 1 7 0 90 39 236 30% 69 26 155 27% 88 2 10 2% 84 1 7 1% 36 30 180 46% 45 4 22 8% 35 12 74 26% 0 31 186 100% Total (boe/d) 5,052 4,064 3,871 3,665 2,793 2,681 2,639 1,499 1,294 816 699 628 130 95 89 85 66 48 48 31 Average Production Per Hz Well Oil & Liquids Nat. Gas Total (bbl/d) (mcf/d) (boe/d) 98 41 105 195 263 239 80 57 90 83 38 89 94 13 96 40 12 43 136 115 155 70 32 75 29 2 29 68 38 74 230 21 233 104 1 105 23 59 32 34 77 47 29 3 30 28 2 28 18 90 33 11 5 12 12 25 16 186 31 0
Mon tney
Company Ticker Penn West Petrl Ltd PWT Coral Hill Enrg Ltd PRIVATE Pengrowth Enrg Corp PGF Arcan Rsrcs Ltd ARN Pinecrest Enrg Inc PRY Lone Pine Rsrcs Cda Lt LPR Second Wave Petrl Ltd SCS Apache Cda Ltd APA-NYSE Harvest Oprtns Corp PRIVATE Devon Cda Corp DVN-NYSE Mancal Enrg Inc PRIVATE Surge Enrg Inc SGY Avenex Enrg Corp AVF Barrick Enrg Inc PRIVATE Baytex Enrg Ltd BTE Dolomite Enrg Inc PRIVATE Guide Exploration GO Crescent Point Enrg Co CPG ARC Rsrcs Ltd ARX Athabasca Oil Sands Co ATH
Horn River
Tight Carbonates - Schematic Cross Section
Tight Carbonates - Land Position by Operator

600 500
Net Sections (1)
545
Tight Carbonate Land Holders
400 300 200 100 0

Baytex Pengrowth Apache (3) Devon (3) Pinecrest (3) KNOC/Harvest (2)(3) Lone Pine (2) Second Wave Penn West Forest Oil Coral Hill (2) Wild Stream Dolomite (2) Baytex Pace Arcan Pace ARC Wild Stream
266 208 150 108 100 100 100 72 64 64 63 45
23
14
30
29
23
15
Source: Company reports; The Edge; Canadian Discovery Digest; CIBC World Markets Inc.
204
Montney Oil
175 150 125
10.0 7.5 6.0 5.0 4.3 4.0 2.5 4% 1% 7% 5% 2% 2.5 2%
10
5
<1% <1% <1% 16%
28%
0 Seal
100
75
50
25
Carbonates
Tight Carbonates - SWAN HILLS Type Curves

700
Tight Carbonates - SWAN HILLS Type Curve Well Economics (Mid Cycle)
SWAN HILLS Type Curve Economics
Low 1 Midcycle Well Economics: Curve NPV (B-Tax) (C$,mlns) NPV (A-Tax) (C$,mlns) IRR (A-tax) (%) 2 P/I Ratio (A-tax) Payback Period (yrs) NPV9 Breakeven ($US/bbl) Mid High Curve Curve
SWAN HILLS HZ Wells - Type Curves


Commodity Prices Productivity Capital Cost Royalties Operating Cost
(C$,mlns)
600 500 400 300 200 100 0 0 3 6 9 12 15
Low
-
$58.50 $47.50
$3.8 $2.2 24% 0.4x 3.6 Mid
$8.2 $5.4 78% 1.0x 1.5 High
Bakken Cardium
$2.0 $1.5 $1.0 $0.5 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5
Assumptions

18
21
24
27
30
Tight Carbonates - SLAVE POINT Type Curves

450 400 350 300 250 200 150 100 50 0 0 3 6 9
Tight Carbonates - SLAVE POINT Type Curve Well Economics (Mid Cycle)
SLAVE POINT Type Curve Economics
Midcycle Well Economics: NPV (B-Tax) (C$,mlns) NPV (A-Tax) (C$,mlns) IRR (A-tax) (%) 2 P/I Ratio (A-tax) Payback Period (yrs) NPV9 Breakeven ($US/bbl)
1
SLAVE POINT HZ Wells - Type Curves


(C$,mlns)
Low Curve
Mid Curve
$2.8 $1.6 21% 0.3x 3.9 Mid
High Curve
$6.6 $4.3 63% 0.9x 1.8
Low
$62.00 $48.50
High
$1.5
$1.0
$0.5
$0.0
$0.5
$1.0
$1.5
$2.0
Assumptions

12
15
18
21
24
27
30
Cardium Gas
Tight Carbonates - Variance of Results - All Time

500 400
Tight Carbonates - Variance of Results - 2011 to Present

500 400 300 200
Variance to Mean - All Time HORIZONTAL Tight Carbonates Wells

Mean (Average) Top Quartile Average

Prod. Rate (Boe/d)
300 200
Bottom Quartile Average

100 0 -100
406
100
Glauconite
3
360
6
280
# of -200 Wells
9 12 15 18 21 24 27 Months on Production (Normalized)

207 169 107 81 72 58 22
30
14
33
14
36
13
6
179
9
106
12
68 26
15
18
21
24
27
30
33
36
# of Wells -200
-100
241 241
Tight Carbonates - Distribution By Peak I.P. Rates

2,000 1,800
140 120 100 80 60 40 20 0 0
Tight Carbonates - Top Wells

Rank Operator 1 Second 2 Second 3 Coral Hill 4 Coral Hill 5 Second 6 Second 7 Coral Hill 8 Second 9 Arcan 10 Second 11 Pengrowth 12 Arcan 13 Arcan 14 Apache 15 Devon 16 Arcan 17 Coral Hill 18 Arcan 19 Coral Hill 20 Second 21 Pengrowth 22 Pengrowth 23 Coral 24 Arcan 25 Arcan All Producers (406) Strike Area Judy Creek Judy Creek Swan Hills South Virginia Hills Judy Creek Judy Creek Swan Hills South Swan Hills South Virginia Hills Judy Creek Judy Creek Swan Hills Swan Hills Swan Hills Swan Hills Swan Hills Virginia Hills Ethel Swan Hills South Judy Creek Judy Creek Judy Creek Virginia Hills Ethel Ethel - Average UWI (Well Location) 13-25-063-10W5 13-20-063-09W5 12-20-064-09W5 12-20-064-13W5 13-35-063-10W5 03-36-063-10W5 05-36-064-10W5 13-01-064-10W5 13-32-064-13W5 15-36-063-10W5 13-12-063-12W5 09-29-068-08W5 04-02-068-09W5 07-30-069-09W5 15-07-067-09W5 13-15-068-08W5 04-33-064-13W5 01-04-068-08W5 04-02-065-10W5 16-24-063-10W5 12-33-063-09W5 01-04-064-10W5 05-27-066-13W5 10-27-067-08W5 13-26-067-08W5 Date On Mths Stream On 2011/10 7 2012/03 2 2011/01 16 2011/07 10 2011/12 5 2011/12 5 2011/06 11 2012/02 3 2012/03 2 2011/04 13 2011/01 16 2010/03 26 2010/12 17 2010/04 25 2011/11 6 2011/09 8 2011/11 6 2011/06 11 2011/08 9 2012/01 4 2012/03 2 2011/08 9 2011/04 13 2010/05 24 2011/06 11 Prod. (Boe/d) Peak I.P. Current 2,769 313 1,984 1,984 1,948 220 1,846 647 1,471 334 1,450 352 1,386 241 1,262 130 1,066 1,066 932 229 850 267 799 98 782 116 767 149 748 231 738 296 728 508 727 179 673 169 656 207 614 614 605 282 593 246 592 60 571 155 281 109 % Gas 20% 34% 16% 15% 4% 18% 20% 14% 8% 17% 11% 3% 0% 5% 7% 6% 18% 5% 22% 16% 2% 11% 8% 0% 2% 6% Depth (Meters) Msrd. Vt. 4,107 2,542 4,317 2,494 3,696 2,500 4,135 2,891 4,191 2,636 4,236 2,627 4,014 2,423 4,011 2,525 4,506 2,857 4,006 2,549 4,146 2,642 3,491 2,312 3,065 2,387 2,855 2,197 4,121 2,615 3,629 2,355 4,366 2,834 3,320 2,301 4,011 2,454 4,243 2,560 3,929 2,432 3,941 2,555 4,584 2,929 3,647 2,303 4,006 2,304 3,159 1,986
Distribution Curve
1,400 1,200 1,000 800 600 400 200 0
Count
1,600
(Boe/d)
10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250 260 270 280 290 300 310 320 330 340 350 360 370 380 390 400
Well Count
Tight Carbonates - YOY Actual Results - Swan Hills Trend

400
Prod. Rate (boe/d)
Tight Carbonates - YOY Actual Results - Slave Point Trend

2008 (3 Wells) 2009 (11 Wells) 2010 (46 Wells)
SWAN HILLS Hz Wells Average Per Well Production

Increasing data set of strong results derisking Swan Hills Trend.
400
SLAVE POINT - Tight Carbonates Hz Wells Average Per Well Production

Results also improving in the northern Slave Point carbonates trend, where 1st year decline rates appear lower. 2008 (6 Wells) 2009 (7 Wells) 2010 (34 Wells) 2011 (130 Wells) 2012 (44 Wells)
2011 (112 Wells) 2012 (57 Wells)
200
Prod. Rate (boe/d)
300
300
200
Horn River Mon tney
200
400
600
800
VET
100
100
0 0 3 6 9 12 15 18 21 24
0 0 3 6 9 12 15 18 21 24
205
Carbonates Bakken Cardium Cardium Gas Glauconite Horn River Mon tney VET
206
Carbonates
Tight Carbonates - Generic Type Curves

700
Tight Carbonates - YOY Actual Results - ALL PRODUCERS

400
Tight Carbonates HZ Wells - Type Curves

Tight Carbonates Hz Wells Average Per Well Production

600
500 Prod. Rate (Boe/d)
300
Bakken Cardium
400
Prod. Rate (boe/d) 0 3 6 9 12 15 18 Months on Production 21 24 27 30
200
300
200 100 100
0 0 3 6 9 12 15 Months on Production (normalized) 18 21 24
Tight Carbonates - YOY Actual Results - SWAN HILLS

400
Tight Carbonates - YOY Actual Results - SAWN LAKE / RED EARTH / EVI
400
Cardium Gas
SWAN HILLS Hz Wells Average Per Well Production

SAWN LAKE / RED EARTH / EVI Hz Wells Average Per Well Production
300 Prod. Rate (boe/d)
Increasing data set of strong results derisking Swan Hills Trend. 200
200
Results also improving in the northern Slave Point carbonates trend, where 1st year decline rates appear lower.
Glauconite
100
100
0 0 3
6 9 12 15 Months on Production (normalized)
18
21
24
Tight Carbonates - YOY Actual Results - UTIKUMA LAKE / NIPISI

400
Tight Carbonates - YOY Actual Results - DAWSON / PUSKWASKAU

400
UTIKUMA LAKE / NIPISI Hz Wells Average Per Well Production

DAWSON / PUSKWASKAU Hz Wells Average Per Well Production

2009 (1 Wells) 2011 (3 Wells)
200
200
100
100
0 0 3 6 9 12 15 18 21 24 Months on Production (normalized)

Horn River Mon tney
VET
207
Bak ken
Card ium
Card ium Gas
Glau coni te
Montney VET
Hor n Rive r
Carbonates
Bak ken
Card ium
Card ium Gas
Glau coni te
Montney VET
Hor n Rive r
Carbonates
A m ar an th
Cardium Oil - Area Map (Circa August, 2012)
Cardium Oil - Resource Potential

25
25.0
Total Resource In Place (Bln barrels) 20

15.0 20.0 20.0
Recovered-to-Date
Cardium
15
10.0
15.0
15.0
10.0 7.5 6.0 5.0 4.3 4.0 2.5 4% 1% 7% 5% 2% 2.5 2%
10
5
<1% <1% <1% 16%
28%
0 Seal Cardium Bakken (SE Sask.) Lower Shaunavon Bakken (Alberta) Duvernay Tight Carbonates Pekisko Viking
Cardium Oil - Area Production Growth

450 400 350
Amaranth
Cardium
Pre 2008 2012 2008 2013 2009 2014 2010 2015 2011 Liquids
300
Actual
250 200 150 100 50 -
Forecast
250 200 150 100 50 0
Cardium Oil - Horizontal Well Operator Summary (Circa August, 2012)

Company Petrobakken Enrg Ltd Penn West Petrl Ltd Vermilion Rsrcs Ltd Bellatrix Expl Ltd Whitecap Rsrcs Inc NAL Rsrcs Lmtd ARC Rsrcs Ltd Sinopec Daylight Enrg Ltd Bonterra Enrg Corp Midway Enrg Ltd Anderson Enrg Ltd Taqa North Ltd Devon Cda Corp Skywest Enrg Corp Baccalieu Enrg Inc Spartan Oil Corp Vero Enrg Inc Bonavista Enrg Corp ConocoPhillips Cda Corp Angle Enrg Inc Ticker PBN PWT VET BXE WCP NAE ARX PRIVATE BNE MEL AXL TAQA-ADX DVN-NYSE SKW PRIVATE STO VRO BNP COP NGL # Operated Hz Wells 179 146 59 49 75 64 58 67 49 51 65 22 10 17 20 13 30 21 15 12 # Licensed Wells 23 61 13 10 6 12 24 19 4 6 10 17 8 2 17 7 3 9 12 2 Total Op./Lic. Wells 202 207 72 59 81 76 82 86 53 57 75 39 18 19 37 20 33 30 27 14 Oil & Liquids (bbl/d) 12,067 5,579 4,814 2,886 2,873 3,078 2,902 2,536 1,873 1,639 1,841 1,126 423 640 866 1,285 1,001 834 653 381 Gross Operated Hz Well Production Nat. Gas Nat. Gas Nat. Gas (boe/d) (mcf/d) (%) 2,268 13,609 16% 3,616 21,698 39% 1,180 7,081 20% 1,843 11,055 39% 1,597 9,579 36% 1,362 8,173 31% 817 4,904 22% 628 3,767 20% 1,046 6,275 36% 1,070 6,421 40% 739 4,433 29% 1,302 7,810 54% 1,479 8,877 78% 1,249 7,493 66% 696 4,177 45% 249 1,493 16% 490 2,941 33% 494 2,966 37% 630 3,780 49% 900 5,400 70% Total (boe/d) 14,335 9,195 5,994 4,728 4,470 4,440 3,720 3,164 2,919 2,709 2,580 2,428 1,903 1,889 1,562 1,534 1,491 1,328 1,283 1,281 Oil & Liquids (bbl/d) 67 38 82 59 38 48 50 38 38 32 28 51 42 38 43 99 33 40 44 32 Average Production Per Hz Well Nat. Gas Nat. Gas (boe/d) (mcf/d) 13 76 25 149 20 120 38 226 21 128 21 128 14 85 9 56 21 128 21 126 11 68 59 355 148 888 73 441 35 209 19 115 16 98 24 141 42 252 75 450 Total (boe/d) 80 63 102 96 60 69 64 47 60 53 40 110 190 111 78 118 50 63 86 107
Horn River
Mon tney
Cardium Oil - Schematic Cross Section
Cardium Oil - Land Position by Operator

500 450 400 300 250 200 150 100 50 0
Pengrowth KNOC(2) Compton TAQA North Crocotta NuVista Devon Angle Crew ARC NAL PetroBakken Spartan Apache Anderson Talisman Bonterra Bonavista ConocoPhillips Fairborne Whitecap Vermilion Suncor Delphi Husky Vero BP Penn West Exxon/Imperial Paramount Perpetual Bellatrix Sinopec Enerplus Equal TriOil
1039
Cardium Land Holders
Net Sections (1)
300
350
265
219
209
204
195
149
132
124
120
118
110
102
100
91
81
80
75
71
67
60
57
52
51
50
49
48
47
40
38
27
25
20
210
17 13
Montney Oil
450 400 350 300
Cardium Oil - Generic Type Curves

400 350 300 Low Case: 100 Boe/d IP, 100 MBoe recovery 250 200 150 100 50 0 0 3 6 9 12 15 18 21 24 27 30 Months on Production
Cardium Oil - Type Curve Well Economics (Mid Cycle)
A m ar an th
Cardium Hz Wells - Type Curves

Low Midcycle1 Well Economics Curve NPV (B-Tax) (C$,mlns) $0.4 NPV (A-Tax) (C$,mlns) $0.0 IRR (A-tax) (%) 9% P/I Ratio2 (A-tax) 0.0x Payback Period (yrs) 6.6 Low
NPV9 Breakeven
Cardium Type Curve Economics

Mid Curve $3.3 $2.1 36% 0.7x 2.4 Mid
High Curve Commodity Prices $6.4 Productivity $4.4 Capital Cost 93% 1.5x Royalties 1.2 Operating Cost High
(C$,mlns)
Cardium
($US/bbl) $82.00 $49.00 $34.50
$1.5 $1.0 $0.5 $0.0 $0.5 $1.0 $1.5

Assumptions Well Cost (C$,mln): $3MM 1st yr Decline Rate: 65% Op Costs (incl.trans): $9.00/Boe 2nd yr Decline Rate: 25% Discount Rate: 9% Success Rate: 90% WTI (US$/bbl) FX ($US/$Cdn) Nat Gas (C$/mcf) 2012 $90.00 $0.99 $2.39 2013 $87.50 $0.98 $3.43 2014 $85.00 $0.98 $4.08
Cardium Cardium
Cardium Oil - YOY Actual Results All Producers

400
Cardium Oil - Variance of Results - All Time 400 350 300 Production Rate (Boe/d) 250 200 150 100 50 0 3 -50 6
1035
ALL Cardium Hz Wells Average Per Well Production


HORIZONTAL Cardium Wells
350
300 Production Rate (boe/d)
2012 (156 Wells)
Mean (Average) Top Quartile Average Bottom Quartile Average Average well performance now exceeding our mid-case type curve.
Gas
250
200
Glauconite
150
100
50

714 496 331 198 146 57 25
33
11
36
8
0 0 3 6 9 12 15 18 Months on Production (normalized) 21 24
Cardium Oil - Distribution By Peak I.P. Rates Distribution by Peak I.P. Rate HORIZONTAL Cardium Oil Wells
1200 1100 1000
Count 400 350 300 250 200 150 100 50 0 0 2008 & Earlier (3 Wells)
Cardium Oil - Top Wells

Rank Operator Strike Area 1 ARC Pembina 2 Tamarack Pembina 3 Sinopec Pembina 4 Bellatrix Willesden Green 5 Bellatrix Pembina 6 Solara Pembina 7 Bellatrix Willesden Green 8 Skywest Willesden Green 9 Bellatrix Willesden Green 10 NAL Lochend 11 Bellatrix Pembina 12 Bellatrix Willesden Green 13 Midway Caroline 14 Spartan Pembina 15 Penn West Willesden Green 16 Vero Edson 17 Exoro Ferrier 18 Bellatrix Willesden Green 19 Bellatrix Willesden Green 20 Angle Ferrier 21 Anterra Pembina 22 Bonavista Willesden Green 23 ConocoPhillipFir 24 Sinopec Pembina 25 Angle Ferrier 26 Bellatrix Willesden Green 27 ConocoPhillipPlacid 28 Bellatrix Willesden Green 29 Bellatrix Brazeau River 30 Angle Ferrier 31 ConocoPhillipPlacid 32 Hyperion Garrington 33 Vero Edson 34 Midway Garrington 35 Penn West Willesden Green All Producers (1347) - Average UWI (Well Location) 13-33-048-06W5 04-35-046-06W5 16-28-050-06W5 13-30-042-08W5 15-26-045-11W5 13-09-045-05W5 12-30-042-08W5 16-15-043-09W5 05-19-042-08W5 16-19-027-03W5 04-01-045-11W5 11-20-042-08W5 04-21-034-04W5 12-19-048-04W5 12-13-043-09W5 15-25-054-18W5 03-02-040-08W5 04-19-042-08W5 05-30-042-08W5 03-26-038-08W5 01-17-045-05W5 01-03-042-08W5 13-06-059-21W5 13-21-050-06W5 15-27-038-08W5 03-20-042-08W5 13-32-059-23W5 12-20-042-08W5 04-02-045-11W5 08-22-038-08W5 14-32-059-23W5 09-27-033-03W5 01-24-054-18W5 15-24-035-04W5 04-17-042-08W5 Date On Mths Stream On 2012/02 3 2011/10 7 2010/03 26 2010/11 18 2012/03 2 2010/09 20 2010/12 17 2012/01 4 2010/11 18 2011/10 7 2012/03 2 2011/11 6 2010/12 17 2012/03 2 2010/07 22 2011/12 5 2011/10 7 2011/07 10 2010/10 19 2011/12 5 2011/01 16 2011/07 10 2011/04 13 2010/09 20 2011/07 10 2011/12 5 2011/04 13 2011/02 15 2012/02 3 2010/07 22 2011/04 13 2011/09 8 2012/03 2 2010/09 20 2012/03 2 Prod. (Boe/d) Peak I.P. Current 2,099 225 1,797 188 1,184 83 1,071 77 1,030 1,030 1,004 65 942 58 898 396 829 108 813 386 754 754 753 251 753 49 748 748 741 155 734 486 731 109 728 96 721 116 706 420 706 73 706 162 693 333 679 1 672 209 658 305 657 222 652 111 650 650 645 95 644 162 644 71 642 642 636 50 630 630 232 85 % Gas 18% 88% 2% 19% 21% 23% 19% 21% 48% 34% 44% 23% 21% 7% 27% 53% 27% 28% 13% 78% 20% 38% 25% 5% 64% 29% 23% 19% 44% 66% 34% 11% 37% 23% 37% 20% Depth (Meters) Msrd. Vt. 3,619 1,388 3,451 1,506 2,571 1,246 3,484 1,991 3,479 2,025 2,921 1,659 3,506 2,002 3,461 2,050 3,186 2,004 3,841 2,309 3,564 2,056 3,638 1,982 3,502 2,057 2,846 1,316 3,706 2,020 3,294 1,805 3,707 2,132 3,249 2,006 3,581 2,001 3,124 2,292 3,131 1,647 3,340 1,939 3,796 1,942 2,819 1,252 3,607 2,303 3,185 2,021 3,709 1,975 3,333 1,996 3,606 2,072 3,608 2,319 3,200 1,971 3,382 1,894 3,221 1,827 3,453 1,895 3,194 2,043 3,174 1,744
Distribution Curve
900 Peak I.P. Rate (Boe/d) 800 700 600 500 400 300 200 100 0
150
300
450
(Boe/d)
600
Horn River Mon tney
# of -100 Wells
1347 1235
804
VET
100
150
200
250
300
350
400
450
500
550
600
650
700
750
800
850
900
950
50
1000
1050
1100
1150
1200
1250
Well Count Source: GeoScout; CIBC World Markets Inc.
1300
211
A m ar an th
Cardium Oil - Sub-Area Map (Circa August, 2012)
Horn River Mon tney VET

Source: GeoScout; Company reports; Geological Altas of Western Canada; The Edge; Canadian Discovery Digest; CIBC World Markets Inc.
Cardium Cardium Cardium Gas Glauconite

212
Cardium Oil - YOY Actual Results ALL PRODUCERS

350 Production Rate (Boe/d) 300 250 200 150 100 50 0 0 3 6 9 12 15 18 Months on Production (normalized) 21 24
Cardium Oil - YOY Actual Results PEMBINA CORE

350 Production Rate (Boe/d) 300 250 200 150 100 50 0 0 3 6 9 12 15 18 21 24 Months on Production (normalized)
A m ar an th
ALL PRODUCERS - Cardium Hz Wells Average Per Well Production

PEMBINA CORE - Cardium Hz Wells Average Per Well Production

Cardium
While well performance has varied by sub-area, overall average well results in the Cardium
Strong 2011 results in the Pembina Core area (particularly at Minnehik/Buck Lake) have challenged negative preconceptions of the core legacy area.
Cardium Cardium
Cardium Oil - YOY Actual Results NW PEMBINA/PINE CREEK

350 300 Production Rate (Boe/d) 250 200 150 100 50 0 0 3 6 9 12 15 18 Months on Production (normalized) 21 24
Cardium Oil - YOY Actual Results BRAZEAU / W. PEMBINA

350 300 Production Rate (Boe/d) 250 200 150 100 50 0 0 3 6 9 12 15 18 21 24 Months on Production (normalized)
NW PEMBINA/PINE CREEK - Cardium Hz Wells Average Per Well Production

BRAZEAU / W. PEMBINA - Cardium Hz Wells Average Per Well Production

We believe the West Pembina / Brazeau area to be one of the most prospective areas of the Cardium - showing the strongest rates in the play after 8-9 months on production.
Gas
Glauconite
Cardium Oil - YOY Actual Results NORTHEAST PEMBINA

350 300 Production Rate (Boe/d) 250 200 150 100 50 0 0 3 6 9 12 15 Months on Production (normalized) 18 21 24
Cardium Oil - YOY Actual Results EAST PEMBINA

350 300 Production Rate (Boe/d) 250 200 150 100 50 0 0 3 6 9 12 15 Months on Production (normalized) 18 21 24
PEMBINA NORTHEAST - Cardium Hz Wells Average Per Well Production

PEMBINA EAST - Cardium Hz Wells Average Per Well Production

After a promising start in 2010 (supported by successful conglomerate wells at Tomahawk) follow up wells have, on average, been less impressive to the northeast.
On average, 2010 wells underperformed 2009 wells in East Pembina, while the most recent wells in 2011 have shown improvement.
Cardium Oil - YOY Actual Results WILLESDEN GREEN / FERRIER

350 300 Production Rate (boe/d) 250 200 150 100 50 0 0 3 6 9 12 15 Months on Production (normalized) 18 21 24
Cardium Oil - YOY Actual Results GARRINGTON SOUTH

350 300 Production Rate (Boe/d)
WILLESDEN GREEN / FERRIER - Cardium Hz Wells Average Per Well Production

GARRINGTON SOUTH - Cardium Hz Wells Average Per Well Production

250 200 150 100 50 0 0 3 6
Exceptional results at Willesden Green continue to lead the pack in the play.
Well performance in the Greater Garrington area has been the most consistent to date in the Cardium.
Horn River Mon tney
VET
21
24
213
A m ar an th
Deep Basin - Area Map (Circa August, 2012)
Ba kk en (U S)
Horn River
Note: Map updated as of May 2012. Source: GeoScout, Sherwin Geoedges, Canadian Discovery Digest, The Edge, Geological Atlas of Western Canada, Core Laboratories, Company reports, CIBC World Markets
Mon tney
Deep Basin Cardium Gas Glauconite

Deep Basin - Operator Summary (Circa August, 2012)
# Operated Hz Wells 617 434 193 453 209 166 135 377 59 121 86 62 59 95 78 124 61 193 46 52 45 56 # Licensed Wells 156 321 40 403 40 62 40 241 24 26 17 18 47 59 5 180 12 16 7 18 13 30 Total Op./Lic. Wells 773 755 233 856 249 228 175 618 83 147 103 80 106 154 83 304 73 209 53 70 58 86 Oil (bbl/d) 260 4 0 3010 203 22 18 3928 0 9 0 3 1 6 3 0 13 1 15 53 0 20 Cnds. (boe/d) 358 76 10 28 66 48 18 25 30 26 19 4 109 55 83 20 19 9 29 21 7 49 Gross Operated Well Production Oil & Liquids Nat. Gas Nat. Gas (bbl/d) (mcf/d) (%) 618 263,908 99% 79 262,337 100% 10 143,595 100% 3,038 93,025 84% 269 100,124 98% 71 90,158 100% 36 86,001 100% 3,953 56,209 70% 30 79,606 100% 35 65,609 100% 19 60,985 100% 7 49,534 100% 110 47,844 99% 61 45,822 99% 86 45,249 99% 20 45,461 100% 32 36,968 99% 9 34,299 100% 44 33,525 1 74 29,416 99% 7 24,344 1 69 23,800 98% Total (mcfe/d) 267,617 262,814 143,653 111,253 101,737 90,581 86,215 79,927 79,788 65,822 61,102 49,577 48,501 46,187 45,764 45,580 37,158 34,355 33,791 29,859 24,386 24,214 Average Production Per Well Oil & Liquids Nat. Gas Total (bbl/d) (mcf/d) (mcfe/d) 1 428 434 0 604 606 0 744 744 7 205 246 1 479 487 0 543 546 0 637 639 10 149 212 1 1,349 1,352 0 542 544 0 709 710 0 799 800 2 811 822 1 482 486 1 580 587 0 367 368 1 606 609 0 178 178 1 729 735 1 566 574 0 541 542 1 425 432 Company ConocoPhillips Cda Oprtns EnCana Corp Peyto Expl&Dvlp Corp Cdn Nat Rsrcs Lmtd Bonavista Enrg Corp Shell Cda Lmtd Apache Cda Ltd Husky Oil Oprtns Ltd Paramount Rsrcs Ltd Devon Cda Corp Tourmaline Oil Corp Fairborne Enrg Ltd Sinopec Daylight Enrg Ltd Taqa North Ltd Celtic Expl Ltd Talisman Enrg Inc Angle Enrg Inc Perpetual Enrg Operatin Velvet Enrg Ltd Harvest Oprtns Corp Nuvista Enrg Ltd NAL Rsrcs Lmtd Ticker COP-NYSE ECA PEY CNQ BNP RDS.A APA-NYSE HSE POU DVN-NYSE TOU FEL SNP-NYSE TAQA CLT TLM NGL PMT PRIVATE PRIVATE NVA NAE
VET
214
Deep Basin - Generic Type Curves - VERTICAL WELLS

Production Rate (Mcfe/d)
Deep Basin - Type Curve Well Economics - VERTICAL WELLS (Mid Cycle)
Low Mid 1 Midcycle Well Economics: Curve Curve NPV (B-Tax) (C$,mlns) $1.1 NPV (A-Tax) (C$,mlns) $0.5 IRR (A-tax) (%) 21% 2 P/I Ratio (A-tax) 0.3x Payback Period (yrs) 3.1 Low
NPV9 Breakeven ($C/Mcf)
A m ar an th
5,000 4,000 3,000 2,000 1,000 0 0 3 6
Deep Basin Vt Wells - Type Curves

High Case: 3,000 Mcfe/d IP, 3 Bcf recovery Mid Case: 1,500 Mcfe/d IP, 1.5 Bcf recovery Low Case: 1,000 Mcfe/d IP, 1 Bcf recovery
Deep Basin VT Type Curve Economics

High Curve $3.6 $2.4 70% 1.2x 1.8 High
$1.85

Commodity Prices Capital Cost Productivity Operating Cost Royalties
(C$,mlns)
$1.0 $0.5 $0.0 $0.5 $1.0
Mid
$2.75

Assumptions Well Cost (C$,mln): $2MM 1st yr Decline Rate: 37% Op Costs (incl.trans): $6.00/Boe Liquids Content: 30Bbl/Mmcf Discount Rate: 9% Success Rate: 90% WTI (US$/bbl) FX ($US/$Cdn) Nat Gas (C$/mcf) 2012 $90.00 $0.99 $2.39 2013 $87.50 $0.98 $3.43 2014 $85.00 $0.98 $4.08
12
15
18
21
24
27
30
Ba kk en (U S)
Deep Basin - Generic Type Curves - HORIZONTAL WELLS

12,000
Deep Basin - Type Curve Well Economics - HORIZONTAL WELLS (Mid Cycle)
Low Mid 1 Midcycle Well Economics: Curve Curve NPV (B-Tax) (C$,mlns) $2.9 $1.7 NPV (A-Tax) (C$,mlns) 17% IRR (A-tax) (%) 2 P/I Ratio (A-tax) 0.3x Payback Period (yrs) 4.6 Low
Deep Basin Hz Wells - Type Curves

High Case: 8,000 Mcfe/d IP, 6 Bcf recovery Mid Case: 4,000 Mcfe/d IP, 4 Bcf recovery Low Case: 2,000 Mcfe/d IP, 2 Bcf recovery
Deep Basin HZ Type Curve Economics
10,000 8,000 6,000 4,000 2,000 0 0 3 6 9
High Curve $7.4 $5.0 47% 1.0x 2.2 High

$2.05

(C$,mlns)
$2.0 $1.0 $0.0 $1.0 $2.0
Deep Basin
Mid
$2.90

12
15
18
21
24
27
30
Cardium Gas
Deep Basin - Variance of Results - 2008 to Present - VERTICAL WELLS

5,000 4,000
Deep Basin - Variance of Results - 2008 to Present - HORIZONTAL WELLS

8,000 7,000
Variance to Mean - All Producers (2007 to Present) VERTICAL Deep Basin Wells (Cardium to Cadomin)
Variance to Mean - All Producers (2007 to Present) HORIZONTAL Deep Basin Wells (Cardium to Cadomin)
3,000 2,000 1,000 0 3 6

2794
6,000 5,000 4,000 3,000 2,000
Glauconite
1,000 0 3
1077 1025
9
2596
12
2482
15
18
2294
21
2107
24
1877
27
30
1585
33
1432
36
1356
# of Wells -2,000
-1,000
2980
-1,000
6
894
9
757
12
683
15
558
18
449
21
370
24
317
27
249
30
203
33
177
36
159
# o -2,000 f Wells -3,000
Deep Basin - Distribution By Peak I.P. Rates - Since 2008

HZ + VT Deep Basin Wells 15,000
500 450 400 350 300 250 200 150 100 50 0
Deep Basin - Top Wells (Cardium to Cadomin)

