2015 Cardium Production

Please refer to page 93 for important disclosures and analyst certification, or on our website

www.macquarie.com/research/disclosures.

CANADA

Inside

Searching for value in a low price environment 2

Setting the stage 3

Aggregate Cardium Performance 4

Activity Ten core areas 7

Economics 17

Appendix Area breakdowns 22

Lochend 23

Garrington 30

Willesden Green Ferrier 37

Alder Flats 44

East Pembina 51

Central Pembina 58

Brazeau 65

West Pembina 72

Pine Creek Kaybob 79

Wapiti 86

Analyst(s) Ray Kwan, CFA +1 403 539 4355 [email protected] Chris Feltin +1 403 539 8544 [email protected] Brian Bagnell, CFA +1 403 539 8540 [email protected] Mike Murphy +1 403 539 8514 [email protected] Ali Ladha, CFA +1 403 218 6659 [email protected] Cara O'Byrne +1 403 218 6655 [email protected]

29 January 2015 Macquarie Capital Markets Canada Ltd.

Dude, Wheres My Cardium? Searching for value in a low price environment Total Cardium oil production over 180,000boe/d

The Cardium Formation has been one of the most actively targeted plays in Western

Canada. Over 2,900 horizontal Cardium oil wells have been placed on production in

Alberta since 2009, translating into current production of over 180mboe/d and

absolute growth of >200% over that time frame. With oil prices hovering around

US$50/bbl WTI, we thought it would be interesting to provide an update of the entire

Cardium oil trend to determine the area of highest productivity and those producers

most efficient in their respective regions.

Needless to say: economics challenged at todays prices

In todays pricing environment, we can safely say the sustainability of the Cardium

play is severely challenged or uneconomic. Out of the ten Cardium regions in our

study, the highest return areas are in Lochend, Willesden Green, and Brazeau.

We calculate after-tax IRRs of greater than 20% for each of these regions assuming

flat prices of C$70/bbl Edmonton Par and C$3.50/mcf AECO. Based on these

economics, our expectation is that activity will be fairly subdued and has the

potential to fall by 3050%.

but improves with lower service costs and recovery in oil prices

Notably, our well cost assumptions are still based on 2014 actuals; we fully expect

service costs to drop between 1030% over the year. The potential for lower service

costs will no doubt boost the overall economics of the play; however, sustained oil

prices above C$60/bbl Edm Par are required to economically justify drilling, in our

view. Assuming a 30% drop in capital costs and C$70/bbl Edm Par, our Cardium

economics for Lochend, Willesden Green, and Brazeau jump to over 50% IRR(AT).

For the greater Pembina region, the type well economics move to greater than 36%

IRR (AT) or simple paybacks of around 2.0 years.

Stick to the efficient producers: ARC, Bellatrix, Tamarack, TORC, and Whitecap

Efficiency is key in any resource play; accordingly, producers that are the most

resourceful in terms of lower than average well costs, highest productivity, or

quickest cycle times will be the potential winners, in our view. The worst positioned

in the Cardium, such as Lightstream and Penn West, will likely have to dispose of

quality assets because of their above-average leverage situation resulting from their

poor capital efficiencies in the play. The winners out of this situation could be

Whitecap, TORC Oil & Gas, Bellatrix, ARC Resources, and Tamarack Valley, as

they are the most efficient operators along the Cardium trend and have the capability

to sift through the wreckage for a number of distressed assets. In addition, with lower

service costs on the horizon, we suspect these producers will be among the few to

capitalize on the current deflationary cycle and benefit on the other side assuming a

modest price recovery scenario.

Macquarie Research Dude, Wheres My Cardium?

29 January 2015 2

Searching for value in a low price environment The Cardium Formation has been one of the most actively targeted plays in Western Canada.

Over 2,900 horizontal Cardium oil wells have been placed on production in Alberta since 2009,

translating into current production of over 180mboe/d and absolute growth of >200% over that

time frame. With oil prices hovering around US$50/bbl WTI, we thought it would be interesting to

provide an update of the entire Cardium trend to determine the area of highest productivity and

producers most efficient in their respective regions. We believe understanding the differences will

help investors identify those producers that can thrive through this low price environment.

A summary of our conclusions is provided below:

Production over 180mboe/d and declines at 34% per annum. Total production from oil

wells in the Cardium has reached >180mboe/d as of September 2014, from only

60mboe/d in early 2009. We estimate aggregate base declines of ~34% over the entire

play, indicating that about one-third of current production needs to be replaced each year

in order to hold production flat. Based on the severe drop in commodity prices in 2015,

our expectation is that activity will be fairly subdued. Accordingly, we see the potential for

production in this play to fall through the year.

Willesden Green, Wapiti, and Brazeau have highest peak rates. Of the ten core

regions, Willesden Green (including Ferrier) still has among the highest peak IP30 rates

for wells put on production post 2013 at 322boe/d (60% liquids). That said, the higher

rates do come with a higher capital cost (on average) and higher gas content. Wapiti and

Brazeau have the second- and third-highest peak rates among the Cardium trend at

321boe/d (~61% liquids) and 308boe/d (4050% liquids), respectively.

Economics challenged at todays prices... At the current strip, we can safely say the

sustainability of the Cardium play is severely challenged or uneconomic. Out of the ten

Cardium regions in our study, the highest return areas are in Lochend, Willesden Green,

and Brazeau. We calculate after-tax IRRs of greater than 20% for each of these regions

assuming flat prices of C$70/bbl Edmonton Par and C$3.50/mcf AECO. Based on these

economics, our expectation is that activity will be fairly subdued and has the potential to

fall by 3050%.

but improve with lower service costs and recovery in oil. Notably, our well cost

assumptions are still based on 2014 actuals; we fully expect service costs to drop between

1030% over the year. The potential for lower service costs will no doubt boost the overall

economics of the play; however, sustained oil prices above C$60/bbl Edm Par are

required to economically justify drilling, in our view. Assuming a 30% drop in capital costs

and C$70/bbl Edm Par, our Cardium economics for Lochend, Willesden Green, and

Brazeau jump to over 50% IRR(AT). For the greater Pembina region, the type well

economics move to greater than 36% IRR (AT) or simple paybacks of around 2.0 years.

Top ways to play. The worst positioned in the Cardium, such as Lightstream and Penn

West, will likely have to dispose of quality assets because of their above-average leverage

situation resulting from their poor capital efficiencies in the play. The winners out of this

situation could be Whitecap, TORC Oil & Gas, Bellatrix, ARC Resources, and

Tamarack Valley, as they are the most efficient operators along the Cardium trend and

have the capability to sift through the wreckage for a number of distressed assets. In

addition, with lower service costs on the horizon, we suspect these producers will be

among the few to capitalize on the current deflationary cycle and benefit on the other side

assuming a modest price recovery scenario.

