INTRODUCTION€¦ · March 8, 2019 in the amount of $22,226.23, the total indebtedness of TORC to...

Form 49 [Rule 13.19]

COURT FILE NUMBER 1901-02578

COURT COURT OF QUEEN'S BENCH OF ALBERTA JUDICIAL CENTRE OF CALGARY

JUDICIAL CENTRE CALGARY

DOCUMENT

IN THE MA TIER OF THE COMPANIES' CREDITORS ARRANGEMENT

ACT, R.S.C. 1985, c. C-36, as amended

AND IN THE MATTER OF THE BUSINESS CORPORATIONS ACT,

R.S.A. 2000, c. B-9

AND IN THE MATTER OF ELCANO EXPLORATION INC., ELCANO EXPLORATION LTD. and ELCANO EXPLORATION PARTNERSHIP

AFFIDAVIT

Burnet, Duckworth & Palmer LLP 2400, 525 8 Ave SW Calgary, Alberta T2P 1 G 1

ADDRESS FOR SERVICE AND CONTACT INFORMATION OF PARTY FILING TIDS DOCUMENT

Lawyer: David LeGeyt / Ashton Butler Phone Number: (403) 260- 0210 / (403) 260-0155 Fax Number: (403) 260-0332 Email Address: [email protected] / [email protected] File No. 72107-32

AFFIDAVIT OF MARVIN TANG

Sworn on June 14, 2019

I, MARVIN TANG, of the City of Calgary, in the Province of Alberta, Businessman,

MAKE OATH AND SAY THAT:

INTRODUCTION

I. I am the Vice President & Controller of TORC Oil & Gas Ltd. ("TORC") and as such I have

personal knowledge of the matters hereinafter deposed to except where stated to be based upon

information and belief, in which case I believe the same to be true.

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mailto:[email protected]


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2. TORC and Elcano Exploration Inc. ("Elcano") each have working interests in two wells. TORC

operates one well (the “Miniota 4-15” well) and Elcano operates the other well. As a result of

this relationship between Elcano and TORC, TORC and Elcano regularly invoice each other for

fees including, but not limited to, emulsion transportation, emulsion processing and water

disposal (together, the “Processing Fees”) related to the operation of these wells.

3. Prior to February 26, 2019, Elcano was indebted to TORC in the amount of $124,661.07, largely

for Elcano’s Processing Fee obligation relating to the Miniota 4-15 well.

4. On February 26, 2019, an Order was granted pursuant to the Companies' Creditors Arrangement

Act, RSC 1985 c C-36, as amended (the "CCAA") staying all proceedings against Elcano, Elcano

Exploration Ltd. and Elcano Energy Partnership (the "CCAA Stay").

5. TORC filed a proof of claim on April 9, 2019 (the "Proof of Claim"), which was disallowed by

Hardie & Kelly Inc. (the "Monitor") in its entirety in the Notice of Revision or Disallowance

dated May 21, 2019 (the "Notice of Revision or Disallowance").

6. On May 30, 2019, TORC filed a Notice of Dispute of Revision or Disallowance of Claim (the

"Notice of Dispute of Revision or Disallowance of Claim" disputing the Notice of Revision or

Disallowance.

7. I make this Affidavit in support of TORC's Application filed June 14, 2019 for an Order declaring

that TORC has a valid unsecured claim in the amount of $124,661.07.

RELATIONSHIP BETWEEN THE PARTIES

8. TORC operates the Miniota 4-15 oil well that both Elcano and TORC have working interests in.

The oil produced from this well is processed at a facility owned by TORC. TORC charges Elcano

Processing Fees for Elcano's share of the processed oil. The fees are set out in the Manson Area

Emulsion and Water Handling Agreement between TORC and Elcano effective January 1, 2019

(the "Manson Area Agreement"). The Manson Area Agreement is attached hereto as Exhibit "A."

9. Elcano operates another producing oil well that both Elcano and TORC also have working

interests in. The oil produced from this well is processed at a facility owned by Elcano, and

Elcano charges TORC Processing Fees for TORC's share of the processed oil. The fees are set out

in the Elcano North Hargrave 3-34-12-27W1M Emulsion and Water Handling Agreement

between Elcano Energy Partnership and Crescent Point Resources Partnership ("Crescent Point") dated January 1, 2015, as assigned by Crescent Point to TORC on June 27, 2018 (the

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"Elcano North Hargrave Agreement"). The Elcano North Hargrave Agreement is attached

hereto as Exhibit "B." The Assignment Agreement whereby Crescent Point assigned its rights to

TORC, dated June 27, 2018 is attached hereto as Exhibit "C."

PROCEDURAL HISTORY

(a) CCAA Proceedings

10. The CCAA Stay stayed any claims TORC had against Elcano prior to February 26, 2019.

11. On March 28, 2019, the Claims Procedure Order was granted, which set out the procedure for

claimants to make a claim (the "Claims Procedure Order"). The Claims Procedure Order is attached hereto as Exhibit "D."

(b) Proof of Claim

12. The Claims Procedure Order included the Proof of Claim Form. On April 9, 2019, I submitted a

Proof of Claim Form on behalf of TORC (the "Proof of Claim").

13. The Proof of Claim indicated that as of February 26, 2019, Elcano was indebted to TORC in the

sum of $124,517.93. The Proof of Claim is attached hereto as Exhibit "E."

(c) Notice of Revision or Disallowance

14. On May 21, 2019, the Monitor served TORC with the Notice of Revision or Disallowance, which

stated that the Monitor disallowed TORC's claim in its entirety. The Notice of Revision or

Disallowance is attached hereto as Exhibit "F."

(d) Notice of Dispute of Revision or Disallowance of Claim

15. On May 30, 2019, I served on the Monitor the Notice of Dispute of Revision or Disallowance of

Claim wherein TORC claimed the amount payable from Elcano to TORC is $124,661.07 before

setting off the amount payable from TORC to Elcano. The Notice of Dispute of Revision or

Disallowance of Claim is attached hereto as Exhibit "G."

16. The Notice of Dispute of Revision or Disallowance of Claim sets out that in addition to the

$124,661.07 amount owing by Elcano to TORC, TORC also recognizes an amount payable from

TORC to Elcano of $94,804.84.

17. The Notice of Dispute of Revision or Disallowance of Claim recognizes that the net payable from

Elcano to TORC after setting of the amount payable from TORC to Elcano is $29,856.23.

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POSITION OF ELCANO

(a) Elcano's indebtedness to TORC

18. Elcano is indebted to TORC in the amount of $124,661.07.

19. The invoices issued by TORC to Elcano indicate that Elcano is indebted to TORC in the amount

of $104,064.98 (the "TORC Invoices").

20. In addition to the amount Elcano is indebted to TORC under the TORC Invoices, Elcano is

indebted to TORC in the amount of $20,596.09 for the recovery of the July and August 2018

invoices paid to Crescent Point by TORC during the interim period (April 1, 2018 to June 27,

2018) of the asset sale from Crescent Point to TORC where TORC overpaid Crescent Point in the

amount of $20,596.09 (the "Overpayment").

21. The Overpayment occurred from an overstated calculation of Processing Fees as opposed to the

actual amounts stated in Exhibit C to the Elcano North Hargrave Agreement.

22. TORC paid Crescent Point $54,654.82 and Crescent Point forwarded the full $54,654.82 to

Elcano. The correct amount payable to Crescent Point under the Elcano North Hargrave

Agreement should have been $34,058.73. This resulted in the Overpayment of $20,596.09. A

calculation demonstrating this difference in Processing Fees is attached hereto as Exhibit "H."

23. Adding the $104,064.98 owing under the TORC invoices and the $20,596.09 Overpayment

results in the total amount Elcano was indebted to TORC on February 26, 2019 being

$124,661.07.

(b) TORC's indebtedness to Elcano

24. TORC is indebted to Elcano in the amount of $94,804.84.

25. The Monitor has stated in the Notice of Revision or Disallowance that TORC is indebted to

Elcano in the amount of $178,104.84.

26. The Monitor has mistaken the amount owing from TORC to Elcano prior to the CCAA Stay

under the stated invoices.

27. The amount owing under the invoices listed does not reflect the correct Processing Fees listed in

Exhibit C of the Elcano North Hargrave Agreement.

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28. Exhibit C of the Elcano North Hargrave Agreement lists the Processing Fees. The amount

charged by Elcano to TORC in the invoices listed in the Notice of Revision or Disallowance

reflects higher Processing Fees than the Processing Fees agreed to by the parties, and these higher

Processing Fees are not permitted and are disputed by TORC.

29. The invoices listed in the Notice of Revision or Disallowance reflect overstated Processing Fees.

Again, this is incorrect and is disputed by TORC.

30. When adjusting the invoices for the correct, lower, Processing Fees as set out in the Elcano North

Hargrave Agreement, $61,073.77 should be subtracted from the $178,104.84 amount set out in

the Monitor’s Notice of Revision or Disallowance.

31. Additionally, the majority of an invoice was erroneously included in the Monitor's calculation of

the amount owing from TORC to Elcano listed in the Notice of Revision or Disallowance.

Invoice number JR201903A-005 is dated March 8, 2019, which is after the CCAA Stay was

ordered on February 26, 2019. The portion of this invoice that relates to periods after the CCAA

Stay is $22,226.23 and should be subtracted from the $178,104.84 amount set out in the Monitor's

Notice of Revision or Disallowance.

32. After subtracting the adjustment of $61,073.77 (to reflect the correct lower Processing Fees as per

the Elcano North Hargrave Agreement as opposed to the overstated Processing Fees as

erroneously calculated by Elcano) and also subtracting Invoice number JR201903A-005 dated

March 8, 2019 in the amount of $22,226.23, the total indebtedness of TORC to Elcano is $94,804.84.

33. A table summarizing the amount payable to Elcano and the amount payable to TORC is attached

hereto as the third page of Exhibit G of this Affidavit.

CONCLUSION

34. The numbers put forward both as payable to Elcano and payable to TORC in the Notice of

Revision or Disallowance are inaccurate.

35. As of February 26, 2019, TORC is indebted to Elcano in the amount of $124,661.07. TORC

recognizes that it is indebted to Elcano in the amount of $94,804.84, as of February 26, 2019, and

that these amounts should be set off leaving a net amount owing to TORC of $29,856.23.

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36. I make this Affidavit in support of an Application declaring that TORC has a valid unsecured

claim in the amount of $124,661.07 filed June 14, 2019.

SWORN BEFORE ME at the City of Calgary, in the Province of Alberta this 14th day of June, 2019.

A Commissioner of Oaths in and for the Province of Alberta

)))

Ashton A. Butler Barrister & Solicitor

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THIS IS EXHIBIT "A" REFERRED TO IN THE AFFIDAVIT OF MARVIN TANG

SWORN BEFORE ME AT CALGARY, ALBERTA THIS 14 DAY OF JUNE, 2019

A Commissioner for Oaths in and for the Province of Alberta


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MANSON AREA

EMULSION AND WATER HANDLING AGREEMENT

BETWEEN

TORG OIL & GAS LTD.

AND

ELCANO EXPLORATION INC.

EFFECTIVE JANUARY 1, 2019

Contract No.: JS0661

MANSON AREAEMULSION AND WATER HANDLING AGREEMENT

TABLE OF CONTENTS

ARTICLE I DEFINITIONS........................................................................................................... 1

ARTICLE II EXHIBITS............................................................................................................ 3

ARTICLE III ACCEPTANCE AND DELIVERY............................................................................4ARTICLE IV CHARGES............................................................................................................................. .....6

ARTICLE V MEASUREMENT..................................................................................................... 6

ARTICLE VI OWNERSHIP AND DISPOSITION OF OUTLET SUBSTANCES....................... 8

ARTICLE VII BILLINGS AND PAYMENT.............................................................................. 10

ARTICLE VIII FORCE MAJEURE.................................................................................................13

ARTICLE IX LIABILITY AND INDEMNIFICATION................................................................... 14ARTICLE X TERM...................................................................................................................... 15

ARTICLE XI DISPUTE RESOLUTION....................................................................................... 15

ARTICLE XII MISCELLANEOUS PROVISIONS........................................................................15

EXHIBIT “A” DESCRIPTION OF FACILITY, SOURCES, FACILITY INLET, FACILITY OUTLET, METERING FACILITIES OPERATOR, MAP (IF APPLICABLE) AND PRIORITIES

EXHIBIT “B” SPECIFICATIONS FOR PRODUCER INLET SUBSTANCES

EXHIBIT “C” HANDLING CHARGES FOR PRODUCER INLET SUBSTANCES

EXHIBIT “D” ADDRESSES FOR SERVICE

EXHIBIT “E” MODIFICATIONS TO THE 2014 PJVA MODEL EMULSION AND WATER HANDLING AGREEMENT

MANSON AREAEMULSION AND WATER HANDLING AGREEMENT

MEMORANDUM OF AGREEMENT effective January 1,2019

BETWEEN

TORC OIL & GAS LTD., a body corporate, having an office in the City of Calgary, in the Province of Alberta, for and on behalf of the Facility owners (“Operator")

AND

ELCANO EXPLORATION INC., a body corporate, having an office in the City of Calgary, in the Province of Alberta, and owning a working interest in or as agent for and on behalf of the Source owners (“Producer”)

The purpose of this Agreement is to provide for the handling of Producer Inlet Substances and Producer Outlet Substances, as further outlined in this Agreement.

In consideration of the mutual covenants and conditions in this Agreement, the Parties agree as follows:

ARTICLE I - DEFINITIONS101. Definitions

In this Agreement, including the recitals, definitions and Exhibits hereto:

(a) “Affiliate" means, with respect to a Party, any other Person which is affiliated with such Party, and for the purposes hereof:

(i) two (2) Persons will be considered to be affiliated with one another if one(1) of them controls the other, or if both of them are controlled by a common third Person, and

(ii) one (1) Person will be considered to control another Person if it has the power to direct or cause the direction of the management and policies of the other Person, whether directly or indirectly, through one (1) or more intermediaries or otherwise, and whether by virtue of the ownership of shares or other equity interests, the holding of voting rights or contractual rights, or otherwise;

(b) “Agreement" means this document together with the Exhibits attached hereto;

(c) “Allocation Procedure" means the procedure used at the Facility at the time of allocation to allocate Outlet Substances recovered from Inlet Substances being handled at the Facility, as may be amended from time to time;

Contract No. JS0661 Page 1

(d) “Crude Oil” means crude oil and condensate separated from Inlet Substances at the Facility which meet relevant specifications for transmission and sale;

(e) “Dav" means a period of time commencing at 08:00 local time on any calendar day and ending at 08:00 on the next calendar day or at such other time as may be agreed upon by the Parties;

(f) “Effective Date1' means January 1, 2019 or, in the case of an Exhibit, the date on which the Exhibit becomes effective;

(9) "Exhibits" means the Exhibits attached to and made a part of this Agreement;

(h) “Facility" means all real and personal property of every kind, nature and description which constitutes all facilities owned or controlled by Operator as further described in Exhibit “A”;

(i) "Faciiitv Intet" means the point or points set forth in Exhibit “A” where Producer Inlet Substances first enter the Facility;

0) “Faciiitv Outlet’’ means the point or points of delivery set forth in Exhibit “A”, or as determined by Operator in its sole discretion, where Outlet Substances exit the Facility;

(k) “Force Maieure” means an occurrence beyond the reasonable control of a Party claiming suspension of an obligation hereunder, which has not been caused by such Party's negligence and which such Party was unable to prevent or provide against by the exercise of reasonable diligence at a reasonable cost and includes, without limiting the generality of the foregoing, an act of God, war, revolution, insurrection, blockade, riot, strike, a lockout or other industrial disturbance, fire, lightning, unusually severe weather, storms, floods, explosion, accident, shortage of labour or materials, or government restraint, action, delay or inaction;

(0 “Gas" means all natural gas, solution gas and any other gas, together with associated substances, separated from Inlet Substances at the Facility that is gaseous under the conditions at which it is separated;

(m) “Inlet Substances” means the total volume of gas, liquids and associated substances delivered to the Facility for handling;

(n) “Interest Rate” means the prime rate of interest as quoted in respect of commercial demand loans on the applicable day by the principal chartered bank in Canada used by Operator plus two percent (2%) per annum;

(o) “Losses and Liabilities” means all claims, liabilities, actions, proceedings, demands, losses, costs, penalties, fines, death, injury or damages, whether contractual or tortious, and expenses, including reasonable legal fees and disbursements on a solicitor and its own client basis;

(P) “Month” means a period of time commencing at the beginning of the first Day of a calendar month and ending at the beginning of the first Day of the next calendar month;

(q) “Outlet Substances" means all substances which are recovered from Inlet Substances and are available for delivery at the Facility Outlet, but excluding such substances as are lost or consumed pursuant to Clause 604;

(r) “Party” means a Person who is bound by this Agreement;


(s) "Person" means an individual, firm, body corporate or other legal entity, or partnership, as the case may be;

(t) "Producer Inlet Substances” means Inlet Substances produced from Sources;

(u) “Producer Outlet Substances” means Outlet Substances that are allocated to the account of Producer in accordance with the Allocation Procedure;

(v) “Related Persons" means a Party’s Affiliates and the directors, officers, agents, consultants, contractors, and employees of that Party or that Party’s Affiliates;

(w) “Sources” means the wells or facilities described in Exhibit “A”;

(x) “Water" means water contained in Inlet Substances delivered to the Facility for handling; and

(y) “Year” means a period commencing at the beginning of the first Day of January of each calendar year and ending at the beginning of the first Day of the next calendar year.

ARTICLE II - EXHIBITS

201. Exhibits

The following Exhibits are attached to and incorporated in this Agreement:

(a) Exhibit “A” sets forth the Sources from which Producer Inlet Substances will be handled in the Facility under the terms of this Agreement, the Facility, the Facility Inlet, the Facility Outlet, handling priorities, any restrictions on volume, if applicable, of Producer Inlet Substances, the Party responsible for operating the metering facilities, and a map illustrating the Facility and Sources, if applicable;

(b) Exhibit “B” sets forth the specifications and conditions for delivery of Producer Inlet Substances;

(c) Exhibit “C” sets forth the charges for handling Producer Inlet Substances;

(d) Exhibit “D” sets forth the addresses for service of the Parties.

(e) Exhibit “E” sets forth the modifications to the body of the 2014 PJVA Model Emulsion and Water Handling Agreement.

202. Revision of Exhibits

Operator and Producer may review Exhibits “A”, and “E” from time to time and any revisions shall be mutually agreed upon. Operator may revise Exhibit “B” from time to time, at its sole discretion, acting reasonably. Operator may revise Exhibit “C” upon thirty (30) Days’ notice to Producer. Exhibit “D” may be revised in accordance with the provisions of clause 1209. Exhibits that are revised shall show the Effective Date of the revision and shall be numbered consecutively and, if required, shall include the approval of the Parties. Operator shall, upon revision of any Exhibit, supply Producer with a copy of the revised Exhibit. If Operator becomes aware of a mistake or mechanical error in any Exhibit, Operator shall prepare a corrected Exhibit and supply Producer with a copy of the corrected Exhibit.

203. Conflicts

If a provision of Exhibits “A” to “D” inclusive conflicts with a provision in the body of this Agreement, the latter shall prevail. If a provision of Exhibit “E” conflicts with a provision in the body of this Agreement, Exhibit “E” shall prevail.


ARTICLE HI -ACCEPTANCE AND DELIVERY301. Acceptance and Delivery of Producer Inlet Substances

(a) Subject to all other terms and conditions of this Agreement, Producer shall, at its sole cost, risk and expense deliver or cause to be delivered, Producer Inlet Substances to Operator at the Facility Inlet, and Operator shall accept and handle Producer Inlet Substances and deliver Producer Outlet Substances to the Facility Outlet and handle Water attributable to Producer Inlet Substances, if applicable.

(b) If delivery is by pipeline:

(i) any costs borne by Operator for tie-in of Producer Inlet Substances, including, without limitation, performing supervisory or administrative functions or supplying labour or materials for tie-in of Producer Inlet Substances, plus 15% of such costs, shall be reimbursed by Producer to Operator in accordance with Article VII following receipt by Producer of a statement of account outlining in reasonable detail the nature of such costs;

(ii) Producer shall indemnify Operator for the cost of any fluids lost during tie-in; and

(iii) At Operator’s request Producer shall provide a copy of the pipeline integrity assessment reports to Operator.

(c) If delivery is by truck, Producer shall at its sole cost, risk and expense:

(i) deliver Producer Inlet Substances only at the times and conditions specified in Exhibit "B” or as otherwise approved by Operator; and

(ii) employ only such contractors for delivery of Producer Inlet Substances as have been approved by Operator prior to any such deliveries.

(d) Producer shall obtain Operator's written approval prior to delivering Producer Inlet Substances from any new wells or facilities.

(e) Producer shall notify Operator’s personnel twenty-four (24) hours prior to first deliveries of Producer Inlet Substances.

(f) Producer shall, at its sole cost, risk and expense, provide a compositional analysis of Producer Inlet Substances prior to first delivery and on an annual basis or as reasonably required by Operator.

(g) Producer shall, at its sole cost, risk and expense, supply samples of Water attributable to Producer Inlet Substances as required by Operator to perform compatibility tests.

(h) Producer shall comply with all of Operator’s safety, environmental and security rules.

(i) Producer shall obtain approval from Operator prior to delivery of any Producer Inlet Substances containing workover fluids, spent acids or any other known contaminants.


(j) Producer shall pay all costs of any remedial action required for Facility Damage if Operator accepts Producer Inlet Substances that do not meet the specifications set forth in Exhibit "B”, provided, however, that if the Facility damage cannot be attributed to a single source of Inlet Substances, Producer’s responsibility for remedial costs will be in the proportion that the volume of Producer Inlet Substances delivered to the Facility bears to the total volume of Inlet Substances delivered to the Facility during the period in which the damage occurred.

(k) Subject to clause 706, Operator shall not acquire title to Producer Inlet Substances but shall only have possession thereof for the purposes mentioned herein.

(l) Producer warrants that it has the authority to deliver Producer Inlet Substances to the Facility as herein provided, and Producer covenants and agrees to indemnify and hold Operator and its Related Persons harmless from and against any and all Losses and Liabilities arising from any Person claiming an interest in Producer Inlet Substances or Producer Outlet Substances.

(m) Operator warrants that it has the authority to accept Producer Inlet Substances at the Facility for handling as herein provided, and Operator covenants and agrees to indemnify and hold Producer and its Related Persons harmless from and against any and all Losses and Liabilities arising from any Person having an interest in the Facility claiming that Operator is not duly authorized to perform its duties hereunder.

(n) Operator shall, subject to clauses 303, 304 and 305, handle Producer Inlet Substances in a good and workmanlike manner in accordance with good oil and gas field practices and in accordance with all applicable laws and regulations.

(o) Operator shall comply with all rules and regulations for waste disposal as required by the applicable provincial or territorial governing body.

(p) Operator shall be entitled to commingle Producer Inlet Substances with any other Inlet Substances.

302. Commencement of Handling

The handling of Producer Inlet Substances shall commence when:

(a) Producer and Operator have installed or have caused to be installed all equipment necessary to effect the acceptance of Producer Inlet Substances at the Facility Inlet;

(b) Producer and Operator have obtained or have caused to be obtained all necessary permits and approvals to produce, accept and handle Producer Inlet Substances and deliver Producer Outlet Substances;

(c) Operator has advised Producer that it will accept deliveries of Producer Inlet Substances;

(d) Producer has confirmed to Operator that all arrangements for the reporting and disposition of Producer Outlet Substances beyond the Facility Outlet have been made; and

(e) Producer has complied with Operator's applicable data requirements for all Sources.