Reported MultiFormation Date On Mths % Prod. (Mcfe/d) Depth (Meters) Zone Hz/Vt Rank Operator Strike Area @ TD UWI (Well Location) Stream On Peak I.P. Current Liquids Msrd. Vt. Prod? Well Edson Kvik_Ss 06-20-054-19W5 2011/01 16 38,585 39,140 9% 3,567 2,466 HZ 1 Transcda 2 Lone Chinook Ridge Kfalher;Kcadom 14-36-063-13W6 2009/04 37 19,773 4,605 N/A 3,701 3,543 Y 3 Devon Narraway Kdunvegan;Kca 07-04-063-11W6 2008/04 49 19,604 6,155 N/A 3,335 3,299 Y 4 Devon Wapiti Kfalher 10-14-065-09W6 2009/02 39 18,609 1,346 N/A 3,393 3,393 Y 5 EnCana Kakwa Kcard_Ss 11-08-062-06W6 2012/01 4 15,129 10,066 N/A 3,590 3,409 6 Transcda Edson Kvik_Ss 12-08-054-19W5 2011/02 15 14,569 8,135 9% 3,114 2,503 7 Tourmaline Cabin Creek Kcadomin 09-08-055-02W6 2011/08 9 14,027 4,970 N/A 4,001 3,890 Y 8 EnCana Kakwa Kfalher 08-27-061-05W6 2010/06 23 13,842 2,130 19% 4,276 3,004 Y HZ 9 Peyto Sundance Knotikwn 11-29-054-22W5 2010/10 19 13,740 2,021 20% 4,597 2,716 Y 10 EnCana Kakwa Kfalher 11-22-061-05W6 2011/07 10 13,709 4,867 19% 4,652 3,027 Y 11 EnCana Deep Basin Kcadomin a-014-A 093-P-08 2008/08 45 13,080 871 N/A 4,597 2,392 HZ 12 Harvest Kakwa Kfalher 01-26-061-06W6 2011/04 13 13,050 4,053 N/A 4,337 2,921 HZ 13 Shell Chinook Ridge Kcadomin;Jnik 02-28-065-13W6 2008/02 51 12,978 1,911 N/A 3,694 3,588 Y 14 EnCana Kakwa Kfalher 15-29-061-05W6 2010/06 23 12,844 3,031 19% 4,666 3,031 Y 15 EnCana Kakwa Kfalher 06-33-061-05W6 2010/06 23 12,663 2,439 19% 4,238 3,008 Y 16 Husky Lynx Kcadotte 07-28-060-09W6 2008/03 50 12,658 833 1% 3,967 3,004 Y HZ 17 Tourmaline Basing Kshftbury;Kma 08-04-050-21W5 2010/04 25 12,493 764 11% 3,707 3,697 Y 18 Pace Wapiti Kcadomin 02-31-068-12W6 2010/03 26 12,453 782 N/A 3,521 2,704 Y HZ 19 EnCana Resthaven Kfalher 13-26-059-02W6 2010/03 26 12,357 2,619 10% 4,401 3,182 Y HZ 20 EnCana Deep Basin Kcadomin b-100-H 093-P-01 2008/05 48 12,270 346 N/A 4,694 2,678 HZ 21 Cdn Forest Bigstone Kcadotte 02-11-061-22W5 2009/04 37 12,191 71 9% 2,448 2,448 22 EnCana Resthaven Kwilrich 06-24-059-02W6 2011/04 13 11,950 6,537 10% 5,032 3,180 Y 23 Bellatrix Ferrier Kmannvl 04-11-044-10W5 2011/03 14 11,907 2,092 N/A 3,848 2,472 Y HZ 24 EnCana Kakwa Kfalher 02-27-061-05W6 2010/11 18 11,813 1,757 19% 4,139 3,032 Y HZ 25 Sinopec Obed Kcard_Ss;Kma 13-25-053-23W5 2009/04 37 11,791 4,167 9% 3,264 3,236 Y 26 Trilogy Kaybob South Kbluesky;Kgeth 05-35-059-20W5 2012/02 3 11,743 7,057 N/A 3,955 2,452 Y 27 Paramount Kakwa Kfalher 13-08-064-04W6 2010/10 19 11,640 6,018 N/A 4,050 2,359 Y HZ 28 Celtic Kaybob South Kbluesky 01-09-059-18W5 2009/06 35 11,387 629 17% 3,671 2,304 Y HZ 29 Deep Basin Kcadomin d-087-J 093-P-01 2010/12 1,443 N/A 4,481 N/A Notes:Apache Our Peak I.P. rate represents the maximum monthly producing-day17 in a wells first 8 months of production (note that we HZ rate 11,339 30 Progress Elmworth Kbluesky;Kgeth 04-09-069-07W6 2009/12 29 11,257 2,116 N/A 2,541 2,512 Y exclude months with less than 10 days of production). Current rate is a "calendar day" rate (i.e. last month's cumulative2,485 volumes divided All Producers (4090) - Average 1,935 656 15% 2,867
Distribution Curve
12,000 Peak I.P. Rate (Boe/d)
0.0
1.0
2.0
3.0
(Mcfe/d/d)
6,000
4.0
9,000
3,000
0 1000 1200 1400 1600 1800 2000 2200 2400 2600 2800 3000 3200 3400 3600 3800 200 400 600 800
Well Count
by 30.5 days). Source: GeoScout; CIBC World Markets Inc.
Deep Basin - YOY Actual Results VERTICAL WELLS (Cardium to Cadomin)

2,500
Deep Basin - YOY Actual Results HORIZONTAL WELLS (Cardium to Cadomin)

5,000
2,000 1,500 1,000 500 0 0 3
ALL VT PRODUCERS - Deep Basin Vt Wells Average Per Well Production

4,000 3,000 2,000 1,000 0
ALL HZ PRODUCERS - Deep Basin Hz Wells Average Per Well Production

Horn River Mon tney
Count
VET
12
15
18
21
24
12
15
18
21
24
215
A m ar an th
Ba kk en (U S)

Source: geoSCOUT, Sherwin Geoedges, Canadian Discovery Digest, The Edge, Geological Atlas of Western Canada, Core Laboratories, Company reports, CIBC World Markets Inc. 216
A m ar an th
Ba kk en (U S)
Horn River Mon tney

Source: geoSCOUT, Sherwin Geoedges, Canadian Discovery Digest, The Edge, Geological Atlas of Western Canada, Core Laboratories, Company reports, CIBC World Markets Inc. 217
VET
A m ar an th
Duvernay - Area Map (Circa August, 2012)
Duvernay - Liquids and Gas Resource Potential

25 Barrels of Oil (Bln) 20 15 10 5 0 Bakken (Alberta) Bakken (SE Sask.) Lower Shaunavon Viking Seal Tight Carbonates Duvernay Cardium 15.0 10.0 25.0 20.0 20.0 15.0 10.0 15.0 7.5
28%
Pekisko
Amaranth
600 Original GIP (Tcf) 500 400 300 200 100 0
500 300
Optimistic Resource Estimate (Tcf)

Conservative Resource Estimate (Tcf)
Horn River
CBM Mnvl
CBM HSC
Montney
Duvernay
Cardium Gas
Deep Basin
Utica Shale
Nikannassin
Notikewin
0
18
Colorado Shale
Cordova
Doig
Duvernay - Area Production Growth

2,400 2,100 Pre 2008 2012 2008 2013
Duvernay
2009 2014 2010 2015 2011 Liquids
400 350
Duvernay
1,800 1,500 1,200 900 600 300 -
300
Actual
Forecast
250 200 150 100 50
Note: Map updated as of June 2012. Source: GeoScout; Company reports; Geological Atlas of Western Canada; The Edge; Canadian Discovery Digest; CIBC World Markets Inc.
Duvernay - Economics
12,000 Production Rate (Mcfe/d) 10,000 8,000 6,000 4,000
Duvernay Hz Wells - Type Curves

High Case: 10,000 Mcfe/d IP, 8 Bcfe recovery Mid Case: 7,500 Mcfe/d IP, 7 Bcfe recovery Low Case: 4,500 Mcfe/d IP, 5 Bcfe recovery
We note that our Duvernay well economics are very sensitive to liquids content. If we increase our assumption for liquids to 250 Bbl/mmcf (from 175 Bbl/mmcf currently) the breakeven gas price drops to $1.65/mcf, and the play's profitability index (P/I ratio) increases to 1.27x.
Horn River
Low Mid 1 Midcycle Well Economics: Curve Curve NPV (B-Tax) (C$,mlns) $3.5 $11.9 NPV (A-Tax) (C$,mlns) $1.4 $7.6 IRR (A-tax) (%) 12% 28% 2 P/I Ratio (A-tax) 0.1x 0.6x Payback Period (yrs) 6.0 3.1 Low
$3.00
Duvernay Type Curve Economics
Mid
$2.25
2,000 0 0 3 6 9 12 15 18 Months on Production 21 24 27 30
Mon tney
Assumptions Well Cost (C$,mln): $12MM 1st yr Decline Rate: 70% Op Costs (incl.trans): $8.50/Boe Liquids Content: 175Bbls/Mmcf Discount Rate: 9% Success Rate: 90%
High Curve $16.0 $10.5 44% 0.9x 2.2 High

$1.90

(C$,mlns) $5.0 $3.0 $1.0 $1.0 $3.0 $5.0

WTI (US$/bbl) FX ($US/$Cdn) Nat Gas (C$/mcf) 2012 $90.00 $0.9900 $2.39 2013 $87.50 $0.9800 $3.43 2014 $85.00 $0.9800 $4.08
Duvernay - Schematic Cross Section
Duvernay Play - Land Position by Operator

1000
1,000 900 800 700 600 500 400 300 200 100 0 Athabasca
625 623 563 400 313 225
Duvernay Land Holders
Net Sections (1)
195 172 156 156 145 141 125 123 113 86
86
79
79
73
70
59
58
43
43
31
23
12
Petrobakken Conoco Phillips TAQA North
Husky
Sonde
Crew
Terra
Yoho
Vero
Penn West
Connacher
Cequence
Encana
CNRL
Enerplus
Sinopec
Talisman
Chevron
Longview
Chinook
Guide
Delphi
Angle
Bonavista
Notes 1) 1 section = 640 acres; 2) Denotes private company. Land positions are approximations based on company disclosure and public data, and do not adjust for prospectivity. (3) Due to licensing data we believe Shell has acquired 42.6 sections from PetroBakken; however, we believe Shell likely has much more land. Source: Company reports; GeoScout; CIBC World Markets Inc.
218
Birchcliff
Shell (3)
Trilogy
Celtic
Westfire
Bellatrix
Glauconite
Ba rn et t
250 250 250 239 218 200
164 69 65 25 15 5
Montney Oil
Ba kk en (U S)
6.0
4%
5.0
1%
4.3
7%
4.0
5%
<1%
<1%
<1%
16%
2.5
2%
2.5
2%
Glauconite VET
Duvernay - All Known Well Results to Date: Data Available As Of June 05, 2012; Production Data Current To May 30, 2012 At Update
# Wells 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 Stike Area Kaybob Chickdee Chickdee Kaybobs Willgr Saxon Saxon Kaybob Fir Kaybobs Kaybobs Kaybobs Kaybobs Edson Pembina Grizzly Saxon Grizzly Grizzly Ferrier Brazr Willgr Kaybobs Kaybobs Kaybobs Kaybobs Kaybobs Foxck Pembina Wilsonck Willgr Ferrier 7-17-63-23 Kaybobs Kaybobs Kaybobs Kaybobs Riv Kaybobs Kaybob Kaybobs Kaybob Ck Kaybobs Cecilia Foxck Kaybobs Kaybob Ckn Kaybob Kaybobs Ferrier Grizzly Grizzly Kaybob Brazr Kaybobs Pembina Pembina Ck Kaybobs Willgr Saxon Saxon Kaybobs Wahigan Cecilia Saxon Kaybobs Foxck Kaybob Kaybob Willgr Willgr Kaybobs Kaybobs Kaybobs Ferrier Reported Formation Duvernay Duvernay Duvernay Duvernay Majeaulk Duvernay Bvrhl_Lk Duvernay Duvernay Duvernay Cook_Lk Duvernay Duvernay Bvrhl_Lk Cook_Lk Bvhl_Lkb Bvhl_Lkb Bvhl_Lkb Duvernay Duvernay Nisku Bvhl_Lkb Swan_Hl Duvernay Duvernay Duvernay Bvhl_Lkb Bvrhl_Lk Majeaulk Bvhl_Lkb Bvhl_Lkb Bvhl_Lkb Bvrhl_Lk Duvernay Bvrhl_Lk Duvernay Duvernay Swan_Hl Nisku Duvernay Duvernay Duvernay Duvernay Duvernay Bvrhl_Lk Bvhl_Lkb Duvernay Gilwd_B Duvernay Rmontney Swan_Hl Cook_Lk Duvernay Bvhl_Lkb Rmontney Nisku Bvhl_Lkb Duvernay Duvernay Bvrhl_Lk Duvernay Bvhl_Lkb Duvernay Duvernay Duvernay Bvhl_Lkb Bvhl_Lkb Bvhl_Lkb Duvernay Duvernay Duvernay Bvhl_Lkb Duvernay Duvernay Duvernay Swan_Hl Swan_Hl Cook_Lk Depth (M) Msrd. Vt. 4,203 2,780 3,027 3,018 5,081 3,313 5,158 3,404 4,559 3,102 5,187 3,824 3,906 3,906 2,975 2,975 4,673 3,441 4,867 3,302 3,308 4,862 3,292 3,179 3,179 3,570 3,570 3,100 3,100 3,761 3,720 3,646 3,646 3,701 3,722 4,671 3,456 3,471 3,453 3,286 3,286 3,281 3,281
A m ar an th
Operator Athabasca Celtic Celtic (TET/YO) Celtic (TET/YO) ConocoPhillips EnCana EnCana Shell Talisman Trilogy (CLT/YO) Yoho (CLT) Yoho (CLT) Alta Angle Antelope Athabasca Athabasca Athabasca Athabasca Bellatrix Blaze Bonavista Celtic Celtic Celtic Celtic Celtic Chevron ConocoPhillips EnCana EnCana EnCana EnCana Husky Husky Husky Husky Husky Mke Shell Shell Shell Talisman Talisman Talisman Taqa Trilogy Trilogy Trilogy Trilogy Westfire Arriva Athabasca Athabasca Athabasca Blaze Celtic Charger Charger Chevron Chevron EnCana EnCana EnCana EnCana EnCana EnCana EnCana Husky Shell Shell Shell Talisman Talisman Trilogy Westfire Westfire Yoho
Well Location 07-18-064-17W5 05-20-060-17W5 15-33-060-20W5 13-36-060-20W5 11-16-044-07W5 16-05-062-24W5 11-08-062-24W5 09-34-062-17W5 01-18-060-20W5 03-13-060-20W5 14-16-062-21W5 13-22-062-21W5 06-18-062-19W5 04-36-052-17W5 10-17-045-06W5 01-24-061-23W5 10-09-062-23W5 04-02-062-23W5 11-10-062-23W5 08-24-044-10W5 04-04-048-13W5 16-33-042-06W5 13-25-059-19W5 13-09-060-19W5 15-31-060-19W5 04-11-060-20W5 14-15-061-21W5 06-22-062-18W5 07-11-045-07W5 13-17-043-04W5 13-05-043-06W5 12-04-042-08W5 06-09-063-23W5 01-01-060-18W5 05-11-060-18W5 08-25-060-18W5 11-25-060-18W5 10-33-056-22W5 10-32-058-17W5 03-21-063-18W5 15-09-063-20W5 02-22-063-20W5 04-09-057-18W5 12-26-059-20W5 12-12-057-22W5 14-10-061-18W5 05-03-060-19W5 09-18-064-19W5 04-03-064-21W5 04-08-063-20W5 03-32-061-19W5 01-06-038-07W5 14-03-062-23W5 04-12-062-23W5 04-18-064-17W5 03-08-047-14W5 03-36-058-18W5 15-25-045-08W5 12-02-046-08W5 08-06-056-18W5 01-36-061-22W5 10-13-044-07W5 09-31-061-24W5 08-05-062-24W5 13-15-063-21W5 13-17-063-23W5 11-34-057-23W5 01-16-061-24W5 16-13-060-18W5 01-18-061-17W5 11-30-063-19W5 01-07-064-19W5 03-02-038-06W5 11-03-041-05W5 13-05-060-19W5 05-32-061-19W5 02-23-062-20W5 16-24-038-07W5
4,353 3,479 3,077 3,077 4,237 3,921 5,577 4,994 3,128 3,147 4,401 4,131 3,101 4,221 4,760 4,861 4,018 3,133 5,307 3,134 4,138 3,184 3,284
3,313 3,479 3,077 3,066 2,900
3,457 3,020 3,128 3,147 3,058 4,131 2,955 2,868
3,563
3,133 3,132 3,184 3,281
Reported Cumulative Prod. Calc'd Reported Hz/Vt Date Date Rig Date On Mths Oil Cdn Gas Liquids Liquids Well Spudded Released Stream On (Bbl) (Bbl) (MMcf) (Bbl/MMcf) (Bbl/MMcf) V Jan-12 Feb-12 Mar-12 3 6,119 10.5 583 325 (oil) V Mar-11 Mar-11 Jun-11 12 18 0.4 45 H Jun-10 Aug-10 Apr-11 14 761 292.8 3 75 (cond.) V Oct-11 Dec-11 Dec-11 6 2,102 115.3 18 80 (cond.) H Jul-11 Oct-11 Nov-11 7 1,536 92.1 22 H Nov-11 Dec-11 Mar-12 3 4,026 20.5 196 200 (cond.) V Nov-10 Dec-10 Aug-11 10 1,632 2.3 710 300 (cond.) V Sep-11 Oct-11 Feb-12 4 550 0.3 1,833 H Sep-11 Nov-11 Jan-12 5 63 209.3 0 H Jan-11 Feb-11 Apr-11 14 45,049 537.8 84 80 (cond.) V Dec-10 Jan-11 Jul-11 11 745 7.1 105 H Nov-11 Dec-11 Jan-12 5 1,098 n.m. 109 (cond.) V Jan-12 Feb-12 V Jul-11 Aug-11 V Sep-11 Oct-11 V Nov-11 Dec-11 V Oct-10 Nov-10 V Oct-11 Dec-11 H Feb-12 H Feb-12 Mar-12 ~0 V Oct-11 Dec-11 V Oct-11 Nov-11 75 V Aug-10 Sep-10 H Apr-12 H Apr-12 V Jan-12 Mar-12 V Jan-11 Feb-11 V Feb-12 Mar-12 V Oct-11 Dec-11 V Dec-11 Feb-12 190 (cond.) V Oct-11 Dec-11 120 (cond.) H Mar-12 H Dec-11 Mar-12 V Feb-12 V Aug-11 Aug-11 V Mar-11 Apr-11 H Oct-11 Nov-11 V May-10 Aug-10 V Dec-10 Jan-11 V Nov-11 Dec-11 H Apr-12 V Dec-11 V Nov-11 Jan-12 V Feb-12 V Mar-00 Aug-09 V Sep-11 Nov-11 H Mar-12 Apr-12 V Mar-11 Apr-11 H Mar-12 V Nov-11 Dec-11 V Aug-11 Sep-11 V V V Company Activity Summary H Confidential TOTAL V Producing Drilled/Spud TOTAL Locations Drilled or V Company Ticker Wells Wells Drilled (Licensed) Licensed V 1 EnCana ECA 2 4 6 7 13 V 2 Celtic CLT 6 5 11 1 12 V 3 Trilogy TET 3 4 7 1 8 4 Athabasca ATH 1 4 5 3 8 V 1 3 4 3 7 5 Shell RDS.A-NYSE V 6 Husky HSE 5 5 1 6 V 5 6 7 Yoho YO 5 1 V 4 6 8 Talisman TLM 1 3 2 V 9 Chevron CVX-NYSE 1 1 2 3 V 10 Westfire WFE 1 1 2 3 V 11 ConocoPhillips COP-NYSE 1 1 2 2 V 1 1 1 2 12 Blaze PRIVATE H 13 Charger CHX 2 2 14 Alta Enrg Prtnr PRIVATE 1 1 1 V 15 Angle NGL 1 1 1 H 1 1 1 16 Antelope PRIVATE V 1 1 17 Bellatrix BXE 1 H 1 1 18 Bonavista BNP 1 V 1 1 19 Mke MKE-ASX 1 H 20 Taqa North TAQA-ADX 1 1 1 V 21 Arriva PRIVATE 1 1 V Total (gross) 12 39 51 27 78 V Mean Liquids Yield (Bbl/MMcf)1 123 Median Liquids Yield (Bbl/MMcf) 93
Producing Wells
Ba kk en (U S)
Ba rn et t
Drilled and/or Tested Wells
Locations
Horn River Mon tney
Duvernay Glauconite
VET
Notes: Our Peak I.P. rate represents the maximum monthly producing-day rate in a wells first 8 months of production (note that we exclude months with less than 10 days of production). Current rate is a "calendar day" rate (i.e. last month's cumulative volumes divided by 30.5 days). Mean liquids yield is calculated removing outliers (i.e. the highest value and the lowest value). Source: GeoScout; CIBC World Markets Inc.
219
Hor n Rive r
Montney
Glau coni te
VET
Duvernay
Barnett
Bakken (US)
Amaranth
Hor n Rive r
Montney
Glau coni te
VET
Duvernay
Barnett
Bakken (US)
Amaranth
A m ar an th
Glauconite - Area Map (Circa August, 2012)
Glauconite - Resource Potential

600 500 Optimistic Resource Estimate (Tcf) Conservative Resource Estimate (Tcf)
Original GIP (Tcf)
Ba kk en (U S)
500
400 300 300 250 250 250 239 218
200 164
200
100
69 65 25 15 5 Glauconite
140 130 Pre 2008 2012 2008 2013 2009 2014 2010 2015 2011 Liquids 120 110 100 90 80 70 60 50 40 30 20 10 0
Glauconite - Area Production Growth

700 650 600 550
Colorado Shale
Ba rn et t
0 CBM Mnvl Cordova Cardium Gas Horn River Nikannassin Deep Basin Utica Shale CBM HSC Notikewin Montney Duvernay Doig
Glauconite
Total Production (MMcfe/d)
Glauconite
Horn River
Mon tney
Net Sections (1)
Suncor
Quatro (2)
Husky Oil
ConocoPhillips
KNOC/Harvest
Sinopec (2)
Ravenwood
Penn West
Bonavista
Vermilion
Petrobakken
Imperial Oil
Pengrowth
222
Fairborne
Enerplus
Blaze (2)
Waldron
Angle
Devon
CNRL
Shell
NAL
Apache
Baytex
Nuvista
Omers
Taqa
Duvernay
500 450 400 350 300 250 200 150 100 50 -
Actual
Forecast
Liquids Production (Mboe/d)
Glauconite - Horizontal Well Operator Summary (Circa August, 2012)

Total # Operated Company Ticker Hz Wells # Licensed Wells Op./Lic. Wells Gross Operated Hz Well Production Oil & Liquids (bbl/d) Nat. Gas (mcf/d) Nat. Gas (%) Total (mcfe/d) Average Production Per Hz Well Oil & Liquids (bbl/d) Nat. Gas (mcf/d) Total (mcfe/d)
Bonavista Enrg Corp BNP 102 14 116 177 Quatro Rsrcs Inc PRIVATE 23 8 31 178 Taqa North Ltd TAQA-ASX 9 17 26 59 Penn West Petrl Ltd PWT 10 4 14 59 Apache Cda Ltd APA-NYSE 12 6 18 5 Omers Enrg Inc PRIVATE 11 3 14 143 Cdn Nat Rsrcs Lmtd CNQ 11 0 11 63 ConocoPhillips Cda Corp COP-NYSE 4 8 12 110 Devon Nec Corp DVN-NYSE 1 0 1 0 Nordegg Rsrcs Inc PRIVATE 8 0 8 18 Waldron Enrg Corp WDN 2 0 2 18 Ravenwood Enrg Corp PRIVATE 2 3 5 220 Birchill Expl Corp PRIVATE 2 2 4 0 Yangarra Rsrcs Corp YAN 6 5 11 110 Harvest Oprtns Corp PRIVATE 3 3 6 0 Note: Quoted production is a gross estimate from public databases which may vary from actual production rates. Source: GeoScout; CIBC World Markets Inc.
69,568 18,083 11,909 11,819 11,230 9,007 9,400 4,504 4,337 3,506 3,455 1,938 3,123 2,162 2,231
98% 94% 97% 97% 100% 91% 96% 87% 100% 97% 97% 60% 100% 77% 100%
70,629 19,153 12,261 12,172 11,261 9,866 9,777 5,163 4,337 3,612 3,562 3,256 3,123 2,823 2,231
2 8 7 6 0 13 6 27 0 2 9 110 0 18 0
682 786 1,323 1,182 936 819 855 1,126 4,337 438 1,727 969 1,561 360 744
692 833 1,362 1,217 938 897 889 1,291 4,337 451 1,781 1,628 1,561 471 744
Glauconite - Cross Section
Glauconite - Land Position by Operator

500 461 400 300 200 106 100 0 86 82 81 70 61 60 60 56 56 52 47 44 41 40 31 29 29 28 28 26 25 329 267 241 219
Glauconite Land Holders
VET
Glauconite - Generic Type Curves

8,000 Prod. Rate (Mcfe/d) 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 0 3 6 9 12 15 18 Months on Production 21 24 27 30
Glauconite - Type Curve Well Economics (Mid Cycle) Glauconite Hz Wells - Type Curves
High liquids content supporting economics of Glauconite play.
Low 1 Midcycle Well Economics Curve (C$,mlns) NPV (B-Tax) NPV (A-Tax) (C$,mlns) IRR (A-tax) (%) 1% 2 P/I Ratio (A-tax) Payback Period (yrs) 10.2 Low
NPV9 Breakeven ($C/Mcf) $4.75
A m ar an th
(C$,mlns)
$2.0 $1.0 $0.0 $1.0 $2.0
Glauconite Type Curve Economics

Mid Curve $3.4 $2.2 25% 0.7x 3.4 Mid
$2.20
High Curve $7.2 $5.0 56% 1.6x 1.8 High

$1.50

Assumptions Well Cost (C$,mln): $3.1MM 1st yr Decline Rate: 65% Op Costs (incl.trans): $4.50/Boe Liquids Content: 70Bbls/Mmcf Discount Rate: 9% Success Rate: 90% WTI (US$/bbl) FX ($US/$Cdn) Nat Gas (C$/mcf) 2012 $90.00 $0.99 $2.39 2013 $87.50 $0.98 $3.43 2014 $85.00 $0.98 $4.08
Ba kk en (U S)
Glauconite - Variance of Results - All Time 6,000 Prod. Rate (Mcfe/d) 5,000 4,000 3,000 2,000 1,000 0 -1,000 3
243 224
Glauconite - Variance of Results - 2011 to Present 6,000 Prod. Rate (Mcfe/d) 5,000 4,000 3,000 2,000 1,000 0 3
131 122

HORIZONTAL Glauconite Wells

HORIZONTAL Glauconite Wells Mean (Average) Top Quartile Average Bottom Quartile Average
Ba rn et t
6
180
# of -2,000 Wells -3,000
9 12 15 18 21 24 27 30 Months on Production (Normalized)

153 119 93 74 60 43 36 29
33
28
36
-1,000
6
89
9
55
12
18
15
18
21
24
27
30
33
36
# of -2,000 Wells -3,000
Duvernay
Glauconite - Distribution By Peak I.P. Rates 12000 10000

125 100
Count
Glauconite - Top Wells

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 Operator Strike Area Well Location ConocoPhillip Willesden Green 16-08-045-09W5 ConocoPhillip Willesden Green 04-05-045-09W5 ConocoPhillip Willesden Green 01-05-045-09W5 Bonavista Willesden Green 01-29-041-05W5 Bonavista Willesden Green 04-22-041-05W5 Exxonmobil Harmattan East 13-32-032-03W5 Bonavista Wilson Creek 13-04-043-04W5 Quatro Wilson Creek 16-10-043-04W5 CNRL Westerose South14-22-044-02W5 Westerose South01-21-044-02W5 Bonavista Wilson Creek 02-10-043-04W5 Quatro Nuvista Pembina 04-36-045-09W5 Quatro Wilson Creek 13-20-042-03W5 Bonavista Willesden Green 01-27-041-05W5 CNRL Westerose South04-16-044-02W5 Quatro Wilson Creek 04-11-043-04W5 Bonavista Wilson Creek 14-15-042-04W5 Taqa Willesden Green 04-03-041-06W5 Bonavista Wilson Creek 04-15-042-04W5 Tournament Wilson Creek 01-28-042-04W5 Bonavista Westerose South11-01-045-03W5 Wilson Creek 16-05-043-04W5 Bonavista Bonavista Willesden Green 04-35-040-06W5 Bonavista Willesden Green 01-30-041-05W5 Bonavista Westerose South04-25-044-03W5 Wilson Creek 13-01-043-04W5 Bonavista Quatro Wilson Creek 14-10-043-04W5 Omers Wilson Creek 15-02-043-04W5 Bonavista Wilson Creek 01-31-042-04W5 Waldron Westerose South01-28-044-03W5 Bonavista Gilby 01-21-041-04W5 Bonavista Wilson Creek 03-18-042-04W5 Penn West Westerose South01-05-044-03W5 Bonavista Gilby 16-05-042-04W5 Bonavista Willesden Green 04-17-041-05W5 Quatro Wilson Creek 02-09-043-04W5 Bonavista Wilson Creek 13-33-042-03W5 Bonavista Willesden Green 01-17-041-05W5 Bonavista Willesden Green 15-21-041-05W5 Bonavista Willesden Green 16-05-041-06W5 Bonavista Wilson Creek 02-28-042-03W5 Petrobakken Westpem 03-22-050-13W5 Quatro Wilson Creek 16-19-042-03W5 Scollard Pembina 13-30-046-01W5 Penn West Gilby 16-22-042-03W5 Apache Willesden Green 03-03-042-05W5 Vero Brazeau River 10-10-048-12W5 Bonavista Willesden Green 15-33-041-05W5 Bonavista Westerose South16-17-044-02W5 Bonavista Willesden Green 04-16-041-05W5 Bonavista Wilson Creek 13-35-041-04W5 ConocoPhillip Brazeau River 08-03-048-12W5 Bonavista Willesden Green 05-33-041-05W5 Bonavista Gilby 13-09-042-04W5 Bonavista Gilby 04-33-041-04W5 Omers Wilson Creek 16-34-042-04W5 Apache Gilby 14-08-042-04W5 Quatro Gilby 01-24-041-04W5 Bonavista Westerose South02-31-044-02W5 ConocoPhillip Gilby 01-27-041-04W5 Penn West Wilson Creek 16-32-042-03W5 Quatro Gilby 11-33-041-03W5 Birchill Strachan 03-24-038-09W5 Bonavista Wilson Creek 01-33-041-04W5 Exxonmobil Harmattan East 07-06-033-03W5 Bonavista Willesden Green 16-22-041-05W5 Birchill Strachan 02-24-038-09W5 CNRL Westerose South04-26-044-02W5 Willesden Green 06-03-041-07W5 Yangarra Bonavista Strachan 03-33-037-08W5 Taqa Wilson Creek 03-30-042-04W5 Bonavista Wilson Creek 01-33-042-04W5 Bonavista Willesden Green 04-06-041-05W5 Bonavista Willesden Green 14-34-041-05W5 Conserve Medicine River 09-11-039-03W5 Date On Stream 2011/04 2011/02 2011/04 2009/04 2009/08 1996/07 2011/05 2010/09 2010/12 2010/09 2010/12 2011/04 2010/04 2009/09 2011/01 2011/06 2008/09 2011/12 2010/02 2010/10 1997/03 2011/05 2011/10 2008/09 2010/05 2010/07 2011/10 2010/07 2010/11 2011/11 2011/05 2011/10 2011/08 2009/12 2011/07 2011/09 2009/12 2010/09 2009/10 2011/10 2009/12 2010/03 2010/11 2011/02 2011/07 2011/01 2009/01 2009/05 2010/04 2011/06 2011/06 2011/01 2009/04 2011/07 2009/12 2010/09 2011/01 2010/06 2011/06 2011/07 2011/12 2010/03 2011/10 2011/05 1995/04 2011/11 2011/09 2011/11 2010/05 2011/08 2011/04 2010/09 2010/12 2009/09 2004/11 Prod. (Mcfe/d) Mths On Peak I.P. Current 11 9,418 3,896 13 6,439 1,925 11 6,316 1,530 5,924 35 495 31 5,921 697 188 5,811 1,371 10 5,533 2,383 5,177 18 973 5,119 15 1,987 18 4,896 1,319 15 4,832 1,237 11 4,682 2,019 4,675 23 776 30 4,670 522 14 4,658 1,370 9 4,635 1,735 4,618 42 647 4,571 3 4,571 25 4,558 591 17 4,464 1,132 180 4,444 117 4,440 10 1,325 5 4,434 2,011 42 4,425 456 22 4,329 839 4,315 20 783 4,200 5 2,887 20 4,199 1,303 16 4,176 1,020 4 4,150 3,386 4,139 10 1,280 5 4,116 2,365 7 4,071 1,788 27 4,036 666 8 4,036 1,045 4,017 6 2,465 27 4,009 396 18 3,978 897 29 3,971 602 3,943 5 1,861 27 3,922 543 24 3,905 429 16 3,900 873 13 3,832 705 3,815 8 1,509 14 3,748 1,353 38 3,638 0 34 3,611 505 3,608 23 622 3,606 9 1,047 9 3,593 1,711 14 3,567 2,236 35 3,492 548 3,472 8 1,634 27 3,456 552 18 3,446 1,065 14 3,436 1,479 3,415 21 801 3,370 9 1,450 8 3,353 2,681 3 3,346 3,346 24 3,323 435 3,323 5 3,256 10 3,311 1,161 203 3,291 789 4 3,267 2,075 3,260 6 1,870 3,255 4 2,731 22 3,246 361 7 3,228 1,681 11 3,204 978 3,175 18 538 15 3,160 812 30 3,125 472 88 3,095 259 2,465 2,266 930 701 % Liquids N/A N/A N/A 18% N/A 18% 17% 17% 2% 2% 17% N/A 16% N/A N/A 17% 17% N/A 17% 17% 15% 17% N/A 18% 2% 17% 17% 17% 17% 2% N/A 17% 2% N/A N/A N/A 15% N/A N/A N/A 16% 13% N/A N/A N/A 18% N/A 18% 2% N/A 17% N/A 18% N/A N/A 17% N/A N/A 2% N/A N/A N/A N/A 17% 18% N/A N/A 2% 9% N/A 17% 17% N/A N/A 14% 12% 17% Depth Msrd. 3,636 3,557 3,657 4,165 3,731 3,696 3,400 3,461 3,264 3,258 3,410 3,871 3,451 3,684 3,301 3,411 3,590 3,772 3,519 3,422 2,692 3,555 3,716 3,426 3,361 3,515 3,481 3,432 3,541 3,356 3,538 3,427 3,302 3,575 3,779 2,900 3,303 3,801 3,663 3,862 3,660 3,384 3,476 3,010 3,471 3,615 3,143 3,447 3,420 3,741 3,481 3,369 3,204 3,556 3,639 3,301 3,531 3,418 3,612 3,931 3,547 2,794 3,718 3,511 3,581 3,703 3,849 3,198 3,268 4,316 3,429 3,585 3,767 3,660 2,526 3,428 3,461 (M) Vt. 2,300 2,312 2,298 2,324 2,223 2,536 2,066 2,055 1,854 1,838 2,060 2,163 2,063 2,195 1,888 2,098 2,063 2,377 2,078 2,065 1,861 2,072 2,367 2,331 1,930 2,062 2,074 2,064 2,078 1,888 2,125 2,127 1,916 2,129 2,320 2,056 2,002 2,279 2,257 2,439 1,997 2,214 2,066 1,709 1,980 2,219 2,295 2,225 1,931 2,278 2,098 2,301 2,228 2,103 2,127 2,076 2,121 2,080 1,867 2,105 2,008 2,094 2,394 2,118 2,548 2,277 2,389 1,805 2,498 2,926 N/A 2,063 2,389 2,216 2,052 2,130 2,084

HORIZONTAL Glauconite Wells
Distribution Curve
2008 & Earlier (27 Wells) 2009 (16 Wells) 2010 (65 Wells) 2011 (135 Wells) Median Mean (Average)
2 3 5 6 0
8000 6000 4000 2000 0
75 50 25
Glauconite
0 (Mcfe/d/d)
Top/Bottom Quartile
100
110
120
130
140
150
160
170
180
190
200
210
220
230
Glauconite - YOY Actual Results ALL PRODUCERS

8000 Production Rate (Mcfe/d) 7000 6000 5000 4000 3000 2000 1000 0 0 3 6
ALL PRODUCERS - GLAUCONITE Hz Wells Average Per Well Production

2012 Wells Recent wells drilled by Conoco at Willesden Green (off the Hoadley Trend) look to be the most productive Glauconite wells to2008 (12 Wells) 2009 (15 Wells) 2010 (66 Wells) 2011 (121 Wells) 2012 (5 Wells)
21
24
Glauconite - YOY Actual Results BONAVISTA

8000 Production Rate (Mcfe/d) 7000 6000 5000 4000 3000 2000 1000 0 0 3 6 9 12 15 18 Months on Production (normalized) 21 24
BONAVISTA - GLAUCONITE Hz Wells Average Per Well Production 2012 Wells

Horn River Mon tney
Well Count
240
10
20
30
40
50
60
70
80
90
VET
All Producers (243) - Average All Producers (243) - Median
223
A m ar an th
Horn River & Cordova Embayment - Area Map (Circa August 2012)
Horn River/Cordova - Resource Potential

600 500 500
Ba kk en (U S)
Original GIP (Tcf)
400 300 300 250 250 250 239 218
200 164
200
100
69
65 25 15 Notikewin 5 Glauconite
250 225 200 175
0 CBM Mnvl CBM HSC Montney Duvernay Colorado Shale Cardium Gas Horn River Cordova Doig Utica Shale
Ba rn et t
Horn River - Area Production Growth

