MANAGEMENT DISCUSSION AND ANALYSIS For Quarter Ended 31 December 2013

Transcription

1 MANAGEMENT DISCUSSION AND ANALYSIS For Quarter Ended 31 December 2013 Traded on the Australian Securities Exchange (ASX) under the symbol SXA and on the Toronto Venture Exchange (TSX.V) under the symbol SXE 1 STRATA-X ENERGY LIMITED ARBN

2 Contents Review of Operations / Outlook... 3 Description of Business... 5 Company Outlook... 7 Production Summary... 8 Maverick Oil Project... 9 Vail Oil Project Sleeping Giant Gas Project Canning Basin Laurel Shale Project Other Projects Financial Notes Definitions Corporate Directory

3 Review of Operations / Outlook The following discussion and analysis for Strata-X Energy Ltd, (hereinafter, Strata-X Energy, Company or Strata-X ) prepared as of 11 February 2014, should be read together with the interim condensed consolidated financial statements for the quarter and mid-year ended 31 December 2013 and related notes appended thereto, which are prepared in accordance with International Financial Reporting Standards. All amounts are stated in United States dollars unless otherwise indicated. Statements in this report that are not historical facts are forward-looking statements involving known and unknown risks and uncertainties, which could cause actual results to vary considerably from these statements. Readers are cautioned not to put undue reliance on forward-looking statements. Additional information related to the Company is available for view on SEDAR for the TSX.V at and for the ASX at Strata-X Highlights during Period (to reporting date) Strata-X operates and has the majority interests in four key projects in the USA and Australia. Following its Australian Securities Exchange (ASX) equity listing and financing in 2013, the Company is working towards de-risking its three key USA projects with the objective of generating early cash flows and achieving final investment decisions (FID) to develop the projects. Corporate Strata-X held its Annual General and Special Meeting ( AGM ) on 22 October 2013 at the Company s headquarters in Denver, Colorado, USA. All resolutions set out in the Notice of Meeting and accompanying Management Information Circular were approved and can be found in the Company s press release dated 22 October On 23 October 2013, Strata-X granted options to certain of its directors to purchase up to 800,000 common shares of the Company at an exercise price of CAD$0.41 per share. The options have a five-year term and expire on 22 October The Company raised AUD$6.03 million in a private placement that closed 29 October The private placement (Placement) consisted of 15,872,962 Chess Depository Interests (CDI) (representing 15,872,962 common shares of the Company) at a price of AUD$0.38 per CDI. The placement represented approximately 13% of the Company s issued capital (pre-placement). Proceeds from the Placement will be used primarily for appraisal programs on Strata-X s three key USA projects and for general corporate purposes. 3

4 Vail Oil Project Illinois Basin, USA 100% of 49,200 net acres Maverick Oil Project Eagle Ford Shale, Texas, USA 10,945 net acres The Company contracted Halliburton to conduct a completion stimulation of the Burkett 5-34HOR well after examining data gathered from the core extracted from the targeted Devonian Lingle formation along with other data collected during the drilling of the well. On 21 November 2013, the Company attempted a completion stimulation of the Burkett 5-34HOR well. After pumping approximately 25,000 pounds of sand in the first of seven stages of the stimulation, the completion screened out. As a consequence, the well bore needed to be cleaned out before the multi-stage stimulation could continue and Halliburton was released from the well location. On 5 January 2014, following several technical and weather related delays, the wellbore of the Burkett 5-34HOR was cleaned out and was prepared for another completion stimulation. Strata-X is the in process of finalizing a new completion stimulation design for the well and is coordinating the scheduling of this operation with Halliburton. The Company is in the process of permitting two new horizontal well locations on the Vail Oil Project. On 27 December 2013, Strata-X spudded the vertical Cinco Saus Creek #1 well. It is designed as a test of the Eagle Ford shale and Buda formations in the Maverick Basin. In drilling the Cinco Saus Creek #1, the Company cored a 600 foot interval of the Eagle Ford shale and Buda formations. The well was drilled to a total depth of 4,220 feet and subsequently logged and 4½ inch casing was set to the total depth. The 600 foot core of the Eagle Ford shale and Buda formations has been sent to a laboratory for analysis. The pending laboratory analysis along with well logs and data acquired in drilling the well will be used to finalize the design of the completion stimulation. Strata-X anticipates the completion stimulation of the Cinco Saus Creek #1 well will occur near the end of the first quarter of Sleeping Giant Gas Project Williston Basin, North Dakota, USA 100% of 145,000 net acres The Company has been issued well permits by the North Dakota Industrial Commission for four well locations covering the Sleeping Giant Gas Project. Strata-X is continuing its land leasing effort to firm-up areas around prospective drilling locations. 4

5 Description of Business Strata-X Energy Ltd, together with its wholly-owned subsidiaries, Strata-X, Inc. and Strata-X Australia Pty Ltd, is an independent oil and gas exploration company listed on the TSX Venture Exchange (TSX-V) under the symbol SXE and the Australian Securities Exchange (ASX) under the symbol SXA. Incorporated in British Columbia, Canada, Strata-X Energy has a diversified portfolio of high growth potential petroleum projects. The Company s strategy is to discover and develop oil and gas prospects with relatively low entry costs, a meaningful acreage position and a large working interest so as to provide shareholders the opportunity for substantial growth. The Company was incorporated as Ozcapital Ventures Inc. on 18 June 2007 in the Province of Alberta, Canada under the Alberta Business Corporations Act. Ozcapital Ventures Inc. was a Capital Pool Corporation and its primary business purpose was to identify and evaluate businesses suitable for a qualifying transaction. It completed a qualifying transaction effective 22 September 2011 pursuant to which it changed its name to Strata- X Ltd. and its trading symbol to SXE on the TSX-V. As part of its qualifying transaction, the Company acquired Strata-X, Inc., a company incorporated in Colorado, USA with activities primarily focused on the acquisition, exploration and development of oil and gas properties in the USA and other regions as noted herein. In May 2012, the Company formed a wholly-owned Australian subsidiary, Strata-X Australia Pty. Ltd., for the purpose of acquiring, exploring and developing oil and gas properties in Australia. On 18 September 2012, the shareholders of the Company approved a special resolution authorizing a continuation of the Company out of the province of Alberta and into the province of British Columbia and a change in the name of the Company from Strata-X Ltd. to On 11 October 2012, the Company was formally continued into the province of British Columbia, Canada. On 11 March 2013, the Company began trading on the Australian Securities Exchange (ASX) through the issuance of 42,303,293 CHESS depository interests (CDIs) at the listing price of AUD$0.30 generating gross proceeds of AUD$12,690,987. Bizzell Capital Partners Limited were the Corporate Advisors to the Offering and BBY Limited and Helmsec Global Capital Ltd. were the joint lead managers for the Offering. Following the initial listing of Strata-X s securities on the Australian Securities Exchange on 11 March 2013, Strata- X ceased to be a venture issuer as defined in Canada s National Instrument Continuous Disclosure Obligations and became a non-venture issuer. One of the results of this change in status was an acceleration in the Company s financial reporting timelines. Strata-X is now required to file its annual audited financial statements within 90 days of each fiscal year end and its interim financial statements within 45 days of each quarter end. The Company is also required to file an annual information form at the time it files its annual audited financial statements. 5