303. Priority of Handling

Producer Inlet Substances will be handled to the extent that capacity is available in the Facility. If the Facility is unable to handle all Inlet Substances available for handling at the Facility on any one Day, acceptance of Inlet Substances by Operator at the Facility will be cut back using the priority set out in Exhibit “A”.

304. Specifications of Producer Inlet Substances

Producer Inlet Substances delivered to the Facility shall meet the specifications as set forth in Exhibit “B”. If any Producer Inlet Substances delivered to the Facility do not meet the specifications set forth in Exhibit “B", Operator may, at its sole discretion, acting reasonably, discontinue taking all or part of Producer Inlet Substances until such time that Producer Inlet Substances to be delivered meet all the requirements under this Agreement.

305. Temporary Capacity Limitations

Notwithstanding the provisions of this Article III, Operator, at its sole discretion, acting reasonably and without incurring any liability to Producer, reserves the right to refuse or limit acceptance of Producer Inlet Substances at the Facility Inlet when the Facility is shut down for maintenance or when Facility capacity is reduced by temporary operational difficulties or operating limitations, until such time as capacity is no longer restricted.

306. Notification of Cutbacks

Operator shall notify Producer as soon as reasonably possible if Producer Inlet Substances have been curtailed pursuant to clauses 303, 304 or 305.

307. Returns at Producer's Expense

When Producer Inlet Substances are delivered to the Facility by truck and Operator is unable to accept Producer Inlet Substances, Operator will instruct the carrier to return such Producer Inlet Substances to Producer at Producer’s expense.

ARTICLE IV - CHARGES401. Handling Charges

The handling charges applicable to the volume of Producer Inlet Substances shall be determined in accordance with Exhibit “C” and billed in accordance with clause 701.

ARTICLE V - MEASUREMENT

501. Metering Facilities

(a) If delivery is by truck, measurement of Producer Inlet Substances as evidenced by gauge tickets, truck tickets, or other industry accepted methods, shall be deemed to be conclusive and final.

(b) If delivery is by pipeline, Producer shall, at its sole cost, risk and expense, install or cause to be installed metering facilities for the purpose of measuring volumes of Producer Inlet Substances delivered to the Facility Inlet. Such metering facilities shall meet Operator's specifications, shall be installed at a location approved by Operator and in a manner which will allow proper measurement and allocation of Producer Inlet Substances under the Allocation Procedure, and shall be maintained by and at the sole cost, risk and expense of Producer. Such metering facilities shall be physically operated by the Party designated in Exhibit


502. Accuracy

(a) The accuracy of Producer’s and Operator’s metering facilities shall be verified by the Party operating the metering facilities at the frequency specified in applicable governmental regulations, or as reasonably required by the Operator, whichever is more frequent. The cost of such verification shall be borne by the Parties for their respective metering facilities. Either Party’s metering facilities shall be open for witnessing of calibration or inspection by the other Party at all reasonable times. The Party performing the calibration or inspection will provide the other Party with at least forty-eight (48) hours’ prior notice.

(b) In case any question arises as to the accuracy of measurement, any metering facilities shall be tested upon demand of either Party and, if found to be correct or to be in error of not more than two percent (2%) with respect to gas measurement, one and one-half percent (1 1/2%) with respect to equilibrium liquid measurement, or one-half of one per cent (1/2%) with respect to liquid measurement (referred to herein as the “Relevant Percentage”), the expense of such testing shall be borne by the Party requesting the test. If the accuracy of measurement is found to be incorrect by more than the Relevant Percentage, the expense of such testing shall be borne by the owner of those metering facilities.

(c) If, upon any test, metering facilities are found to be in error of not more than the Relevant Percentage, previous readings of such metering facilities shall be considered correct in computing the volumes being metered, but such metering facilities shall be adjusted properly as soon as practicable to record accurately. If, upon any test, any metering facilities are found to be in error by any amount exceeding the Relevant Percentage, then any previous readings of such metering facilities shall be corrected to zero error for any previous period which is known definitely or is agreed upon, but in case the period is not known definitely or not agreed upon, such correction shall be for a period covering the last half of the time lapsed since the date of the last test.

(d) In the event metering facilities are out of service or require repair, such that the volume being measured is not correctly indicated by the reading thereof, the volumes attributable to the period shall be estimated and agreed upon on the basis of the best data available, using the most appropriate of the following methods:

(i) by using the registration of any check metering facilities, if installed and accurately registering; or

(ii) by correcting the error if the percentage of error is ascertainable by calibrations, tests or mathematical calculations; or

(iii) by estimating on the basis of actual volumes measured during the preceding periods under similar conditions when the metering facilities were registering accurately.

503. Units of Volume and Weight

The standards of measurements shall be governed by the following:

(a) The unit of volume of Gas for all purposes hereunder shall be one thousand cubic metres (103m3) at a temperature of fifteen degrees Celsius (15°C) and an absolute pressure of one hundred one and three hundred twenty-five one thousandths kilopascals (101.325 kPa);


(b) the unit of volume of liquids for all purposes hereunder shall be one cubic metre (1 m3) as defined in the Weights and Measures Act (Canada), as amended; and

(c) the unit of weight of solids for all purposes hereunder shall be one tonne (1t), being one thousand kilograms (1000 kg).

504. Determination of Volumes

Volumes shall be determined in accordance with prevailing regulatory requirements relating to the measurement of upstream petroleum industry fluids.

505. Assumed Atmospheric Pressure

For the purposes of measurement and meter calibration, the atmospheric pressure at the point of measurement shall be assumed to be constant considering the actual elevation or location of any of the metering facilities above sea level and irrespective of variations in the atmospheric pressure from time to time.

ARTICLE VI - OWNERSHIP AND DISPOSITION OF OUTLET SUBSTANCES

601. Producer's Share of Outlet Substances

(a) The volumes of Outlet Substances allocated to Producer shall be determined each Month in a manner consistent with the Allocation Procedure.

(b) Producer shall own and at its sole cost, risk and expense shall take in kind or separately dispose of Producer Outlet Substances.

(c) Producer shall provide, or cause to be provided, to Operator, by the tenth (10th) Day of each Month, or as may be required by governing regulations, a statement of the total volume of Producer Inlet Substances delivered to the Facility Inlet for the preceding Month and details of any changes in ownership of Producer Inlet Substances or Sources. Further, Producer acknowledges its obligation to provide or cause to be provided to Operator, on a timely basis, all production data and information as may be required for the preparation of statements pursuant to subclause 601(e).

(d) (i) If Producer fails to provide, or cause to be provided, Operator withsufficient information to perform allocations of Outlet Substances as specified under the Allocation Procedure, then Operator will use its reasonable judgment regarding the allocations. Producer shall be liable for, and indemnify Operator against, any penalties, costs or damages levied against Operator as a result of allocation.

(ii) Any costs incurred by Operator resulting from Producer's failure to provide production data and information under this Agreement, including but not limited to administrative costs for revising allocations, shall be paid by Producer.

(e) Operator shall, on or before the twenty-fifth (25th) Day of each Month, provide Producer with a statement showing the total volume of Producer Inlet Substances accepted at the Facility Inlet for the preceding Month and volume and heat content of Gas, the volume and density of Crude Oil and the volume of Water produced therefrom.


(f) Producer and Operator shall preserve all original test data, charts, the Allocation Procedure and other similar records related to this Agreement for a period of at least seven (7) Years after the Year to which the data relate. Notwithstanding the foregoing, Operator and Producer shall retain any original test data, charts, the Allocation Procedure and other similar records related to this Agreement to which a query under clauses 704 or 705 relates until all such queries are resolved.

(g) Producer shall, within twenty-six (26) Months following the end of the Year to which the records relate, have the right to examine at all reasonable times the records of Operator relating to clause 601.

(h) Operator shall be entitled to deal only with Producer on all matters arising under this Agreement, including, without limitation, all reporting of deliveries and directions regarding the handling of Producer Outlet Substances attributable to Producer Inlet Substances.

6°2. Delivery of Producer's Share of Gas and Crude Oil

Operator shall deliver Producer’s share of Gas and Crude Oil to Producer or to suchPerson as Producer designates at the Facility Outlet.

603. Failure to Take in Kind

(a) If Producer fails, in the opinion of Operator, to take or otherwise adequately dispose of Producer Outlet Substances, Operator may, at its sole option, so long as such failure continues, for the account and at the expense of Producer, handle and sell on the open market or, if a purchaser is not available, store Producer Outlet Substances or cease to accept Producer Inlet Substances.

(b) In the event of a failure to take in kind and a subsequent sale by Operator of Producer Outlet Substances, Operator shall remit to Producer within a reasonable period of time the proceeds of such sale less all direct costs of the sale and less a charge as specified in Exhibit “C”.

(c) The authority of Operator to enter into contracts for the sale of Producer Outlet Substances shall be restricted to contracts that are for such reasonable periods of time as are consistent with the minimum needs of the industry under the circumstances, but not in excess of a one Month period. Subject to such contracts, Producer may commence or resume taking Producer Outlet Substances in kind at any time if it has given notice to Operator at least thirty (30) Days prior to the expiration of the current sales contract that it intends to take its share in kind.

604. Volume Losses

(a) Operator shall have the right at any time, in its sole discretion and acting reasonably in accordance with industry practice, to flare, use or consume Producer Inlet Substances free of charge. Producer Inlet Substances flared as a discrete stream at the Facility Inlet shall be conclusively deemed not delivered to the Facility.

(b) Producer shall bear a share of any losses suffered during a Month due to evaporation, flaring, fuel gas consumption or Force Majeure in accordance with the Allocation Procedure.


(c) If and when it cannot be determined to whom a loss should be allocated, any such loss shall be borne by Producer in the proportion that the volume of Producer Inlet Substances handled through the Facility during the previous Day bears to the total volume of Inlet Substances handled through the Facility during the previous Day.

605. Specifications of Outlet Substances

Operator shall use reasonable efforts to ensure that Outlet Substances meet the specifications which are acceptable to the purchasers or carriers of Outlet Substances as of the Effective Date or such other specifications as may be subsequently agreed upon by Operator and the purchasers or carriers.

606. Measurement or Allocation Adjustments

In the event of an adjustment in measurement or allocation to Producer Outlet Substances, adjustments shall be made using:

(a) for Gas, the arithmetic average price for the Month for which the adjustment is required as listed in the table “Daily Spot Gas Price at AECO C & NOVA Inventory Transfer" in the Canadian Gas Price Reporter less the NOVA tolls (3 year toll) at the NOVA meter station and less NOVA fuel; and

(b) for Crude Oil, the simple average of the NYMEX prompt month (WTI) crude contract settlement prices during the calendar month of delivery plus the monthly volume weighted average of the NGX and Net Energy index prices for the specific crude oil stream adjusted for applicable quality and transportation.

If Operator determines a need for Crude Oil quality equalization, Producer shall be charged in accordance with the quality scales provided for in the “Canadian Crude Oil Quality Equalization Process Procedures Guide” published July, 1994 and any subsequent revisions thereto or replacements thereof.

ARTICLE VII - BILUNGS AND PAYMENT701. Billings

Operator shall bill Producer on or before the thirtieth (30th) Day of each Month for the charges payable by Producer attributable to handling of Producer Inlet Substances for the preceding Month, using the basis outlined in Exhibit “C”. Producer shall pay all bills which become payable pursuant to this Agreement within thirty (30) Days after receiving them. If Producer fails to pay a bill within the said thirty (30) Day period, the unpaid amount shall, at Operator's option, bear interest following such thirty (30) Day period at the Interest Rate regardless of whether or not Operator has notified Producer in advance of its intention to charge interest with respect to that unpaid amount. The obligation to pay interest with respect to a default is to apply until such default is rectified and shall not merge into a judgment for principal and interest, or either of them. In addition, Operator shall have the right at any time thereafter, such default continuing, to enforce the remedies hereinafter provided.

702. Commingling of Funds

Subject to clauses 603 and 706, funds received by Operator for the account of Producer which are in excess of the amounts payable under this Agreement are trust funds and are not to be used by Operator for its own purposes. Operator may commingle funds received by it under this Agreement with its own funds but such right to commingle is granted to Operator as an administrative aid in its duties hereunder and does not alter the purpose or intent of such funds received by Operator as trust funds.


703. Books and Records

Operator will keep within the Province of Alberta true and correct books, accounts and records of the operations conducted hereunder.

704. Correctness of Billinas

Producer shall not withhold payment of any portion of any bill delivered to Producer by Operator in accordance with the terms of this Agreement, except as provided in this clause, and such payment shall not affect the right of Producer to protest or question the correctness of such bills.

Inquiries or requests by a Producer for additional information related to a bill shall be made in writing to Operator, accompanied by reasonable supporting detail, within twenty-six (26) Months following the end of the Year in which the bill was presented; otherwise the bill shall be deemed conclusively to be correct except where the item is under dispute pursuant to clause 705. Operator shall respond to such queries within thirty (30) days of receipt. Any such inquiry shall not extend Producer’s obligation to pay the amount unless agreed to by the Operator.

If the Operator agrees that a billed amount requires adjustment, the Operator shall make such adjustment within thirty (30) days or at such time as mutually agreed to by the Operator and the Producer.

705. Audits

(a) The Operator’s books, accounts, and records, including Monthly product allocation statements relating to joint operations for a Year, may be audited within twenty-four (24) months following the end of that year in which the bill or statement was issued.

(b) Any audit conducted pursuant to the Agreement shall:

(i) be conducted in accordance with the PASO Accounting Guidelines relating to the conduct of audits of this nature;

(ii) give due consideration to documentation requirements as may reasonably be required to substantiate or reasonably test or assess the Operator's compliance with the Agreement or the accounting procedure; and

(iii) be scheduled in such a manner, so as to cause a minimum of inconvenience to the Operator.

(iv) be administered as set out below

(c) Producer shall make every reasonable effort to conduct its audit at the same time as an audit conducted by the Facility owners. Furthermore, where two or more producers wish to conduct an audit, Producer shall make every reasonable effort to conduct its audit jointly with the other producers.

(d) The scope of the audit shall be limited to the following:

(i) For fixed fee arrangements, the audit shall be limited to the verification of volumes allocated to the Producer;

(ii) For variable fee arrangements, the audit shall be limited to the verification of volumes allocated to the Producer and the fee calculation method including any related 13th month adjustment calculation, however the scope shall not extend to a detailed audit or review of the operating costs and capital values used in determining the charges to Producer.


706. Remedies

Producer, in order to secure any indebtedness to Operator under this Agreement, hereby gives and grants to Operator a lien and charge on Producer’s share of Crude Oil and Gas attributable to Producer Inlet Substances, to pay any handling charge or other amount payable to Operator by Producer. In the event Producer defaults in payment of its bills and such default shall continue for five (5) Days after receipt of written demand from Operator, Operator may, without limiting Operator’s other rights in this Agreement or otherwise held at law or in equity:

(a) enforce such lien in any manner provided by the laws governing this Agreement;

(b) discontinue handling of Producer Inlet Substances until such time as the indebtedness is paid;

(c) set-off against the amount unpaid by Producer any sums due or accruing to Producer from Operator, other than lessor royalty payments due to such defaulting Producer who is also an owner of freehold mineral rights, pursuant to this Agreement and from any other agreement between Operator and Producer, whether executed before or after the Effective Date;

(d) maintain an action or actions for such unpaid amounts and interest thereon on a continuing basis as such amounts are payable but not paid by Producer, as if the obligation to pay such amounts and the interest thereon were liquidated demands due and payable on the relevant date such amounts were due to be paid, without any right or resort of such Producer to set-off or counter-claim;

(e) treat the default as an immediate and automatic assignment to Operator of proceeds of the sale of such Producer’s share of Gas and Crude Oil. Service of a copy of this Agreement upon a purchaser of such Producer’s share of Gas and Crude Oil, together with written notice from Operator, shall constitute a written irrevocable direction by Producer to any such purchaser to pay to Operator the entire proceeds from any such sale and such purchaser is authorized by Producer to rely upon the statement of Operator as to the amount so owed to it by Producer. Operator shall apply all sums so collected against the unpaid amount including any interest accrued thereon and any fee provided for in subclause 603(b) payable to Operator, and all sums so applied shall be considered as received from Producer, and any excess of such proceeds shall be paid by the Operator to the Producer within a reasonable period of time of receipt of proceeds; and

(f) sell on the open market such quantity or quantities of Producer’s share of Gas and Crude Oil as shall be sufficient to pay such indebtedness; provided, however, that such sale of Producer’s share of Gas and Crude Oil shall first be made under the terms of any existing contracts for the sale of Producer’s share of Gas and Crude Oil previously executed by Producer and in all cases subject to the charge pursuant to subclause 603(b).

Should default occur, Producer shall be liable to Operator for all reasonable expenses incurred by Operator to remedy such default, including legal costs on a solicitor and his own client basis, and other expenses in connection with obtaining satisfaction of the obligations of Producer. Such expenses shall bear interest calculated and payable in accordance with clause 701 of this Agreement.

Books and records kept by Operator shall constitute proof of the existence and amount of such default, including the associated direct costs and charges pursuant to clause 603.


707. Royalty Indemnification

Producer shall pay, or be responsible for the payment of, and shall indemnify and save harmless Operator and its Related Persons against liability for any and all royalties, overriding royalties, product payments, and any and all other payments chargeable against Producer Inlet Substances or Producer Outlet Substances.

708. Taxes

(a) Producer shall pay all taxes, levies, assessments and like charges which may be imposed in respect of Producer Inlet Substances.

(b) When Operator is required to charge Goods and Services Tax (GST), or similar value added tax, Operator's invoice shall include information prescribed by the Input Tax Credit Information Regulations under the Excise Tax Act (Canada), or any information prescribed for a similar value added tax.

709. Insolvency

If Producer:

(a) becomes bankrupt or insolvent, or commits or suffers any act of bankruptcy or insolvency;

(b) is placed in receivership or a receiver/manager or person filling that role is appointed with respect to its property;

(c) makes a compromise with or an assignment for the benefit of creditors;

(d) seeks debtor relief protection under applicable legislation including without restricting the generality of the foregoing, the Bankruptcy and Insolvency Act (Canada) and the Companies’ Creditors Arrangement Act (Canada): or

(e) is otherwise unable or unwilling to pay its debts as they fall due in the usual course of business;

Operator may, at its sole option, elect to terminate this Agreement upon five (5) Days’ notice subject to subclause 1001(b), or to demand immediate payment for all current invoiced amounts plus estimated amounts that have accrued but have not yet been invoiced, and amounts that are estimated as likely to accrue in the remainder of the current Month and in the following Month. Producer shall pay these amounts within five (5) Days of receipt of Operator’s written demand and shall continue to make prepayment for services as required by Operator prior to services being rendered.

ARTICLE VIII - FORCE MAJEURE801. Force Maieure

(a) If a Party fails by reason of Force Majeure to fulfil any obligations, the obligations of that Party, insofar as its obligations are affected by the Force Majeure, shall be suspended while the Force Majeure continues to prevent the performance of such obligation and for that time thereafter as that Party may reasonably require to commence to fulfil such obligation. A Party prevented from fulfilling any obligation by the Force Majeure shall promptly give the other Party notice of the Force Majeure and the affected obligations, including reasonably full particulars in respect thereof.


(b) The Party claiming suspension of an obligation as aforesaid shall promptly remedy the cause and effect of the applicable Force Majeure, insofar as it is reasonably able so to do, and such Party shall promptly give the other Party notice when the Force Majeure ceases to prevent the performance of the applicable obligation. However, the terms of settlement of any strike, lockout or other industrial disturbance shall be wholly at the discretion of such Party, and that Party shall not be required to accede to the demands of its opponents in any strike, lockout or industrial disturbance solely to remedy promptly the Force Majeure constituted by such action.

(c) Notwithstanding anything contained in this clause, lack of finances shall not be considered a Force Majeure nor shall any Force Majeure suspend any obligation for the payment of money hereunder.

ARTICLE IX - LIABILITY AND INDEMNIFICATION901. Liability and Indemnification

(a) Operator and its Related Persons shall not be liable to Producer or its Related Persons for any Losses or Liabilities suffered or incurred by Producer or its Related Persons resulting from or in any way attributable to or arising out of any act or omission, whether negligent or otherwise, of Operator or its Related Persons in conducting or carrying out operations hereunder except when and to the extent that such Losses and Liabilities are a direct result of, or are directly attributable to, gross negligence or wilful misconduct of Operator or its Related Persons. Gross negligence shall not include any act or omission, insofar as it was done or not done in accordance with the written instructions or express concurrence of the Producer.

(b) To the extent that the gross negligence or wilful misconduct described in subclause 901 (a) applies, Operator shall be solely liable for such Losses and Liabilities and, in addition, shall indemnify and save harmless Producer and its Related Persons from and against such Losses and Liabilities.

(c) To the extent that the gross negligence or wilful misconduct described in subclause 901(a) does not apply, Producer shall be solely liable for and indemnify and save harmless Operator and its Related Persons from and against any and all Losses and Liabilities related to conducting or carrying out operations hereunder, including damage to the Facility caused by acceptance of Producer Inlet Substances which do not meet the specifications of Exhibit “B”.

(d) In no event shall the responsibility of either Party prescribed by this Agreement extend to losses suffered by the other Party respecting the loss or delay of production, including, without restricting the generality of the foregoing, loss of profits or other consequential or indirect losses applicable to such loss or delay in production.


ARTICLE X - TERM1001. Term

(a) This Agreement shall commence as of the Effective Date and shall continue until terminated by either Party giving thirty (30) Days’ prior notice to the other Party.

(b) Notwithstanding the termination of this Agreement, the provisions respecting liability and indemnification, the settlement of accounts and the Operator’s remedies in respect thereof, shall remain in full force and effect to the extent of any liabilities which may have accrued prior to the termination of this Agreement.

ARTICLE XI - DISPUTE RESOLUTION1101. Dispute Resolution

The Parties will attempt to resolve any claim or dispute arising out of this Agreement through consultation and negotiation in good faith within the appropriate time periods as set out in this Agreement. If those attempts fail then either Party may refer the dispute for resolution through mediation, with costs of the mediation being shared equally by both Parties. If either Party refers a dispute for resolution through mediation, the other Party agrees to participate in the mediation. If the Parties cannot agree to a mediator, they shall have one appointed by the Canadian Foundation for Dispute Resolution or its successor. However, either Party may terminate the mediation at any time upon giving reasonable notice to the other Party. If mediation fails or is terminated, then the Parties may agree to refer the matter to binding arbitration pursuant to the Arbitration Act (Alberta), and any subsequent revisions thereto, or a Party may resort to judicial proceedings to resolve the dispute.

ARTICLE XII - MISCELLANEOUS PROVISIONS

1201. Interpretation

The captions or headings used in this Agreement are inserted solely for convenience and shall not be considered or given any effect in interpreting the Agreement or in ascertaining the intent of the Parties.

1202. Number and Gender

In this Agreement words importing the singular include the plural and vice versa; words importing the masculine gender include the feminine and neuter genders.