1,500
Horn River
Pre 2008 2012 2008 2013 2009 2014 2010 2015 2011 Liquids
1,350
1,200
Ea gl ef or d
1,050
Nikannassin
Deep Basin
900
Actual
Forecast
150
750
125
600
100
450
75
300
50
150
25
Fa ye tt ev ill e
Horn River - Horizontal Well Operator Summary (Circa August 2012)
Horn River - Operational Summary

Gross Operated Hz Well Production Average Production Per Hz Well Total (mcfe/d) 114,515 34,556 28,696 12,528 10,392 5,301 4,947 3,720 3,699 514 Oil & Liquids (bbl/d) 0 0 0 0 0 0 0 0 0 0 Nat. Gas (mcf/d) 4,978 2,879 3,587 4,176 5,196 757 2,473 930 3,699 514 Total (mcfe/d) 4,979 2,880 3,587 4,176 5,196 757 2,473 930 3,699 514
# Operated # Licensed Oil & Liquids Company EnCana Corp Apache Cda Ltd Nexen Inc Ticker ECA APA-NYSE NXY PRIVATE KWK-NYSE EOG-NYSE PRIVATE DVN-NYSE SRX PBG Hz Wells 23 12 8 3 2 7 2 4 1 1 Wells 10 1 2 1 6 11 1 (bbl/d) 2 1 0 0 0 0 0 0 0 0
Nat. Gas (mcf/d) 114,503 34,552 28,696 12,528 10,392 5,301 4,947 3,720 3,699 514
Nat. Gas (%) 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Horn River Mon tney
SMR O&G Ltd Quicksilver Rsrcs Cda Inc EOG Rsrcs Cda Inc Ramshorn Cda Invstmnt Ltd Devon Nec Corp Storm Gas Rsrcs Corp Petrobank Enrg&Rsrcs
Note: Quoted production is a gross estimate from public databases which may vary from actual production rates. Source: GeoScout, CIBC World Markets Inc.
Horn River - Cross Section
Horn River - Land Position By Operator

600 500 Net Sections (1) 400 300 200 100 0 Exxon/Imperial Quicksilver ConocoPhillips Suncor Penn West CNRL Storm Resources EnCana Petrobakken Apache Nexen Pengrowth Devon Crew EOG 531 450 313 266 245 203 156 148 139 141 138 116 113 84 15
Horn River Land Holders
VET
224
Horn River - Generic Type Curves
Horn River - Generic Per Well Economics (Mid Cycle)
A m ar an th
20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 0 3 6
Horn River Hz (18 stage) Well

Horn River Hz Wells - Type Curves
High Case: 17,640 Mcfe/d IP, 17.64 Bcf recovery Mid Case: 12,600 Mcfe/d IP, 12.6 Bcf recovery Low Case: 7,560 Mcfe/d IP, 7.56 Bcf recovery
Well Economics: Low NPV (B-Tax) (C$,mlns) NPV (A-Tax) (C$,mlns) IRR (A-tax) (%) P/I Ratio (A-tax) Payback Period (yrs) Low
Mid $5.3 $2.7 13% 0.2x 5.9 Mid

$3.20
High $13.5 $8.9 23% 0.7x 4.2 High

$2.55
(C$,mlns)
$5.0
$2.5
$0.0
$2.5
$5.0

Assumptions Well Cost (C$,mln): $12.6MM 1st yr Decline Rate: 65% Op Costs (incl.trans): $5.27/Boe Liquids Content: 0Bbl/Mmcf Discount Rate: 9% Success Rate: 90% WTI (US$/bbl) FX ($US/$Cdn) Nat Gas (C$/mcf) 2012 $90.00 $0.99 $2.39 2013 $87.50 $0.98 $3.43 2014 $85.00 $0.98 $4.08
Ba kk en (U S)
12 15 18 21 Months on Production
24
27
30
Horn River - YOY Actual Results - All Producers
Horn River - Variance of Results - All Time
Ba rn et t
14,000 12,000 Prod. Rate (Mcfe/d) 10,000 8,000 6,000 4,000 2,000 0 0 3
ALL Horn River Hz Wells Average Per Well Production

14,000 12,000
Variance to Mean - All Producers HORIZONTAL Horn River Wells

10,000 8,000 6,000 4,000 2,000 0 3 6 54 9 45 12 15 18 31 21 31 24 31 27 29 30 26 33 18 36 16

Ea gl ef or d
6 9 12 15 18 Months on Production (normalized)
21
24
# of Wells
63 61
41 41
Horn River - Distribution By Peak I.P. Rates
Horn River - Top Wells

Rank Operator Strike Area 1 Nexen Horn River 2 EnCana Horn River 3 Nexen Horn River 4 EnCana Horn River 5 EnCana Horn River 6 EnCana Horn River 7 EOG Horn River 8 Quicksilver Horn River 9 EnCana Horn River 10 Nexen Horn River 11 Apache Horn River 12 EnCana Horn River 13 Quicksilver Horn River 14 EnCana Horn River 15 Apache Horn River 16 SMR Horn River 17 EnCana Horn River 18 Apache Horn River 19 Apache Horn River 20 EnCana Horn River 21 EnCana Horn River 22 Apache Horn River 23 EnCana Horn River 24 Apache Horn River 25 Ramshorn Horn River All Producers (62) - Average Date On Mths Prod. (Mcfe/d) UWI (Well Location) Stream On Peak I.P. Current d-090-H 094-O-08 2011/10 4 15,076 5,506 c-024-D 094-O-09 2011/08 6 15,049 13,124 c-089-H 094-O-08 2011/10 4 14,109 3,920 c-033-D 094-O-09 2011/09 5 14,063 11,955 a-034-D 094-O-09 2011/09 5 13,858 8,854 b-050-J 094-O-08 2010/11 15 12,888 4,888 d-010-K 094-O-15 2008/09 41 12,607 1,483 b-075-D 094-O-16 2010/11 15 12,346 5,279 d-031-K 094-O-08 2010/11 15 12,015 6,885 b-098-H 094-O-08 2012/01 1 11,728 11,720 c-057-L 094-O-08 2011/06 8 11,678 3,995 a-041-K 094-O-08 2010/11 15 11,606 4,917 b-018-D 094-O-16 2010/10 16 11,547 5,526 d-050-J 094-O-08 2010/09 17 11,158 4,800 a-058-L 094-O-08 2011/06 8 10,921 4,946 d-056-B 094-O-15 2011/12 2 10,441 10,441 a-041-K 094-O-08 2010/11 15 10,255 6,105 d-048-L 094-O-08 2011/06 8 10,160 4,665 a-067-L 094-O-08 2011/06 8 9,738 3,328 d-032-K 094-O-08 2010/11 15 9,573 6,464 a-058-J 094-O-08 2009/07 31 9,196 3,300 b-066-L 094-O-08 2011/06 8 9,096 3,836 c-088-K 094-O-08 2011/04 10 8,999 3,838 d-066-L 094-O-08 2011/05 9 8,913 5,115 a-044-B 094-O-15 2009/08 30 8,839 3,905 8,068 3,580 % Liquids 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Depth (Meters) Msrd. Vt. 4,823 2,616 6,006 2,825 4,606 N/A 6,004 2,812 5,752 2,759 5,228 2,638 4,451 3,073 4,331 N/A 5,407 2,641 4,861 2,598 5,363 2,698 5,113 2,646 4,298 2,765 5,209 2,636 5,497 2,702 4,417 2,912 5,241 2,650 5,641 2,824 5,305 N/A 5,206 2,657 4,375 N/A 5,226 2,813 4,381 2,715 5,391 2,647 3,888 2,737 4,637 2,738
30,000 27,000

HORIZONTAL Horn River Gas Wells
25 20 15 10 5 0
Fa ye tt ev ill e
Count
24,000 21,000 18,000 15,000 12,000 9,000 6,000 3,000 0
Distribution Curve
2008 & Earlier (17 Wells) 2009 (13 Wells) 2010 (11 Wells) 2011 (21 Wells) Median Mean (Average) Top/Bottom Quartile Bottom Quartile
(Mcfe/d/d)
10.5
0.0
1.5
3.0
4.5
6.0
7.5
9.0
Well Count
Mon tney
Horn River
10
15
20
25
30
35
40
45
50
55
Horn River - Drilling Costs
60
Horn River - Completion Costs
Drilling Costs Per Lateral Meter ($C)
Completion Costs Per Frac ($C MM)
$3,500 $2,800 $2,100 $1,400 $700 $0 2008

-33% -18%
$1.2 $1.0 $0.8 $0.6 $0.4 $0.2 $0.0 2010F 2008

-34% -54%
VET
2009
2009
2010F
225
A m ar an th
Montney - Area Map (Circa August, 2012)
Montney - Resource Potential

600 500 500
Ba kk en (U S)
Original GIP (Tcf)
400 300 300 250 250 250 239 218
200 164
200
100
69
65 25 15 Notikewin
0
5 Glauconite
1,200 1,080 960
0 Colorado Shale CBM HSC Doig
Ba rn et t
Montney - Area Production Growth

7,200 6,480 5,760
Montney Gas
Pre 2008 2012 2008 2013 2009 2014 2010 2015 2011 Liquids
Cardium Gas
Nikannassin
Deep Basin
Utica Shale
CBM Mnvl
Horn River
Montney
Duvernay
Cordova
Ea gl ef or d
5,040 4,320 3,600 2,880 2,160 1,440 720
840
Actual Forecast
720 600 480 360 240 120
Fa ye tt ev ill e
Montney - Horizontal Well Operator Summary (Circa August, 2012)

Company Ticker EnCana Corp ECA ARC Rsrcs Ltd ARX Murphy Oil Comp Ltd MUR-NYSE Shell Cda Lmtd RDS-NYSE Talisman Enrg Inc TLM Advantage O&G Ltd AAV Birchcliff Enrg Ltd BIR Cdn Nat Rsrcs Lmtd CNQ Tourmaline Oil Corp TOU Trilogy Rsrc Ltd TET Celtic Expl Ltd CLT Crew Enrg Inc CR Huron Enrg Corp PRIVATE Taqa North Ltd TAQA Paramount Rsrcs Ltd PMT Devon Cda Corp #N/A Canbriam Enrg Inc PRIVATE Guide Exploration GO Pengrowth Corp PGF Progress Enrg Ltd PRQ Nuvista Enrg Ltd NVA ConocoPhillips Cda Oprt #N/A # Operated Hz Wells 286 117 154 143 79 87 75 60 37 48 81 35 20 21 23 10 11 60 13 3 11 7 # Licensed Wells 164 37 46 119 149 15 6 46 14 13 4 24 13 9 21 6 24 18 7 68 3 0 Total Op./Lic. Wells 450 154 200 262 228 102 81 106 51 61 85 59 33 30 44 16 35 78 20 71 14 7 Gross Operated Hz Well Production Oil & Liquids Nat. Gas Nat. Gas (bbl/d) (mcf/d) (%) 583 534,884 99% 317 325,511 99% 0 294,408 100% 13 266,504 100% 50 152,225 100% 22 143,256 100% 185 122,638 99% 73 108,176 100% 224 100,182 99% 446 86,879 97% 399 73,957 97% 46 43,422 99% 177 30,827 97% 145 28,973 97% 237 26,347 95% 182 21,980 95% 437 20,215 89% 392 18,833 89% 0 17,612 100% 74 9,359 95% 38 7,800 97% 4 3,583 99% Total (mcfe/d) 538,381 327,412 294,408 266,581 152,527 143,387 123,750 108,611 101,525 89,553 76,348 43,696 31,890 29,840 27,769 23,075 22,835 21,186 17,612 9,805 8,029 3,605 Average Production Per Hz Well Oil & Liquids Nat. Gas Total (bbl/d) (mcf/d) (mcfe/d) 2 1,870 1,882 3 2,782 2,798 0 1,912 1,912 0 1,864 1,864 1 1,927 1,931 0 1,647 1,648 2 1,635 1,650 1 1,803 1,810 6 2,708 2,744 9 1,810 1,866 5 913 943 1 1,241 1,248 9 1,541 1,594 7 1,380 1,421 10 1,146 1,207 18 2,198 2,307 40 1,838 2,076 7 314 353 0 1,355 1,355 25 3,120 3,268 3 709 730 515 1 512
H ay ne sv ill e
Montney Gas
Montney - Schematic Cross Section
Montney - Land Position by Operator

1,400 1281 1,200 1,000 Net Sections (1) 800 600 400 200 0 NuVista Advantage Paramount Birchcliff Cequence EnCana Tourmaline ConocoPhillips Painted Pony Bonavista ARC Talisman Progress Sinopec Guide CNRL Celtic Murphy Terra Crew Shell RMP 303 266 264 201 195 195 190 180 152 144 133 1083 1011 841 694 688
Montney Land Holders
80 78 70 67 55
VET
226
Montney - Generic Type Curves

8,000 7,000
Montney - DRY Type Curve Well Economics (Mid Cycle)

Low Mid Midcycle1 Well Economics: Curve Curve NPV (B-Tax) (C$,mlns) $1.7 NPV (A-Tax) (C$,mlns) $0.8 IRR (A-tax) (%) 13% P/I Ratio2 (A-tax) 0.2x Payback Period (yrs) 5.8 Low
A m ar an th
Montney Hz Wells - Type Curves

Montney (Dry) Type Curve Economics
6,000 5,000 4,000 3,000 2,000 1,000 0 0 3 6 9
High Curve $7.3 $4.9 33% 1.0x 3.3 High

$2.30

(C$,mlns)
$2.0 $1.0 $0.0 $1.0 $2.0
Mid
$3.30
Ba kk en (U S)

12
15
18
21
24
27
30
Montney - Variance of Results - All Time
Montney - LIQUIDS RICH Type Curve Well Economics (Mid Cycle)
Ba rn et t
9,000 8,000 Prod. Rate (Mcfe/d) 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 -1,000 -2,000 # of Wells -3,000 3
1459 1406

Montney (Liquids Rich) Type Curve Econ.

Midcycle Well Economics: NPV (B-Tax) (C$,mlns) NPV (A-Tax) (C$,mlns) IRR (A-tax) (%) 2 P/I Ratio (A-tax) Payback Period (yrs)
1
Low Curve Low

-
Mid Curve $5.5 $3.4 23% 0.5x 3.9 Mid

$2.55
High Curve $14.9 $10.4 58% 1.6x 2.0 High

$1.80

(C$,mlns)
$4.0 $2.0 $0.0 $2.0 $4.0

Assumptions Well Cost (C$,mln): $6.5MM 1st yr Decline Rate: 65% Op Costs (incl.trans): $8.00/Boe Liquids Content: 75Bbl/Mmcf Discount Rate: 9% Success Rate: 90% WTI (US$/bbl) FX ($US/$Cdn) Nat Gas (C$/mcf) 2012 $90.00 $0.99 $2.39 2013 $87.50 $0.98 $3.43 2014 $85.00 $0.98 $4.08
Ea gl ef or d
6
1261

1036 926 790 664 559 474 375
33
299
36
1144
Montney - Variance of Results - 2010 to Present
Montney - Top Wells

Rank Operator Strike Area UWI (Well Location) 1 Manitok Solomon 12-28-052-01W6 2 Talisman Findley 07-24-056-06W6 3 EnCana Kelly d-083-G 093-P-01 4 Trilogy Kaybob South 14-24-059-20W5 5 Trilogy Kaybob South 04-11-060-20W5 6 Talisman Northern Montney a-073-I 094-B-01 7 Talisman Northern Montney c-005-A 094-B-08 8 Talisman Findley 11-25-057-06W6 9 Artek Inga 10-02-088-23W6 10 Murphy Heritage b-084-A 093-P-09 11 Trilogy Kaybob South 01-19-059-19W5 12 Talisman Northern Montney c-065-I 094-B-01 13 EnCana Heritage a-001-G 093-P-09 14 Trilogy Kaybob South 04-35-059-20W5 15 EnCana Kelly d-038-J 093-P-01 16 Progress Northern Montney a-056-J 094-B-09 17 Shell Heritage 13-31-078-18W6 18 EnCana Kelly c-015-J 093-P-01 19 Trilogy Kaybob South 15-26-059-20W5 20 Tourmaline Heritage 13-26-080-16W6 21 Trilogy Kaybob South 14-23-059-20W5 22 Celtic Kaybob South 13-36-058-20W5 23 Trilogy Kaybob South 13-24-059-20W5 24 EnCana Heritage a-093-B 093-P-09 25 Shell Heritage 12-20-079-18W6 26 Trilogy Kaybob South 04-31-059-19W5 27 Trilogy Kaybob South 08-01-060-20W5 28 Celtic Kaybob South 15-27-060-18W5 29 Trilogy Kaybob South 01-01-060-20W5 30 EnCana Heritage 11-28-079-17W6 31 Advantage Glacier 14-14-076-13W6 32 NAL Fireweed a-085-I 094-A-12 33 Murphy Heritage a-032-A 093-P-09 34 Murphy Heritage b-077-A 093-P-09 35 Crew Heritage 12-33-081-19W6 36 Canbriam Northern Montney c-035-H 094-B-08 37 Sinopec Elmworth 07-29-068-08W6 38 Trilogy Kaybob South 01-36-059-20W5 39 Advantage Glacier 16-18-076-13W6 40 Murphy Heritage a-041-A 093-P-09 41 Trilogy Kaybob South 01-21-059-19W5 42 Talisman Northern Montney a-073-I 094-B-01 43 Talisman Northern Montney b-076-F 094-B-08 44 Crew Heritage 12-03-082-19W6 45 Murphy Heritage c-077-A 093-P-09 46 Talisman Northern Montney c-011-K 094-B-09 47 Talisman Northern Montney d-004-A 094-B-08 48 EnCana Heritage d-005-H 093-P-09 49 Trilogy Kaybob South 14-25-059-20W5 50 Shell Heritage 12-17-079-18W6 51 EnCana Heritage d-005-H 093-P-09 52 Trilogy Kaybob South 16-23-059-20W5 53 Trilogy Kaybob South 13-25-059-20W5 54 EnCana Heritage b-023-H 093-P-09 55 EnCana Heritage c-005-H 093-P-09 56 Shell Heritage 04-20-079-18W6 57 Murphy Heritage b-055-B 093-P-09 58 Trilogy Kaybob South 04-06-060-19W5 59 EnCana Heritage 03-24-079-17W6 60 Celtic Kaybob South 12-16-060-19W5 All Producers (1346) - Average Date On Mths Stream On 2005/10 76 2007/11 51 2010/07 19 2011/04 10 2010/04 22 2010/10 16 2011/12 2 2008/03 47 2011/04 10 2009/09 29 2011/02 12 2010/10 16 2011/08 6 2011/02 12 2011/12 2 2010/12 14 2011/09 5 2011/04 10 2009/11 27 2011/12 2 2010/12 14 2010/09 17 2009/12 26 2009/05 33 2008/11 39 2011/01 13 2011/05 9 2010/03 23 2010/04 22 2010/11 15 2011/02 12 2009/01 37 2011/11 3 2011/01 13 2010/02 24 2011/08 6 2011/05 9 2011/03 11 2009/11 27 2011/11 3 2011/06 8 2010/10 16 2011/01 13 2011/04 10 2011/04 10 2011/08 6 2012/01 1 2007/04 58 2010/01 25 2011/01 13 2010/02 24 2009/10 28 2009/11 27 2006/12 62 2007/03 59 2010/12 14 2011/05 9 2011/03 11 2011/08 6 2007/07 55 Prod. (Mcfe/d) Peak I.P. Current 18,514 1,453 18,278 3,421 14,442 3,441 13,211 1,582 12,490 1,038 12,334 2,023 12,087 5,265 11,978 976 11,960 2,642 11,949 1,912 11,815 1,570 11,759 2,297 11,582 8,723 11,505 1,631 11,407 9,750 11,059 3,488 10,932 5,725 10,931 9,357 10,689 493 10,675 10,675 10,618 1,256 10,606 1,143 10,311 545 10,310 1,758 10,302 1,708 10,280 1,589 10,224 1,660 10,170 589 9,943 1,149 9,790 3,729 9,783 1,500 9,693 1,112 9,664 6,028 9,581 3,293 9,566 1,113 9,561 8,132 9,510 774 9,460 1,445 9,428 2,003 9,412 4,341 9,412 1,472 9,389 2,313 9,366 2,833 9,356 3,485 9,329 2,133 9,326 5,828 9,272 9,261 9,251 762 9,249 1,172 9,211 4,667 9,091 3,268 9,056 1,061 8,992 494 8,982 1,207 8,981 1,063 8,924 4,714 8,916 2,800 8,887 1,466 8,884 6,680 8,866 257 4,284 1,707 % Liquids N/A N/A N/A N/A N/A N/A N/A N/A 10% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 8% Depth (Meters) Msrd. Vt. 3,489 2,813 4,391 3,553 4,953 3,407 4,130 2,567 4,018 2,357 4,576 4,576 4,806 N/A 5,121 3,964 3,102 1,774 4,201 2,666 4,280 2,545 4,351 N/A 5,061 2,702 3,939 2,455 4,983 3,353 3,646 2,111 4,121 2,458 5,197 3,403 4,441 2,537 3,673 1,946 4,054 2,580 3,841 2,418 4,141 2,565 4,513 2,704 4,651 N/A 4,176 2,406 4,123 2,415 3,847 2,189 3,969 2,418 4,312 N/A 3,941 2,330 2,962 1,642 4,408 N/A 4,549 2,685 3,419 2,035 3,964 2,219 4,129 2,763 4,076 2,451 4,513 2,474 4,559 2,660 4,077 2,411 4,351 N/A 4,251 N/A 3,586 2,020 4,487 2,652 4,464 2,305 4,621 2,510 4,330 2,441 4,463 2,527 4,524 2,365 4,243 2,451 4,117 2,574 4,416 2,521 3,841 3,842 3,923 2,446 4,715 2,328 4,241 2,832 4,100 2,327 4,616 2,148 3,257 2,293 4,000 2,363
10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 -1,000 # of -2,000 Wells -3,000 Prod. Rate (Mcfe/d)

Fa ye tt ev ill e
H ay ne sv ill e
3
573 519
6
382
271

172 81 0 0
33
36
Montney Gas
Montney - Distribution By Peak I.P. Rates

15,000
300 270 240 210 180 150 120 90 60 30 0 0 2
Distribution Curve
12,000
9,000
10
12
14
(Mcfe/d/d)
6,000
16
Count
VET
3,000
50
1000
1050
1100
1150
1200
1250
1300
1350
1400
1450
100
150
200
250
300
350
400
450
500
550
600
650
700
750
800
850
900
950
Well Count
227
A m ar an th
Montney - Sub-Area Map (Circa August, 2012)
Ba kk en (U S)
Ba rn et t
Northeast Region
Ea gl ef or d
Fa ye tt ev ill e
Dawson Groundbirch
H ay ne sv ill e
Swan Pouce Coupe Kaybob
Montney Gas VET

Source: GeoScout; Company reports; Geological Atlas of Western Canada; The Edge; Canadian Discovery Digest; CIBC World Markets Inc.
228
Montney - Generic Type Curves

8,000 7,000
Montney - YOY Actual Results ALL PRODUCERS
A m ar an th
Montney Hz Wells - Type Curves

High Case: 8,000 Mcfe/d IP, 8 Bcf recovery
8,000 7,000
ALL PRODUCERS - Montney Hz Wells Average Per Well Production

Mid Case: 5,000 Mcfe/d IP, 5 Bcf recovery Low Case: 2,000 Mcfe/d IP, 2 Bcf recovery
6,000 5,000 4,000 3,000 2,000 1,000 0 0 3 6 9
6,000 5,000 4,000 3,000
2012 (124 Wells) 2,000 1,000 0
Ba kk en (U S)
12
15
18
21
24
27
30
12
15
18
21
24
Montney - YOY Actual Results DAWSON

8,000 7,000
Montney - YOY Actual Results GROUNDBIRCH

8,000 7,000
DAWSON - Montney Hz Wells Average Per Well Production

Dawson wells have shallower declines (on average) because some operators (including ARC) are choosing to constrain initial production rates. 2007 (9 Wells) 2008 (15 Wells) 2009 (25 Wells) 2010 (67 Wells) 2011 (40 Wells) 2012 (15 Wells)
GROUNDBIRCH - Montney Hz Wells Average Per Well Production

Ba rn et t
6,000 5,000 4,000 3,000 2,000 1,000 0 0 3
6,000 5,000 4,000 3,000 2,000 1,000 0
Ea gl ef or d
12
15
18
21
24
12
15
18
21
24

Source: GeoScout; CIBC World Markets Inc. Source: GeoScout; CIBC World Markets Inc.
Montney - YOY Actual Results KAYBOB

8,000
Montney - YOY Actual Results POUCE COUPE

8,000 7,000
KAYBOB - Montney Hz Wells Average Per Well Production

Lower drilling costs give an advantage to economics at Kaybob, AB. 2008 (8 Wells) 2009 (39 Wells) 2010 (49 Wells) 2011 (32 Wells) 2012 (16 Wells)
POUCE COUPE - Montney Hz Wells Average Per Well Production

2007 (11 Wells) 2008 (20 Wells) 2009 (34 Wells) 2010 (83 Wells) 2011 (79 Wells) 2012 (31 Wells)
Fa ye tt ev ill e
6,000
6,000 5,000 4,000 3,000 2,000 1,000 0
4,000
2,000
0 0 3 6 9 12 15 18 21 24
12
15
18
21
24
H ay ne sv ill e

Montney - YOY Actual Results SWAN

8,000 7,000
Montney - YOY Actual Results NORTHEAST REGION

8,000 7,000
Montney Gas
SWAN - Montney Hz Wells Average Per Well Production

2007 (37 Wells) 2008 (44 Wells) 2009 (74 Wells) 2010 (54 Wells) 2011 (71 Wells) 2012 (13 Wells)
NORTHEAST REGION - Montney Hz Wells Average Per Well Production

Recent results at properties such as Town & Kobe have opened up a new prospective Montney fairway in northeast B.C. 2009 (12 Wells) 2010 (55 Wells) 2011 (82 Wells) 2012 (28 Wells)
6,000 5,000 4,000 3,000 2,000 1,000 0

0 3
Encana is the biggest operator at Swan, BC.
6,000 5,000 4,000 3,000 2,000 1,000 0
VET
12
15
18
21
24
12
15
18
21
24

229
A m ar an th
Montney Oil - Area Map (Circa August, 2012)
Montney Oil - Resource Potential

25
25.0
Total Resource In Place (Bln barrels)
Ba kk en (U S)
20
15.0
20.0
20.0
Recovered-to-Date
15
15.0
15.0
10.0
10.0 7.5 6.0 5.0 4.3
10
4.0 2.5 2.5 2%
Tight Carbonates
Duvernay
Montney Oil - Area Production Growth

200
Amaranth
Ba rn et t
<1%
<1%
<1%
16%
28% 4% 1% 7% 5%
2%
Seal
Bakken (Alberta)
Montney Oil
Pre 2008 2012 2008 2013 2009 2014 2010 2015 2011 Liquids
200
Ea gl ef or d
175
175
150
150
125
Actual
Forecast
125
100
100
75
75
Fa ye tt ev ill e
50
50
25
25
H ay ne sv ill e
Montney Oil - Horizontal Well Operator Summary (Circa August, 2012)

# Operated Hz Wells 23 31 45 19 1 16 18 11 71 29 13 7 2 6 1 # Licensed Wells 27 15 24 17 2 17 7 4 5 7 3 8 3 6 1 Total Op./Lic. Wells 50 46 69 36 3 33 25 15 76 36 16 15 5 12 2 Gross Operated Hz Well Production Oil & Liquids Nat. Gas Nat. Gas Nat. Gas (bbl/d) (boe/d) (mcf/d) (%) 9,455 2,449 14,692 21% 2,302 2,529 15,173 52% 2,083 1,702 10,209 45% 2,049 1,570 9,423 43% 3,072 0 0 0% 1,852 1,034 6,205 0 1,071 1,495 8,972 58% 969 1,115 6,691 54% 1,973 78 465 4% 1,825 179 1,074 9% 359 721 4,326 67% 3,042 65% 278 507 46% 390 335 2,009 337 194 1,162 36% 50 274 1,647 85% Total (boe/d) 11,904 4,830 3,785 3,619 3,072 2,886 2,566 2,084 2,051 2,004 1,080 785 725 531 324 Average Production Per Hz Well Oil & Liquids Nat. Gas Total (bbl/d) (mcf/d) (boe/d) 411 639 518 74 489 156 46 227 84 108 496 190 3,072 0 3,072 116 388 180 59 498 143 88 608 189 28 7 29 63 37 69 28 333 83 40 435 112 195 1,005 362 56 194 88 50 1,647 324
M ar ce llu s
Company Ticker Trilogy Rsrc Ltd TET ARC Rsrcs Ltd ARX Galleon Enrg Inc GO Cdn Nat Rsrcs Lmtd CNQ Tourmaline Oil Corp TOU RMP Enrg Inc RMP NAL Rsrcs Lmtd NAE Whitecap Rsrcs Inc WCP Pace O&G Ltd PCE Barrick Enrg Inc PRIVATE Bonavista Enrg Corp BNP ATH Athabasca Oil Sands Corp Seven Generations Enrg L PRIVATE Devon Cda Corp DVN-NYSE Deethree Expl Ltd DTX
Montney Oil - Schematic Cross Section
Montney Oil - Land Position By Operater 300 250 200 150 100 50 0
260
Montney Oil Land Holders
Montney Oil
Net Sections (1)
120
100 58 ~50 ~50 45 38 ?
Trilogy (2)
Guide (4)
Bellamont (4)
Bonavista
Pace
Whitecap (3)
RMP
ARC
Notes: 1) 1 section = 640 acres; 2) Trilogy Montney Oil land position is a CIBC estimate and includes prospective land outside Trilogys first Kaybob pool. 3) Whitecap lands are GROSS and CIBC estimates 4) CIBC estimates. Source: Company reports; geoSCOUT; CIBC World Markets Inc.
230
NAL
Montney Oil
Cardium
Viking
Pekisko
Montney Oil - Generic Type Curves

1,100 1,000 900 800 700 600 500 400 300 200 100 0 0 3 6
Montney Oil - BASE Type Curve Well Economics (Mid Cycle)

BASE Type Curve Economics
Well Economics: NPV (B-Tax) (C$,mlns) NPV (A-Tax) (C$,mlns) IRR (A-tax) (%) P/I Ratio (A-tax) Payback Period (yrs)
NPV9 Breakeven
A m ar an th
Montney Oil HZ Wells - Type Curves

Low Curve $1.2 $0.4 13% 0.1x 4.3
Mid High Curve Curve Commodity Prices $4.3 $11.4 Productivity $2.7 $7.9 Capital Cost 30% 223% 0.6x 1.7x Royalties 3.2 0.8 Operating Cost Low Mid High
(C$,mlns)
($US/bbl) $75.50 $49.00 $35.00
($2.5)
($1.5)
($0.5)
$0.5
$1.5
$2.5

Assumptions Well Cost (C$,mln): $4.5MM 1st yr Decline Rate: 65% Op Costs (incl.trans): $7.00/Boe 2nd yr Decline Rate: 25% Discount Rate: 9% Success Rate: 90% WTI (US$/bbl) F/X (US$/C$) Nat Gas (C$/mcf) 2012 $90.00 $0.99 $2.39 2013 $87.50 $0.98 $3.43 2014 $85.00 $0.98 $4.08
Ba kk en (U S)
12
15
18
21
24
27
30
Montney Oil - Distribution By Peak I.P. Rates - Since 2007

2,500 2,250 Peak I.P. Rate (Boe/d) 2,000 1,750
Count 150 100 50 0 200 400 600 (Boe/d) 800 0 Distribution Curve
Montney Oil - KAYBOB Type Curve Well Economics (Mid Cycle)

Low Well Economics: Curve NPV (B-Tax) (C$,mlns) $6.0 NPV (A-Tax) (C$,mlns) $3.9 IRR (A-tax) (%) 60% P/I Ratio (A-tax) 0.9x Payback Period (yrs) 1.8 Low
NPV9 Breakeven
Distribution by Peak I.P. Rate HORIZONTAL Montney Oil Wells

KAYBOB Type Curve Economics
1,500 1,250 1,000 750 500 250 0
Mid High Curve Curve $13.3 $20.0 $9.2 $13.9 368% 11376% 2.0x 3.1x 0.6 0.3 Mid High
$28.50

Commodity Prices Productivity Royalties Capital Cost Operating Cost
Ba rn et t
($US/bbl) $46.00 $33.50
(C$,mlns)
($4.0)
($2.0)
$0.0
$2.0
$4.0

Assumptions Well Cost (C$,mln): $4.5MM 1st yr Decline Rate: 65% Op Costs (incl.trans): $9.00/Boe 2nd yr Decline Rate: 25% Discount Rate: 9% Success Rate: 90% WTI (US$/bbl) FX ($US/$Cdn) Nat Gas (C$/mcf) 2012 $102.50 $0.99 $2.21 2013 $87.50 $0.98 $3.43 2014 $85.00 $0.98 $4.08
Well Count Source: GeoScout; CIBC World Markets Inc.
Montney Oil - Variance of Results - Since 2007

1,000 900 800 700 600 500 400 300
Montney Oil - Variance of Results - 2011 to Present

1,000 900 800 700 600 500 400 300 200 100 0 # -100 of -200
Ea gl ef or d
10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250 260 270 280 290 300 310 320 330 340 350 360 370 380
Variance to Mean - Since 2007 HORIZONTAL Montney Oil Wells Mean (Average) Top Quartile Average Bottom Quartile Average
Variance to Mean - 2011 to Present HORIZONTAL Montney Oil Wells Mean (Average) Top Quartile Average Bottom Quartile Average
Prod. Rate (Boe/d)
Prod. Rate (Boe/d)
200 100 0 -100 # of -200 Wells -300
3 385 359
6 304
9 235
12 206
15 190
18 168
21 142
24 121
27 113
30 93
33 76
36 70
12
15
18
21
24
27
30
33
36
Wells
152 130
55

31 13
Fa ye tt ev ill e
Montney Oil - YOY Actual Results ALL PRODUCERS

1000 900 800 700 600 500 400 300 200 100 0 0 3 6 9 12 15 18 21 24
Montney Oil - Top Wells - Since 2007

Rank Operator Strike Area UWI (Well Location) Kaybob 05-17-064-18W5 1 Trilogy 2 Trilogy Kaybob 12-17-064-18W5 3 Trilogy Kaybob 13-17-064-18W5 4 Surge Valhalla 16-07-074-08W6 5 Trilogy Kaybob 03-21-064-18W5 6 Trilogy Kaybob 04-21-064-18W5 7 Surge Valhalla 11-18-074-08W6 8 Trilogy Kaybob 05-02-064-18W5 9 Trilogy Kaybob 01-08-064-18W5 10 Trilogy Kaybob 01-11-064-18W5 11 Trilogy Kaybob 04-09-064-18W5 12 Tourmaline Elmworth 06-31-069-09W6 13 Trilogy Kaybob 02-08-064-18W5 14 Whitecap Valhalla 11-26-075-09W6 15 Surge Valhalla 13-19-074-08W6 16 NAL Sturgeon Lake Sou 05-28-069-25W5 Kaybob 04-17-064-18W5 17 Trilogy 18 Trilogy Kaybob 13-02-064-18W5 19 Seven Karr 09-12-064-04W6 20 CNRL Ante Creek North 16-03-067-24W5 All Producers (327) - Average Date On Mths Stream On 2011/08 6 2011/08 6 2011/09 5 2011/09 5 2011/02 12 2011/11 3 2011/07 7 2011/09 5 2012/01 1 2011/10 4 2011/11 3 2011/08 6 2011/11 3 2011/05 9 2011/05 9 2009/12 26 2011/11 3 2011/05 9 2011/07 7 2011/12 2 Prod. (Boe/d) Peak I.P. Current 2,867 446 1,957 1,235 1,727 700 1,620 851 1,608 459 1,520 940 1,502 445 1,398 870 1,332 1,332 1,315 167 1,284 1,018 1,182 3,081 1,177 1,052 1,066 386 1,036 494 1,033 183 1,005 494 997 119 973 551 965 934 286 144 % Gas 15% 7% 18% 50% 13% 16% 30% 10% 15% 7% 12% 92% 12% 87% 34% 30% 10% 10% 48% 69% 32% Depth (Meters) Msrd. Vt. 3,720 1,835 3,556 1,841 3,586 1,836 3,041 2,030 3,121 1,824 4,011 1,824 3,097 2,034 3,567 1,843 3,641 1,846 3,583 1,837 3,562 1,839 4,375 2,749 3,546 1,848 3,348 2,198 3,119 2,019 2,852 1,774 3,614 1,837 3,502 1,855 5,351 2,929 3,169 1,879 2,646 1,417
ALL Montney Oil Hz Wells Average Per Well Production