Whitecap Resources (WCP CN, C$11.99, Outperform, TP: C$19.00)

TORC Oil & Gas (TOG CN, C$8.15, Outperform, TP: C$12.00)

Bellatrix Exploration (BXE CN, C$2.99, Neutral, TP: C$4.25)

ARC Resources (ARX CN, C$23.09, Outperform, TP: C$28.00)

Tamarack Valley Energy (TVE CN, C$3.60, Outperform, TP: C$4.75)


29 January 2015 3

Setting the stage We have broken down the Cardium oil resource play into ten distinct areas: Lochend, Garrington, Willesden Green-Ferrier, Alder Flats, East Pembina, Central Pembina, Brazeau, West Pembina,

Pine Creek-Kaybob, and Wapiti. We acknowledge that there are large geological variations in each

of these regions, but believe that segregating the data into smaller areas will allow producers and

investors alike to better understand the quality and top performers within each region.

Fig 1 Cardium focus areas

Source: geoSCOUT, Macquarie Research, January 2015


29 January 2015 4

Aggregate Cardium Performance Production has been steady, but will it continue in 2015?

Production from the Cardium has been on a steady increase for the past several years. Total

production from oil wells in the Cardium has reached ~180190mboe/d as of September 2014,

from only 60mboe/d in early 2009. Fig 2 shows the vintage of Cardium production by year.

We estimate aggregate base declines of ~34% over the entire play, indicating that about one-third

of current production needs to be replaced each year in order to hold production flat. Based on

the severe drop in commodity prices in 2015, our expectation is that activity will be fairly subdued.

Accordingly, we see the potential for production in this play to fall through the year, as the current

activity outlook is unlikely to replace the 3035% annual production decline.

Fig 2 Cardium oil production vintage by year


By region. In 2010, the West Pembina region saw the largest increase in activity and production

(See Fig 3). Since then, activity at Garrington, East Pembina, and Willesden Green-Ferrier has

ramped up considerably, driven by the likes of Whitecap, Vermilion, Penn West, and Lightstream.

Next to see an increase in activity was Lochend and Alder Flats, followed by Pine Creek-Kaybob

and Brazeau. In our view, Wapiti is still an emerging region for the Cardium, with the lowest

activity out of all the regions in this study.

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29 January 2015 5

Fig 3 Cardium production history by area


The number of wells targeting oil peaked in 2012, with 733 new wells brought on production in

that year (See Fig 4). In 2013, wells brought on production dropped by nearly 15% YoY, though

gross Cardium oil production for the basin has stayed relatively flat at around 170180mboe/d.

We attribute this flat growth to the type of producers dominating the Cardium landscape.

Specifically, High Yield (or former Yield) producers (ie, Whitecap, Penn West, and Lightstream)

are the most active and generally focus their capital and efforts on sustainability rather than

production growth. In addition, more productive Cardium wells have resulted in fewer wells

required to keep overall production flat in the trend. Year-to-date for 2014 (through September)

the amount of wells brought on production has been over 400 wells. We suspect drilling activity

through 2015 will fall by nearly 3050%, given the drop in commodity prices.

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29 January 2015 6

Fig 4 Wells on production by year

*2014 year-to-date until September 2014


Lightstream is by far the top producer within the greater Cardium trend at nearly 18mboe/d of

current production. Next in line is Whitecap Resources, which catapulted into second place after

the acquisition of Imperial Oils Pembina assets in early 2014. In third place is Bellatrix, followed

by Penn West.

Fig 5 Gross September production by operator (Top 10)


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29 January 2015 7

Activity Ten core areas Licences/drilling. Fig 6 shows producing Cardium oil horizontal wells and current outstanding

Cardium oil licences issued in Alberta. In total, 2903 Cardium horizontals (oil) have been drilled

and placed on production since 2009. Separately, there are 306 Cardium wells that have been

licensed (included drilled and cased). The concentration of wells that have been spud and/or

licensed are generally focused in Greater Pembina (East, West, and Central), Garrington,

Willesden Green and Lochend.

Fig 6 Cardium producing and licensed wells



29 January 2015 8

Cardium producers/licences by core area. Of the ten main focus areas described in Fig 1, West

Pembina has the most producing horizontal wells at 765, followed by East Pembina and Garrington

at 536 and 481, respectively. The areas attracting the highest number of future horizontal locations

are: Willesden Green (80), West Pembina (53), and Lochend (32). Drilling activity in these areas is

largely dominated by mid-cap and high-yield producers, including Penn West, Whitecap, and

Lightstream.

Fig 7 Cardium oil producing horizontals by area Fig 8 Cardium oil horizontal licences by area


Cardium producers/licences by producer. Lightstream and Whitecap have been the most active

companies in the Cardium Formation, particularly in the West Pembina, East Pembina, and

Garrington regions. Lightstream has 331 producing horizontal wells. Similarly, Whitecap operates

~326 producing horizontals. In third place is Penn West, which has a significant chunk of

production in Greater Pembina as well as Willesden Green. Note that Whitecap Resources

acquired Imperial Oils West Pembina assets last year in early 2014, which catapulted the

company to one of the largest operators along the Cardium trend. Due to the fall in commodity

prices, a number of producers have set austere budgets. Whitecap has plans to drill less than 19

gross wells in 2015 following its budget reduction to C$200m (from C$245m). Penn West has

allocated a total of C$625m in capital to drill only its Cardium and Viking plays; however, we

suspect this capital program could decrease, given its balance sheet issues. Lightstream is also

capital constrained because of its balance sheet issues; therefore, we suspect activity to be fairly

muted for the company in 2015.

Among the small- to mid-cap producers, we highlight Bellatrix, TORC Oil & Gas, and Tamarack

Valley as some of the more active producers along the Cardium trend. TORC had plans to drill 15

(12.8 net) wells in the Cardium, though this may change with WTI prices below US$50/bbl.

Notably, the company has more than 290 net undrilled light oil focused development locations

identified. Tamarack has recently set its 2015 budget at C$47m for 2015 (in line with cashflow),

of which a large portion will be focused at Wilson Creek after acquiring assets from Suncor in late

2014. Notably, Bellatrixs Cardium activity will be tempered and will only be focused on expiring

leases and commitment wells.