1203. Laws and Regulations

Subject to clauses 1204 and 1214, this Agreement and the rights and obligations of the Parties are subject to all present and future laws, rules, regulations and orders of any legislative body or duly constituted authority now or hereafter having jurisdiction.

1204. Applicable Laws

This Agreement shall be construed in accordance with the laws of the Province of Alberta and each of the Parties submits to the jurisdiction of the courts of the Province of Alberta for the interpretation and enforcement hereof.


1205. Waivers

A waiver of a provision of this Agreement, whether for future or past actions, shall not be binding upon a Party unless it is in writing and signed by its duly authorized representative(s), and such a waiver shall not operate as a waiver in the future of any provision, whether of a like or different character.

1206. Suits

A Party who is sued on a cause of action allegedly arising out of operations hereunder shall forthwith notify the other Party.

1207. Further Assurances

Producer and Operator shall do all such further acts and execute and deliver all such further deeds and documents as may be reasonably required in order to fully perform and carry out the terms of this Agreement.

1208. No Implied Covenants

Producer and Operator have expressed their entire understanding and agreement concerning the subject matter of this Agreement and no implied covenant, condition, term or reservation shall be read into this Agreement relating to or concerning such subject matter.

1209. Notices

All notices and other communications to be given in connection with this Agreement shall be in writing and shall be sufficiently given:

(a) if delivered by hand or by courier to a Party at its address for service, such delivery shall be deemed received by the Party when actually delivered, if such delivery is during the Party's normal business hours, on any Day other than a Saturday, a Sunday or a statutory holiday. If such notice or other communication is not delivered during the Party's normal business hours, such notice or other communication shall be deemed to have been received by the Party on the Day next following the date of delivery, other than a Saturday, Sunday or a statutory holiday;

(b) except during any period of actual or impending postal disruption, if sent by first class mail or by airmail if sent from outside Canada or the United States, postage prepaid, to a Party at its address for service, such mailing shall be deemed received by the Party on the fourth (4th) Day following the date of mailing (Saturdays, Sundays and statutory holidays excepted). However, if postal service is interrupted or operating with unusual or imminent delay, such notice or other communication shall not be sent by such means during such interruption or period of delay; and

(c) to a Party which has provided an electronic manner as part of its address for service, if sent by electronic manner to the Party's designated electronic address for service, such transmission shall be deemed received by the Party when actually received, if such transmission is during the Party's normal business hours on any Day other than a Saturday, a Sunday or a statutory holiday. If such notice or other communication is not received during the Party's normal business hours, such notice or other communication shall be deemed to have been received by the Party on the Day next following the date of transmission, other than a Saturday, a Sunday or a statutory holiday.


For the purposes of this clause 1209, the address for service for each Party initially shall be as set forth in Exhibit “D". A Party may change its address for service by giving written notice to the other Party.

1210. Enuring Clause

This Agreement shall enure to the benefit of and be binding upon Producer and Operator and their respective successors and permitted assigns.

1211. Supersedes Prior Agreements

As of the Effective Date, this Agreement shall govern the relationship of the Parties and supersedes all other agreements, documents, writings and verbal understandings and representations between the Parties in relation to the handling of Producer Inlet Substances in the Facility.

1212. Assignment

Either Party may assign this Agreement, including all rights and liabilities hereunder, at any time by providing the other Party with a fully executed instrument effecting such assignment, provided that no such assignment shall be effective unless the assignee agrees to be bound by the terms of this Agreement.

1213. Time of the Essence

Time is of the essence in this Agreement.

1214. Statute of Limitations

The two (2) year period for seeking a remedial order under section 3(1 )(a) of the Limitations Act (Alberta), including any amendments to or replacements of the Act, for any claim (as defined in that Act) arising in connection with this Agreement is extended to:

(a) for claims disclosed by an audit, two (2) years after the time this Agreement permitted that audit to be performed; or

(b) for all other claims, four (4) years.

1215. Modifications and Prevailing Provisions

The body of this Agreement is identical to the body of the 2014 PJVA Model Emulsion and Water Handling Agreement and has not been modified except as specifically noted in Exhibit “E”. In the event that modifications are made to the body of the 2014 PJVA Model Emulsion and Water Handling Agreement and such modifications are not appropriately noted in Exhibit “E” then the applicable provisions in the unmodified 2014 PJVA Model Emulsion and Water Handling Agreement are deemed to prevail.

1216. Common Decisions

In the case where Producer acts as agent for and on behalf of the Source owners, Operator shall at all times be entitled to deal solely with Producer for all purposes of this Agreement, and any notice or communication given by Operator to Producer shall be deemed given to all parties who have an interest in Producer Inlet Substances. Any notice given by Producer to Operator shall similarly be deemed to have been given by and on behalf of the owners of Producer Inlet Substances.


1217. Severability

If any provision of this Agreement is partially or completely unenforceable pursuant to governing law, then such provision shall be deemed amended to the extent necessary to make it enforceable, if possible. If not possible, then such provision shall be deemed to be deleted. If any provision is so deleted, then the remaining provisions shall remain in full force and effect.

1218. Confidentiality

Producer acknowledges that the terms and conditions of this agreement and any information disclosed by Operator to Producer pursuant to this Agreement are confidential in nature and agrees to keep such information confidential and not to disclose any or if to any other Person, other than to its auditors, lenders, legal or financial advisors, to its bona fide potential lenders, successors or assigns or as required by applicable law.


IN WITNESS WHEREOF the Parties have executed this Agreement each as of the Effective Date.

Operator: TORC OIL & GAS LTD.,

^/XxLfACnAJL

Kristine LavergneEngineering Manager, Saskatchewan

FH. 12 70! HDate

Producer: ELCANO EXPLORATION INC.

Phe-hiAotvJ- j c£r>

Title

dan 3/&*>'?Date

This is the execution page of the Agreement entitled “MANSON AREA EMULSION AND WATER HANDLING AGREEMENT” between TORC OIL & GAS LTD. and ELCANO EXPLORATION INC. effective January 1, 2019


EXHIBIT AATTACHED TO AND MADE PART OF AN

EMULSION AND WATER HANDLING AGREEMENT BETWEEN TORC OIL & GAS LTD. AND ELCANO EXPLORATION INC.


DESCRIPTION OF FACILITY. SOURCES. FACILITY INLET. FACILITY OUTLET. METERINGFACILITY OPERATOR AND PRIORITIES

1. Facility Description

FACILITY NAME AND DESCRIPTION

FACILITY INLET (legal description)

FACILITY OUTLET (legal description)

South Kirkella08-16-011-29 W1 Battery 08-16-011-29 W1 08-16-011-29 W1

Manson 16-04-013-28 W1 Battery and Salt Water Disposal Facilities

16-04-013-28 W1 16-04-013-28 W1

2. Operation of Metering Facilities

The metering facilities referred to in clause 501 shall be operated by Operator.

3. Sources

SOURCE(legal description)

FACILITY INLET PARTICIPATINGINTEREST*

100/04-15-013-27W1/00 08-16-011-29 W1 or16-04-013-28 W1

37.5%

*For the purposes of this Agreement

4. Handling Priority

Producer Inlet Substances will be handled on a reasonable efforts basis to the extent that capacity is available in the Facility. If the Facility is unable to handle all Inlet Substances available for delivery to the Facility on any one Day, acceptance of Inlet Substances by Operator at the Facility will be cut back at Operator’s sole discretion.

Revision No:Revision Effective Date:Contract No.: JS0661 Contract Effective Date: January 1, 2019 Exhibit 'A'

EXHIBIT BATTACHED TO AND MADE PART OF AN



SPECIFICATIONS FOR PRODUCER INLET SUBSTANCES

1) All Producer Inlet Substances delivered to the Facility Inlet shall:

(a) be of a kind, quality and composition and at a temperature and pressure so as to be within the design and operating parameters of the Facility;

(b) be free from substances in such quantities that may obstruct, damage or be detrimental to the operation of the Facility. Producer Inlet Substances also shall be free of substances that may result in Outlet Substances having objectionable odors, solid matter, dust, gums and gum-forming constituents which might affect their marketability or cause injury to or interference with the proper operation of the lines, regulators, meters or other appliances through which such Outlet Substances flow. Such substances include, but are not limited to, drilling fluids, completion fluids, workover fluids, spent acids, excessive amounts of water or other chemical additives.

2) Specifications for delivery of Producer Inlet Substances:

(a) if delivery is by pipeline, Producer Inlet Substances delivered hereunder for handling at the Facility shall be capable of entering the Facility at a minimum pressure provided by Operator;

(b) if delivery is by truck, such deliveries shall be made between the hours specifically approved by Operator

Revision No:Revision Effective Date:Contract No.: JS0661 Contract Effective Date: January 1, 2019 Exhibit 'B'

EXHIBIT CATTACHED TO AND MADE PART OF AN



HANDLING CHARGES FOR PRODUCER INLET SUBSTANCES

1. Emulsion Handling ChargeThe charge for emulsion handling for each m3 of Producer Inlet Substances shall be $7.70 plus applicable federal and provincial value added taxes

2. Water Handling Charge

The charge for handling of each m3 of Producer Inlet Substances that are Water shall be $2.00 plus applicable federal and provincial value added taxes.

3. Failure to Take in Kind Charges

Pursuant to clause 603 of the Agreement, if Producer fails to take its share of Outlet Substances in kind, Producer shall be responsible for the following fees, as applicable, plus applicable federal and provincial value added taxes:

(i) for Producer Outlet Substances that are Gas, two and one half percent (2.5%) of the gross proceeds of the sale or $500 per month;

(ii) for Producer Outlet Substances that are Crude Oil, five percent (5%) of the gross proceeds of the sale.

Revision No.-Revision Effective Date:Contract No.: JS0661 Contract Effective Date: January 1, 2019 Exhibit 'C'

EXHIBIT DATTACHED TO AND MADE PART OF AN



ADDRESSES FOR SERVICE

Operator Producer

TORC OIL & GAS LTD. ELCANO EXPLORATION INC.

1800, 525 - 8 Avenue SW 1600, 521 -3 Avenue SW

Calgary, Alberta Calgary, Alberta

T2P 1G1 T2P 0S2

Attention: Joint Venture Department Attention: Richard Fulton

Phone No. (403)930-4166 Phone No.: (403)460-4188

Fax No.: (403)930-4159 Fax No.: (403)460-4965

Field Contact: Jim Larter Field Contact:

Phone No.: (306) 634-7573 Phone No.:

Fax No.: (306) 634-7567 Fax No.:

Revision No:Revision Effective Date:Contract No.: JS0661 Contract Effective Date: January 1, 2019 Exhibit 'D'

EXHIBIT EATTACHED TO AND MADE PART OF AN



MODIFICATIONS TO 2014 PJVA MODEL EMULSION AND WATER HANDLINGAGREEMENT

Reference ModificationsTable ofContents Page Added "if applicable” after "map” in reference to Exhibit “A”.Page 1 Added “as further outlined in this Agreement” at the end of the first sentence.Clause 101 (f) Removed “the date first above written” and replaced with “January 1, 2019”Clause 101 (g) Added definition of “Exhibits” and renumbered subsequent subclauses

accordingly.Clause 202 Removed “D (Part B)” from clause 202: Revision of Exhibits

Added period (.) after “Producer”, before “Exhibit D” in fourth line of clause 202Removed “Part A” after “Exhibit D” in fourth line of clause 202

Clause 203 Added period (.) at the end of the paragraphClause 606 (b) Removed:

for Crude Oil, the Edmonton Crude Oil Market Price for the Month, adjusted for quality and transportation; for purposes of this clause, “Edmonton CrudeOil Market Price” means the average Crude Oil posted price at Edmonton.

Replaced with:for Crude Oil, the simple average of the NYMEX prompt month (WTI) crude contract settlement prices during the calendar month of delivery plus the monthly volume weighted average of the NGX and Net Energy index prices for the specific crude oil stream adjusted for applicable quality and transportation.

Clause 901 Added “or wilful misconduct" after “gross negligence” in subclause (a), (b) and (c) of clause 901.

Clause 1209 (b) Added an “s” to “Saturday” on the fifth lineExecution Page Removed “dated” and replaced with “effective” in the very last line.

Revision No:Revision Effective Date:Contract No.: JS0661 Contract Effective Date: January 1, 2019 Exhibit 'E’

THIS IS EXHIBIT "B" REFERRED TO IN THE AFFIDAVIT OF MARVIN TANG




2014 EWHA

ELCANO NORTH HARGRAVE 3-34-12-27W1MBATTERY

EMULSION AND WATER HANDLING AGREEMENT

BETWEEN

ELCANO ENERGY PARTNERSHIP

AND

CRESCENT POINT RESOURCES PARTNERSHIP

DATED JANUARY 1, 2015

Contract No.: C032Effective Date: JANUARY 1, 2015

ELCANO NORTH HARGRAVE 3-34-12-27W1M BATTERYEMULSION AND WATER HANDLING AGREEMENT

TABLE OF CONTENTS

ARTICLE I DEFINITIONS............................................................................................................1ARTICLE II EXHIBITS................................................................................................................. 3

ARTICLE III ACCEPTANCE AND DELIVERY........................................................................... 4

ARTICLE IV CHARGES.................................................................................................................6ARTICLE V MEASUREMENT......................................................................................................6

ARTICLE VI OWNERSHIP AND DISPOSITION OF OUTLET SUBSTANCES........................ 8ARTICLE VII BILLINGS AND PAYMENT................................................................................... 10

ARTICLE VIII FORCE MAJEURE.................................................................................................13

ARTICLE IX LIABILITY AND INDEMNIFICATION....................................................................13

ARTICLE X TERM....................................................................................................................... 14

ARTICLE XI DISPUTE RESOLUTION........................................................................................14

ARTICLE XII MISCELLANEOUS PROVISIONS........................................................................ 15

EXHIBIT “A” DESCRIPTION OF FACILITY, SOURCES, FACILITY INLET, FACILITYOUTLET, METERING FACILITIES OPERATOR, MAP (IF APPLICABLE) AND PRIORITIES

EXHIBIT “B” SPECIFICATIONS FOR PRODUCER INLET SUBSTANCES

EXHIBIT “C” HANDLING CHARGES FOR PRODUCER INLET SUBSTANCES

EXHIBIT “D” ADDRESSES FOR SERVICEEXHIBIT “E” MODIFICATIONS TO THE 2014 PJVA MODEL EMULSION AND

WATER HANDLING AGREEMENT

MEMORANDUM OF AGREEMENT effective JANUARY 1,2015

ELCANO NORTH HARGRAVE 3-34-12-27W1M BATTERYEMULSION AND WATER HANDLING AGREEMENT

BETWEEN

ELCANO ENERGY PARTNERSHIP, a general partnership or body corporate, having an office in the City of Calgary, in the Province of Alberta, for and on behalf of the Facility owners (“Operator”)

AND

CRESCENT POINT RESOURCES PARTNERSHIP, a general partnership or body corporate, having an office in the City of Calgary, in the Province of Alberta, and owning a working interest in or as agent for and on behalf of the Source owners (“Producer”)

The purpose of this Agreement is to provide for the handling of Producer Inlet Substances and Producer Outlet Substances, as further outlined in the Agreement.

In consideration of the mutual covenants and conditions in this Agreement, the Parties agree as follows:ARTICLE I - DEFINITIONS

101. Definitions

In this Agreement, including the recitals, definitions and exhibits hereto:(a) “Affiliate” means, with respect to a Party, any other Person which is affiliated with

such Party, and for the purposes hereof:

(i) two (2) Persons will be considered to be affiliated with one another if one(1) of them controls the other, or if both of them are controlled by a common third Person, and

(ii) one (1) Person will be considered to control another Person if it has the power to direct or cause the direction of the management and policies of the other Person, whether directly or indirectly, through one (1) or more intermediaries or otherwise, and whether by virtue of the ownership of shares or other equity interests, the holding of voting rights or contractual rights, or otherwise;

(b) “Agreement” means this document together with the exhibits attached hereto;

(c) “Allocation Procedure” means the procedure used at the Facility at the time of allocation to allocate Outlet Substances recovered from Inlet Substances being handled at the Facility, as may be amended from time to time;

Contract No. C032 Page 1

(d) “Crude Oil” means crude oil and condensate separated from Inlet Substances at the Facility which meet relevant specifications for transmission and sale;

(e) “Day” means a period of time commencing at 08:00 local time on any calendar day and ending at 08:00 on the next calendar day or at such other time as may be agreed upon by the Parties;

(f) “Effective Date” means the date first above written or, in the case of an exhibit, the date on which the exhibit becomes effective;

(g) “Exhibits” means the Exhibits attached to and made a part of this Agreement;

(h) “Facility” means all real and personal property of every kind, nature and description which constitutes all facilities owned or controlled by Operator as further described in Exhibit “A”;

(i) “Facility inlet” means the point or points set forth in Exhibit “A” where Producer Inlet Substances first enter the Facility;

0) “Facility Outlet” means the point or points of delivery set forth in Exhibit “A”, or as determined by Operator in its sole discretion, where Outlet Substances exit the Facility;

(k) “Force Maieure” means an occurrence beyond the reasonable control of a Party claiming suspension of an obligation hereunder, which has not been caused by such Party's negligence and which such Party was unable to prevent or provide against by the exercise of reasonable diligence at a reasonable cost and includes, without limiting the generality of the foregoing, an act of God, war, revolution, insurrection, blockade, riot, strike, a lockout or other industrial disturbance, fire, lightning, unusually severe weather, storms, floods, explosion, accident, shortage of labour or materials, or government restraint, action, delay or inaction;

(l) “Gas" means all natural gas, solution gas and any other gas, together with associated substances, separated from Inlet Substances at the Facility that is gaseous under the conditions at which it is separated;

(m) “Inlet Substances" means the total volume of gas, liquids and associated substances delivered to the Facility for handling;

(n) “Interest Rate” means the prime rate of interest as quoted in respect of commercial demand loans on the applicable day by the principal chartered bank in Canada used by Operator plus two percent (2%) per annum;

(o) “Losses and Liabilities” means all claims, liabilities, actions, proceedings, demands, losses, costs, penalties, fines, death, injury or damages, whether contractual or tortious, and expenses, including reasonable legal fees and disbursements on a solicitor and its own client basis;

(p) “Month” means a period of time commencing at the beginning of the first Day of a calendar month and ending at the beginning of the first Day of the next calendar month;

(q) “Outlet Substances” means all substances which are recovered from Inlet Substances and are available for delivery at the Facility Outlet, but excluding such substances as are lost or consumed pursuant to Clause 604;

(r) “Party” means a Person who is bound by this Agreement;

(s) “Person” means an individual, firm, body corporate or other legal entity, or partnership, as the case may be;


(t) “Producer Inlet Substances” means Inlet Substances produced from Sources;

(u) “Producer Outlet Substances” means Outlet Substances that are allocated to the account of Producer in accordance with the Allocation Procedure;

(v) “Related Persons” means a Party’s Affiliates and the directors, officers, agents, consultants, contractors, and employees of that Party or that Party’s Affiliates;

(w) “Sources” means the wells or facilities described in Exhibit “A”;

(x) “Water” means water contained in Inlet Substances delivered to the Facility for handling; and

(y) “Year” means a period commencing at the beginning of the first Day of January of each calendar year and ending at the beginning of the first Day of the next calendar year.

ARTICLE II - EXHIBITS201. Exhibits

The following exhibits are attached to and incorporated in this Agreement:

(a) Exhibit “A” sets forth the Sources from which Producer Inlet Substances will be handled in the Facility under the terms of this Agreement, the Facility, the Facility Inlet, the Facility Outlet, handling priorities, any restrictions on volume, if applicable, of Producer Inlet Substances, the Party responsible for operating the metering facilities, and a map illustrating the Facility and Sources, if applicable;

(b) Exhibit “B” sets forth the specifications and conditions for delivery of Producer Inlet Substances;

(c) Exhibit “C” sets forth the charges for handling Producer Inlet Substances;

(d) Exhibit “D” sets forth the addresses for service of the Parties.

(e) Exhibit “E” sets forth the modifications to the body of the 2014 PJVA Model EMULSION AND WATER Handling Agreement.

202. Revision of Exhibits

Operator and Producer may review Exhibits “A”, “D (Part B)” and “E" from time to time and any revisions shall be mutually agreed upon. Operator may revise Exhibit “B” from time to time, at its sole discretion, acting reasonably. Operator may revise Exhibit “C” upon thirty (30) Days’ notice to Producer. Exhibit “D” may be revised in accordance with the provisions of clause 1209. Exhibits that are revised shall show the Effective Date of the revision and shall be numbered consecutively and, if required, shall include the approval of the Parties. Operator shall, upon revision of any exhibit, supply Producer with a copy of the revised exhibit. If Operator becomes aware of a mistake or mechanical error in any exhibit, Operator shall prepare a corrected exhibit and supply Producer with a copy of the corrected exhibit.

203. Conflicts

If a provision of Exhibits “A” to “D” inclusive conflicts with a provision in the body of this Agreement, the latter shall prevail. If a provision of Exhibit “E” conflicts with a provision in the body of this Agreement, Exhibit “E” shall prevail.


ARTICLE III - ACCEPTANCE AND DELIVERY

301. Acceptance and Delivery of Producer Inlet Substances

(a) Subject to all other terms and conditions of this Agreement, Producer shall, at its sole cost, risk and expense deliver or cause to be delivered, Producer Inlet Substances to Operator at the Facility Inlet, and Operator shall accept and handle Producer Inlet Substances and deliver Producer Outlet Substances to the Facility Outlet and handle Water attributable to Producer Inlet Substances, if applicable.

(b) If delivery is by pipeline:

(i) any costs borne by Operator for tie-in of Producer Inlet Substances, including, without limitation, performing supervisory or administrative functions or supplying labour or materials for tie-in of Producer Inlet Substances, plus 15% of such costs, shall be reimbursed by Producer to Operator in accordance with Article VII following receipt by Producer of a statement of account outlining in reasonable detail the nature of such costs;

(ii) Producer shall indemnify Operator for the cost of any fluids lost during tie- in; and

(iii) At Operator’s request Producer shall provide a copy of the pipeline integrity assessment reports to Operator.

(c) If delivery is by truck, Producer shall at its sole cost, risk and expense:

(i) deliver Producer Inlet Substances only at the times and conditions specified in Exhibit “B” or as otherwise approved by Operator; and

(ii) employ only such contractors for delivery of Producer Inlet Substances as have been approved by Operator prior to any such deliveries.

(d) Producer shall obtain Operator’s written approval prior to delivering Producer Inlet Substances from any new wells or facilities.

(e) Producer shall notify Operator’s personnel twenty-four (24) hours prior to first deliveries of Producer Inlet Substances.

(f) Producer shall, at its sole cost, risk and expense, provide a compositional analysis of Producer Inlet Substances prior to first delivery and on an annual basis or as reasonably required by Operator.

(g) Producer shall, at its sole cost, risk and expense, supply samples of Water attributable to Producer Inlet Substances as required by Operator to perform compatibility tests.

(h) Producer shall comply with all of Operator’s safety, environmental and security rules.

(i) Producer shall obtain approval from Operator prior to delivery of any Producer Inlet Substances containing workover fluids, spent acids or any other known contaminants.