Prod. Rate (boe/d)
H ay ne sv ill e

Montney Oil - Actual Results BY AREA Since 2007

1600 1500 1400 1300 1200 1100 1000 900 800 700 600 500 400 300 200 100 0 0 3
Montney Oil - Actual Results BY AREA Since 2007

1000 900
M ar ce llu s
KAYBOB to VALHALLA - Montney Oil Hz Wells Average Per Well Production

Kaybob (8 Wells) Waskahigan (6 Wells) Ante Creek (27 Wells) Valhalla (18 Wells) With recent wells at Kaybob coming on production at over 2,000 Boe/d we believe there is upside to our type curves.
WORSLEY to GRAND PRAIRIE - Montney Oil Hz Wells Average Per Well Production
Elmworth-Grand Prairie (8 Wells) Sturgeon Lake (24 Wells) Tangent-Girouxville (32 Wells) Worsley/Dixonville (95 Wells)
800 700 600 500 400 300 200 100 0
Montney Oil
12
15
18
21
24
12
15
18
21
24
231
A m ar an th
Montney Oil - Sub-Area Map (Circa August, 2012)
Ba kk en (U S)
Ba rn et t
Ea gl ef or d
Fa ye tt ev ill e
H ay ne sv ill e
M ar ce llu s
Montney Oil
232
Montney Oil - YOY Actual Results KAYBOB

1400 1200
Montney Oil - YOY Actual Results WASKAHIGAN

1000 900
A m ar an th
KAYBOB - Montney Oil Hz Wells Average Per Well Production

WASKAHIGAN - Montney Oil Hz Wells Average Per Well Production

800 700 600 500 400 300 200 100
1000 800 600 400 200 0 0 3 6
Trilogys most recent well at Kaybob tested at close to 4,000 boe/d, and continued to produce at over 2,000 boe/d after over 30 days on production.
We will be watching the Waskahigan area closely to establish repeatability and gain comfort in the stabilization levels of new horizontals.
Ba kk en (U S)
0 9 12 15 18 21 24 0 3 6 9 12 15 18 21 24

Source: GeoScout; Company reports. Source: GeoScout; Company reports.
Montney Oil - YOY Actual Results ANTE CREEK

1000 900 800
Montney Oil - YOY Actual Results VALHALLA

1000 900 800
ANTE CREEK - Montney Oil Hz Wells Average Per Well Production

Ba rn et t
VALHALLA - Montney Oil Hz Wells Average Per Well Production

700 600 500 400 300 200 100 0 0 3 6
700 600 500 400 300 200 100 0
Increased processing capacity for associated gas should debottleneck Montney Oil development at Ante Creek in 2012.
Recent HZ wells drilled by Whitecap at Valhalla may have opened up a new Montney Oil fairway.
Ea gl ef or d
12
15
18
21
24
12
15
18
21
24

Montney Oil - YOY Actual Results ELMWORTH-GRANDE PRAIRIE

1000 900
Montney Oil - YOY Actual Results STURGEON LAKE

1000 900
ELMWORTH-GRANDE PRAIRIE - Montney Oil Hz Wells Average Per Well Production

STURGEON LAKE - Montney Oil Hz Wells Average Per Well Production

700 600 500 400 300 200 100 0 0 3 6
800
800 700 600 500 400 300 200 100 0
Fa ye tt ev ill e
Wells in the Elmworth/Grand Prairie area are highly productive, but more commonly produce liquids-rich gas rather than oil.
H ay ne sv ill e
0 3 6 9 12 15 18 21 24
12
15
18
21
24

Montney Oil - YOY Actual Results TANGENT-GIROUXVILLE

1000 900
Montney Oil - YOY Actual Results WORSLEY/DIXONVILLE

1000 900 800
TANGENT-GIROUXVILLE - Montney Oil Hz Wells Average Per Well Production

WORSLEY/DIXONVILLE - Montney Oil Hz Wells Average Per Well Production

800 700 600 500 400 300 200 100 0 0 3 6
M ar ce llu s
700 600 500 400
Montney Oil
300 200 100 0
12
15
18
21
24
12
15
18
21
24

233
Nikanassin
Nikanassin - Area Map (Circa August, 2012)
Nikanassin - Resource Potential

600 500 500
Original GIP (Tcf)
400 300 300 250 250 250 239 218
Colorado Shale
Utica Shale
Nikannassin
Notikewin
40 Trilogy(3)
Nikanassin - Area Production Growth

540
Cardium Gas
Deep Basin
Nikanassin
Pre 2008 2012 2008 2013 2009 2014 2010 2015 2011 Liquids
90
480
80
420
70
360
60
Actual
300
Forecast
50
240
40
180
30
120
20
60
10
Nikanassin - Operator Summary - Since 2007 (Circa August, 2012)

# Operated Wells 126 23 10 29 20 13 21 5 12 8 1 6 3 2 3 4 4 3 # Licensed Wells 73 11 17 9 20 3 7 12 1 141 35 1 12 5 5 Total Op./Lic. Wells 199 34 27 38 40 16 28 5 24 9 142 41 3 3 3 16 9 8 Oil & Liquids (bbl/d) 0 0 0 1 0 11 5 15 38 0 0 2 0 2 2 0 0 11 Gross Operated Well Production Nat. Gas Nat. Gas (mcf/d) (%) 70,416 100% 53,372 100% 43,065 100% 28,816 100% 27,311 100% 16,732 100% 11,247 100% 10,374 99% 5,929 96% 5,069 100% 2,711 100% 2,667 100% 2,493 100% 2,210 100% 2,025 100% 1,620 100% 1,620 100% 1,062 94% Total (mcfe/d) 70,417 53,372 43,066 28,825 27,311 16,796 11,277 10,466 6,158 5,069 2,711 2,680 2,493 2,221 2,034 1,620 1,620 1,128 Average Production Per Well Oil & Liquids Nat. Gas (bbl/d) (mcf/d) 0 559 0 2,321 0 4,307 0 994 0 1,366 1 1,287 0 536 3 2,075 3 494 0 634 0 2,711 0 445 0 831 1 1,105 1 675 0 405 0 405 4 354 Total (boe/d) 93 387 718 166 228 215 90 349 86 106 452 74 138 185 113 68 67 63
Horn River
Mon tney
Company ConocoPhillips Cda Corp Devon Cda Corp Talisman Enrg Inc Shell Cda Lmtd Lone Pine Rsrcs Cda Ltd Tourmaline Oil Corp Progress Enrg Ltd Apache Cda Ltd Delphi Enrg Corp Pace O&G Ltd EnCana Corp Cdn Nat Rsrcs Lmtd Chinook Enrg Inc Husky Oil Oprtns Ltd EOG Rsrcs Cda Inc Nuvista Enrg Ltd Artek Expl Ltd Paramount Rsrcs Ltd
Ticker COP-NYSE DVN-NYSE TLM RDS-NYSE LPR TOU PRQ APA-NYSE DEE PCE ECA CNQ CKE HSE EOG-NYSE NVA RTK PMT
Nikanassin - Cross Section
Nikanassin - Land Position by Operator

1,400 Nikanassin Land Holders 1100 1,200 1,000 800 800 600 600 469 450 600 300 300 250 228 400 200 148 144 100 70 200 0 Celtic(3) Husky(3) CNRL(3) Conoco(3) Apache(3) Encana(3) Devon(3) Delphi Shell(3) Tourmaline(3) Talisman(3) Progress Paramount Lone Pine Birchcliff
Net Sections (1)
70 Taqa(3)
61 Advantage(3)
60 Pace
60 Omers(2)(3)
36 Suncor(3)
234
Glauconite
Horn River
CBM Mnvl
Montney
Duvernay
CBM HSC
Cordova
Doig
200 164
200
100
69 65 25 15 5
Nikanassin
Nikanassin - Generic Type Curves - VERTICAL WELLS

10,000
Nikanassin - Type Curve Well Economics - VERTICAL WELLS (Mid Cycle)

Nikanassin VT Type Curve Economics
Low 1 Curve Midcycle Well Economics: NPV (B-Tax) (C$,mlns) NPV (A-Tax) (C$,mlns) IRR (A-tax) (%) 2 P/I Ratio (A-tax) Payback Period (yrs) NPV9 Breakeven ($C/Mcf) Mid High Curve Curve
Nikanassin Vertical Wells - Type Curves

Despite lower productivity, economics for vertical wells challenge horizontals. High Case: 5,000 Mcfe/d IP, 5 Bcf recovery Mid Case: 2,000 Mcfe/d IP, 2 Bcf recovery Low Case: 1,000 Mcfe/d IP, 1 Bcf recovery

(C$,mlns)
Prod. Rate (Mcfe/d)
8,000 6,000 4,000 2,000 0 0
$0.9 $0.5 17% 0.2x 3.8 Mid
$5.7 $4.0 85% 2.0x 1.6
Low
-
$2.95
$1.80
High
($1.00)
($0.50)
$0.00
$0.50
$1.00
Bakken Cardium
Assumptions
12
15
18
21
24
27
30
Well Cost (C$,mln): $2MM Op Costs (incl.trans): $6.50/Boe Discount Rate: 9%
1st yr Decline Rate: 40% Liquids Content: 14Bbl/Mmcf Success Rate: 90%
Nikanassin - Generic Type Curves - HORIZONTAL WELLS

10,000
Nikanassin - Type Curve Well Economics - HORIZONTAL WELLS (Mid Cycle)

Nikanassin HZ Type Curve Economics
Low 1 Curve Midcycle Well Economics: NPV (B-Tax) (C$,mlns) NPV (A-Tax) (C$,mlns) IRR (A-tax) (%) 2 P/I Ratio (A-tax) Payback Period (yrs) NPV9 Breakeven ($C/Mcf) Low Mid High Curve Curve $1.7 $8.7 $0.7 $5.8 12% 34% 0.1x 0.9x 5.5 3.1 Mid $3.30 High $2.25
Nikanassin Horizontal Wells - Type Curves

High Case: 10,000 Mcfe/d IP, 10 Bcf recovery Mid Case: 5,000 Mcfe/d IP, 5 Bcf recovery

Commodity Prices Productivity Royalties Capital Cost Operating Cost
(C$,mlns)
8,000
Prod. Rate (Mcfe/d)
6,000
Low Case: 2,500 Mcfe/d IP, 2.5 Bcf recovery
($3.0)
($2.0)
($1.0)
$0.0
$1.0
$2.0
$3.0
4,000
Assumptions
Well Cost (C$,mln): $6.5MM Op Costs (incl.trans): $6.50/Boe Discount Rate: 9% 1st yr Decline Rate: 60% Liquids Content: 14Bbl/Mmcf Success Rate: 90%

2,000
Note: We will be watching actual results to either validate or disprove these type curves, and plan to make adjustments on an on-going basis as dictated by empirical data. Source: GeoScout; Company reports; CIBC World Markets Inc. 0
Cardium Gas
Nikanassin - Variance of Results - 9 2007 to Present -15 VERTICAL WELLS 0 3 6 12 18 21

10,000 8,000
24
27
30
Nikanassin - Variance of Results - 2007 to Present - HORIZONTAL WELLS

10,000

VERTICAL Nikanassin Wells Mean (Average)

HORIZONTAL Nikanassin Wells
Prod. Rate (Mcfe/d)
Prod. Rate (Mcfe/d)
8,000 6,000 4,000 2,000 0
6,000 4,000 2,000 0
Top Quartile Average Bottom Quartile Average
Glauconite
-2,000
12
15
18
21
24
27
30
33
36
6 51 45
9 42
12 29
15 25
18 19
21 15
24 13
27 11
30 11
33 9
36 7
# of Wells -6,000
-4,000

404 397 387 368 341 317 296 258 220 209 201 178 151
# -2,000 of Wells -4,000

51
Nikanassin - Distribution By Peak I.P. Rates Distribution by Peak I.P. Rate VT + HZ Nikanassin Wells
2008 & Earlier (180 Wells)
Nikanassin - Top Wells Since 2007

Rank Operator Strike Area 1 Lone Chinook Ridge 2 Devon Narraway 3 Shell Chinook Ridge 4 Talisman Ojay 5 Devon Ojay 6 Shell Chinook Ridge 7 Pace Wapiti 8 EnCana Resthaven 9 EnCana Resthaven 10 Paramount Kakwa 11 ConocoPhillip Hiding Creek 12 Lone Chinook Ridge 13 Lone Chinook Ridge 14 Tourmaline Cabin Creek 15 ConocoPhillip Hiding Creek 16 Lone Chinook Ridge 17 EnCana Resthaven 18 ConocoPhillip Hiding Creek 19 Shell Ojay 20 Shell Chinook Ridge 21 Cdn Forest Ojay 22 ConocoPhillip Chinook Ridge 23 Tourmaline Kakwa 24 Shell Chinook Ridge 25 Shell Ojay All Producers (455) - Average UWI (Well Location) 14-36-063-13W6 07-04-063-11W6 04-29-065-13W6 b-013-A 093-I-09 a-039-A 093-I-09 02-28-065-13W6 02-31-068-12W6 13-26-059-02W6 06-24-059-02W6 01-36-062-05W6 c-048-G 093-I-16 12-27-063-13W6 14-22-063-13W6 09-08-055-02W6 a-059-G 093-I-16 15-26-063-13W6 01-03-060-02W6 c-070-G 093-I-16 a-055-J 093-I-09 13-20-065-13W6 a-051-G 093-I-09 03-33-063-13W6 16-13-062-06W6 04-32-064-12W6 b-073-J 093-I-09 Date On Mths Stream On 2009/04 33 2008/04 45 2006/06 67 2010/03 22 2008/05 44 2008/02 47 2010/03 22 2010/03 22 2011/04 9 2010/06 19 2009/01 36 2010/10 15 2011/02 11 2011/08 5 2008/10 39 2011/01 12 2010/07 18 2008/03 46 2008/04 45 2009/03 34 2010/11 14 2007/03 58 2010/03 22 2008/11 38 2009/03 34 Prod. (Mcfe/d) Peak I.P. Current 19,773 5,107 19,604 6,611 17,115 875 13,789 8,203 13,194 8,838 12,978 2,025 12,453 1,097 12,357 3,609 11,939 8,133 10,915 4,198 10,237 2,090 10,038 1,523 9,942 2,764 9,861 8,274 9,632 2,205 9,476 3,105 9,134 4,836 8,764 1,727 8,699 1,704 8,441 1,100 8,422 2,550 8,344 635 8,307 561 8,281 1,702 8,241 1,700 2,687 862 % Liquids 2% 9% 5% N/A 0% 5% 8% 10% 10% 19% N/A 2% 2% N/A N/A N/A 10% N/A 1% 5% N/A 2% 19% 5% 1% 10% Depth (Meters) Msrd. Vt. 3,701 3,543 3,335 3,299 4,676 3,293 3,426 N/A 3,270 3,148 3,694 3,588 3,521 2,704 4,401 3,182 5,032 3,180 4,093 2,648 3,561 3,526 3,943 3,750 3,516 3,516 4,001 3,890 3,402 3,360 3,528 3,509 4,420 3,198 3,554 3,512 3,494 3,470 4,641 3,440 3,371 3,368 3,671 3,654 3,285 3,285 4,030 3,439 3,737 3,673 3,220 3,020 Hz/Vt Well V V H V V V H H V H V V V V V V H V V H V V V H V
12000 9000 6000 3000
140 120 100 80 60 40 20 0 0
Distribution Curve
2009 (66 Wells) 2010 (137 Wells) 2011 (72 Wells) Median Mean (Average) Top/Bottom Quartile
10
15
(Mcfe/d)
20
0 Well Count 25 50 75 100 125 150 175 200 225 250 275 300 325 350 375 400 425 450
Nikanassin - YOY Actual Results VERTICAL WELLS

10000
Nikanassin - YOY Actual Results HORIZONTAL WELLS

10000
Prod. Rate (mcfe/d)
2008 (83 Wells) 6000 4000 2000 0

0 3 6 9 12 15
2009 (70 Wells) 2011 (45 Wells)
Prod. Rate (mcfe/d)
8000
ALL Nikanassin Vertical Wells Average Per Well Production

2010 (79 Wells)
8000 6000 4000 2000 0
ALL Nikanassin Horizontal Wells Average Per Well Production

Pre 2008 (4 Wells) 2009 (6 Wells) 2011 (21 Wells) 2008 (3 Wells) 2010 (17 Wells)
Horn River Mon tney
15000
Count
VET
18
21
24
9 12 15 Months on Production (normalized)
18
21
24
235
A m ar an th
Pekisko - Area Map (Circa August, 2012)
Pekisko - Resource Potential

25
25.0
Total Resource In Place (Bln barrels) 20

15.0 20.0 20.0
Recovered-to-Date
Pekisko
15
10.0
15.0
15.0
10.0 7.5 6.0 5.0 4.3 4.0 2.5 4% 1% 7% 5% 2% 2.5 2%
10
5
<1% <1% <1% 16%
28%
0 Cardium Bakken (SE Sask.) Lower Shaunavon Tight Carbonates Amaranth Bakken (Alberta) Duvernay Pekisko Viking Seal
Pekisko - Area Production Growth

50 45 40 35 30 25 20 15 10 5 -
Pekisko
Pre 2008 2012 2008 2013 2009 2014 2010 2015 2011 Liquids
Actual
Forecast
Source: GeoScout; Company reports; Geological Atlas of Western Canada; The Edge; Canadian Discovery Digest; CIBC World Markets Inc.
Pekisko - Horizontal Well Operator Summary (Circa August, 2012)

# Operated Hz Wells 109 13 2 22 12 12 6 3 5 2 3 2 1 # Licensed Wells 29 2 1 1 3 1 10 6 Total Op./Lic. Wells 138 15 2 23 13 15 7 3 5 2 13 8 1 Gross Operated Hz Well Production Oil & Liquids Nat. Gas Nat. Gas Nat. Gas (bbl/d) (boe/d) (mcf/d) (%) 4,204 1,612 9,669 28% 1,001 176 1,053 15% 77 669 4,014 90% 340 344 2,067 50% 134 227 1,365 63% 252 77 461 23% 139 100 601 42% 124 113 679 48% 144 73 440 34% 135 75 448 36% 89 55 328 38% 125 0 0 0% 39 54 322 58% Total (boe/d) 5,816 1,177 746 685 362 329 239 237 218 210 143 125 93 Average Production Per Hz Well Oil & Liquids Nat. Gas Total (bbl/d) (mcf/d) (boe/d) 39 89 53 77 81 91 38 2,007 373 15 94 31 11 114 30 21 38 27 23 100 40 41 226 79 29 88 44 67 224 105 30 109 48 62 0 62 39 322 93
Mon tney
Company Crew Enrg Inc Cenovus Enrg Inc Bonavista Enrg Corp Second Wave Petrl Ltd Husky Oil Oprtns Ltd Pace O&G Ltd Connacher O&G Lmtd NAL Rsrcs Lmtd Cdn Abraxas Petrl Corp Pengrowth Enrg Corp All Points Enrg Ltd ISH Enrg Ltd Cdn Nat Rsrcs Lmtd
Ticker CR CVE BNP SCS HSE PCE CLL NAE PRIVATE PGF PRIVATE PRIVATE CNQ
Horn River
Pekisko - Schematic Cross Section
Pekisko - Land Position By Operator

500 450 400 350 300 250 200 150 100 50 0
442 200
Pekisko Land Holders
Net Sections (1)
144 142 125 121 111 100 100
Pengrowth(3)
Husky(3)
Crew
EOG(3)
Cenovus(3)
NAL(3)
CNRL(3)
ConocoPhilips(3)
236
Second Wave
Twin Butte
Pace
Bonavista
TAQA (3)
92
90
50
30
Montney Oil
50 45 40 35 30 25 20 15 10 5 0
Pekisko - Generic Type Curves

500
Pekisko - Type Curve Well Economics (Mid Cycle) Pekisko HZ Wells - Type Curves
A m ar an th
Pekisko Type Curve Economics

NPV9 Breakeven
1
400 300 200 100 0 0 3 6 9
Low Curve $1.8 $1.2 38% 0.9x 2.7
Mid High Curve Curve Commodity Prices $2.4 $4.0 Productivity $1.7 $2.8 Capital Cost 70% 162% 1.3x 2.2x Operating Cost 1.6 0.8 Royalties Low Mid High
Pekisko
($US/bbl) $39.00 $35.00 $29.50
(C$,mlns) $1.0
$0.5
$0.0
$0.5
$1.0

12
15
18
21
24
27
30
Pekisko - Variance of Results - All Time

500
Pekisko - Variance of Results - 2011 to Present

500

HORIZONTAL Pekisko Wells
Cardium Cardium

Mean (Average) Top Quartile Average
400 300 200 100 0 -100 3 188 177 6 139 9
400 300 200 100 0 3

102 98
Bottom Quartile Average
12 87
15 66
18 47
21 34
24 25
27 16
30
33
36
-100
# o -200 f We lls -300
6
59
9
34
12
18
15
18
21
24
27
30
33
36
-200 # of We lls -300

113
Pekisko - Distribution By Peak I.P. Rates
Pekisko - YOY Actual Results ALL PRODUCERS
Gas
1,000 900 800 700 600 500 400 300 200 100 0
80 60
Distribution Curve

500

ALL Pekisko Hz Wells Average Per Well Production

400
Count
40 20 0
0 150 300 450
300
Glauconite
200
(Boe/d)
600
100
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
160
170
180
12
15
18
21
24
Well Count

700 600 To date, the Princess area has shown significantly better productivity than the Judy Creek or Northern areas. "Gassier" Pekisko wells at Sylvan Lake have recently shown promise, however.
ALL Pekisko Hz Wells Average Per Well Production

Sylvan Lake (7 Wells) Princess (116 Wells) Judy Creek (20 Wells) Northern (14 Wells)
500 400 300 200 100 0 0
12
15
18
21
24
Pekisko - Actual Results - PRINCESS

500
400 300 200 100 0 0
PRINCESS - Pekisko Hz Wells Average Per Well Production

In 2011, however, performance at Princess has lagged compared to previous years.
12
15
18
21
24
Date On Mths % Prod. (Boe/d) Depth (Meters) Rank Operator Strike Area UWI (Well Location) Stream On Peak I.P. Current Gas Msrd. Vt. 11-06-018-11W4 2010/12 14 1,028 193 11% 1,580 993 1 Crew Bantry 2 Crew Princess 10-07-019-11W4 2009/10 28 947 149 15% 1,890 1,004 3 Bonavista Prevo 12-07-039-01W5 2010/01 25 945 683 88% 3,199 2,043 4 Crew Alderson 12-06-018-11W4 2011/10 4 820 764 8% 1,944 992 5 Crew Princess 16-12-019-12W4 2009/11 27 766 132 37% 1,763 1,016 6 Crew Bantry 08-02-018-12W4 2010/01 25 634 62 4% 1,959 997 7 Crew Bantry 15-01-018-12W4 2010/08 18 561 41 7% 1,529 989 8 Crew Princess 01-11-019-11W4 2011/07 7 557 1,589 79% 1,919 995 9 Crew Bantry 15-05-017-11W4 2011/03 11 546 68 8% 1,777 985 10 Crew Bantry 09-36-017-12W4 2010/12 14 506 195 18% 1,898 993 11 Cenovus Countess 13-25-019-15W4 2011/02 12 488 191 11% 1,977 1,009 12 Crew Bantry 05-05-017-11W4 2010/10 16 461 90 5% 1,887 983 13 Crew Bantry 11-06-018-11W4 2011/08 6 449 78 24% 1,713 1,005 14 Crew Bantry 09-01-018-12W4 2009/09 29 444 89 5% 1,609 988 15 Crew Alderson 01-32-017-11W4 2010/10 16 442 35 4% 1,796 994 16 Crew Bantry 08-08-017-11W4 2008/10 40 426 33 5% 2,198 982 17 Crew Bantry 07-18-017-11W4 2010/08 18 411 12 2% 2,026 981 18 Husky Bantry 01-03-019-14W4 2009/09 29 409 45 15% 1,707 1,025 19 Crew Alderson 02-01-018-12W4 2011/11 3 384 384 13% 1,823 993 20 Crew Princess 15-12-019-11W4 2011/11 3 378 11,339 21% 1,621 1,000 21 Crew Princess 06-05-019-11W4 2010/12 14 377 34 27% 1,795 1,007 22 Crew Princess 12-06-019-11W4 2010/11 15 374 96 38% 2,289 1,002 23 Crew Princess 04-36-018-11W4 2011/02 12 374 17 8% 1,253 989 24 Husky Bantry 15-03-019-14W4 2010/03 23 368 15 25% 1,415 1,023 25 Crew Princess 12-02-019-11W4 2011/08 6 366 128 84% 1,869 1,003 26 Crew Alderson 11-30-017-11W4 2010/02 24 347 56 11% 1,934 986 27 Crew Princess 09-15-019-12W4 2010/05 21 331 26 23% 2,063 1,026 28 All Hussar 08-31-026-21W4 2011/03 11 308 118 30% 2,724 1,486 29 NAL Sylvan Lake 07-08-037-03W5 2010/10 16 308 138 58% 3,227 2,346 30 Hemisphere Jenner 10-14-021-09W4 2010/11 15 294 106 9% 2,002 981 31 Crew Bantry 15-06-017-11W4 2010/11 15 290 12 8% 1,966 994 32 Crew Alderson 02-32-017-11W4 2009/08 30 288 4 4% 1,814 1,003 33 Crew Bantry 15-02-018-12W4 2011/10 4 284 54 24% 2,098 995 34 Crew Princess 12-31-018-10W4 2010/11 15 275 67 19% 1,980 984 35 Crew Princess 07-11-019-11W4 2011/11 3 273 5,399 52% 1,604 997 36 Crew Alderson 06-33-016-11W4 2010/10 16 258 19 3% 2,034 996 37 Crew Princess 03-36-018-11W4 2011/11 3 254 118 34% 1,680 981 38 Husky Bantry 08-03-019-14W4 2011/02 12 250 42 39% 1,559 1,025 39 Crew Princess 16-34-018-11W4 2011/03 11 246 70 51% 2,093 1,001 Notes: Our Peak I.P. rate represents 01-14-019-11W4 the maximum monthly producing-day rate in a wells first 8 months of production (note 40 Crew Princess 2010/08 18 245 34 56% 1,920 1,006 All we exclude months with less 2,021 thatProducers (188) - Average than 10 days of production). Current rate is a 177 "calendar259 rate27% last month's 1,122 day" (i.e.
Prod. Rate (Boe/d)
Horn River Mon tney
Pekisko - Actual Results - All Producers By Area
Pekisko - Top Wells
VET
cumulative volumes divided by 30.5 days). Source: GeoScout; CIBC World Markets Inc.
237
A m ar an th
SEAL - Area Map (Circa August, 2012)
SEAL - Resource Potential

25
25.0 Total Resource In Place (Bln barrels)
Ba kk en (U S)
20
15.0
20.0
20.0
Recovered-to-Date
15
10.0
15.0
15.0
10.0 7.5 6.0 5.0 4.3 4.0 2.5 4% 1% 7% 5% 2% 2.5 2%
10
5
<1% <1% <1% 16%
28%
0 Cardium Viking Tight Carbonates Bakken (SE Sask.) Lower Shaunavon Pekisko Seal Duvernay Bakken (Alberta)
Amaranth
Seal
SEAL - Area Production Growth

130 120 110 100 Pre 2008 2012 2008 2013 2009 2014 2010 2015 2011 Liquids
Seal
90 80 70 60 50 40 30 20 10
Actual
Forecast
Note: Map updated as of May 2012. Source: GeoScout; Company reports; Geological Atlas of Western Canada; The Edge; Canadian Discovery Digest; Hubbard et. Al. (1999); Bluesky Depositional Environments; CIBC World Markets Inc.
SEAL - Horizontal Well Operator Summary (Circa August, 2012)

Total # Operated # Licensed Company Ticker BTE RDS-NYSE MUR-NYSE PWT HSE PRIVATE Hz Wells 126 271 217 68 30 3 Wells 26 53 39 12 0 2 Baytex Enrg Ltd Shell Cda Lmtd Murphy Oil Comp Ltd Penn West Petrl Ltd Husky Oil Oprtns Ltd Koch Expl Cda G/P Ltd Op./Lic. Wells 152 324 256 80 30 5 Gross Operated Hz Well Production Oil & Liquids (bbl/d) 18,121 13,588 6,848 2,983 1,902 107 Nat. Gas Nat. Gas (mcf/d) 3,236 18,448 7,618 3,908 955 1 (%) 3% 18% 16% 18% 8% 0% Total (boe/d) 18,660 16,663 8,117 3,634 2,061 107 Average Production Per Hz Well Oil & Liquids (bbl/d) 144 50 32 44 63 36 Nat. Gas (mcf/d) 26 68 35 57 32 0 Total (boe/d) 148 61 37 53 69 36
Horn River
Mon tney
SEAL - Schematic Cross Section
Seal - Land Position by Operator

300 250 Net Sections (1) 200 150 100 50 0 Murphy Baytex CNRL Strata Grizzly(2) TAQA Penn West* Chinook Koch(2) CIC*(2) Shell Imperial Husky 82 60 280 263 259 250 212
Seal Land Holders
42
40
26
22
20
Source: The Edge; CIBC World Markets Inc.
Notes 1) 1 section = 640 acres; 2) Denotes private company. Land positions are approximations based on company disclosure and public data, and do not adjust for prospectivity. * PWT and CIC are joint parnters. Source: Company reports; GeoScout; CIBC World Markets Inc.
238
Montney Oil
130 120 110 100
Cardium Gas Glauconite VET
90 80 70 60 50 40 30 20 10 0
SEAL - COLD HZ Production Type Curves

500
SEAL - COLD Production
SEAL - Type Curve Well Economics (COLD)

SEAL (COLD) Type Curve Economics
NPV9 Breakeven
1
A m ar an th
Prod. Rate (boe/d)
SEAL HZ Wells (COLD) - Type Curves

400 300 200 100 0 0 3 6 9 12 15
Low Curve $1.6 $1.0 24% 0.6x 3.9 Low
Mid High Curve Curve $4.9 $8.3 $3.5 $6.0 91% 319% 2.0x 3.4x 1.3 0.6 Mid High
($US/bbl) $45.50 $30.50 $26.50
18
21
24
27
30
Note: We will be watching actual results to either validate or disprove these type curves, and plan to make adjustments on an on-going basis as dictated by empirical data. Source: GeoScout; Company reports; CIBC World Markets Inc. Source: Company Reports;
Assumptions Well Cost (C$,mln): $1.75MM 1st yr Decline Rate: 50% Op Costs (incl.trans): $11.00/Boe 2nd yr Decline Rate: 25% Discount Rate: 9% Success Rate: 90%
Ba kk en (U S)
SEAL - THERMAL Cyclic Steam Stimulation (CSS) Production Type Curve

2,500
SEAL - THERMAL Production
SEAL - Type Curve Well Economics (THERMAL)

SEAL Thermal Type Curve Economics
Low 1 Midcycle Well Economics Curve NPV (B-Tax) (C$,mlns) NPV (A-Tax) (C$,mlns) IRR (A-tax) (%) 2 P/I Ratio (A-tax) Payback Period (yrs) Low
NPV9 Breakeven ($US/bbl)
SEAL HZ Wells (Thermal) - Type Curve

Prod. Rate (boe/d)
2,000 1,500 1,000 500 0

0
We assume peak production is achieved in the 4th steam cycle (yr 4).
Mid Curve $23.8 $14.7 20% 0.5x 4.5 Mid

$48.50
High Curve $43.6 $29.6 31% 1.0x 3.3 High

$39.50
Seal
12
24
36 Months on Production
48
60
Note: We will be watching actual results to either validate or disprove these type curves, and plan to make adjustments on an on-going basis as dictated by empirical data. Source: GeoScout; Company reports.
Assumptions Well Cost (C$,mln): $31MM EUR: 3,900 MBoe Op Costs (incl.trans): $10.00/Bo Peak Rate: 2,200 Boe/d Discount Rate: 9% Peak Year Rate: 1,700 Boe/d
Source: Company Reports;
Cardium Gas
SEAL - Variance of Results - All Time

500
SEAL - Variance of Results - 2011 to Present

600 Prod. Rate (Boe/d) 500 400 300 200 100 0
Variance to Mean - All TIME

COLD HORIZONTAL Bluesky/Gething Wells
Prod. Rate (Boe/d)
400 300 200 100 0 3 -100 6
Variance to Mean - 2011 to Present COLD HORIZONTAL Bluesky/Gething Wells

702 677 636 612 -200 Source: GeoScout; CIBC World Markets Inc.
# of We lls
12 15 18 21 24 27 Months on Production (Normalized) 576 541 526 511 491 470
30 451
33 441
36 423
Glauconite
-100 # of -200 We lls
12 15 18 21 24 Months on Production (Normalized)
27
30
33
36
141
132
89
67
37
SEAL - Distribution By Peak I.P. Rate (Cold Production)

1300 1200 1100 1000 900 800 700 600 500 400 300 200 100 0
SEAL - Top Wells (Cold Production)

Rank Operator 1 Baytex 2 Baytex 3 Baytex 4 Murphy 5 Baytex 6 Baytex 7 Baytex 8 Baytex 9 Penn West 10 Baytex 11 Baytex 12 Baytex 13 Baytex 14 Baytex 15 Baytex 16 Baytex 17 Baytex 18 Baytex 19 Baytex 20 Baytex All Producers (702) Strike Area Peace River Peace River Peace River Peace River Peace River Peace River Peace River Peace River Peace River Peace River Peace River Peace River Peace River Peace River Peace River Peace River Peace River Peace River Peace River Peace River Average Area Area Area Area Area Area Area Area Area Area Area Area Area Area Area Area Area Area Area Area UWI (Well Location) 13-01-084-19W5 01-02-084-19W5 16-02-084-19W5 16-12-084-18W5 08-01-084-19W5 14-02-084-19W5 13-02-084-19W5 01-09-084-19W5 16-05-082-15W5 16-16-084-19W5 05-19-084-18W5 16-16-084-18W5 09-03-084-19W5 12-18-084-18W5 08-15-084-19W5 13-30-084-18W5 13-30-084-18W5 16-22-084-18W5 01-03-084-19W5 09-09-084-19W5 Date On Mths Stream On 2011/05 9 2011/04 10 2011/02 12 2011/10 4 2011/05 9 2011/04 10 2011/04 10 2011/06 8 2011/07 7 2011/12 2 2010/05 21 2010/02 24 2009/09 29 2010/04 22 2011/07 7 2011/05 9 2011/05 9 2010/07 19 2009/11 27 2011/06 8 Prod. (Boe/d) Peak I.P. Current 1,060 1,086 1,037 781 973 510 962 306 950 1,045 862 706 803 403 699 376 696 398 675 675 669 333 662 257 633 178 630 192 624 411 621 366 611 299 602 283 595 209 580 381 188 88 % Gas 1% 0% 0% 0% 1% 0% 0% 2% 0% 3% 4% 1% 1% 1% 2% 0% 0% 1% 1% 1% 2% Depth (Meters) Msrd. Vt. 2,108 595 1,464 585 2,138 597 2,118 613 2,066 596 2,137 585 2,091 587 2,264 573 2,233 684 1,088 574 2,284 593 2,373 599 2,433 576 2,412 596 2,042 569 2,186 582 2,293 585 2,430 605 2,468 579 1,115 570 2,270 627
Distribution by Peak I.P. Rate HORIZONTAL Bluesky/Gething Wells

