NOTICE OF ANNUAL MEETING AND MANAGEMENT INFORMATION CIRCULAR

Transcription

1 NOTICE OF ANNUAL MEETING AND MANAGEMENT INFORMATION CIRCULAR For the Annual Meeting of Shareholders to be held on Thursday, May 7, 2015

2 BONAVISTA ENERGY CORPORATION NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON THURSDAY, MAY 7, 2015 The annual meeting of the shareholders of Bonavista Energy Corporation will be held in the Alberta Room at the Fairmont Palliser th Avenue S.W., Calgary, Alberta on Thursday, May 7, 2015 at 3:00 p.m. (MDT) to: 1. receive and consider our consolidated financial statements for the year ended December 31, 2014, together with the report of the auditors; 2. elect nine directors of Bonavista Energy Corporation; 3. appoint the auditors and authorize the directors to fix their remuneration as such; and 4. transact such other business as may properly be brought before the meeting or any adjournment thereof. The specific details of the matters proposed to be put before the meeting are set forth in the information circular proxy statement accompanying this notice. Registered shareholders who are unable to attend the meeting in person are requested to complete, date and sign the enclosed form of proxy and return it to Valiant Trust Company, Attention: Proxy Department, Suite 310, 606 4th Street S.W., Calgary, Alberta T2P 1T1, or deliver it by fax to (403) at least 24 hours, excluding Saturdays, Sundays and holidays, before the meeting or any adjournment thereof. Registered shareholders may also vote via the internet at Votes by internet must be received by 3 p.m. (MDT) on May 6, 2015 or at least 24 hours prior to the time of any adjournment of the meeting. See the information circular proxy statement for further instructions on internet voting. If a shareholder receives more than one proxy form because such shareholder owns our common shares and/or exchangeable shares registered in different names or addresses, each proxy form should be completed and returned. Only shareholders of record at the close of business on March 24, 2015 will be entitled to vote at the meeting, unless that shareholder has transferred any common shares or exchangeable shares subsequent to that date and the transferee shareholder, not later than 10 days before the meeting, establishes ownership of such shares and demands that the transferee's name be included on the list of shareholders entitled to vote at the meeting. DATED at Calgary, Alberta this 10th day of March, By order of the Board of Directors of Bonavista Energy Corporation (signed) Grant A. Zawalsky Corporate Secretary

3 Solicitation of Proxies BONAVISTA ENERGY CORPORATION Information Circular Proxy Statement for the Annual Meeting to be held on Thursday, May 7, 2015 PROXIES This information circular proxy statement is furnished in connection with the solicitation of proxies for use at our annual meeting to be held on Thursday, May 7, 2015 at 3:00 p.m. (MDT), in the Alberta Room at the Fairmont Palliser, th Avenue S.W., Calgary, Alberta and at any adjournment thereof. Forms of proxy must be addressed to and reach Valiant Trust Company, at Suite 310, 606 4th Street S.W. Calgary, Alberta, T2P 1T1 Attention: Proxy Department, or by fax to (403) , not less than 24 hours before the time for holding the meeting or any adjournment thereof. Registered shareholders may also use the internet at to vote their shares. Shareholders will be prompted to enter the control number which is located on the form of proxy. Votes by internet must be received by 3 p.m. (MDT) on May 6, 2015 or at least 24 hours prior to the time of any adjournment of the meeting. The website may also be used to appoint a proxy holder to attend and vote at the meeting on the shareholder's behalf and to convey a shareholder's voting instructions. Only shareholders of record at the close of business on March 24, 2015 will be entitled to vote at the meeting, unless that shareholder has transferred any common shares or exchangeable shares subsequent to that date and the transferee shareholder, not later than 10 days before the meeting, establishes ownership of such shares and demands that the transferee's name be included on the list of shareholders entitled to vote at the meeting. The instrument appointing a proxy must be in writing and must be executed by you or your attorney authorized in writing or, if you are a corporation, under your corporate seal or by a duly authorized officer or attorney of the corporation. The persons named in the enclosed form of proxy are our officers. As a shareholder, you have the right to appoint a person or company, who need not be a shareholder, to represent you at the meeting. To exercise this right you should insert the name of the desired representative in the blank space provided on the form of proxy and strike out the other names or submit another appropriate proxy. Advice to Beneficial Holders of Common Shares and Exchangeable Shares The information set forth in this section is of significant importance to you if you do not hold your common shares or exchangeable shares in your own name. Only proxies deposited by shareholders whose names appear on our records as the registered holders of such shares can be recognized and acted upon at the meeting. If shares are listed in your account statement provided by your broker, then in almost all cases those shares will not be registered in your name on our records. Such shares will likely be registered under the name of your broker or an agent of that broker. In Canada, the vast majority of shares are registered under the name of CDS & Co., the registration name for CDS Clearing and Depository Services Inc., which acts as nominees for many Canadian brokerage firms. Shares held by your broker or their nominee can only be voted upon your instructions. Without specific instructions, your broker or their nominee is prohibited from voting your shares. We do not know for whose benefit the shares registered in the name of CDS & Co. are held. The majority of shares held in the United States are registered in the name of Cede & Co., the nominee for the Depository Trust Company, which is the United States equivalent of CDS Clearing and Depository Services Inc.

