CAPLA SUMMIT NOV. 13, 2018 Complications with Conveyancing [email protected] COMPLICATIONS WITH CONVEYANCING

THREE THINGS THAT WILL ALWAYS EXIST: DEATH, TAXES & A&D.

AS OUR INDUSTRY EVOLVES WE FIND NEW SOLUTIONS IN A&D

2 CAPLA

Complications with Conveyancing

1. NON CONSENT on a Transaction (Land Contract)

2. AER STATEMENT OF CONCERN (SOC)

3. WELLS ABANDONED/STATE OF SUSPENSION

4. DELINQUENT PARTIES

5. NEW AER DIRECTIVE 067

3 COMPLICATIONS WITH CONVEYANCING NON CONSENT (LAND CONTRACT)

 BACKGROUND: IMPROVEMENTS IN LAND ADMINISTRATION Since the Assignment Procedure in 1993 was adopted by Industry with the use of the Notice of Assignment (NOA), the Assignment and Novation (A&N) has been nearly taken out of the equation in our Land Agreements. Accounting records that were a nightmare were eventually aligned with Land contractual records.  UNSIGNED A&Ns CAUSED A BACKLOG AND THE ACCOUNTING NIGHTMARE WAS EASED WITH NOAS PAVING THE WAY.  NOTICE OF ASSIGNMENT TOOK THE INDUSTRY BY STORM  TIME CERTAINTY WITH BINDING DATE AND NO THIRD PARTY SIGNATURES

4 NOTICE OF ASSIGNMENT - CONSENT:

ASSIGNOR – TRUSTEE AND ASSIGNEE – BENEFICIARY TO AGENT FOR ASSIGNEE FROM THE ASSIGNOR FROM THE EFFECTIVE EFFECTIVE DATE TO BINDING DATE DATE TO BINDING DATE AND AND REMAINS THE RECOGNIZED BECOMES RECOGNIZED INTO THE PARTY OF THE MASTER AGREEMENT MASTER AGREEMENT AS OF THE UNTIL THE BINDING DATE BINDING DATE EFFECTIVE BINDING DATE INTERESTS, DATE OBLIGATIONS, LIABILITIES

THIRD PARTY – AGREES/CONSENTS TO RECOGNIZE AND ACCEPT ASSIGNOR AS TRUSTEE AND AGENT FOR ASSIGNEE.

5 COMPLICATIONS WITH CONVEYANCING

A&N

NOAS THIRD PARTY THIRD PARTY NON CONSENT - A&N PROBLEMATIC UNEXECUTED - PROBLEMATIC

NOAS ASSIGNMENT CONSENT PROCEDURE

6 COMPLICATIONS WITH CONVEYANCING

NON CONSENT (REFUSAL TO NOVATE) SENIOR, INTERMEDIATE, JUNIOR, START-UP COMPANIES ARE ALL AFFECTED UNTIL NOVATION OCCURS, THE VENDOR/ASSIGNOR REMAINS RECOGNIZED AND NOT THE PURCHASER/ASSIGNEE. CL 2.04 ASSIGN PROC UNDER APPLICATIONS, CONDITIONS AND FORM OF NOTICE – THE RATIONALE OR JUSTIFICATION IS THAT A THIRD PARTY MAY “PASS JUDGEMENT” ON A PROPOSED TRANSFER OF ASSIGNEE IN THE FORM OF REFUSING TO ALLOW THE TRANSACTION TO BE COMPLETED (WITHHOLDING CONSENT). SINCE THE OIL PRICE COLLAPSE AND NATURAL GAS PRICE CRASH IN 2014, WE’VE FALLEN ON TOUGH FINANCIAL TIMES AND MUCH HIGHER RISKS OF COMPANY INSOLVENCY. STRICTER MEASURES OF COMPLIANCE FROM THE GOVERNMENT HAS SET THE TONE FOR UNEASINESS IN OUR SEDIMENTARY BASIN IN WESTERN CANADA ‘S ENERGY INDUSTRY. COMPANIES ARE ALSO SETTING THE TONE TO PROTECT THEIR ASSETS. THIS HAS LED TO PARTNERS ABILITY TO PAY ITS SHARE OF - JOINT INTEREST BILLINGS (JIB) - ROYALTIES, RENTALS, ALL ENCUMBRANCES - ANY FUTURE CAPITAL COSTS