300 250
Distribution Curve
IP Rate (Boe/d)
Count
200 150 100 50 0 0 200 400 600
(Boe/d)
50
100
150
200
250
300
350
400
450
500
550
600
650
700
Well Count
SEAL - YOY Actual Results ALL PRODUCERS

550 500
SEAL - YOY Actual Results BAYTEX

550 500 2007 ( Wells) 2008 (37 Wells) 2009 (18 Wells) 2010 (24 Wells) 2011 (31 Wells)
All Producers - Primary (Cold) Hz Wells Average Per Well Production

2004 ( Wells) 2006 ( Wells) 2008 (93 Wells) 2010 (58 Wells) 2011 Wells 2005 ( Wells) 2007 ( Wells) 2009 (51 Wells) 2011 (134 Wells)
BAYTEX - Primary (Cold) Hz Wells Average Per Well Production

Baytex has recently completed 4 multi-lateral cold wells (11-15 legs each) achieving initial rates of 800 to +1,000 Boe/d (challenging even our "high case" economics). The YOY improvement in Baytex's results is largely due to the increased number of HZ legs per well.
450 400 350 300 250 200 150 100 50 0 0 3 6 9
450 400 350 300 250 200 150 100 50 0
Horn River Mon tney
VET
12
15
18
21
24
27
30
33
36
12
15
18
21
24

239
A m ar an th
Lower Shaunavon - Area Map (Circa August, 2012)
Lower Shaunavon - Resource Potential

25
25.0
Ba kk en (U S)
20
15.0
20.0
20.0
Recovered-to-Date
15
10.0
15.0
15.0
10.0 7.5 6.0 5.0 4.3 4.0 2.5 4% 1% 7% 5% 2% 2.5 2%
10
5
<1%
Ba rn et t
<1%
<1%
16%
28%
0 Cardium Seal Tight Carbonates Bakken (SE Sask.) Lower Shaunavon Amaranth Bakken (Alberta) Pekisko Viking Duvernay
Lower Shaunavon - Area Production Growth

70 65 60 55 Pre 2008 2012 2008 2013 2009 2014 2010 2015 2011 Liquids
Shaunavon
Shaunavon
50 45 40 35 30 25 20 15 10 5 -
Actual
Forecast
Lower Shaunavon - Horizontal Well Operator Summary (Circa August, 2012)

Total Op./Lic. Wells 343 117 87 1 7 12 1 9 1 1 1 1 Gross Operated Hz Well Production Oil & Liquids Nat. Gas Nat. Gas Total (bbl/d) (mcf/d) (%) (boe/d) 9,989 2,841 5% 10,463 3,475 778 4% 3,605 2,911 58 0% 2,920 521 0 0% 521 351 0 0% 351 117 42 6% 125 27 2 1% 28 11 0 0% 11 10 0 0% 10 7 0 0% 7 7 2 5% 8 1 0 0% 1 Average Production Per Hz Well Oil & Liquids Nat. Gas Total (bbl/d) (mcf/d) (boe/d) 32 9 33 51 11 53 49 1 49 521 0 521 50 0 50 17 6 18 27 2 28 11 0 11 10 0 10 7 0 7 7 2 8 1 0 1
Mon tney
Company Crescent Point Enrg Corp Cenovus Enrg Inc Wild Stream Expl Inc Anterra Enrg Inc Jarrod Oils Ltd Husky Oil Oprtns Ltd Grizzly Rsrcs Ltd ARC Rsrcs Ltd Trafina Enrg Ltd Avenex Enrg Corp Novus Enrg Inc Penn West Petrl Ltd
# Operated Ticker Hz Wells CPG 313 CVE 68 WSX 59 AE.A 1 7 PRIVATE HSE 7 PRIVATE 1 ARX 1 TFA.A 1 AVF 1 NVS 1 PWT 1
# Licensed Wells 30 49 28 5 8 -
Horn River
Lower Shaunavon - Schematic Cross Section
Lower Shaunavon - Land Position By Operator

700 600 500 Net Sections (1) 400 300 200 100 0 Crescent Point Talisman (3) Wild Stream Husky (3) Taqa (3) Cenovus Diaz 234 125 100 600
Shaunavon Land Holders
240
54
25
10
Montney Oil
70 65 60 55
50 45 40 35 30 25 20 15 10 5 0
Glauconite VET
Lower Shaunavon - Generic Type Curves 350 Prod. Rate (Boe/d) 300 250 200 150 100 50 0 0 3 6 9
Lower Shaunavon - Type Curve Well Economics (Mid Cycle)

Shaunavon Type Curve Economics
NPV9 Breakeven
1
A m ar an th
Shaunavon Hz Wells - Type Curves

While our Shaunavon type curve looks very similar to the Bakken, Shaunavon economics are slightly less attractive because the play produces medium
Low Curve $0.6 $0.3 13% 0.1x 5.3 Low
Mid Curve $2.0 $1.3 33% 0.7x 2.9 Mid
High Curve Commodity Prices $5.0 Productivity $3.5 Capital Cost 107% 2.0x Operating Cost 1.3 Royalties High
(C$,mlns)
($US/bbl) $61.50 $44.50 $29.50
$1.0
$0.5
$0.0
$0.5
$1.0

Ba kk en (U S)
24
27
30
Lower Shaunavon - Variance of Results - All Time 350 300 Prod. Rate (Boe/d) 250 200 150 100 50 6
345
Lower Shaunavon - Variance of Results - 2011 to Present

HORIZONTAL Lower Shaunavon Wells

350 300 250 200 150 100 50 0 -50 3 # of -100 173 147 Wells -150
HORIZONTAL Lower Shaunavon Wells

c
0 3 -50 # -100 of 461 432 Wells -150
12 15 18 21 24 27 Months on Production (Normalized)

275 239 206 179 147 124
30
103
33
93
36
78
Prod. Rate (Boe/d)
Ba rn et t
6
62
308
30 13
30
33
36
Shaunavon
Lower Shaunavon - Distribution By Peak I.P. Rates 700 Peak I.P. Rate (Boe/d) 600 500 400 300 200 100 0 100 125 150 175 200 225 250 275 300 325 350 375 400 425 450 25 50 75
300 250 200 150 100 50 0 0
Lower Shaunavon - Top Wells

Rank Operator Strike Area UWI (Well Location) 1 Crescent Point Swift Current Medi11-009-19W3/00 (33 2 Crescent Point Swift Current Medi02-005-20W3/00 (33 3 Crescent Point Swift Current Medi21-008-19W3/00 (33 4 Crescent Point Swift Current Medi16-008-19W3/00 (33 5 Crescent Point Swift Current Medi03-009-19W3/00 (33 6 Crescent Point Swift Current Medi04-005-20W3/00 (33 7 Crescent Point Swift Current Medi02-006-20W3/00 (33 8 Crescent Point Swift Current Medi11-009-19W3/00 (33 9 Crescent Point Swift Current Medi15-009-19W3/00 (33 10 Crescent Point Swift Current Medi36-003-20W3/00 (33 11 Crescent Point Swift Current Medi30-008-19W3/00 (33 12 Crescent Point Swift Current Medi33-009-19W3/00 (33 13 Crescent Point Swift Current Medi10-009-19W3/00 (33 14 Crescent Point Swift Current Medi06-009-18W3/00 (33 15 Crescent Point Swift Current Medi31-007-19W3/00 (33 16 Crescent Point Swift Current Medi16-009-19W3/00 (33 17 Crescent Point Swift Current Medi09-010-19W3/00 (33 18 Crescent Point Swift Current Medi31-005-20W3/00 (33 19 Crescent Point Swift Current Medi16-009-19W3/00 (33 20 Crescent Point Swift Current Medi11-005-20W3/00 (33 21 Crescent Point Swift Current Medi31-005-20W3/00 (33 22 Crescent Point Swift Current Medi22-009-19W3/00 (33 23 Crescent Point Swift Current Medi04-009-19W3/00 (33 24 Crescent Point Swift Current Medi07-006-19W3/00 (33 25 Crescent Point Swift Current Medi21-004-20W3/00 (33 26 Crescent Point Swift Current Medi09-006-20W3/00 (33 27 Crescent Point Swift Current Medi09-009-19W3/00 (33 28 Crescent Point Swift Current Medi03-008-19W3/00 (33 29 Crescent Point Swift Current Medi13-006-20W3/00 (33 30 Crescent Point Swift Current Medi21-004-20W3/00 (33 31 Crescent Point Swift Current Medi12-009-19W3/00 (33 32 Crescent Point Swift Current Medi05-008-19W3/00 (33 33 Crescent Point Swift Current Medi17-005-20W3/00 (33 34 Crescent Point Swift Current Medi12-005-20W3/00 (33 35 Crescent Point Swift Current Medi19-005-20W3/00 (33 36 Crescent Point Swift Current Medi10-009-19W3/00 (33 37 Crescent Point Swift Current Medi23-009-19W3/00 (33 38 Crescent Point Swift Current Medi05-008-19W3/00 (33 39 Crescent Point Swift Current Medi03-006-20W3/00 (33 40 Crescent Point Swift Current Medi16-009-19W3/00 (33 41 Crescent Point Swift Current Medi30-005-20W3/00 (33 42 Crescent Point Swift Current Medi01-008-19W3/00 (33 43 Crescent Point Swift Current Medi26-003-20W3/00 (33 44 Cenovus Swift Current Medi22-005-20W3/00 (33 45 Crescent Point Swift Current Medi12-006-20W3/00 (33 46 Crescent Point Swift Current Medi10-008-19W3/00 (33 47 Crescent Point Swift Current Medi19-005-20W3/00 (33 48 Crescent Point Swift Current Medi07-006-19W3/00 (33 49 Crescent Point Swift Current Medi18-009-19W3/00 (33 50 Crescent Point Swift Current Medi06-008-18W3/00 (33 51 Crescent Point Swift Current Medi34-007-19W3/00 (33 52 Crescent Point Swift Current Medi22-003-20W3/00 (33 53 Crescent Point Swift Current Medi04-009-19W3/00 (33 54 Crescent Point Swift Current Medi03-009-19W3/00 (33 55 Crescent Point Swift Current Medi06-008-19W3/00 (33 56 Crescent Point Swift Current Medi11-005-20W3/00 (33 57 Crescent Point Swift Current Medi32-004-20W3/00 (33 58 Crescent Point Swift Current Medi21-009-19W3/00 (33 59 Crescent Point Swift Current Medi35-007-19W3/00 (33 60 Crescent Point Swift Current Medi22-003-20W3/00 (33 61 Crescent Point Swift Current Medi32-007-19W3/00 (33 62 Crescent Point Swift Current Medi33-007-19W3/00 (33 63 Crescent Point Swift Current Medi23-009-19W3/00 (33 64 Crescent Point Swift Current Medi34-007-19W3/00 (33 65 Crescent Point Swift Current Medi06-008-19W3/00 (33 66 Crescent Point Swift Current Medi32-007-19W3/00 (33 67 Crescent Point Swift Current Medi13-009-19W3/00 (33 68 Crescent Point Swift Current Medi14-009-19W3/00 (33 69 Crescent Point Swift Current Medi10-006-20W3/00 (33 70 Crescent Point Swift Current Medi34-007-19W3/00 (33 71 Crescent Point Swift Current Medi01-009-19W3/00 (33 72 Crescent Point Swift Current Medi02-008-19W3/00 (33 73 Crescent Point Swift Current Medi35-007-19W3/00 (33 74 Crescent Point Swift Current Medi34-007-19W3/00 (33 75 Crescent Point Swift Current Medi15-009-19W3/00 (33 All Producers (461) - Average Date On Stream 2009/11 2011/08 2011/02 2010/01 2009/07 2011/09 2010/10 2009/11 2007/02 2008/08 2008/08 2008/10 2007/07 2007/11 2008/03 2007/08 2011/03 2011/08 2011/07 2008/07 2011/02 2010/12 2009/02 2011/10 2011/07 2011/03 2007/09 2011/09 2011/10 2010/12 2007/07 2008/03 2011/10 2008/08 2010/03 2007/11 2007/02 2008/09 2010/07 2007/11 2010/05 2010/06 2011/10 2011/01 2011/08 2007/11 2011/09 2011/10 2008/06 2010/08 2008/08 2011/10 2008/08 2011/11 2008/09 2008/11 2010/09 2008/07 2010/02 2009/11 2008/10 2008/11 2010/09 2008/10 2008/09 2008/12 2007/08 2008/01 2010/07 2011/09 2009/05 2008/07 2008/10 2008/06 2007/11 Mths On 27 6 12 25 31 5 16 27 60 42 42 40 55 51 47 54 11 6 7 43 12 14 36 4 7 11 53 5 4 14 55 47 4 42 23 51 60 41 19 51 21 20 4 13 6 51 5 4 44 18 42 4 42 3 41 39 17 43 24 27 40 39 17 40 41 38 54 49 19 5 33 43 40 44 51 Prod. (Boe/d) Peak I.P. Current 428 37 375 194 373 162 372 37 345 4 342 177 341 235 339 17 328 41 324 11 294 9 288 18 287 48 286 13 282 11 279 5 277 77 272 167 266 125 265 31 263 127 257 34 256 2 253 172 250 134 250 90 250 27 248 54 248 148 245 130 243 7 241 14 237 190 236 22 234 101 231 3 226 11 224 35 222 19 222 8 221 69 219 42 217 199 216 159 214 132 213 10 212 188 211 175 211 21 211 20 210 16 210 210 209 17 209 209 208 13 207 26 206 59 202 23 201 52 200 43 198 18 198 8 198 30 196 19 196 67 196 23 196 16 195 29 194 43 194 118 193 3 191 11 191 25 191 9 190 10 126 40 % Gas 0% 9% 7% 1% 0% 9% 1% 0% 1% 0% 9% 9% 0% 0% 0% 2% 10% 0% 9% 0% 0% 3% 0% 0% 0% 0% 6% 8% 0% 0% 0% 0% 0% 0% 1% 0% 0% 0% 0% 9% 2% 5% 0% 1% 0% 1% 0% 0% 9% 0% 0% 0% 9% 0% 0% 0% 9% 1% 7% 1% 0% 0% 11% 0% 0% 0% 3% 0% 0% 4% 0% 9% 0% 0% 1% 3% Depth (Meters) Msrd. Vt. 2,179 N/A 2,846 N/A 2,863 N/A 2,870 N/A 2,744 N/A 2,585 N/A 2,411 N/A 2,248 N/A 2,468 1,365 2,949 N/A 2,681 N/A 2,687 N/A 2,067 1,357 2,561 1,379 2,874 N/A 2,613 1,367 2,849 N/A 2,704 N/A 2,740 N/A 2,998 N/A 2,561 N/A 2,596 N/A 2,657 N/A 2,951 N/A 2,567 N/A 2,347 N/A 2,851 1,372 2,546 N/A 2,963 N/A 2,579 N/A 2,687 1,364 2,605 N/A 2,889 N/A 2,932 N/A 2,548 N/A 2,405 1,364 2,527 1,354 2,671 N/A 3,009 1,439 2,676 1,371 2,836 N/A 2,748 N/A 2,913 N/A 2,701 N/A 2,950 N/A 2,893 1,383 2,268 N/A 2,419 N/A 2,397 N/A 2,950 N/A 2,701 N/A 2,893 N/A 2,710 N/A 2,667 N/A 2,686 N/A 2,971 N/A 2,955 N/A 2,774 N/A 2,904 N/A 2,871 N/A 2,644 N/A 2,551 N/A 2,530 N/A 2,706 N/A 2,713 N/A 2,651 N/A 2,652 1,364 2,038 1,348 2,896 N/A 2,889 N/A 2,689 N/A 2,626 N/A 2,617 N/A 2,691 N/A 2,574 1,364 2,685 1,395

HORIZONTAL Shaunavon Wells
Distribution Curve
(Boe/d)
Count
Glauconite
160
320
480
Well Count
350 300 Prod. Rate (Boe/d) 250 200 150 100 50 0 0 3
ALL PRODUCERS - Shaunavon Hz Wells

Average Per Well Production
21
24
Lower Shaunavon - YOY Actual Results WATERFLOOD PILOT #1 Combined Production - 5 HZ Wells Offsetting Injector Production (Boe/d) 100 Water Cut (%) 80 60 40 20 0 2006-09
Injection Started
A 2nd waterflood pilot into the lower Shaunavon has now commenced. Water Cut (%) Production (Boe/d) 600 500
Waterflood Response?
400 300 200 100 0
Horn River Mon tney
Lower Shaunavon - YOY Actual Results ALL PRODUCERS
VET
2007-01
2007-05
2007-09
2008-01
2008-05
2008-09
2009-01
2009-05
2009-09
2010-01
2010-05
2010-09
2011-01
2011-05
241
A m ar an th
Viking - Area Map (Circa August, 2012)
Viking - Resource Potential

25
25.0
ALBERTA
SASK
Ba kk en (U S)
20
15.0
20.0
20.0
Recovered-to-Date
15
10.0
15.0
15.0
10.0 7.5 6.0 5.0 4.3 4.0 2.5 4% 1% 7% 5% 2% 2.5 2%
10
5
<1% <1% <1% 16%
28%
Ba rn et t
0 Cardium Seal Bakken (SE Sask.) Lower Shaunavon Bakken (Alberta) Pekisko Viking Tight Carbonates Duvernay
Amaranth
2012
Viking - Area Production Growth

160 150 140 130 120 Pre 2008 2013 2008 2014 2009 2015 2010 Liquids 2011
Viking
110 100 90 80 70 60 50 40 30 20
Actual
Forecast
Viking Oil
10 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15
Viking - Horizontal Well Operator Summary (Circa August, 2012)

Company Penn West Petrl Ltd Novus Enrg Inc Renegade Petrls Ltd Teine Enrg Ltd Husky Oil Oprtns Ltd Allstar Enrg Lmtd Home Quarter Rsrcs Ltd Flagstone Enrg Inc Polar Star Cdn O&G Inc Invicta Enrg Corp Harvest Oprtns Corp ISH Enrg Ltd Devon Cda Corp Crescent Point Enrg Corp Westfire Enrg Ltd Ticker PWT NVS RPL PRIVATE HSE PRIVATE PRIVATE PRIVATE PRIVATE VCA PRIVATE PRIVATE DVN CPG WFE # Operated Hz Wells 132 78 59 51 18 15 16 21 24 11 13 12 14 25 17 # Licensed Wells 26 111 54 47 15 15 5 21 14 7 19 30 16 39 27 Total Op./Lic. Wells 158 189 113 98 33 30 21 42 38 18 32 42 30 64 44 Oil & Liquids (bbl/d) 2,672 1,900 1,739 855 575 258 281 346 266 219 227 204 250 214 164 Gross Operated Hz Well Production Nat. Gas Nat. Gas Nat. Gas (boe/d) (mcf/d) (%) 661 3,965 20% 837 5,020 31% 0 0 0% 65 390 7% 12 74 2% 116 697 31% 66 395 19% 0 0 0% 65 392 20% 110 659 33% 96 577 30% 66 396 24% 4 21 1% 0 0 0% 5 27 3% Total (boe/d) 3,333 2,737 1,739 920 587 374 347 346 332 329 323 270 253 214 168 Average Production Per Hz Well Oil & Liquids Nat. Gas Total (bbl/d) (mcf/d) (boe/d) 20 30 25 24 64 35 29 0 29 17 8 18 32 4 33 17 46 25 18 25 22 16 0 16 11 16 14 20 60 30 17 44 25 17 33 22 18 2 18 9 0 9 10 2 10
Horn River
Mon tney
Viking - Schematic Cross Section
Viking - Land Position By Operator

900 800 700 Net Sections (1) 600 500 400
248 245 240 170
1170
Viking Land Holders
300 200 100 0
220
150
150
137
114
110
110
100
98
85
85
75
60
60
60
51
47
45
44
40
31
30
30
27 Equal Energy
Compass
Sure Energy
ISH Energy(2)(3)
Crescent Point
Penn West
Source: The Edge, Canadian Discovery Digest, CIBC World Markets Inc.
1) 1 section = 640 acres; 2) Denotes private company; 3) Denotes CIBC/Geoscout estimate Note: Land positions include acreage accessible via farm-in agreements. Source: Company reports; GeoScout; CIBC World Markets Inc.
242
ConocoPhillips(3)
Silverback(2)
Wild Stream
Imperial(3)
Pengrowth
Husky(3)
Renegade
Enerplus
Apache
Zargon
Vero
CNRL(3)
Cutpick(2)
Bonavista
Teine(2)
Emerge
ARC(3)
NAL(3)
Baytex
Novus
Angle
Devon(3)
Westfire
Kallisto
24
Montney Oil
160 150 140 130 120 110
Duvernay VET
100 90 80 70 60 50 40 30 20 10 0
Viking - Generic Type Curves
Viking - Type Curve Well Economics (Mid Cycle)
A m ar an th
200 Prod. Rate (boe/d) 150 100 50 0 0 3 6
Viking HZ Wells - Type Curves

Low Mid High 1 Midcycle Well Economics: Curve Curve Curve Commodity Prices NPV (B-Tax) (C$,mlns) $1.4 $3.2 Productivity NPV (A-Tax) (C$,mlns) $0.9 $2.2 Capital Cost IRR (A-tax) (%) 27% 71% P/I Ratio2 (A-tax) 0.7x 1.7x Operating Cost Payback Period (yrs) 3.5 1.7 Royalties Low Mid High
NPV9 Breakeven ($US/bbl)
Viking Type Curve Economics
$53.50 $37.50
(C$,mlns)
$0.5
$0.0
$0.5

Ba kk en (U S)
12
15
18
21
24
27
30
Viking - Variance of Results - All Time
Viking - Variance of Results - 2011 to Present
Ba rn et t
200 150

HORIZONTAL Viking Wells
Prod. Rate (Boe/d)
200 150

HORIZONTAL Viking Wells
Mean (Average)
Prod. Rate (Boe/d)
Mean (Average) 100 50 0 3 6 9 12 15 18 21 24 27 30 33 36 -50

1477 1308 1115
100 50 0 3 6 9 12 15 18 21
Duvernay
24
27
30
33
36
# of

838 655 508 355 217 161 103 60 51
# of
-50
758 747 613

343 169 88
Wells -100
Wells -100
Viking Oil
Viking - Distribution By Peak I.P. Rates
Viking - Top Wells

Rank Operator Strike Area UWI (Well Location) 10-33-043-26W4 1 Glencoe Chigwell 2 Glencoe Chigwell 09-23-042-26W4 3 Glencoe Chigwell 01-13-042-26W4 4 Glencoe Chigwell 07-26-042-26W4 5 Superman Westerose South 04-34-043-03W5 6 Superman Sylvan Lake 01-34-037-01W5 7 Cutpick Halkirk East 14-07-040-13W4 8 Angle Crossfield 01-20-030-03W5 9 Cutpick Halkirk East 13-09-040-13W4 10 NAL Caroline 11-36-035-07W5 11 Angle Harmattan East 08-17-031-02W5 12 Sure Redwater 03-02-058-23W4 13 Cutpick Halkirk East 12-09-040-13W4 14 Cutpick Halkirk East 14-14-040-13W4 15 Cutpick Provost 15-13-039-12W4 16 Cutpick Halkirk East 08-20-040-14W4 17 Cutpick Halkirk East 15-07-040-13W4 18 Cutpick Halkirk East 06-14-040-13W4 19 Bonterra Willesden Green 12-23-043-09W5 20 Velvet Carrot Creek 01-28-052-14W5 21 Cutpick Halkirk East 16-07-040-13W4 22 Baccalieu Harmattan East 16-30-031-03W5 23 Angle Crossfield 16-11-029-02W5 24 Cutpick Halkirk East 08-13-040-14W4 25 Cutpick Provost 16-11-038-12W4 All Producers (1477) - Average Date On Mths Stream On 2010/12 17 2011/03 14 2012/02 3 2011/04 13 2011/07 10 2011/02 15 2011/01 16 2010/07 22 2011/08 9 2011/05 12 2010/09 20 2010/11 18 2011/09 8 2010/11 18 2011/10 7 2011/02 15 2011/10 7 2010/09 20 2012/02 3 2011/03 14 2010/11 18 2011/10 7 2010/12 17 2012/03 2 2011/03 14 Prod. (Boe/d) Peak I.P. Current 918 977 726 526 724 712 698 593 654 134 588 19 490 52 475 99 438 86 426 15 407 27 374 67 356 67 350 66 330 132 318 55 313 67 304 30 297 204 296 106 293 87 287 209 280 77 255 255 250 70 67 32 % Gas 83% 28% 35% 74% 13% 15% 12% 21% 18% 28% 75% 11% 34% 13% 15% 17% 4% 6% 46% 48% 1% 49% 94% 12% 18% 13% Depth (Meters) Msrd. Vt. 2,304 1,405 2,606 1,380 2,951 1,378 2,266 1,371 3,251 1,778 3,251 1,795 2,252 858 3,555 2,367 2,360 836 3,649 2,722 3,466 2,175 1,806 730 2,455 834 2,059 831 2,213 825 2,257 868 2,216 854 2,123 835 3,532 2,048 3,430 2,080 2,175 849 3,623 2,345 3,477 2,213 2,041 853 2,300 856 1,625 863 Confidential Status?
800 Peak I.P. Rate (Boe/d) 700 600 500 400 300 200 100 0
1400 1200 1000 800 600 400 200 0
Distribution by Peak 30-Day I.P. Rate HORIZONTAL Viking Wells

Distribution Curve
(Boe/d)
50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850 900 950 1000 1050 1100 1150 1200 1250 1300 1350 1400 1450
Well Count
Viking - YOY Actual Results - All Producers
Viking - Actual Results - All Producers By Area
250 225 200 Prod. Rate (Boe/d) 175 150 125 100 75 50 25 0 0 3
ALL Viking Hz Wells Average Per Well Production

2008 (47 Wells) 2009 (37 Wells) 2010 (424 Wells) 2011 (758 Wells) 2012 (211 Wells) Prod. Rate (boe/d)
250 225 200 175 150 125 100 75 50 25 0
ALL PRODUCERS By Area - Viking Hz Wells Average Per Well Production

Central Alberta (31 Wells) Provost (227 Wells) Redwater (187 Wells) SW SASK (1005 Wells)
Horn River Mon tney

24
2008 (47 Wells) 2009 (37 Wells) 2010 (424 Wells) 2011 (758 Wells) 2012 (211 Wells) Median Mean (Average) Top/Bottom Quartile
Count
150
300
VET
21
24
21
243
A m ar an th
Viking - Sub-Area Map (Circa August, 2012)
Ba kk en (U S)
Ba rn et t

Viking Oil
244
Duvernay
Viking - Generic Type Curves
Viking - YOY Actual Results - All Producers Viking HZ Wells - Type Curves
A m ar an th
150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0 0 3 6
High Case: 125 Boe/d IP, 125 MBoe recovery Prod. Rate (Boe/d) Mid Case: 70 Boe/d IP, 75 MBoe recovery Low Case: 30 Boe/d IP, 35 MBoe recovery
150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0 0 3
ALL Viking Hz Wells Average Per Well Production
Prod. Rate (boe/d)
Ba kk en (U S)
Ba rn et t
6 9 12 15 18 Months on Production (normalized) 21 24
24
27
30
Viking - YOY Actual Results - SW SASK
Viking - YOY Actual Results - REDWATER
150 140 130 120 110 Prod. Rate (Boe/d) 100 90 80 70 60 50 40 30 20 10 0 0 3
SW SASK - Viking Hz Wells Average Per Well Production
150 140 130 120 Prod. Rate (Boe/d) 110 100 90 80 70
RED WATER - Viking Hz Wells Average Per Well Production
Duvernay
Lower drilling costs for the Viking in SW Saskatchewan allow economics to remain competitive with other tight oil plays, despite the area's lower productivity.
While HZ Viking wells at Red Water have been more productive than those in SW Saskatchewan, the resource potential at Redwater is somewhat smaller.
Viking Oil
60 50 40 30 20 10 0 0 3 6 9 12 15 18 Months on Production (normalized) 21 24
Viking - YOY Actual Results - CENTRAL ALBERTA
Viking - YOY Actual Results - PROVOST, AB
300 280 260 240 220 200 Prod. Rate (Boe/d) 180 160 140 120 100 80 60 40 20 0 0 3
CENTRAL ALBERTA - Viking Hz Wells Average Per Well Production
150 140 130 120 110 100 Prod. Rate (Boe/d) 90 80 70 60 50 40 30 20 10 0 0 3
PROVOST AB - Viking Hz Wells Average Per Well Production
2010 (14 Wells) 2011 (10 Wells) 2012 (7 Wells) Recent wells drilled by Glencoe (private) at Chigwell, and by NAL at Caroline represent the best Viking wells drilled to-date. We will be watching follow up wells in these areas closely to establish repeatability.
2010 (45 Wells) 2011 (136 Wells) 2012 (46 Wells) While less known, we consider the Provost pool to be the most interesting emerging Viking sub-area (owing to its ariel extent, the high productivity of its initial wells). Recent activity has begun to test the prospectivity of the southern part of the play.
Horn River Mon tney
21
24
VET
21
24
21
24
245
Hor n Rive r
Montney
VET
Viking Oil
Barnett
Bakken (US)
Amaranth
D uv er na y
Hor n Rive r
Montney
VET
Viking Oil
Barnett
Bakken (US)
Amaranth
D uv er na y
A m ar an th
Methodology: New Tools For A New Ball Game Welcome To The Matrix
Our price targets are set close to our Risked NAV which we define as our CORE NAV (2P booked reserves) + a companys Risked upside potential.
B ak ke n (U S)
B ar ne tt
Ea gl ef or d
Fa ye tt ev ill e
As plays improve their scores in the criteria outlined in our developmental and geological/asset frameworks, the plays become de-risked and shift from tier 5 towards tier 1, receiving greater credit in our Risked NAV.
Methodology
Our de-risking tiers correlate with cascading risking percentages which are applied to drilling inventories on a year-by-year basis. Our risking not only becomes more punitive in the higher risking tiers (where riskier plays are placed) but also is more punitive for wells drilled into the future. The additional time risking in each tier is incremental to our 9% discount rate, and is justified by basic assumptions such as the notion that companies drill their best wells first, down-spacing wells are typically less productive, and, empirically, investors are less inclined to pay for wells drilled 5 years from now than for wells expected to be drilled in a year. Source: CIBC World Markets Inc.
VET
248
Methodology: Putting The Pieces Together Our Risked NAV Roll-up

NET ASSET VALUE SUMMARY (9% disc. rate; base commodity prices)
RISKED & UNRISKED UPSIDE (Unbooked Prospects)
Unrisked Total Upside Risked Upside (incremental) ("Bluesky") (4) Unbooked Prospects : (C$/share) (%) (C$/share)(C$/share) (%) Cardium - (AB) Colorado/Viking (AB/SK) Amaranth (MB) Seal - Cold Prod. (AB) Seal - Thermal (AB) Carbonates (AB) Cordova Embayment(5) TOTAL UPSIDE $6.26 $3.15 $3.08 $2.37 $2.45 $3.30 $0.69 $21.30 29% 15% 14% 11% 12% 16% 3% 100% $9.99 $7.25 $3.48 $6.10 $12.25 $7.53 $0.69 $39.07 $16.25 $10.40 $6.55 $8.47 $14.70 $10.84 $1.38 $68.59 24% 15% 10% 12% 21% 16% 2% 100%
$15.41
A m ar an th
Risked NAV SENSITIVITY - Penn West Exploration

Risked NAV
$17.96
Commodity Price (+/- 20%)
CORE NAV (Booked Reserves)
Core NAV summary.
Risked and UnRisked upside summary (by play). Risked NAV Bluesky (unrisked) NAV Target multiple: Near-term production growth (shown to the right) is the greatest factor in determining whether or not a company receives a premium or a discounted target multiple. Target Price Key assumptions: key assumptions for each play include NPV/well, prospective net sections, wells per section, initial wells per year, and optimal wells per year.
Proved + Probable Res. (2) Undeveloped Land Long Term Debt Other Assets and Liab. (3) CORE NAV
$19.21 $0.89 ($7.37) ($0.54) $12.20
Ultimate Recovery (+/- 20%)
$9.60
$10.80
Capital Costs (+/- 20%)
$2.64
$4.34
B ak ke n (U S)
NAV & Price Target Summary

CORE NAV Risked Upside RISKED NAV Unrisked Upside (Incr.) "BLUESKY" NAV $12.20 $21.30 $33.50 $39.07 $72.56 Risked NAV Less Forecast Dist'ns Price Target Multiple (6) PRICE TARGET Current Price Forecast Return $33.50 ($1.08) $32.42 0.9x $29.00 $18.35 64%
Our $29.00/share target price is based on a discounted 0.9x multiple to Penn West's Risked NAV (vs. the group avg. of 1.0x). We award a discounted multiple to Penn West primarily due to the company's lower than average production per share growth profile.
Operating Costs (+/- 20%)
$2.52
$4.21
Wells per Year (+/- 20%)
$1.72
$3.80
Core NAV Risked Upside
$16
$20
$24
$28
$32
$36
$40
$44
$48
$52
B ar ne tt
Current Price
Price Target
Cardium - (AB)
NPV/well - Midcycle ($M) Risking Tier (1 to 5)
Drilling Inventory
A-Tax 4.1 B-Tax 4.6 2 1040 80% 832 4 330 2998 1073 115 325 5 9 B-Tax 2.0 3 1170 60% 702 8 280 5336 1486 145 350 5 15 B-Tax 4.0 2 115 100% 115 12 276 1104 485 145 150 5 7 B-Tax 7.2 3 258 50% 129 12 1548 377 10 80 5 19 B-Tax 42.0 4 258 50% 129 4 516 70 1 25 5 21
RISK timeline (TIER 2) 75% 60% 50% 40% 30% 30% 30% 30% Unconstrained Pace Undiscounted Discounted (wells/yr) (wells/yr) 2998 325 325 325 325 325 325 325 325 2998 2998 Total Company Pace RISKED Bluesky (wells/yr) (wells/yr) 115 86 168 101 220 110 273 109 325 98 325 98 325 98 325 98 1073 2998
Risked Valuation
Unconstrained Pace Undiscounted Discounted NPV/yr ($M) NPV/yr ($M) $13,734 $1,366 $1,253 $1,150 $1,055 $968 $888 $736 $675 $13,734 $8,837 Undiscounted Discounted $26.18/boe $16.84/boe $29.04/sh $18.69/sh Company Pace RISKED Bluesky NPV/yr ($M) NPV/yr ($M) $483 $363 $646 $388 $778 $389 $884 $354 $968 $290 $888 $266 $736 $221 $675 $202 $7,683 $2,960 Bluesky RISKED $14.64/boe $5.64/boe $16.25/sh $6.26/sh
Impact of Risking
Included in Valuation $35.00 $29.04 $30.00 $25.00 $18.69 Impact Relative NPVs $16.25 $20.00 ($/share) (%) (%) $15.00 Undiscounted $29.04 ### $6.26 $10.00 Discounted $18.69 ### -36% $5.00 Bluesky $16.25 ### -13% $0.00 Risked $6.26 ### -61%
Assumptions:
ou nt ed
co un te d
Bl ue s
nd isc
Initial # Wells/yr (company) Optimal # Wells per Year Years to Optimal Pace Optimal Years to Dev. Inventory
Resource (MMBoe) (UnRisked) (Risked)
525
188
UNCONSTRAINED (not in valuation)
D is
COMPANY
Colorado/Viking (AB/SK)
Drilling Inventory
Risked Valuation
Unconstrained Pace Undiscounted Discounted NPV/yr ($M) NPV/yr ($M) $10,916 $657 $603 $553 $507 $465 $427 $356 $326 $10,916 $5,576 Undiscounted Discounted (C$/boe) $27.28/boe $13.93/boe (C$/share) $23.08/sh $11.79/sh Company Pace RISKED Bluesky NPV/yr ($M) NPV/yr ($M) $272 $163 $338 $169 $391 $156 $433 $130 $465 $116 $427 $107 $356 $89 $326 $82 $4,920 $1,490 Bluesky RISKED $12.29/boe $3.72/boe $10.40/sh $3.15/sh
Impact of Risking
$25.00 $20.00
UNCO NSTR COMP (C$/share) AINE ANY D
Assumptions:
A-Tax 1.9
$23.08
Relative NPVs ($/share) $23.08 $11.79 $3.15
Included in Valuation
De-risking Tier: it is at this step that we integrate our risk ranking from our matrix on the preceding page.
co un te d
ou nt ed
Bl ue s
Un di s
400
111
i sc
COMPANY
Amaranth (MB)
Assumptions:
NPV/well - Midcycle ($M) Risking Tier (1 to 5) A-Tax 3.7
YEAR 1 2 3 4 5 6 7 8 RISK timeline (TIER 2) 75% 60% 50% 40% 30% 30% 30% 30%
Drilling Inventory
Unconstrained Pace Undiscounted Discounted (wells/yr) (wells/yr) 1104 150 150 150 150 150 150 150 54 1104 1104 Total Company Pace RISKED Bluesky (wells/yr) (wells/yr) 145 109 146 88 148 74 149 60 150 45 150 45 150 45 67 20 485 1104
Risked Valuation
Impact of Risking
Included in Valuation $10.00 $9.42 $9.00 $8.00 $6.59 $6.55 $7.00 Relative NPVs Impact $6.00 $5.00 ($/share) (%) (%) $3.08 $4.00 Undiscounted $9.42 ### $3.00 Discounted $6.59 ### -30% $2.00 $1.00 Bluesky $6.55 ### -1% $0.00 Risked $3.08 ### -53%
Inventory / Pace of Development: the companys pace of development and the risked inventory included in our valuation are shown here.
co un te d
ou nt ed
Bl ue s
Un di s
p
138
61
i sc
COMPANY
Seal - Cold Prod. (AB)

