Canadian Oil and Gas Acquisition and Development Opportunities

October 2019

Forward Looking Statements

Certain information regarding the Company contained herein may constitute forward-looking statements within the meaning of applicable securities laws. Forward-lookingstatements may include estimates, plans, expectations, opinions, forecasts, projections,guidance or other statements that are not statements of fact. Although the Companybelieves that the expectations reflected in such forward-looking statements arereasonable, it can give no assurance that such expectations will prove to have beencorrect. The Company cautions that actual performance will be affected by a number offactors, many of which are beyond the Company's control, and that future events andresults may vary substantially from what the Company currently foresees.

Discussion of the various factors that may affect future results is contained in theCompany's Annual Report which is available at www.sedar.com. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement.

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Oil and Gas Business Model(Acquire – Develop – Divest)

1. Acquire producing oil and gas assets with high value growth potential deliverable through field development, e.g. low risk drilling, water floods

2. Develop fields to unlock asset value by increasing production and Proved reserves valuation through well recompletions, development drilling, enhanced recovery/reservoir management

3. Divest assets at maximum valuation point in oil and gas project life cycle (e.g. maximum production and Proved reserves valuation) within 2 to 4 years

Acquire – Develop - Divest

Oil Prod

(bbl/d)

EUR

(Mbbl)

NPV10

($K CAD)

Investment

($K CAD)

Oil Prod

(bbl/d)

EUR

(Mbbl)

NPV10

($K CAD)

Investment

($K CAD)

Oil Prod

(bbl/d)

EUR

(Mbbl)

NPV10

($K CAD)

Saskatchewan Oil 160 70 484 2,600 685 500 8,753 6,982 1,000 1,037 18,504

Alberta A 170 0 negative 7,000 500 954 19,443 19,000 1,160 2,943 77,858Alberta B 174 170 1,067 8,000 670 718 20,507 9,900 1,025 1,088 43,180

Total 504 240 1,551 17,600 1,855 2,172 48,703 35,882 3,185 5,068 139,542

Current Acquisition & Initial Development Only Full Field Development Potential

Current Hillcrest Oil and Gas Opportunities - Indicative Value

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Canadian Oil and Gas industry remains distressed as a result of a long and difficult oil price downturn, with numerous bankruptcies and many remaining upstream oil and gas players struggling.

Many assets with high value potential available for acquisition:• Debt distressed from legacy energy loans• Current owners of small private companies tired, looking for exit (e.g. age

demographic)• Small private companies capital constrained and undercapitalized to deliver

value potential of their properties• Small listed oil companies re-positioning out of oil and gas

Competitive advantages:• Hillcrest relationships and business network - Access to high deal flow for

acquisitions through company contacts and trade sales• Buyers market - many properties for sale with few genuine, capitalized buyers

able to close deals• Cash is king - ability to show funding and make cash offers to close deals quickly

and cleanly

Canadian Oil and Gas Acquisitions Market

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Saskatchewan - West Hazel Field

Production operations• 160 bbl/d heavy oil (12 to 16 API), WCS pricing

• 5 active wells: 4 oil producers, 1 SWD, ~ 800m well depth

• recently upgraded integrated production facilities including artificial lift, separators, storage tanks, 5000 bbl/d water injection system in place

Further Field Development Potential• Multiple conventional reservoirs,

>20% porosity available to drill recomplete:o General Petroleum (GP)o Wasecao Sparky

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Saskatchewan - West Hazel Oil Project Summary

Hillcrest is operator with 75% working interest (WI), reverting to 50% WI after payout of the Production Restart costs. • Approx $1m invested to upgrade production/injection facilities and restart field

production (Q1 2019)• Current Production (4 wells) 160 bbl/d

Phase 1. Development Plan:• Acquire remaining WI• 3 development wells targeting Waseca, Sparky, GP• 1 Sparky Recompletion• Facilities expansion for additional oil volumes

Expected Oil Production* 490 bbl/dCapital Investment C$ 2,600,000Gross Monthly Revenue* C$ 900,000

Indicative Asset valuation** (including Phase 1 development)Undiscounted Cashflow C$ 10,100,000Cashflow NPV @ 10% discount C$ 8,750,000

Additional potential field development value in further development wells and recompletions

* avg first 12 months ** WCS @ WTI approx. $US 60/bbl with avg $US 15 WCS differential

As almost all Op Cost is fixedUnit Op Cost drops from $14/bblto < $7/bbl after development*

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Alberta Acquisition Targets

• conventional, producing, light oil fields located in South Central Alberta

• Extensive infrastructure and easy access to services

• Production facilities connected to existing oil and gas export lines.