4 2 Applicable regulatory policy requires your broker to seek voting instructions from you in advance of the meeting. Every broker has its own mailing procedures and provides its own return instructions, which you should carefully follow in order to ensure that your shares are voted at the meeting. Often, the form of proxy supplied by your broker is identical to the form of proxy provided to registered shareholders. However, its purpose is limited to instructing the registered shareholder how to vote on your behalf. The majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Investor Communications, Canada, which mails a scannable voting instruction form in lieu of the form of proxy. You are asked to complete and return the voting instruction form to them by mail or facsimile. Alternately, you can call their tollfree telephone number or access the internet to vote your shares. They then tabulate the results of all instructions received and provide appropriate instructions respecting the voting of such shares to be represented at the meeting. If you receive a voting instruction form from Broadridge Investor Communications, Canada it cannot be used as a proxy to vote shares directly at the meeting as the proxy must be returned to them well in advance of the meeting in order to have the shares voted. Although you may not be recognized directly at the meeting for the purposes of voting shares registered in the name of your broker, you may attend the meeting as a proxyholder for the registered holder and vote your shares in that capacity. If you wish to attend the meeting and vote your own shares, you must do so as proxyholder for the registered holder. To do this, you should enter your own name in the blank space on the form of proxy provided to you and return the document to your broker or the agent of such broker in accordance with the instructions provided by such broker well in advance of the meeting. Revocability of Proxy You may revoke your proxy at any time prior to a vote. If you or the person you give your proxy to attend personally at the meeting, you or such person may revoke the proxy and vote in person. In addition to revocation in any other manner permitted by law, a proxy may be revoked by an instrument in writing executed by you or your attorney authorized in writing or, if you are a corporation, under your corporate seal or by a duly authorized officer or attorney of the corporation. To be effective, the instrument in writing must be deposited either at our head office at any time up to and including the last business day before the day of the meeting, or any adjournment thereof, at which the proxy is to be used, or with the chairman of the meeting on the day of the meeting, or any adjournment thereof. Persons Making the Solicitation This solicitation is made on behalf of our management. We will bear the costs incurred in the preparation and mailing of the form of proxy, notice of annual meeting and this information circular proxy statement. In addition to mailing forms of proxy, proxies may be solicited by personal interviews, or by other means of communication, by our directors, officers and employees who will not be remunerated therefor. Exercise of Discretion by Proxy The shares represented by proxy in favour of management nominees will be voted on any matter at the meeting. Where you specify a choice with respect to any matter to be acted upon, the shares will be voted or withheld from voting on any matter in accordance with the specification so made. If you do not provide instructions, your shares will be voted in favour of the matters to be acted upon as set out herein. The persons appointed under the form of proxy which we have furnished are conferred with discretionary authority with respect to amendments or variations of those matters specified in the form of proxy and notice of annual meeting and with respect to any other matters which may properly be brought before the meeting or any adjournment thereof. At the time of printing this information circular proxy statement, we know of no such amendment, variation or other matter.

5 3 NoticeandAccess We have elected to use the "noticeandaccess" provisions under National Instrument Communications with Beneficial Owners of Securities of a Reporting Issuer (the NoticeandAccess Provisions) for the meeting to those of you who do not hold your common shares or exchangeable shares in your own name. The NoticeandAccess Provisions are a set of rules developed by the Canadian Securities Administrators that reduce the volume of materials that we must physically mail to you by allowing us to post our information circular in respect of our meeting and related materials online. We have also elected to use procedures known as 'stratification' in relation to our use of the Noticeand Access Provisions. Stratification occurs when we, while using the NoticeandAccess Provisions, provide a paper copy of our notice of meeting and information circular and a paper copy of our financial statements and related management's discussion and analysis to some of our shareholders. In relation to the meeting, our registered shareholders will receive a paper copy of each of the notice of the meeting, this information circularproxy statement dated March 10, 2015, our consolidated financial statements and related management's discussion and analysis and a form of proxy whereas our shareholders who do not hold their common shares or exchangeable shares in their own name will receive only a Noticeand Access Notification and a voting instruction form. Furthermore, a paper copy of our financial statements and related management's discussion in respect of our most recent financial year will be mailed to those shareholders who do not hold their common shares or exchangeable shares in their own name but who have previously requested to receive paper copies of our financial information. VOTING SHARES AND PRINCIPAL HOLDERS THEREOF We are authorized to issue an unlimited number of common shares without nominal or par value, an unlimited number of exchangeable shares without nominal or par value and 10,000,000 preferred shares, issuable in series. As at March 10, 2015, there were 205,110,237 common shares, 8,756,114 exchangeable shares and no preferred shares issued and outstanding. As a holder of common shares you are entitled to one vote for each common share owned. As a holder of exchangeable shares you are entitled to that number of votes at the meeting equal to the number of exchangeable shares you own multiplied by the exchange ratio in effect at March 16, 2015 (rounded to the nearest whole number). As at March 16, 2015, the exchange ratio for the exchangeable shares will be As a result, holders of exchangeable shares will be entitled to approximately 11,460,440 votes at the meeting. To the knowledge of our directors and officers, as at March 10, 2015 no person or company beneficially owned or controlled, directly or indirectly, common shares or exchangeable shares entitled to more than 10% of the votes which may be cast at the meeting except as noted below: Approximate Number of Common Shares Held Approximate Percentage of Outstanding Common Share Equivalents Name Invesco Canada Ltd. (1) 31,975, % Franklin Resources, Inc. (1) 24,756, % Note: (1) Based upon information provided to us by Franklin Resources, Inc. and Invesco Canada Ltd. As at March 10, 2015, our directors and executive officers, as a group, beneficially owned, directly or indirectly, or exercised control over 14,156,862 common shares or approximately 7% of the issued and outstanding common shares and 6,932,895 exchangeable shares or approximately 79% of the issued and outstanding exchangeable shares or approximately 11% of the votes to be cast at the meeting.