Drilling Inventory
Risked Valuation
Impact of Risking
$25.00 $20.00
Assumptions:
A-Tax 6.7
$23.63
Relative NPVs ($/share) $23.63 $10.59 $8.47 $2.37
Included in Valuation
ou nt ed
Value of risked and unrisked inventory.
Bl ue sk
sc o
577
152
nd i
Di sc
COMPANY
Seal - Thermal (AB)

Assumptions:
NPV/well - Midcycle ($M) Risking Tier (1 to 5) A-Tax 37.6
YEAR 1 2 3 4 5 6 7 8 RISK timeline (TIER 4) 40% 30% 25% 20% 15% 15% 15% 15%
Drilling Inventory
Unconstrained Pace Undiscounted Discounted (wells/yr) (wells/yr) 516 25 25 25 25 25 25 25 25 516 500 Total Company Pace RISKED Bluesky (wells/yr) (wells/yr) 1 0 7 2 13 3 19 4 25 4 25 4 25 4 25 4 70 440
Risked Valuation
Impact of Risking
Included in Valuation $50.00 $45.85 $45.00 $40.00 $35.00 Relative NPVs Impact $30.00 ($/share) (%) $25.00 $19.20 (%) $14.70 $20.00 Undiscounted $45.85 ### $15.00 Discounted $19.20 ### -58% $10.00 $2.45 $5.00 Bluesky $14.70 ### -23% $0.00 Risked $2.45 5% -83%
O
Impact of risking: the impact of our different layers of risking is illustrated here, as is the value per unit included in our valuation for each play.
co un te d
ou nt ed
Bl ue sk y
U nd is
Initial # Modules per year Optimal # Modules per Year Years to Optimal Pace Optimal Years to Dev. Inventory
1,672
264
i sc
COMPANY
R i sk
Net Sections Prospectivity Prospective Sections Wells per Section Booked (or producing) Locations Max Well Inv. (less booked loc.) RISKED Well Inventory
C O M PA
(C$/share) C
U N
YEAR 1 2 3 4 5 6 7 8
$15.00 $10.00 Undiscounted

Discounted $5.00 Bluesky
Impact
$10.59 (%) (%)

### ### ### ### -55% -20% -72%
$8.47 $2.37
$0.00 Risked
un te d
ed
i sk ed
R is
ky
ke d
Ri s
YEAR 1 2 3 4 5 6 7 8
$15.00 $10.00 Undiscounted

Discounted $5.00
$11.79
(%) ### ### ### ###
Impact (%) $10.40 -49% -12% -70%
YEAR 1 2 3 4 5 6 7 8
Ea gl ef or d
UNCO NSTR (C$/share) COMP AINE ANY D
ky
is k
ed
$3.15
Bluesky $10.40
$0.00Risked
Fa ye tt ev ill e
ky
ke d
Methodology VET
249
Comparative Valuations
250
Exhibit 52. Senior E&P Valuations
CIBC Price Deck

Current Price Canadian Integrateds Cenovus Energy Husky Energy Imperial Oil Ltd Suncor Energy Average Canadian Large Caps Canadian Natural Resources Encana (USD) Nexen Talisman Energy (USD) Average Oil Sands Pure Plays Canadian Oil Sands Connacher Oil & Gas MEG Energy Average $20.99 $0.45 $40.00 $18.00 $0.90 $50.00 SU Spec-SP SO -14% 100% 25% 6.0% 0.0% 0.0% 128% 71% 125% 120% 50% 78% 113% 27% 56% $32.34 $26.86 $45.28 $31.57 $40.00 $29.00 $44.00 $42.00 SO SP SU SO 24% 8% -3% 33% 2.7% 4.5% 1.0% 1.6% 113% 105% 127% 88% 81% 88% 108% 77% 68% 64% 80% 64% Target Price Target Rating Target Return Dividend Yield Price / Price / ~ Base NAV Risked NAV Price / Unrisked NAV
2011 EV / DACF 2011 2012E 2013E 2014E 2015E 2016E
2011 P/EPS 2011 2012E 2013E 2014E 2015E 2016E
2011 Free Cash Flow Yield - % 2011 2012E 2013E 2014E 2015E 2016E
7.7x 5.0x 9.6x 5.6x 7.0x
7.0x 6.6x 9.7x 6.0x 7.3x
7.5x 6.9x 9.1x 6.2x 7.4x
7.1x 5.9x 9.4x 6.0x 7.1x
6.7x 5.6x 7.3x 5.8x 6.3x
5.8x 5.3x 6.9x 5.6x 5.9x
19.8x 11.6x 11.5x 8.8x 12.9x
16.0x 15.9x 11.9x 10.7x 13.6x
15.7x 15.6x 12.3x 11.7x 13.8x
14.6x 12.7x 12.9x 11.7x 13.0x
13.3x 11.8x 10.1x 10.9x 11.5x
11.6x 11.2x 10.0x 10.5x 10.8x
3% 0% 1% 12% 4%
2% -1% -3% 3% 0%
2% 0% -1% 0% 0%
1% 5% 0% 0% 2%
2% 4% 4% 1% 3%
4% 4% 4% 1% 3%
$30.15 $22.15 $25.43 $13.22
$34.00 $23.00 $27.50 $18.00
SO SP SU SO
13% 4% 8% 36%
1.4% 3.6% 0.8% 2.0%
104% 273% 150% 129%
89% 92% 126% 68%
75% 33% 80% 38%
6.1x 5.1x 7.2x 5.5x 6.0x
6.9x 5.3x 6.0x 5.5x 5.9x
6.1x 8.4x 5.1x 5.5x 6.3x
5.3x 7.1x 5.4x 5.2x 5.7x
4.9x 6.1x 4.6x 4.7x 5.1x
4.2x 5.8x 5.0x 4.5x 4.9x
13.1x 40.8x 15.0x 22.5x 22.9x
19.3x 18.9x 30.1x 34.7x 25.7x
14.6x 53.9x 27.5x 37.8x 33.4x
11.5x 19.9x 26.7x 22.0x 20.0x
10.1x 15.2x 19.2x 18.9x 15.9x
8.6x 12.1x 28.5x 16.0x 16.3x
1% -6% 2% -13% -4%
-2% 0% 2% -5% -1%
-1% -3% 2% -2% -1%
1% -1% 1% -2% 0%
2% -3% 7% -1% 1%
7% -5% 5% -1% 1%
5.4x 25.3x 25.5x 18.7x 2011
7.8x 11.6x 48.9x 22.8x
11.6x 8.9x 32.2x 17.5x
9.0x 8.7x 14.9x 10.9x
8.6x 7.1x 11.9x 9.2x
8.7x 6.4x 13.5x 9.6x
8.9x nm nm 8.9x 2011
13.0x nm nm 13.0x
18.0x nm 185.8x 101.9x
14.6x nm 36.6x 25.6x
14.3x nm 23.1x 18.7x
13.7x nm 26.4x 20.1x
12% 0% -7% 2% 2011
2% -9% -21% -9%
-3% 1% 2% -2% -116% -93% -18% -15% -15% -8% -44% -35%
9% -58% -16% -22%
Sensitivity Based on Current Forward Strip

Current Price Canadian Integrateds Cenovus Energy Husky Energy Imperial Oil Ltd Suncor Energy Average Canadian Large Caps Canadian Natural Resources Encana (USD) Nexen Talisman Energy (USD) Average Oil Sands Pure Plays Canadian Oil Sands Connacher Oil & Gas MEG Energy Average $20.99 $0.45 $40.00 $18.00 $0.90 $50.00 SU Spec-SP SO -14% 100% 25% 6.0% 0.0% 0.0% 118% 55% 121% 111% 42% 76% 105% 25% 55% $30.15 $22.15 $25.43 $13.22 $34.00 $23.00 $27.50 $18.00 SO SP SU SO 13% 4% 8% 36% 1.4% 3.6% 0.8% 2.0% 100% nm 141% 133% 87% 196% 122% 76% 74% 58% 83% 45% $32.34 $26.86 $45.28 $31.57 $40.00 $29.00 $44.00 $42.00 SO SP SU SO 24% 8% -3% 33% 2.7% 4.5% 1.0% 1.6% 110% 105% 123% 85% 79% 88% 105% 74% 67% 65% 81% 62% Target Price Target Rating Target Return Dividend Yield Price / Price / Base NAV Risked NAV Price / Unrisked NAV
EV / DACF 2011 2012E 2013E 2014E 2015E 2016E 2011
P/EPS 2012E 2013E 2014E 2015E 2016E 2011
Free Cash Flow Yield - % 2012E 2013E 2014E 2015E 2016E
7.7x 5.0x 9.6x 5.6x 7.0x
6.9x 6.3x 9.2x 5.5x 7.0x
7.2x 6.6x 8.6x 5.6x 7.0x
6.6x 5.6x 8.7x 5.4x 6.6x
6.3x 5.5x 6.8x 5.4x 6.0x
5.6x 5.3x 6.6x 5.3x 5.7x
19.8x 11.6x 11.5x 8.8x 12.9x
15.7x 14.6x 11.3x 9.7x 12.8x
14.5x 14.8x 11.5x 10.5x 12.8x
13.1x 12.0x 11.8x 10.3x 11.8x
12.5x 11.9x 9.6x 10.2x 11.0x
11.3x 11.9x 9.8x 10.2x 10.8x
3% 0% 1% 12% 4%
2% -1% -2% 4% 1%
2% 0% 0% 1% 1%
2% 5% 1% 2% 2%
3% 4% 5% 2% 3%
4% 4% 5% 2% 4%
6.1x 5.1x 7.2x 5.5x 6.0x
6.4x 5.4x 5.7x 5.4x 5.7x
5.6x 10.4x 4.8x 5.3x 6.5x
4.8x 9.7x 5.0x 5.0x 6.1x
4.6x 8.3x 4.5x 4.8x 5.5x
4.0x 8.1x 4.9x 4.8x 5.5x
13.1x 40.8x 15.0x 22.5x 22.9x
15.8x 19.3x 24.0x 31.7x 22.7x
12.4x nm 21.8x 30.5x 21.6x
10.0x nm 22.2x 20.1x 17.4x
9.5x 39.8x 18.0x 20.5x 22.0x
8.5x 27.5x 29.8x 20.4x 21.5x
1% -6% 2% -13% -4%
-1% 0% 3% -4% 0%
1% -6% 3% -1% -1%
2% -6% 2% -2% -1%
2% -8% 8% -1% 0%
7% -10% 5% -3% 0%
5.4x 25.3x 25.5x 18.7x
7.2x 10.6x 44.8x 20.9x
9.8x 7.8x 29.5x 15.7x
7.9x 7.0x 13.5x 9.5x
7.8x 5.2x 11.1x 8.0x
8.2x 5.1x 13.0x 8.8x
8.9x nm nm 8.9x
11.7x nm nm 11.7x
13.9x nm 119.5x 66.7x
11.8x nm 21.6x 16.7x
12.4x nm 14.9x 13.7x
12.6x nm 17.6x 15.1x
12% 0% -7% 2%
3% -5% -20% -8%
-2% 2% 3% 3% -105% -82% -18% -14% -14% -5% -39% -31%
9% -47% -16% -18%
VET
Methodology
Fayetteville
Eagleford
Barnett
Bakken (US)
Amaranth
Exhibit 53. Senior E&P Forecasted CFPS And EPS Sensitivities
VET
Methodology
Fayetteville
Eagleford
Barnett
Bakken (US)
Amaranth
CIBC Price Deck

Canadian Integrateds Cenovus Energy Husky Energy Imperial Oil Ltd Suncor Energy Average Canadian Large Caps Canadian Natural Resources Encana (USD) Nexen Talisman Energy (USD) Average Oil Sands Pure Plays Canadian Oil Sands Connacher Oil & Gas MEG Energy Average
2011 2011 $4.32 $5.63 $4.70 $6.17 2012E $4.88 $4.43 $4.84 $5.74 CFPS (Diluted) 2013E 2014E $4.70 $4.48 $5.21 $5.72 $5.09 $5.24 $5.11 $5.84 2015E $5.50 $5.52 $6.45 $6.14 2016E $6.25 $5.88 $6.59 $6.45 T+2 4% -11% 5% -4% -1% CAGR T+5 8% 1% 7% 1% 4%
2011 2011 $1.64 $2.31 $3.95 $3.59 2012E $2.02 $1.69 $3.79 $2.95 Operating EPS (Diluted) 2013E 2014E $2.06 $1.72 $3.67 $2.69 $2.22 $2.11 $3.50 $2.71 2015E $2.44 $2.28 $4.49 $2.89 2016E $2.79 $2.39 $4.52 $3.01 T+2 12% -14% -4% -13% -5% CAGR T+5 11% 1% 3% -3% 3%
$5.94 $5.60 $4.49 $3.33
$5.43 $4.90 $5.02 $3.12
$6.31 $3.70 $5.72 $3.05
$7.29 $4.60 $5.44 $3.38
$7.90 $5.03 $5.94 $3.74
$8.80 $5.71 $5.31 $4.02
3% -19% 13% -4% -3%
8% 0% 3% 4% 3%
$2.30 $0.54 $1.70 $0.59
$1.56 $1.17 $0.85 $0.38
$2.07 $0.41 $0.93 $0.35
$2.61 $1.12 $0.95 $0.60
$2.97 $1.45 $1.32 $0.70
$3.49 $1.83 $0.89 $0.83
-5% -13% -26% -23% -17%
9% 28% -12% 7% 8%
$3.92 $0.09 $1.54
$2.80 $0.05 $0.97
$2.09 $0.09 $1.70
$2.69 $0.13 $4.07
$2.79 $0.24 $5.55
$2.74 $0.32 $5.37
-27% -3% 5% -9%
-7% 28% 28% 17%
$2.35 ($0.20) $0.55
$1.61 ($0.22) ($0.01)
$1.16 ($0.16) $0.22
$1.44 ($0.13) $1.09
$1.46 ($0.09) $1.73
$1.53 ($0.09) $1.51
-30% nm -38% -34%
-8% nm 22% 7%
2011

2011 Canadian Integrateds Cenovus Energy Husky Energy Imperial Oil Ltd Suncor Energy Average Canadian Large Caps Canadian Natural Resources Encana (USD) Nexen Talisman Energy (USD) Average Oil Sands Pure Plays Canadian Oil Sands Connacher Oil & Gas MEG Energy Average $3.92 $0.09 $1.54 $3.00 $0.07 $1.05 $2.44 $0.11 $1.84 $3.04 $0.19 $4.42 $3.02 $0.29 $5.91 $2.86 $0.37 $5.52 -21% 9% 9% -1% -6% 32% 29% 18% $5.94 $5.60 $4.49 $3.33 $5.81 $4.86 $5.23 $3.18 $6.71 $3.06 $5.96 $3.15 $7.74 $3.54 $5.64 $3.45 $8.12 $3.90 $6.03 $3.67 $8.90 $4.41 $5.31 $3.79 6% -26% 15% -3% -5% 8% -5% 3% 3% 0% $4.32 $5.63 $4.70 $6.17 $4.95 $4.62 $5.07 $6.13 $4.91 $4.58 $5.51 $6.12 $5.40 $5.38 $5.46 $6.27 $5.68 $5.51 $6.69 $6.37 $6.35 $5.74 $6.71 $6.56 7% -10% 8% 0% 1% 8% 0% 7% 1% 4% 2012E CFPS (Diluted) 2013E 2014E 2015E 2016E T+2 CAGR T+5
2011 2011 $1.64 $2.31 $3.95 $3.59 2012E $2.06 $1.84 $4.00 $3.26 Operating EPS (Diluted) 2013E 2014E $2.23 $1.81 $3.95 $3.02 $2.47 $2.24 $3.82 $3.08 2015E $2.58 $2.27 $4.72 $3.09 2016E $2.87 $2.26 $4.64 $3.11 T+2 17% -11% 0% -8% -1% CAGR T+5 12% 0% 3% -3% 3%
$2.30 $0.54 $1.70 $0.59
$1.91 $1.15 $1.06 $0.42
$2.43 ($0.07) $1.17 $0.43
$3.02 $0.32 $1.15 $0.66
$3.16 $0.56 $1.41 $0.64
$3.56 $0.80 $0.85 $0.65
3% nm -17% -14% -9%
9% 8% -13% 2% 2%
$2.35 ($0.20) $0.55
$1.79 ($0.22) $0.05
$1.51 ($0.14) $0.33
$1.78 ($0.09) $1.86
$1.69 ($0.05) $2.68
$1.66 ($0.05) $2.27
-20% nm -22% -21%
-7% nm 33% 13%
Exhibit 54. Senior E&P Forecasted Capital Spending Sensitivities
CIBC Price Deck

2011 2011 $2,744 $5,278 $3,974 $6,876 Capital Expenditures ($mm) 2012E 2013E 2014E 2015E $3,257 $4,680 $5,245 $7,455 $3,118 $4,483 $4,817 $8,926 $3,669 $3,812 $4,369 $8,858 $3,615 $4,229 $3,980 $9,066 2016E $3,805 $4,567 $3,974 $9,345
2011 2011 $3,276 $4,823 $4,009 $9,746 Cash Flow From Continuing Operations ($mm) 2012E 2013E 2014E 2015E $3,699 $3,862 $4,135 $8,941 $3,555 $4,359 $4,459 $8,893 $3,848 $5,105 $4,373 $9,084 $4,158 $5,374 $5,512 $9,545 2016E $4,723 $5,721 $5,634 $10,022
2011 2011 0.8x 1.1x 0.9x 0.4x 0.8x Reinvestment Ratio (Net Capex / Cash Flow) 2012E 2013E 2014E 2015E 0.9x 1.2x 1.2x 0.8x 1.0x 0.9x 1.0x 1.1x 1.0x 1.0x 1.0x 0.7x 1.0x 1.0x 0.9x 0.9x 0.8x 0.7x 0.9x 0.8x 2016E 0.8x 0.8x 0.7x 0.9x 0.8x
$6,183 $4,578 $2,569 $4,289
$6,501 $3,784 $3,043 $3,763
$6,981 $4,519 $2,851 $3,259
$7,693 $3,918 $2,821 $3,673
$8,092 $4,424 $2,276 $3,768
$7,480 $5,046 $2,290 $4,154
$6,279 $4,135 $2,368 $3,434
$5,899 $3,611 $2,687 $3,200
$6,924 $2,725 $3,137 $3,016
$7,988 $3,387 $2,987 $3,348
$8,661 $3,707 $3,258 $3,702
$9,652 $4,205 $2,915 $3,978
1.0x 0.7x 0.9x 1.3x 1.0x
1.1x 0.3x 0.9x 0.4x 0.7x
1.0x 1.2x 0.9x 1.1x 1.1x
1.0x 1.1x 0.9x 1.1x 1.0x
0.9x 1.1x 0.7x 1.0x 0.9x
0.8x 1.2x 0.8x 1.0x 0.9x
$643 $158 $856
$1,124 $49 $1,799
$1,334 $42 $1,759
$1,249 $295 $1,999
$1,115 $293 $2,254
$466 $260 $2,353
$1,897 $41 $296
$1,353 $24 $193
$1,013 $38 $339
$1,303 $60 $813
$1,351 $106 $1,108
$1,324 $143 $1,072
0.3x 1.0x 2.9x 1.4x
0.8x 1.7x 9.3x 3.9x
1.3x 1.1x 5.2x 2.5x
1.0x 4.9x 2.5x 2.8x
0.8x 2.8x 2.0x 1.9x
0.4x 1.8x 2.2x 1.5x
2011.0x

2011 Canadian Integrateds Cenovus Energy Husky Energy Imperial Oil Ltd Suncor Energy Average Canadian Large Caps Canadian Natural Resources Encana (USD) Nexen Talisman Energy (USD) Average Oil Sands Pure Plays Canadian Oil Sands Connacher Oil & Gas MEG Energy Average $643 $158 $856 $1,124 $49 $1,798 $1,334 $42 $1,759 $1,249 $295 $1,999 $1,115 $293 $2,253 $466 $260 $2,352 $6,183 $4,578 $2,569 $4,289 $6,500 $3,784 $3,042 $3,763 $6,978 $4,519 $2,849 $3,259 $7,687 $3,918 $2,820 $3,673 $8,084 $4,424 $2,276 $3,766 $7,470 $5,046 $2,292 $4,153 $2,744 $5,278 $3,974 $6,876 $3,257 $4,679 $5,245 $7,451 $3,118 $4,481 $4,817 $8,918 $3,669 $3,811 $4,369 $8,856 $3,615 $4,230 $3,980 $9,066 $3,805 $4,564 $3,974 $9,347 Capital Expenditures ($mm) 2012E 2013E 2014E 2015E 2016E
2011 2011 $3,276 $4,823 $4,009 $9,746 Cash Flow From Continuing Operations ($mm) 2012E 2013E 2014E 2015E $3,750 $4,043 $4,327 $9,551 $3,712 $4,463 $4,713 $9,512 $4,082 $5,235 $4,666 $9,747 $4,292 $5,367 $5,724 $9,908 2016E $4,801 $5,588 $5,736 $10,194
2011 2011 0.8x 1.1x 0.9x 0.4x 0.8x Reinvestment Ratio (Net Capex / Cash Flow) 2012E 2013E 2014E 2015E 0.9x 1.2x 1.2x 0.8x 1.0x 0.8x 1.0x 1.0x 0.9x 1.0x 0.9x 0.7x 0.9x 0.9x 0.9x 0.8x 0.8x 0.7x 0.9x 0.8x 2016E 0.8x 0.8x 0.7x 0.9x 0.8x
$6,279 $4,135 $2,368 $3,434
$6,320 $3,580 $2,803 $3,256
$7,359 $2,251 $3,270 $3,116
$8,483 $2,606 $3,093 $3,413
$8,908 $2,872 $3,308 $3,630
$9,760 $3,247 $2,916 $3,753
1.0x 0.7x 0.9x 1.3x 1.0x
1.0x 0.3x 0.9x 0.4x 0.6x
1.0x 1.5x 0.9x 1.0x 1.1x
0.9x 1.4x 0.9x 1.1x 1.1x
0.9x 1.4x 0.7x 1.0x 1.0x
0.8x 1.5x 0.8x 1.1x 1.0x
$1,897 $41 $296
$1,453 $30 $210
$1,179 $49 $367
$1,470 $84 $882
$1,460 $128 $1,181
$1,386 $165 $1,101
0.3x 1.0x 2.9x 1.4x
0.8x 1.4x 8.5x 3.6x
1.1x 0.9x 4.8x 2.3x
0.9x 3.5x 2.3x 2.2x
0.8x 2.3x 1.9x 1.7x
0.3x 1.6x 2.1x 1.3x
VET
Methodology
Fayetteville
Eagleford
Barnett
Bakken (US)
Amaranth
Exhibit 55. Senior E&P Forecasted Balance Sheet Sensitivities
VET
Methodology
Fayetteville
Eagleford
Barnett
Bakken (US)
Amaranth
CIBC Price Deck

2011 2011 $3,032 $2,260 $5 $6,976 2012E $3,453 $3,219 $1,653 $5,657 Net Debt - $mm 2013E 2014E $3,723 $4,544 $2,409 $6,613 $4,209 $4,420 $2,803 $7,271 2015E $4,331 $4,444 $1,669 $7,738 2016E $4,079 $4,457 $408 $8,072
2011 2011 24% 11% 0% 15% 13% 2012E 25% 15% 9% 12% 15% Net Debt / Debt + Equity 2013E 2014E 25% 19% 12% 13% 16% 25% 18% 12% 13% 17% 2015E 24% 18% 6% 13% 15% 2016E 21% 17% 1% 13% 12%
2011 2011 0.9x 0.4x 0.0x 0.7x 0.5x 2012E 0.9x 0.7x 0.4x 0.6x 0.7x Net Debt / Cash Flow 2013E 2014E 1.0x 1.0x 0.5x 0.7x 0.8x 1.1x 0.9x 0.6x 0.8x 0.9x 2015E 1.0x 0.8x 0.3x 0.8x 0.7x 2016E 0.9x 0.8x 0.1x 0.8x 0.6x
$8,537 $7,351 $3,538 $4,481
$9,870 $5,452 $2,745 $3,649
$10,624 $6,689 $2,609 $4,165
$10,789 $7,602 $2,550 $4,757
$10,680 $8,700 $1,673 $5,090
$8,968 $10,122 $1,155 $5,532
27% 31% 30% 31% 30%
29% 39% 23% 27% 30%
29% 45% 22% 30% 31%
27% 47% 21% 32% 32%
25% 49% 14% 32% 30%
20% 51% 10% 33% 28%
1.4x 1.8x 1.5x 1.3x 1.5x
1.7x 1.5x 1.0x 1.2x 1.3x
1.5x 2.5x 0.8x 1.4x 1.6x
1.4x 2.2x 0.9x 1.4x 1.5x
1.2x 2.3x 0.5x 1.4x 1.4x
0.9x 2.4x 0.4x 1.4x 1.3x
$412 $829 $24
$919 $839 $1,668
$1,780 $806 $3,119
$2,233 $1,041 $4,305
$2,241 $1,228 $5,451
$2,249 $1,345 $6,732
8% 66% 1% 25%
16% 72% 29% 39%
27% 73% 44% 48%
31% 82% 50% 54%
29% 86% 54% 57%
30% 90% 58% 59%
0.2x 20.2x 0.1x 6.8x
0.7x 34.6x 8.6x 14.6x
1.8x 21.0x 9.2x 10.7x
1.7x 17.3x 5.3x 8.1x
1.7x 11.6x 4.9x 6.0x
1.7x 9.4x 6.3x 5.8x
2,011.0x

2011 Canadian Integrateds Cenovus Energy Husky Energy Imperial Oil Ltd Suncor Energy Average Canadian Large Caps Canadian Natural Resources Encana (USD) Nexen Talisman Energy (USD) Average Oil Sands Pure Plays Canadian Oil Sands Connacher Oil & Gas MEG Energy Average $412 $829 $24 $820 $825 $1,637 $1,515 $777 $3,040 $1,801 $995 $4,183 $1,809 $1,167 $5,290 $1,817 $1,266 $6,563 $8,537 $7,351 $3,538 $4,481 $9,347 $5,494 $2,573 $3,585 $9,609 $7,210 $2,264 $3,996 $9,346 $8,896 $2,143 $4,529 $9,069 $10,820 $1,276 $4,941 $7,291 $13,193 $796 $5,613 $3,032 $2,260 $5 $6,976 $3,353 $2,998 $1,460 $4,931 $3,441 $4,190 $1,963 $5,200 $3,729 $3,968 $2,064 $5,274 $3,753 $4,032 $719 $5,477 $3,446 $4,197 ($645) $5,705 2012E Net Debt - $mm 2013E 2014E 2015E 2016E
2011 2011 24% 11% 0% 15% 13% 2012E 24% 14% 8% 11% 14% Net Debt / Debt + Equity 2013E 2014E 23% 18% 9% 10% 14% 23% 16% 9% 10% 14% 2015E 21% 16% 3% 10% 11% 2016E 18% 16% -2% 9% 8%
3-Jul-05 2011 0.9x 0.4x 0.0x 0.7x 0.5x 2012E 0.9x 0.7x 0.3x 0.5x 0.6x Net Debt / Cash Flow 2013E 2014E 0.9x 0.9x 0.4x 0.5x 0.7x 0.9x 0.8x 0.4x 0.5x 0.7x 2015E 0.9x 0.8x 0.1x 0.6x 0.6x 2016E 0.7x 0.8x -0.1x 0.6x 0.5x
27% 31% 30% 31% 30%
27% 39% 22% 27% 29%
26% 48% 19% 29% 30%
24% 54% 17% 30% 31%
21% 59% 11% 32% 31%
17% 64% 7% 34% 30%
1.4x 1.8x 1.5x 1.3x 1.5x
1.5x 1.5x 0.9x 1.1x 1.3x
1.3x 3.2x 0.7x 1.3x 1.6x
1.1x 3.4x 0.7x 1.3x 1.6x
1.0x 3.8x 0.4x 1.4x 1.6x
0.7x 4.1x 0.3x 1.5x 1.6x
8% 66% 1% 25%
15% 71% 29% 38%
23% 71% 43% 46%
25% 79% 48% 51%
24% 83% 52% 53%
24% 85% 55% 55%
0.2x 20.2x 0.1x 6.8x
0.6x 27.0x 7.8x 11.8x
1.3x 15.8x 8.3x 8.5x
1.2x 11.8x 4.7x 5.9x
1.2x 9.1x 4.5x 4.9x
1.3x 7.7x 6.0x 5.0x
Exhibit 56. Senior E&P Forecasted Production Profiles

2011 Canadian Integrateds Cenovus Energy Husky Energy Imperial Oil Ltd Suncor Energy Average Canadian Large Caps Canadian Natural Resources Encana Nexen Talisman Energy Average Oil Sands Pure Plays Athabasca Oil Sands Canadian Oil Sands Connacher Oil & Gas MEG Energy Average 0 106,088 14,519 26,524 2,081 106,649 13,381 28,149 10,700 108,016 14,552 34,513 19,050 111,873 16,547 68,100 31,800 115,731 18,547 80,072 45,713 115,731 23,400 76,069 34% 0% 0% 0% 0% 66% 100% 100% 100% 100% nm 1% 0% 14% 5% nm 2% 10% 23% 12% nm 100% 97% 100% 0% 100% 98% 100% 0% 100% 98% 100% 51% 100% 98% 100% 75% 100% 98% 100% 87% 100% 99% 100% 598,245 523,064 202,687 426,219 677,116 540,725 197,402 437,666 743,433 559,812 230,465 422,514 818,100 545,657 224,962 457,222 863,736 551,375 233,133 478,197 934,310 575,205 213,188 504,401 31% 94% 16% 60% 50% 69% 6% 84% 40% 50% 11% 3% 7% 0% 5% 9% 2% 1% 3% 4% 23% 90% 8% 24% 29% 91% 10% 32% 31% 92% 11% 39% 34% 93% 11% 45% 35% 94% 14% 51% 39% 95% 16% 55% 243,492 312,501 300,137 545,923 260,488 303,148 304,177 557,110 282,087 338,438 360,943 635,466 317,203 386,221 371,027 705,577 345,173 406,624 453,668 721,580 395,906 433,242 476,277 750,690 38% 32% 14% 9% 23% 62% 68% 86% 91% 77% 8% 4% 10% 8% 7% 10% 7% 10% 7% 8% 27% 90% 78% 62% 32% 91% 78% 67% 34% 92% 81% 67% 40% 93% 82% 71% 44% 94% 85% 71% 49% 95% 86% 76% 2012E Total Company Production (boe/d) 2013E 2014E 2015E 2012E 2016E % Gas % Oil T+2 CAGR T+5 2011 Long-Life Production (as % of Total) 2012E 2013E 2014E 2015E 2016E
VET
Methodology
Fayetteville
Eagleford
Barnett
Bakken (US)
Amaranth
Exhibit 57. Oil Sands Pure Plays Valuation Metrics

Current Price Oil Sands Pure Plays Athabasca Oil Sands Canadian Oil Sands Connacher Oil & Gas MEG Energy Petrobank (HBU) Average $12.78 $20.99 $0.45 $40.00 $0.00 $17.00 $18.00 $0.90 $50.00 $2.50 SO SU Spec-SP SO SO 33% -14% 100% 25% nm $5,106 $10,171 $202 $7,773 nm $5,813 ($750) $412 $829 $24 $74 $118 $4,356 $10,583 $1,031 $7,797 nm $5,942 $3.56 $16.45 $0.64 $32.12 $1.81 359% 128% 71% 125% nm $18.12 $17.51 $0.89 $51.10 $2.49 71% 120% 50% 78% nm $48.88 $18.57 $1.66 $71.36 $5.61 26% 113% 27% 56% nm nm 5.4x 25.3x 25.5x nm nm 7.8x 11.6x 48.9x nm nm 11.6x 8.9x 32.2x nm 26.4x 9.0x 8.7x 14.9x nm 14.0x 8.6x 7.1x 11.9x nm 11.3x 8.7x 6.4x 13.5x nm $0.50 $1.81 ($0.18) $0.32 ($0.34) $0.42 $0.73 $0.40 $0.24 $0.69 $0.41 $0.49 Target Price Target Rating Target Return Market Cap ($MM) Net Debt 2011 ($MM) EV ($MM) Base NAV Price/ Base NAV Risked NAV Price/ Risked NAV Unrisked NAV Price/ Unrisked NAV 2011 2012E EV / DACF 2013E 2014E 2015E 2016E EV / Undeveloped Bbl Current Px Target Px
Exhibit 58. Oil Sands Pure Plays Operating Metrics

