San Lorenzo Gold Corp V.SLG.RT

RBC Report On Sterling - $5.75 Target

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Sterling Resources (TSX-V: SLG; C$4.40)

Thinking Big

Recommendation Net Asset Value C$/share % of NAV

Rating Outperform Core NAV C$1.30 23%

Risk Speculative Risked Upside C$4.46 77%

Close Price 21/2/11 C$4.40 NAV C$5.76 100%

Price Target C$5.75 2011 E&A Upside C$6.51 113%

Implied Return 31% 2011 E&A Downside (C$1.71) (30%)

Capitalisation Valuation Metrics SLG Median1

Shares outstanding (m) 184.6 P/NAV (%) 76% 83%

Market Cap ($m) 795.8 2011 P/CFPS (x) n/a 5.7x

Net Debt/(Cash) ($m) (133.3) 2P reserves (mmboe) 30.5

Enterprise Value ($m) 662.5 EV/barrel ($/boe) $21.72 $18.19

NAV Sensitivity to Brent $60/bbl $70/bbl $80/bbl $90/bbl $100/bbl $110/bbl

NAV - PV12.5% (C$/share) C$3.13 C$4.23 C$5.32 C$6.42 C$7.50 C$8.53

P/NAV (%) 141% 104% 83% 69% 59% 52%

Financials 2008 2009 2010E 2011E 2012E

Net Production (mboe/d) 0.0 0.0 0.0 0.0 2.5

CFPS (C$/share) (C
.02) (C
.03) (C
.01) (C
.03) C
.08

EPS (adjusted) (C$/share) (C
.02) (C
.04) (C
.04) (C
.04) (C
.01)

1Median value for North Sea E&P Peer Group – AEN, EO, ENQ, FPM, IAE, NPE, SQZ, SLG, VPP

Source: Company reports, RBC Capital Markets estimates

Investment Highlights

• Compelling combination of value and material upside possible from potential catalysts

during 2011 – Trading at a 24% discount to our NAV, Sterling’s stock is at a deeper discount

than many of its North Sea peers. Additionally, the company provides exposure to several

significant potential catalysts during 2011, which could provide substantial upside to our NAV.

• Set to test the upside potential of Cladhan – The multi-well campaign is now underway and

should test the 200mmbbl upside case. The extent of the field will be determined by where

down-dip an oil-water-contact is encountered. Only ~33% of the 119–256–466mmbbl STOIIP

estimate is currently categorised by Sterling as contingent. Fully unrisked, we estimate Cladhan

could add C$2.80/share to our NAV with a downside of C$1.24.

• Breagh development set to provide a growing production core until 2017 – First gas from

the 610Bcf field is scheduled for H2/12 before ramping up to 225MMcf/d in 2014. Further

phases of the development could provide Sterling with five years of production growth. We

believe that the appeal of its 30% interest to European utility companies will increase

substantially on first gas.

• London listing on the horizon – In its Q3 report management discussed obtaining a Main

Market listing in London, which we believe makes sense given Sterling’s focus on the North

Sea and its U.K.-based management team. Such a move could elevate Sterling into a broader

peer group, thereby increasing its access to capital and broadening the base of potential

investors. A Competent Persons Report to accompany the listing would provide important

insights into the company’s exploration portfolio.

• Breagh phase one and Cladhan appraisal funded – After raising C$121 million in 2010, we

forecast Sterling will have ended the year with cash of C$133 million. With the £100 million

project finance debt facility for Breagh, we are confident that the company’s current 2011

activities are fully funded; nevertheless, further success at Cladhan (or development activity in

Romania) is likely to require an additional equity raise during 2011.

• Recommendation – Outperform, Speculative Risk and a C$5.75 price target. Our price target

is set at a multiple of 1.0x our NAV, reflecting the potential for upcoming, clear catalysts.