6 Organizational Chart The corporate structure of the Company is as follows: TSX Venture and ASX Listed Strata-X, Inc. Maverick Oil Project Vail Oil Project Sleeping Giant Gas Project Vallecitos Project Eagle Field Project Strata-X Australia Pty Ltd. Canning Project 6

7 Company Outlook During the past few years, the Company has been building a portfolio of projects that offer relatively low geologic risk and the potential for significant oil and gas reserves. The Company has also been targeting large working interests and operatorship, thereby giving it full control of its key projects with a view to maximizing shareholder value. This approach has allowed Strata-X to dictate which targets it will pursue, using the technology it considers best suited for the purpose, and according to a schedule that reflects the availability of critical resources on economic terms. Strata-X has four key projects that align with this strategy: the Sleeping Giant Gas, Canning Basin, Vail Oil and Maverick Oil Projects. The Company has a 100% interest in the Sleeping Giant Gas Project, the Canning Basin Project, and the Vail Oil Project and a 75%-100% interest in the Maverick Oil Project. All of these projects are operated by the Company. Management considers the Company s asset base to be unique for an entity of its size. Comparable entities typically have only one or two projects that are scalable and possess significant reserve potential. Strata-X, by comparison, has access to four projects of this magnitude. The Company s primary focus is to conduct the appraisal work necessary to demonstrate the production potential and commercial viability of its three key USA projects: Sleeping Giant, Vail and Maverick. Strata-X commenced its appraisal drilling campaign on the Vail Oil Project early in the third quarter of 2013 and the Maverick Oil Project in late fourth quarter Its Burkett 5-34HOR well on the Vail Oil Project is currently awaiting re-completion following a screen out event during its first completion stimulation attempt. Meanwhile, the completion stimulation on the Cinco Saus Creek #1 well in the Maverick Oil Project is anticipated to occur in late first quarter The Company expects to conduct exploratory activities on the Sleeping Giant Gas Project in In the Canning Basin Project, the Company will be seeking to finalize access agreements with Native Title claimants as a requirement of having the tenement granted. The timing of the exploration of this project is subject to Native Title completion. Strata-X is also reviewing its other projects, in which it has 22.5% to 37.5% working interests, in order to determine going-forward activities that meet the Company s growth plans. No decision has been made on drilling or continuing any of these projects at this time. Any drilling on these projects will depend on the Company s ability to target oil reserves that, in the Company s assessment, offer a combination of acceptable risk and sufficiently high potential reward to more than offset such risk. The Company also continues to seek out and review other growth opportunities. In summary, Strata-X is preparing for, or has already commenced, the drilling and testing of its key USA projects as follows: Drilling Completed Awaiting Completion of Multi-stage Stimulation Q Vail Oil Project, one horizontal multi-stage stimulated well. Q Maverick Oil Project, one vertical stimulated well. Anticipated Exploration Activities in 2014 Q Vail Oil Project, second horizontal well Sleeping Giant Gas Project, up to four vertical wells. 7

8 Production Summary For the six months ended 31 December 2013, oil production to the Company s net revenue interest was up 275% to 555 barrels (Bbls) compared to 148 Bbls for the six months ending 31 December The increase in oil production is attributed to higher production from the Vallecitos Project after the project s salt-water disposal well was brought back online following a workover and the purchase of existing production for the Vail Oil Project. For the six months ended 31 December 2013, the Company produced no natural gas. For the same period ending 31 December 2012, the Company produced 5,430 Mcf. The decline in natural gas production is attributed to the cessation of production volumes from the Flour Bluff project following Strata-X s surrender of its interests in the project effective 20 November Total barrel oil equivalents (BOE) to the Company s net revenue interest of 555 BOE produced for the six months ended 31 December 2013 were down 47% compared to 1,053 BOE produced for the six months ended 31 December Total revenue for the six months ended 31 December 2013 was $46,202 compared to $63,886 for the six months ended 31 December 2012, a decrease of 28%. This decrease was due primarily to no production contribution from the Flour Bluff project after Strata-X surrendered its interests in the project effective 20 November

