Stoller Arch Fund, LP From Avocation to Vocation

Private and Confidential April 2011

THIS IS NOT AN OFFERING OR THE SOLICITATION OF AN OFFER TO PURCHASE AN INTEREST IN THE STOLLER ARCH FUND, L.P. (THE FUND) ANY SUCH OFFER OR SOLICITATION WILL ONLY BE MADE TO QUALIFIED INVESTORS BY MEANS OF A CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM AND ONLY IN THOSE JURISDICTIONS WHERE PERMITTED BY LAW. AN INVESTMENT IN THE FUND IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. OPPORTUNITIES FOR WITHDRAWAL, REDEMPTION AND TRANSFERABILITY OF INTERESTS ARE RESTRICTED, SO INVESTORS MAY NOT HAVE ACCESS TO CAPITAL WHEN IT IS NEEDED. THERE IS NO SECONDARY MARKET FOR THE INTERESTS AND NONE IS EXPECTED TO DEVELOP. THE FEES AND EXPENSES CHARGED IN CONNECTION WITH THIS INVESTMENT MAY BE HIGHER THAN THE FEES AND EXPENSES OF OTHER INVESTMENT ALTERNATIVES AND MAY OFFSET PROFITS. NO ASSURANCE CAN BE GIVEN THAT THE INVESTMENT OBJECTIVE WILL BE ACHIEVED OR THAT AN INVESTOR WILL RECEIVE A RETURN OF ALL OR PART OF HIS OR HER INVESTMENT. INVESTMENT RESULTS MAY VARY SUBSTANTIALLY OVER ANY GIVEN TIME PERIOD.

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Six Months Ago I Couldnt Spell Ingineer and Now I Is One

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Epiphany I: A share of stock is fractional ownership in a business and I could use my business experience to help guide my investments.

Fractional Ownership

Ticker Symbol

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Epiphany 2: I can actually do this for a living

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Stoller Arch Fund Who Is Arch?

It was the practice of ancient Romans to require an archs engineer stand beneath his work as the construction supports were removed-- clearly requiring a very personal investment in his work. The General Partner designed this fund to allow others to invest alongside his life savings managing one best ideas portfolio.

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Im a better investor because Im a businessman, and a better businessman because Im an investor Warren Buffett

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Investment Process: Buy A Great Businessat a Good price

unfollowed/mis understood competitive advantage dividend % dividend coverage moat

margin of safety working capital

price ratios

capital allocation

net, net ,net EBITDA

ROIC

free cash flow

management ownership editda ratios current ratio yields

hidden assets ROE

b/s strength EV ratios

Share of Stock Is A Piece of A Business

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Financial Statements Represent Real World Business Activity

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Idea Sources
Reading, Reading, Reading (Value Line,
Barrons, Internet)

Other Fund Managers Headlines (do the opposite). Watch List Multi-Year Conferences/Presentations

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Key Terms and Fees

Management Fee: None
Performance Fee: 20% Minimum Subscription: $250,000 Subscriptions: Monthly Redemptions: Quarterly with 45 days notice Lock-up: Two Years

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Service Providers

Prime Broker: Morgan Stanley Smith Barney Administrator: Michael Liccar & Co.

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Contact Information
Steven Stoller Managing Director, Stoller Capital LLC, the General Partner for the Stoller Arch Fund Steven@StollerCapital.com 404-822-4252 cell StollerCapital.com <investor site> Username: stoller (lowercase) Password: capital (lowercase)

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This slide is here to keep you in suspense

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Petrobank (PBG.TO)
OR An undervalued business with lots of optionality
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Management Creates Value

PBG Petrobank

Oil & Gas Cos.

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Petrobank has value today

Success in ongoing E&P activity (99%) Technological leaders/innovators Focused on capital allocation and creating shareholder value. They own 10% of the business as well. Business is inexpensive relative to peers Business sells for less than the value of their assets

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Petrobank has optionality

Management has history of creating value in excess of the price of oil Improvements in drilling process = more extraction and higher IRR by lowering costs

New oil land developments

Technology licensing

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Petrobank

Petrobakken (59%) Light Oil & Gas E&P

Whitesands (100%) Heavy Oil Reserves

Archon (100%) Technology

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Petrobank (PBG = $ cd 20.28)

Petrobakken (59%) Light Oil & Gas E&P

Whitesands (100%) Heavy Oil Reserves

Archon (100%) Technology

(PBN = $ cd 18.24)

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At current market prices, buying a share of Petrobank give you a share of Petrobakken plus the other assets for $1.44
Petrobank (PBG.TO) Share Price CD$ times share weight Value per PBG share $20.28 1.00 $20.28 Petrobakken (PBN.TO) $18.24 1.03 $18.79

difference CD$ difference US$

implied value per share HBU $1.49 and Archon $1.44

Share prices as of 4/6/11

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Petrobank

Petrobakken (59%) Oil & Gas E&P

Whitesands (100%) Heavy Oil Reserves

Archon (100%)
Technology

Undervalued Asset Optionality

Undervalued Asset Optionality

Optionality

$ 1.44
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Petrobank

Petrobakken (59%) Oil & Gas E&P

Whitesands (100%) Heavy Oil Reserves

Archon (100%)
Technology

Undervalued Asset Optionality

Undervalued Asset Optionality

Optionality

$ 1.44
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Petrobakken as a business: What is it worth today? How good are they are getting value from their assets (worth tomorrow)?