0) Producer shall pay all costs of any remedial action required for Facility Damage if Operator accepts Producer Inlet Substances that do not meet the specifications set forth in Exhibit “B”, provided, however, that if the Facility damage cannot be attributed to a single source of Inlet Substances, Producer’s responsibility for remedial costs will be in the proportion that the volume of Producer Inlet


Substances delivered to the Facility bears to the total volume of Inlet Substances delivered to the Facility during the period in which the damage occurred.

(k) Subject to clause 706, Operator shall not acquire title to Producer Inlet Substances but shall only have possession thereof for the purposes mentioned herein.

(l) Producer warrants that it has the authority to deliver Producer Inlet Substances to the Facility as herein provided, and Producer covenants and agrees to indemnify and hold Operator and its Related Persons harmless from and against any and all Losses and Liabilities arising from any Person claiming an interest in Producer Inlet Substances or Producer Outlet Substances.

(m) Operator warrants that it has the authority to accept Producer Inlet Substances at the Facility for handling as herein provided, and Operator covenants and agrees to indemnify and hold Producer and its Related Persons harmless from and against any and all Losses and Liabilities arising from any Person having an interest in the Facility claiming that Operator is not duly authorized to perform its duties hereunder.

(n) Operator shall, subject to clauses 303, 304 and 305, handle Producer Inlet Substances in a good and workmanlike manner in accordance with good oil and gas field practices and in accordance with all applicable laws and regulations.

(o) Operator shall comply with all rules and regulations for waste disposal as required by the applicable provincial or territorial governing body.

(p) Operator shall be entitled to commingle Producer Inlet Substances with any other Inlet Substances.

302. Commencement of Handling

The handling of Producer Inlet Substances shall commence when:

(a) Producer and Operator have installed or have caused to be installed all equipment necessary to effect the acceptance of Producer Inlet Substances at the Facility Inlet;

(b) Producer and Operator have obtained or have caused to be obtained all necessary permits and approvals to produce, accept and handle Producer Inlet Substances and deliver Producer Outlet Substances;

(c) Operator has advised Producer that it will accept deliveries of Producer Inlet Substances;

(d) Producer has confirmed to Operator that all arrangements for the reporting and disposition of Producer Outlet Substances beyond the Facility Outlet have been made; and

(e) Producer has complied with Operator's applicable data requirements for all Sources.

303. Priority of Handling

Producer Inlet Substances will be handled to the extent that capacity is available in the Facility. If the Facility is unable to handle all Inlet Substances available for handling at the Facility on any one Day, acceptance of Inlet Substances by Operator at the Facility will be cut back using the priority set out in Exhibit “A”.


304. Specifications of Producer Inlet Substances

Producer Inlet Substances delivered to the Facility shall meet the specifications as set forth in Exhibit “B”. If any Producer Inlet Substances delivered to the Facility do not meet the specifications set forth in Exhibit “B”, Operator may, at its sole discretion, acting reasonably, discontinue taking all or part of Producer Inlet Substances until such time that Producer Inlet Substances to be delivered meet all the requirements under this Agreement.

305. Temporary Capacity Limitations

Notwithstanding the provisions of this Article III, Operator, at its sole discretion, acting reasonably and without incurring any liability to Producer, reserves the right to refuse or limit acceptance of Producer Inlet Substances at the Facility Inlet when the Facility is shut down for maintenance or when Facility capacity is reduced by temporary operational difficulties or operating limitations, until such time as capacity is no longer restricted.

306. Notification of Cutbacks

Operator shall notify Producer as soon as reasonably possible if Producer Inlet Substances have been curtailed pursuant to clauses 303, 304 or 305.

307. Returns at Producer’s Expense

When Producer Inlet Substances are delivered to the Facility by truck and Operator is unable to accept Producer Inlet Substances, Operator will instruct the carrier to return such Producer Inlet Substances to Producer at Producer’s expense.ARTICLE IV - CHARGES401. Handling Charges

The handling charges applicable to the volume of Producer Inlet Substances shall be determined in accordance with Exhibit “C” and billed in accordance with clause 701.

ARTICLE V - MEASUREMENT

501. Metering Facilities

(a) If delivery is by truck, measurement of Producer Inlet Substances as evidenced by gauge tickets, truck tickets, or other industry accepted methods, shall be deemed to be conclusive and final.

(b) If delivery is by pipeline, Producer shall, at its sole cost, risk and expense, install or cause to be installed metering facilities for the purpose of measuring volumes of Producer Inlet Substances delivered to the Facility Inlet. Such metering facilities shall meet Operator's specifications, shall be installed at a location approved by Operator and in a manner which will allow proper measurement and allocation of Producer Inlet Substances under the Allocation Procedure, and shall be maintained by and at the sole cost, risk and expense of Producer. Such metering facilities shall be physically operated by the Party designated in Exhibit “A”.

502. Accuracy

(a) The accuracy of Producer’s and Operator’s metering facilities shall be verified by the Party operating the metering facilities at the frequency specified in applicable governmental regulations, or as reasonably required by the Operator, whichever is more frequent. The cost of such verification shall be borne by the Parties for their respective metering facilities. Either Party’s metering facilities shall be open for witnessing of calibration or inspection by the other Party at all reasonable times.


The Party performing the calibration or inspection will provide the other Party with at least forty-eight (48) hours’ prior notice.

(b) In case any question arises as to the accuracy of measurement, any metering facilities shall be tested upon demand of either Party and, if found to be correct or to be in error of not more than two percent (2%) with respect to gas measurement, one and one-half percent (1 1/2%) with respect to equilibrium liquid measurement, or one-half of one per cent (1/2%) with respect to liquid measurement (referred to herein as the “Relevant Percentage”), the expense of such testing shall be borne by the Party requesting the test. If the accuracy of measurement is found to be incorrect by more than the Relevant Percentage, the expense of such testing shall be borne by the owner of those metering facilities.

(c) If, upon any test, metering facilities are found to be in error of not more than the Relevant Percentage, previous readings of such metering facilities shall be considered correct in computing the volumes being metered, but such metering facilities shall be adjusted properly as soon as practicable to record accurately. If, upon any test, any metering facilities are found to be in error by any amount exceeding the Relevant Percentage, then any previous readings of such metering facilities shall be corrected to zero error for any previous period which is known definitely or is agreed upon, but in case the period is not known definitely or not agreed upon, such correction shall be for a period covering the last half of the time lapsed since the date of the last test.

(d) In the event metering facilities are out of service or require repair, such that the volume being measured is not correctly indicated by the reading thereof, the volumes attributable to the period shall be estimated and agreed upon on the basis of the best data available, using the most appropriate of the following methods:

(i) by using the registration of any check metering facilities, if installed and accurately registering; or

(ii) by correcting the error if the percentage of error is ascertainable by calibrations, tests or mathematical calculations; or

(iii) by estimating on the basis of actual volumes measured during the preceding periods under similar conditions when the metering facilities were registering accurately.

503. Units of Volume and Weight

The standards of measurements shall be governed by the following:

(a) The unit of volume of Gas for all purposes hereunder shall be one thousand cubic metres (103m3) at a temperature of fifteen degrees Celsius (15°C) and an absolute pressure of one hundred one and three hundred twenty-five one thousandths kilopascals (101.325 kPa);

(b) the unit of volume of liquids for all purposes hereunder shall be one cubic metre (1m3) as defined in the Weights and Measures Act (Canada), as amended; and

(c) the unit of weight of solids for all purposes hereunder shall be one tonne (11), being one thousand kilograms (1000 kg).

504. Determination of Volumes

Volumes shall be determined in accordance with prevailing regulatory requirements relating to the measurement of upstream petroleum industry fluids.


505. Assumed Atmospheric Pressure

For the purposes of measurement and meter calibration, the atmospheric pressure at the point of measurement shall be assumed to be constant considering the actual elevation or location of any of the metering facilities above sea level and irrespective of variations in the atmospheric pressure from time to time.

ARTICLE VI - OWNERSHIP AND DISPOSITION OF OUTLET SUBSTANCES601. Producer's Share of Outlet Substances

(a) The volumes of Outlet Substances allocated to Producer shall be determined each Month in a manner consistent with the Allocation Procedure.

(b) Producer shall own and at its sole cost, risk and expense shall take in kind or separately dispose of Producer Outlet Substances.

(c) Producer shall provide, or cause to be provided, to Operator, by the tenth (10th) Day of each Month, or as may be required by governing regulations, a statement of the total volume of Producer Inlet Substances delivered to the Facility Inlet for the preceding Month and details of any changes in ownership of Producer Inlet Substances or Sources. Further, Producer acknowledges its obligation to provide or cause to be provided to Operator, on a timely basis, all production data and information as may be required for the preparation of statements pursuant to subclause 601(e).

(d) (i) If Producerfails to provide, or cause to be provided, Operator with sufficientinformation to perform allocations of Outlet Substances as specified under the Allocation Procedure, then Operator will use its reasonable judgment regarding the allocations. Producer shall be liable for, and indemnify Operator against, any penalties, costs or damages levied against Operator as a result of allocation.

(ii) Any costs incurred by Operator resulting from Producer's failure to provide production data and information under this Agreement, including but not limited to administrative costs for revising allocations, shall be paid by Producer.

(e) Operator shall, on or before the twenty-fifth (25th) Day of each Month, provide Producer with a statement showing the total volume of Producer Inlet Substances accepted at the Facility Inlet for the preceding Month and volume and heat content of Gas, the volume and density of Crude Oil and the volume of Water produced therefrom.

(f) Producer and Operator shall preserve all original test data, charts, the Allocation Procedure and other similar records related to this Agreement for a period of at least seven (7) Years after the Year to which the data relate. Notwithstanding the foregoing, Operator and Producer shall retain any original test data, charts, the Allocation Procedure and other similar records related to this Agreement to which a query under clauses 704 or 705 relates until all such queries are resolved.

(g) Producer shall, within twenty-six (26) Months following the end of the Year to which the records relate, have the right to examine at all reasonable times the records of Operator relating to clause 601.

(h) Operator shall be entitled to deal only with Producer on all matters arising under this Agreement, including, without limitation, all reporting of deliveries and


directions regarding the handling of Producer Outlet Substances attributable to Producer Inlet Substances.

602. Delivery of Producer’s Share of Gas and Crude Oil

Operator shall deliver Producer’s share of Gas and Crude Oil to Producer or to such Person as Producer designates at the Facility Outlet.

603. Failure to Take in Kind

(a) If Producer fails, in the opinion of Operator, to take or otherwise adequately dispose of Producer Outlet Substances, Operator may, at its sole option, so long as such failure continues, for the account and at the expense of Producer, handle and sell on the open market or, if a purchaser is not available, store Producer Outlet Substances or cease to accept Producer Inlet Substances.

(b) In the event of a failure to take in kind and a subsequent sale by Operator of Producer Outlet Substances, Operator shall remit to Producer within a reasonable period of time the proceeds of such sale less all direct costs of the sale and less a charge as specified in Exhibit “C”.

(c) The authority of Operator to enter into contracts for the sale of Producer Outlet Substances shall be restricted to contracts that are for such reasonable periods of time as are consistent with the minimum needs of the industry under the circumstances, but not in excess of a one Month period. Subject to such contracts, Producer may commence or resume taking Producer Outlet Substances in kind at any time if it has given notice to Operator at least thirty (30) Days prior to the expiration of the current sales contract that it intends to take its share in kind.

604. Volume Losses

(a) Operator shall have the right at any time, in its sole discretion and acting reasonably in accordance with industry practice, to flare, use or consume Producer Inlet Substances free of charge. Producer Inlet Substances flared as a discrete stream at the Facility Inlet shall be conclusively deemed not delivered to the Facility.

(b) Producer shall bear a share of any losses suffered during a Month due to evaporation, flaring, fuel gas consumption or Force Majeure in accordance with the Allocation Procedure.

(c) If and when it cannot be determined to whom a loss should be allocated, any such loss shall be borne by Producer in the proportion that the volume of Producer Inlet Substances handled through the Facility during the previous Day bears to the total volume of Inlet Substances handled through the Facility during the previous Day.

605. Specifications of Outlet Substances

Operator shall use reasonable efforts to ensure that Outlet Substances meet the specifications which are acceptable to the purchasers or carriers of Outlet Substances as of the Effective Date, or such other specifications as may be subsequently agreed upon by Operator and the purchasers or carriers.

606. Measurement or Allocation Adjustments

In the event of an adjustment in measurement or allocation to Producer Outlet Substances, adjustments shall be made using:


(a) for Gas, the arithmetic average price for the Month for which the adjustment is required as listed in the table “Daily Spot Gas Price at AECO C & NOVA Inventory Transfer” in the Canadian Gas Price Reporter less the NOVA tolls (3 year toll) at the NOVA meter station and less NOVA fuel; and

(b) for Crude Oil, the Edmonton Crude Oil Market Price for the Month, adjusted for quality and transportation; for purposes of this clause, “Edmonton Crude Oil Market Price” means the average Crude Oil posted price at Edmonton.

If Operator determines a need for Crude Oil quality equalization, Producer shall be charged in accordance with the quality scales provided for in the “Canadian Crude Oil Quality Equalization Process Procedures Guide” published July, 1994 and any subsequent revisions thereto or replacements thereof.

ARTICLE VII - BILLINGS AND PAYMENT701. Billings

Operator shall bill Producer on or before the thirtieth (30th) Day of each Month for the charges payable by Producer attributable to handling of Producer Inlet Substances for the preceding Month, using the basis outlined in Exhibit “C”. Producer shall pay all bills which become payable pursuant to this Agreement within thirty (30) Days after receiving them. If Producer fails to pay a bill within the said thirty (30) Day period, the unpaid amount shall, at Operator's option, bear interest following such thirty (30) Day period at the Interest Rate regardless of whether or not Operator has notified Producer in advance of its intention to charge interest with respect to that unpaid amount. The obligation to pay interest with respect to a default is to apply until such default is rectified and shall not merge into a judgment for principal and interest, or either of them. In addition, Operator shall have the right at any time thereafter, such default continuing, to enforce the remedies hereinafter provided.

702. Commingling of Funds

Subject to clauses 603 and 706, funds received by Operator for the account of Producer which are in excess of the amounts payable under this Agreement are trust funds and are not to be used by Operator for its own purposes. Operator may commingle funds received by it under this Agreement with its own funds but such right to commingle is granted to Operator as an administrative aid in its duties hereunder and does not alter the purpose or intent of such funds received by Operator as trust funds.

703. Books and Records

Operator will keep within the Province of Alberta true and correct books, accounts and records of the operations conducted hereunder.

704. Correctness of Billings

Producer shall not withhold payment of any portion of any bill delivered to Producer by Operator in accordance with the terms of this Agreement, except as provided in this clause, and such payment shall not affect the right of Producer to protest or question the correctness of such bills.

Inquiries or requests by a Producer for additional information related to a bill shall be made in writing to Operator, accompanied by reasonable supporting detail, within twenty-six (26) Months following the end of the Year in which the bill was presented; otherwise the bill shall be deemed conclusively to be correct except where the item is under dispute pursuant to clause 705. Operator shall respond to such queries within thirty (30) days of receipt. Any such inquiry shall not extend Producer’s obligation to pay the amount unless agreed to by the Operator.


If the Operator agrees that a billed amount requires adjustment, the Operator shall make such adjustment within thirty (30) days or at such time as mutually agreed to by the Operator and the Producer.

705. Audits

(a) The Operator’s books, accounts, and records, including Monthly product allocation statements relating to joint operations for a Year, may be audited within twenty- four (24) months following the end of that year in which the bill or statement was issued.

(b) Any audit conducted pursuant to the Agreement shall:

(1) be conducted in accordance with the PASO Accounting Guidelines relating to the conduct of audits of this nature;

(2) give due consideration to documentation requirements as may reasonably be required to substantiate or reasonably test or assess the Operator’s compliance with the Agreement or the accounting procedure; and

(3) be scheduled in such a manner, so as to cause a minimum of inconvenience to the Operator.

(4) be administered as set out below

(c) Producer shall make every reasonable effort to conduct its audit at the same time as an audit conducted by the Facility owners. Furthermore, where two or more producers wish to conduct an audit, Producer shall make every reasonable effort to conduct its audit jointly with the other producers.

(d) The scope of the audit shall be limited to the following:

(1) For fixed fee arrangements, the audit shall be limited to the verification of volumes allocated to the Producer;

(2) For variable fee arrangements, the audit shall be limited to the verification of volumes allocated to the Producer and the fee calculation method including any related 13th month adjustment calculation, however the scope shall not extend to a detailed audit or review of the operating costs and capital values used in determining the charges to Producer.

706. Remedies

Producer, in order to secure any indebtedness to Operator under this Agreement, hereby gives and grants to Operator a lien and charge on Producer’s share of Crude Oil and Gas attributable to Producer Inlet Substances, to pay any handling charge or other amount payable to Operator by Producer. In the event Producer defaults in payment of its bills and such default shall continue for five (5) Days after receipt of written demand from Operator, Operator may, without limiting Operator's other rights in this Agreement or otherwise held at law or in equity:

(a) enforce such lien in any manner provided by the laws governing this Agreement;

(b) discontinue handling of Producer Inlet Substances until such time as the indebtedness is paid;

(c) set-off against the amount unpaid by Producer any sums due or accruing to Producer from Operator, other than lessor royalty payments due to such defaulting Producer who is also an owner of freehold mineral rights, pursuant to this Agreement and from any other agreement between Operator and Producer, whether executed before or after the Effective Date;


(d) maintain an action or actions for such unpaid amounts and interest thereon on a continuing basis as such amounts are payable but not paid by Producer, as if the obligation to pay such amounts and the interest thereon were liquidated demands due and payable on the relevant date such amounts were due to be paid, without any right or resort of such Producer to set-off or counter-claim;

(e) treat the default as an immediate and automatic assignment to Operator of proceeds of the sale of such Producer’s share of Gas and Crude Oil. Service of a copy of this Agreement upon a purchaser of such Producer’s share of Gas and Crude Oil, together with written notice from Operator, shall constitute a written irrevocable direction by Producer to any such purchaser to pay to Operator the entire proceeds from any such sale and such purchaser is authorized by Producer to rely upon the statement of Operator as to the amount so owed to it by Producer. Operator shall apply all sums so collected against the unpaid amount including any interest accrued thereon and any fee provided for in subclause 603(b) payable to Operator, and all sums so applied shall be considered as received from Producer, and any excess of such proceeds shall be paid by the Operator to the Producer within a reasonable period of time of receipt of proceeds; and

(f) sell on the open market such quantity or quantities of Producer’s share of Gas and Crude Oil as shall be sufficient to pay such indebtedness; provided, however, that such sale of Producer’s share of Gas and Crude Oil shall first be made under the terms of any existing contracts for the sale of Producer’s share of Gas and Crude Oil previously executed by Producer and in all cases subject to the charge pursuant to subclause 603(b).

Should default occur, Producer shall be liable to Operator for all reasonable expenses incurred by Operator to remedy such default, including legal costs on a solicitor and his own client basis, and other expenses in connection with obtaining satisfaction of the obligations of Producer. Such expenses shall bear interest calculated and payable in accordance with clause 701 of this Agreement.

Books and records kept by Operator shall constitute proof of the existence and amount of such default, including the associated direct costs and charges pursuant to clause 603.

707. Royalty Indemnification

Producer shall pay, or be responsible for the payment of, and shall indemnify and save harmless Operator and its Related Persons against liability for any and all royalties, overriding royalties, product payments, and any and all other payments chargeable against Producer Inlet Substances or Producer Outlet Substances.

708. Taxes

(a) Producer shall pay all taxes, levies, assessments and like charges which may be imposed in respect of Producer Inlet Substances.

(b) When Operator is required to charge Goods and Services Tax (GST), or similar value added tax, Operator's invoice shall include information prescribed by the Input Tax Credit Information Regulations under the Excise Tax Act (Canada), or any information prescribed for a similar value added tax.

709. InsolvencyIf Producer:

(a) becomes bankrupt or insolvent, or commits or suffers any act of bankruptcy or insolvency;


(b) is placed in receivership or a receiver/manager or person filling that role is appointed with respect to its property;

(c) makes a compromise with or an assignment for the benefit of creditors;

(d) seeks debtor relief protection under applicable legislation including without restricting the generality of the foregoing, the Bankruptcy and Insolvency Act (Canada) and the Companies’ Creditors Arrangement Act (Canada)] or

(e) is otherwise unable or unwilling to pay its debts as they fall due in the usual course of business;

Operator may, at its sole option, elect to terminate this Agreement upon five (5) Days’ notice subject to subclause 1001(b), or to demand immediate payment for all current invoiced amounts plus estimated amounts that have accrued but have not yet been invoiced, and amounts that are estimated as likely to accrue in the remainder of the current Month and in the following Month. Producer shall pay these amounts within five (5) Days of receipt of Operator’s written demand and shall continue to make prepayment for services as required by Operator prior to services being rendered.

ARTICLE VIII - FORCE MAJEURE801. Force Maieure

(a) If a Party fails by reason of Force Majeure to fulfil any obligations, the obligations of that Party, insofar as its obligations are affected by the Force Majeure, shall be suspended while the Force Majeure continues to prevent the performance of such obligation and for that time thereafter as that Party may reasonably require to commence to fulfil such obligation. A Party prevented from fulfilling any obligation by the Force Majeure shall promptly give the other Party notice of the Force Majeure and the affected obligations, including reasonably full particulars in respect thereof.

(b) The Party claiming suspension of an obligation as aforesaid shall promptly remedy the cause and effect of the applicable Force Majeure, insofar as it is reasonably able so to do, and such Party shall promptly give the other Party notice when the Force Majeure ceases to prevent the performance of the applicable obligation. However, the terms of settlement of any strike, lockout or other industrial disturbance shall be wholly at the discretion of such Party, and that Party shall not be required to accede to the demands of its opponents in any strike, lockout or industrial disturbance solely to remedy promptly the Force Majeure constituted by such action.

(c) Notwithstanding anything contained in this clause, lack of finances shall not be considered a Force Majeure nor shall any Force Majeure suspend any obligation for the payment of money hereunder.

ARTICLE IX - LIABILITY AND INDEMNIFICATION

901. Liability and Indemnification

(a) Operator and its Related Persons shall not be liable to Producer or its Related Persons for any Losses or Liabilities suffered or incurred by Producer or its Related Persons resulting from or in any way attributable to or arising out of any act or omission, whether negligent or otherwise, of Operator or its Related Persons in conducting or carrying out operations hereunder except when and to the extent that such Losses and Liabilities are a direct result of, or are directly attributable to,


gross negligence of Operator or its Related Persons. Gross negligence or willful misconduct shall not include any act or omission, insofar as it was done or not done in accordance with the written instructions or express concurrence of the Producer.

(b) To the extent that the gross negligence or willful misconduct described in subclause 901(a) applies, Operator shall be solely liable for such Losses and Liabilities and, in addition, shall indemnify and save harmless Producer and its Related Persons from and against such Losses and Liabilities.

(c) To the extent that the gross negligence or willful misconduct described in subclause 901(a) does not apply, Producer shall be solely liable for and indemnify and save harmless Operator and its Related Persons from and against any and all Losses and Liabilities related to conducting or carrying out operations hereunder, including damage to the Facility caused by acceptance of Producer Inlet Substances which do not meet the specifications of Exhibit “B”.

(d) In no event shall the responsibility of either Party prescribed by this Agreement extend to losses suffered by the other Party respecting the loss or delay of production, including, without restricting the generality of the foregoing, loss of profits or other consequential or indirect losses applicable to such loss or delay in production.

