Vail Project Primer Final

Tim Hoops

Managing Director

[email protected]

www.strata-x.com

Vail Project Primer

Contact:

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Illinois is a Proven and Mature Oil Provence

–Production dates back to 1894 with over 4 billion barrels of oil produced to date

–Over 140,000 wells have been drilled, with 32,000 wells still producing

–600+ oil fields produced 9 million barrels last year

–High quality, light, sweet crude oil

Why is Strata-X drilling in Illinois?

Photos from: Illinois Department of Natural Resources Office of Mines and

Minerals and Illinois Oil Field Museum

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Why is Strata-X drilling in Illinois?

Geological conditions appear right for a significant oil accumulation in

Southern Illinois.

• Excellent Source Rock –

• New Albany Shale

• Proven oil generation

• Low Geologic Risk

• Evidence of a large reservoir from analysis of over 100 previous wells

• Good Analog evidence with the Bakken Elm Coulee Field

Map Ref: USGS

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New Albany Shale and its Neighbors

• New Albany Shale was deposited

at the same time as several other

significant North American oil

targets.

• All 5 areas exhibit very good oil

generating capacities. (Light blue

areas)

• Map shows what experts believed

North America looked liked during

Late Devonian time, 400 million

years ago. The brown and green

areas are land masses, light blue

are sedimentary basins, dark blue

deep oceans

Formation History

modified from Blakey, 2011

Anadarko Basin,

Woodford Shale

Michigan Basin,

Antrim Shale

Appalachian Basin,

Marcellus Shale

Williston Basin,

Bakken Shale

Illinois Basin,

New Albany Shale

Late Devonian Time

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• As shown on the previous

slide, the New Albany has a

good pedigree having been

deposited during a time when

prolific source rocks were being

deposited in North America.

• After deposition the New

Albany was buried to a depth

sufficient to generate significant

quantities of oil, potentially

more than 300 billion barrels as

calculated by Lewan (2002)

• Vail Project is immediately up

dip of the peak generating area

(kitchen).

New Albany Oil Generation

Map Ref: Illinois State

Geological Survey

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Numerous Productive Intervals in Illinois

319-1078 billion

barrels of expelled oil

as estimated by Rock

Eval (Lewan, et. al.,

2002).

Primary Target

Productive

Interval

• Illinois has produced over 4 billion barrels of oil from numerous formations 1

• Nearly all of the oil produced in Illinois was generated from the New Albany shale 2

• Focus of prior exploration was for conventional targets above the New Albany

• The Lingle Formation is a tight dolomite which requires horizontal drilling to prove

up commercial production

1) ref: Higley, etal, 2003

2) ref: Hatch and others, 1991.

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New Albany / Lingle Couplet

• Maturation, generation and expulsion of

oil from New Albany source rocks results

in migration of oil into porous, low

permeability zones in the underlying

Lingle Formation as well as overlying

conventional reservoirs.

• Similar to the Bakken and Three Forks

petroleum systems in the Williston Basin.

Lingle Fm.

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Source Rock - New Albany similar to

other proven shale oil formations

Oil Generation – Evidenced by the 4+

billion barrels of oil produced to date

which were generated by the New

Albany

Reservoir Rock – Mapping suggests the

Lingle reservoir may extend over 500

square miles in areal extent

Proximity – The Lingle reservoir is

immediately underneath the New Albany

Shale providing the opportunity to be

filled with oil.

Vail Oil Project – Key Elements

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5-98 BOPD

OCM

OCM

368 MBO

4-28 BOPD

Gas

G & OCM

G & OCM

236 MBO

Numerous O, G &

OCM

16-70 BOPD

60-199

BOPD

Gas

Elm Coulee Bakken has similarities to the Vail Oil Project

Similar oil generating attributes

• Total Organic Carbon

• Hydrocarbon Index

• Tmax

Similar size, source rock and reservoir

• Dolomitic reservoir immediately below excellent

source rock (~11% porosity)

• Same geological ages and paleogeography

Elm Coulee has produced > 123 MMBO* from horizontal/ frac wells Projected Field EUR ~212 MMBO

Similar scales 10 miles

* Ref: Montana Board of Oil and Gas

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How is Strata-X going to drill the Burkett 5-34HOR well?