Resources (MMBbls) 2P Oil Sands Pure Plays Athabasca Oil Sands Canadian Oil Sands Connacher Oil & Gas MEG Energy Petrobank (HBU) Average 339 1,860 502 1,919 0 10,400 1,800 223 3,716 nm 10,739 3,660 725 5,635 nm 100% 0% 100% 100% 0 2,081 10,700 106,088 106,649 108,016 14,519 13,381 14,552 26,524 28,149 34,513 0 350 1,441 19,050 111,873 16,547 68,100 18,601 31,800 115,731 18,547 80,072 19,501 45,713 115,731 23,400 76,069 18,901 nm 1% 0% 14% nm 5% nm 2% 10% 23% nm 12% ($0.07) $3.92 $0.09 $1.54 ($0.16) ($0.05) $2.80 $0.05 $0.97 ($0.06) $0.20 $2.09 $0.09 $1.70 $0.20 $0.54 $2.69 $0.13 $4.07 $0.45 $1.04 $2.79 $0.24 $5.55 $0.58 $1.51 $2.74 $0.32 $5.37 $0.48 nm -27% -3% 5% nm -9% nm -7% 28% 28% nm 17% Best Estimate Contingent 2P + 2C % SAGD 2011 2012E Production (Bbls/d) 2013E 2014E 2015E 2016E CAGR T+2 T+5 2011 2012E CFPS 2013E 2014E 2015E 2016E T+2 CAGR T+5
Exhibit 59. Oil Sands Pure Plays Liquidity and NAV Sensitivities
CAPEX 2011 Oil Sands Pure Plays Athabasca Oil Sands Canadian Oil Sands Connacher Oil & Gas MEG Energy Petrobank (HBU) $610 $643 $40 $856 $169 ($757) $1,124 $42 $1,791 $43 $1,199 $2,942 $49 $2,392 ($125) ($135) ($81) $24 $163 ($175) $13.17 $4.02 ($0.45) $27.41 $5.09 $14.64 $9.20 ($0.01) $35.88 $5.09 $16.11 $14.08 $0.38 $43.40 $7.94 $17.43 $18.53 $0.80 $50.69 $10.43 $18.70 $22.63 $1.21 $57.53 $12.78 $19.83 $26.45 $1.55 $63.70 $14.77 $30.16 $5.08 $0.05 $38.46 $9.60 $35.06 $10.26 $0.53 $50.14 $15.24 $40.23 $15.14 $0.97 $60.43 $20.17 $45.01 $19.59 $1.51 $70.61 $24.80 $49.58 $23.70 $2.05 $80.14 $28.72 $53.79 $27.52 $2.51 $88.68 $32.35 2012E Available Liquidity 2012E 2013E $60.00 $70.00 Risked NAV $80.00 $90.00 $100.00 $110.00 $60.00 $70.00 Unrisked NAV $80.00 $90.00 $100.00 $110.00
VET
Methodology
Fayetteville
Eagleford
Barnett
Bakken (US)
Amaranth
Exhibit 60. Intermediate E&Ps Investment Ratings And Valuation

Symbol Share Price 08/13/12 52-Week High Low Shares O/S (M) Market Cap ($M) Enterprise Value ($M) Total Senior Debt Notes Conv. Debs. Enterprise Value Total Debt/CF 2012E Total Debt/CF 2013E Total Cur. Avail ($M) Bank Credit Lines Drawn (%) Drawn ($M) Current Current 2012E Target Price Expected Return Rating Analyst
ARC ARX Baytex BTE Bonavista BNP Bonterra BNE Crescent Point CPG Eagle EGL.UN Enerplus ERF Freehold FRU Longview LNV Parallel PLT.UN Perpetual PMT Pengrowth PGF Penn West PWT PetroBakken PBN Peyto PEY Progress PRQ Trilogy TET Twin Butte TBE Vermilion VET Total/Average - INTERMEDIATES Total/Average - JUNIORS Total/Average
$23.27 $44.09 $17.06 $47.20 $41.10 $9.73 $14.49 $19.30 $6.35 $6.26 $1.13 $6.76 $14.14 $12.72 $20.76 $22.33 $23.79 $2.56 $46.00
$26.74 $59.40 $27.49 $57.40 $47.30 $11.74 $30.95 $21.59 $11.05 $9.40 $3.17 $11.48 $22.22 $18.29 $26.33 $23.00 $39.47 $3.00 $50.96
$18.36 $38.54 $13.76 $38.75 $35.51 $7.95 $11.67 $14.51 $5.89 $5.20 $0.55 $5.92 $12.51 $6.04 $14.62 $9.44 $20.23 $1.28 $38.62
291.5 118.9 168.6 19.7 327.1 27.9 197.3 65.4 46.8 50.3 147.1 500.4 474.6 187.9 143.9 234.6 116.3 192.0 98.3
$6,784 $5,243 $2,876 $932 $13,444 $271 $2,859 $1,263 $297 $315 $166 $3,383 $6,711 $2,390 $2,987 $5,238 $2,766 $492 $4,523 $4,307 $528 $3,313
$713.3 $760 $375.1 $445 $1,121.3 $557 $133.4 $0 $1,592.4 $838 $36.5 $0 $1,400.2 $791 $25.1 $0 $118.8 $0 $201.1 $57 $319.5 $147 $1,932.1 $959 $4,066.0 $1,974 $1,567.2 $874 $505.4 $100 $471.6 $0 $605.3 $0 $163.0 $0 $524.1 $222 $1,095 $548 $109 $12 $835 $407
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $85 $238 $0 $300 $0 $400 $0 $0 $0 $73 $0 $54
$7,497 $5,618 $3,997 $1,065 $15,036 $308 $4,260 $1,288 $416 $516 $486 $5,315 $10,777 $3,957 $3,492 $5,709 $3,371 $655 $5,047 $5,402 $636 $4,148
R 0.8x 3.0x 2.1x R 1.0x 2.5x 0.4x 2.0x 5.6x 6.6x 3.9x 3.7x 2.9x 2.4x 3.9x 1.5x 1.5x 1.2x 2.9x 2.1x 2.6x
P/CF (x) 2012E
$1,025 $700 $1,000 $120 $2,100 $49 $1,000 $210 $200 $175 $140 $1,250 $3,000 $1,400 $700 $650 $600 $240 $950
-$181 -$134 $476 $76 $583 $24 $369 $23 $112 $134 $81 $474 $1,717 $213 $475 $47 $567 $121 $230
R -19% 48% 63% R 49% 37% 11% 56% 76% 58% 38% 57% 15% 68% 7% 95% 51% 24% 41% 49% 43%
Core P+P NAV ($/sh)
R -7% 55% 93% R 41% 31% 15% 57% 75% 45% 15% 68% 33% 96% 27% 71% 73% 52% 48% 52% 49%
Risked NAV ($/sh) Unrisked NAV ($/sh)
R $46.00 $22.00 $49.00 R $12.00 $14.50 $20.00 $9.00 $6.25 $2.00 $8.00 $18.50 $18.00 $26.00 $22.00 $34.00 $2.65 $48.00
R 10% 37% 10% R 34% 8% 10% 51% 14% 77% 25% 38% 49% 29% 0% 45% 14% 9% 28% 25% 27%
P/Risked NAV
R SP SO SP R SO SU SP SP SO SO SP SO SO SO SP SO SP SP
Kaliel Kaliel Kaliel Kaliel Kaliel Gill Kaliel Gill Grayfer Gill Kaliel Kaliel Kaliel Kaliel Kaliel Kaliel Kaliel Grayfer Kaliel Kaliel Gill/Grayfer
EV/ Prd'n ($/boe/d) EV/P+P Reserves ($/boe)
Cash Dist'n/Dividends ($ per Share) 2012E 2013E
Cash Yield 2012E
2013E
Cash Flow from Operations ($ per Share, basic) Per Share Growth 2011A 2012E 2013E 2012E 2013E
2013E
EV/DACF (x) 2012E 2013E
P/Core NAV
P/Bluesky NAV
ARC ARX Baytex BTE Bonavista BNP Bonterra BNE Crescent Point CPG Eagle EGL.UN Enerplus ERF Freehold FRU Longview LNV Parallel PLT.UN Perpetual PMT Pengrowth PGF Penn West PWT PetroBakken PBN Peyto PEY Progress PRQ Trilogy TET Twin Butte TBE Vermilion VET Total/Average - INTERMEDIATES Total/Average - JUNIORS Total/Average
Price Forecast Crude Oil (US$/bbl) Nymex Gas (US$/mcf) Natural Gas (C$/mcf) F/X (US$/C$) 2011A
R $2.64 $1.44 $3.12 R $1.05 $1.53 $1.58 $0.60 $0.89 $0.00 $0.66 $1.08 $0.96 $0.72 $0.40 $0.42 $0.16 $2.28
R $2.64 $1.44 $3.12 R $1.05 $1.08 $1.44 $0.60 $0.72 $0.00 $0.48 $1.08 $0.96 $0.72 $0.40 $0.42 $0.18 $2.28
R 6.0% 8.4% 6.6% R 10.8% 10.6% 8.2% 9.4% 14.1% 0.0% 9.8% 7.6% 7.5% 3.5% 1.8% 1.8% 6.2% 5.0% 5.7% 9.8% 6.9%
2014E
R 6.0% 8.4% 6.6% R 10.8% 7.5% 7.5% 9.4% 11.5% 0.0% 7.1% 7.6% 7.5% 3.5% 1.8% 1.8% 7.0% 5.0% 5.2% 9.2% 6.4%
Long-term
R $4.79 $3.44 $5.27 R $1.11 $3.19 $2.14 $1.60 $0.67 $0.52 $1.87 $3.29 $3.79 $2.36 $0.99 $1.89 $0.44 $5.22
R $4.26 $2.13 $4.04 R $1.76 $3.17 $1.29 $1.24 $0.76 $0.37 $1.23 $2.41 $3.14 $2.27 $0.65 $2.75 $0.59 $5.23
R $4.17 $2.36 $4.80 R $1.76 $3.79 $1.31 $1.30 $0.92 $0.46 $1.35 $2.74 $3.66 $3.27 $0.97 $4.23 $0.50 $5.59
R -11.0% -38.2% -23.4% R 58.7% -0.7% -40.0% -22.4% 12.9% -28.6% -34.3% -26.7% -17.1% -4.0% -34.0% 45.6% 33.1% 0.1% -14.4% 8.5% -7.6%
R -2.2% 11.1% 18.8% R 0.0% 19.8% 1.6% 4.9% 21.5% 24.9% 9.8% 13.7% 16.5% 44.3% 48.5% 53.7% -15.6% 6.9% 22.1% 2.5% 16.4%
R $14.96 $9.00 $15.00 R $9.02 $10.44 $7.69 $8.03 $8.54 $2.03 $4.32 $6.64 $8.13 $9.32 $2.08 $6.44 $1.73 $28.43
R $42.73 $22.45 $46.01 R $11.95 $16.54 n.a. $9.24 $7.09 $2.72 $8.33 $22.06 $23.79 $25.36 $11.54 $31.49 $2.46 $40.73
R $82.70 $48.83 $70.14 R $17.89 $33.08 n.a. $9.90 $8.49 $4.61 $14.51 $48.15 $31.54 $46.31 $26.23 $82.97 $2.77 $58.29
R 295% 190% 315% R 108% 139% 251% 79% 73% 56% 156% 213% 156% 223% 1075% 369% 148% 162% 279% 132% 236%
R 103% 76% 103% R 81% 88% n.a. 69% 88% 42% 81% 64% 53% 82% 193% 76% 104% 113% 89% 86% 88%
R 53% 35% 67% R 54% 44% n.a. 64% 74% 25% 47% 29% 40% 45% 85% 29% 92% 79% 48% 71% 54%
R $104,030 $58,140 $157,822 R $106,170 $51,166 $155,179 $65,497 $83,857 $22,859 $60,918 $62,838 $87,452 $76,338 $123,442 $91,110 $46,069 $129,420 $85,461 $91,354 $87,194
R $22.28 $11.71 $25.89 R $40.12 $13.23 $58.05 $10.99 $16.65 $6.04 $16.12 $14.99 $19.60 $10.83 $17.65 $38.06 $18.38 $34.52 $19.24 $28.84 $22.06
CIBC Base Assumptions 2012E 2013E
$95.05 $4.03 $3.66 $1.01
$90.00 $2.70 $2.39 $0.99
$87.50 $3.75 $3.43 $0.98
$85.00 $4.50 $4.08 $0.98
$85.00 $4.75 $4.34 $0.98
Notes: Shares outstanding, net debt, and convertible debentures are based on most recent information adjusted for any equity issues or acquisitions. Debt-to-cash flow (D/CF) ratios are based on estimated 2012E year-end debt and 2012E cash flow. Ratio of enterprise value to proved plus probable (P+P) reserves based on YE/11 reserve estimates adjusted for 2012 acquisitions YTD. Ratio of enterprise value to daily production is based on 2012E estimated production. Total debt includes convertible debentures as debt. Cash dividends per share are based on the actual shares outstanding at the time of each dividend. Cash flow from operations per share is based on the weighted average of shares outstanding during the fiscal year. Core NAV is based on a blowdown analysis of P+P reserves, using a 9% after-tax discount rate, and is net of G&A, mgmt. fees, and abandonment costs. Risked NAV = Core NAV + Risked Unbooked Value. Bluesky NAV = Core NAV + Unrisked Unbooked Value. Ratings: SO=Sector Outperformer, SP=Sector Performer, SU=Sector Underperformer, R=Restricted. Source: Company reports; CIBC estimates.
VET
Methodology
Fayetteville
Eagleford
Barnett
Bakken (US)
Amaranth
Exhibit 61. Intermediate E&Ps Key Operating Statistics

Gross Revenue ($/boe) Netback Analysis ($/boe) - 2012E Hedging ($/boe) Royalties ($/boe) (%) Operating Costs ($/boe) Operating Netback ($/boe) CFPS Sensitivity (2012E) Oil Gas FX (US$5.00 (C$1.00 (US/CAD /bbl) /mcf) $0.05) % Total Volume Hedged Gain/ Loss (% of CF) % Vol Hedged 2012E Hedging Oil Avg Flr. (US$/Bbl) Nat. Gas % Vol Avg Flr. Hedged (C$/Mcf) Capital Expenditure Analysis (2012E) CapEx Funded Via Dev. % of CapEx Cash Cash Equity Bank ($M) Flow Flow (DRIP) Debt 2013E Payout Ratios Total Total (incl. DRIP) Sustainable
VET
Methodology
Fayetteville
Eagleford
Barnett
Bakken (US)
Amaranth
Basic
ARC Baytex Bonavista Bonterra Crescent Point Eagle Enerplus Freehold Longview Parallel Perpetual Pengrowth Penn West PetroBakken Peyto Progress Trilogy Twin Butte Vermilion INTERMEDIATES JUNIORS Total/Average
R $46.76 $30.89 $57.45 R $84.19 $42.27 $46.71 $58.57 $34.53 $22.71 $43.91 $51.05 $67.45 $21.92 $19.06 $35.45 $48.76 $73.61 $42.71 $54.55
R $3.54 $0.22 $0.00 R $1.08 $1.29 $0.00 $0.46 $2.83 $3.43 $1.75 $0.76 $0.02 $3.13 ($0.03) ($0.02) $6.99 ($0.55) $1.13 $2.27 $1.46
R ($9.41) ($5.07) ($5.75) R ($23.60) ($8.59) ($1.89) ($11.83) ($6.87) ($1.74) ($9.08) ($9.56) ($9.90) ($2.11) ($1.73) ($5.07) ($10.97) ($3.96) ($6.00) ($11.03) ($7.48)
R 20% 16% 10% R 28% 20% 4% 20% 20% 8% 21% 19% 15% 10% 9% 14% 22% 5% 14% 19% 15%
R ($12.06) ($9.14) ($15.30) R ($12.95) ($10.31) ($4.17) ($19.50) ($7.11) ($10.80) ($14.21) ($17.27) ($12.31) ($1.94) ($5.79) ($7.76) ($18.50) ($12.71) ($10.80) ($12.45) ($11.28)
Oil (bbl/d)
R $28.83 $16.90 $36.40 R $48.72 $24.65 $40.65 $27.70 $23.38 $13.60 $22.37 $24.98 $45.25 $21.00 $11.51 $22.60 $26.28 $56.40 $27.04 $33.34 $28.89
2013E Production Gas (mmcf/d)
R 3.7% 3.5% 4.9% R 26.4% 2.4% 13.7% n.a. 43.7% 3.6% 2.4% 1.3% 6.2% 1.8% 2.5% 6.5% 9.3% 4.7% 3.6% 23.3% 8.5%
Total (boe/d)
R 1.1% 6.8% 3.0% R 0.0% 6.4% 5.3% n.a. 17.1% 2.0% 5.6% 3.9% 1.0% 9.8% 19.9% 14.2% 4.5% 1.5% 6.3% 6.7% 6.4%
R 6.0% 4.3% 5.4% R 26.6% 6.7% 13.8% n.a. 44.0% 4.2% 2.4% 2.5% 6.1% 2.8% 4.7% 9.9% 9.4% 6.2% 5.1% 23.5% 9.7%
R 29% 36% 0% R 20% 33% 0% 0% 18% 72% 28% 41% 46% 38% 45% 10% 25% 33% 34% 13% 28%
R 59% 3% 0% R 5% 20% 0% 2% 13% 18% 13% 10% 0% 37% 0% 0% 18% -8% 13% 8% 11%
R 31% 47% 0% R 40% 45% 0% 0% 157% 56% 45% 56% 53% 0% 0% 24% 30% 44% 33% 45% 37%
R $97.97 $83.41 --R n.a. $96.22 n.a. n.a. n.a. $84.25 $93.40 $85.53 ------$90.66 $83.83 $83.16 $89.32 $83.83 $88.71
R 21% 29% 0% R 0% 21% 0% 0% 5% 75% 8% 14% 0% 43% 52% 0% 0% 7% 23% 1% 16%
R $5.18 $2.93 --R n.a. --n.a. n.a. n.a. $3.31 $4.26 $4.30 --$3.86 $4.00 ----$2.74 $3.82 n.a. $3.82
R $400 $375 $65 R $42 $850 $30 $46 $24 $65 $525 $1,525 $875 $450 $270 $300 $70 $450 $6,150 $212 $6,362
R R 79% 49% 104% 39% 82% 28% R R 98% 41% 137% 38% 36% -63% 80% 64% 66% -25% 119% 84% 96% 48% 133% 42% 150% 46% 140% 49% 176% 22% 112% 73% 60% 100% 86% 66% 118% 49% 68% 23% 103% 41%
R 21% 20% 0% R 42% 4% 101% 0% 110% 0% 23% 7% 13% 0% 15% 0% 0% 17% 10% 51% 22%
R 30% 41% 72% R 16% 58% 62% 36% 15% 16% 29% 51% 41% 51% 63% 27% 0% 17% 41% 26% 37%
R 63% 53% 65% R 60% 28% 110% 46% 78% 0% 36% 39% 26% 22% 41% 12% 36% 41% 36% 66% 45%
R 138% 140% 134% R 145% 127% 145% 128% 120% 95% 112% 156% 148% 106% 199% 83% 106% 123% 130% 129% 130%
R 118% 118% 134% R 107% 122% 112% 128% 99% 95% 98% 143% 124% 106% 171% 83% 106% 107% 118% 110% 116%
R 39% 12% 47% R 77% 0% 98% 13% 77% 0% 8% 0% 2% 26% 0% 46% 27% 46% 19% 58% 31%
Oil (bbl/d)
2012E Production Gas Total (mmcf/d) (boe/d) (% Gas)
(% Gas)
Gross Production 2012E 2013E
Production Growth Prod. Per Share (PPS) PPS + Dist. Reinvested 2012E 2013E 2012E 2013E
PPS + Dist + Debt Adj'd 2012E 2013E
P+P Reserve Reconciliation (mmboe) - 2011A Opening Develop. Closing Balance Net Drilling Balance YE/09A Acq's & Rev. Prod'n YE/10A
Reserve Life Index (Years) Proved Proved Devp'd Proved + Prob.
ARC Baytex Bonavista Bonterra Crescent Point Eagle Enerplus Freehold Longview Parallel Perpetual Pengrowth Penn West PetroBakken Peyto Progress Trilogy Twin Butte Vermilion INTERMEDIATES JUNIORS Total/Average
R 46,432 27,757 4,694 R 2,865 41,046 5,273 4,890 4,070 3,565 47,377 107,851 38,292 5,477 6,705 15,516 11,625 25,964 370,677 28,722 399,399
R 45.4 246.0 12.3 R 0.2 253.2 18.2 8.8 12.5 106.1 239.2 354.9 38.7 241.6 237.3 128.9 15.5 72.2 1,976 55 2,031
R 54,000 68,750 6,750 R 2,900 83,250 8,300 6,350 6,151 21,250 87,250 171,500 45,250 45,750 46,250 37,000 14,208 39,000 705,999 37,910 743,909
R 14% 60% 30% R 1% 51% 36% 23% 34% 83% 46% 35% 14% 88% 86% 58% 18% 32% 50% 23% 42%
R 50,000 28,503 5,522 R 3,533 45,500 5,056 5,000 5,025 4,000 54,050 116,982 45,131 8,602 6,750 21,000 13,300 29,800 415,840 31,914 447,753
R 45.0 240.0 12.5 R 1.1 258.0 17.1 9.0 14.9 97.5 263.7 339.1 41.2 305.4 262.5 141.0 15.0 71.7 2,078 57 2,135
R 57,500 68,500 7,600 R 3,710 88,500 7,900 6,500 7,500 20,250 98,000 177,500 52,000 59,500 50,500 48,000 15,800 42,750 770,600 41,410 812,010
R 13% 58% 27% R 5% 49% 36% 23% 33% 80% 45% 32% 13% 86% 87% 53% 16% 29% 48% 23% 40%
R 8% -1% 7% R 111% 11% 11% 1% 86% -10% 18% 2% 9% 29% 6% 32% 87% 8% 10% 59% 24%
R 6% 0% 13% R 28% 6% -5% 2% 22% -5% 12% 4% 16% 30% 9% 20% 11% 10% 10% 12% 11%
R 5% -6% 5% R 54% 2% 3% -28% 26% -10% -12% 1% 8% 22% 4% 31% 26% 0% 4% 16% 8%
R 4% -4% 12% R 7% 4% -7% 2% 16% -5% -3% 2% 11% 27% 8% 19% 2% 7% 7% 4% 6%
R 10% 2% 12% R 70% 10% 12% -23% -37% -10% -6% 10% 16% 27% 8% 33% 35% 6% 10% 11% 10%
R 9% 3% 19% R 17% 9% 0% 8% -150% -5% 2% 7% 18% 32% 11% 21% 9% 12% 12% -23% 1%
R 15% 2% 8% R 62% 4% 13% -19% -41% 126% -8% 3% 29% 18% 1% 30% 21% -1% 19% 7% 15%
R 8% 2% 16% R 17% 4% 0% 5% -150% -6% 4% 2% 12% 32% 4% 25% 11% 12% 9% -23% 0%
485.1 229.0 310.7 39.4 379.5 7.1 306.2 23.6 n.a 29.4 80.9 317.5 661.0 169.8 259.7 253.4 78.2 142.3 3,713 60 3,773
(14.6) 11.4 22.4 5.3 (5.1) 0.2 n.a 4.6 (2.0) (0.2) (5.3) (0.9) 2.2 (8.8) (0.2) 4 5 9
132.0 30.0 33.3 4.1 66.9 1.1 48.2 1.0 n.a (2.2) 10.1 39.3 123.3 47.8 73.5 94.6 20.6 17.0 741 (0) 741
(30.1) (18.3) (25.1) (2.3) (26.9) (0.5) (27.5) (2.6) n.a (1.0) (8.5) (26.8) (59.3) (14.8) (12.9) (15.9) (10.2) (12.8) (292) (4) (296)
572.4 252.2 341.4 41.1 424.8 7.7 321.9 22.2 37.9 31.0 80.4 329.7 719.0 201.9 322.4 323.4 88.6 35.6 146.2 4,165 134 4,300
R 3.2 5.4 8.2 R 3.0 6.2 4.9 6.4 13.7 3.4 6.7 6.2 4.2 8.9 5.5 5.5 4.2 4.7 5.7 6.4 5.9
R 8.1 8.7 11.5 R 5.0 7.8 5.0 9.1 19.3 4.5 8.4 8.1 6.8 15.7 11.3 6.2 6.3 7.2 8.7 8.9 8.8
R 13.0 12.7 16.9 R 10.4 11.4 7.8 16.5 22.4 9.0 11.8 11.7 11.5 22.4 19.4 8.6 10.8 10.9 13.3 13.6 13.4
Notes: Per share cash flow sensitivities are based on 2011 estimates and include the impact of hedging activity. Reserve Life Index is calculated using estimated year-end 2011 reserves divided by estimated Q4/11 production (adjusted for 2012 acquisitions YTD). Basic payout ratio is defined as cash dividends divided by cash flow from operations. Total payout ratio is defined as cash dividends plus development capital expenditures divided by each company's cash flow from operations. Total payout ratio (including the DRIP) is defined as cash dividends plus development capital expenditures divided by each company's cash flow from operations plus proceeds from the company's dividend reinvestment program (DRIP). Sustainable payout ratio is defined as a theoretical payout ratio which would yield flat production and be financially self-sustaining (i.e., fund 100% of capex from cash flow while spending sufficient capital to replace 100% of annual production declines). CFPS: Cash flow per share; CF: Cash flow. R=Restricted. Source: Company reports; CIBC estimates.
Exhibit 62. Intermediate E&Ps Base Versus Forward Data

A. Base Pricing Assumptions Share Price ($) 08/13/12 Cash Flow from Operations ($ per Share, basic) Per Share Growth 2011A 2012E 2013E 2012E 2013E 2011A 2012E 2013E CDPS CDPS CDPS P/CF (x) 2012E 2013E EV/DACF (x) 2012E 2013E Cash Yield 2012E 2013E Core NAV ($) Net Asset Value (NAV) Risked P/Core P/Risked NAV ($) NAV NAV 2012E Payout Ratio Basic Total Total Bank Line Debt/CF Drawn 2012E 2012E 1-Yr. Target Price Expected Return Most Recent Dist./Div. ($ per Share) Running Current Annualized Yield
ARC $23.27 Baytex $44.09 Bonavista $17.06 Bonterra $47.20 Crescent Point $41.10 Eagle $9.73 Enerplus $14.49 Freehold $19.30 Longview $6.35 Parallel $6.26 Perpetual $1.13 Pengrowth $6.76 Penn West $14.14 PetroBakken $12.72 Peyto $20.76 Progress $22.33 Trilogy $23.79 Twin Butte $2.56 Vermilion $46.00 Total/Average - INTERMEDIATES Total/Average - JUNIORS Total/Average
R $4.79 $3.44 $5.27 R $1.11 $3.19 $2.14 $1.60 $0.67 $0.52 $1.87 $3.29 $3.79 $2.36 $0.99 $1.89 $0.44 $5.22
R $4.26 $2.13 $4.04 R $1.76 $3.17 $1.29 $1.24 $0.76 $0.37 $1.23 $2.41 $3.14 $2.27 $0.65 $2.75 $0.59 $5.23
R $4.17 $2.36 $4.80 R $1.76 $3.79 $1.31 $1.30 $0.92 $0.46 $1.35 $2.74 $3.66 $3.27 $0.97 $4.23 $0.50 $5.59
R -11.0% -38.2% -23.4% R 58.7% -0.7% -40.0% -22.4% 12.9% -28.6% -34.3% -26.7% -17.1% -4.0% -34.0% 45.6% 33.1% 0.1% -14.4% 8.5% -7.6%
R -2.2% 11.1% 18.8% R 0.0% 19.8% 1.6% 4.9% 21.5% 24.9% 9.8% 13.7% 16.5% 44.3% 48.5% 53.7% -15.6% 6.9% 22.1% 2.5% 16.4%
R $2.42 $1.44 $3.06 R $1.05 $2.16 $1.68 $0.49 $0.63 $0.20 $0.84 $1.08 $0.96 $0.72 $0.40 $0.42 $0.00 $2.28
R $2.64 $1.44 $3.12 R $1.05 $1.53 $1.58 $0.60 $0.89 $0.00 $0.66 $1.08 $0.96 $0.72 $0.40 $0.42 $0.16 $2.28
R $2.64 $1.44 $3.12 R $1.05 $1.08 $1.44 $0.60 $0.72 $0.00 $0.48 $1.08 $0.96 $0.72 $0.40 $0.42 $0.18 $2.28
R 6.0% 8.4% 6.6% R 10.8% 10.6% 8.2% 9.4% 14.1% 0.0% 9.8% 7.6% 7.5% 3.5% 1.8% 1.8% 6.2% 5.0% 5.7% 9.8% 6.9%
R 6.0% 8.4% 6.6% R 10.8% 7.5% 7.5% 9.4% 11.5% 0.0% 7.1% 7.6% 7.5% 3.5% 1.8% 1.8% 7.0% 5.0% 5.2% 9.2% 6.4%
R $14.96 $9.00 $15.00 R $9.02 $10.44 $7.69 $8.03 $8.54 $2.03 $4.32 $6.64 $8.13 $9.32 $2.08 $6.44 $1.73 $28.43
R $42.73 $22.45 $46.01 R $11.95 $16.54 n.a. $9.24 $7.09 $2.72 $8.33 $22.06 $23.79 $25.36 $11.54 $31.49 $2.46 $40.73
R 295% 190% 315% R 108% 139% 251% 79% 73% 56% 156% 213% 156% 223% 1075% 369% 148% 162% 279% 132% 236%
R 103% 76% 103% R 81% 88% n.a. 69% 88% 42% 81% 64% 53% 82% 193% 76% 104% 113% 89% 86% 88%
R 63% 53% 65% R 60% 28% 110% 46% 78% 0% 36% 39% 26% 22% 41% 12% 36% 41% 36% 66% 45%
R 138% 140% 134% R 145% 127% 145% 128% 120% 95% 112% 156% 148% 106% 199% 83% 106% 123% 130% 129% 130%
R -7% 55% 93% R 41% 31% 15% 57% 75% 45% 15% 68% 33% 96% 27% 71% 73% 52% 48% 52% 49%
R $46.00 $22.00 $49.00 R $12.00 $14.50 $20.00 $9.00 $6.25 $2.00 $8.00 $18.50 $18.00 $26.00 $22.00 $34.00 $2.65 $48.00
R 10% 37% 10% R 34% 8% 10% 51% 14% 77% 25% 38% 49% 29% 0% 45% 14% 9% 28% 25% 27%
$0.10 $0.22 $0.12 $0.26 $0.23 $0.09 $0.09 $0.10 $0.05 $0.07 $0.00 $0.04 $0.09 $0.08 $0.06 $0.03 $0.04 $0.02 $0.19
R $2.64 $1.44 $3.12 R $1.05 $1.08 $1.16 $0.60 $0.89 $0.00 $0.48 $1.08 $0.96 $0.72 $0.40 $0.42 $0.27 $2.28
R 6.0% 8.4% 6.6% R 10.8% 7.5% 6.0% 9.4% 14.1% 0.0% 7.1% 7.6% 7.5% 3.5% 1.8% 1.8% 10.5% 5.0% 5.2% 10.2% 6.7%
B. Forward Strip Pricing Assumptions (as at 08/10/12) Share Price ($) 08/13/12 Cash Flow from Operations ($ per Share, basic) Per Share Growth 2011A 2012E 2013E 2012E 2013E 2011A 2012E 2013E CDPS CDPS CDPS P/CF (x) 2012E 2013E EV/DACF (x) 2012E 2013E Cash Yield 2012E 2013E Core NAV ($) Net Asset Value (NAV) Risked P/Core P/Risked NAV ($) NAV NAV 2012E Payout Ratio Basic Total Total Bank Line Debt/CF Drawn 2012E 2012E Implied Target Price Potential Return
Most Recent Dist./Div. ($ per Share) Running Current Annualized Yield
ARC $23.27 Baytex $44.09 Bonavista $17.06 Bonterra $47.20 Crescent Point $41.10 Eagle $9.73 Enerplus $14.49 Freehold $19.30 Longview $6.35 Parallel $6.26 Perpetual $1.13 Pengrowth $6.76 Penn West $14.14 PetroBakken $12.72 Peyto $20.76 Progress $22.33 Trilogy $23.79 Twin Butte $2.56 Vermilion $46.00 Total/Average - INTERMEDIATES Total/Average - JUNIORS Total/Average
Pricing Assumptions:
$2.95 $4.79 $3.44 $5.27 R $1.11 $3.19 $2.14 $1.60 $0.67 $0.52 $1.87 $3.29 $3.79 $2.36 $0.99 $1.89 $0.44 $5.22
R $4.52 $2.29 $4.46 R $1.88 $3.30 $1.42 $1.48 $0.81 $0.41 $1.25 $2.72 $3.46 $2.34 $0.68 $2.44 $0.58 $5.77
R $4.71 $2.51 $5.37 R $1.69 $3.94 $1.31 $1.39 $1.00 $0.45 $1.51 $3.05 $4.14 $3.26 $0.92 $3.78 $0.53 $5.93
R -5.6% -33.3% -15.4% R 70.2% 3.6% -33.8% -7.2% 21.0% -21.7% -33.0% -17.3% -8.8% -1.1% -31.3% 28.8% 30.9% 10.6% -10.4% 16.2% -2.6%
R 4.2% 9.4% 20.3% R -10.4% 19.2% -7.3% -6.1% 23.9% 11.5% 20.5% 12.3% 19.6% 39.4% 35.5% 55.3% -7.8% 2.8% 20.8% -1.5% 14.3%
$1.20 $2.42 $1.44 $3.06 R $1.05 $2.16 $1.68 $0.49 $0.63 $0.20 $0.84 $1.08 $0.96 $0.72 $0.40 $0.42 $0.00 $2.28
R $2.64 $1.44 $3.12 R $1.05 $1.53 $1.56 $0.60 $0.83 $0.00 $0.66 $1.08 $0.96 $0.72 $0.40 $0.42 $0.16 $2.28
R $2.64 $1.44 $3.12 R $1.05 $1.08 $1.44 $0.60 $0.72 $0.00 $0.48 $1.08 $0.96 $0.72 $0.40 $0.42 $0.18 $2.28
R 6.0% 8.4% 6.6% R 10.8% 10.6% 8.1% 9.4% 13.2% 0.0% 9.8% 7.6% 7.5% 3.5% 1.8% 1.8% 6.2% 5.0% 5.7% 9.5% 6.8%
R 6.0% 8.4% 6.6% R 10.8% 7.5% 7.5% 9.4% 11.5% 0.0% 7.1% 7.6% 7.5% 3.5% 1.8% 1.8% 7.0% 5.0% 5.2% 9.2% 6.4%
R $16.59 $8.08 $16.11 R $9.84 $10.32 $8.48 $8.75 $6.85 $0.33 $5.81 $7.35 $9.33 $7.06 $0.58 $5.64 $1.87 $27.02
R $44.21 $19.72 $53.83 R $12.96 $16.56 n.a. $10.07 $7.29 $1.02 $10.58 $24.23 $26.24 $22.00 $6.53 $32.57 $2.69 $39.88
R 266% 211% 293% R 99% 140% 228% 73% 91% 347% 116% 192% 136% 294% 3874% 422% 137% 170% 539% 125% 417%
R 100% 87% 88% R 75% 87% n.a. 63% 86% 111% 64% 58% 48% 94% 342% 73% 95% 115% 106% 80% 99%
R 58% 55% 70% R 56% 46% 110% 41% 101% 0% 53% 40% 28% 31% 59% 17% 28% 39% 41% 67% 49%
R 132% 152% 144% R 125% 178% 143% 109% 174% 108% 165% 158% 161% 167% 228% 123% 89% 119% 153% 128% 146%
R -12% 53% 86% R 32% 28% 14% 56% 80% 42% 68% 55% 35% 94% 26% 78% 74% 46% 50% 51% 50%
R $46.00 $22.00 $49.00 R $12.00 $14.50 $20.00 $9.00 $6.25 $2.00 $8.00 $18.50 $18.00 $26.00 $22.00 $34.00 $2.65 $48.00
R 10% 37% 10% R 34% 8% 10% 51% 14% 77% 25% 38% 49% 29% 0% 45% 14% 9% 28% 25% 27%
R $0.22 $0.12 $0.26 R $0.09 $0.09 $0.10 $0.05 $0.07 $0.00 $0.04 $0.09 $0.08 $0.06 $0.03 $0.04 $0.02 $0.19
R $2.64 $1.44 $3.12 R $1.05 $1.08 $1.16 $0.60 $0.89 $0.00 $0.48 $1.08 $0.96 $0.72 $0.40 $0.42 $0.27 $2.28
R 6.0% 8.4% 6.6% R 10.8% 7.5% 6.0% 9.4% 14.1% 0.0% 7.1% 7.6% 7.5% 3.5% 1.8% 1.8% 10.5% 5.0% 5.2% 10.2% 6.7%
Crude Oil (US$/bbl) Ed. Par (C$/bbl) Natural Gas (US$/mcf) Natural Gas (C$/mcf) F/X (US$/C$)
$95.05 $95.25 $4.03 $3.66 $1.01
2011A
$90.00 $81.82 $2.70 $2.39 $0.99
CIBC Base Assumptions 2012E 2013E 2014E
$87.50 $80.36 $3.75 $3.43 $0.98
$85.00 $82.40 $4.50 $4.08 $0.98
$85.00 $83.27 $4.75 $4.34 $0.98
LT Crude Oil (US$/bbl) Ed. Par (C$/bbl) Natural Gas (US$/mcf) Natural Gas (C$/mcf) F/X (US$/C$)
$95.05 $95.25 $4.03 $3.65 $1.01
2011A
$95.30 $88.09 $2.71 $2.30 $1.00
Forward Strip 2012E 2013E
$94.70 $87.82 $3.57 $3.13 $1.00
$91.50 $87.11 $3.98 $3.58 $1.00
2014E
Notes: R=Restricted. Source: Bloomberg; Company Reports; CIBC World Markets
VET
Methodology
Fayetteville
Eagleford
Barnett
Bakken (US)
Amaranth
Price Target Calculations

Exhibit 63. Risked NAV Simplified
Source: Company reports and CIB C World Markets I nc.
As illustrated above, our NAV valuation can be broken into three distinct stages (or wedges):
1. Core NAV: The wedge is our Core after-tax NAV, which includes our 2P
reserve valuation. We utilize a 9% discount rate.