Investment Rationale

We assume coverage of Sterling Resources (TSX-V: SLG) with an Outperform, Speculative

Risk recommendation and a C$5.75 12-month price target (previously C$3.80). Our price

target is set at a multiple of 1.0x our NAV, which is consistent with our base methodology for

International E&P companies with an established asset base and the potential for clear

catalysts.

Sterling’s elevation during the last year, to become an $800 million business with a portfolio

of three material development opportunities, is founded on its technical strengths in

exploration and appraisal, often revisiting discoveries overlooked by previous owners. A new

management team is now positioning the company to become an active participant in the

development of these discoveries while also pursuing further exploration opportunities.

Trading at a 24% discount to our PV12.5% NAV of C$5.76/share, we believe that Sterling

provides a compelling combination of value and material upside possible from potential

catalysts during 2011.

2011 appraisal to test 200mmbbl upside potential of Cladhan: Already established as a future

development opportunity, the appraisal programme is designed to test the field’s upside case and

gradually de-risk Cladhan with wells moving progressively down-dip to the east. Failure to

encounter an oil-water-contact with each well is likely to have positive implications for the

ultimate size of the discovery, with confirmation of a 200mmbbl development adding up to

C$2.80/share to our NAV. We expect interest from larger players to result in a mark-to-market

opportunity for the Northern North Sea asset ahead of development activity.

Breagh progressing toward production during 2012: Awaiting FDP approval, the 610Bcf field

remains on schedule for first gas in H2/12 and ramping upward to ~225MMcf/d in 2014. With a

£100 million project finance facility in place to finance phase one of the development, future cash

flows are to be used to fund further phases of the development, most likely alongside a borrowingbase

facility. In our view, the appeal of Sterling’s 30% interest to European utility companies will

increase substantially on first gas.

New management in place ahead of increasing development activity: During 2010, Sterling

responded to its expanding opportunity set and its desire to become more heavily involved in

development activity by appointing a new CEO and CFO. Mike Azancot and David Blewden

bring significant upstream experience operating producing and development assets. Previous

CEO, Stewart Gibson, remains actively involved with the company as an executive director.

Teeing up a further phase of exploration-led growth: Sterling’s portfolio spreads to the

Netherlands, France and Romania, any of which could generate significant exploration newsflow

during 2011. In Romania, a well on the Eugenia prospect targeting a proven oil play could add up

to C
.95/share to our NAV if successful. Initial drilling results from acreage adjacent to

Sterling’s in the Paris Basin could increase interest in the Liassic shale play ahead of its own

drilling campaign. Meanwhile in the Netherlands, we await details on appraisal drilling planned

for H2/11 before including value for the recently acquired blocks in our NAV.

Potential London listing makes sense: With a portfolio focused on the U.K. North Sea and a

U.K.-based management team, we believe Sterling has become an outlier with a sole TSX-Venture

Exchange listing. We believe a successful appraisal campaign on Cladhan could create a need for

further equity and this may be an opportunity for management to obtain a Main Market listing in

London. Such a move could elevate Sterling into a broader peer group, thereby increasing its

access to capital and broadening the base of potential investors. A Competent Persons Report to

accompany the listing would provide important insights into the company’s exploration portfolio.

Exhibit 59: Sterling Resources on the value curve

Exploration Commercialisation Start-up

Time

Production

Value

Cladhan

Eugenia, Paris Basin

Breagh

Doina & Ana

Oil

Gas

Undrilled

NAV

Market value

Industry value

Source: Company reports, RBC Capital Markets estimates

Exhibit 60: Sterling Resources NAV and potential upside from upcoming catalysts

0.00

2.00

4.00

6.00

8.00

10.00

NAV Cladhan Appraisal Eugenia Other North Sea

Exploration

Breagh

Development

C$/share

Other Breagh Cladhan Upside

Source: Company reports, RBC Capital Markets estimates

Potential Catalysts

Near term (less than 6 months)

• Cladhan appraisal drilling – The proposed four-well campaign is now underway and should

test the 200mmbbl upside case by drilling farther south into the central channel and east into

the fan system. The extent of the field will be determined by where down-dip an oil-watercontact

is encountered. Fully unrisked, we estimate that Cladhan could add C$2.80/share to our

NAV with a downside of C$1.24.