- ASSET RETIREMENT OBLIGATIONS (ARO). 7 NOA - NON CONSENT: REFUSAL TO NOVATE ASSIGNOR BECOMES MIDDLEMAN FOR ASSIGNEE

ASSIGNOR – TRUSTEE AND ASSIGNEE – AGENT FOR ASSIGNEE FROM THE BENEFICIARY TO ASSIGNOR FROM EFFECTIVE DATE TO BINDING DATE AND THE EFFECTIVE DATE TO BINDING REMAINS THE RECOGNIZED PARTY OF THE DATE AND BECOMES RECOGNIZED MASTER AGREEMENT UNTIL THE BINDING INTO THE MASTER AGREEMENT AS DATE EFFECTIVE OF THE BINDING DATE BINDING DATE INTERESTS, DATE OBLIGATIONS, LIABILITIES

THIRD PARTY – DOES NOT AGREE/NON CONSENT TO RECOGNIZE AND ACCEPT ASSIGNOR AS TRUSTEE AND AGENT FOR ASSIGNEE.

8 THE IN FLUX OF NON CONSENTS. LIKE THE CANADIAN PIPELINE EGRESS, NO OR DELAYED RESOLUTION CREATES BOTTLENECKS/BLOCKADES - A&D TRANSACTIONS

•SENIOR OIL AND • INTERMEDIATE OIL GAS COMPANY NOAS AND GAS •COMPLIANT? COMPANY •LMR 2+ •COMPLIANT? •LMR 2+

POTENTIAL VENDOR PURCHASER

THIRD THIRD PARTY PARTY CONSENT NON CONSENT •JUNIOR OIL •START-UP • AND GAS •OIL AND GAS •COMPANY - •COMPANY - •COMPLIANT? SCRUTINIZED •COMPLIANT? SCRUTINIZED

9 COMPLICATIONS WITH CONVEYANCING

NON CONSENT BY A CURRENT THIRD PARTY – PURCHASER IS NOT RECOGNIZED, VENDOR REMAINS RECOGNIZED. A GROWING LIST OF THIRD PARTIES ARE REFUSING TO PROVIDE PRIOR CONSENT ON A REASONABLE BELIEF THAT THE PROPOSED ASSIGNEE DOES NOT HAVE THE FINANCIAL ABILITY TO MEET THE OBLIGATIONS UNDER THE AGREEMENT: HERE’S AN ONGOING CASE THAT IS AN ADMINISTRATION BOTTLEKNECK! -THE TP (OPERATOR) REFUSES TO GIVE CONSENT (REFUSAL TO NOVATE) AND CONTINUES TO BILL (JIBS) VENDOR -TP CONTINUES TO SEND CORRESPONDENCE RELATED TO THE LANDS TO VENDOR -VENDOR ACTS AS MIDDLEMAN – FORWARDS/RECEIVES ELECTIONS FROM PURCHASER. - ANY QUERIES OR FOLLOW UP REMAINS WITH VENDOR FOR ANSWERS.

- IF PURCHASER HAS ANY QUESTIONS - MUST GO THROUGH VENDOR TO ASK THIRD PARTY OPERATOR.

- I.E. AFE QUESTIONS ON COSTS AND REVENUES, ETC. NEED TO BE TRACKED TO BE REFLECTED ON SOA OF THE SALE (VENDOR >PURCHASER). - THIS BECOMES A HUGE ADMINISTRATION NIGHTMARE AND BURDEN ON VENDORS DAILY WORK LOAD. THIS HEADACHE HAS BEEN GOING ON NOW FOR OVER ONE PLUS YEARS WITH NO END IN SIGHT. THIS CANNOT BE THE WAY INDUSTRY MOVES FORWARD AND A JOINT EFFORT TO CORRECT THIS MOVING FORWARD.

10 COMPLICATIONS WITH CONVEYANCING

- IS NON CONSENT FAIR?