9 Exploration and Evaluation Projects (E&E) Maverick Oil Project Eagle Ford Shale 10,945 net Acres Maverick Acreage To date, the Company has acquired 10,945 mostly contiguous acres net for the Maverick Oil Project, which is situated in the Eagle Ford shale fairway in southern Texas, USA. The Company s exploration efforts target light shale oil and associated gas and condensate. Within the Maverick Oil Project area is the El Indio-1H well drilled by a previous operator. The operator reported flows on this well from the Eagle Ford shale of 175 barrels of oil and 1.8 Mmcf (million cubic feet) of gas per day over a 12-day test period despite having conducted a less than adequate completion stimulation and testing program. In the Company s assessment, the nature of the hydrocarbons and reservoirs within the Eagle Ford shale formation in and around the Maverick Basin requires a different approach to drilling and completion methods than those currently being utilized in deeper portions of the Eagle Ford shale trend. To this end, Strata-X carried out specialized seismic analysis to select drilling locations, then vertically drilled and continuously cored prospective sections of the Eagle Ford shale and Buda formations. The next stage involves a detailed core analysis to select intervals for a multi-stage vertical stimulation completion. In June 2013, the Company secured the services of specialized analysis company, Total Depth Pty Ltd, to conduct proprietary seismic processing and interpretation analysis of the current 3-D seismic data on the Maverick Oil Project. This analysis was designed to assist the Company in geological mapping for the proposed vertical well drilling campaign. It is anticipated that the work completed by Total Depth Pty Ltd will allow the Company to more accurately predict the most appropriate zones for fracture stimulation within the approximate 600 feet of interpreted vertical oil column exhibited in previous wells within the Project area. To date, Total Depth Pty Ltd has supplied the Company with multiple prospective drilling locations based on its seismic interpretation. One of the locations supplied by Total Depth Pty Ltd is known as the Cinco Saus Creek #1. This well was drilled as a vertical test of the targeted Eagle Ford shale and Buda formations in the Maverick Basin. In drilling the Cinco Saus Creek #1, Strata-X recovered 100% of a 600 foot continuous core of the target interval and the well was drilled to a total depth of 4,220 feet. Upon reaching total depth, the well was logged and 4 ½ inch casing was set and cemented into place. Unison Drilling, Inc s. rig #11, which was utilized to drill the well, was released on 13 January

10 The 600 foot core of the Eagle Ford shale and Buda formations has been sent to a laboratory for analysis. The pending laboratory analysis, along with well logs and data acquired in drilling the well, will be used to finalize the design of the completion stimulation. Strata-X anticipates the vertical completion stimulation of the Cinco Saus Creek #1 well will occur near the end of the first quarter of Strata-X is the operator of the Cinco Saus Creek #1 well and retains an approximate 96.9% working interest in it. Strata-X s joint venture partner on the Maverick Oil Project elected not to participate on the Cinco Saus Creek #1 well. This election granted Strata-X an additional 3.1% working interest in the well, which interest is subject to a 300% payback penalty. Unison Drilling, Inc s. rig #11 drilling the Strata-X Cinco Saus Creek #1 Well. 10

11 Exploration and Evaluation Projects (E&E) Vail Oil Project Illinois Basin 100% of 49,200 Acres Based on existing well data, the Company has mapped a potential oil accumulation that could be as large as 520 square miles. The potential oil accumulation is within an unconventional stratigraphic dolomitic trap immediately below the oil mature primary shale source rock in the Illinois Basin. The Illinois Basin has historical production of 4.3 billion barrels of oil and existing infrastructure including oil and gas pipelines with capacity. To date, the Company has secured 100% of the lease rights to approximately 49,200 net acres over the mapped potential oil accumulation. The secured lease rights contain favorable terms and provide an average net revenue interest to the Company of 86.25%. The Company is continuing its efforts to secure additional strategically located leases and maintains an ongoing presence in the area. In June 2013, Strata-X acquired all necessary regulatory approvals to drill the Burkett 5-34HOR well, which was designed as a horizontal test of the targeted Devonian Lingle formation and on 10 July 2013, spudded the Burkett 5-34HOR well. It was designed to be drilled in two stages. First, the Company drilled a vertical hole to the top of the target formation and then cored approximately 60 feet of the formation. Next, the Company plugged back the vertical section of the well and drilled the horizontal leg. The vertical portion of the well reached a total depth of 4,730 feet. Oil and gas shows were encountered in the targeted Devonian Lingle formation and a drill stem test of the target recovered gas and oil cut mud. In drilling this portion of the well, the Company successfully cored 59 feet of the target formation and logged the vertical section of the well. Initial core analysis indicated two oil zones in the dolomite reservoir with a total net thickness of 10.5 feet over a 30 foot interval. After plugging back the vertical portion of the well, the Company commenced drilling the lateral portion. On 4 September 2013, upon reaching a total depth of 6,762 feet in the Burkett 5-34HOR well, the Company successfully set a liner and 7-stage sliding sleeve completion system through the 1,824 foot laterally drilled oil zone. Oil and gas shows were encountered while drilling the lateral portion of the well, and live oil was visible in the drilling mud. Shortly thereafter, Strata- X released Les Wilson, Inc s drilling rig #25 that was used to drill the Burkett 5-34HOR well. 11

12 HORIZONTAL BURKETT 5-34 HIGHLIGHTS Drilled and cased to the landing point Drilled ~ 1,800 feet of lateral in the targeted Lingle Formation Oil and gas shows observed with oil seen in the mud Production liner set with mechanical packers and sliding sleeve assembly. In October 2013, Strata-X contracted Halliburton to conduct the completion stimulation of the Burkett 5-34HOR well. Equipment was mobilized to the well site and, on 20 November 2013, the Company began the completion stimulation process on the well. After pumping approximately 25,000 pounds of sand in the first of seven stages of stimulation on the well, the completion screened out. As a consequence, the well bore needed to be cleaned out before the multistage stimulation could continue and Halliburton was released from the well location. In early 2014, the wellbore of the Burkett 5-34HOR was cleaned out and prepared for another completion stimulation attempt. The Company is working with Halliburton to schedule the next completion stimulation on the Burkett 5-34HOR well. In September 2013, Strata-X began the permitting process for two new horizontal well locations on its Vail Oil Project. The Company anticipates all required permits will be issued in due course. 12