• Breagh FDP approval – Approval for the 610Bcf development should be the catalyst for

finalising service contracts for drilling rigs, offshore facilities construction and installation. It

should also enable Sterling to begin drawing down its £100 million project finance debt

facility.

• Drilling activity in Paris Basin – Toreador and Hess are scheduled to begin drilling the

Liassic shale play in April on acreage adjacent to Sterling’s. Positive results could help Sterling

to attract a larger partner with experience of unconventional exploration ahead of potential

drilling in 2012.

• Potential London listing – Further appraisal success at Cladhan is likely to result in Sterling

making a fresh call for equity during in 2011. We believe this could be the catalyst for the

company to obtain a listing on London’s Main Market. Already a ~$850 million company, the

move could elevate Sterling into a broader peer group, therein increasing its access to capital

and broadening the base of potential investors. A Competent Persons Report to accompany the

listing would provide important insights into the company’s exploration portfolio.

Medium term (6–12 months)

• Resuming exploration activity offshore Romania – Management plans to drill a first

exploration well on the Pelican XIII block during H2/11, which will most likely target the

Eugenia prospect. Pursing a proven Eocene oil trend, the well could add C
.95/share to our

NAV (excluding the high-risk Oligocene play) with a downside of up to C
.40.

• Netherlands exploration well – After farming in to five offshore licences in November 2011,

Sterling has obtained 3D seismic data and intends to begin appraisal drilling during H2/11.

With management yet to outline prospect sizes, we currently include no value for the

opportunity, which Sterling will operate with a 50% interest.

• Development drilling on Breagh – By starting development drilling in Q4/11, the RWEoperated

development should remain on track for first gas in H2/12, in our opinion.

• Possible Cladhan mark to market – We would expect Sterling to divest part of its interest in

Cladhan on the conclusion of the appraisal campaign. A deal with a proven North Sea operator

would help de-risk the project and provide an industry valuation for the asset to underpin the

stock price.

Longer term (greater than 12 months)

• First gas from Breagh – Production is scheduled to begin in H2/12 and will be a milestone in

Sterling’s evolution to becoming a more balanced E&P company. As a phased development,

the field is scheduled to ramp up to a plateau rate of 225MMcf/d in 2014.

• Romania development progress – The timing of any development activity on the Doina and

Ana gas discoveries remains unknown. Regulatory approval for the outstanding farm-out

agreements could clear the way for Sterling to introduce a new partner ahead of development

activity. Clear steps toward beginning development work in 2012 would materially enhance

Sterling’s investment case, in our view.

Company Strategy & Management

Traditionally a North Sea exploration play, Toronto-listed Sterling Resources is gradually

evolving into a more rounded exploration and production company as a direct result of successful

exploration and appraisal drilling. The U.K. North Sea is the most significant area within a

growing portfolio that includes assets in the Netherlands, France and Romania. First oil from the

Breagh gas field in 2012 could give the company a solid production base, potentially becoming a

60MMcf/d net producer in 2013. Typically an operator of its exploration and appraisal activities,

Sterling has been happy to let others operate during the development phase to date.

2010 saw managerial changes as Sterling prepared for the next phase of its growth. Mike Azancot

joined as CEO and David Blewden joined as CFO. Both men arrive with more than 30 years’

experience in the global upstream industry and a desire to see Sterling establish itself as an

attractive partner in development activity as well as exploration. Previous CEO, Stewart Gibson,

remains on the board and continues to play an active role in the business.

Sterling twice raised equity in 2010, both times as a result of its ongoing success requiring

additional activity. Further success—particularly at Cladhan—could create a need for further

equity issuance in 2011, which may also be the catalyst for Sterling to secure a U.K. listing. In our

view, a move to the U.K. Main Market would make sense for the ~$800 million company: its

management team is based in the U.K., and its most significant assets are located in the North Sea.