- NON CONSENT BY A THIRD PARTY IS A PROTECTION FROM BRINGING IN A NEW POTENTIAL PURCHASER PARTY INTO THE SHOES OF A VENDOR.

- WITH THE AMOUNT OF COMPANIES GOING INTO FINANCIAL DISTRESS, WITH BANKRUPCIES, THE INABLITITY OF MAINTAINING GOOD BUSINESS PRACTICE HAS CREATED AN UNCERTAINTY AND HAS BECOME MORE COMMON IN TODAY’S INDUSTRY.

- IS NON CONSENT HOLDING UP DEALS?

- ABSOLUTELY, MOST AFFECTED ARE NEW ENTITIES AND/OR SMALL CORPORATIONS. THEIR INABILITY TO PROCEED WITH DEALS HAS CREATED MORE COMPANIES JUMPING ON BOARD WITH PROTECTING THEIR ASSETS THAT THEY HOLD WITH PARTNERS,

.

11 COMPLICATIONS WITH CONVEYANCING

PROVIDE EVIDENCE FROM PURCHASER THAT IS SATISFACTORY: 1. BALANCE SHEET 2. FINANCIAL STATEMENTS 3. LMR/LLR RATING 4. LETTER OF CREDIT IN AMOUNT OF EXPECTED AOR (RECLAMATION OBLIGATIONS) OF AGREEMENTS.

PROCESS/PROGRESS: 1) POTENTIAL PURCHASER PROVIDES INFORMATION LETTER TO THIRD PARTY. 2) THEN CONSENT IS GRANTED BY THIRD PARTY WITH A FOLLOW UP LETTER FROM TP TO ALL PARTIES TO THE AGREEMENT 3) NOA IS PROCESSED WITH CURRENT BINDING DATE. PURCHASER IS NOW RECOGNIZED INTO THE LAND AGREEMENT AND VENDOR IS DISCHARGED FROM THE ASSIGNED INTEREST.

12 COMPLICATIONS WITH CONVEYANCING

QUERY DEFICIENCY RESOLUTION

NON CONSENT POTENTIAL BY THIRD PARTY (TP) FINANCIAL PROOF PURCHASER/ASSIGNEE TO LAND PROVIDED AGREEMENT WILL NOT BE -LETTER T0 THIRD RECOGNIZED INTO AGT. PARTY TP CONSENTS

13 COMPLICATIONS WITH CONVEYANCING

QUERY DEFICIENCY NO RESOLUTION

REQUIRE POTENTIAL PURCHASER PROOF TO NO FINANCIAL THIRD PARTY IS UNABLE/UNWILLLING PROOF THEN TP TO PROVIDE BACKUP TO REMAINS THIRD PARTY NON CONSENT - PURCHASER NOT RECOGNIZED IN AGT

14 COMPLICATIONS WITH CONVEYANCING

CONSENT LETTER WITH NOA - ASSIGNMENT PRODECURE (AP) - INITIALLY CALLS FOR – ISSUE CONSENT SEPARATELY THEN ISSUE NOA FOLLOWING CONSENT - TO EASE THE BURDEN COMMON PRACTICE BECAME THE NORM TO SEND OUT NOA WITH CONSENT AFTER CLOSING OF DEAL. - CRUISE CONTROL WITH NOAS AND CONSENTS UNTIL RECENTLY COMPANIES WITHOLD CONSENT. - WITHOLD CONSENT - NON CONSENT IS SUBJECT TO NOAS, ROFR LETTERS AND CHANGE OF OPERATOR LETTERS - WHY - IS IT REASONABLE? - FINANCES - VENDOR OR PURCHASER HAS PAST HISTORY OF $ OWED I.E. UNPAID AFE - INABILITY TO MEET FUTURE FINANCIAL OBLIGATIONS THAT MAY ARISE WITH JOINTLY HELD ASSETS

15 A&D PROCESS/TIMELINE – TYPICAL TRANSACTION – HIGH RISK

LOI P&S PRE CLOSE PRE CLOSING POST POST FSOA CLOSE CLOSE CLOSE

DUE DILIGENCE SALE SIGNE SIGNED ROFRS NOA/ NOA BD COMPLETE FINALIZED D CONSENT - PURCAHSER FINALIZE RECOGNIZE SENT TO TPS ENVIRONMENT, ISSUED, $ = PNG & D ASSETS, RECEIPT TANGIBLES -TITLE SENT TITLE VENDOR, OF FOR REGIST REGIST PURCHASER ELECTIO NS