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29 January 2015 9

Fig 9 Horizontal producing Cardium wells by producer


Fig 10 Cardium licences by producer


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29 January 2015 10

Gas-Oil Ratios (GORs) by region

To give a sense of the various oil/gas producing ratios, we have provided a GOR map along the

Cardium trend (in Fig 11). As can be seen, Greater Pembina, Garrington, and Lochend all have

the lowest GORs between 01,000 mcf/bbl (>80% oil); these areas represent the oilier portions of

the play. Willesden Green, Wapiti, Alder Flats, Brazeau, and Pine Creek are generally gassier

regions at GORs between 100010,000mcf/bbl (


29 January 2015 11

Peak rates

Willesden Green, Wapiti, and Brazeau. Of the ten core regions, Willesden Green (including

Ferrier) still has among the highest peak IP30 rates for wells put on production post 2013 at

322boe/d (60% liquids) across 165 horizontals wells. That said, the higher rates do come with a

higher capital cost (on average) and higher gas content. Note the average depth at Willesden

Green is around 2,100m. Wapiti and Brazeau have the second- and third-highest peak rates

among the Cardium trend at 321boe/d (~61% liquids) and 308boe/d (4050% liquids),

respectively. Average TVD for the Cardium is ~1,600m at Wapiti and ~2,000m at Brazeau.

Garrington, Lochend, and Alder Flats. The Garrington, Lochend and Alder Flats regions have

average IP30 rates post 2013 of 233boe/d (82% liquids), 279boe/d (7085% liquids), and

234boe/d (85% liquids), respectively. Interestingly, results from all three regions have improved

since 2013, driven by enhanced completion techniques as well as longer lateral wells. Note that

the average TVD for the Cardium at Garrington, Lochend, and Alder Flats are ~2,000m, ~2,300m,

and ~1,700m, respectively.

Central Pembina, East Pembina and West Pembina. The Pembina halo regions have

demonstrated fairly close average 30-day peak rates post 2013, ranging between 184186boe/d

(7585% liquids). Though similar in rates, we emphasize that the depth of the Cardium in West

Pembina is greater at ~1,800m, compared to Central Pembina at ~1,600m and East Pembina at

~1,300m.

Fig 12 Average Cardium peak rate by area


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29 January 2015 12

Peak rate by producer. In Fig 13, we present the average peak rate achieved by each operator

with at least one producing Cardium well since 2013. Note that this metric can be misleading, as

capital costs within each of the ten core areas vary considerably; therefore, higher IP rates do not

always translate into better economics. Nevertheless, producers with at least 15 producing wells

such as Long Run, Bellatrix, Whitecap, Tamarack, Pengrowth, ARC and TORC have all

demonstrated 30-day peak rates above 200boe/d on average post 2013.

Fig 13 Average Cardium peak rate (all) by operator and number of wells (since 2013)


Variability. To get a sense of the variability within each region, we have generated a P90-to-P10

ratio for the average first 90 days of production (ie, IP90). The higher this ratio is, the greater the

variability in initial production rates. As shown in Fig 14, results in Pine Creek, Wapiti, and Central

Pembina have the highest variability among the ten Cardium core areas. Regions that have

exhibited fairly consistent results are Brazeau, West Pembina, Garrington, and Lochend.

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29 January 2015 13

Fig 14 P90-to-P10 by area (variability)


Cycle times

Cycle time is the number of days necessary to bring a well on production from the initial spud

date. The median cycle time for all Cardium wells is around 39 days, with some producers taking

over 150 days (TAQA, EOG, Conoco) down to


29 January 2015 14

Fig 15 Number of days from spud to production by producer


East Pembina continues to show the quickest tie-in times with an average of 51 days from spud

to first production, followed by Brazeau at 54 days and Garrington at 60 days (see Fig 16). The

longest cycle times have been in the Wapiti and Alder Flats regions, followed by Pine Creek-

Kaybob. Wapiti, Pine Creek-Kaybob, and Alder Flats are the less developed regions for the

Cardium, in our view, and thus are sometimes lacking (or restricted) in infrastructure; therefore,

cycle times are typically longer in those regions.

Fig 16 Number of days from spud to production by area


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0

20

40

60

80

100

120

140

160

Wapiti

Ald

er F

lats

Pin

e C

reek

Centr

al

Pem

bin

a

Will

esd

en

Gre

en

Lochend

West

P

em

bin

a

Garr

ingto

n

Bra

zeau

East

Pem

bin

a

Days fro

m S

pu

d t

o P

rod

ucti

on


29 January 2015 15

Top wells on entire Cardium trend

For curiositys sake, we scanned the entire Cardium region to highlight the top wells in the play.

Interestingly, Bellatrix dominated the rankings, with 10 of the top 20 wells by IP30 rate; however,

most of these wells were brought on production in 2012/2013. Notably, the region with the largest

IP rates was in Willesden Green, followed by Brazeau.

Fig 17 Top 20 wells by peak rate


In terms of cumulative production rankings, ConocoPhillips, Bellatrix, Penn West, and TORC

dominate the top 20. A majority of these wells have been on production for the past 34 years.

Once again, the Willesden Green region has some of the highest cumulatively produced wells.