Other Toronto-listed North Sea players already have a London listing. Such a move could increase

the company’s access to capital.

Exhibit 61: Sterling Resources Management Team

Director Position Experience

Shares

(m) %

Walt DeBoni Chairman Husky Energy, Bow Valley Energy 0.20 0.11%

Mike Azancot CEO Petrokazakhstan, LASMO, Occidental 0.00 0.00%

Stewart Gibson Director Various executive positions in upstream industry 1.00 0.54%

David Blewden CFO PetroSaudi, African Arabian Petroleum, Yukos 0.00 0.00%

John Rapach COO NRG Ltd, Troy Ikoda, Helix RDS 0.00 0.00%

Teck Soon Kong NED Noble Denton, Nimir Petroleum, Shell 1.65 0.90%

Raj K Agrawal NED NRG Engineering, Shell 0.36 0.20%

Robert Carter NED Cirrus Energy, Vanguard Oil Corp. 0.17 0.09%

Graeme Phipps NED Petrokazakhstan, Petro-Canada, Nexen 0.12 0.07%

3.50 1.90%

Source: Company reports

Exhibit 62: Sterling Resources NAV: Discounted at 12.5% from 1 January 2011

Working Interest Reserves Asset Value

Field Oil Gas Total PV12.5% PV12.5% PV12.5%

Interest mmbbl Bcf mmboe US$m C$m C$/share

Producing fields/assets 0 0 0 0 0 0.00

Fields under development 0 137 23 152 155 0.79

UK 0 137 23 152 155 0.79

Breagh (Phase 1) 30.0% 0 137 23 152 155 0.79

Exploration/development upside (risked) 41 336 97 861 879 4.46

France 0 0 0 32 33 0.17

Exploration 16.6% 23 23 0.12

Paris Basin acreage various 10 10 0.05

Netherlands 0 0 0 0 0 0.00

Exploration 50.0% 0 0 0.00

Romania 0 290 48 314 321 1.63

Doina & Ana 65.0% 0 290 48 190 194 0.98

Exploration 65.0% 124 127 0.64

UK 41 46 48 514 525 2.66

Breagh (Phase 2) 30.0% 0 46 8 43 44 0.22

Breagh (Upside) 30.0% 45 46 0.23

Cladhan (100mmbbls) 39.9% 41 0 41 355 362 1.84

Cladhan (upside) 39.9% 33 34 0.17

Exploration various 38 39 0.20

Financial commitments 0 0 0 99 101 0.51

End 2010E net cash/(debt) adjusted for deals 131 133 0.68

E&A cost associated with prospects -56 -57 -0.29

Corporate effects 0 0 0.00

Investments 0 0 0.00

Estimated effect of options/warrants 25 25 0.13

Core commercial value 0 137 23 251 257 1.30

Risked potential/exploration 41 336 97 861 879 4.46

Net asset value 41 473 120 1112 1135 5.76

Number of shares fully diluted (m) 197.0

Number of share options/warrants (m) 12.4

Number of shares (m) 184.6

Exchange rate assumption(s) C$/$ 1.02

Base case Brent crude price forecast $87.55/bbl in 2011, $89/bbl in 2012, $84/bbl in 2013 flat real thereafter

Source: Company reports, RBC Capital Markets estimates

Valuation – Net Asset Value

On a sum-of-the-parts NAV basis, we value Sterling Resources at C$5.76/share. Our NAV

includes a Core NAV of C$1.30/share, which consists of assets currently producing or approved

for development and corporate adjustments including cash-in-hand and debt. A risked valuation of

the company’s undeveloped discoveries and exploration portfolio totalling C$4.46/share is

included as Risked Upside.

Key Assumptions

• Oil Price – Our base case Brent crude oil price assumption is $87.55/bbl in 2011, $89/bbl in

2012, $84/bbl in 2013 and flat in real terms thereafter.