16 A&D PROCESS/TIMELINE – DEALING WITH CONSENT PRO- ACTIVELY – AS PER THE 1993 ASSIGNMENT PROCEDURE CONSENT PRE-CLOSE – LESS RISK

LOI P&S PRE CLOSE PRE CLOSING POST POST FSOA CLOSE CLOSE CLOSE DUE DILIGENCE SALE SIGNE SIGNED ROFRS NOA/ NOA BD COMPLETE FINALIZED D COVER PURCAHSER FINALIZE RECOGNIZE CONSENT LETTER - ENVIRONMENT, $ = PNG & D -SENT TO SENT TO TPS ASSETS, TANGIBLES TPS TITLE VENDOR, -TITLE SENT REGIST PURCHASER ISSUED, FOR REGIST RECEIPT OF CONSENT – PROCEED TO CLOSING

17 COMPLICATIONS WITH CONVEYANCING

SOLUTIONS:

- VENDOR AND PURCHASER ENSURES THE DEAL MUST CLOSE SMOOTHLY

- PURCHASER IS RECOGNIZED ON ALL DOCUMENTS AND VENDOR DISCHARGED FROM ASSETS

- DUE DILIGENCE: REPS AND WARRANTIES ON EACH: LMR SEARCH, PPR SEARCH, CORPORATE SEARCH

- LIABILITIES OF THE ASSETS SOLD, AER – LMR DEPOSITS AND POSSIBLE THIRD PARTY LETTER OF CREDIT DEPOSITS

- CONSENT LETTERS SENT OUT PRIOR TO THE CLOSING OF THE SALE THEN ONCE CONSENT IS GRANTED THEN PROCEED TO CLOSE THE DEAL.

- SIMILAR TO ENVIRONMENTAL OR SECURITIES THAT HAVE NOT BEEN DISCHARGED THAT AFFECT TITLE, THE NON CONSENT IS A VALID REASON TO HOLD UP OR CANCEL A SALE OF THE ASSETS. IF YOU REFER TO PROPERTY TRANSFER IT IS UNDERSTOOD THAT A CONSENT WOULD BE SENT OUT EARLY IN THE SALE PROCESS.

18 COMPLICATIONS WITH CONVEYANCING

STATEMENT OF CONCERN (SOC) (Well)

If there are concerns about a company’s proposed energy development, i.e. taking on a well transfer, then a third party may submit a statement of concern (SOC) to the Alberta Energy Regulator (AER) a statement about a current AER application that describes specific concerns about a company. Normally a standard case is where a company has an interest in the well.

Why is a SOC used?

If a company has reason. i.e. transferee is a Purchaser in a sale in conjunction with a non consent on a land contract or another example is a low LMR rating then a SOC will be submitted and registered with AER.

REBUTTAL? A rebuttal letter from transferee can discharge the SOC if the reason is considered valid by AER. i.e. LMR rating is above the threshold and in good standing will be based on AER’s calculation. however it will delay or hold up a well license transfer, which can last months.

NON CONSENT MAY HOLD UP A POTENTIAL PURCHASER AND REGISTERING AN SOC AGAINST THEIR WELLS WILL OCCUR IN THE SAME DEAL, CAUSING DELAYS.

19 A&D PROCESS/TIMELINE – DOMINO AFFECT – WITHOLD CONSENT – SOC REGISTERED

LOI P&S PRE CLOSE PRE CLOSING POST POST FSOA CLOSE CLOSE CLOSE

DUE DILIGENCE SALE SIGNE SIGNED ROFRS NOA/ NOA BD COMPLETE FINALIZED D CONSENT - PURCAHSER FINALIZE RECOGNIZED SENT TO ENVIRONMENT, ISSUED, $ = PNG & TPS ASSETS, RECEIPT TANGIBLES TITLE VENDOR, OF REGIST -TITLE SENT WELL PURCHASER ELECTIO NS FOR REGIST TRANSFER - WELL DELAYS TRANSFERS AS SOC SENT IN MUST BE CLEARED BY AER