ARTICLE X - TERM1001. Term

(a) This Agreement shall commence as of the Effective Date and shall continue until terminated by either Party giving thirty (30) Days’ prior notice to the other Party.

(b) Notwithstanding the termination of this Agreement, the provisions respecting liability and indemnification, the settlement of accounts and the Operator's remedies in respect thereof, shall remain in full force and effect to the extent of any liabilities which may have accrued prior to the termination of this Agreement.

ARTICLE XI - DISPUTE RESOLUTION1101. Dispute Resolution

The Parties will attempt to resolve any claim or dispute arising out of this Agreement through consultation and negotiation in good faith within the appropriate time periods as set out in this Agreement. If those attempts fail then either Party may refer the dispute for resolution through mediation, with costs of the mediation being shared equally by both Parties. If either Party refers a dispute for resolution through mediation, the other Party agrees to participate in the mediation. If the Parties cannot agree to a mediator, they shall have one appointed by the Canadian Foundation for Dispute Resolution or its successor. However, either Party may terminate the mediation at any time upon giving reasonable notice to the other Party. If mediation fails or is terminated, then the Parties may agree to refer the matter to binding arbitration pursuant to the Arbitration Act (Alberta) , and any subsequent revisions thereto, or a Party may resort to judicial proceedings to resolve the dispute.


ARTICLE XM - MISCELLANEOUS PROVISIONS1201. Interpretation

The captions or headings used in this Agreement are inserted solely for convenience and shall not be considered or given any effect in interpreting the Agreement or in ascertaining the intent of the Parties.

1202. Number and Gender

In this Agreement words importing the singular include the plural and vice versa; words importing the masculine gender include the feminine and neuter genders.

1203. Laws and Regulations

Subject to clauses 1204 and 1214, this Agreement and the rights and obligations of the Parties are subject to all present and future laws, rules, regulations and orders of any legislative body or duly constituted authority now or hereafter having jurisdiction.

1204. Applicable Laws

This Agreement shall be construed in accordance with the laws of the Province of Alberta and each of the Parties submits to the jurisdiction of the courts of the Province of Alberta for the interpretation and enforcement hereof.

1205. Waivers

A waiver of a provision of this Agreement, whether for future or past actions, shall not be binding upon a Party unless it is in writing and signed by its duly authorized representative(s), and such a waiver shall not operate as a waiver in the future of any provision, whether of a like or different character.

1206. Suits

A Party who is sued on a cause of action allegedly arising out of operations hereunder shall forthwith notify the other Party.

1207. Further Assurances

Producer and Operator shall do all such further acts and execute and deliver all such further deeds and documents as may be reasonably required in order to fully perform and carry out the terms of this Agreement.

1208. No Implied Covenants

Producer and Operator have expressed their entire understanding and agreement concerning the subject matter of this Agreement and no implied covenant, condition, term or reservation shall be read into this Agreement relating to or concerning such subject matter.

1209. Notices

All notices and other communications to be given in connection with this Agreement shall be in writing and shall be sufficiently given:

(a) if delivered by hand or by courier to a Party at its address for service, such delivery shall be deemed received by the Party when actually delivered, if such delivery is during the Party's normal business hours, on any Day other than a Saturday, a Sunday or a statutory holiday. If such notice or other communication is not delivered during the Party's normal business hours, such notice or other communication shall be deemed to have been received by the Party on the Day


next following the date of delivery, other than a Saturday, Sunday or a statutory holiday;

(b) except during any period of actual or impending postal disruption, if sent by first class mail or by airmail if sent from outside Canada or the United States, postage prepaid, to a Party at its address for service, such mailing shall be deemed received by the Party on the fourth (4th) Day following the date of mailing (Saturdays, Sundays and statutory holidays excepted). However, if postal service is interrupted or operating with unusual or imminent delay, such notice or other communication shall not be sent by such means during such interruption or period of delay; and

(c) to a Party which has provided an electronic manner as part of its address for service, if sent by electronic manner to the Party's designated electronic address for service, such transmission shall be deemed received by the Party when actually received, if such transmission is during the Party's normal business hours on any Day other than a Saturday, a Sunday or a statutory holiday. If such notice or other communication is not received during the Party's normal business hours, such notice or other communication shall be deemed to have been received by the Party on the Day next following the date of transmission, other than a Saturday, a Sunday ora statutory holiday.

For the purposes of this clause 1209, the address for service for each Party initially shall be as set forth in Exhibit “D”. A Party may change its address for service by giving written notice to the other Party.

1210. Enuring Clause

This Agreement shall enure to the benefit of and be binding upon Producer and Operator and their respective successors and permitted assigns.

1211. Supersedes Prior Agreements

As of the Effective Date, this Agreement shall govern the relationship of the Parties and supersedes all other agreements, documents, writings and verbal understandings and representations between the Parties in relation to the handling of Producer Inlet Substances in the Facility.

1212. Assignment

Either Party may assign this Agreement, including all rights and liabilities hereunder, at any time by providing the other Party with a fully executed instrument effecting such assignment, provided that no such assignment shall be effective unless the assignee agrees to be bound by the terms of this Agreement.

1213. Time of the Essence

Time is of the essence in this Agreement.

1214. Statute of Limitations

The two (2) year period for seeking a remedial order under section 3(1 )(a) of the Limitations Act (Alberta), including any amendments to or replacements of the Act, for any claim (as defined in that Act) arising in connection with this Agreement is extended to:

(a) for claims disclosed by an audit, two (2) years after the time this Agreement permitted that audit to be performed; or


(b) for all other claims, four (4) years.

1215. Modifications and Prevailing Provisions

The body of this Agreement is identical to the body of the 2014 PJVA Model Emulsion and Water Handling Agreement and has not been modified except as specifically noted in Exhibit “E”. In the event that modifications are made to the body of the 2014 PJVA Model Emulsion and Water Handling Agreement and such modifications are not appropriately noted in Exhibit “E” then the applicable provisions in the unmodified 2014 PJVA Model Emulsion and Water Handling Agreement are deemed to prevail.

1216. Common Decisions

In the case where Producer acts as agent for and on behalf of the Source owners, Operator shall at all times be entitled to deal solely with Producer for all purposes of this Agreement, and any notice or communication given by Operator to Producer shall be deemed given to all parties who have an interest in Producer Inlet Substances. Any notice given by Producer to Operator shall similarly be deemed to have been given by and on behalf of the owners of Producer Inlet Substances.

1217. Severability

If any provision of this Agreement is partially or completely unenforceable pursuant to governing law, then such provision shall be deemed amended to the extent necessary to make it enforceable, if possible. If not possible, then such provision shall be deemed to be deleted. If any provision is so deleted, then the remaining provisions shall remain in full force and effect.

1218. Confidentiality

Producer acknowledges that the terms and conditions of this agreement and any information disclosed by Operator to Producer pursuant to this Agreement are confidential in nature and agrees to keep such information confidential and not to disclose any or if to any other Person, other than to its auditors, lenders, legal or financial advisors, to its bona fide potential lenders, successors or assigns or as required by applicable law.


IN WITNESS WHEREOF the Parties have executed this Agreement each as of the Effective Date.

Operator: ELCANO ENERGY PARTNERSHIP

Name

Title

Date

Producer: CRESCENT POINT RESOURCES PARTNERSHIP,BY ITS MANAGING PARTNER CRESCENT POINT ENERGY CORP.

Name

Title

Date

This is the execution page of the Agreement entitled “ELCANO NORTH HARGRAVE 3-34-12- 27W1M BATTERY EMULSION AND WATER HANDLING AGREEMENT” between ELCANO ENERGY PARTNERSHIP and CRESCENT POINT RESOURCES PARTNERSHIP dated JANUARY 1,2015


DESCRIPTION OF FACILITY. SOURCES. FACILITY INLET, FACILITY OUTLET. METERINGFACILITY OPERATOR AND PRIORITIES

EXHIBIT AATTACHED TO AND MADE PART OF AN

EMULSION AND WATER HANDLING AGREEMENT BETWEENELCANO ENERGY PARTNERSHIP AND CRESCENT POINT RESOURCES PARTNERSHIP


1. Facility Description

FACILITY NAME AND DESCRIPTION

FACILITY INLET (legal description)

FACILITY OUTLET (legal description)

ELANO NORTH HARGRAVE 03-34 OIL BATTERY

03-34-012-27WPM ELANO NORTH HARGRAVE OS- 34 OIL BATTERY

2. Operation of Metering Facilities

The metering facilities referred to in clause 501 shall be operated by Operator

3. Sources

SOURCE(legal description)

FACILITY INLET PERCENTAGE OF PRODUCER INLET SUBSTANCES (for billing purposes)

100/03-10-013-27W1/00 03-34-012-27W1M 50%

100/07-10-013-27W1/00 03-34-012-27W1M 50%

100/02-07-013-26W1/00 03-34-012-27W1M 50%

100/12-07-013-26W1/00 03-34-012-27W1M 50%

100/16-10-013-27W1/00 03-34-012-27W1M 50%

100/13-10-013-27W1/00 03-34-012-27W1M 50%

4. Handling Priority

Producer Inlet Substances will be handled on a reasonable efforts basis to the extent that capacity is available in the Facility. If the Facility is unable to handle all Inlet Substances available for delivery to the Facility on any one Day, acceptance of Inlet Substances by Operator at the Facility will be cut back at Operator’s sole discretion.

Contract No. C032 Contract Effective Date: JANUARY 1,2015 Exhibit ‘A’Revision No.: Revision Effective Date:

EXHIBIT BATTACHED TO AND MADE PART OF AN

EMULSION AND WATER HANDLING AGREEMENT BETWEEN ELCANO ENERGY PARTNERSHIP AND CRESCENT POINT RESOURCES PARTNERSHIP


SPECIFICATIONS FOR PRODUCER INLET SUBSTANCES

1) All Producer Inlet Substances delivered to the Facility Inlet shall:

(a) be of a kind, quality and composition and at a temperature and pressure so as to be within the design and operating parameters of the Facility;

(b) be free from substances in such quantities that may obstruct, damage or be detrimental to the operation of the Facility. Producer Inlet Substances also shall be free of substances that may result in Outlet Substances having objectionable odors, solid matter, dust, gums and gum-forming constituents which might affect their marketability or cause injury to or interference with the proper operation of the lines, regulators, meters or other appliances through which such Outlet Substances flow. Such substances include, but are not limited to, drilling fluids, completion fluids, workover fluids, spent acids, excessive amounts of water or other chemical additives.

2) Specifications for delivery of Producer Inlet Substances:

(a) if delivery is by pipeline, Producer Inlet Substances delivered hereunderfor handling at the Facility shall be capable of entering the Facility at a minimum pressure provided by Operator;

(b) if delivery is by truck, such deliveries shall be made between the hours specifically approved by Operator

Contract No. C032 Contract Effective Date: JANUARY 1,2015 Exhibit ‘B’Revision No.: Revision Effective Date:





1. Transportation ChargeThe charge for transportation of each m3 of Producer Inlet Substances shall be:

i. <=100 m3 per day - $2.50 per m3 of Producer’s Well Effluent, plus

ii. >100 m3 per day to <=200 m3 per day - $1.50 per m3 of Producer’s Well Effluent, plus

iii. >200 m3 per day - $1.00 per m3 of Producer’s Well Effluent, plus

any applicable federal and provincial value added taxes.

2. Processing Charge

The charge for emulsion handling for each m3 of Producer Inlet Substances shall be $4.60 plus applicable federal and provincial value added taxes


The charge for handling of each m3 of Producer Inlet Substances that are Water shall be:

iv. <=100 m3 per day - $2.50 per m3 of Producer’s Well Effluent, plus

v. >100 m3 per day to <=200 m3 per day - $1.50 per m3 of Producer’s Well Effluent, plus

vi. >200 m3 per day - $1.00 per m3 of Producer’s Well Effluent, plus

plus applicable federal and provincial value added taxes


Pursuant to clause 603 of the Agreement, if Producer fails to take its share of Outlet Substances in kind, Producer shall be responsible for the following fees, as applicable, plus applicable federal and provincial value added taxes:



Contract No. C032Revision No.: 3

Contract Effective Date JANUARY 1,2015Revision Effective Date: February 1,2018

Exhibit ‘C’

EXHIBIT DATTACHED TO AND MADE PART OF AN



ADDRESSES FOR SERVICE

PART A:

Operator Producer

ELCANO ENERGY PARTNERSHIPCRESCENT POINT RESOURCES PARTNERSHIP

420, 550 6th Avenue SW 2000, 585 8th Avenue SW

Calgary, AB T2P 1G1 Calgary, AB T2P 0S2

Attention: Joint Venture Rep. Attention: Joint Venture Rep.

Phone No. (403) 460-4188 Phone No.: (403) 693-6068

Fax No.: Fax No.:

Field Contact: Dale Barnard Field Contact: Daniel Henrion

Phone No.: (204) 851-3958 Phone No.: (306) 453-3242

Fax No.: Fax No.:



Exhibit ‘C’

EXHIBIT EATTACHED TO AND MADE PART OF AN



MODIFICATIONS TO 2014 PJVA MODEL EMULSION AND WATER HANDLINGAGREEMENT

Reference ModificationsExhibit “A” (b) Adding the 100/13-10-013-27W1/00 well to the agreement (2/1/2018)



Exhibit ‘C’

9

THIS IS EXHIBIT "C" REFERRED TO IN THE AFFIDAVIT OF MARVIN TANG


_____________ ________________________________A Commissioner for Oaths in and for the Province

of Alberta


9664826.1

ASSIGNMENT AGREEMENT

THIS AGREEMENT is made as of June 27, 2018 between:

CRESCENT POINT RESOURCES PARTNERSHIP, a general partnership, having offices in the City of Calgary, in the province of Alberta (the “Assignor")

- and -

TORC OIL & GAS LTD., a body corporate, having offices in the City of Calgary, in the Province of Alberta (the "Assignee”)

RECITALS:

Assignor is a party or a successor in interest to one or more parties to the agreement or agreements (such agreement or agreements, including all amendments thereto, if any, hereinafter referred to as the “Agreement”) set out in Schedule “A”.

Assignor has agreed to assign the Agreement to Assignee pursuant to the terms and conditions set forth in that certain Purchase and Sale Agreement dated May 8, 2018 (the "Governing Agreement").

Assignor has conveyed to Assignee all of the right, title, estate and interest of Assignor in the Agreement and the interests related thereto.

THE PARTIES HERETO agree as follows:

1. Assignor hereby assigns, transfers, sets over and conveys unto Assignee, effective as of April 1, 2018 (the “Effective Date”), all of Assignor’s right, title, estate and interest in and to the Agreement, to have and to hold the same for its sole use and benefit absolutely.

2. Assignee hereby accepts the assignment herein provided and covenants and agrees with Assignor to assume as of the Effective Date, and thereupon and thereafter to be bound by and observe, carry out and perform and fulfill all of the covenants, conditions, obligations and liabilities of Assignor under the Agreement, to the same extent and with the same force and effect as though Assignee had been named a party to the Agreement as of the Effective Date in the place and stead of Assignor.

3. The address of Assignee for notices under the Agreement shall be:

TORC OIL & GAS LTD.

1800, 525 - 8th Avenue SW Calgary, Alberta T2P 1G1

Attention: Colleen RemendaManager, Land & Contracts

Fax: (403)930-4159

JV02358

-2-

4. The parties hereto shall, from time to time and at all times hereafter, without further consideration, do all such further acts and execute and deliver all such further documents as shall be reasonably required to give full effect to the provisions hereof.

5. This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective administrators, trustees, receivers, successors and assigns.

The parties have executed and delivered this agreement as of the day and year first written above.

CRESCENT POINT RESOURCES PARTNERSHIP,By its Managing Partner,Crescent Point Energy Corp. (Assignor)

TORC OIL & GAS LTD.(Assignee)

Per: Per:Name: Paul TysonTitle: Manager, Joint Venture

Name: Colleen Remenda Title: Manager, Land & Contracts

JV02358

SCHEDULE "A" ATTACHED TO AN ASSIGNMENT OF FACILITY INTERESTS DATEDJUNE 27, 2018 BETWEEN CRESCENT POINT RESOURCES PARTNERSHIP, AS ASSIGNOR, ANDTORC OIL & GAS LTD., AS ASSIGNEE.

Agreement

Elcano North Hargrave 3-34-12-27W1M Battery Emulsion and Water Handling AgreementBetween Elcano Energy Partnership and Crescent Point Resources PartnershipDated and Effective February 1,2018(Crescent Point File: JV02358; Elcano File: C063)

Wells (for reference only)

100/08-10-013-27W1/00

JV02358

10

THIS IS EXHIBIT "D" REFERRED TO IN THE AFFIDAVIT OF MARVIN TANG


______________ ________________________________A Commissioner for Oaths in and for the Province

of Alberta


9664826.1

COURT FILE NUMBER

COURT

JUDICIAL CENTRE

IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, as amended

i hereby certify this to be a true copy of the original (J

Dated this

IN THE MATTER OF THE BUSINESS CORPORATIONS ACT, R.S.A, 2000, c. B-9, as amended

AND IN THE MATTER OF THE PLAN OF COMPROMISE OR ARRANGEMENT OF ELCANO EXPLORATION INC., ELCANO EXPLORATION LTD. and ELCANO EXPLORATION PARTNERSHIP

DOCUMENT ORDER (CLAIMS PROCEDURE!

ADDRESS FOR SERVICE AND CONTACT INFORMATION OF PARTY FILING THIS DOCUMENT

BENNETT JONES LLP Barristers and Solicitors 4500, 855 -2ndStreet S.W. Calgary, Alberta T2P 4IC7

Attention: Chris Simard and Kelsey Meyer Telephone No.: 403-298-4485 / 403-298-3323 Fax No.: 403-265-7219 Client File No.: 86037.1

DATE ON WHICH ORDER WAS Thursday, March 28,2019PRONOUNCED:

LOCATION OF HEARING OR TRIAL: Calgary, Alberta

NAME OF JUDGE The Honourable Mr. Justice B. NixonWHO MADE THIS ORDER:

WSLEGAL\08<S037\00001\22088392vl

UPON the Application of Elcano Exploration Inc. ("EEI") and Elcano Exploration Ltd. ("EEL");

AND UPON having read the Application, the Affidavit of Richard Fulton sworn March 18, 2019

(the "Fulton Affidavit"), the First Report of Hardie & Kelly Inc., the Court-appointed Monitor of

the Applicants (the "Monitor"), and the Affidavit of Service of Allison Endersby affirmed

March 20, 2019, all filed; AND UPON hearing the submissions of counsel for the Applicants,

counsel for the Monitor, counsel for the National Bank of Canada ("NBC"), and counsel for other

interested parties:

IT IS HEREBY ORDERED AND DECLARED THAT:

Service

1. Service of this application and supporting document is hereby deemed to be good and

sufficient, the time for notice is hereby abridged to the time provided, and no other person

is required to have been served with notice of this application.

Interpretation and General Provisions

2. Capitalized terns not defined herein have the meaning given to such terms in the Initial

Order granted by the Honourable Madam Justice K. M. Horner on February 26, 2019,

pursuant to the Companies' Creditors Arrangement Act, RSC 1985, c C-36, as amended

(the "Initial Order").

3. For the purposes of this Order (the "Claims Procedure Order"), in addition to terms

defined elsewhere herein, the following terms shall have the following meanings:

(a) "BIA" means the Bankruptcy and Insolvency Act, RSC 1985, c. B-3, as amended;

(b) "Business Day" means a day other than a Saturday, Sunday, or statutory holiday,

on which banks are generally open for business in Calgary, in the province of

Alberta, Canada.

(c) "Calendar Day" means a day, including Saturday, Sunday, or any statutory

holiday.

WSLEGAL\086037\00001\22088392vl

(d) "CCAA" means tlie Companies' Creditors' Arrangement Act, RSC 1985, c C-36,

and "CCAA Proceedings" means the proceedings commenced by EEI and EEL

pursuant to the provisions of the CCAA under Court File No. 1901-02578.

(e) "Claim" means any right or claim of any Person that may be asserted or made in

whole or in part against EEI, EEL or Elcano Energy Partnership ("EEP" and,

together with EEI and EEL, the "Elcano Group"), whether or not asserted or made,

in connection with any indebtedness, liability or obligation of any kind whatsoever,

and any interest accrued thereon or costs payable in respect thereof, including

without limitation, any claim arising in tort (whether intentional or unintentional),

breach of contract or other agreement, breach of duty (including, without limitation,

any legal, statutory, express, implied, equitable or fiduciary duty) or by reason of

any right of ownership to title to property or assets or right to a trust or deemed trust

(statutory, express, implied, resulting, constructive, or otherwise) and whether or

not any indebtedness, liability or obligation is reduced to judgment, liquidated,

unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal,

equitable, secured, unsecured, present or future, known or unknown, by guarantee,

surety or otherwise, and whether or not any right or claim is executory or

anticipatory in nature including, without limitation, any right or ability of any

Person to advance a claim for contribution or indemnity or otherwise with respect

to any matter, action, cause or chose in action whether existing at present or

commenced in the future, which indebtedness, liability, or obligation, and any

interest accrued thereon or costs payable in respect thereof (A) is based in whole or

in part on facts prior to the Filing Date, (B) relates to a time period prior to the

Filing Date, or (C) is a right or claim of any kind that would be a debt provable in

bankruptcy within the meaning of the BIA had EEI, EEL or EEP become bankrupt

on the Filing Date, and includes:

(i) a D&O Claim;

(ii) a D&O Indemnity Claim;

(iii) any right or claim of any Person against the Elcano Group in connection

with any indebtedness, liability or obligation of any kind whatsoever

WSLEGAL\086037\00001\22088392vl

resulting from the restructuring, disclaimer, resiliation, termination or

breach by the Elcano Group on or after the Filing Date of any contract,

lease, or other agreement, whether written or oral, and whether or not such

restructuring, disclaimer, resiliation, termination or breach took place

before the date of this Claims Procedure Order; and

(iv) that portion of any Claim (as defined herein) that is

(A) secured by security validly charging or encumbering property or

assets of the Elcano Group (including statutory and possessory

liens) up to the value of such collateral; and

(B) duly and properly perfected in accordance with the relevant

legislation in the appropriate jurisdiction as of the Filing Date;

provided, however, that "Claim" shall not include an "Excluded Claim".

(f) "Claimant" means any Person asserting a Claim and includes the transferee or

assignee of a Claim, or a trustee, executor, liquidator, receiver, receiver and

manager, or other Person acting on or behalf of or through such Person.

(g) "Claims Bar Date" means 5:00 P.M. Mountain Time on May 13, 2019, or such

later date as may be ordered by the Court.

(h) "Claims Package" means the materials to be provided by the Monitor to Persons

who may have a Claim, which materials shall include:

(i) In the case of a Known Claimant, a notice setting out the amount of such

Known Claimant's Claim as determined by the Elcano Group, in

consultation with the Monitor, a blank Proof of Claim, a Proof of Claim

Instruction Letter, and such other materials as the Elcano Group, in

consultation with the Monitor, may consider appropriate.

(ii) In the case of an Unknown Claimant, a blank Proof of Claim, a Proof of

Claim Instruction Letter, and such other materials as the Elcano Group or

the Monitor may consider appropriate.

WSLEGAL\086037\00001\22088392vl

(i) "Claims Procedure" means the procedures set forth in this Claims Procedure Order

and the schedules thereto.