13 Exploration and Evaluation Projects (E&E) Sleeping Giant Gas Project Williston Basin, North Dakota 100% of 145,000 net Acres The Company has acquired the rights to approximately 145,000 net acres in the Williston Basin in North Dakota having multiple prospective structures for natural gas. The targets are shallow gas accumulations in reservoirs at depths generally under 2,000 feet (610 metres). Currently, the Company is acquiring additional strategic leases prior to beginning evaluation drilling of up to four pilot wells on this project. The Company has been issued well permits by the North Dakota Industrial Commission for four well locations covering the Sleeping Giant Project. Under the terms of a Purchase and Sale Agreement with the original owners of the Sleeping Giant Project, the Company has until September 2014 to drill a minimum of 4 exploratory appraisal wells or the rights to the project will revert to the original owners. Exploration and Evaluation Projects (E&E) Canning Basin Laurel Shale Project Laurel Shale, Western Australia 100% of 1.4 million acres In March 2012, the Company was conditionally awarded 100% of a permit to explore approximately 1.4 million acres in the Canning Basin in northwest Australia. The Permit, L 11-3, in the rapidly emerging Laurel shale petroleum province, was won in a competitive acreage release round based on a work program. Granting of this permit is conditional upon complying with the Native Title Act of The Company is continuing the negotiation process towards securing access agreements with the Native Title claimants. The Company believes the L 11-3 onshore Canning Basin block is prospective for both conventional and unconventional petroleum resources within the Carboniferous Laurel Formation where recent discoveries have been made by Buru Energy along similar geologic trends in the basin. 13

14 Exploration and Evaluation Projects (E&E) Other Projects Vallecitos Oil Project San Benito County, California, USA The Company has a 22.5% working interest and a 19.5% net revenue interest in approximately 21,000 gross acres of leasehold in the Vallecitos area in California, including a 120 acre F&I Pool. Multiple leads and prospects have been interpreted using a 24 square mile 3D seismic survey acquired in The 3D seismic was recently reprocessed incorporating VSP data obtained during the drilling of a prior well on the project to help high-grade the leads and prospects that the Company is considering developing. In December 2012, the partners of the Vallecitos project were the high bidders for multiple Bureau of Land Management (BLM) leases covering 10,373 gross acres, with 2,334 acres net to the Company s interest. The leases were subsequently named in a lawsuit between an environmental activist group and the BLM delaying the vesting of the leases to the partners until the case is resolved. Neither the partners of the project nor the Company have any liability associated with the third party suit. In September 2013, the Company was notified by the operator of the Vallecitos Oil Project, Patriot Resources Inc., of its intent to recomplete two shutin wells on the project. The net cost to the Company of the proposed workovers is approximately $50,000. The operator anticipates increasing production in the field by Bbl/day gross after completion. Strata-X consented to participate in the proposed workovers and the Company anticipates results from the projects will be available at the end of March Margarita Oil Project AMI Southern Texas, USA The Company has a 37.5% equity interest in this Area of Mutual Interest (AMI) in southern Texas. Land has been acquired over a low risk oil prospect that was mapped using 3D seismic data. 14

15 Eagle Project San Benito County, California, USA The Company now has a 23.59% working interest in 5,160 gross acres of land in the Eagle Project in the San Joaquin Valley area in California and is the operator of the project. One previously drilled well in the Eagle Project area encountered good oil shows in the Eocene Age Gatchell sands that tested up to 192 barrels of light oil and 427 Mcf per day. Although light oil was recovered, the well was considered to be non-commercial at the time due primarily to formation damage by heavy drilling mud and cement squeezing. Subsequent activity on the prospect was met with mechanical issues despite continuing indications of oil shows in the primary target. At this time, the Company anticipates drilling on the project in calendar

16 Financial Notes USA Tenement / Lease Explanation The ownership of in-situ hydrocarbons in the United States differs from almost all other countries in that the owners are typically private individuals or private entities. The vast majority of the exploration tenements or leases held by the Company in the USA are with private parties. Currently, the Company holds rights to over 1,800 leases in the USA. These leases differ from each other in numerous ways including the size of each parcel of land, financial terms, royalties and contract duration. Differences in expiration dates allow for a gradual release or roll-over or, if renewed, continuation, of exploration rights. The tenement or leasehold position for each project, including its relative location, reflects the position of the Company as of the date of this report. If the disposal of a Company position was material or represented a change from a prior reporting period then this aggregate change would be reflected in the total position listed by the Company. Generally, petroleum rights in the USA are purchased from the owner as leases on negotiated terms which may include cash payments up front, royalties and rental arrangements. Competition for leases can become very heated, particularly in highly sought-after productive areas. Strata-X s goal has been and continues to be to minimize lease purchase costs while maximizing shareholder growth potential, by striving to be the first or early mover on areas or projects. To accomplish this, the Company carries out its own in-house geological mapping and analysis to high-grade areas or projects for acquisition. Further, the Company will not be making public detailed geological maps or detailed lease maps as this may attract competitors, especially much larger and better financed rivals, potentially increasing the Company s lease purchase costs and diminishing its ability to consolidate significant land positions on attractive terms. Common Stock and Convertible Debenture Offerings On 13 July 2012, the Company completed a second tranche of a private placement that closed on 29 June The second tranche included the issuance of 300,000 units at a price of CDN$0.25 per unit with each unit comprising one common share and one-half of a common share purchase warrant. Each whole warrant allows the holder to purchase one common share of the Company at a price of CDN$0.60 until 13 July The placement also included the issuance of CDN$200,000 in convertible debentures bearing interest at 5% per annum, compounded semi-annually, with a maturity date of 13 July The debentures converted into units on 21 December 2012 on the basis of one unit for each CDN$0.25 of the principal amount of debenture plus accrued interest. Each unit issued upon conversion consisted of one common share and one-half of a common share purchase warrant. Each whole warrant allows the holder to purchase one common share of the Company at a price of CDN$0.50 until 13 July On 11 September 2012, 483,349 common shares were issued at a deemed value of CDN$0.206 per share for total consideration of US$99,443 per the terms of an extension agreement executed by the Company to acquire options to develop certain mineral interests located in North Dakota for the Sleeping Giant Project. On 26 September 2012, 3,000,000 common shares were issued at a deemed value of CDN $0.25 per share for total consideration of US$762,517 per the terms of a purchase and sale agreement executed by the Company to acquire an interest and option to acquire further interests for exploration and development in acreage located in Texas Q1 Management Discussion and Analysis