• U.K. Gas Price – We assume U.K. spot gas prices will average 45p/therm (~$7.50/Mcf) in

2011 and 45p/therm (~$7.25/Mcf) in 2012. From 2013 onward, we assume a link between U.K.

gas prices and Brent, which results in a gas price of 51p/therm (~$8.40/Mcf) at $84/bbl Brent

and $1.60/£.

• FX Rates – Our models are based on long-term equilibrium exchange rates of $1.60/£ and

C$1.02/$.

• Discount Rate – Future cash flows are discounted from January 1, 2011 at 12.5%. A 12.5%

discount rate is used for companies for which the majority of the value is within predevelopment

assets and/or additional equity capital may be required to realise further value

from the assets.

Price Target: C$5.75

Our 12-month price target is set at a multiple of 1.0x our NAV, which is consistent with our base

methodology for International E&P companies with an established asset base and the potential for

clear catalysts. During 2011-12, Sterling is set to be engaged in development activity on the

Breagh gas field, appraisal drilling on Cladhan and further exploration activity in the North Sea,

Romania and France.

Key Assets

Southern North Sea: Breagh Gas development

Sterling (30%) and RWE (70%, operator)

First gas from the 610Bcf Breagh gas field is currently due in H2/12. As a phased

development, production is scheduled to reach a plateau rate of 225MMcf/d in 2014, and

further phases could enable Sterling to deliver production growth until 2017 from this asset

alone. Sterling’s share of the initial development costs—estimated by the operator to be

£100-130 million—is to be funded from cash and a £100 million project finance debt facility.

Operated by RWE, the field is currently awaiting FDP approval before development activity

begins. Development drilling is scheduled to start in Q4/11. Service contracts have already been

awarded for pipeline construction work and the onshore processing facilities. Development

approval should be the catalyst for the confirmation of further service contracts and a drawdown

on the debt facility.

As an operator, Sterling oversaw three successful appraisal wells on the field, which had been

discovered by Mobil in 1997. Each well encountered gas-bearing Lower Carboniferous reservoir

with the final well testing a maximum rate of 26MMcf/d. Following conclusion of the appraisal

campaign in 2009, RWE secured its 70% interest in the field by buying out Sterling’s partners and

obtaining a 15% stake and operatorship from Sterling for $94 million.

Although Sterling’s management has repeatedly played down the possibility of divesting its

remaining 30% interest, we believe that the asset is an obvious target for European utilities that are

seeking uncontracted gas. With significant volumes already established and further upside to

capture, buyers may be willing to pay a strategic premium to secure a non-operated interest in a

growing production profile, increasingly so after first gas.

Northern North Sea: Cladhan discovery

Sterling (39.9%, operator), Wintershall (33.5%), EnCore Oil (16.6%) and Dyas (10%)

Discovered in November 2008, Cladhan was generally overlooked as a modest Northern North

Sea oil discovery requiring further appraisal to establish its commerciality. After drilling two

sidetrack wells in September 2010 and delivering a restricted test rate of 5,900b/d, Sterling

upgraded its STOIIP estimate to 119–256–466mmbbls from 35–95–234mmbbls of light oil (P90-

P50-P10). With drilling yet to identify an oil-water-contact and only ~33% of the estimated

volumes categorised as contingent, a four-well appraisal programme is planned for the coming

months.

The 2011 appraisal programme is designed to test the upside case by drilling farther south

into the central channel and east into the fan system to establish the oil-water-contact.

Drilling to date has focused on the crest of the structure in the northern channel with a

stratigraphic trapping edge identified to the west (see Exhibit 63). The appraisal campaign is

intended to de-risk the field gradually, with wells moving progressively down-dip to the east.

Failure to encounter an oil-water-contact with each well is likely to have positive

implications for the ultimate size of the discovery. We estimate that confirmation of a

development larger than 200mmbbl recoverable could add ~50% to our Sterling NAV.