6 4 MATTERS TO BE ACTED UPON AT THE MEETING Election of Directors Our board of directors has fixed the number of directors at nine members. Management is soliciting proxies, in the accompanying form of proxy, for an ordinary resolution in favour of the election as directors of the nine nominees set forth below: Keith A. MacPhail Ian S. Brown Michael M. Kanovsky Sue Lee Margaret A. McKenzie Robert G. Phillips Ronald J. Poelzer Jason E. Skehar Christopher P. Slubicki In the event that a vacancy among such nominees occurs because of death or for any reason prior to the meeting, the proxy shall not be voted with respect to such vacancy. Voting for Election of Directors Our board has adopted an individual director voting policy which allows you to vote with respect to each individual director. The individual voting results will be published by news release and on after the meeting. The individual voting results will be reviewed by the Governance and Nominating Committee and will be considered as part of the committee's overall review and assessment of the nominees recommended to shareholders at the next annual meeting of shareholders. Our board of directors has also adopted a majority voting policy, which provides that if a nominee for election as a director receives a greater number of votes "withheld" than votes "for" at a meeting of our shareholders, such nominee shall offer his or her resignation as a director to the board of directors promptly following the meeting of shareholders at which the director was elected. Upon receiving such offer of resignation, our Governance and Nominating Committee will consider such offer and make a recommendation to our board of directors whether to accept it or not. We will announce the decision of our board of directors in a news release with respect to whether they have decided to accept such director's resignation, which decision will be made within 90 days following the meeting of shareholders. The director who tendered such resignation will not be part of any deliberations of any board committee (including the Governance and Nominating Committee if such director is a member of such committee) or the board of directors pertaining to the resignation offer. The majority voting policy only applies in circumstances involving an uncontested election of directors. For the purpose of the policy, an uncontested election of directors means that the number of nominees for election as a director is the same as the number of directors to be elected to the board of directors and that no proxy material is circulated in support of one or more nominees who are not named as nominees in the applicable management information circular. Biographies of our Directors The following information relating to the nominees as directors is based partly on our records and partly on information received by us from the nominees and sets forth the names, ages and cities of residence of the proposed nominees, their committee memberships, the date on which each became a director of us (or a predecessor of us), the present occupations and brief biographies of such persons and the number of our common shares and exchangeable shares owned, controlled or directed by each and the number of incentive rights held as at March 10, 2015 in respect of 2015 and as of March 18, 2014 in respect of 2014:

7 5 Nominee for Election as Director Age Director Since Securities Owned, Controlled or Directed (1) Incentive Rights (2) Keith A. MacPhail Calgary, Alberta 58 November ,232,891 / 371,545 8,667,972 / 1,072, , ,254 Executive Chairman of the Board Member of: Executive Committee (Chair) Reserves Committee Mr. MacPhail has 34 years of experience in the oil and gas industry and is currently our Executive Chairman. Mr. MacPhail was President and CEO of the company from 1997 to 2008 and Chairman and CEO from 2008 to Prior to joining Bonavista Petroleum Ltd. in 1997, Mr. MacPhail held progressively more responsible positions with Canadian Natural Resources Limited with his final position being Executive Vice President and COO. Prior thereto, he held the position of Production Manager with Poco Petroleums Ltd. Mr. MacPhail holds a Bachelor of Science (Honours) degree in Petroleum Engineering from the Montana College of Mineral Science and is a member of the Association of Professional Engineers, Geologists & Geophysicists of Alberta. Mr. MacPhail is Chairman of the Board of NuVista Energy Ltd. and serves on the board of directors of Canadian Natural Resources Limited and Modern Resources Inc. and is on the Board of Governors of SAIT Polytechnic. Securities Owned, Controlled or Directed (1) Incentive Rights (2) Nominee for Election as Director Director Age Since Ian S. Brown Calgary, Alberta Member of: Audit Committee (Chair) Governance and Nominating Committee 57 May ,881 / 26,191 / 10,000 15,000 Mr. Brown has been an independent businessman and a corporate director since January Prior thereto, Mr. Brown was a Senior Managing Director of Raymond James Ltd. from 1995 to From 1986 to 1995, Mr. Brown was the Executive Vice President of The Alberta Stock Exchange. Mr. Brown presently sits on several public and private boards, including: Cathedral Energy Services Ltd. and Lightstream Resources Ltd. Mr. Brown also was a board member of the TSX Group from 2001 to 2006; a board member of Market Regulation Services Inc. from 2001 to 2005; and a board member and Vice Chairman of the Canadian Venture Exchange from 1999 to Mr. Brown obtained his Chartered Accountant designation in 1983 and also holds a Bachelor of Arts (Economics) and a Bachelor of Commerce degree.