20 COMPLICATIONS WITH CONVEYANCING

ABANDONED WELLS

A DILEMMA HAS OCCURRED WITH ABANDONED WELLS. WITH THE AMOUNT OF A&D GONG ON THERE ARE CERTAIN WELLS THAT ARE NEGLECTED. IT BECOMES A PROBLEM WHEN A COMPANY ASSIGNS ALL OF ITS INTEREST UNDER THE AGREEMENT BUT THE ABANDONED (NOT YET RECLAIMED) WELL IS NOT ON THE VENDOR/PURCHASER’S WELL SCHEDULE.

SOLUTION LAND SYSTEM – LINK TO ALL CONTACT AGREEMENTS. WELLS WITH NO ACTIVE LEASE –REC CERT ISSE TO STATUS OF CONTRACT – KEEP ACTIVE. ENSURE YOU HAVE ACCESS TO ALL PRIOR WELL SCHEDULES ON ALL SALES IN A CONTRACT. THIS WILL GIVE YOU THE ABILITY TO LOCATE AND BILL THE PROPER PARTIES ACCORDINGLY OR TO ANSWER ANY INCOMING QUERIES FROM COMPANIES OR FROM THE AER

21 COMPLICATIONS WITH CONVEYANCING

 WELLS IN A “STATE OF SUSPENSION”

 Do NOAs, where applicable, into the land agreements that are in a “state of suspension” and still have remaining liabilities on wellbores, with no active mineral rights.

 if we white-map an area, add all of the wells on the P&S and choose option “A” to the NOA.

 if we are retaining well(s) from the agreement, use Option “B” of the NOA where some of a portion of the Wells are not listed on the well schedule.

 It’s good practice to serve a ROFR on a contract with only a well liability and no active mineral rights. Then proceed with the NOA as the agreement will not terminate until typically all REC Certification Certificates have been issued on all wells in the agreement. Refer to the agreement’s Termination clause.

 Once agreement is in fact terminated and if no operating procedure exists - the Operator to forward a Rec Cert with letter to all parties.

22 COMPLICATIONS WITH CONVEYANCING

UNDERLYING JOA WITH AN NCC POOLING – D&A WELL

 Be aware of D&A WELLS of the underlying Agreements on purely production agreements like the non cross conveyed Pooling.

 A Pooling is created to drill a well from the JOA. Once the well is drilled and eventually abandoned check the termination clause of the Pooling as the Pooling may terminate and the well liability falls back to the Operating Procedure of the JOA. If the JOA has a ROFR then it should be served with a well liability.

 UNDERLYING NCC JOA POOLING WELL - RENTALS/ROY POOLED INT. DRILLED - 2401B (ROFR) - 2401A (NO ROFR)

WELL - NOW ABD LEASE - TERM CL ACTIVE (SEC 18 AER) 23 COMPLICATIONS WITH CONVEYANCING

QUERY DEFICIENCY RESOLUTION

LAND AGT – ISSUE ALL PARTIES TO AGT A NOA – WELL ONLY RE-ACTIVATE MISSING HAVE NO ACTIVE AGT AND SERVE NOA CONTRACT - ADD D&A WELL IN “REFERENCE TO LANDS” NOA - CHOOSE OPT “A”

24 COMPLICATIONS WITH CONVEYANCING

DELINQUENT PARTIES

HOW ARE COMPANIES SETTING UP THEIR FILES? RULE OF THUMB: YOU MUST CONTINUE TO AFE AND INVOICE THE DELINQUENT PARTY IF YOU INTEND TO MAKE AN APPLICATION TO THE ORPHAN WELL ASSOCIATION (OWA) TO RECEIVE A REFUND FROM THE ORPHAN WELL FUND (OWF).

- ARTICLE 19 OF THE 1990 CAPL SUGGESTS THAT AN OPERATOR WILL NO LONGER PROVIDE FURTHER COMMUNICATION AND HAS 15 DAYS TO RESPOND AND THEREFORE DECLARED DELINQUENT.