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Alberta A: Opportunity Summary

Target Company• Financially distressed private oil company - 100% interest in 2 mature,

producing oil fields in Alberta, Canada• Acquired fields in 2012 with intention to complete field development and

flip, but caught out in oil price crash with substantial bank debt • No ability to raise funds and production declining due to inability to maintain

producing wells on production.• Current production 160 bbl/d, operating cash flow around break even and

bank sweeping any free cash

The Opportunity1. Pay out bank debt (at a deep discount) and acquire 100% of Target Company

shares through a share swap with Hillcrest (Q2/Q3 2019)2. Immediately implement workover program on shut in wells to triple

production to around 500 bbl/d by end 2019 (operating cash flow > $1MM/month)

3. Complete full field developments for both fields, including development drilling and water flood optimisation in 2020

4. Divest at maximum valuation point in 2021/2022 for multiples on investment

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Alberta A: Opportunity Summary Continue

• Single reservoir• Mature water flood, not optimized (unswept oil)• Current production 60 bbl/d, 21 Mcf/d• 65 wells in total: 13 producing oil wells, 3 water injectors, 49 inactive,

including 27 shut in producing wells awaiting workovers (expected to add >400bbl/d)

Production Facilities and Infrastructure• Oil Battery (emulsion treatment)• Gas plant (amine, NGL recovery)• Water disposal• $25.6MM replacement cost• Production gathering system

1. Includes current producing and workover wells 2. includes 5 infill wells and water flood optimization

• Multiple wells in separate reservoirs connected to common production facilities

• Current production 100 bbl/d, 520 Mcf/d• 38 wells in total: 21 Producing oil wells, 3 water injection, 14 inactive,

with 1 shut in producing well awaiting workover

Production Facilities and Infrastructure• Oil Battery (emulsion treatment)• Gas plant with NGL extraction• Gas compression• Water disposal• $13.6 MM replacement cost• Production gathering system

Current Field Additional Full FieldDevelopment Development 2. Development

Oil Mbbl 904 757 1,661Gas MMcf 700 273 973Undisc $MM 28.5 45.8 74.3NPV10 $MM 20.8 27.2 48.0

Current Field Additional Full FieldDevelopment 1. Development Development

Oil Mbbl 93 320 413Gas MMcf 393 851 1,244Undisc $MM -2.3 5.3 3.0NPV10 $MM -1.7 4.2 2.5

1. Abandonment costs ($2.4 MM) drives cash flow values negative2. includes 5 infill wells and water flood optimization

Field 1

Field 2

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Asset Valuation and Value Proposition(all values in $CAD)

Indicative Value Metrics: ROI (NPV10/Investment) = 3x, IRR = 116%, Payback = 18 months

Additional upside potential:

➢ Option to exit through sale/divestment at maximum valuation point within 3 years ➢ >1MM bbl additional oil recovery from water flood optimization based on offsetting analog fields➢ Additional development drilling identified➢ Potential additional acquisitions to expand/consolidate position in operating area

Asset Value Current Field

(with well workovers)Additional Development

(drilling + water flood opt)Full Field Development (Current + Additional)

Oil Recovery (Mbbl) 997 1,077 2,074

Gas Recovery (MMcf) 1,093 1,124 2,217

Cum Cash Flow Undisc ($MM) 26.2 51.1 77.2

Cum Cash Flow PV10 ($MM ) 19.1 31.4 50.5

Operating MetricsMay 2019

(Current Operations)End 2019

(After Workovers) 2020 (after drilling)

Oil Production (bbl/d) 160 540 1,000

Operating Costs ($/boe) 51 32 17

Operating Cash Flow ($MM/mo) ~ Breakeven 1.1 1.8

Funding Tranches ($MM) $3MM (Bank Debt) Discounted from $8m

$4MM (Workovers) $13MM (Development)Fund part from cash flow?

Timing On closing On closing Q1 2020

Key Management Team

Hillcrest Petroleum’s experienced management team is comprised of energy industry professionals with a proven track record in oil and gas exploration & development and company management.

Executive Chairman – Michael Krzus (BSc Petroleum Engineering)Former CEO and Director of NYSE listed Oil company with 35 years oil & gas experience including senior technical and executive management positions with both large and small listed oil and gas companies in Canada, USA, Australia and the Netherlands.

Chief Executive Officer – Donald J. Currie30 years experience building and financing both private and public companies in Canada and the United States.

Chief Operating Officer – Dale Miller (P.Eng, BSc Petroleum Engineering)

35 years experience in the Canadian upstream oil and gas industry focused on managing production operations, engineering and building value through field development and A&D.

Chief Financial Officer – Sean C. McGrath (CPA)

Over 20 years of accounting/finance experience with publicly traded petroleum and mineral resource

companies.

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Board of Directors

Michael Krzus, Executive Chairman▪ 35 years oil & gas industry experience including senior technical/executive mgt. positions in Shell, ASX

listed Woodside Petroleum Ltd., Founding CEO/Director of NYSE listed Emerald Oil Inc., CEO/Managing Director of ASX listed Emerald Oil and Gas NL

Don Currie, CEO/Director▪ Hillcrest CEO & Chairman 2010 to 2015; over 20 years experience in finance, development & operation of

various North American resource properties

David Stone, Director (Independent)▪ Professional engineer with 30+ years in mining evaluating projects; holds Bachelor of Applied Science from

the University of British Columbia, Ph.D. in Civil Engineering from Queens University & Executive Masters of Business Administration from Queens University

Tom Milne, Director (Independent)▪ Senior financial executive with extensive international experience in energy E&P, pipelines, oil sands &

communication technology; served as Director of both public & private companies including Chairman of Audit Committee for AMEX-listed oil sands company

Robert Lambert, Director (Independent)▪ Currently Deputy Chairman of Jadestone Energy Inc., Founder of Ipex Energy Ltd and a Partner in Oilfield

Capital International LLP. Over past 12 years held positions of CEO of Petra Petroleum Inc, Senior

Independent Director of Eland Oil & Gas PLC, CEO of GB Petroleum Ltd years and previously held a variety of executive management and senior operational roles with Conoco Inc over a 25-year international career.

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