Fig 18 Top 20 wells by cumulative production


Well ID Operator Peak Rate (boe/d) On Production Date Area

1 100/16-28-050-06W5/00 Sinopec Daylight 1,204 2010-03 East Pembina

2 100/13-15-064-05W6/00 ConocoPhillips 1,103 2012-11 Wapiti

3 100/16-28-044-10W5/00 Bellatrix 1,099 2012-02 Brazeau

4 100/04-01-045-11W5/00 Bellatrix 1,038 2012-03 Brazeau

5 100/13-30-042-08W5/00 Bellatrix 979 2010-11 Willesden Green


7 100/12-02-046-11W5/00 Bellatrix 836 2012-09 Brazeau

8 100/15-25-044-11W5/00 Bellatrix 822 2013-12 Brazeau


10 100/14-20-027-03W5/00 Pengrowth 757 2011-09 Lochend


12 100/12-13-043-09W5/00 Penn West 753 2010-07 Willesden Green


14 100/13-32-038-05W5/00 Anderson Energy 739 2014-03 Willesden Green

15 100/13-24-038-08W5/00 Baccalieu Energy 735 2013-11 Willesden Green

16 100/03-31-027-03W5/00 Pengrowth 734 2013-06 Lochend

17 100/13-33-048-06W5/00 ARC Resources 734 2012-02 East Pembina



20 100/13-36-054-18W5/00 Long Run 715 2012-08 Pine Creek

Well ID Cum. Production (boe) On Production Date Area

1 100/13-15-064-05W6/00 ConocoPhillips 443,470 11/1/2012 Wapiti

2 100/16-28-044-10W5/00 Bellatrix 348,032 2/1/2012 Brazeau

3 100/16-28-050-06W5/00 Sinopec Daylight 320,604 3/1/2010 East Pembina

4 100/13-06-059-21W5/00 ConocoPhillips 285,549 4/1/2011 Pine Creek

5 100/09-14-040-05W5/00 Penn West 277,071 4/1/2011 Willesden Green

6 100/12-13-043-09W5/00 Penn West 255,785 7/1/2010 Willesden Green

7 100/08-22-057-20W5/00 Pengrowth 224,047 4/1/2009 Pine Creek

8 100/01-06-060-23W5/00 Canadian Oil & Gas 220,692 2/1/2010 Pine Creek

9 100/04-01-045-11W5/00 Bellatrix 218,358 3/1/2012 Brazeau

10 100/04-02-064-05W6/02 ConocoPhillips 214,286 4/1/2012 Wapiti

11 100/14-34-038-08W5/00 Canadian Natural 213,789 1/1/2011 Willesden Green

12 100/13-32-059-23W5/00 ConocoPhillips 212,423 4/1/2011 Pine Creek

13 100/04-01-044-10W5/00 Bellatrix 200,698 8/1/2012 Willesden Green


15 100/15-25-054-18W5/00 TORC 197,163 12/1/2011 Pine Creek


17 100/15-34-038-08W5/00 Canadian Natural 194,199 2/1/2011 Willesden Green

18 100/05-10-049-07W5/00 ARC Resources 192,290 11/1/2009 Central Pembina

19 100/14-32-059-23W5/00 ConocoPhillips 187,344 4/1/2011 Pine Creek20 100/04-02-045-11W5/00 Bellatrix 183,592 3/1/2012 Brazeau


29 January 2015 16

Have aggregate type curves improved?

We also thought it would be interesting to provide an aggregate type curve along the Cardium

trend to determine whether productivity has improved since the introduction of multi-stage

fracture stimulation in the play. As shown in Figs 1920, overall productivity has indeed shown a

steepening upward trend, with nearly all years highlighting YoY improvements. Interestingly, the

Cardium type well for 2013 has improved by nearly 1015% versus the 2012 vintage and nearly

5060% since the 2009 vintage. We attribute the productivity increases to improved completion

and fracture stimulation technology as well as longer lateral wells. For 2014, we believe the

aggregate type well will follow closely to the 2013 vintage curve. Going forward, we are of the

view that economics will improve via lower service costs, especially in the current low commodity

cycle, rather than productivity gains.

Fig 19 Aggregate type curve by year


Fig 20 Aggregate cumulative production by year


-

50

100

150

200

250

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

Ca

len

da

r D

ay

Ra

te (

bo

e/d

)

Productive Month(s)

All avg

2009

2010

2011

2012

2013

2014

-

20

40

60

80

100

120

140

160

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47

Cu

mu

lati

ve

Pro

du

cti

on

(m

bo

e)

Productive Month(s)

P90

P50 (Median)

P10

2009

2010

2011

2012

2013

2014


29 January 2015 17

Economics What makes sense at todays prices?

We have updated our type curves for the ten different Cardium regions. Obviously, we recognize

that some plays are more mature than others, and our degree of confidence in the type curves

from the more mature plays is greater. Currently, we believe the revised type curves outlined

below are an accurate representation of current well rates and recoveries in the Cardium.

Figs 2128 outline the various inputs for our type curves, in addition to profitability metrics

(NPV10, P/I ratio, IRR and payback period) on an after-tax basis. In addition, we show the

breakeven price for oil (Edmonton Light) on an after-tax basis. Our breakeven calculations assume

a 10% after-tax IRR, and are based on a C$3.50/mcf flat AECO price. Our P/I ratio is calculated as

a wells NPV divided by its all-in cost (drill, complete, and tie-in). A P/I of 0.0x assumes that a well

only recovers its 10% required rate of return, while any output greater than 0.0x assumes higher

profitability. Note that only half-cycle economics are illustrated in the type curves and, as such,

they do not include land purchases and/or necessary infrastructure builds.

As can be seen, based on flat pricing of C$70/bbl Edm Par and C$3.50/mcf AECO, a large chunk

of the Cardium is economic (except for Wapiti). The highest return areas are found in Lochend,

Willesden Green, and Brazeau. At todays pricing environment, however, we can safely say that

the average Cardium well is simply uneconomic.

Fig 21 Macquarie type well assumptions: Alberta Cardium Oil

*Economics based on flat C$70/bbl Edmonton Par and C$3.50/mcf AECO

Source: Company reports, Macquarie Research, January 2015

Well properties

Central

PembinaBrazeau East Pembina

West

PembinaPine Creek Wapiti Lochend

Willesden

GreenGarrington Alder Flats

IP Rate (gas) mcf/d 400 960 209 252 680 425 280 840 286 264

IP Rate (liquids) boe/d 200 240 190 210 170 170 280 240 220 240

IP Rate (total) boe/d 267 400 225 252 283 241 327 380 268 284

EUR/well (gas) bcf 0.2 0.9 0.1 0.1 0.4 0.2 0.2 0.5 0.2 0.1

EUR/well (liquids) mbbl 110 140 105 117 112 93 154 154 86 104

EUR/well (total) mboe 147 283 124 140 186 132 179 243 112 123

% Liquids % 75% 49% 85% 83% 60% 71% 86% 63% 69% 85%

Liquids Yield (C5+); GOR bbl/mmcf; scf/bbl 2,000 4,000 1,100 1,200 4,000 2,500 1,000 3,500 1,300 1,100

Liquids Yield (NGLs) bbl/mmcf 0 0 0 0 0 0 0 0 0 0

Well economics

Total Costs $m 3.0 4.0 3.0 3.5 3.5 4.2 3.7 4.0 3.0 3.0

F&D Costs ($/boe) $/boe 20.39 14.12 24.25 24.93 18.80 31.80 20.65 16.44 26.77 24.42

Recycle Ratio x 1.5x 1.9x 1.2x 1.3x 1.5x 0.6x 1.5x 1.7x 1.2x 1.3x

Average royalty rate % 13% 15% 14% 13% 13% 14% 16% 16% 10% 13%

Before Tax

NPV10 $m 0.8 1.5 0.3 0.6 0.5 -0.5 1.6 1.4 0.5 0.6

P/I Ratio x 0.3x 0.4x 0.1x 0.2x 0.2x -0.1x 0.4x 0.4x 0.2x 0.2x

IRR % 25% 32% 17% 20% 18% 2% 43% 30% 23% 27%

Payback period years 2.8 2.5 3.7 3.2 3.8 6.7 1.8 2.8 2.5 2.4

After Tax

NPV10 $m 0.4 0.9 0.1 0.2 0.2 -0.7 1.0 0.9 0.1 0.3

P/I Ratio x 0.1x 0.2x 0.0x 0.1x 0.1x -0.2x 0.3x 0.2x 0.0x 0.1x

IRR % 17% 22% 11% 14% 13% 0% 27% 21% 13% 16%

Payback period years 3.7 3.3 4.7 4.0 4.6 10.0 2.6 3.5 3.4 3.6

Breakeven price (Edm. Light) $/bbl 60.99 52.10 68.35 65.33 64.92 87.00 53.42 53.51 66.91 63.97


29 January 2015 18

Fig 22 Macquarie Cardium oil type curves

The highest IP rates are from the Brazeau and Willesden Green regions; however, both areas tend to produce at a higher GOR relative to the other Cardium regions.