8 6 Nominee for Election as Director Age Director Since Securities Owned, Controlled or Directed (1) Incentive Rights (2) Michael M. Kanovsky Calgary, Alberta 66 February ,080,677 / 1,889,613 1,054,009 / 1,889,613 10,000 15,000 Lead Director Member of: Audit Committee Executive Committee Governance and Nominating Committee (Chair) Reserves Committee In 1978, Mr. Kanovsky cofounded Canadian Northstar Corporation and its successor, Northstar Energy Corporation, where he was primarily responsible for strategic development, finance and acquisitions until its acquisition by Devon Energy Corporation. Mr. Kanovsky continues today as a director of Devon Energy Corporation. Mr. Kanovsky has also held positions such as Chairman of Taro Industries Limited, CEO of Arrowstar Drilling and ViceChairman of Precision Drilling Inc. In 1997, Mr. Kanovsky was instrumental in the reorganization of Bonavista Petroleum Ltd. and continues as an active director. In addition to Devon Energy Corporation, he is also a director of TransAlta Corporation, retiring April 2015, and Pure Technologies Ltd. Mr. Kanovsky holds a Bachelor of Applied Science (Honours) degree in Mechanical Engineering from Queen's University and a Masters of Business Administration from the Ivey School of Business and is a Professional Engineer. Nominee for Election as Director Age Director Since Securities Owned, Controlled or Directed (1) Incentive Rights (2) Sue Lee Calgary, Alberta 63 November ,237 / 10,944 / 10,000 15,000 Member of: Compensation Committee (Chair) Governance and Nominating Committee Ms. Lee has more than 33 years of business experience. Prior to joining the board at Bonavista she was the lead executive for Suncor Energy Inc.'s Human Resources and Communications functions for 16 years. Ms. Lee's broad business experience and expertise encompasses employee and government relations, executive compensation, executive succession planning and transition, organization design and effectiveness, leadership development, community investment, merger and acquisition strategy, preparedness and integration. Ms. Lee retired from her role as Senior Vice President, Human Resources and Communications at Suncor in March Ms. Lee holds a Bachelor of Arts degree from Rhodes University and a Post Graduate Honours Diploma, Personnel Management and Organizational Behaviour from the University of Witwatersrand in Johannesburg, South Africa and is currently a member of the Board of Directors of Empire Company Limited and Progressive Waste Solutions Ltd. and the Board of Governors of the University of Calgary.

9 7 Nominee for Election as Director Age Director Since Securities Owned, Controlled or Directed (1) Incentive Rights (2) Margaret A. McKenzie Calgary, Alberta Member of: Audit Committee Compensation Committee 53 May ,445 / 20,926 / 10,000 15,000 Ms. McKenzie was formerly the Chief Financial Officer of Range Royalty Management Limited (general partner of Range Royalty Limited Partnership, a private royalty partnership) and the Vice President, Finance and Chief Financial Officer of Profico Energy Management Ltd. (a private oil and gas company). Ms. McKenzie holds a Bachelor of Commerce (Distinction) degree from the University of Saskatchewan and has been a member of the Institute of Chartered Accountants of Alberta since She obtained her ICD.D designation from the Institute of Corporate Directors in Ms. McKenzie is a director of PrairieSky Royalty Ltd. and a director/officer of two other private oil and gas companies Spur Resources Ltd. and Endurance Energy Ltd. Effective March 15, 2015, Ms. McKenzie will become a director of Encana Corporation. Nominee for Election as Director Age Director Since Securities Owned, Controlled or Directed (1) Incentive Rights (2) Robert G. Phillips (3) Houston, Texas Member of: Governance and Nominating Committee 60 May 2014 / / 15,000 Mr. Phillips is the Chairman, President and Chief Executive Officer of Crestwood Midstream Partners LP, and Crestwood Equity Partners LP, based in Houston, and is a highly respected energy executive with over 30 years of experience, Mr. Phillips brings an intimate knowledge of the North American midstream market and strong public company executive expertise to Bonavista. Prior to Crestwood, Mr. Phillips held various management positions including President and Chief Executive Officer at Enterprise Products Partners L.P., El Paso Corporation, and Eastex Energy Inc. Mr. Phillips has a Bachelor of Business Administration from the University of Texas at Austin and a Juris Doctorate from the South Texas College of Law.