- NO RESPONSE THEN DELINQUENT PARTY’S INTEREST HELD IN TRUST. UNDER ARTICLE 506 -TO ALLOCATE A DELINQUENT PARTY’S SHARE OF COSTS AND EXPENSES AMONG ALL JOINT PARTNERS.

- UNDER CAPL OPERATING PROCEDURES EXCEPT 2007, OPERATORS UNDER A CONTRACT CANNOT SIMPLY REMOVE THE DELINQUENT PARTY FROM AN AGREEMENT.

25 COMPLICATIONS WITH CONVEYANCING

IF OPERATOR THEN SERVES A DELINQUENT PARTY NOTICE WITH A COPY TO ALL PARTIES. PROVIDE A TABLE WITH CURRENT PARTY INTERESTS AND DELINQUENT PARTY 0%

- ADVISE THAT OPERATOR WILL CONTINUE TO AFE AND INVOICE AS PER THE CORRECT INTEREST

- SET UP A “DELINQUENT PARTY DOI” AND DISTRIBUTE DELINQUENT PARTY’S INTEREST TO ALL REMAINING JOINT INTEREST OWNERS SO THE UNPAID AMOUNTS CAN BE PROPORTIONATELY SPLIT AMONGST THE REMAINING PARTIES.”

- ADD “REMARKS” TO EACH RECORD STATUS OF DELINQUENT PARTY WITH UPDATES AS THEIR STATUS CHANGES. I.E. RECEIVOR RENOUNCE PROPERTIES.

SET UP A FOLDER (DEFAULTING COMPANIES) ON A COMMON DRIVE WITH ALL PAPERWORK ON EACH PARTY. RETRIEVE INFORMATION FROM RECEIVOR/TRUSTEE WEBSITE WITH ANY NOTICES OR LETTERS THAT YOUR COMPANY HAS SENT OUT. THIS ALLOWS TRANSPARENY WITHIN THE ORGANIZATION. CO X (DP) 20% CO X 0% CO A 40% CO A 50% CO B 40% CO B 50%

26 COMPLICATIONS WITH CONVEYANCING

AER DIRECTIVE 067 - NEW EDITION EFFECTIVE DEC 2017 (REPLACES PREVIOUS JULY 2015 EDITION).

PURPOSE -ACQUIRING AND HOLDING A LICENCE OR APPROVAL FOR ENERGY DEVELOPMENT IN ALBERTA - IS A PRIVELAGE, NOT A RIGHT. -GRANTED TO RESPONSIBLE PARTIES -SETS OUT REQUIREMENTS FOR APPLYING FOR MAINTAINING AND AMENDING LICENCE ELIGIBILITY. -IDENTIFIES THE CIRCUMSTANCES IN WHICH THE AER MAY REVOKE OR RESTRICT LICENCE ELIGIBILITY.

27 COMPLICATIONS WITH CONVEYANCING

MATERIAL CHANGES (STRICTER COMPLIANCE).

- AER HAS A MORE COMPREHENSIVE APPLICATION PROCESS TO ENSURE LICENSEE APPLICANTS DO NOT POSE AN UNREASONABLE RISK, THIS INCLUDES:

- COPY OF AUDITED FINANCIAL STATEMENTS

- DIRECTORS/OFFICER’S BACKGROUND CHECK

- DETAILS OF CORPORATE STRUCTURE

- REFER TO THE AER DIRECTIVE 067 WEBSITE FOR FURTHER DETAILS,

28 COMPLICATIONS WITH CONVEYANCING

EXAMPLE: A HIGHLY REPUTABLE COMPANY X ( HIGH LMR AND GOOD FINANCES) SELLS TANGIBLES TO COMPANY Y AND SUBMITS FACILITIES, PIPELINES AND WELLS FOR TRANSER REGISTRATION. ALBERTA ENERGY REGULATOR (AER) RECEIVES THE LICENCE TRANSFER APPLICATIONS TANSFERRING LICENCES FROM COMPANY X TO COMPANY Y (SUBMITTED DDS SYSTEM). SINCE THE INCEPTION OF THE NEW D67 GUIDELINES, COMPANY X HAS NOT COMPLETED A SCHEDULE 1 AS PER D67 TO VERIFY THEY ARE ELIGIBLE TO HOLD ENERGY LICENCES FOR THE BELOW.