Well design has multiple components

Surface Hole

•Designed to protect freshwater zone

Vertical Section

•Designed to obtain necessary geologic and reservoir data

Bend

•Turning the wellbore from the vertical to horizontal

•Cased production string further protects upper formations

Horizontal

•Up to 4,200 feet of exposure to the target zone

•Drilled with minimal invasion fluids

Scope of work subject to actual conditions encountered

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Drilling Plan – Surface Hole

• Drill surface hole with freshwater to

~350’, below the freshwater zones

• Freshwater zones are then isolated with

steel casing and cement.


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Drilling Plan – Vertical Hole

• Prior to drilling, surface casing is

pressure tested to insure the

freshwater zones are protected.

• Drill vertically from the surface casing

to just above the target formations

• Take a core of the reservoir and

adjoining formations

Core will give needed data for

completion design

• Test the reservoir for fluid content and

reservoir pressure


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Drilling Plan – Bend

• Plug bottom portion of vertical hole

• Well drilled at an increasing angle until

drill bit is nearly horizontal

• Casing run from bottom to surface and

cemented to further protect freshwater

zones.


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Drilling Plan – Horizontal

• Once the Bend has been cased

the well is drilled horizontally

through the target zone.

• Between 2,000’ to 4,300’ of

lateral will be drilled

• The target zone is then isolated

by the use of casing, and

packers

• The packers isolate the target

zone into separate stages for

more effective stimulation.

Completed Wellbore Diagram


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How is Strata-X going to complete the Burkett 5-34HOR well?

Completion design

Final completion design will be dependent on data obtained

while drilling and testing

• Rock mechanics from core, test and logs

• Pressure test from Stage 1 test

• Permeability will be a prime factor in determining completion techniques


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Completion Plan – Production Test – Stage 1

• Stage 1 – also known as the toe, will

be tested first to determine rock

properties and reservoir conditions

Completion


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Completion Plan – Hypothetical Production Mode

• The exact completion method has not been

determined

• Strata-X may conduct fracture stimulation of the

target zone to develop pathways for the oil to

flow to the wellbore and ultimately be pumped to

the surface

• The diagram below shows what this might look

like should a fracture stimulation be conducted

Production


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Significant land position:

• ~48,000 acres under lease or option

• Ability to increase position upon success

100% working interest in the project:

• Good margins ~85% NRI

Proven – Mature Petroleum Basin:

• 4+ billion barrels produced to date

• Infrastructure in place

• Flat easy access

Shallow Resource:

• Expected well costs ~ USD$2.5 million once in full

development

• 10-20 foot thick reservoir mapped over a large area

• Estimated 200 million barrels of OOIP* net to Strata-X

Strata-X is a first mover in the Vail Oil Project

* Undiscovered Estimated original oil in place, unrisked

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Management aligned with shareholders:

• Chairman and President own ~20% of company

• Have a proven track record of shareholder growth

100% of Vail & Maverick (Eagle Ford-TX) unconventional oil:

• USA unconventional oil projects with ~1.1 billion barrels of oil

resources in place net to Strata-X*

• Primary goal: proving commercial oil production

• Strata-X to use latest drilling and multistage stimulation extraction

technologies

100% of the Sleeping Giant (ND) unconventional gas:

• Tcf gas potential*, shallow/low cost, improving gas price

100% Canning Basin Project in the Canning Basin, (WA, AUS):

• 1.4 million acre Canning project is within the interpreted Laurel

shale oil to wet gas window

• 5.5 Tcf and 1,000 Mmbbls** – undiscovered resource potential in

place

Financial capability to drill/test key USA projects:

• Recent $12.7 million ASX capital raise

Vail Project just one of 4 large projects in the Strata-X portfolio

* Undiscovered Estimated OOIP

** Undiscovered Estimated Resource Potential

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Definitions

In this document, the abbreviations set forth below have the following meanings:

Oil and Natural Gas

Bbl barrel

Bbls barrels

Mbbls thousand barrels

MMbbls million barrels

Mcf thousand standard cubic feet

MMcf million standard cubic feet

Bcf billion cubic feet

TCF trillion cubic feet

Other

Hydrocarbon Index- measure of the hydrogen richness of the source rock, and when the kerogen type is known it can be used to

estimate the thermal maturity of the rock.