10 8 Nominee for Election as Director Age Director Since Securities Owned, Controlled or Directed (1) Incentive Rights (2) Ronald J. Poelzer Calgary, Alberta 53 November ,778,806 / 3,939,658 2,429,944 / 4,439, , ,754 Executive Vice Chairman of the Board Member of: Executive Committee Mr. Poelzer has more than 30 years of experience in the oil and gas industry and is currently our Executive Vice Chairman. Mr. Poelzer has been with Bonavista since 1997 and was Executive Vice President up to Prior to joining Bonavista Petroleum Ltd. in 1997, Mr. Poelzer was Vice President, Business Development with Poco Petroleums Ltd. Mr. Poelzer holds a Bachelor of Commerce (Distinction) degree from the University of Saskatchewan and is a member of the Institute of Chartered Accountants of Alberta. Mr. Poelzer is also a member of the board of directors of NuVista Energy Ltd., as well as various private companies, the Fraser Institute and a charitable foundation. Nominee for Election as Director Age Director Since Securities Owned, Controlled or Directed (1) Incentive Rights (2) Jason E. Skehar Chestermere, Alberta 42 May ,490 / ,836 / 272 1,046, ,463 Member of: Executive Committee Mr. Skehar has more than 20 years of experience in the oil and gas industry. Mr. Skehar joined the Bonavista team in November 1999 as Production Engineer, was promoted to Production Manager in January 2003, Vice President Production in January 2005, to President and Chief Operating Officer in November 2008 and then promoted to President and Chief Executive Officer in December He started his career in 1994 as Operations Engineer at Fletcher Challenge and prior to joining Bonavista, held both production and exploitation positions at Renaissance Energy Inc. and Probe Exploration Inc. Mr. Skehar graduated from the University of Saskatchewan in 1994 with Bachelor of Science (Distinction) degree in Mechanical Engineering and is a member of the Association of Professional Engineers, Geologists and Geophysicists of Alberta.

11 9 Nominee for Election as Director Age Director Since Securities Owned, Controlled or Directed (1) Incentive Rights (2) Christopher P. Slubicki Calgary, Alberta 56 May ,453 / 19,975 / 10,000 15,000 Member of: Reserves Committee (Chair) Compensation Committee Mr. Slubicki has more than 30 years of experience in the business sector. Mr. Slubicki is currently President and CEO of Modern Resources Inc., a Calgary based private oil and gas company. Prior to November 28, 2011, Mr. Slubicki was President and CEO of OPTI Canada Inc. Until June of 2006, Mr. Slubicki was the ViceChairman of Scotia Waterous, a Division of Scotia Capital. Prior thereto, Mr. Slubicki was a founding partner of Waterous & Co., a global independent energy investmentbanking firm. Prior to the founding of Waterous, Mr. Slubicki held various operations management and engineering positions with Placer CEGO Petroleum and Chevron Canada Resources Limited. Mr. Slubicki holds a Bachelor of Applied Science (Honours) degree in Mechanical Engineering from Queen's University and a Masters of Business Administration from the University of Calgary and is a member of the Association of Professional Engineers, Geologists & Geophysicists of Alberta. Notes: (1) (2) (3) (4) The "Securities Owned, Controlled or Directed" represents our common shares and exchangeable shares. The "Incentive Rights" include awards and/or options granted under our common share rights incentive plan, stock option plan, 2011 restricted share award plan and 2013 incentive award plan. See the footnotes to the table provided under the heading "Executive Compensation Securities Authorized for Issuance under Equity Compensation Plans" for more information. Mr. Phillips joined our board on May 2, The information as to voting securities beneficially owned, directly or indirectly, is based upon information furnished to us by the nominees. Additional Disclosure Relating to Proposed Directors Except as otherwise disclosed herein, none of our directors (nor any personal holding company of any of such persons) is, as of the date hereof, or was within ten years before the date hereof, a director, chief executive officer or chief financial officer of any company (including us), that was subject to a cease trade order (including a management cease trade order), an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, in each case that was in effect for a period of more than 30 consecutive days (collectively, referred to as an "Order") that was issued while the director was acting in the capacity as director, chief executive officer or chief financial officer; or was subject to an Order that was issued after the director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer. Except as otherwise disclosed herein, none of our directors (nor any personal holding company of any of such persons) is, as of the date hereof, or has been within the ten years before the date hereof, a director or executive officer of any company (including us) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets other than Mr. MacPhail who was formerly a director of The Resort at Copper Point Ltd. (a real estate development company) which was placed into receivership in 2009 and Mr. Slubicki who was formerly the President and Chief Executive Officer of OPTI Canada Inc. (a public oil and gas company) which commenced proceedings in the Court of Queen's Bench of Alberta under the Companies' Creditors