17 On 30 October 2012, the Company completed a non-brokered private placement of CDN$4,181,000 (US$4,182,672) in convertible debentures bearing interest at 5% per annum, compounded semi-annually, with a maturity date of 30 October The debentures converted into units on 13 February 2013 on the basis of one unit for each CDN $0.25 of the principal amount of debenture. Each unit issued upon conversion of the principal amount of the debentures comprises one common share and one-half of a common share purchase warrant. Each whole warrant allows the holder to purchase one common share of the Company at a price of CDN$0.50 until 30 October Accrued interest held by related parties converted into 29,040 common shares and other accrued interest related to the debentures was converted into units on the basis of one unit for each CDN$0.375 of accrued interest, resulting in 132,848 units issued with each unit comprising one share and one-half of a common share purchase warrant. Each such whole warrant also allows the holder to purchase one common share of the Company at a price of CDN $0.50 until 30 October On 31 October 2012, the Company completed a second tranche of a private placement of convertible debentures that closed on 30 October The second tranche consisted of 1,255,600 units at a price of CDN$0.25 per unit representing total proceeds of CDN$313,900 (US$313,800). Each unit comprises one common share and one-half of a common share purchase warrant. Each whole warrant is exercisable into one common share of the Company at a price of CDN$0.50 until 31 October The gross proceeds of CDN$244,111 and $CDN69,789 were allocated to the common shares and warrants, respectively. Warrants were valued using the Black Scholes model. The warrants were classified as a derivative financial liability since the exercise price of the warrants is fixed in Canadian dollars and the functional currency is US dollars. On 21 December 2012, as noted above, the convertible debentures dated 29 June 2012 and 13 July 2012 were converted into units per the provisions of each when the Company lodged a prospectus with the Australian Securities and Investment Commission (ASIC) for the eventual co-listing of its shares on the Australian Securities Exchange (ASX). The balances related to the convertible debentures and the related derivative financial liabilities of CDN$3,087,487 and CDN$438,509, respectively, were reclassified as share capital and derivative warrants and a gain on conversion of CDN$297,576 was recorded in profit and loss. The total balance of converted debentures resulted in 12,920,000 units being issued. Accrued interest related to the debentures was converted into units per the provisions of each convertible debenture on 12 February 2013 upon closing of the initial public offering related to the listing of shares of the Company on the ASX. The total accrued interest balance of US$77,175 was reclassified as share capital and derivative warrants. Each unit issued comprises one common share and one-half of a common share purchase warrant, with one warrant exercisable at CDN $0.50 per share to acquire one common share of the Company until 29 June 2014 for the debentures issued 29 June 2012 and 13 July 2014 for the debentures issued 13 July 2012, at which times the warrants, respectively, expire. The values of CDN$2,779,707 and CDN$450,293 were allocated to the common shares and warrants, respectively, for the converted debentures, and the values of CDN$66,326 and CDN$11,105 were allocated to share capital and warrants, respectively, for the converted accrued interest. Warrants attributed to the convertible debentures and the accrued interest were valued using the Black Scholes option pricing model. The warrants have been classified as a derivative liability since the exercise price is fixed in Canadian dollars and the functional currency is US dollars. On 13 February 2013, as noted above, the convertible debentures dated 30 October 2012 and the related accrued interest were converted into units and shares of common stock. The total balance of debentures of CDN$4,181,000 (US$4,182,672) converted per the provisions of the debentures resulting in 16,724,000 units being issued. The accrued interest payable on the debentures converted per the terms noted above. The values of CDN$3,273,278 (US$3,267,350) and CDN$907,722 (US$906,078) were allocated to share capital and warrants, respectively, for the converted debentures, and the values of CDN$45,382 and CDN$15,326 were allocated to share capital and warrants, respectively, for the accrued interest converted into units. Warrants attributed to the convertible debentures and the accrued interest thereon that converted into units were valued using the Black Scholes option pricing model. The warrants have been classified as a derivative liability since the exercise price is fixed in Canadian dollars and the functional currency is US dollars. On 20 February 2013, the Company completed its initial public offering of 42,303,293 CHESS depository interests (CD) at a price of AUD$0.30 per CDI with each CDI equivalent to and exchangeable for one common share of stock of the Company. The CDI trade on the ASX. The offering resulted in proceeds of AUD$12,690,987. Share 17

18 issuance costs of AUD$1,955,565 have been netted against the proceeds from the issuance. The existing shares of the Company continue to be traded on the TSX Venture Exchange. During the year ended 30 June 2013, a total of 3,120,000 incentive stock options were issued with a total fair value of US$554,111 as determined using the Black-Scholes option pricing model. During the six months ended 31 December 2013, a total of 850,000 incentive stock options were issued with a total fair value of US$147,106. As of 31 December 2013, a total of 139,785,415 common shares were issued and outstanding along with 20,648,654 common share purchase warrants and 5,570,000 incentive stock options.. 18

19 Summary of Annual Results Historical annual information is as follows: 30 June 2013 (IFRS) 30 June 2012 (IFRS) 30 June 2011 (IFRS) Revenue $128,818 $120,124 $255,668 Expenses $(2,432,363) $(4,591,258) $(900,131) Other income and net $996,795 $6,635 $(84,379) finance expense Impairment of oil and $(40,564) $(1,811,750) $(119,290) gas properties Gain (loss) on disposal $- $- $- of property and equipment Net Loss $(1,347,314) $(6,276,249) $(848,132) Basic & diluted net loss $0.02 $0.17 $0.04 per share Assets $21,714,394 $7,565,748 $3,537,346 Liabilities $2,399,531 $5,637,477 $1,414,354 19