East Pembina exhibits the lowest IP30 rate, which we model at ~225boe/d.

Lochend, greater Pembina, Garrington, and Alder Flats generally have the highest initial oil weighting relative to the other Cardium regions at >75%.

Our breakeven calculations assume a 10% after-tax IRR, and are based on a C$3.50/mcf flat AECO price. All our economics assume Crown royalties.

At C$70/bbl Edm Par and C$3.50/mcf AECO, before-tax payback periods range from 1.83.8 years.

Source: Macquarie Research, January 2015

0

50

100

150

200

250

300

350

400

450

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

Pro

du

cti

on

Ra

te (

bo

e/d

)

Months on production

Lochend

Pine Creek

West Pembina

East Pembina

Willesden Green

Garrington

Wapiti

Brazeau

Central Pembina

Alder Flats


29 January 2015 19

Fig 23 Ranking after tax IRR Fig 24 Ranking after tax NPV

Fig 25 Ranking after tax P/I ratio Fig 26 Ranking after tax payback period

Fig 27 Ranking oil breakeven supply cost Fig 28 Ranking after tax breakeven price: Oil Plays


-5%

0%

5%

10%

15%

20%

25%

30%

Lo

ch

end

Bra

zeau

Wille

sden G

reen

Cen

tral P

em

bin

a

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er F

lats

West P

em

bin

a

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ingto

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e C

reek

East P

em

bin

a

Wap

iti

AT

IRR

(%

)

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

Lo

ch

end

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zeau

Wille

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reen

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tral P

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a

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West P

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a

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e C

reek

Garr

ingto

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East P

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a

Wap

iti

AT

NP

V ($m

)

-0.20

-0.15

-0.10

-0.05

0.00

0.05

0.10

0.15

0.20

0.25

0.30

Lo

ch

end

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zeau

Wille

sden G

reen

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tral P

em

bin

a

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er F

lats

West P

em

bin

a

Pin

e C

reek

Garr

ingto

n

East P

em

bin

a

Wap

iti

AT

P/I R

ati

o

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Lo

ch

end

Bra

zeau

Garr

ingto

n

Wille

sden G

reen

Ald

er F

lats

Cen

tral P

em

bin

a

West P

em

bin

a

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e C

reek

East P

em

bin

a

Wap

iti

AT

payb

ack p

eri

od

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

Bra

zeau

Lo

ch

end

Wille

sden G

reen

Cen

tral P

em

bin

a

Ald

er F

lats

Pin

e C

reek

West P

em

bin

a

Garr

ingto

n

East P

em

bin

a

Wap

iti

Oil b

reakeven

pri

ce

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

Ba

kke

n-S

K-S

ing

le

Mo

ntn

ey-K

ayb

ob

oil

Mo

ntn

ey-P

ou

ce

Co

up

e

Be

lly R

ive

r-B

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au

Ba

kke

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erg

uso

n

Mo

ntn

ey-G

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uxville

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ing

-Pro

vo

st

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ua

y-H

off

er

Vik

ing

Do

dsla

nd

AB

Ba

kke

n-B

ig V

alle

y/B

an

ff

Sp

ea

rfis

h-W

aska

da

Ca

rdiu

m-B

raze

au

Mo

ntn

ey-A

nte

Cre

ek

Mo

ntn

ey-T

ow

er

Ca

rdiu

m-L

och

en

d

Ca

rdiu

m-W

ille

sd

en

Gre

en

Lo

we

r S

ha

un

avo

n

Mo

ntn

ey-W

aska

hig

an

Ca

rdiu

m-C

en

tra

l Pe

mb

ina

Ca

rdiu

m-A

lde

r F

lats

Ca

rdiu

m-P

ine

Cre

ek

Ca

rdiu

m-W

est P

em

bin

a

Vik

ing

-Re

dw

ate

r

Ca

rdiu

m-G

arr

ing

ton

Ca

rdiu

m-E

ast P

em

bin

a

Du

ve

rna

y-K

ayb

ob

Be

ave

rhill L

ake

Ca

rdiu

m-W

ap

iti

Sla

ve

Po

int-R

ed

Ea

rth

AT

Bre

ak

ev

en

Pri

ce

(C

$/b

bl)

Lochend and Brazeau have the highest IRRs at C$70/bbl Edm Par among the Cardium plays in Alberta.

The lowest NPVs are in the East Pembina and Wapiti region.

Again, Brazeau and Lochend show the highest P/I ratios due to the high peak rates and EURs in both regions of the Cardium.

Not surprisingly, Brazeau has the lowest breakeven price at C$52.10/bbl followed by Lochend at C$53.42/bbl.

On average, Cardium break-even costs are at the higher end of the basin cost curve.

The average after-tax payback period is around 3.6 years.


29 January 2015 20

Sensitivities

In Figs 2932, we outline the NPV and IRR sensitivities of each of our Cardium type curves to a

+/- C$10/bbl change in oil prices and +/- C$0.50/mcf change in gas prices.

East Pembina and Wapiti have the highest NPV and IRR sensitivities to a change in the oil price.

On an IRR basis, East Pembina and Garrington round out the top three most sensitive plays to

changes in oil prices.

Pine Creek and Wapiti have the highest NPV and IRR sensitivity to a change in the gas price,

given their higher gas weightings. On an IRR basis, Pine Creek and Brazeau round out the top

three most sensitive plays to changes in gas prices.

Fig 29 NPV AT sensitivity to oil prices (+/- C$10/bbl) Fig 30 IRR AT sensitivity to oil prices (+/- C$10/bbl)

Fig 31 NPV AT sensitivity to gas prices (+/- C$0.50/mcf) Fig 32 IRR AT sensitivity to gas prices (+/- C$0.50/mcf)


-800% -600% -400% -200% 0% 200% 400% 600% 800%

Brazeau

Lochend

Willesden Green

Wapiti

Central Pembina

Alder Flats

Pine Creek

West Pembina

Garrington

East Pembina

-150% -100% -50% 0% 50% 100% 150%

Brazeau

Willesden Green

Lochend

Pine Creek

Central Pembina

West Pembina

Alder Flats

East Pembina

Garrington

Wapiti

-60% -40% -20% 0% 20% 40% 60%

Lochend

Wapiti

Alder Flats

Central Pembina

Willesden Green

West Pembina

Brazeau

Garrington

East Pembina

Pine Creek

-25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25%

Lochend

West Pembina

Alder Flats

East Pembina

Central Pembina

Willesden Green

Garrington

Brazeau

Pine Creek

Wapiti


29 January 2015 21

In Figs 3334, we provide the IRR and P/I sensitivities of each of our Cardium type curves at Edm

Par pricing between C$4080/bbl and assuming a flat C$3.50/mcf AECO price. As can been seen,

most of the wells are simply uneconomic around C$4060/bbl Edm Par.