Development planning remains at an early stage with the scale yet to be determined. With five

potential offtake routes within 30km, we believe that even a modest 30mmbbl development could

be commercial. We do not expect Sterling to retain operatorship during the development phase

and anticipate a partial divestment after appraisal activity is completed. In our view, the

development is likely to be of interest to nearby infrastructure owners TAQA (Cormorant and

Tern), KNOC (Hudson) and EnQuest (Heather) that have the experience to operate the potentially

large-scale development.

Exhibit 63: Cladhan drilling to date and 2011 appraisal campaign

The planned 2011 appraisal

campaign (wells A4, B, C & F)

represents a gradual step-out

from the existing discovery.

Continued success and no oilwater-

contact are likely to lead

to additional appraisal in the

southern channel and outer fan

system.

The planned 2011 appraisal

campaign (wells A4, B, C & F)

represents a gradual step-out

from the existing discovery.

Continued success and no oilwater-

contact are likely to lead

to additional appraisal in the

southern channel and outer fan

system.

Source: Company reports, RBC Capital Markets estimates

Offshore Romania: Gas discoveries and oil exploration

Pelican XIII and Midia XV blocks: Sterling (65%, operator), Petro Ventures (20%*) and

Gas Plus (15%*)

Sterling’s operations in the Black Sea have been stalled since late 2008 as Romanian politics

delayed approval of a now abandoned farm out to Melrose Resources. The Melrose deal would

have halved Sterling’s stake in the 460Bcf Doina and Ana gas discoveries in exchange for $12

million cash and up to a $90 million carry through development activity. The proposed farm-out

deals with Petro Ventures and Gas Plus are also yet to be approved, although no termination date

exists for either agreement between the companies. We note that both deals pre-date Sterling’s

2007-08 drilling activity on the block.

Our ~$190 million risked valuation of the company’s Romanian gas discoveries is risked harder than

equivalent North Sea developments to reflect the significant uncertainty around development timing

and political risks. We do not expect development activity to occur until the outstanding farm-outs

are approved and, most likely, Sterling divests part of its stake to a new participant. The price of

regulatory approval could be changes to the licence’s fiscal terms with Romania’s 16% corporate-tax

rate making the discoveries highly economic. Progress would materially enhance Sterling’s

investment case, thereby potentially adding a third development to the portfolio alongside

Breagh and Cladhan. The recovery in commodity prices since December 2008, when the

Melrose deal was agreed, should help Sterling secure a better deal now. We also believe that

Doina and Ana may be candidates for the company to operate its first development.

*Subject to regulatory approval.

Despite the uncertainty surrounding its gas discoveries on the Midia XV block, Sterling intends to

begin exploration drilling on the Pelican XIII block during 2011, where it is targeting a proven oil

trend to the east and west. A well on the Eugenia prospect is the most likely target for a well in

H2/11. Fully unrisked, we estimate that success with the primary Eocene target reservoirs could

add C
.95/share to our NAV. Further exploration potential exists in deeper Cretaceous reservoirs

and shallower Oligocene reservoirs, which are higher risk but with the potential to increase the

scale of the opportunity significantly. In our view, further exploration activity on the Midia XV

block targeting the proven gas trend is unlikely to occur before 2012.

Exhibit 64: Sterling’s Black Sea acreage, offshore Romania

Source: Company reports, RBC Capital Markets estimates

France: Paris Basin shale play and conventional gas exploration

Sterling is currently awaiting final approvals from the General Industry and Environment Council

on its application for 9.5 blocks in the Paris Basin comprising ~62,500 net acres that are believed

to contain significant unconventional oil potential within the Liassic shale, analogous to the U.S.

Bakken. The French government has recently announced a study to review the impacts and

standards related to unconventional drilling. A preliminary report is due in April with final results

in June 2011. Sterling’s acreage is adjacent to Toreador and Hess’s Chateau Thierry permit where

a first vertical exploration well is scheduled to spud in April. Three of Sterling’s blocks have been

applied for in partnership with Toreador and Hess. In 2010, Hess acquired half of Toreador’s

acreage in the basin in exchange for a $15 million upfront payment, a $120 million phased carry

through initial activity plus success fees. We include a $10-million valuation of Sterling’s net

acreage using a $155/acre metric, which is in line with the upfront fees and phase one carry being

paid to Toreador by Hess. Focused on exploiting the Paris Basin’s shale oil potential, Toreador’s

shares currently trade at $500-$550/acre.