20 Summary of Quarterly Results 31 Dec Sept June March Dec Sept June March 2012 Revenue $31,459 $14,744 $30,781 $34,151 $51,638 $12,248 $8,212 $30,676 Expenses $(559,909) $(392,430) $(892,901) $(249,823) $(802,950) $(641,820) $(305,862) $(502,241) Other Income $- $- $10,296 $6,500 $- $15,000 $22,531 $- Impairment of oil and gas properties Gain (loss) on valuation of derivative liabilities Gain on conversion of convertible debentures $- $- $(307) $(31,634) $- $(8,623) $(1,811,750) $ - $492,896 $(458,570) $432,301 $(21,361) $(51,147) $171,057 $ - $ - $- $- $- $417,779 $297,576 $- $- $- Dry Hole Costs $- $- $(7,171) $(38,904) $(80,000) $ - $(411,553) $ - Net Loss $(34,961) $(835,596) $(427,001) $116,708 $(584,883) $(452,138) $(2,498,422) $(471,565) Other Comprehensiv e Income (Loss): Currency translation adjustment Comprehensiv e Income (Loss) Basic & diluted net income (loss) per share $(73,323) $(11,939) $(1,410,252) $479,803 $(3,642) $28,102 $(72) $26,619 $(108,284) $(847,535) $(1,837,253) $596,511 $(588,525) $(424,036) $(2,498,494) $(444,946) $(0.00) $(0.01) $(0.01) $0.01 $(0.02) $(0.01) $(0.06) $(0.01) 20

21 Results of Operations As noted above, total revenue for the quarter ended 31 December 2013 was $31,459 compared to $51,638 for the comparable quarter ended 31 December Production and exploration expenses for the quarter ended 31 December 2013 decreased 45.9% totaling $51,515 compared to $95,268 for the comparable quarter last year. General and administrative expenses for the quarter ended 31 December 2013 decreased by $218,506 to $488,623 compared to $707,129 for the same quarter last year. The decrease is primarily due to costs attributable to the Australian public offering that were incurred in the quarter ended 31 December 2012 and a reduction in contracted professional and administrative services in the quarter ended 31 December The monetary assets and liabilities of and Strata-X Australia Pty. Ltd. are denominated in Canadian and Australian dollars, respectively. The translation of these assets and liabilities at the reporting date into United States dollars, which is the functional currency of the Company, resulted in a currency translation loss of $73,323 for the quarter ended 31 December This loss is included as a component of other comprehensive income for the quarter. The currency translation rate from Canadian and Australian dollars to United States dollars was taken from the close of currency trading on 31 December Liquidity and Capital Resources The interim condensed consolidated financial statements have been prepared on a going concern basis in accordance with International Financial Reporting Standards (IFRS), which assumes that the Company will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities and commitments in the normal course of business. The Company incurred a net loss of $34,961 for the quarter ended 31 December The ability of the Company to continue as a going concern and to realize the carrying value of its assets and discharge its liabilities when due is dependent on the success of the Company s exploration and development of its oil and gas properties, as well as the ability of the Company to obtain additional financing or equity to fund the exploration and development of those oil and gas properties. As discussed in the notes to the consolidated financial statements, in March 2013 the Company completed its initial public offering of CDI on the Australian Securities Exchange, raising net proceeds of approximately $11,302,000 and completed a private placement in November 2013 resulting in proceeds of approximately $5,401,000. As a result of these offerings, the Company had a working capital surplus of approximately $7,571,400 as at 31 December The interim condensed consolidated financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate. In particular, adjustments would be required to the carrying value of the assets and liabilities, the reported profits and losses, and the balance sheet classifications used. The Company is authorized to issue an unlimited number of common shares and an unlimited number of preferred shares. As at 31 December 2013, a total of 139,785,415 common shares and CDIs were issued and outstanding with a resulting share capital of $31,990,607. 5,530,000 common shares are in escrow pursuant to TSX- V Escrow agreements dated 11 July 2008 and 9 September The Company has established a Stock Option Plan (Plan) for the benefit of directors, officers, employees and consultants of the Company. Pursuant to the Plan, 10% of the issued and outstanding common shares have been reserved for options to be granted to the Company s directors, officers, employees and consultants. The vesting period and the exercise price of the options shall be determined by the Board of Directors. The period during which an option is exercisable shall be determined by the Board of Directors at the time of grant, but subject to the rules of the stock exchange or other applicable regulatory body. 21

22 Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements. Transactions with Related Parties The Company formerly utilized the services of an outside firm in which the President and Chief Executive Officer (CEO) of the Company is a majority shareholder. The Company terminated its contractual services with the firm in May 2013 when the CEO became a salaried employee of the Company. During the six months ended 31 December 2013, the Company paid $45,000 to the outside firm for reimbursement of prior costs incurred by the firm. During the six months ended 31 December 2012, the Company incurred $286,996 in costs with the outside firm for consulting services. These costs are allocated to general and administrative expenses and exploration and evaluation assets. At 31 December 2013, the Company owed the firm $0 ( $269,831), which is included in amounts due to related parties. The Company utilizes the services of an outside firm in which the former Chief Financial Officer (CFO) of the Company is a majority shareholder. The former CFO resigned his position with the Company effective 21 May 2013 and remains a member of the board of directors of the Company. The contract with this firm for ongoing accounting, reporting and tax compliance services calls for monthly retainer payments of approximately $6,100. During the six months ended 31 December 2013, the Company incurred $39,200 ( $48,000) in costs with the outside firm for accounting services. These costs are allocated to general and administrative expenses and exploration and evaluation assets. The Company utilizes outside consultants to perform corporate secretarial services in Canada and Australia. The current contract with the Australian consultant calls for monthly payments of AUD $2,500. During the six months ended 31 December 2013, the Company incurred CDN $15,805 and AUD $12,901 in costs with the outside consultants for Canada and Australia, respectively, for corporate services, all of which are included in general and administrative expenses. Total compensation paid to key management personnel, including the related parties identified above, together with incentive stock compensation related to the granting and vesting of stock options, was approximately $344,400 ( $500,000) for the six months ended 31 December Summary of Significant Accounting Policies The condensed interim consolidated financial statements have been prepared following the same accounting policies and methods of computation as the Company s 30 June 2013 annual financial statements. The Company continues to assess the impact of adopting the pronouncements of the IASB as described in the Company s 30 June 2013 annual financial statements. Financial Instruments The Company's financial instruments consist of cash and cash equivalents, investments, accounts receivable, accounts payable and accrued liabilities, derivative financial liabilities and amounts due to related parties. Financial risk management The Company's activities are exposed to a variety of financial risks: interest rate risk, market risk, credit risk, liquidity risk and foreign exchange risk. The Company's overall risk management program focuses on the unpredictability of financial and economic markets and seeks to minimize potential adverse effects on the Company's financial results. Risk management is carried out by financial management in conjunction with overall corporate governance. 22