In Figs 3536, we have shown the same sensitivity assuming that total well costs decrease by

30%, which we believe is a likely scenario under this low commodity price environment. As shown,

the economics greatly improve; however, the break-even costs are still in the low C$4050/bbl

range, suggesting a higher price of around C$60/bbl Edm Par would be required to justify

incremental drilling in the Cardium.

Fig 33 IRR AT sensitivity to oil prices Fig 34 P/I AT sensitivity to oil prices

Fig 35 IRR AT sensitivity to oil prices at 70% of cost Fig 36 P/I AT sensitivity to oil prices at 70% of cost


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

120%

$80 $70 $60 $50 $40

IRR

%

Edmonton Par (C$/bbl)

Central Pembina

Brazeau

East Pembina

West Pembina

Pine Creek

Wapiti

Lochend

Willesden Green

Garrington

Alder Flats

-0.6x

-0.5x

-0.4x

-0.3x

-0.2x

-0.1x

0.0x

0.1x

0.2x

0.3x

0.4x

0.5x

0.6x

0.7x

0.8x

0.9x

1.0x

1.1x

1.2x

$80 $70 $60 $50 $40

P/I R

ati

o


Central Pembina

Brazeau

East Pembina

West Pembina

Pine Creek

Wapiti

Lochend

Willesden Green

Garrington

Alder Flats

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

110%

120%

$80 $70 $60 $50 $40

IRR

%


Central Pembina

Brazeau

East Pembina

West Pembina

Pine Creek

Wapiti

Lochend

Willesden Green

Garrington

Alder Flats

-0.6x

-0.5x

-0.4x

-0.3x

-0.2x

-0.1x

0.0x

0.1x

0.2x

0.3x

0.4x

0.5x

0.6x

0.7x

0.8x

0.9x

1.0x

1.1x

1.2x

$80 $70 $60 $50 $40

P/I R

ati

o


Central Pembina

Brazeau

East Pembina

West Pembina

Pine Creek

Wapiti

Lochend

Willesden Green

Garrington

Alder Flats


29 January 2015 22

Appendix Area breakdowns

Breaking down the Cardium

Lochend .............................................................................................................................. 23

Garrington ........................................................................................................................... 30

Willesden Green Ferrier .................................................................................................. 37

Alder Flats .......................................................................................................................... 44

East Pembina ..................................................................................................................... 51

Central Pembina ................................................................................................................. 58

Brazeau .............................................................................................................................. 65

West Pembina .................................................................................................................... 72

Pine Creek Kaybob .......................................................................................................... 79

Wapiti .................................................................................................................................. 86


29 January 2015 23

Lochend


29 January 2015 24

Fig 37 Cardium Lochend map


Fig 38 Gross Lochend Cardium production (September 2014)


4,576boe/d

2,719boe/d

1,273boe/d

607boe/d 197boe/d 34boe/d

Pengrowth

Lightstream

Bonavista

TriOil

Tamarack

Others


29 January 2015 25

Fig 39 Vintage production by year Lochend

Cardium production from horizontal wells at Lochend has increased from 0 in 2010, peaking at >10.0mboe/d in early 2014 according to geoSCOUT data.

The largest wedge of production came from 2013 with Pengrowth leading the way in terms of wells drilled at Lochend. Since that time, activity appears to have tapered in the area.

As of September 2014, Cardium horizontal production from the area was ~9.7mboe/d.

Fig 40 Type curve vs results Lochend

Over 120 horizontal Cardium wells have been put on production at Lochend.

Our type curve has an IP30 of 327boe/d and a first-year decline of ~74% and generates an EUR of 179mboe.

This compares to Pengrowths internal type curve at Lochend with an IP30 of 285boe/d and EUR of 239mboe.

Fig 41 Activity by producer Lochend

Pengrowth and Lightstream are among the most active producers in the Cardium play at Lochend with 55 and 31 wells producing respectively.

TriOil has the most horizontal Cardium licences in the area at 14.


0.0

2.0

4.0

6.0

8.0

10.0

12.0

Pro

du

cti

on

(m

bo

e/d

)

2014

2013

2012

2011

2010

-

20

40

60

80

100

120

140

-

50

100

150

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1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

# P

rod

uc

ing

We

lls

Ca

len

da

r D

ay

Ra

te (

bo

e/d

)

Productive Month(s)

Count

P90

Swanson Mean

P50 (Median)

P10

Macq Cardium Type

0

10

20

30

40

50

60

70

Peng

row

th

TriO

il

Lig

hts

tream

Bo

navis

ta

Tam

ara

ck

Bern

um

# W

ells

Drilled & Cased

Location

Producing


29 January 2015 26

Fig 42 Type curve by year Lochend

There has been a marked improvement in the type curve since the initial horizontal wells came on production during the 20092010 time period.

Improvements in fracking technology and completion optimizations have improved the deliverability of individual wells in the play.

Our type curve for Lochend assumes slightly better rates than the group average due to the improving well performance with time. The 2014 data is currently exceeding our Lochend type curve.

Fig 43 Type curve by operator Lochend

Bonavista, Lightstream, and Tamarack have all exceeded our type curve, particularly in the first year of production.

Pengrowth and TriOil have both underperformed the group average and type curve in terms of average well productivity.

Fig 44 Type curve by operator, 20132014 wells Lochend

As previously mentioned, well productivity has improved with time as completion techniques have been optimized.

Looking at the most recent Cardium wells, which were drilled in 20132014, Lightstream, Bonavista, and Tamarack have performed better than our type curve while Pengrowth has been in line, and TriOil is underperforming.


-

50

100

150

200

250

300

350

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

Ca

len

da

r D

ay

Ra

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bo

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)

Productive Month(s)

2009

2010

2011

2012

2013

2014

All avg

Macq Cardium Type

-

50

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350

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

Ca

len

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ay

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)

Productive Month(s)

TriOil

Lightstream

Pengrowth

Tamarack

Bonavista

All avg

Macq Cardium Type

-

50

100

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250

300

350

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

Ca

len

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ay

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)

Productive Month(s)

TriOil

Lightstream

Pengrowth

Tamarack

Bonavista

Macq Cardium Type


29 January 2015 27

Fig 45 Average peak month rate by operator Lochend

Since 2013, Bonavista and Lightstream have shown the highest peak rates.

Peak rates have shown improvement post 2013 for Lightstream, Bonavista, and Pengrowth.

Fig 46 12-month average rate and decline by operator Lochend

The data shows first-year declines ranging from 5570%, which compares to 74% for our type curve. The reason why the data is understating the actual decline is that first-month IPs are underestimated using calendar day rates. Declines in the Cardium are comparable to other tight oil plays in Canada (6080%).