APPLICATION SUBMISSION LICENCES INCLUDED NO. DATE

199930 07/23/2018 10 FACILITIES, 15 PIPELINES

199931 07/23/2018 48 WELLS

29 COMPLICATIONS WITH CONVEYANCING

TRANSFERS BY COMPANY X WERE NOT ACCEPTED BY AER UNTIL CO, X PROVIDED: AER DIRECTIVE 067 – SCHEDULE 1 LICENCE ELIGIBILITY (WELL, FACILITY, OR PIPELINE) -AUDITED FINANCIAL STATEMENTS -COPY OF PROOF OF INSURANCE -ATTESTATION/DOCUMENTATION FOR EACH DIRECTOR

CO X HAD A LIMITED WINDOW AND HAD TO “SUBMIT THE ABOVE DOCUMENTATION WITHIN 5 BUSINESS DAYS TO [email protected]

FAILURE TO PROVIDE COMPLETE SUBMISSION WOULD RESULT IN THE REJECTION OF THE TRANSFERS.

AER DIRECTIVE 067 – SCHEDULE 1 LICENCE ELIBILITY (WELL, FACILITY, OR PIPELINE)

REFER TO WEBSITE: HTTPS://AER.CA/REGULATING-DEVELOPMENT/RULES-AND-DIRECTIVES/DIRECTIVE-067

30 A&D PROCESS/TIMELINE – TYPICAL TRANSACTION

LOI P&S PRE CLOSE PRE CLOSING POST POST FSOA CLOSE CLOSE CLOSE

DUE DILIGENCE SALE SIGNE SIGNED ROFRS NOA/ NOA BD COMPLET FINALIZED D CONSENT - PURCAHSER E FINALIZE RECOGNIZED SENT TO TPS ENVIRONMENT, ISSUED, $ = PNG & ASSETS, RECEIPT TANGIBLES TITLE -TITLE SENT VENDOR, OF REGIST ELECTIO FOR REGIST WELL PURCHASER NS - WELL TRANSFER - ENSURE TRANSERS DELAYS DIRECTIVE SENT IN AS SOC MUST BE 067 IN CLEARED GOOD BY AER STANDING WITH AER

31 COMPLICATIONS WITH CONVEYANCING

IN SUMMARY: WE ARE CONTINUALLY ADJUSTING THE WAY WE DO BUSINESS IN OUR LAND ADMINISTRATION A&D IN ORDER TO COMPLY WITH THE GOVERNMENT AND WITH OUR JOINT PARTNERS ESPECIALLY IN THESE FRAGILE TIMES WITH A LOT OF FINANCIAL AND EGRESS UNCERTAINTY. FOCUSING ON AREAS OF PRE CLOSE AND OUR INITIAL STAGE OF A&D ANALYSIS MAY PREVENT DELAYS AND PROVIDE AN APPETITE FOR DEALS TO BE COMPLETED AS PLANNED, ON TIME AND ON BUDGET. BEING AWARE OF ALL UPDATES ON REGULATIONS AND GOOD COMMUNICATION WITH PEERS MAY PREVENT ROADBLOCKS ON DEALS. ACKNOWLEDGEMENTS: THANK YOU FOR JOINING ME TODAY! THANKS TO: MIKE FLYNN, KELLIE SIDLOSKSI, JIM MACLEAN, PAUL NEGENMAN, KELLY THOM, BRAD WILLISCROFT, MEGAN MCGLOAN, ADAM SKULSKY, LINDA BIGELOW, BRUCE JAMIESON, CINDY MILLER,SUSAN LEWIS, KEN MCNEILL, PAULA WHITEHORN, JON BELL, JOHN NICHOLS, DENA BROWN, KEN YOUNG, KEVIN BURKE-GAFFNEY, PAM CARLSON, VAL MITCHELL, JOANNE MCNUTT, TRACEY STOCK & KEN ROSSI FOR YOUR INVOLVEMENT EITHER INDIRECTLY OR DIRECTLY REGARDING THIS PRESENTATION.

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