23 Market risk The Company's exposure to financial market risk is the risk that the fair value of future cash flows from a financial instrument will fluctuate because of changes in market prices. Market risk comprises interest rate risk and foreign exchange risk. Interest rate risk Interest rate risk is the risk that the fair value of future cash flows from a financial instrument will fluctuate due to changes in market interest rates. The Company is exposed to interest rate risk arising from fluctuations in interest rates received on its cash. Management does not believe this risk is significant. Foreign exchange risk Foreign exchange risk is the risk that the fair value of future cash flows from a financial instrument will fluctuate as a result of a change in foreign exchange rates. The Company cannot give any assurance that any future movements in the exchange rates of the U.S. dollar against the Canadian dollar and the Australian dollar will not adversely affect the financial statements. The Company does not use derivative instruments to reduce its exposure to foreign currency risk. Credit risk The Company's exposure to credit risk relates to cash and accounts receivable and arises from the possibility that the third party does not satisfy its contractual obligations. The Company minimizes its exposure to credit risk by keeping the majority of its cash with major chartered banks. The Company performs continuous evaluation of its accounts receivable and records an allowance for doubtful accounts when determined necessary. The Company's maximum exposure to credit risk is equal to the carrying value of the financial assets. It is management's opinion that the level of credit risk is low due to the credit-worthiness of the counterparties involved and that its counterparties currently have the financial capacity to settle outstanding obligations in the normal course of business. All of the Company s oil and natural gas production is sold to major crude purchasers. The Company has assessed the risk of non-collection from the buyers of its sold commodities to be low due to the buyers financial condition. Liquidity risk The Company's exposure to liquidity risk is dependent on the collection of accounts receivable, purchasing commitments and obligations, and raising of funds to meet commitments and sustain operations. The Company controls liquidity risk by the management of working capital and cash flows. As at 31 December 2013, the Company had a positive working capital of approximately $7,571,400. The Company s contractual obligations as of 31 December 2013 consisted of accounts payable and accrued liabilities of $842,039 and deposits of $23,726. Loss per Share Basic loss per share is computed by dividing the loss by the weighted average shares outstanding during the period. Diluted loss per share is computed in similar fashion to the basic loss per share, except that the weighted average shares outstanding are increased to include additional shares from the assumed exercise of stock options, convertible debentures and warrants, if dilutive, using the treasury stock method. Under the treasury stock method, the number of additional shares is calculated by assuming that the outstanding stock options, convertible debentures and warrants are exercised and that the proceeds from such exercises are used to acquire shares of common stock at the average market price during the period. 23

24 Income Taxes Income tax expense comprises current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized directly in equity or other comprehensive income. Current income tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred income tax is recognized using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and carry-forward of unused tax losses and unused tax credits to the extent that it is probable that taxable profits will be available against which those deductible temporary differences and carry-forward of unused tax losses and unused tax credits can be utilized. Deferred income tax is not recognized on the initial recognition of assets or liabilities in a transaction that is not a business combination. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred income tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. Critical Accounting Estimates The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from these estimates. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Accounting estimates will, by definition, seldom equal the actual results. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future years affected. The following paragraphs discuss management s most critical estimates and assumptions in determining the value of assets, liabilities and equity. Recorded amounts for impairment, depletion and depreciation of oil and gas properties and equipment are based on estimates. These estimates include proved and probable reserves, production rates, future oil and natural gas prices, future development costs, remaining lives and periods of future benefits of the related assets and other relevant assumptions. The Company s reserve estimates are evaluated annually pursuant to the parameters and guidelines stipulated under National Instrument Standards of Disclosure for Oil and Gas Activities. The value of exploration and evaluation assets is dependent upon the discovery of economically recoverable reserves which, in turn, is dependent on future oil and natural gas prices, future capital expenditures and environmental and regulatory restrictions. The value of decommissioning liabilities depends on estimates of current risk-free interest rates, future restoration and reclamation expenditures and the timing of those expenditures. Actual results could differ from those estimates. 24

25 The determination of Cash Generating Units ( CGUs ) requires judgement in defining the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash flows from other assets or groups of assets. CGUs are determined primarily by similar geological structure, shared infrastructure and geographical proximity. The amounts recorded relating to the fair value of stock options are based on estimates of the future volatility of the Company s share price, expected lives of the options, expected dividends and other relevant assumptions. The amounts recorded relating to the fair value of derivative liabilities associated with warrants issued is based on estimates of the future volatility of the Company s share price, estimated market price of the Company s shares at the grant date and subsequent measurement dates, the remaining expected lives of the derivative instruments, expected dividends and other relevant assumptions. The amounts recorded for deferred income taxes are based on the probability of the Company utilizing certain tax pools and assets which, in turn, is dependent on estimates of proved and probable reserves, production rates, future oil and natural gas prices, tax rates and interpretations by taxation authorities. Control Certification Disclosure Controls and Procedures Disclosure controls and procedures have been designed to ensure information required to be disclosed by the Company is accumulated and communicated to management to allow for timely decisions regarding required disclosures. The Company carried out an evaluation of the effectiveness of the Company s disclosure controls and procedures as of 30 June The evaluation was carried out under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer. The Company s Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation of the effectiveness of the Company s disclosure controls and procedures as at year-end, that the Company s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company is (1) recorded, processed, summarized and reported within the time periods specified by Canadian securities law and (ii) accumulated and communicated to the Company s Management, including its Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosure. It should be noted that while the Company s Chief Executive Officer and the Chief Financial Officer believe that the Company s disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect that the disclosure controls and procedures will necessarily prevent all error and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. Internal Controls over Financial Reporting The Company s Chief Executive Officer and the Chief Financial Officer have designed, or caused to be designed under their supervision, a system of internal controls over financial reporting to provide reasonable assurances regarding the reliability of the Company s financial reporting and the preparation of the financial statements for external purposes in accordance with IFRS. As at the financial year-end of the Company, such officers have evaluated, or caused to be evaluated under their supervision, the Company s internal controls over financial reporting and have determined that such internal control system is effective for the foregoing purposes. The Company is required to disclose herein any change in its internal controls over financial reporting during the period that has materially affected, or is reasonably likely to materially affect, the Company s internal controls over financial reporting. No change in the Company s internal controls over financial reporting was identified during such period that has materially affected, or is reasonably likely to materially affect, the Company s internal controls over financial reporting. It should be noted that a control system, including the Company s disclosure and internal control procedures, no matter how well conceived can provide only reasonable, but not absolute, assurance that the objectives of the control system will be met and it should not be expected that the disclosure and internal controls and procedures 25