Fig 47 Variability by operator (P90/P10) Lochend

Variability is a measure of the consistency in well performance. We calculate the P90 (only 10% of wells above this rate) and P10 (90% of wells above this rate) curves, then took the ratio of P90/P10 over a 90-day period. The higher this number, the greater the variability in initial production rates on the play. Wells with lower variability can facilitate capital budgeting and provide for greater certainty for meeting production targets.

TriOils well results have among the highest variability within the peer group. Tamarack and Bonavista have the lowest P90/P10 (IP90 avg) ratios.


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hts

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lls

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pre 2013 well count

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0.0x

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3.0x

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6.0x

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Tam

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row

th

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tream

TriO

il

P9

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10

(IP

90

av

g)


29 January 2015 28

Fig 48 Average well depth by operator Lochend

Average True Vertical Depth of the Cardium at Lochend is between 2,2002,300m.

Average lateral length is longest for wells drilled by Lightstream and Tamarack.

Fig 49 Cumulative production vs time Lochend

We highlight cumulative production by year. Wells drilled during 20122014 have shown the highest cumulative production over a comparable time frame.

The two years that fall below the median are 2009 and 2010, which represent the initial horizontal wells in the play.

Fig 50 Cumulative production vs time by operator Lochend

Lightstream, Bonavista, and Tamarack are all on par with or slightly outperforming our type curve on a cumulative production basis.

Pengrowth and TriOil have wells that on average have produced a lower volume than our Lochend type curve over a comparable time period.


0

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TVD Avg

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1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

Cu

mu

lati

ve

Pro

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(m

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e)

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P90

P50 (Median)

P10

2009

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2014

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1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

Cu

mu

lati

ve

Pro

du

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on

(m

bo

e)

Productive Month(s)

TriOil

Lightstream

Pengrowth

Tamarack

Bonavista

Macq Cardium Type


29 January 2015 29

Fig 51 Log rate vs cumulative production Lochend

By plotting the logarithmic average production rate against the cumulative production, we are able to forecast the potential EUR that a well may produce over its life.

By approximating a line of best fit for 20122014 wells, we forecast new wells at Lochend will recover ~170mboe before reaching an estimated economic limit of 5boe/d. This compares to the EUR of 179mboe that we estimate from our Lochend type curve.

Fig 52 Top 20 wells by peak monthly rate Lochend

Eleven of the top 20 wells measured by peak monthly rate were brought on production by Lightstream and six by Pengrowth.

Eleven of the top 20 wells measured by peak monthly rate were brought on production in 20132014.

Bonavista and TriOil also have among the top 20 Cardium wells drilled at Lochend.

Fig 53 Top 20 wells by cumulative production Lochend

Twelve of the top 20 wells by cumulative production at Lochend were by Lightstream.

Pengrowth, TriOil, Bonavista, and Tamarack each had wells in the top 20.


1

10

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1,000

0 50 100 150 200 250

Lo

g R

ate

Cumulative Production (mboe)

P90

P50 (Median)

P10

2009

2010

2011

2012

2013

2014

Well ID Operator Peak Rate (boe/d) On Production Date

1 100/14-20-027-03W5/00 Pengrowth Enrg Corp 757 2011-09



4 100/04-08-027-03W5/00 Lightstream Rsrcs Ltd 548 2011-10

5 100/15-01-028-04W5/00 Bonavista Enrg Corp 542 2013-09



8 100/14-01-028-04W5/00 Bonavista Enrg Corp 510 2013-09






14 100/01-31-026-03W5/00 TriOil Rsrcs Ltd 436 2012-04







Well ID Operator Cumulative Production On Production Date

1 100/01-08-027-03W5/00 Lightstream Rsrcs Ltd 146,009 2011-09

2 100/14-20-027-03W5/00 Pengrowth Enrg Corp 139,576 2011-09








10 100/01-31-026-03W5/00 TriOil Rsrcs Ltd 109,152 2012-04


12 100/14-01-028-04W5/00 Bonavista Enrg Corp 107,367 2013-09

13 100/15-01-028-04W5/00 Bonavista Enrg Corp 107,133 2013-09





18 100/02-29-026-03W5/00 Tamarack Valley Enrg Ltd 97,218 2012-05




29 January 2015 30

Garrington


29 January 2015 31

Fig 54 Cardium Garrington map


Fig 55 Gross Garrington Cardium production (September 2014)


7,992boe/d

4,975boe/d

4,007boe/d

1,108boe/d

685boe/d497boe/d 1,088boe/d

Pengrowth

Whitecap

Exxonmobil

Bellatrix

Lightstream

Baccalieu

Others


29 January 2015 32

Fig 56 Vintage production by year Garrington

Cardium production from horizontal wells at Garrington has increased from 0 in 2009, peaking at >23.0mboe/d in late 2013 according to geoSCOUT data.

Production growth in the Garrington area has shown to be consistent between 2010 and 2013. Since that time, activity appears to have tapered slightly in the area.

As of September 2014, Cardium horizontal production from the area was ~20.0mboe/d.

Fig 57 Vintage production by area Garrington

~450 horizontal Cardium wells have been put on production at Garrington.


This compares to Whitecaps internal Garrington type curve with an IP30 of 320boe/d and an EUR of 227mboe. Pengrowth uses an IP30 of 170boe/d and EUR of 137mboe at Garrington.

Fig 58 Type curve vs results Garrington

Whitecap and Pengrowth are among the most active producers in the Cardium play at Garrington with 151 and 136 wells producing, respectively.

Lightstream has the most horizontal Cardium licences in the area at 7.


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Macq Cardium Type

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ells

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29 January 2015 33

Fig 59 Type curve by year Garrington

There has been a noticeable improvement in the type curve since the initial horizontal wells came on production during the 2009 time period.


Our type curve for Garrington assumes slightly better rates than the group average due to the improving well performance with time. The 2013 and 2014 data is currently exceeding the early months of our Garrington type curve.

Fig 60 Type curve by operator Garrington

Pengrowth and Baccalieu have both exceeded our type curve in the first year of production.

Conoco and Bonavista have both underperformed the group average and our type curve in terms of average well productivity at Garrington.

Fig 61 Type curve by operator, 20132014 wells Garrington

Type curves have improved substantially in recent years, with Baccalieu, Whitecap, Pengrowth, and Bellatrix all outperforming our type curve in 20132014.


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All avg

Macq Cardium Type

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Baccalieu Bellatrix Bonavista

Conoco Exxon Hyperion

Lightream Pengrowth Tamarack

Whitecap All avg Macq Cardium Type

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Baccalieu Bellatrix

Bonavista Exxon

Lightream Pengrowth

Tamarack Whitecap

Macq Cardium Type


29 January 2015 34

Fig 62 Average peak month rate by operator Garrington

Since 2013, Baccalieu and Whitecap have shown the highest peak rates.