(j) "Court" means the Court of Queen's Bench of Alberta, in the Judicial Centre of

Calgary.

(k) "Creditors' Meeting" means any meeting of creditors called for the purpose of

considering and voting in respect of the Plan, if one is filed, to be scheduled

pursuant to further order of the Court.

(l) "D&O Claim" means any right or claim of any Person that maybe asserted or made

in whole or in part against one or more Directors or Officers of EEI or EEL, or any

claim for which such Directors or Officers are by law liable to pay in their capacity

as Directors or Officers;

(m) "D&O Indemnity Claim" means any existing or future right of any Director or

Officer against the Elcano Group which arose or arises as a result of any Person

filing a Proof of Claim in respect of such Director or Officer for which such

Director or Officer is entitled to be indemnified by the Elcano Group;

(n) "Director" means anyone who is, was, or may be deemed to be, or to have been,

by statute, operation of law, or otherwise, a director or de facto director of EEI or

EEL.

(o) "Elcano Group" means Elcano Exploration Inc., Elcano Exploration Ltd. and

Elcano Energy Partnership.

(p) "Employee Amounts" means all outstanding wages, salaries, and employee

benefits (including employee medical, dental, disability, life insurance and similar

benefit plans or arrangements, incentive plans, share compensation plans and

employee assistance programs and employee or employer contributions in respect

of pension or group savings plans, and other benefits), vacation pay, commissions,

bonuses and other incentive payments, termination and severance payments, and

employee expenses and reimbursements, in each case incurred in the ordinary

course of business and consistently with existing compensation policies and

WSLEGAL\086037\00001\22088392vl

arrangements, and all equivalent amounts related to individuals who perform

employment-like services for the Elcano Group as contractors.

(q) "Excluded Claim" includes:

(i) any claim secured by a Court-ordered charge in the CCAA Proceedings,

whether arising from the terms of the CCAA Initial Order, or thereafter by

order of the Court;

(ii) any claim in respect of Employee Amounts; and

(iii) any claim arising under a contract entered into by the Elcano Group after

the Filing Date or with respect to goods or services provided to the Elcano

Group on or after the Filing Date.

(r) "Filing Date" means February 26, 2019.

(s) "Governmental Authority" means a federal, provincial, state, territorial,

municipal or other government or government department, agency, or authority

(including a court of law) having jurisdiction over the Elcano Group or its business.

(t) "Known Claimant" means:

(i) any Person who, based upon the books and records of the Elcano Group,

was owed monies by the Elcano Group as of the Filing Date, and which

monies remain unpaid in whole or in part;

(ii) any Person who has commenced a legal proceeding in respect of a Claim,

or given the Elcano Group written notice of an intention to commence a

legal proceeding or demand for payment in respect of a Claim;

(iii) any Person who was at or prior to the Filing Date a party to a material lease,

contract, or other agreement or obligation of the Elcano Group, with respect

to which such Person may assert a Claim; and

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(iv) any Person who is a party to a lease, contract, or other agreement or

obligation of the Elcano Group which was restructured, terminated,

repudiated or disclaimed by the Elcano Group between the Filing Date and

the date of this Claims Procedure Order.

(u) "Monitor's Website" means www.relieffromdebt.ca/elcano-group/.

(v) "Newspaper Notice to Claimants" means a notice for publication prepared by the

Monitor in substantially the form attached hereto as Schedule "A".

(w) "Notice of Revision or Disallowance" means a notice in substantially the form

attached hereto as Schedule "D".

(x) "Notice of Dispute of Revision or Disallowance" means a notice in substantially

in the form attached hereto as Schedule "E".

(y) "Officer" means anyone who is, was, may be deemed to be, or have been, by

statute, operation of law or otherwise, an officer or de facto officer of the Elcano

Group.

(z) "Person" includes an individual, firm, corporation, limited or unlimited liability

company, general or limited partnership, association, trust, unincorporated

organization, joint venture, Government Authority or other agency, officer or

instrumentality thereof or any other entity, wherever situate or domiciled and

whether or not having legal status.

(aa) "Plan" means any proposed plan(s) of compromise or arrangement to be filed in

respect of the Elcano Group pursuant to the CCAA, as the same may be amended,

supplemented or restated from time to time in accordance with the terms thereof.

(bb) "Proof of Claim" means the Proof of Claim referred to herein, substantially in the

form attached hereto as Schedule "B".

(cc) "Proof of Claim Instruction Letter" means the instruction letter to Claimants,

substantially in the form attached hereto as Schedule "C", setting forth instructions

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http://www.relieffromdebt.ca/elcano-group/

for the completion of a Proof of Claim by a Claimant and regarding the Claims

Procedure.

(dd) "Unknown Claimant" means a Claimant that is not a Known Claimants, or a

Claimant with an Excluded Claim.

4. All references as to time herein shall mean local time in Calgary, Alberta, Canada, and any

reference to an event occurring on a Business Day shall mean prior to 5:00 P.M. Mountain

Time on such Business Day unless otherwise indicated herein.

5. The word "including" shall, when used herein, mean "including, without limitation".

6. All Claims shall be denominated in Canadian dollars. Any Claims denominated in a

foreign currency shall be converted to Canadian dollars for purposes of any Plan at the

Bank of Canada's noon exchange rate in effect on the Filing Date.

7. Copies of all forms delivered hereunder, as applicable, and any determinations of Claims

by the Court, shall be maintained by the Elcano Group, and subject to further order of the

Court, the applicable Claimant will be entitled to reasonable access thereto by appointment

during regular business hours on a Business Day on written request to the Elcano Group or

the Monitor.

8. A Person with an Excluded Claim shall not file a Proof of Claim, unless required to do so

by further order of the Court, and the Monitor is not required to send a Claims Package to

Persons with Excluded Claims.

9. The Elcano Group may, with the consent of the Monitor, refer a Claim for resolution to the

Court for voting and/or distribution purposes, where in the Elcano Group's view such a

referral is necessary or desirable for the resolution of the valuation of the Claim.

Monitor's Role

10. The Monitor, in addition to its prescribed rights, duties, responsibilities and obligations

under the CCAA and under the CCAA Initial Order, shall assist the Elcano Group in

connection with the administration of the Claims Procedure, and is directed and

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empowered to take such actions and fulfill such roles as are contemplated by this Claims

Procedure Order.

11. In carrying out the terms of this Claims Procedure Order, the Monitor shall incur no liability

or obligation

(a) as a result of the carrying out of the provisions of this Claims Procedure Order; or

(b) as a result of its reliance, without independent investigation, on the books and

records of the Elcano Group, and any information provided by the Elcano Group;

except as arising from the Monitor's gross negligence or willful misconduct.

12. The Elcano Group and the Monitor may, where they are satisfied that a Claim has been

adequately proven, waive strict compliance with the requirements of this Claims Procedure

Order, including the completion and execution of the forms contemplated in the Claims

Procedure, and to request any further documentation from a Person that the Elcano Group

or Monitor may require in order to determine the validity of a Claim.

Claims Procedure

13. For each of the Known Claimants, the Elcano Group, in consultation with the Monitor,

shall determine the classification and value of such Known Claimants' Claim for all

purposes, on the basis of the books and records of the Elcano Group.

14. The Monitor shall send a Claims Package to each of the Known Claimants (or to the

counsel of record for any such Known Claimants) by prepaid ordinary mail, courier,

personal delivery, or electronic or facsimile transmission, before 11:59 P.M. Mountain

Time on April 5, 2019. A Claims Package sent to a Known Claimant shall include the

classification and value of such Known Claimant's Claim, as determined by the Elcano

Group in accordance with this Claims Procedure Order.

15. The Monitor shall, as soon as practicable after the date of this Claims Procedure Order:

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(a) cause the Newspaper Notice to Claimants to be published, as soon as practicable

after the date of this Claims Procedure Order, in each of the Globe and Mail

(National Edition) and the Winnipeg Free Press; and

(b) post to the Monitor's Website electronic copies of the Newspaper Notice to

Claimants, a blank Proof of Claim, and this Claims Procedure Order.

16. The Monitor shall send a Claims Package to any Unknown Claimant (or to counsel of

record for such Unknown Claimant) on written request of the Unknown Claimant (or its

counsel of record) to the Monitor.

17. A Known Claimant, having received a Claims Package, may notify the Elcano Group and

the Monitor that it disagrees with the classification and/or the value of its Claim as

determined by the Elcano Group and the Monitor and as set out in the Claims Package, by

delivery of a Proof of Claim to the Monitor on or before the Claims Bar Date.

18. An Unknown Claimant wishing to assert a Claim must return a completed Proof of Claim

to the Monitor on or before the Claims Bar Date.

19. Any action taken by the Elcano Group to restructure, disclaim, resiliate, terminate or breach

any contract, lease, or other agreement, whether written or oral, pursuant to the terms of

the CCAA Initial Order, must occur at least ten (10) Calendar Days prior to the date of the

Creditors' Meeting. Any notice of disclaimer or resiliation delivered to a Claimant (or

counsel of record for such Claimant) shall be accompanied by a Claims Package, and shall

include the Elcano Group's assessment of the value of such Claim in accordance with this

Claims Procedure Order. Notwithstanding anything to the contrary in this Claims

Procedure Order, a Claimant receiving a Claims Package as a result of the Elcano Group's

restructuring, disclaimer, termination, or breach of any contract, lease or other agreement

under this paragraph (a "Restructuring Period Claimant") must notify the Elcano Group

and Monitor of any disagreement with the value of its Claim by delivery of a Proof of

Claim within five (5) Business Days of its (or its counsel's) receipt of a Claims Package

under this paragraph.

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Bariing of Claims

20. A Known Claimant or Restructuring Period Claimant that does not object to the

classification and/or the value of its Claim as set forth in the Claims Package in the manner

directed by this Claims Procedure Order is:

(a) deemed to have accepted the classification and value of its Claim as set forth in the

Claims Package, and such value will be deemed to be the value of such Known

Claimant's Claim, or such Restructuring Period Claimant's Claim, as the case may

be, for all purposes; and

(b) forever barred from disputing the classification and value of the Claim as set forth

in the Claims Package, and for greater clarity is forever barred from pursuing,

enforcing, or otherwise asserting a Claim in an amount exceeding the value of its

Claim as determined by the Elcano Group in accordance with this Claims Procedure

Order.

21. Any Unknown Claimant that does not return a completed Proof of Claim to the Monitor

on or before the Claims Bar Date, unless otherwise ordered by the Court, shall:

(a) not be entitled to vote at any Creditors' Meeting;

(b) not be entitled to receive any distribution under any Plan;

(c) not be entitled to any further notice in, and shall not be entitled to participate as a

Claimant or creditor in the CCAA Proceeding in respect of such Claim;

(d) be forever barred from making or enforcing any such Claim against the Elcano

Group, or its Directors and Officers, and all such Claims will be forever

extinguished and barred without any further act or notification by the Elcano

Group; and

(e) be forever barred from making or enforcing such Claim against any other Person

who could claim contribution or indemnity from the Elcano Group, its directors and

officers, or any of them, and all such Claims will be forever extinguished and barred

without any further act or notification by the Elcano Group.

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Adjudication of Claims

22. The Elcano Group and the Monitor shall review all Proofs of Claim received by the Claims

Bar Date and shall accept, revise or disallow the classification and/or the value of each

Claim set out therein.

23. Where the Elcano Group and the Monitor wish to revise or disallow a Claim, either in

whole or in Part, the Monitor shall deliver a Notice of Revision or Disallowance to the

Claimant. Unless the Monitor delivers a Notice of Revision or Disallowance in accordance

with this provision, the classification and value of such Claimant's Claim shall be deemed

to be as set out in the Proof of Claim for all purposes.

24. Any Claimant who intends to dispute a Notice of Revision or Disallowance sent pursuant

to the preceding paragraph shall:

(a) deliver a Notice of Dispute of Revision or Disallowance to the Monitor no later

than 5:00 P.M. Mountain Time on the tenth Calendar Day after its or its counsel's

receipt of the Notice of Revision or Disallowance, whichever is earlier; and

(b) within fifteen (15) Calendar Days of delivering the Notice of Dispute of Revision

or Disallowance to the Monitor, file an application with the Court supported by an

affidavit setting out the basis for its dispute of the Notice of Revision or

Disallowance and send copies of the application and affidavit to the Elcano Group

and the Monitor immediately after filing.

25. Unless a Claimant delivers a Notice of Dispute of Revision or Disallowance and schedules

an application with the Court in accordance with paragraph 24 hereof, the classification

and value of such Claimant's Claim shall be deemed to be as set out in the Notice of

Revision or Disallowance for all purposes.

Resolution of Claims

26. Upon the Monitor's receipt of a Notice of Dispute of Revision or Disallowance, the Elcano

Group, in consultation with the Monitor, may attempt to resolve the classification or value

of the Claimant's Claim by consent. If the Claimant and the Elcano Group resolve the

classification, and/or the value of the Claimant's Claim by consent, the Elcano Group may

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accept, with the consent of the Monitor, a revised Claim, which shall be accepted as the

Claimant's Claim for all purposes.

27. Where the classification and/or the value of a Claim is disputed, and has not been finally

determined by the Court by the date of the Creditors' Meeting, the Elcano Group shall:

(a) accept the Claimant's assessment of the classification and/or the value of the Claim

as set out in the applicable Notice of Dispute of Revision or Disallowance, and

conduct the vote of the creditors on that basis subject to a final determination of

such Claim, and in such case the Monitor shall record separately the value of such

Claimant's Claim for voting purposes, and whether such Claimant voted in favour

of or against the Plan;

(b) adjourn the Creditors' Meeting until a final determination of the Claim(s) is made;

or

(c) take such steps or actions as the Court may direct or as the Elcano Group, the

Monitor and the Claimant may agree.

Indemnification of D&O Indemnity Claims

28. Any D&O Claim that:

(a) has been accepted or revised by the Elcano Group and the Monitor; or

(b) is resolved by consent by the Elcano Group and the Claimant or by final

determination by the Court;

shall automatically be deemed to be an approved D&O Indemnity Claim by the Director(s)

or Officer(s) named in the D&O Claim as against EEI and/or EEL (the entity that the

Director or Officer named in the D&O Claim is a director or officer of).

Service and Notice

29. The Monitor and the Elcano Group may serve and deliver any letters, notices, or other

documents contemplated by the Claims Procedure to Claimants, Directors or Officers, and

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any other interested Persons, by ordinary mail, courier, personal delivery, or electronic or

digital transmission to:

(a) such Persons at the address as last shown in the records of the Elcano Group; or

(b) any known counsel of record for any such Person.

30. Service or notice of any document on any Person (or on counsel of record for such Person)

shall be deemed to have been received,

(a) if sent by ordinary mail, on

(i) the third Business Day after mailing within Alberta;

(ii) the fifth Business Day after mailing within Canada, but outside of Alberta;

and

(iii) the tenth Business Day after mailing outside of Canada;

(b) if sent by courier or personal delivery, on the next Business Day;

(c) if sent by electronic or digital transmission by 5:00 P.M. Mountain Time on a

Business Day, on such Business Day, and if delivered after 5:00 P.M. Mountain

Time or other than on a Business Day, on the following Business Day.

31. Any notice or other communication (including Proofs of Claim) to be given under this

Claims Procedure Order to the Monitor shall be in writing in substantially the form (if any)

provided for herein. Such notice or communication must be delivered by prepaid registered

mail, courier, personal delivery, or electronic or digital transmission addressed to the

following address, and shall be deemed received only upon actual receipt during normal

business hours on a Business Day, or if delivered outside of normal business hours, the

next Business Day:

Iiardie & Kelly Inc.Monitor of the Elcano Group 110, 5800 2nd Street SW Calgary, Alberta T2H 0H2

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Attention: Marc Kelly Phone: 403-536-8510 Fax: 403-640-0591 Email: [email protected]

32. If, during any period during which notices or other communications are being given

pursuant to this Claims Procedure Order, a postal strike or postal work stoppage or

slowdown should occur, such communications sent by ordinary mail and then not received

shall not, unless this Court orders, be effective, and notices and other communications

given hereunder during the course of any such postal strike, postal work stoppage, or

slowdown, shall only be effective if given by courier, personal delivery, or electronic or

digital transmission.

33. In the event that this Claims Procedure Order is later amended by further order of the Court,

the Monitor shall post such amended order on the Monitor's Website and such posting shall

constitute adequate notice of any amendment or change to the Claims Procedure to all

affected Persons.

Set-off

34. The Elcano Group may set off (whether by way of legal, equitable, or contractual set-off)

against payments or other distributions to be made under the Plan to any Claimant, any

claims of any nature whatsoever that the Elcano Group may have against such Claimant;

however, the failure of the Elcano Group to claim set-off in this manner shall not constitute

a waiver or release by the Elcano Group of any such claim or right of set-off.

Miscellaneous

35. Notwithstanding any other provision of this Claims Procedure Order, the sending of any

notice to a Claimant, or any Person, the solicitation of Proofs of Claim, and the filing by

any Person of a Proof of Claim, shall not, for that reason only, grant any Person any

standing in the CCAA Proceedings, or any rights under the Plan, if any.

36. Nothing in this Claims Procedure Order shall constitute, or be deemed, an allocation of

Claims or Excluded Claims by the Elcano Group into particular affected or unaffected

classes for the purposes of a Plan, and for greater certainty, the treatment of Claims, or

Excluded Claims, are to be subject to a Plan and the class or classes of creditors for voting

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and distribution purposes shall be subj ect to the terms of any proposed Plan or further order

of the Court.

37. In the event that no Plan is approved by the Court, the Claims Bar Date shall be of no effect

in any subsequent proceeding or distribution with respect to any Claims.

38. Nothing in this Order shall prejudice the rights and remedies of any Directors or Officers

under any existing Directors' and/or Officers' liability insurance policy (a "D&O

Insurance Policy") or prevent or bar any Person from seeking recourse against or payment

from any D&O Insurance Policy or other insurance policy that exists to protect or

indemnify the Directors and/or Officers, whether such recourse or payment is sought

directly by the Person asserting a Claim from the insurer or derivatively through the

Director or Officer or the Elcano Group.

39. This Court respectfully requests the aid and recognition of any court of any judicial,

regulatory or administrative body in any province or territory of Canada (including the

assistance of any court in Canada) and the Federal Court of Canada and any judicial,

regulatory or administrative tribunal or other court constituted pursuant to the Parliament

Of Canada or the legislature of any province, and any court or any judicial, regulatory or

administrative body of the United States of America, and of any other nation or state, to

act in aid of the carrying out of the terms of this Claims Procedure Order.

40. This Claims Procedure Order shall have full force and effect in all provinces and territories

of Canada, outside Canada and against all Persons against whom it may be enforceable.

41. The Elcano Group or the Monitor may apply to the Court to amend, vary, supplement or

replace the terms of this Claims Procedure Order, or for adyk$and direction concerning

the discharge of their respective powers and duties hereunder.\X

C.Q.B.A. or Clerk of the Court

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SCHEDULE "A

SCHEDULE “A”NEWSPAPER NOTICE TO CLAIMANTS AND OTHERS IN RESPECT OF CLAIMS

In the Matter of the CCAA Proceedings of Elcano Exploration Inc. ("EEI"), Elcano Exploration Ltd. ("EEL") and Elcano Energy Partnership ("EEP", and together with EEI and EEL, the "Elcano Group")

PLEASE TAKE NOTICE that this Newspaper Notice to Claimants is being published pursuant to an order of the Honourable Justice K.M. Horner of the Court of Queen’s Bench of Alberta, Judicial Centre of Calgary, dated March 28, 2019 (the “Claims Procedure Order”). All capitalized terms not otherwise defined in this Newspaper Notice to Claimants shall have the meaning set forth in the Claims Procedure Order, which is posted on the website of the Monitor at www.relieffromdebt.ca/elcano-group/ (the “Monitor’s Website”).

A Claims Package will be delivered to all Known Claimants, and such Claims Package will set out the classification and value of such Known Claimant’s Claim as determined by the Elcano Group, in consultation with the Monitor.

If you are a Known Claimant, and have received a Claims Package, and you do not dispute the classification or amount of your Claim as set forth in the Claims Package, no further action is required.

Any other Person who believes he, she, or it has a Claim (other than an Excluded Claim) against the Elcano Group, or the Directors or Officers of EEI or EEL, shall submit a Proof of Claim form (which may be found on the Monitor’s Website) to evidence such a Claim. Please note that any Claim relating to goods and services provided on or after the Filing Date is an Excluded Claim.

Proof of Claim forms can also be obtained by contacting the Monitor at the address below, and providing particulars as to your name, address, facsimile number and e-mail address. Once the Monitor has this information, you will receive, as soon as practicable, a Proof of Claim form.

All Persons wishing to assert Claims, and all Known Claimants wishing to dispute the amount of their Claims, must submit their Proof of Claim forms by submitting them to the Monitor, no later than 5:00 P.M. (Mountain Time) on May 13, 2019, 2016 (the “Claims Bar Date”) by registered mail, personal delivery, e-mail (in PDF format), courier or facsimile transmission, and all such Proof of Claim forms must be actually received by the Monitor before the Claims Bar Date, at the following address:

Hardie & Kelly Inc.Monitor of the Elcano Group 110, 5800 2nd Street SW Calgary, AB T2H 0H2


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http://www.relieffromdebt.ca/elcano-group/


CLAIMS WHICH ARE NOT RECEIVED BY THE MONITOR BY THE CLAIMS BAR DATE WILL BE BARRED AND EXTINGUISHED FOREVER.

KNOWN CLAIMANTS WHO DO NOT DISPUTE THE AMOUNT OF THEIR CLAIMS BY THE CLAIMS BAR DATE WILL BE DEEMED TO HAVE ACCEPTED THE AMOUNTS SET FORTH IN THE CLAIMS PACKAGE.

The publication of this Notice to Claimant, the solicitation of Proofs of Claim by the Monitor or the Elcano Group, and/or the sending of a Proof of Claim by a Claimant to the Monitor, does not grant any Claimant or any Person standing in the CCAA Proceeding, or any rights under any Plan filed in respect of the Elcano Group or the Directors or Officers of EEI or EEL.

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SCHEDULE "B

Schedule “B”

PROOF OF CLAIM


Regarding the claim of______________ __________________________ _ (the “Claimant”)

All notices or correspondence regarding this claim are to be forwarded to the Claimant at the following address:

Telephone Number: (____ )

Facsimile Number: (____ )

Email address:

Attention (Contact Person):_______________________________________

(.All future correspondence will be delivered to the designated email address unless the Claimant specifically requests hard copies)

□ Please provide hard copies of correspondence to the address above.

I,______________ _____________ _ (name of Claimant or authorized representative), of__________________ _______________ {City, Province or State), do hereby certify that:

1. The Claimant:

___ has requested a Claims Package from the Monitor, and wishes to assert a Claim

OR.

___ has received a Claims Package from the Monitor, and wishes to dispute the amount of theClaim as set forth by the Elcano Group in the Claims Package.

2. I am the Claimant.

OR

I am__________________________ _______ {position/title) of the Claimant.

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3. I have knowledge of all the circumstances connected with the claim referred to in this form.

4. The Claimant states that __________________ [EEI, EEL and/or EEP] was/were, as ofFebruary 26, 2019, and still is/are, indebted to the Claimant in the sum ofCDN$________________ (iinsert CDN$ value of claim) as shown by the statement of accountattached hereto and marked Schedule “A”.

