Mail from mr BinnionPresident's Message While we invested in building reserves at Kakwa, we continued to move Quebec and Jordan forward during the quarter. In addition to the infrastructure expansion at Kakwa, three joint venture wells were completed. Capital costs are trending lower per metre of horizontal drilled. In total, we are planning for up to seven (1.68 net) wells for 2017 including one (0.25 net) well that spud last December. In Quebec, we are working on a path to zero emissions natural gas production to support social acceptability for a pilot project. This dovetails with the governments action plan for their energy policy with the goal of reducing emissions. It includes promoting local natural gas and a new approach to hydrocarbons. Based on this plan, we expect the draft hydrocarbon regulations this summer and hopefully finalized by year-end. To accelerate the appraisal of our oil shale project in Jordan, we made a strategic investment in Red Leaf. They are optimizing the EcoShale process which we are prioritizing for Jordan and, in particular, the use of reusable capsules based on existing refining technology. This could materially reduce break-even oil prices for this significant oil shale deposit. Highlights Development at Kakwa continues with well completions and infrastructure expansion Government of Quebec releases Energy Policys 2017-2020 Action Plan with natural gas key to the provinces energy transition Acquired minority interest in Red Leaf to accelerate feasibility study of oil shale project in Jordan Average daily production of 1,037 boe/d and 490 boe/d currently behind pipe with adjusted funds flow from operations of $0.89 million(1) Kakwa, Alberta Early well results support the increased investment in the Kakwa joint venture acreage this year. We are experimenting with more efficient sand tonnage and pump rates on our new wells. Based on the improvements last year, we anticipate that these and future wells will benefit from the ongoing improvements in completion design. Future wells will also benefit from our investment in infrastructure. This will be $2.5 million higher than originally estimated due to planned expansion in the capacity of the central water facility, and cost overruns on the amine unit. This should contribute to reducing our current operating costs for chemical sweetening and future capital costs for completions. Our investment in infrastructure includes a central gas lift facility and associated pipelines that was commissioned at the end of the quarter. We expect this will make a material improvement in uptime for older wells. St. Lawrence Lowlands, Quebec Our vision for clean natural gas from Quebec is to be zero emissions, zero drinking water usage and 100% biodegradable chemicals. We expect we can deliver one of the lowest supply costs in North America in a market that currently has one of the highest. Working with a Quebec-based engineering firm, we are evaluating tie-ins to the local power grid to replace diesel with zero emissions hydroelectricity in the generators and compressors used for drilling and production. By capturing and recycling flow-back water, similar to our operations at Kakwa, we can minimize our fresh water usage. We are also looking at grey water from sewage treatment plants as an alternative to fresh water for completions. One of our future goals is to move completions to entirely biodegradable chemicals. Oil Shale Mining We made progress towards our goal of finding a way to commercialize our giant oil shale deposit in Jordan. Red Leafs reusable capsule design has several advantages for our Jordanian oil shale. It efficiently heats and produces oil from the shale while capturing the produced water for future use in the process. Using large steel vessels found in coker facilities in refineries as reusable capsules has the potential to materially lower break-even prices. Red Leaf estimates that moving to a reusable capsule design from its single use capsule design, for their project in Utah, could lower breakeven prices from US$70-$100/bbl to US$50-$60/bbl. We are working closely with Red Leaf to optimize the yield from our oil shale with this reusable capsule design. The data from this work will be incorporated into a feasibility study on Jordan conducted by Red Leaf and AECOM, a large US-based international engineering firm, this fall. Operational & Financial Our production declined over the prior year as we did not fully participate in the 2016 drilling program at Kakwa. Production averaged 1,037 boe/d (2016: 1,422 boe/d) for the quarter and 1,080 boe/d for the first six months of the year (2016: 1,480 boe/d) with Kakwa accounting for over three quarters of production. Revenue declined by just over 5% to $4.18 million from $4.42 million last year with the decline in production volumes mostly offset by higher commodity prices. Higher operating and G&A costs coupled with lower realized gains on risk management contracts resulted in adjusted funds flow from operations of $0.89 million for the period (2016: $1.92 million) and $2.29 million for the year to date (2016: $3.66 million). Gross capital investment increased to $12.31 million for the six months ended June 30, 2017 (2016: $4.90 million) and over 90% was spent at Kakwa. This was offset by the sale of shallow exploration rights at Kakwa for net proceeds of $4.45 million. We also invested $8.2 million on the acquisition of Red Leaf shares in the quarter. Outlook Despite the volatility in commodity prices, we are sticking with our business plan. We will continue to develop Kakwa as a base of value and future source of capital for Quebec. Though we restricted investment last year to preserve liquidity, we are participating in all wells going forward based on recent results. We remain flexible and may adjust our plans as circumstances change. It has been just under seven years since the Government of Quebec began its first environmental assessment on shale gas development. Our step by step approach of working with the government and other stakeholders has been rewarded with the introduction of the new hydrocarbon law last December. We are looking forward to the release of the regulations so we can resume piloting work on our multi-Tcf natural gas discovery.