In 2012, we expect Sterling to participate in the drilling of a conventional exploration well

onshore France on the 3.2Tcf Audignon prospect, although it is likely to farm down its ~33%

stake prior to drilling. Operator Edgon Resources may acquire more seismic in 2011 to establish

the optimal drill location.

Financials

With Breagh not due on stream until 2012, interest in Sterling’s financial numbers is focused on

the cash position and access to debt. Unlike its peers, Sterling reports in Canadian dollars,

something we suspect will change in the event of a U.K. listing. After two equity offerings in

2010, we expect Sterling will have ended the year with cash of C$133 million, in anticipation of a

step-up in capital expenditure during 2011 and 2012 to fund both phase one of the Breagh

development and appraisal drilling on Cladhan. A £100 million project finance debt facility should

become available for drawdown on FDP approval for Breagh, and we currently forecast that it will

be fully drawn by the end of 2012. On completion of the development, we expect Sterling to

refinance the debt into a borrowing-base facility.

In our view, investors should anticipate that further success at Cladhan or progress in

Romania will be followed by an equity fundraising. Although divestment activity would

mitigate the need for more equity to a degree, Sterling’s business strategy relies on access to

the capital markets. On the basis that additional equity is required due to expanding or

accelerating investment opportunities, we do not believe that investors should be concerned about

dilution at this time.

Exhibit 65: Sterling Resources Income Statement

Y/Ending 31 Dec (C$MM) 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010E 2010E 2011E 2012E

Brent 61.96 76.58 78.85 76.33 86.76 79.65 87.55 89.00

Oil Production (mbbl/d) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Gas Production (MMcf/d) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15.0

Total Production (mboe/d) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.5

Turnover ($/boe) n/a n/a n/a n/a n/a n/a n/a 43.50

Opex ($/boe) n/a n/a n/a n/a n/a n/a n/a (17.50)

Depreciation ($/boe) n/a n/a n/a n/a n/a n/a n/a (12.11)

Net income ($/boe) n/a n/a n/a n/a n/a n/a n/a (2.12)

Op. cash flow ($/boe) n/a n/a n/a n/a n/a n/a n/a 15.17

Gross Revenue 0.0 0.0 0.0 0.0 0.0 0.0 0.0 39.8

Cost of Sales 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (27.0)

Other (1.3) (0.3) (0.5) (0.6) (0.5) (2.0) (2.1) (2.1)

Administration (3.8) (1.5) (0.8) (1.0) (1.0) (4.3) (4.0) (4.5)

Exceptional Items 72.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Exploration Expense 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Operating Profit 67.1 (1.9) (1.3) (1.6) (1.5) (6.3) (6.1) 6.2

Net Financials (0.7) 3.1 (0.5) (1.6) 0.2 1.3 (1.2) (8.2)

Profit before Tax 66.4 1.2 (1.8) (3.2) (1.3) (5.0) (7.3) (1.9)

Tax 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Reported Net Income 66.4 1.2 (1.8) (3.2) (1.3) (5.0) (7.3) (1.9)

Exceptional Items (net) 72.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Adjusted Net Income (5.7) 1.2 (1.8) (3.2) (1.3) (5.0) (7.3) (1.9)

Average no shares (m) 131.1 131.0 133.5 146.7 160.5 142.9 184.6 184.6

EPS (C$) 0.51 0.01 (0.01) (0.02) (0.01) (0.04) (0.04) (0.01)

EPS (adjusted) (C$) (0.04) 0.01 (0.01) (0.02) (0.01) (0.04) (0.04) (0.01)

CFPS (C$) (0.03) (0.01) (0.00) 0.01 (0.00) (0.01) (0.03) 0.08

Dividend (C$) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Source: Company reports, RBC Capital Markets estimates