26 will prevent all errors and fraud. Given the size of the finance and management team there are limits to the Company s ability to implement a robust and segregated control environment. The Chief Executive Officer and the Chief Financial Officer conclude that the control environment is operating effectively given the size and complexity of the Company. Recent Accounting Pronouncements IFRS 9 Financial Instruments ( IFRS 9 ) was issued by the IASB in October 2010 and will replace IAS 39 Financial Instruments: Recognition and Measurement ( IAS 39 ). IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after 1 January IFRS 10 Consolidated Financial Statements ( IFRS 10 ) was issued by the IASB in May IFRS 10 establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. IFRS 10 replaces the consolidated requirements in SIC-12 Consolidated Special Purpose Entities and IAS 27 Consolidated and Separate Financial Statements and is effective for annual periods beginning on or after 1 January The Company adopted IFRS 10 effective 1 July The implementation of this standard resulted in no significant impact to the Company. IFRS 11 Joint Arrangements ( IFRS 11 ) was issued by the IASB in May IFRS 11 provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form. The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in jointly controlled entities. IFRS 11 supersedes IAS 31 Interest in Joint Ventures and SIC- 13 Jointly Controlled Entities Non-Monetary Contributions by Venturers, and is effective for annual periods beginning on or after 1 January The Company adopted IFRS 10 effective 1 July The implementation of this standard resulted in no significant impact to the Company. IFRS 12 Disclosure of Interests in Other Entities ( IFRS 12 ) was issued by the IASB in May IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. IFRS 12 is effective for annual periods beginning on or after 1 January The Company adopted IFRS 10 effective 1 July The implementation of this standard resulted in no significant impact to the Company. IFRS 13 Fair Value Measurement ( IFRS 13 ) was issued by the IASB in May IFRS 13 establishes new guidance on fair value measurement and disclosure requirements for IFRS and US generally accepted accounting principles ( GAAP ). The guidance, set out in IFRS 13 and an update to Topic 820 in the FASB s Accounting Standards Codification (formerly referred to as SFAS 157), completes a major project of the board s joint work to improve IFRS and US GAAP and to bring about their convergence. The standard is effective for annual periods beginning on or after 1 January Earlier application is permitted. IAS 27 Consolidated and Separate Financial Statements, which is effective for the Company beginning on 1 January 2013, with earlier adoption permitted, has been revised and is limited to the accounting for investments in subsidiaries, joint ventures and associates in separate financial statements. The Company is currently evaluating the impact of the above standards on its financial performance and financial statement disclosures but expects that such impact will not be material. 26

27 Other Company Information Additional disclosure information for Strata-X Energy Limited can be located in its latest Annual Management Discussion and Analysis and Audited Financials for the year ended 30 June Both documents are available on SEDAR and the Company s website. Tim Hoops President and Managing Director David Hettich Chief Financial Officer 27

28 Definitions In this document, the abbreviations set forth below have the following meanings: Oil and Natural Gas Bbl Bbls Mbbls MMbbls Mcf MMcf Bcf TCF barrel barrels thousand barrels million barrels thousand standard cubic feet million standard cubic feet billion cubic feet trillion cubic feet Other Hydrocarbon Index- measure of the hydrogen richness of the source rock, and when the kerogen type is known it can be used to estimate the thermal maturity of the rock. OOIP Original Oil in Place. Permeability the ability or measurement of a rock s ability to transmit fluids. Porosity percentage of pore volume or void space or that volume within rock that can contain fluids. Reservoir Rock refers to a subsurface pool of hydrocarbons contained in porous or fractured rock formations. Rock Eval is used to identify the type and maturity of organic matter and to detect petroleum potential in sediments. Source Rock - refers to carbon bearing rocks from which hydrocarbons have been generated or are capable of being generated. Tmax -highest temperature incurred by a Source Rock, generally higher temperatures equates to larger hydrocarbon generation. Total Organic Carbon (TOC) amount of carbon in a geological formation, mainly Source Rocks. 28

29 Corporate Directory Directors Mr. Ron Prefontaine Chairman of the Board of Directors Mr. Tim Hoops President and Managing Director Mr. Tim Bradley Non Executive Director Mr. Bohdan (Don) Romaniuk Non Executive Director Mr. Don Schurman Non Executive Director Company Management Mr. David Hettich Chief Financial Officer Mr. Larry Kellison V.P. of Operations Company Secretaries Shaun Maskerine Canada Duncan Cornish Australia Head Office Strata-X Energy Ltd 1624 Market St. #300A Denver, CO USA Tel: Canadian Office c/o Armstrong Simpson Hornby Street Vancouver, B.C. Canada V6Z 1S4 Solicitors Canada Armstrong Simpson Suite Hornby Street Vancouver, British Columbia Canada, V6Z 1S4 Australia HopgoodGanim Level 8, Waterfront Place 1 Eagle Street Brisbane QLD 4000, Australia Share Registries Canada Olympia Trust Company Suite 2200, 125 9th Ave SE Calgary, Alberta, Canada T2G 0P6 Tel: Australia Link Market Services Ltd Level 15 ANZ Building 324 Queen Street Brisbane QLD 4000, Australia Tel: Auditor Collins Barrow Edmonton LLP Commerce Place, Suite Street NW Edmonton, Alberta, Canada T5J 4G8 Stock Exchanges - Toronto Venture Exchange (TSX-V) - Australian Securities Exchange (ASX) Australian Office c/o Corporate Administration Services Level 5, 10 Market Street Brisbane QLD 4000, Australia 29