OOIP – Original Oil in Place.

Permeability – the ability or measurement of a rock’s ability to transmit fluids.

Porosity – percentage of pore volume or void space or that volume within rock that can contain fluids.

Reservoir Rock – refers to a subsurface pool of hydrocarbons contained in porous or fractured rock formations.

Rock Eval – is used to identify the type and maturity of organic matter and to detect petroleum potential in sediments.

Source Rock - refers to carbon bearing rocks from which hydrocarbons have been generated or are capable of being generated.

Tmax - highest temperature incurred by a Source Rock, generally higher temperatures equates to larger hydrocarbon generation.

Total Organic Carbon (TOC) – amount of carbon in a geological formation, mainly Source Rocks.

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Disclaimer Statement

Forward-Looking Statements This summary contains certain statements which constitute forward-looking statements or information ("forward-looking statements"), including statements regarding the use of proceeds. These forward-looking statements are based on certain key expectations and assumptions, including assumptions regarding the general economic conditions in USA and globally, industry conditions in USA and the operations of the Company. These factors and assumptions are based upon currently available information and the forward-looking statements contained herein speak only as of the date hereof. Although the Company believes the expectations and assumptions reflected in the forward-looking statements are reasonable, as of the date hereof, undue reliance should not be placed on the forward-looking statements as the Company can give no assurances that they will prove correct and because forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking statements. These risks include, but are not limited to: uncertainties and other factors that are beyond the control of the Company; global economic conditions; risks associated with the oil and gas industry; commodity prices and exchange rate changes; operational risks associated with exploration, development and production operations; delays or changes in plans; specific risks associated with the ability to execute production sharing contracts, ability to meet work commitments, ability to meet the capital expenditures, estimated size of any seismic features and whether additional geosciences work will progress to defining drillable locations; risk associated with stock market volatility and the ability of the Company to continue as a going concern. The Company assumes no obligation to update any forward-looking statements or to update the reasons why actual results could differ from those reflected in the forward-looking statements, except as required by securities laws. (Additional information identifying risks and uncertainties is contained in filings of the Company with Canadian securities regulators).

Disclaimer This summary shall not constitute an offer to sell or the solicitation of an offer to buy any securities of the Company in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities to be offered have not been and will not be registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold within the United States or to or for the account or benefit of a U.S. Person absent registration or an applicable exemption from the registration requirements of such Act or laws.

In addition, the Company makes not representation or warranty, express or implied, in relation to, and no responsibility or liability is or will be accepted by the Company or its directors, officers, shareholders, partners, employees or advisers as to or in relation to the accuracy or completeness of the information, statements , opinions or matters (express or implied) arising out of, contained in or derived from this presentation or any omission from this presentation or of any other written or oral information or opinions provided now or in the future to any interested party or its advisers.

Cautionary Statement: Undiscovered Resources, OOIP and BOE

Undiscovered Hydrocarbon-In-Place (equivalent to undiscovered resources) is that quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered. There is no certainty that any portion of the undiscovered resources will be discovered or that, if discovered, it will be economically viable or technically feasible to produce. Original-Oil-in-Place (equivalent to Discovered Petroleum Initially in Place), also known as ‘discovered resource’, is defined as that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of OOIP includes production, reserves and contingent resources; the remainder is defined as unrecoverable. The terms “barrels of oil equivalent” or “boe” may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (6 mcf) to one barrel (1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Investor Relations

Vail Project Primer Final