12 10 Arrangement Act to implement a restructuring in July of 2011 which was completed on November 28, None of our directors (nor any personal holding company of any of such persons) has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority or any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision. Appointment of Auditors Management is soliciting proxies, in the accompanying form of proxy, in favour of the appointment of the firm of KPMG LLP, Chartered Accountants, as our auditors, to hold office until the next annual meeting of our shareholders and to authorize the directors to fix their remuneration as such. Board of Directors The majority of our board of directors is independent. Our board of directors has determined that Mr. Brown, Mr. Kanovsky, Ms. Lee, Ms. McKenzie, Mr. Phillips and Mr. Slubicki are independent. Mr. MacPhail is not considered independent as he was our Chief Executive Officer until December 3, Mr. Poelzer is not considered independent as he was our Executive Vice President until May 3, Mr. Skehar is not considered independent as he is our President and Chief Executive Officer effective December 3, Our independent board members conduct "incamera" sessions as part of the agenda of each regularly scheduled meeting, generally immediately following regularly scheduled board of directors meetings chaired by our lead director Mr. Kanovsky and committee meetings. To provide leadership for the independent board members, the nonmanagement directors have determined that given the size of the board of directors they are capable of providing effective governance without an independent chair. We have also appointed Mr. Kanovsky as lead director. We have established a director disclosure policy, whereby the Nominating Committee shall be notified in advance of any change in directorships that involve any public company or private energy company. The following directors are presently directors of other issuers that are reporting issuers (or the equivalent): Director Keith A. MacPhail Ian S. Brown Michael M. Kanovsky Sue Lee Margaret A. McKenzie Robert G. Phillips Ronald J. Poelzer Jason E. Skehar Christopher P. Slubicki Names of Other Issuers Canadian Natural Resources Limited and NuVista Energy Ltd. Cathedral Energy Services Ltd. and Lightstream Resources Ltd. Devon Energy Corporation, Pure Technologies Ltd. and TransAlta Corporation Empire Company Limited and Progressive Waste Solutions Ltd. PrairieSky Royalty Ltd. Effective March 15 th, 2015 Encana Corporation Crestwood Midstream Partners LP and Crestwood Equity Partners LP NuVista Energy Ltd. None None

13 11 The following is a summary of attendance of our directors at meetings of the board of directors and its committees for 2014: Name Board of Directors Audit Committee Meetings Attended Compensation Committee Reserves Committee Governance and Nominating Committee Independent Directors (1) Keith A. MacPhail 9/9 1/1 Jason E. Skehar 9/9 Ian S. Brown 9/9 4/4 2/2 9/9 Michael M. Kanovsky 9/9 4/4 1/1 9/9 Harry L. Knutson (2) 0/1 0/1 0/1 Sue Lee 9/9 2/2 1/1 9/9 Margaret A. McKenzie 9/9 4/4 2/2 1/1 9/9 Robert G. Phillips (3) 8/8 7/7 Ronald J. Poelzer 9/9 2/2 Christopher P. Slubicki 8/9 2/2 1/1 8/9 Walter C. Yeates (4) 2/2 1/1 1/1 2/2 Notes: (1) (2) (3) (4) Our board of directors conducts nonmanagement director "incamera" sessions as part of the agenda at each regularly scheduled meeting. Mr. Knutson retired from our board of directors on February 27, Mr. Phillips joined our board on May 2, 2014 and became a member of the Governance and Nominating Committee on November 6, Mr. Yeates retired from our board of directors on May 1, Board of Directors Mandate Our board of directors, either directly or through its committees, is responsible for the supervision of management of our business and affairs with the objective of enhancing shareholder value. The board of directors' written mandate is as follows: Our board of directors is responsible for the stewardship of us and our subsidiaries, partnerships, trusts and other controlled entities. In discharging its responsibility, the board of directors will exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances and will act honestly and in good faith with a view to our best interests. In general terms, our board of directors will: in consultation with the chief executive officer, define our principal objectives; supervise our management of the business and affairs with the goal of the achieving principal objectives as defined by the board of directors; discharge the duties imposed on the board of directors by applicable laws; and for the purpose of carrying out the foregoing responsibilities, take all such actions deemed necessary or appropriate. A copy of the mandate of our board is contained in Schedule A. A copy is also available on our website at

14 12 Board Committees Our board has five committees; the Audit Committee, Compensation Committee, Executive Committee, Reserves Committee and Governance and Nominating Committee, all members of whom are independent directors, other than Mr. MacPhail who is a member of the Reserves Committee and the Executive Committee and Mr. Poelzer and Mr. Skehar who are members of the Executive Committee. Our board has accepted overall responsibility for health, safety and environment and no separate committees have been established to deal separately with these issues. The full text of the mandate of each committee is available on our website Audit Committee The members of the Audit Committee are: Mr. Brown (Chair), Mr. Kanovsky and Ms. McKenzie. The Audit Committee's mandate includes: reviewing our annual audited consolidated financial statements and the auditors' report thereon and related public disclosure documents prior to submission to the board for approval; reviewing the quarterly consolidated financial statements prior to submission to the board for approval; reviewing the scope of external and internal audits; reviewing and discussing accounting and reporting policies and changes in accounting principles; reviewing our internal control systems and procedures; and overseeing the work of the external auditors and meet with the external auditors independently of our management. Compensation Committee The members of the Compensation Committee are: Ms. Lee (Chair), Ms. McKenzie and Mr. Slubicki. The Compensation Committee's mandate includes: determining compensation and terms of employment for executives, including the granting of common shares and incentive programs; recommending a corporate performance score and the CEO's compensation to the board for approval; approving compensation and bonus plans; and assessing, at least annually, the compensation and terms of employment of the President and Chief Executive Officer.