2. Risked NAV: The second stage is our Risked NAV, which includes our Core
NAV (2P reserve valuation) as well as the portion of unbooked resource potential that we believe investors should consider paying for today.
3. Bluesky NAV: The third stage is our Bluesky NAV (or Unrisked NAV), which
includes our Risked NAV in addition to the incremental valuation that we believe is realistically obtainable by the company, but not yet concrete enough for investors to pay for today.
Tempering Our Risked NAVs And Setting Our Price Targets

While our price targets are generally in line with our Risked NAVs, in some cases, we have applied a slight premium or a discount to our Risked NAVs, which we view as justifiable by one of three key considerations:
1. Outlook for near-term production per unit growth. 2. Managements track record for positive surprises. 3. Additional prospective plays on the horizon: do we see the potential for other
plays with significant unbooked upside to break into our Risked NAV?
Key Risks To Price Targets

The primary risks to the E&P companies achieving our price targets include commodity price volatility, rising operating costs, and execution on key growth projects. In addition to the aforementioned company-specific and commodity macros risks, there is risk around greenhouse gas (GHG) legislation, in particular for the oil sands due to the relatively high GHG emission intensity. The rig fire and oil spill in the Gulf of Mexico raise risk as to tighter offshore drilling legislation, costs, and potentially longer cycle times. Unconventional gas projects are heavily reliant on fraccing, which uses various fluid types to promote flow rates. There are emerging concerns around the safety of such frac fluids and, as such, there is growing risk of greater regulation of unconventional gas growth.
260
IMPORTANT DISCLOSURES:
Analyst Certification: Each CIBC World Markets research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report. Potential Conflicts of Interest: Equity research analysts employed by CIBC World Markets are compensated from revenues generated by various CIBC World Markets businesses, including the CIBC World Markets Investment Banking Department. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. CIBC World Markets generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. Additionally, CIBC World Markets generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers. In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.
261
Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by CIBC World Markets Inc.:
Stock Prices as of 08/15/2012: Advantage Oil & Gas Ltd. (2g) (AAV-TSX, C$3.26, Sector Performer) Anderson Energy Ltd. (2g) (AXL-TSX, C$0.29, Sector Underperformer) Angle Energy Inc. (2a, 2c, 2e, 2g, 7) (NGL-TSX, C$3.67, Sector Outperformer) ARC Resources Ltd. (2g, 7) (ARX-TSX, C$23.26, Restricted) Arcan Resources Ltd. (2a, 2c, 2e, 2g) (ARN-V, C$1.49, Sector Outperformer) Athabasca Oil Corp. (2g) (ATH-TSX, C$13.05, Sector Outperformer) Baytex Energy Corp. (2a, 2c, 2e, 2g, 7) (BTE-TSX, C$44.88, Sector Performer) Bellatrix Exploration Ltd. (2g) (BXE-TSX, C$3.24, Sector Outperformer) Birchcliff Energy Ltd. (2a, 2c, 2e, 2g) (BIR-TSX, C$7.09, Sector Performer) Bonavista Energy Corporation (2a, 2c, 2e, 2g) (BNP-TSX, C$16.91, Sector Outperformer) Bonterra Energy Corp. (2g) (BNE-TSX, C$45.33, Sector Performer) Canadian Natural Resources Ltd. (2a, 2c, 2d, 2e, 2g, 7, 9) (CNQ-TSX, C$30.56, Sector Outperformer) Canadian Oil Sands Limited (2a, 2b, 2d, 2e, 2g, 7) (COS-TSX, C$21.18, Sector Underperformer) Celtic Exploration Ltd. (2a, 2c, 2e, 2g) (CLT-TSX, C$17.17, Sector Outperformer) Cenovus Energy Inc. (2g, 7, 9) (CVE-TSX, C$32.59, Sector Outperformer) Cequence Energy Ltd. (2a, 2c, 2e, 2g) (CQE-TSX, C$1.24, Sector Performer) Coastal Energy Company (2g) (CEN-TSX, C$14.66, Sector Outperformer) Connacher Oil & Gas Limited (2g) (CLL-TSX, C$0.36, Sector Performer - Speculative) Crescent Point Energy Corp. (2a, 2c, 2e, 2g, 7) (CPG-TSX, C$41.00, Restricted) Crew Energy Inc. (2g) (CR-TSX, C$6.75, Sector Outperformer) Delphi Energy Corp. (2a, 2c, 2e, 2g) (DEE-TSX, C$1.28, Sector Performer) Eagle Energy Trust (2a, 2c, 2e, 2g) (EGL.UN-TSX, C$9.64, Sector Outperformer) Enbridge Inc. (2a, 2c, 2e, 2g, 7, 9) (ENB-TSX, C$39.50, Sector Outperformer) Encana Corporation (2a, 2c, 2d, 2e, 2g, 7, 9) (ECA-NYSE, US$22.42, Sector Performer) Enerplus Corporation (2a, 2c, 2e, 2g, 7) (ERF-TSX, C$14.76, Sector Underperformer) Fairborne Energy Ltd. (2g) (FEL-TSX, C$1.63, Sector Performer) Freehold Royalties Ltd. (2a, 2c, 2e, 2g) (FRU-TSX, C$19.27, Sector Performer) Gran Tierra Energy Inc. (2g) (GTE-TSX, C$4.81, Sector Outperformer) Husky Energy Inc. (2a, 2c, 2e, 2g) (HSE-TSX, C$26.87, Sector Performer) Imperial Oil Limited (2g) (IMO-TSX, C$45.88, Sector Underperformer) Legacy Oil + Gas Inc. (2g, 7) (LEG-TSX, C$6.76, Sector Outperformer) Longview Oil Corp. (2a, 2c, 2e, 2g) (LNV-TSX, C$6.33, Sector Performer) MEG Energy Corp. (2a, 2e, 2g) (MEG-TSX, C$39.48, Sector Outperformer) Nexen Inc. (2a, 2c, 2e, 2g, 7) (NXY-TSX, C$25.40, Sector Underperformer) NuVista Energy Ltd. (2g) (NVA-TSX, C$4.40, Sector Outperformer) Painted Pony Petroleum Ltd. (2a, 2c, 2e, 2g) (PPY-V, C$10.11, Sector Outperformer) Parallel Energy Trust (2a, 2c, 2e, 2g) (PLT.UN-TSX, C$5.75, Sector Outperformer) Paramount Resources Ltd. (2a, 2c, 2e, 2g) (POU-TSX, C$25.24, Sector Performer) Pembina Pipeline Corporation (2g, 7) (PPL-TSX, C$27.05, Sector Outperformer) Pengrowth Energy Corporation (2a, 2c, 2e, 2g) (PGF-TSX, C$6.94, Sector Performer) Penn West Petroleum Ltd. (2g, 7) (PWT-TSX, C$14.04, Sector Outperformer) Perpetual Energy Inc. (2g) (PMT-TSX, C$1.18, Sector Outperformer) PetroBakken Energy Ltd. (2a, 2e, 2g) (PBN-TSX, C$13.01, Sector Outperformer) Petrobank Energy And Resources Ltd. (2g) (PBG-TSX, C$12.16, Sector Outperformer) Peyto Exploration & Development Corp. (2a, 2c, 2e, 2g) (PEY-TSX, C$21.21, Sector Outperformer) Pinecrest Energy Inc. (2g, 7) (PRY-V, C$1.87, Sector Outperformer) Progress Energy Resources Corp. (2g) (PRQ-TSX, C$22.32, Sector Performer)
262
Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by CIBC World Markets Inc.: (Continued)
Stock Prices as of 08/15/2012: RMP Energy Inc. (2a, 2c, 2e, 2g) (RMP-TSX, C$1.76, Sector Performer) Suncor Energy Inc. (2g, 3a, 3c, 7, 9) (SU-TSX, C$31.59, Sector Outperformer) Surge Energy Inc. (2a, 2c, 2e, 2g) (SGY-TSX, C$8.12, Sector Outperformer) Talisman Energy Inc. (2a, 2c, 2e, 2g, 7) (TLM-NYSE, US$13.40, Sector Outperformer) Tourmaline Oil Corp. (2a, 2c, 2e, 2g) (TOU-TSX, C$28.62, Restricted) TransCanada Corp. (2g, 7) (TRP-TSX, C$45.25, Sector Performer) Trilogy Energy Corp. (2a, 2c, 2e, 2g) (TET-TSX, C$24.10, Sector Outperformer) Twin Butte Energy Ltd. (2g, 7) (TBE-TSX, C$2.67, Sector Performer) Vermilion Energy Inc. (2a, 2c, 2e, 2g, 7) (VET-TSX, C$45.89, Sector Performer) Vero Energy Inc. (2g) (VRO-TSX, C$1.87, Sector Performer) WestFire Energy Ltd. (2g) (WFE-TSX, C$3.89, Sector Performer) Whitecap Resources Inc. (2g) (WCP-TSX, C$7.39, Sector Outperformer)
Companies Mentioned in this Report that Are Not Covered by CIBC World Markets Inc.:
Stock Prices as of 08/15/2012: Abu Dhabi National Energy Company (TAQA-DU, [AED]1.24, Not Rated) American Capital Ltd. (ACAS-NASDAQ, US$11.03, Not Rated) Anadarko Petroleum Corp. (APC-NYSE, US$69.29, Not Rated) Apache Corp. (APA-NYSE, US$87.68, Not Rated) Argosy Energy Inc. (GSY-TSX, C$0.24, Not Rated) Arsenal Energy Inc. (AEI-TSX, C$0.46, Not Rated) Artek Exploration Ltd. (RTK-TSX, C$2.00, Not Rated) Atikwa Resources Inc. (ATK-V, C$0.03, Not Rated) Atlas Energy Inc. (ATLS-NYSE, US$34.02, Not Rated) AvenEx Energy Corp. (AVF-TSX, C$2.75, Not Rated) Barnwell Industries, Inc. (BRN-NASDAQ, US$2.99, Not Rated) BG Group PLC (BG-L, p13.23, Not Rated) BHP Billiton (BHP-NYSE, US$68.24, Not Rated) Bill Barrett Corporation (BBG-NYSE, US$22.67, Not Rated) BlackPearl Resources Inc. (PXX-TSX, C$3.31, Not Rated) BNK Petroleum Inc. (BKX-TSX, C$1.06, Not Rated) Border Petroleum Corp. (BOR-V, C$0.16, Not Rated) Bowood Energy Inc. (BWD-V, C$0.06, Not Rated) BP p.l.c. (BP-NYSE, US$42.44, Not Rated) Cabot Oil & Gas Corp. (COG-NYSE, US$42.42, Not Rated) Carrizo Oil & Gas Inc. (CRZO-NASDAQ, US$25.24, Not Rated) Charger Energy Corp. (CHX-V, C$0.57, Not Rated) Cheniere Energy Inc. (LNG-AMEX, US$14.48, Not Rated) Chesapeake Energy Corporation (CHK-NYSE, US$18.87, Not Rated) Chevron Corporation (CVX-NYSE, US$112.49, Not Rated) China Petroleum And Chemical Corporation (SNP-NYSE, US$95.91, Not Rated) Chinook Energy Inc. (CKE-TSX, C$1.48, Not Rated) Chubu Electric Power Company Inc. (9502-T, 986.00, Not Rated) Cimarex Energy Co. (XEC-NYSE, US$61.98, Not Rated)
263
Companies Mentioned in this Report that Are Not Covered by CIBC World Markets Inc.: (Continued)
Stock Prices as of 08/15/2012: CNOOC Ltd. (CEO-NYSE, US$200.41, Not Rated) Compton Petroleum Corporation (CMT-TSX, C$1.24, Not Rated) Comstock Resources, Inc. (CRK-NYSE, US$17.35, Not Rated) Concho Resources Inc. (CXO-NYSE, US$95.60, Not Rated) ConocoPhillips (COP-NYSE, US$57.14, Not Rated) Continental Resources, Inc. (CLR-NYSE, US$72.61, Not Rated) Crocotta Energy Inc. (CTA-TSX, C$2.77, Not Rated) Crosstex Energy LP (XTEX-NASDAQ, US$15.60, Not Rated) DCP MIDSTREAM LP (DPM-NYSE, US$43.08, Not Rated) Deethree Exploration Ltd. (DTX-TSX, C$4.67, Not Rated) Denbury Resources Inc (DNR-NYSE, US$15.44, Not Rated) Devon Energy Corp. (DVN-NYSE, US$58.38, Not Rated) Dow Chemical (DOW-NYSE, US$29.52, Not Rated) DTE Energy Company (DTE-NYSE, US$60.10, Not Rated) Enbridge Energy Partners, L.P. (EEP-NYSE, US$29.61, Not Rated) Energen Corporation (EGN-NYSE, US$52.31, Not Rated) Energy Transfer Partners LP (ETP-NYSE, US$43.75, Not Rated) Eni S.p.A. (E-NYSE, US$43.98, Not Rated) Enterprise Products Partners L (EPD-NYSE, US$52.40, Not Rated) EOG Resources, Inc. (EOG-NYSE, US$110.58, Not Rated) EQT Corp. (EQT-NYSE, US$55.08, Not Rated) Equal Energy Ltd. (EQU-TSX, C$3.31, Not Rated) EXCO Resources, Inc. (XCO-NYSE, US$7.41, Not Rated) ExxonMobil Corporation (XOM-NYSE, US$88.00, Not Rated) Forest Oil Corporation (FST-NYSE, US$7.25, Not Rated) Formosa Plastics Group (1301-TW, [TWD]84.60, Not Rated) GAIL India Ltd. (GAIL-BO, [INR]375.00, Not Rated) GMX Resources Inc. (GMXR-NYSE, US$0.82, Not Rated) Goodrich Petroleum (GDP-NYSE, US$12.82, Not Rated) Guide Exploration Ltd. (GO-TSX, C$1.70, Not Rated) Gulfport Energy Corporation (GPOR-NASDAQ, US$25.55, Not Rated) Harvest Operations Corp. (HTE.DB.G-TSX, C$104.00, Not Rated) Hess (HES-NYSE, US$49.42, Not Rated) Inpex Corp. (1605-T, 472500.00, Not Rated) Insignia Energy Ltd. (ISN-TSX, C$0.70, Not Rated) Kinder Morgan Energy Partners (KMP-NYSE, US$82.41, Not Rated) Kinder Morgan, Inc. (KMI-NYSE, US$34.87, Not Rated) Kodiak Oil & Gas Corp. (KOG-NYSE, US$8.94, Not Rated) Korea Gas Corporation (036460-KS, [KRW]51600.00, Not Rated) Linn Energy, LLC (LINE-NASDAQ, US$39.28, Not Rated) Lone Pine Resources Inc. (LPR-TSX, C$1.34, Not Rated) LyondellBasell Industries NV (LYB-NYSE, US$47.50, Not Rated) Mako Energy Ltd. (MKE-AUS, A$0.06, Not Rated) Manitok Energy Inc. (MEI-V, C$1.86, Not Rated) Marathon Oil Corp. (MRO-NYSE, US$27.25, Not Rated) MarkWest Energy Partners, LP (MWE-AMEX, US$48.70, Not Rated) Mitsubishi Corp (8058-T, 1555.00, Not Rated)
264
Stock Prices as of 08/15/2012: Murphy Oil (MUR-NYSE, US$54.13, Not Rated) National Fuel Gas (NFG-NYSE, US$50.67, Not Rated) Noble Energy Inc. (NBL-NYSE, US$89.71, Not Rated) Oasis Petroleum Inc. (OAS-NYSE, US$30.43, Not Rated) Occidental Petroleum (OXY-NYSE, US$88.99, Not Rated) Oneok Partners LP (OKS-NYSE, US$56.70, Not Rated) Open Range Energy Corporation (ONR-TSX, C$1.53, Not Rated) Osaka Gas Co Ltd (9532-T, 338.00, Not Rated) Pace Oil & Gas Limited (PCE-TSX, C$2.86, Not Rated) PDC Energy Inc. (PDCE-NASDAQ, US$26.63, Not Rated) Penn Virginia Corporation (PVA-NYSE, US$7.41, Not Rated) Petro-Reef Resources Ltd. (PER-TSX, C$0.16, Not Rated) Petronas Gas (PGAS-KL, [MYR]19.92, Not Rated) PetroQuest Energy, Inc. (PQ-NYSE, US$6.46, Not Rated) Pioneer Natural Resources (PXD-NYSE, US$98.01, Not Rated) Plains Exploration & Production Co. (PXP-NYSE, US$40.97, Not Rated) QEP Resources, Inc. (QEP-NYSE, US$26.64, Not Rated) Questerre Energy Corp. (QEC-TSX, C$0.67, Not Rated) Quicksilver Resources Inc. (KWK-NYSE, US$4.08, Not Rated) Range Resources Corp (RRC-NYSE, US$66.75, Not Rated) Redwater Energy Corp. (RED-TSX, C$0.19, Not Rated) Regency Energy Partners LP (RGP-NYSE, US$22.94, Not Rated) Reliance Industries Limited (500325-BO, [INR]780.30, Not Rated) Renegade Petroleum Ltd. (RPL-V, C$2.72, Not Rated) Rosetta Resouces Inc. (ROSE-NASDAQ, US$44.67, Not Rated) Royal Dutch Shell (RDS.A-NYSE, US$70.93, Not Rated) Sandridge Energy (SD-NYSE, US$6.43, Not Rated) Sasol (SSL-NYSE, US$42.30, Not Rated) Second Wave Petroleum Inc. (SCS-TSX, C$0.92, Not Rated) SM Energy Co. (SM-NYSE, US$47.58, Not Rated) Sonde Resources Corp. (SOQ-TSX, C$0.91, Not Rated) Southwestern Energy Co. (SWN-NYSE, US$31.99, Not Rated) Spartan Oil Corp. (STO-TSX, C$3.70, Not Rated) Statoil ASA (STO-NYSE, US$25.18, Not Rated) Storm Resources Ltd. (SRX-V, C$1.70, Not Rated) Sunoco Inc. (SUN-NYSE, US$47.50, Not Rated) Sunoco Logistics Partners LP (SXL-NYSE, US$42.52, Not Rated) Sure Energy Inc. (SHR-TSX, C$0.71, Not Rated) Targa Resources Corp. (TRGP-NYSE, US$42.61, Not Rated) Terra Energy Corp (TT-TSX, C$0.27, Not Rated) Torquay Oil Corp. (TOC.A-V, C$0.18, Not Rated) Total S.A. (TOT-NYSE, US$49.19, Not Rated) Transmontaigne Inc (TLP-NYSE, US$36.82, Not Rated) TriOil Resources Ltd. (TOL-V, C$1.96, Not Rated) Unit Corporation (UNT-NYSE, US$41.20, Not Rated) Waldron Energy Corporation (WDN-TSX, C$0.59, Not Rated) WESTLAKE CHEMICAL CORP (WLK-NYSE, US$66.69, Not Rated)
265
Stock Prices as of 08/15/2012: Whiting Petroleum Corporation (WLL-NYSE, US$44.61, Not Rated) Williams Partners LP (WPZ-NYSE, US$51.04, Not Rated) WPX Energy Inc. (WPX-NYSE, US$14.83, Not Rated) Yangarra Resources Ltd. (YGR-V, C$0.32, Not Rated) Yoho Resources Inc. (YO-V, C$1.83, Not Rated) Zargon Oil & Gas Ltd. (ZAR-TSX, C$8.85, Not Rated) Important disclosure footnotes that correspond to the footnotes in this table may be found in the "Key to Important Disclosure Footnotes" section of this report.
266
Key to Important Disclosure Footnotes:

1 2a 2b 2c 2d 2e 2f 2g 3a 3b 3c 4a 4b 4c 5a 5b 6a 6b 7 8 9 CIBC World Markets Corp. makes a market in the securities of this company. This company is a client for which a CIBC World Markets company has performed investment banking services in the past 12 months. CIBC World Markets Corp. has managed or co-managed a public offering of securities for this company in the past 12 months. CIBC World Markets Inc. has managed or co-managed a public offering of securities for this company in the past 12 months. CIBC World Markets Corp. has received compensation for investment banking services from this company in the past 12 months. CIBC World Markets Inc. has received compensation for investment banking services from this company in the past 12 months. CIBC World Markets Corp. expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months. CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months. This company is a client for which a CIBC World Markets company has performed non-investment banking, securities-related services in the past 12 months. CIBC World Markets Corp. has received compensation for non-investment banking, securities-related services from this company in the past 12 months. CIBC World Markets Inc. has received compensation for non-investment banking, securities-related services from this company in the past 12 months. This company is a client for which a CIBC World Markets company has performed non-investment banking, non-securities-related services in the past 12 months. CIBC World Markets Corp. has received compensation for non-investment banking, non-securities-related services from this company in the past 12 months. CIBC World Markets Inc. has received compensation for non-investment banking, non-securities-related services from this company in the past 12 months. The CIBC World Markets Corp. analyst(s) who covers this company also has a long position in its common equity securities. A member of the household of a CIBC World Markets Corp. research analyst who covers this company has a long position in the common equity securities of this company. The CIBC World Markets Inc. fundamental analyst(s) who covers this company also has a long position in its common equity securities. A member of the household of a CIBC World Markets Inc. fundamental research analyst who covers this company has a long position in the common equity securities of this company. CIBC World Markets Corp., CIBC World Markets Inc., and their affiliates, in the aggregate, beneficially own 1% or more of a class of equity securities issued by this company. An executive of CIBC World Markets Inc. or any analyst involved in the preparation of this research report has provided services to this company for remuneration in the past 12 months. A senior executive member or director of Canadian Imperial Bank of Commerce ("CIBC"), the parent company to CIBC World Markets Inc. and CIBC World Markets Corp., or a member of his/her household is an officer, director or advisory board member of this company or one of its subsidiaries. Canadian Imperial Bank of Commerce ("CIBC"), the parent company to CIBC World Markets Inc. and CIBC World Markets Corp., has a significant credit relationship with this company. The equity securities of this company are restricted voting shares. The equity securities of this company are subordinate voting shares. The equity securities of this company are non-voting shares. The equity securities of this company are limited voting shares.
10 11 12 13 14
267
CIBC World Markets Inc. Price Chart

For price and performance information charts required under NYSE and NASD rules, please visit CIBC on the web at http://apps.cibcwm.com/sec2711 or write to CIBC World Markets Inc., Brookfield Place, 161 Bay Street, 4th Floor, Toronto, Ontario M5J 2S8, Attn: Research Disclosure Chart Request.
CIBC World Markets Inc. Stock Rating System

Abbreviation Rati Stock Ratings SO SP SU NR R O M U NA Sector Outperformer Sector Performer Sector Underperformer Not Rated Restricted Overweight Market Weight Underweight None Stock is expected to outperform the sector during the next 12-18 months. Stock is expected to perform in line with the sector during the next 12-18 months. Stock is expected to underperform the sector during the next 12-18 months. CIBC World Markets does not maintain an investment recommendation on the stock. CIBC World Markets is restricted*** from rating the stock. Sector is expected to outperform the broader market averages. Sector is expected to equal the performance of the broader market averages. Sector is expected to underperform the broader market averages. Sector rating is not applicable. ng Description
Sector Weightings**
**Broader market averages refer to the S&P 500 in the U.S. and the S&P/TSX Composite in Canada. "Speculative" indicates that an investment in this security involves a high amount of risk due to volatility and/or liquidity issues. ***Restricted due to a potential conflict of interest.
Ratings Distribution*: CIBC World Markets Inc. Coverage Universe

(as of 15 Aug 2012) Sector Outperformer (Buy) Sector Performer (Hold/Neutral) Sector Underperformer (Sell) Restricted Count 147 161 29 15 Percent 41.6% 45.6% 8.2% 4.2% Inv. Banking Relationships Sector Outperformer (Buy) Sector Performer (Hold/Neutral) Sector Underperformer (Sell) Restricted Count 145 159 27 15 Percent 98.6% 98.8% 93.1% 100.0%
Ratings Distribution: Oil & Gas - Large Cap Coverage Universe

(as of 15 Aug 2012) Sector Outperformer (Buy) Sector Performer (Hold/Neutral) Sector Underperformer (Sell) Restricted Count 7 3 3 0 Percent 53.8% 23.1% 23.1% 0.0% Inv. Banking Relationships Sector Outperformer (Buy) Sector Performer (Hold/Neutral) Sector Underperformer (Sell) Restricted Count 7 3 3 0 Percent 100.0% 100.0% 100.0% 0.0%
Oil & Gas - Large Cap Sector includes the following tickers: ATH, CLL, CNQ, COS, CVE, ECA, HSE, IMO, MEG, NXY, PBG, SU, TLM. *Although the investment recommendations within the three-tiered, relative stock rating system utilized by CIBC World Markets Inc. do not correlate to buy, hold and sell recommendations, for the purposes of complying with NYSE and NASD rules, CIBC World Markets Inc. has assigned buy ratings to securities rated Sector Outperformer, hold ratings to securities rated Sector Performer, and sell ratings to securities rated Sector Underperformer without taking into consideration the analyst's sector weighting.
Important disclosures required by IIROC Rule 3400, including potential conflicts of interest information, our system for rating investment opportunities and our dissemination policy can be obtained by visiting CIBC World Markets on the web at http://researchcentral.cibcwm.com under 'Quick Links' or by writing to CIBC World Markets Inc., Brookfield Place, 161 Bay Street, 4th Floor, Toronto, Ontario M5J 2S8, Attention: Research Disclosures Request.
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Legal Disclaimer
This report is issued and approved for distribution by (a) in Canada, CIBC World Markets Inc., a member of the Investment Industry Regulatory Organization of Canada (IIROC), the Toronto Stock Exchange, the TSX Venture Exchange and a Member of the Canadian Investor Protection Fund, (b) in the United Kingdom, CIBC World Markets plc, which is regulated by the Financial Services Authority ("FSA"), and (c) in Australia, CIBC Australia Limited, a member of the Australian Stock Exchange and regulated by the ASIC (collectively, "CIBC World Markets") and (d) in the United States either by (i) CIBC World Markets Inc. for distribution only to U.S. Major Institutional Investors (MII) (as such term is defined in SEC Rule 15a-6) or (ii) CIBC World Markets Corp., a member of the Financial Industry Regulatory Authority (FINRA). U.S. MIIs receiving this report from CIBC World Markets Inc. (the Canadian broker-dealer) are required to effect transactions (other than negotiating their terms) in securities discussed in the report through CIBC World Markets Corp. (the U.S. broker-dealer). This report is provided, for informational purposes only, to institutional investor and retail clients of CIBC World Markets in Canada, and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation would be prohibited. This document and any of the products and information contained herein are not intended for the use of private investors in the United Kingdom. Such investors will not be able to enter into agreements or purchase products mentioned herein from CIBC World Markets plc. The comments and views expressed in this document are meant for the general interests of wholesale clients of CIBC Australia Limited. The securities mentioned in this report may not be suitable for all types of investors. This report does not take into account the investment objectives, financial situation or specific needs of any particular client of CIBC World Markets. Recipients should consider this report as only a single factor in making an investment decision and should not rely solely on investment recommendations contained herein, if any, as a substitution for the exercise of independent judgment of the merits and risks of investments. The analyst writing the report is not a person or company with actual, implied or apparent authority to act on behalf of any issuer mentioned in the report. Before making an investment decision with respect to any security recommended in this report, the recipient should consider whether such recommendation is appropriate given the recipient's particular investment needs, objectives and financial circumstances. CIBC World Markets suggests that, prior to acting on any of the recommendations herein, Canadian retail clients of CIBC World Markets contact one of our client advisers in your jurisdiction to discuss your particular circumstances. Non-client recipients of this report who are not institutional investor clients of CIBC World Markets should consult with an independent financial advisor prior to making any investment decision based on this report or for any necessary explanation of its contents. CIBC World Markets will not treat non-client recipients as its clients solely by virtue of their receiving this report. Past performance is not a guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance of any security mentioned in this report. The price of the securities mentioned in this report and the income they produce may fluctuate and/or be adversely affected by exchange rates, and investors may realize losses on investments in such securities, including the loss of investment principal. CIBC World Markets accepts no liability for any loss arising from the use of information contained in this report, except to the extent that liability may arise under specific statutes or regulations applicable to CIBC World Markets. Information, opinions and statistical data contained in this report were obtained or derived from sources believed to be reliable, but CIBC World Markets does not represent that any such information, opinion or statistical data is accurate or complete (with the exception of information contained in the Important Disclosures section of this report provided by CIBC World Markets or individual research analysts), and they should not be relied upon as such. All estimates, opinions and recommendations expressed herein constitute judgments as of the date of this report and are subject to change without notice. Nothing in this report constitutes legal, accounting or tax advice. Since the levels and bases of taxation can change, any reference in this report to the impact of taxation should not be construed as offering tax advice on the tax consequences of investments. As with any investment having potential tax implications, clients should consult with their own independent tax adviser. This report may provide addresses of, or contain hyperlinks to, Internet web sites. CIBC World Markets has not reviewed the linked Internet web site of any third party and takes no responsibility for the contents thereof. Each such address or hyperlink is provided solely for the recipient's convenience and information, and the content of linked third-party web sites is not in any way incorporated into this document. Recipients who choose to access such third-party web sites or follow such hyperlinks do so at their own risk. Although each company issuing this report is a wholly owned subsidiary of Canadian Imperial Bank of Commerce ("CIBC"), each is solely responsible for its contractual obligations and commitments, and any securities products offered or recommended to or purchased or sold in any client accounts (i) will not be insured by the Federal Deposit Insurance Corporation ("FDIC"), the Canada Deposit Insurance Corporation or other similar deposit insurance, (ii) will not be deposits or other obligations of CIBC, (iii) will not be endorsed or guaranteed by CIBC, and (iv) will be subject to investment risks, including possible loss of the principal invested. The CIBC trademark is used under license. 2012 CIBC World Markets Inc. All rights reserved. Unauthorized use, distribution, duplication or disclosure without the prior written permission of CIBC World Markets is prohibited by law and may result in prosecution.
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CIBC NA Energy Economy Too - Much.of.a.good - Thing Full - Report

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CIBC NA Energy Economy Too - Much.of.a.good - Thing Full - Report

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Institutional Equity Research Industry Update

August 15, 2012

Oil & Gas - Large Cap

Too Much Of A Good Thing...

All figures in Canadian dollars, unless otherwise stated.

Andrew Potter, CFA 1 (403) 221-5700

Jeremy Kaliel 1 (403) 260-8657

Nick Lupick 1 (403) 221-5049

Kyle Balaux 1 (403) 216-3401

Serhiy Petrenko 1 (403) 221-5047

Shahzaib Merwat 1 (403) 216-8518

Find CIBC research on Bloomberg, Reuters, firstcall.com and ResearchCentral.cibcwm.com

Too Much Of A Good Thing... - August 15, 2012

Too Much Of A Good Thing... - August 15, 2012

U.S. Resource Plays Key Takeaways

Too Much Of A Good Thing... - August 15, 2012

Canadian Resource Plays Key Takeaways

Too Much Of A Good Thing... - August 15, 2012

Oil Sands Key Takeaways

Too Much Of A Good Thing... - August 15, 2012

Oil Supply/Demand Balances Key Takeaways

Too Much Of A Good Thing... - August 15, 2012

Too Much Of A Good Thing... - August 15, 2012

Natural Gas Supply/Demand Balances Key Takeaways

Too Much Of A Good Thing... - August 15, 2012

Too Much Of A Good Thing... - August 15, 2012

Too Much Of A Good Thing... - August 15, 2012

Too Much Of A Good Thing... - August 15, 2012

The Future Of North American Energy.Too Much Of A Good Thing Is Bad

A Quick Word On Methodology & Data Quality

Too Much Of A Good Thing... - August 15, 2012

Too Much Of A Good Thing... - August 15, 2012

The U.S. Energy Renaissance

Exhibit 1. Key Resource Play Growth Q1/08-Q1/12 (MMcfe/d)

Source: HPDI and CIBC World Markets Inc.

Too Much Of A Good Thing... - August 15, 2012

Exhibit 2. Key Resource Play Growth Marketable Gas Production (MMcf/d)

Exhibit 3. Key Resource Play Growth Oil Production (Bbls/d)

Too Much Of A Good Thing... - August 15, 2012

3,750 2,500 1,250 (1,250) (2,500)

Eagleford Barnett Mississippi Lime

Marcellus PA Woodford Permian

Haynesville Emerging Liquids Plays Anadarko Basin

Fayetteville US Bakken Total Production

Exhibit 5. Y/Y Changes In Oil Production By Play

Eagleford Barnett Mississippi Lime

Marcellus PA Woodford Permian

Haynesville US Bakken Anadarko Basin

Fayetteville Emerging Liquids Plays

NGL GrowthAnother Example Of Too Much Of A Good Thing

Too Much Of A Good Thing... - August 15, 2012

U.S. NGL Production By Area

Pentanes Plus Ethane-Ethylene Normal Butane-Butylene

PADD 1 PADD 3 PADD 5

Source: EIA and CIBC World Markets Inc.

Q1 / 08 Q2 / 08 Q3 /08 Q4 / 08 Q1 /09 Q2 / 09 Q3 / 09 Q4 /09 Q1 / 10 Q2 /10 Q3 / 10 Q4 /10 Q1 /11 Q2 / 11 Q3 /11 Q4 / 11 Q1 /12 Q2 /12

Too Much Of A Good Thing... - August 15, 2012

Mixed Butane Edmonton Mixed Propane Edmonton Condensate

Source: Bloomberg and CIBC World Markets Inc.

Non-resource Play Production In Steep Decline

Too Much Of A Good Thing... - August 15, 2012

Exhibit 8. U.S. Natural Gas Shale Vs. Non-Shale (MMcf/d)

Non Resource Play Gas Production