Any Claims denominated in a foreign currency need to be converted to Canadian dollars at the Bank of Canada’s noon exchange rate in effect on February 26, 2019.

Claims should not include the value of goods and/or services supplied after February 26, 2019.

If the claim is to be reduced by deducting any counterclaim to which the Elcano Group is entitled, or amounts associated with the return of equipment or assets by the Elcano Group, please specify.

The statement of account must specify the evidence in support of the claim including the date and location of the delivery of all services and materials. Any claim for interest must be supported by contractual documentation evidencing the entitlement to interest.

5. A. UNSECURED CLAIM OF $___________ . That in respect of this claim the Claimant doesnot hold and has not held any assets as security.B. SECURED CLAIM OF $______________ . That in respect of this claim the Claimantholds assets valued at $___________ as security, particulars of which are as follows:

Give full particulars of the security, including the date on which the security was given and the value at which the claimant assesses the security together with the basis of valuation, and attach a copy of the security documents as Schedule “B”.

6. Have you acquired this Claim by assignment? ___Yes ___ No{if yes, attach documents evidencing assignment)

DATED this___day of_________ , 2019

WitnessPer:

Name of Claimant:

(if Claimant is not an individual, print name and title of authorized signatory

Name:

Title:

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SCHEDULE "C"

Schedule “C”

Proof of Claim Instruction Letter


CLAIMS PROCEDURE FOR ALL CLAIMANTSBy order of the Alberta Court of Queen’s Bench, dated March 28, 2019, (the “Claims Procedure Order”), pursuant to the Companies’ Creditors Arrangement Act, RSC 1985, c C-36 (the “CCAA”), the Elcano Group and Hardie & Kelly Inc., in its capacity as Court-appointed monitor of the Elcano Group (the “Monitor”), have been authorized to conduct a claims procedure (the “Claims Procedure”). A copy of the Claims Procedure Order and other public information concerning this proceeding can be obtained from the Monitor’s website at: www.relieffromdeht.ea/elcano-group/ (the “Monitor’s Website”).

Additional copies of all forms and notices relating to the Claims Procedure, including blank Proof of Claim forms, can also be obtained from the Monitor’s Website.

This letter is intended to provide general instructions regarding the procedure to be followed in asserting a claim against the Elcano Group, or the directors and officers (a “Claim”). Capitalized terms not defined herein have the meaning ascribed to such terms in the Claims Procedure Order. Please review the Claims Procedure Order for the frill terms and conditions of the Claims Procedure authorized by the Court.

All notices and inquiries with respect to the Claims Procedure should be directed to the Monitor by prepaid registered mail, courier, personal delivery, facsimile transmission, email, or telephone to the address below:

Hardie & Kelly Inc.Monitor of the Elcano Group 110,5800 2nd Street SW Calgary, Alberta T2H 0H2


PROCESS FOR DISPUTING THE AMOUNT OF A CLAIM BY A KNOWN CLAIMANTThe Elcano Group and the Monitor have attempted, on a best efforts basis and on the basis of the books and records of the Elcano Group, to identify all Claims against the Elcano Group, and to assess the classification and value of all such Claims in accordance with the Claims Procedure. Any Person whose Claim against the Elcano Group has been identified and valued by the Elcano Group, in consultation with the Monitor, is a Known Claimant under the Claims Procedure.

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http://www.relieffromdeht.ea/elcano-group/


If a Known Claimant receives a Claims Package, and does not dispute the amount of the Claim as set forth in the Claims Package, no further action is required. Such a Known Claimant may submit a Proof of Claim if it wishes, but this is not necessary.

A Known Claimant that wishes to dispute the amount of its Claim as set forth in the Claims Package must complete and return a Proof of Claim to the Monitor on or before 5:00 P.M. Mountain Time on May 13, 2019 (the “Claims Bar Date”).

If a Proof of Claim is not received from a Known Claimant on or before the Claims Bar Date, such Known Claimant is deemed to have accepted the determination of the Claim as set out in the Claims Package for all purposes, and any and all rights of such Known Claimant to dispute the Claim as so classified or valued, or otherwise to assert or pursue its Claim in an amount that exceeds the amount set forth in the Claims Package shall be forever extinguished and barred without further act or notification by the Elcano Group or the Monitor.

If a Known Claimant has additional Claims other than the Claims described in the Claims Package, such Known Claimant must file a separate Proof of Claim to assert such Claims prior to the Claims Bar Date, and in respect of such Claims must follow the procedure set forth below for Unknown Claimants.

PROCESS FOR ASSERTING A CLAIM BY AN UNKNOWN CLAIMANTA Claimant that has not received a Claims Package assessing the value of its Claim, but believes it has a Claim (other than an Excluded Claim) against the Elcano Group is an Unknown Claimant, under the Claims Procedure.

An Unknown Claimant may assert a Claim by submitting a completed Proof of Claim to the Monitor on or before the Claims Bar Date. All Proofs of Claim from Unknown Claimants must be received by the Monitor on or before the Claims Bar Date, unless otherwise ordered by the Court.

If an Unknown Claimant does not file a Proof of Claim in respect of any and all of its Claims on or before the Claims Bar Date, that Unknown Claimant will not be entitled to any vote at a meeting of creditors regarding the plan of compromise or arrangement being proposed by the Elcano Group (a “Plan”), will not be entitled to participate in any distributions under any Plan, and its Claims will be forever extinguished and barred without further act or notification by the Elcano Group or the Monitor.

PROCESS FOR DISPUTING A RESTRUCTURING PERIOD CLAIMIn the course of restructuring its business and affairs under the CCAA, the Elcano Group may, in accordance with the CCAA and in consultation with the Monitor, restructure, disclaim, resiliate, terminate or breach any contract, lease, or other agreement (written or oral).

If the Elcano Group takes any such action, it is required by the Claims Procedure to give notice to any affected party at least ten (10) Calendar Days before any Creditors’ Meeting. Any such notice of restructuring, disclaimer, resiliation, termination, or breach of contract, lease or other agreement, must be accompanied by a Claims Package, setting forth the value of the resulting Claim (a “Restructuring Period Claim”) as determined by the Elcano Group.

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If a Claimant receives a Claims Package relating to a Restructuring Period Claim and does not dispute the amount of the Restructuring Period Claim as set forth in the Claims Package, no further action is required. Such a Claimant may submit a Proof of Claim if it wishes, but this is not necessary.

A Claimant that wishes to dispute the amount of its Restructuring Period Claim as set forth in the Claims Package must complete and return a Proof of Claim to the Monitor within five (5) Business Days of the date that such Claimant (or such Claimant’s counsel of record) received the Claims Package.

If a Proof of Claim is not received in respect of a Restructuring Period Claim on or before the Claims Bar Date, the Claimant is deemed to have accepted the determination of the Restructuring Period Claim as set out in the Claims Package for all purposes, and any and all rights of such Claimant to dispute the Claim as so valued, or otherwise to assert or pursue its Claim in an amount that exceeds the amount set forth in the Claims Package shall be forever extinguished and barred without further act or notification by the Elcano Group or the Monitor..

DATED this_____ day of___________________ , 2019

Hardie & Kelly Inc., in its capacity as Monitor of Elcano Exploration Inc., Elcano Exploration Ltd. and Elcano Energy Partnership

Per:

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SCHEDULE "D"

Schedule “D”Notice of Revision or Disallowance

To: [NAME AND ADDRESS OF CLAIMANT]Date:Proof of Claim No.

In the Matter of the CCAA Proceedings of Elcano Exploration Inc. ("EEI"), Elcano Exploration Ltd. ("EEL") and Elcano Energy Partnership ("EEP", and together with EEI and EEL, the "Elcano Croup")

Take notice that I-Iardie & Kelly Inc., in its capacity as court-appointed monitor of the Elcano Group (the “Monitor”) has reviewed the Proof of Claim in respect of the above-named Claimant, and the Elcano Group and Monitor have reviewed and assessed the Proof of Claim in accordance with the order of the Alberta Court of Queen’s Bench issued on March 28, 2019 (the “Claims Procedure Order”). All capitalized terms not defined herein have the meaning given to such terms in the Claims Procedure Order.

The Monitor has revised or disallowed your claim in its entirety, for the following reason(s):

Subject to further dispute by you in accordance with the Claims Procedure, your Claim will be allowed as follows:Name of Claimant

' ClaimAmount per Proof ofClaim

Classification of Claim per Proof of Claim

Amount of Claim revised/ disallowed

Classification of Claim revised/ disallowed

Amount of Claim allowed for all purposes

$ $ $

IF YOU WISH TO DISPUTE THE REVISION OR DISALLOWANCE OF YOUR CLAIM AS SET FORTH HEREIN YOU MUST TAKE THE STEPS OUTLINED BELOW.

The Claims Procedure Order provides that if you disagree with the revision or disallowance of your claim as set forth herein, you must:

1. before 5:00 P.M. Mountain Time on the tenth Calendar Day after your (or your counsel’s) receipt of this Notice of Revision or Disallowance, whichever is earlier, deliver to the Monitor a completed Notice of Dispute of Revision or Disallowance; and

WSLEQAL\086037\00001\22088392vl

2. within fifteen (15) Calendar Days of delivering the Notice of Dispute of Revision or Disallowance to the Monitor, file an application with the Court supported by an affidavit setting out the basis for your dispute of the Notice of Revision or Disallowance and send copies of the application and affidavit to the Elcano Group and the Monitor immediately after filing.

If you do not deliver a Notice of Dispute of Revision or Disallowance on or before the abovedeadline, you:1. will be forever barred from making or enforcing any Claim against the Elcano Group or the

Directors and Officers of EEI or EEL (other than with respect to a Claim in the amount allowed in this Notice of Revision or Disallowance), and all such Claims that you may have or have had, will be forever extinguished.

2. will not be entitled to vote on (and/or receive any distribution under) any Plan that is advanced on behalf of the Elcano Group, or entitled to any further notice or distribution under such a Plan, if any (other than with respect to a Claim in the amount allowed in this Notice of Revision or Disallowance).

If you have any questions or concerns regarding the Claims Procedure, or the attached materials,please contact the Monitor directly.

DATED the_____ day of ________________, 2019

Hardie & Kelly Inc., in its capacity as Monitor of Elcano Exploration Inc., Elcano Exploration Ltd.and Elcano Energy Partnership

Per:

WSLEGAL\086037\00001\22088392vl

SCHEDULE "E"

Schedule “E”Notice of Dispute of Revision or Disallowance of Claim


To: Hardie & Kelly Inc., court-appointed Monitor of the Elcano Group (the “Monitor”)Date:Proof of Claim No.:Claimant: [NAME AND ADDRESS OF CLAIMANT]

Pursuant to the order of the Court of Queen’s Bench of Alberta dated March 28,2019 (the “Claims Procedure Order”), the above-noted Claimant hereby gives notice that it disputes the Notice of Revision or Disallowance dated____________________, 2019, issued by the Monitor.

The Claimant accepts/disputes the Claim as revised and or disallowed in the said Notice of Revision or Disallowance as follows:

Amount of Revised Claim accepted by Monitor

Amount of Revised Claim as disputed

Classification of Revised Claim by Monitor

Classification of Revised Claim as disputed

$ $

Reason for the dispute (attach copies of any supporting documentation)

Address for service of Notice of Dispute of Revision or Disallowance:

Hardie & Kelly Inc.Monitor of the Elcano Group 110,5800 2nd Street SW Calgary, Alberta T2FI0H2

WSLEGAL\086037\00001\22088392vl


THIS FORM AND ANY REQUIRED SUPPORTING DOCUMENTATION MUST BE RETURNED TO THE MONITOR BY REGISTERED MAIL, PERSONAL SERVICE, EMAIL (IN PDF FORMAT), FACSIMILE OR COURIER TO THE ABOVE-NOTED ADDRESS, AND MUST BE RECEIVED BY THE MONITOR BEFORE 5:00 P.M. MOUNTAIN TIME ON THE TENTH DAY AFTER YOU OR YOUR COUNSEL RECEIVED THE NOTICE OF REVISION OR DISALLOWANCE FROM THE MONITOR.

DATED this____day of _______________ , 2019

WitnessPer.

Name of Claimant:

(if Claimant is not an individual, print name and title of authorized signatory

Name:

Title:

WSLEGAL\086037\00001\22088392vl


11

THIS IS EXHIBIT "E" REFERRED TO IN THE AFFIDAVIT OF MARVIN TANG




9664826.1

PROOF OF CLAIM


Regarding the claim of______CotfC OIL Cnflr6 IffP ,_______ (the “Claimant”)

All notices or correspondence regarding this claim are to be forwarded to the Claimant at the following address: u

5\}IT& (Boo - &£ t4- 5W CAUiAfti

l k l CAKmfic

Telephone Number: (^°3 ) H (3 I

Facsimile Number: (H&3 ) ^3° - S^f Email address: /U17VaJ 4n @ ~7~oAco{ L . j oj,/(

•

Attention (Contact Person): _

{All future correspondence will be delivered to the designated email address unless the Claimant specifically requests hard copies)

□ Please provide hard copies of correspondence to the address above.

... .............. ....m.._ (name of Claimant or authorized representative), of (City, Province or State), do hereby certify that:

1. The Claimant:

has requested a Claims Package from the Monitor, and wishes to assert a Claim

OR

has received a Claims Package from the Monitor, and wishes to dispute the amount of the Claim as set forth by the Elcano Group in the Claims Package.

2. I am the Claimant.

OR

1 am i (■€ f£(%tP&JT C(t^f&O\A-0L(position/title) of the Claimant.t

1

3. I have knowledge of all the circumstances connected with the claim referred to in this form.

4. The Claimant states that __________ [EEI, EEL and/or EEP] was/were, as ofFebruary 26, 2019, and still is/are, indebted to the Claimant in the sum of CDN$ ivM flf, (insert CDN$ value of claim) as shown by the statement of accountattached hereto and marked Schedule “A”.

Any Claims denominated in a foreign currency need to be converted to Canadian dollars at the Bank of Canada’s noon exchange rate in effect on February 26, 2019.

Claims should not include the value of goods and/or services supplied after February 26, 2019.

If the claim is to be reduced by deducting any counterclaim to which the Elcano Group is entitled, or amounts associated with the return of equipment or assets by the Elcano Group, please specify. ,

The statement of account must specify the evidence in support of the claim including the date and location of the delivery of all services and materials. Any claim for interest must be supported by contractual documentation evidencing the entitlement to interest.

5. A. UNSECURED CLAIM OF That in respect of this claim the Claimantdoes not hold and has not held any assets as security.

B. SECURED CLAIM OF $______________ . That in respect of this claim the Claimantholds assets valued at $___________ as security, particulars of which are as follows:

Give full particulars of the security, including the date on which the security was given and the value at which the claimant assesses the security together with the basis of valuation, and attach a copy of the security documents as Schedule “B ”,

6. Have you acquired this Claim by assignment? ___ Yes i/ No

(if yes, attach documents evidencing assignment)

DATED this day of frpfc I , 2019Per:--------(jfyfCL------------------------

Name of Claimant:

f&ltc- OIL 4 In/kb Ltd .(if Claimant is not an individual,

print name and title of authorized signatory

Name: Kik£.^f^J XM(% _______ _

Thle:__________________________

2

Schedule AStatement of Account Between TORC and Elcano

Invoice Number Date Activity Month Invoice Amount Notes107518 31-Mar-19 Oct - Feb 19 $31,276.38FEB19MB900001 25-Mar-19 February-19 $12,476.88 Elcano revoked TORC's Feb 2019 take-in-kind revenue107381 28-Feb-19 January-19 $11,424.19JAN19MB900001 25-Feb-19 January-19 $7,976.07 Elcano revoked TORC's Feb 2019 take-in-kind revenue107235 31-Jan-19 December-18 $8,411.52107101 31-Dec-18 November-18 $6,525.45106951 30-Nov-18 October-18 $8,255.56106790 31-Oct-18 September-18 $13,154.22106633 30-Sep-18 Jul - Aug 18 $17,397.20106482 31-Aug-18 July-18 $2,628.44106338 31-Jul-18 Jun-Jul 18 $4,992.02

Total $124,517.93

12

THIS IS EXHIBIT "F" REFERRED TO IN THE AFFIDAVIT OF MARVIN TANG


__________________________________________A Commissioner for Oaths in and for the Province

of Alberta


9664826.1

Notice of Revision or Disallowance

To: Tore Oil & Gas Ltd.Suite 1800, 525 - 8th Ave. SW Calgary, AB T2P 1G1

Date: May 21, 2019


Re: Proof of Claim dated April 9, 2019

Take notice that Hardie & Kelly Inc., in its capacity as court-appointed monitor of the Elcano Group (the “Monitor”) has received the above-noted Proof of Claim in respect of the above- named Claimant, and the Elcano Group and Monitor have reviewed and assessed the Proof of Claim in accordance with the order of the Alberta Court of Queen’s Bench issued on March 28, 2019 (the “Claims Procedure Order”). All capitalized terms not defined herein have the meaning given to such terms in the Claims Procedure Order.

The Monitor has disallowed your claim in its entirety, for the following reason(s):

The Elcano Group (“Elcano”) is claiming a right of set-off in respect of amounts owed to it by Tore Oil & Gas Ltd. (“Tore”) as set out in the attached statement of account and asserts a claim against Tore for the net amount owed by Tore to Elcano.

Subject to further dispute by you in accordance with the Claims Procedure, your Claim will beallowed as fol ows:

Name of Claimant

Claim Amount per

Proof of Claim

Classification of Claim per

Proof of Claim

Amount of Claim revised/

disallowed

Classification of Claim revised/

disallowed


Tore Oil & Gas Ltd.

$124,517.93 UnsecuredClaim

$124,517.93 N/A $0.00



1. before 5:00 P.M. Mountain Time on the tenth Calendar Day after your (or your counsel’s) receipt of this Notice of Revision or Disallowance, whichever is earlier, deliver to the Monitor a completed Notice of Dispute of Revision or Disallowance; and

2. within fifteen (15) Calendar Days of delivering the Notice of Dispute of Revision or Disallowance to the Monitor, file an application with the Court supported by an affidavit setting out the basis for your dispute of the Notice of Revision or Disallowance and send copies of the application and affidavit to the Elcano Group and the Monitor immediately after filing.

If you do not deliver a Notice of Dispute of Revision or Disallowance on or before the abovedeadline, you:

1. will be forever barred from making or enforcing any Claim against the Elcano Group or the Directors and Officers of EEI or EEL (other than with respect to a Claim in the amount allowed in this Notice of Revision or Disallowance), and all such Claims that you may have or have had, will be forever extinguished.



DATED the 21st day of May, 2019

Hardie & Kelly Inc., in its capacity as Monitor of Elcano Exploration Inc., Elcano ExplorationLtd. and Elcano Energy Partnership

2G194teM7:11$0am ELCANO EXPLORATION INC.Pandsii JV 4.5.21.184 - Parsdeli Technology Corp instaSatfon; ELCANO {Primary: CAD)

Aged AP / AR Summary. (Level: Invoice)Period: 2019-05. Aged from: 2019-05-31. Outstanding Only: Yes, Age by invoice date.

Company: TORCOIL. Accounts: Beginning to End

Usen SCOTT Page 1 www.pandeil.com/orlandgas (rxa„aged_apar)

Company Acct Invoice Pay Date < 31 days 31 to 60 days 61 to 90 days Over 90 days Grand TotalTORCOfir=~ IORC OIL & GAS LTD.

1200 JR201809A-0091200 JR201810A-0091200 JR201811A-0081200 JR201812A-0081200 JR201901A-0081200 JR201902A-0081200 JR201903A-005

2018-09-302018-10-312018-11-302018- 12-312019- 01-31 2019-02-28 2019-03-31 22,247.59

31,528.8534,191.4334,971.5517,166.6316,595.0821,040.85

31,528.8534,191.4334,971.5517,166.6316,595.0821,040.8522,247.59

“Account Totals: o:of 0.00 “ 22247.W ... ^rrrywms

1205 JC201812A-008 2018-12-31 362.86 362.86“Account Totals: DOT 0.00 0.00 ... 3606 ......—3606

5000 106338 2018-08-08 -4,992.02 -4,992.025000 106482 2018-09-10 -2,628.44 -2,628.445000 106633 2018-10-05 -17,397.20 -17,397.205000 106790 2018-11-07 -13,154.22 -13,154.225000 106951 2018-12-07 -8,255.56 -8,255.565000 107101 2019-01-08 -6,525.45 -6,525.455000 107235 2019-02-07 -8,411.52 -8,411.52

“Account Totals: 0.00 "Off 0.00 -6T73643T —^3147415020 FH201901 2019-01-31 -125.52 -125.52

“Account Totals: 070TF 0.00 0.00 -125.52 -125.52

5040 107648 2019-05-07 -131.59 -131.59“Account Totals: -131.59 0.00 '■ 0.00 • 0700 -"“-israff

“•Company Totals: -131.59 0.00 22,247.59 94,367.32 116,483.32““Grand Total: -131.59 0.00 22,247.59 94,367.32 116,483.32

http://www.pandeil.com/orlandgas

13

THIS IS EXHIBIT "G" REFERRED TO IN THE AFFIDAVIT OF MARVIN TANG




Schedule “E”Notice of Dispute of Revision or Disallowance of Claim


To: Hardie & Kelly Inc., court-appointed Monitor of the Elcano Group (the “Monitor”)Date:Proof of Claim No.:Claimant: [NAME AND ADDRESS OF CLAIMANT]

'Dtu $ b)/& LXp . i$oo Sig 0*^ /[vgT 6>\a) CAlM&i, A6 TiPiMPursuant to the order of the Court of Queen’s Bench of Alberta dated March 28,2019 (the “Claims Procedure Order”), the above-noted Claimant hereby gives notice that it disputes the Notice of Revision or Disallowance dated MaV ->•(_____ , 2019, issued by the Monitor.

The Claimant accepts/disputes the Claim as revised and or disallowed in the said Notice of Revision or Disallowance as follows:

Amount of Revised Claim accepted by Monitor

Amount of Revised Claim as disputed

Classification of Revised Claim by Monitor

Classification of Revised Claim as disputed

$ .\’f( % l<\ $5 b.i?> 1AfsicaMpeJ^ VfêaM-^Lc{t

Reason for the dispute (attach copies of any supporting documentation)

Vrtru {,S ^ /yi OaaÂ CiVHcPl CrfiMauzt- af tucauadi,

da£Uiêtd#f?a/l.

Address for service of Notice of Dispute of Revision or Disallowance:

Hardie & Kelly Inc.Monitor of the Elcano Group 110,5800 2nd Street SW Calgary, Alberta T2H 0H2

WSLEGAL\086037\00001\22088392vl


THIS FORM AND ANY REQUIRED SUPPORTING DOCUMENTATION MUST BE RETURNED TO THE MONITOR BY REGISTERED MAIL, PERSONAL SERVICE, EMAIL (IN PDF FORMAT), FACSIMILE OR COURIER TO THE ABOVE-NOTED ADDRESS, AND MUST BE RECEIVED BY THE MONITOR BEFORE 5:00 P.M. MOUNTAIN TIME ON THE TENTH DAY AFTER YOU OR YOUR COUNSEL RECEIVED THE NOTICE OF REVISION OR DISALLOWANCE FROM THE MONITOR.