The majority of operators have shown an improvement in peak rates post 2013 including Baccalieu, Whitecap, Pengrowth, Lightstream, and Bonavista.

Fig 63 12-month average rate and decline by operator Garrington

The data shows first-year declines ranging from 4581%, which compares to 79% for our type curve. The data is understating the actual decline because first-month IPs are underestimated using calendar day rates. Declines in the Cardium are comparable to other tight oil plays in Canada (6080%).

Fig 64 Variability by operator (P90/P10) Garrington

Lightstreams well results have among the highest variability within the peer group. Tamarack, Baccalieu, and Exxon have the lowest P90/P10 (IP90 avg) ratios at Garrington.


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Lig

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g)


29 January 2015 35

Fig 65 Average well depth by operator Garrington

Average True Vertical Depth of the Cardium at Garrington is ~2,000m.

Fig 66 Cumulative production vs time Garrington

We highlight cumulative production by year. Wells drilled during 20132014 have shown the highest cumulative production over a comparative time frame.

The two years that fall below the median are 2009, 2010 and 2011, which represent the initial horizontal wells in the play.

Fig 67 Cumulative production vs time by operator Garrington

Baccalieu is the only company on par with our type curve on a cumulative production basis.

Conoco, Crescent Point, and Husky have wells that have underperformed versus its peers.


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Cu

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Baccalieu Bellatrix

Bonavista Conoco

Crescent Pt Exxon

Husky Hyperion

Lightream Pengrowth

Tamarack Whitecap

Macq Cardium Type


29 January 2015 36

Fig 68 Log rate vs cumulative production Garrington

By plotting the logarithmic average production rate against the cumulative production, we are able to forecast the potential EUR that a well may produce over its life.

By approximating a line of best fit for 2013 and 2014 wells, it is estimated that new wells at Garrington will recover ~125mboe before reaching an estimated economic limit of 5boe/d. This compares to the EUR of 112mboe that we estimate from our Garrington type curve.

Fig 69 Top 20 wells by peak monthly rate Garrington

Ten of the top 20 wells measured by peak monthly rate were brought on production by Whitecap.

12 of the top 20 wells measured by peak monthly rate were brought on production in 20132014.

Exxon, Tamarack, Baccalieu, Pengrowth, and Bellatrix also have wells in the top 20.

Fig 70 Top 20 wells by cumulative production Garrington

Eight of the top 20 wells by cumulative production at Garrington have been by Whitecap.

Bellatrix, Lightstream, Pengrowth, Tamarack, and Baccalieu also have wells in the top 20.


1

10

100

1,000

0 20 40 60 80 100 120 140 160 180 200

Lo

g R

ate

Cumulative Production (mboe)

P90

P50 (Median)

P10

2009

2010

2011

2012

2013

2014

Well ID Operator Peak Rate (boe/d) On Production Date

1 100/02-12-035-04W5/00 Whitecap Rsrcs Inc 531 2010-04

2 100/03-28-031-03W5/00 Exxonmobil Cda Ltd 510 2012-06

3 100/02-20-032-03W5/00 Tamarack Acqstn Corp 496 2012-07







10 100/02-30-032-03W5/00 Baccalieu Enrg Inc 451 2013-01










20 100/03-03-032-03W5/00 Bellatrix Expl Ltd 398 2012-02

Well ID Operator Cumulative Production On Production Date


2 100/04-21-033-03W5/00 Whitecap Rsrcs Inc 127,821 2013-05

3 100/03-03-032-03W5/00 Bellatrix Expl Ltd 120,472 2012-02








11 100/02-30-032-03W5/00 Baccalieu Enrg Inc 97,207 2013-01





16 100/02-20-032-03W5/00 Tamarack Acqstn Corp 95,960 2012-07






29 January 2015 37

Willesden Green Ferrier


29 January 2015 38

Fig 71 Cardium Willesden Green/ Ferrier map


Fig 72 Gross Willesden Green-Ferrier Cardium production (September 2014)


10,916boe/d

2,682boe/d2,618boe/d

2,317boe/d

1,866boe/d

1,808boe/d

1,586boe/d

1,538boe/d

1,325boe/d

2,402boe/d

Bellatrix

Penn West

Bonavista

Tournament

Yangarra

CNRL

Anderson

Bonavista

Baccalieu

Others


29 January 2015 39

Fig 73 Vintage production by year Willesden Green/Ferrier

Cardium production from horizontal wells at Willesden Green-Ferrier has increased from 0 in early 2010, peaking at >30.0mboe/d in early 2014 according to geoSCOUT data.

Production growth has been steady on an annual basis at Willesden Green-Ferrier and this trend has continued into 2014.

As of September 2014, Cardium horizontal production from the area was >29.0mboe/d.

Fig 74 Type curve vs results Willesden Green/Ferrier

Over 350 horizontal Cardium wells have been put on production at Willesden Green.


This compares to Bellatrixs internal Willesden Green type curve with an IP30 of 582boe/d and EUR of 341mboe. Penn West uses an IP30 of 370boe/d and EUR of 334mboe.

Fig 75 Activity by producer Willesden Green/Ferrier

Bellatrix leads the pack in terms of Cardium horizontal wells producing, drilled, and cased; while Penn West has the greatest number of licences for the group.


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ells

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29 January 2015 40

Fig 76 Type curve by year Willesden Green/Ferrier

The following display shows an improving type curve with time.


Our type curve for Willesden Green assumes better rates than the group average due to the improving well performance with time, specifically in 2013 and 2014.

Fig 77 Type curve by operator Willesden Green/Ferrier

The best results from the Willesden Green-Ferrier Cardium have come from Bellatrix, whose wells have on average outperformed our type curve in the first 24 months of production.

Also of note, Penn West and Bonavista have significant production in the area and are both underperforming our type curve

Fig 78 Type curve by operator, 20132014 wells Willesden Green/Ferrier

Looking at the most recent Cardium wells, which were drilled in 20132014, Whitecap, Tournament, and Bellatrix have performed better than our type curve while Bonavista and Penn West have underperformed.


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2010

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Anderson Baccalieu Bellatrix

Bonavista Bonterra CNRL

Conoco Exoro Penn West

Baytex Tournam. TriOil

Whitecap Yangarra Macq Cardium Type

All avg

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1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

Ca

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Productive Month(s)

Anderson Baccalieu

Bellatrix Bonavista

CNRL Penn West

Tournam. TriOil

Whitecap Yangarra

Macq Cardium Type


29 January 2015 41

Fig 79 Average peak month rate by operator Willesden Green/Ferrier

Since 2013, Bellatrix, Tournament, Whitecap, and Anderson have had the highest average peak

Documents

2015 Cardium Production