15 13 Executive Committee The members of the Executive Committee are: Mr. MacPhail (Chair), Mr. Kanovsky, Mr. Poelzer, and Mr. Skehar. The Executive Committee's mandate includes: assisting, as required by the Chief Executive Officer, in managing our affairs on a more frequent basis than the quarterly board meetings; reviewing material items impacting our affairs and the energy industry, which may include relevant and material operational updates from time to time. The meeting topics concentrate on our strategic issues/decisions; monitoring and influencing strategic direction by bringing its expertise to bear in dealing with value enhancement opportunities and/or challenges of our business; and defining and resolving material business opportunities/issues as identified and required by our Chief Executive Officer or Chief Financial Officer. Governance and Nominating Committee The members of the Governance and Nominating Committee are: Mr. Kanovsky (Chair), Mr. Brown, Ms. Lee and Mr. Phillips. The Governance and Nominating Committee's mandate includes: assessing our corporate governance practices and making recommendations to the board with respect to corporate governance practices; establishing a nomination process and making recommendations to the board with respect to the nomination of directors; and assessing, at least annually, the effectiveness of the board and its committees. Reserves Committee The members of the Reserves Committee are Mr. Slubicki (Chair), Mr. Kanovsky and Mr. MacPhail. The Reserves Committee's mandate includes: reviewing management's recommendations for the appointment of the independent engineers; reviewing the terms of the independent engineers' engagement and the appropriateness and reasonableness of the proposed fees; reviewing the scope and methodology of the independent engineers' evaluation; reviewing any significant new discoveries, additions, revisions and acquisitions; reviewing assumptions and consistency with prior years; reviewing any problems experienced by the independent engineer in preparing the reserve report, including any restrictions imposed by management or significant issues on which there was a disagreement with management; and reviewing all public disclosure documents containing reserve information prior to its release, including, the annual report, the annual information form and management's discussion and analysis.

16 14 Director Orientation and Continuing Education Upon joining our board, a new director is provided with a directors' information binder which includes a copy of all board and committee mandates, corporate policies, relevant position descriptions, organizational structure, the structure of the board and its committees, bylaws as well as agendas and minutes for board and committee meetings for the preceding 12 months. In addition, new directors receive presentations with respect to our operations. As part of continuing education, our board receives management presentations with respect to the operations and risks of our business at least 4 times per year, with a more significant presentation provided in conjunction with the annual budgeting process and annual strategic planning meeting with all directors and officers in attendance. In addition, the individual directors identify their continuing education needs through a variety of means, including discussions with management and at board and committee meetings. Ethical Business Conduct Our board has adopted a Code of Business Conduct and Ethics, a copy of which is available to review at and on our website at Annually, each employee, officer and director confirms that he or she has read, understood and complied with the code. Any reports of variance from the code are reported to our board. Our board has also adopted a whistleblower policy which provides employees with the ability to report, on a confidential and anonymous basis, any violations within our organization including (but not limited to), falsification of financial records, unethical conduct, harassment or theft. Our board believes that providing a forum for employees, officers and directors to raise concerns about ethical conduct and treating all complaints with the appropriate level of seriousness foster a culture of ethical conduct. Board Nominations Our Governance and Nominating Committee has the responsibility for establishing a nomination process and making recommendations to our board with respect to nomination of directors. See "Board Committees Governance and Nominating Committee" for a summary of the committee's mandate. The Governance and Nominating Committee is composed entirely of independent directors. In accordance with its mandate, when considering nominations, the committee considers what competencies and skills the board, as a whole, should possess, the competencies and skills the board considers each existing director to possess and the competencies and skills each proposed nominee will bring to the board as well as whether the new nominee can devote sufficient time and resources to his or her duties as a member of the board. Directors are selected for their integrity and character, sound and independent judgement, breadth of experience, openmindedness, insight into and knowledge of our business and industry and overall business acumen. Each of our directors is expected to have these personal qualities and to apply sound and reasonable business judgment in aiding our board of directors to make the most thoughtful and informed decisions possible and to provide the best counsel to our senior management. The Governance and Nominating Committee acknowledges that our board's membership should represent a diversity of backgrounds, experience and skills and has established a "skills matrix" outlining the skills and experience which they believe are required by the members of our board of directors. This skills matrix is reviewed annually by the committee and updated as necessary.

17 15 The current skills matrix used by the Governance and Nominating Committee is as follows: Executive Leadership Enterprise Risk Assessment Value Creation Health, Safety & Environment Operations Reserves and Resource Evaluation Compensation and Human Resources Accounting & Finance Legal, Regulatory and Governmental Corporate Governance Experience leading a business organization or a significant division of an organization. Board or executive experience in evaluating and managing risks in the oil and natural gas business. Board or executive experience in evaluating, and executing on, value creation opportunities through acquisitions, divestiture, mergers or developmental opportunities. Board or management experience with environmental compliance and workplace health and safety in the oil and gas industry. Management experience with oil and natural gas operations. Board experience with, or management responsibility for, oil and natural gas reserve and resource evaluation and reporting. Management experience in human resources and executive compensation. Financial literacy in reading financial statements, financial accounting and operational accounting experience as well as corporate finance knowledge and experience usually from senior accounting and financial management, audit firm background or banking experience. Broad understanding of corporate, securities, land tenure and oil and natural gas law, regulatory regimes in Western Canada and governmental royalty, incentive and taxation policies usually through management experience or a legal background. Broad understanding of good corporate governance usually through experience as a board member or as a senior executive officer. In seeking nominees the Governance and Nominating Committee encourages input from all members of our board. The Governance and Nominating Committee also maintains an "evergreen list" of potential board nominees. In establishing the "evergreen list" the committee considers both the "skills matrix" described above and board diversity. The committee is authorized under its charter to retain experts to assist them in "board searches" for qualified candidates. Diversity and Inclusion Our board has adopted a policy regarding board and executive officer diversity. Our board believes that board nominations and executive officer appointments should be made on the basis of the skills, knowledge, experience and character of individual candidates and the requirements of the board or the particular position at the time. We are committed to a meritocracy and believe that considering the broadest group of individuals who have the skills, knowledge, experience and character required to provide the leadership needed to achieve our business objectives, without reference to their age, gender, race, ethnicity or religion, is in our best interests and all of our stakeholders. Our board of directors recognizes benefits of diversity but will not compromise the principles of a meritocracy by imposing quotas or targets. Of our nine directors, two women are currently serving on our board, which represents approximately 22% of our directors.