DATED this lay of 2019

WitnessName of Claimant:

ML 4 LT0 ,(if Claimant is not an individual,

print name and title of authorized signatory

Name: '1______

Title: \lP |

WSLEGAL\08G037\000OtV22O88392vl


Payable to Elcanq_ ;' ■ 177,741.98 perdisajlowance letter (Elcano's number)

362.86 per disallowance letter (Elcano's number) ____/ .; (61,073.77) less: adjustment for lower processing rate per agreement _________

(22,226.23) less: portion of JIB JR201903A-005 that is post^A^at^"'""__”~ ' ________

__ 94,804.84 payable to Elcano ___

Payable to TORC£ 124,517.93 Invoices per TORC's statement of claim

__f£_ (20,452.95) less: adjustment for revoked Jan & Feb TORC TIK production, which was netted on Elcano's JIBs JR201901A-008 and JR201902A-008 to TORC _20,596.09 recovery of Jul & Aug 2018 invoices per agreement processing rate (TORC paid $54,654.82 to CP6, who forwarded to Elcano...the correct amount

__^____________ .'should’ve been $34,058.73)....____.......... . _ _ _

: 124,661.07 payable to TORC

29,856,23 net payable to TORC

g.

Notice of Revision or Disallowance

To: Tore Oil & Gas Ltd.Suite 1800, 525 - 8th Ave. SW Calgary, AB T2P 1G1

Date: May 21, 2019


Re: Proof of Claim dated April 9. 2019

Take notice that Hardie & Kelly Inc., in its capacity as court-appointed monitor of the Elcano Group (the “Monitor”) has received the above-noted Proof of Claim in respect of the above- named Claimant, and the Elcano Group and Monitor have reviewed and assessed the Proof of Claim in accordance with the order of the Alberta Court of Queen’s Bench issued on March 28, 2019 (the “Claims Procedure Order”). All capitalized terms not defined herein have the meaning given to such terms in the Claims Procedure Order.

The Monitor has disallowed your claim in its entirety, for the following reason(s):

The Elcano Group (“Elcano”) is claiming a right of set-off in respect of amounts owed to it by Tore Oil & Gas Ltd. (“Tore”) as set out in the attached statement of account and asserts a claim against Tore for the net amount owed by Tore to Elcano.

Subject to further dispute by you in accordance with the Claims Procedure, your Claim will beallowed as fol ows:

Name of Claimant

Claim Amount per

Proof of Claim

Classification of Claim per

Proof of Claim

Amount of Claim revised/

disallowed

Classification of Claim revised/

disallowed


Tore Oil & Gas Ltd.

$124,517.93 UnsecuredClaim

$124,517.93 N/A $0.00



1. before 5:00 P.M. Mountain Time on live tenth Calendar Day after your (or your counsel’s) receipt of this Notice of Revision or Disallowance, whichever is earlier, deliver to the Monitor a completer! Notice of Dispute of Revision or Disallowance; and

2. within fifteen (15) Calendar’ Days of delivering the Notice of Dispute of Revision or Disallowance to the Monitor, file an application with the Court supported by an affidavit setting out the basis for your dispute of the Notice of Revision or Disallowance and send copies of the application and affidavit to the Elcano Group and the Monitor immediately after filing.

If you do not deliver a Notice of Dispute of Revision or Disallowance on or before the abovedeadline, you:

1. will be forever barred from making or enforcing any Claim against the Elcano Group or the Directors and Officers of EEI or EEL (other than with respect to a Claim in the amount allowed in this Notice of Revision or Disallowance), and all such Claims that you may have or have had, will be forever extinguished.



DATED the 21st day of May, 2019

Hardie & Kelly Inc., in its capacity as Monitor of Elcano Exploration Inc., Elcano ExplorationLtd. and Elcano Energy Partnership

Per: - _/ ’ ______Marc Kelly

/Senior Vice lhus'ident

/

2Q19-May-17; 11:00 amPandell JV 45.21.164 - Pandel/ Technology Cofp

ELCANO EXPLORATION INC.ELCANO

Aged AP / AR Summary. (Level; Invoice)Period: 2019-05. Aged from; 2019-05-31. Outstanding Only: Yes, Age by invoice date.

Company: TORCOIL. Accounts: Beginning to End

User SCOTT PaQe 1 wiMpandeil.cofri/oilandgas (nta_aged_apar)

Company Acct Invoice Pay Date < 31 days 31 to 60 days 61 to 90 days Over 90 days Grand Total70ROTffT=~ rone OIL & UASLTU.

1200 JR201809A-009 1200 JR201810A-009 1200 JR201811A-008 1200 JR201812A-008 1200 JR201901A-0Q8 1200 JR201902A-008 1200 JR201903A-005

2018-09-302018-10-312018-11-302018- 12-312019- 01-31 2019-02-28 2019-03-31

"Account Totals: -------- 0.00 ..... ............. '0300 ..22.247.592224739 ....

31,528.8534,191.4334,971.5517,166.6316,595.0821,040.85

..... 155,494.39 “

31,528.8534,191.4334,971.5517,166.6316,595.0821,040.8522,247.59

177,741:98

1205 JC201812A-008 2018-12-31 362.86 362.86"Account Totals: £030 0.00 o:oo .... ... ... ~38Z86r ' 362386

5000 106338 2018-08-08 -4,992.02 -4,992.025000 106482 2018-09-10 -2,628.44 -2,628.445000 106633 2018-10-05 -17,397.20 -17,397.205000 106790 2018-11-07 -13.154.22 -13,154.225000 106951 2018-12-07 -8,255.56 -8,255.565000 107101 2019-01-08 -6,525.45 -6,525.455000 107235 2019-02-07 -8,411.52 -8,411.52

"Account Totals; 0.00 0.00 0700 ~ -BT3364.4T ' ~~73T336434T

5020 FH201901 2019-01-31 -125.52 -125.52"Account Totals: 070TT ODD 0.00 -125.52

5040 107648 2019-05-07 -131.59 -131.59"Account Totals: — TnjfTjo ..... -..... .....0.00 " 0300' ~~- ~......... 0.00 -131.59

"•Company Totals: -131.59 0.00 22,247.59 94,367.32 116,483.32

""Grand Total: -131.59 0.00 22,247.59 94,36722 116,483.32

Total Production NetTORC (50%) at Old Fees NetTORC 50%) at Current Fees - Exh ”C Rev. 3Emulsion

TransportationEmulsion

ProcessingSWD Total Oil

C/m1)Water

(/ml

Oil + Waterl/mJ)

EmulsionTransportation

($2.50/m’j

EmulsionProcessing($7.70/m3)

WaterDisposal

(52.00/m1!

Total

($/mon)

EmulsionTransportation

E$1.50/m3)

EmulsionProcessingE$4.60/m3}

WaterDisposal

($1.50/ma)

Total

($/month)Jul-18 $ 6,438-38 $ 19,830.19 $ 5,060.50 $ 31,329.07 90.20 5,068,90 5,159.10 $ 6,448.88 $ 19,862.54 $ 5,068.90 $ 31380.31 $ 3,86933 $ 11,86593 S 3,801,68 $ 19,536,93

Aug-18 5 4.794,38 S 14.766.S7 $ 3,764.70 $ 23.325.75 70.80 3.764.70 3,835.50 $ 4,794.38 S 14.766.68 $ 3,764.70 $ 23325.75 $ 2.876,63 5 8,821,65 S 2,823.53 S 14,521.80$ S4.5S4.82 $ 34,058.73

Paid on FSOA to CFG who paid the amounts noted in bold.

$20396.09

Sop-18! 5 5378.75 S 16.566,55 s 4,227.50 $ 26.172 SO 75.50 4,227 50 4,303.00 $ 5,378.75 $ 16,56635 s 4,227.50 $ 26,172.80 s 3,227.25 S 9.896.90 S 3.170.63 $ 16,294,78Oct-18| s ’ 6,332.38 £ 19,503 72 s 4,995,90 $ 30,832.00 70.00 4.99590 5,065 90 $ 6,33238 $ 19,503.72 $ 4,995.90 s 30,831.99 s 3,799,43 $ 11.65157 $ 3,746.33 s 19.297.92Nov-lSl S 6,449.00 S 19,862.92 $ 5,090 60 S 31,402.52 68.60 5,090.60 5.159.20 5 6.449.00 $ 19,86292 s 5,030.60 s 31,402.52 5 3,869.40 $ 11,866.16 5 3.817,95 $ 19,553.51Dcc-lSl S 4.497.00 S 13,850.76 s 3.S48.60 $ 21.896.36 49.00 3.548.60 3,597.60 s 4,497.00 $ 13,850.76 s 3.548,60 $ 21.396.36 s 2,698.20 5 8.274,48 S 2,661.45 $ 13,634,13Jan-19! $ 4.426,88 $ 13.637,78 s 3.496,00 s 21,560,65 45.50 3.496.00 3,541.50 S 4.426.88 5 13.63478 5 3.496.00 5 21,557 65 $ 2.656,13 S 8,145.45 $ 2.622.00 $ 13.423.58Feb-191 5 6,15725 $ 1S.964.33 $ 4,362,10 s 29,983.68 63.60 4.862.20 4,925 80 s 6,157-25 $ 18.964.33 S 4,862 20 S 29.983.78 $ 3,694.35 $ 11,325,34 $ 3,646.65 $ 18.670.34Total;__________________________________________ $ 36184&Q2_________________________________________________________________________________________________________________________________ $ 100,774.25 $61,073.77

Marvin Tang

From:Sent:To:Cc:Subject:Attachments:

Importance:

Bob Stepan <[email protected]>Monday, May 27, 2019 10:04 PM [email protected] Bodzioch; Marvin Tang; Jarrad Freadrich; Sarah Kozan; Bob Stepan FW: Elcano JVB'sAGREEMENTS_2018-02-01_(6747352v1).pdf; EXHIBIT A_2018-02-01J6747353vD.pdf; EXHIBIT C_2018-02-01_(6747355v1).pdf; Crescent Point 3-34 Processing Agreement - Updated Exhibit C Feb 2018.pdf

High

EXTERNAL SENDER. Do not open links or attachments that are unexpected. Do not give out User IDs or Passwords.

**** POSSIBLE PHISHING ATTEMPT **** This message was sent from outside the company by someone with a display name matching a user in your organization. Please do NOT click any links or open any attachments unless you have independently verified (by phone or SMS, NOT by email) that the source of this email is legitimate. If you are unsure, please contact Don Hiebert at [email protected].

Hi Richard,

Thank you for your follow-up with Rob.

I have attached EWHA Contract No. C063 (agreement body, Exhibit "A" and Exhibit "C") for the 100/08-10-013-27W1/00 well that has the following fee schedule in Exhibit "C":

l




EXHIBIT Cin'

ATTACHED TO AND MADE PART OF AN EMULSION AND WATER HANDLING AGREEMENT BETWEEN

ELCANO ENERGY PARTNERSHIP AND CRESCENT POINT RESOURCES PARTNERSHIPDATED FEBRUARY 1, 2018


1. Transportation ChargeThe charge for transportation of each m3 of Producer Inlet Substances shall be

$1 75 perm3 of Producer's Well Effluent*, plus

any applicable federal and provincial value added taxes


The charge for emulsion handling for each ma of Producer Inlet Substances shall be $3 00* plus applicable federal and provincial value added taxes

3- Water Handling CharmThe charge for handling of each m3 of Producer Inlet Substances that are Water shall be

$1 00 per m3 of Producer's Well Effluent*, plus


4. EailureJoTakeinKindChargesPursuant to clause 603 of the Agreement, if Producer fails to take its share of Outlet Substances in kind, Producer shall be responsible for the following fees, as applicable, plus applicable federal and provincial value added taxes

(i) for Producer Outlet Substances that are Gas. two and one half percent (2 5%) of the gross proceeds of the sale or $500 per month,

(n) for Producer Outlet Substances that are Crude Oil, five percent (5%) of the gross proceeds of the sate

* Fees are guaranteed until February 1, 2020

Contract No C063 Contract Effective Date FEBRUARY 1, 2018 Exhibit CRevision No Revision Effective Date

You are correct that the other Section 10 wells are not part of EWHA C063 and have different fees.

2

I have attached EWHA Contract No. C032 ("Crescent Point 3-34 Processing Agreement - Updated Exhibit C Feb 2018") for the other Section 7 and 10 wells that has the following fee schedule in Exhibit "C":

3


EMULSION AND WATER HANDLING AGREEMENT BETWEENELCANO ENERGY PARTNERSHIP AND CRESCENT POINT RESOURCES PARTNERSHIP

DATED JANUARY 1,2015


1. Transportation Charge

The charge for transportation of each m* of Producer Inlet Substances shall be:

i. <=100 m3 per day - $2.50 per m3 of Producer’s Well Effluent, plus

ii. >100 m3 per day to <=200 m3 per day -$1.50 per m3 of Producer’s Well Effluent, plus

iii. >200 m3 per day - S1.00 per m3 of Producer's Well Effluent, plus

any applicable federal and provincial value added taxes.


The charge for emulsion handling foreacfi m* of Producer inlet Substances shall be $4.60plus applicable federal and provincial value added taxes


The charge for handling of each nt5 of Producer Inlet Substances that are Water shall be:

iv. <=100 m3 per day - $2.50 per m3 of Producer’s Well Effluent, plusv. >100 m3 per day to <=200 m3 per day - $1.50 per m3 of Producer’s Well

Effluent, plus

vl. >200 m3 per day - S1.00 per m3 of Producer's Well Effluent, plus



Pursuant to clause 603 of the Agreement, if Producer falls to take its share of Outlet Substances in kind. Producer shall be responsible for the following fees, as applicable, plus applicable federal and provincial value added taxes:



Contract No. C032 Contract Effective Date JANUARY 1,2015 Exhibit 'CRevision No.: 3 Revision Effective Date: February 1,2018

4

As you can see, EWHA C032 for the other Section 7 and 10 wells has much higher fees than EWHA C063 for the 100/08- 10-013-27W1/00 well.

TORC is asking for the fees for the other Section 7 and 10 wells be applied pursuant to the current EWHA C032's Exhibit "C" Revision No. 3 (effective February 1, 2018). As Rob has communicated, when the fees are properly charged, there will be an overall net payable to TORC.

I trust that the aforementioned is sufficient and that Elcano will correct the applicable invoices.

*** I have cc'ed our TORC team including Marvin Tang (Vice President & Controller) as he has been in communication with the monitor.

Thanks

BobJV Consultant - TORC (403) 473-6699

From: Richard Fulton <[email protected]>Sent: Monday, May 27, 2019 2:43 PMTo: Robert Bodzioch <[email protected]>Subject: RE: Elcano JVB’s

| EXTERNAL SENDER. Do not open links or attachments that are unexpected. Do not give out User IDs or Passwords.

Hi Rob,

Just looking over the information as I have a few minutes now. I see that the worksheet presented assumes that the balance of wells in section 10 are to be under the proposed 8-10 fee structure. As mentioned, Elcano agreed to the fees (for the 8-10 well only) with Crescent Point when we jointly agreed to drill the well. Elcano never agreed to fee changes in the balance of the wells in section 10.

I trust that we are not meeting to debate this and there are some accounting items that need review? You and I can deal with the other items ourselves.

Talk soon,

Richard

From: Robert Bodzioch ftnailto:[email protected]: Monday, May 27, 2019 11:01 AM To: Richard Fulton <RFulton(a>elcano.ca>Subject: RE: Elcano JVB’s

Good Morning Richard,

I hope the weekend treated you well and that you managed to get in some extended dog walks outside of all the rain on Saturday.

Further to our conversation last week surrounding the JVB regarding our joint wells at North Hargrave, attached is a summary of what TORC views as the outstanding amounts payable as at February 26, 2019. The aforementioned

5




summary includes all billings and statements made by both parties and also incorporates the revised handling charges for the Elcano 3-34-12-27W1 EWHA dated January 1, 2015 as per the revision to Exhibit C, effective February 1, 2018 (copy attached). A summary of the fee amounts/breakdown is also attached for your reference.

With respect to tomorrow’s meeting, please come to the lobby on the 18th Floor in 8th Ave Place. My apologies that I wont be able to attend myself as I will be in Regina for a few days but I will be sure to touch base and follow up once I return.

Thanks,

-Rob

From: Richard Fulton <[email protected]>Sent: Friday, May 24, 2019 8:49 AMTo: Robert Bodzioch <rbodzioch@torcoil,com>Subject: Elcano JVB's

| EXTERNAL SENDER. Do not open links or attachments that are unexpected. Do not give out User IDs or Passwords.

Hi Rob,

I did get your message yesterday. I am open to meet next week and look at some of the detailed items that you would like to review with us. Other than Wednesday morning I am fairly open. Do you want to try for Tuesday morning?

If you want to forward any of the details ahead of our meeting so that I can get a feel for the items that would be helpful. Let me know either way.

Regards,

Richard

Richard Fulton, P. Land President & CEO Elcano Exploration Inc. (403) 243-3548

» rv

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6


Operations StatementPartner Operator invoice

CC

OP Account

GROSS REVENUE-OIL

TORCOIL 17722TORC OIL & GAS LTD ELCANO EXPLORATION INC,1800, 525 - 8 AVENUE SW SUITE 1600, 521 - 3RD AVE SWCALGARY, AB T2P 1G1 CALGARY, AB T2P3T3

(403)460-4188

Operator

54044

| Z7s, Tsiy* l-jT adescriotion ^ i

MSNIOTA 100/13-10-013-27W1QQ

Minor Account description _.s£L

Partner ActivityPercent Month

Invoice Number

Op Accounting Month

Invoiced

Disputed

Accepted

JR201903A-005

March 2019

22,194.48

22,194 48

GrossAmounts

Partner GST

9710,010 OIL & CONDENSATE 50,00000000 Mar 19 (29,816.64) (14,908.32)

Total GROSS REVENUE - OIL (29,816.64) (14,908.32)Total Revenue (29,816.64) (14,908.32)

Y - OIL

9810.012 CROWN ROYALTY - OIL 50.00000000 Mar 19 1,235 32 617 66

Total GROSS ROYALTY - OIL 1,235.32 617.663ENSE

9910 097 OIL TRANSPORTATION 50,00000000 Mar 19 950,85 475.43

9910,105 CONTRACT OPERATOR 50.00000000 Mar 19 607.82 303 91

9910.106 OPERATING LABOUR 5000000000 Mar 19 135,00 67 50

9910,108 ROAD & LEASE MAINTENANCE 50,00000000 Mar 19 96,56 48.28

9910 110 VEHICLES 50,00000000 1 Feb 19 | 42.03 l

9910.110 VEHICLES 50.00000000 Mar 19 223.47 111 73

9910,112 CHEMICALS 50.00000000 Mar 19 369.05 184.53

9910,165 FIELD COMMUNICATIONS 50,00000000 Mar 19 3,88 1.94

9910,170 FUEL & POWER 50,00000000 Mar 19 11.41 5.709910.176 SALT WATER DISPOSAL 100,00000000 Mar 19 5,392.40 5,392.40

9910.177 GATHERING FEES 100,00000000 Mar 19 6,827,38 6,827,38

9910,179 PROCESSING FEES 100 00000000 Mar 19 21,028,32 21,028,32

9910 184 ENGINEERING 50,00000000 Mar 19 90,00 45.00

991Q 186 PRODUCTION ACCOUNTING 50 00000000 Mar 19 70,00 35,00

9910.190 GST 100,00000000 Mar 19 1,662,41 1,662,419910 191 PST - PROVINCIAL SALES TAX 50.00000000 l-FSSTs) 0.67 fosT/

9910,191 PST - PROVINCIAL SALES TAX 50.00000000Snarls

34.91 17.46

9910.196 OPERATORS OVERHEAD 50,00000000 Mar 19 513.57 256.79

Total OPERATING EXPENSE 38,059.73 36,485.14Total Expense 39,295.05 37,102.80

Total Statement 9,478.41 22,194.48

Disputed

?TS

■V¥

J"rT

VolumesAccepted Gross Partner

(14,908,32) £69,60) (34 80)

(14,908.32) (69.60) (34.80)(14,908.32) (69.60) (34.80)

61766 0,00 0.00

617.66 0.00 0.00

475.43 000 0.00

303.91 0.00 000

67.50 0.00 0.00

48,28 0.00 0.00

21.02 0,00 0.00

111.73 0,00 0.00

184,53 0.00 000

1,94 0.00 0.00

5,70 0.00 0 00

5,392.40 2,696 20 2,696.20

6,827,38 2,73100 2,731.00

21,028.32 2,73100 2,73100

45.00 0.00 0.00

35,00 0 00 0,00

1,662.41 0.00 0.00

0,34 0.00 0.00

17,46 0.00 0,00

256,79 000 0.00

36,485.14 8,158.20 8,158.2037,102.80 8,158.20 8,158.2022,194.48 8,088.60 8,123.40

www.enerovlink.com Report reflects amounts as at Wednesday, May 22, 2019 11:24 AM © 2019 Red Dog Systems, Inc Alt rights reserved Unauthorized use prohibited

Page 1 of 2

http://www.enerovlink.com

Schedule A

K7

Statement of Account Between TORC and Elcano

Due to TORC:Invoice

Invoice Number □ate Activity Month Invoice Amount Notes107518 31-Mar-19 Oct - Feb 19 $31,276.38FEB19MB900001 25-Mar-19 February-19 (j) $12,476.88 Elcano revoked TORC's Feb 2019 take-in-kind revenue107381 28-Feb-19 January-19 $11,424.19JAN19MB900001 25-Feb-19 January-19 ([) $7,976.07 Elcano revoked TORC's Feb 2019 take-in-kind revenue107235 31-Jan-19 December-18 $8,411.52107101 31-Dec-18 November-18 $6,525.45106951106790

30- Nov-1831- Oct-18

October-18September-18

$8,255.56$13,154.22 -........... .—...-...... - ---------

106633 30-Sep-18 Jul - Aug 18 $17,397.20106482 31-Aug-18 July-18 $2,628.44106338 31-Jul-18 Jun-Jul18 $4,992.02

Total $124,517.93 Pi

' & 2r> Ug'ij-s' A

14

THIS IS EXHIBIT "H" REFERRED TO IN THE AFFIDAVIT OF MARVIN TANG




Note: the below information and calculation is an exerptfrom the Statement of Adjustments ("SOA"), as prepared by Crescent Point, in connection with on asset acquisition transaction between TORC and Crescent Point, which closed in June 2018. The $54,654.82 was paid by TO RC to Crescent Point os part of a larger dollar amount related to the SOA.

NON-OPERATED - Amount paid by Crescent Point in Interim PeriodG/L Account |Account Name |Cost Centre |Cost Centre Name |2018-07 2018-08 Grand Total |

9900.02 GATH & PROCESS FEE - SALT WATER DISP9900.555 PROCESSING EMULSION9900.66 EMULSION TRANSPORTATION

63055 100/13-10-013-27W1/00 SOLD 63055 100/13-10-013-27W1/00 SOLD 63055 100/13-10-013-27W1/00 SOLD

$5,060.50$19,830.19$6,438.38

$3,764.70$14,766.67

$4,794.38

$8,825.20$34,596.86$11,232.76

Total Fees: $31,329.07 $23,325.75 $54,654.82

INTRODUCTION€¦ · March 8, 2019 in the amount of $22,226.23, the total indebtedness of TORC to...

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