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Petrobakken Assets

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Proved and Probable Reserves are worth at least $4.1B

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Largest Assets are well established with low Developmental and Geological Risk

99% well success

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Petrobakken is worth $29 per share while trading at $19

NPV 10 of proved and provable divided by the share count less debt land value value of risked inventory Share is worth

$4,142 187.7 $22.07 -9.44 $12.63 1.17 $13.80 15.31 $29.11

(assumes 2011 WTI at $88.4 per barren with 1.5% inflation)

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Petrobakken is inexpensive relative to peers on a Price to Net Asset Value basis

At current oil and share prices, PBN discount to Risked NAV is approximately 75%

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 and inexpensive on an Cash Flow to EV valuation as well

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 and produces more profit per Barrel Of Oil

And Petrobakken is currently seeing BOE profits of $60-$65

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Petrobakken is technology leader.

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Bilateral Fraccing Increased NPV per Well from $2.9 to $3.6 MM with IRR increasing from 51% 98%, or payback in one year.

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The Cardium purchases were timely You cannot buy land in that area anymore Oil prices have increased Alberta royalty changes improved profits by $1MM per well.

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Value of options

Oil Price increase holds Value of unrisked inventory Value of improved drilling

$4 0 to $13 0 to $4

Enhanced recovery

0 to $4
0 to $25

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Petrobank

Petrobakken (59%) Oil & Gas E&P

Whitesands (100%) Heavy Oil Reserves

Archon (100%)
Technology

Undervalued Asset Optionality $28-$30 for the business plus options

Undervalued Asset Optionality

Optionality

$1.44 ?
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Petrobank

Petrobakken (59%) Oil & Gas E&P

Whitesands (100%) Heavy Oil Reserves

Archon (100%)
Technology

Undervalued Asset Optionality $28-$30 for the business plus options

Undervalued Asset Optionality

Optionality

$1.44 ?
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What is Whitesands worth?

1. Oil analyst estimates NPV of $786M, or $7-$8 per share using current SAGD drilling methods. 2. Private sale of adjoining land at low end of comp, or $1.50 per BOE, or $9-$10 per share 3. Recovery with THAI, $11-$18 per share

Reserve Recovery Method Size 1 SAGD 2 SAGD 3 THAI 3 THAI 1.5 B 1.5 B 1.785 B 1.785 B

Value at % MM BOE $1.50/B recovery recoverable OE $MM Per share $786 45% 45% 70% 664 803 1250 $1,012 $1,204 $1,875 $ 7.42 $9.55 $11.36 $17.69

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Petrobank

Petrobakken (59%) Oil & Gas E&P

Whitesands (100%) Heavy Oil Reserves

Archon (100%)
Technology

Undervalued Asset Optionality $28-$30 for the business plus options

Undervalued Asset Optionality

Optionality

$4-$8
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Petrobank

Petrobakken (59%) Oil & Gas E&P

Whitesands (100%) Heavy Oil Reserves

Archon (100%)
Technology

Undervalued Asset Optionality $28-$30 for the business plus options

Undervalued Asset Optionality

Optionality

$4-$8
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What is THAI and whats it worth?

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THAI benefits are incremental and discreet. Not all have to work.

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Blue Sky value of THAI licensing is worth more than the whole company. But this a longshot however Per Deal

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Petrobank

Petrobakken (59%) Oil & Gas E&P

Whitesands (100%) Heavy Oil Reserves

Archon (100%)
Technology

Undervalued Asset Optionality $28-$30 for the business plus options

Undervalued Asset Optionality

Optionality

$4-$8
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0 to $$
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What Can Blow Up? How To Buy? What Can Blow Up: Oil prices Reserves overstated/Depletion Operation Errors

How To Buy:

Petrobank
Petrobank less Oil Petrobank less Petrobakken Petrobakken (5% dividend)
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Contact Information
Steven Stoller Managing Director, Stoller Capital LLC, the General Partner for the Stoller Arch Fund Steven@StollerCapital.com 404-822-4252 cell StollerCapital.com <investor site> Username: stoller (lowercase) Password: capital (lowercase)

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