18 16 Our policies of diversity and inclusion extend to our entire organization, and we strive to maintain an environment where all employees, regardless of background, are extended the principle of meritocracy. Presently there are two women serving in an executive officer positions at Bonavista and four women in senior management positions, which represents approximately 22% of the number of our executive officers (excluding directors) and 16% of the number of our management positions. Director Term Limits Our board of directors does not believe that fixed term limits are in the best interests of our company. Our Corporate Governance and Nominating Committee considers both the term of service of individual directors, the average term of the board as a whole and turnover of directors over prior three years when proposing nominees. The committee also considers the benefits of regular renewal in the context of the needs of the board at the time and the benefits of the institutional knowledge of the board members. Board and Director Assessment We have a formal process of assessing the performance of our board as a whole, each committee of the board and each individual director under the direction of the Governance and Nominating Committee. Our process consists of: an annual written director peer review completed by all directors; a oneonone personal interview conducted by our Lead Director and Chairman of the Governance and Nominating Committee with each member of the board as well as senior management to assess board, committee and each individual directors' performance; an incamera discussion of the results of the process at the Governance and Nominating Committee; and feedback on the peer review to each member of the board. Through this process, our board satisfies itself that the board, its committees and individual directors are performing effectively. Each year, the committee conducts an assessment of the skills represented by our directors individually and as a group in order to assess whether there are any gaps that should be filled with the addition of a new board member(s). The most recent board effectiveness survey was conducted in April of 2014 and our board of directors has determined that the required skills are well represented by the current slate of director nominees for election at the meeting.

19 17 The following table outlines the skills of our directors based on information provided by such individuals: Name Executive Leadership Enterprise Risk Assessment Value Creation Health, Safety & Environment Operations Reserves and Resource Evaluation Compensation and Human Resources Accounting & Finance Legal, Regulatory and Governmental Corporate Governance Keith A. MacPhail Jason E. Skehar Ian S. Brown Michael M. Kanovsky Sue Lee Margaret A. McKenzie Robert G. Phillips Ronald J. Poelzer Christopher P. Slubicki Position Descriptions Our board has developed position descriptions for each of the Executive Chairman, the Chief Executive Officer, the Lead Director and the Chairman of each of the board committees. Succession Planning Our board has developed a formal succession plan process for each of the executive officers, including the Chief Executive Officer. Our process includes: the presentation of formal written succession plans to the Compensation Committee and board of directors; the succession plans include details around each possible successor's competencies and areas requiring development, as well as a timeline and development plan; these plans are reviewed by the board annually with the Chief Executive Officer; and the board reviews the Chief Executive Officer's plan in an incamera meeting of the independent directors. Our board receives regular updates on the status of the succession plans and the professional development of individuals within our organization.

20 18 Director Compensation Our board of directors, through the Governance and Nominating Committee, is responsible for the development and implementation of a compensation plan for our directors who are not officers. Officers who are also directors are not paid any compensation for acting as a director. The main objectives of the compensation plan for directors are to attract and retain the services of the most qualified individuals and to compensate the directors in a manner that is commensurate with the risks and responsibilities assumed in board and committee membership and at a level that is similar to the compensation paid to directors of a peer group of oil and gas companies. In addition, our philosophy of using compensation to foster a culture of ownership also extends to our director compensation policies. Directors' Summary Compensation Table The following table sets forth the principal elements of the cash compensation plan for our directors for the year ended December 31, 2014: Compensation Element Amount Board Retainer Annual 55,000 Additional Chair Retainers Annual: Lead Director Audit Compensation Governance and Nominating Reserves Committee Membership: Audit Compensation Governance and Nominating Reserves Meeting Attendance Fee: Board meetings Other meetings 20,000 20,000 10,000 10,000 10,000 10,000 6,000 6,000 6,000 1,500 1,500 Special and Telephone Meetings 1,500 In addition to the annual cash compensation, directors are provided with an initial grant of incentive awards or RIAs under our 2013 incentive award plan and a subsequent grant every 3 years. The grant provides 15,000 RIAs to each director, both upon appointment and every three years thereafter. Although the grants are fixed at 15,000 RIAs per director, consideration is given to our share price and our operating environment before approving the grant.