Notice of Meeting of Shareholders. Proxy Statement and Information Circular ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

Transcription

1 Notice of Meeting of Shareholders and Proxy Statement and Information Circular in respect of the ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS to be held on May 6, 2015

2 TABLE OF CONTENTS NOTICE OF MEETING OF SHAREHOLDERS... 1 PROXY STATEMENT AND INFORMATION CIRCULAR... 2 GENERAL PROXY INFORMATION... 2 VOTING SHARES AND PRINCIPAL HOLDERS THEREOF... 4 QUORUM FOR MEETING... 5 APPROVAL REQUIREMENTS... 5 NOTE ON SHARE REFERENCES... 5 GLOSSARY... 6 BUSINESS OF THE MEETING... 9 EXECUTIVE COMPENSATION EQUITY COMPENSATION PLAN INFORMATION DIRECTOR COMPENSATION SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS STATEMENT OF CORPORATE GOVERNANCE PRACTICES INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON OTHER BUSINESS MANAGEMENT CONTRACTS ADDITIONAL INFORMATION DATE AND APPROVAL ADDENDA SCHEDULE A CHANGE OF AUDITOR SCHEDULE B MANDATE OF THE BOARD OF DIRECTORS

3 SEVEN GENERATIONS ENERGY LTD. NOTICE OF MEETING OF SHAREHOLDERS to be held on May 6, 2015 TO THE SHAREHOLDERS OF SEVEN GENERATIONS ENERGY LTD. NOTICE IS HEREBY GIVEN that an annual and special meeting (the Meeting ) of holders ( Shareholders ) of class A common shares ( Common Shares ) of Seven Generations Energy Ltd. (the Corporation ) will be held at the TELUS Convention Centre, Chinook Rooms 2 and 3, Calgary, Alberta at 10:00 a.m. (Calgary time) on May 6, 2015, for the following purposes: 1. to receive and consider the financial statements of the Corporation for the year ended December 31, 2014 and the auditor s report thereon; 2. to fix the number of directors of the Corporation to be elected at the Meeting at nine (9); 3. to elect the directors of the Corporation for the ensuing year; 4. to appoint the auditor of the Corporation for the ensuing year and authorize the board of directors to fix the remuneration of the auditor; and 5. to transact such other business as may properly be brought before the Meeting or any adjournment or adjournments thereof as ordinary business. Shareholders should refer to the accompanying Proxy Statement and Information Circular for more detailed information with respect to the Corporation and the matters to be considered at the Meeting. If you are a registered Shareholder and are unable to attend the Meeting in person, please exercise your right to vote by dating, signing and returning the accompanying form of proxy to Computershare Trust Company of Canada, the Corporation s transfer agent. To be valid, completed proxy forms must be dated, completed, signed and deposited with our transfer agent, Computershare Trust Company of Canada, as follows: (i) by mail using the enclosed return envelope or one addressed to Computershare Trust Company of Canada, Proxy Department, 135 West Beaver Creek, P.O. Box 300, Richmond Hill, Ontario, L4B 4R5; (ii) by hand delivery to Computershare Trust Company of Canada, 8th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1; or (iii) by facsimile to (416) or If you vote through the Internet, you may also appoint another person to be your proxyholder. Please go to and follow the instructions. You will require your 15digit control number found on your proxy form. Your proxy or voting instructions must be received in each case no later than 48 hours (excluding weekends and holidays) before the time set for the holding of the Meeting or any adjournment(s) thereof or may be deposited with the Chairman of the Meeting prior to its commencement. If you are not a registered Shareholder and receive these materials through your broker or through another intermediary, please complete and return the form of proxy or applicable voting information form in accordance with the instructions provided to you by your broker or other intermediary with respect to the procedures to be followed for voting at the Meeting. The board of directors of the Corporation has fixed March 30, 2015 as the record date for the Meeting. Only Shareholders of record at the close of business on March 30, 2015 are entitled to notice of the Meeting and to attend and vote thereat or at any adjournment(s) thereof on the basis of one vote for each Common Share held. BY ORDER OF THE BOARD OF DIRECTORS (Signed) Patrick B. Carlson Patrick B. Carlson Chief Executive Officer and Director March 30, 2015

4 Solicitation of Proxies SEVEN GENERATIONS ENERGY LTD. PROXY STATEMENT AND INFORMATION CIRCULAR FOR THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 6, 2015 GENERAL PROXY INFORMATION This Proxy Statement and Information Circular (the Circular ) is furnished in connection with the solicitation of proxies by the management of Seven Generations Energy Ltd. ( Seven Generations or the Corporation ) for use at the annual and special meeting (the Meeting ) of the holders (the Shareholders ) of class A common shares (the Common Shares ) of Seven Generations to be held at the TELUS Convention Centre, Chinook Rooms 2 and 3, Calgary, Alberta at 10:00 a.m. (Calgary time) on May 6, 2015, and at any adjournments thereof, for the purposes set forth in the Notice of Meeting of Shareholders (the Notice of Meeting ) accompanying this Circular. Information contained herein is given as of March 30, 2015, unless otherwise specifically stated. The Board of Directors (as defined herein) has fixed March 30, 2015 as the record date for the Meeting. Only Shareholders of record at the close of business on March 30, 2015 are entitled to notice of the Meeting and to attend and vote thereat or at any adjournment(s) thereof on the basis of one vote for each Common Share held. Solicitation of proxies will be primarily by mail but may also be by telephone, facsimile or in person by directors, officers and employees of Seven Generations who will not be additionally compensated in respect thereof. The costs incurred in connection with the preparation and mailing of this Circular and of soliciting proxies will be borne by Seven Generations. Seven Generations is not sending proxy related materials to registered or beneficial Shareholders using the notice and access provisions of National Instrument Communication with Beneficial Owners of Securities of a Reporting Issuer ( NI ). Seven Generations is not sending proxyrelated materials directly to nonobjecting beneficial owners (as described in NI 54101) of Common Shares ( NOBOs ) and such materials will be delivered to NOBOs through intermediaries under the procedures set out in NI Seven Generations will pay for intermediaries to deliver to objecting beneficial owners (as described in NI 54101) of Common Shares ( OBOs ) as set out in NI , this Circular and Form 54101F7 Request for Voting Instructions Made by Intermediary. Appointment of Proxyholders Enclosed herewith is a form of proxy for use at the Meeting. The persons named in the form of proxy are directors and/or executive officers of Seven Generations. A Shareholder submitting a proxy has the right to appoint a nominee (who need not be a Shareholder) to represent him or her at the Meeting other than the persons designated in the enclosed form of proxy by inserting the name of his or her chosen nominee in the space provided for that purpose on the form and by striking out the printed names. Registered Shareholder Voting Information You are a registered Shareholder (a Registered Shareholder ) if your name appears on your share certificate. Registered Shareholders who are eligible to vote can vote their Common Shares either in person at the Meeting or by proxy. If you are a registered Shareholder who wishes to vote by proxy please complete and sign the enclosed form of proxy and deliver it to Computershare Trust Company of Canada (the Transfer Agent ), as follows: (i) by mail using the enclosed return envelope or one addressed to Computershare Trust Company of Canada, Proxy Department, 135 West Beaver Creek, P.O. Box 300, Richmond Hill, Ontario, L4B 4R5; (ii) by hand delivery to Computershare Trust Company of Canada, 8th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1; or (iii) by facsimile to (416) or If you vote through the Internet, you may also appoint another person to be your proxyholder. Please go to and follow the instructions. You will require your 15digit control number found on your proxy form. Your proxy or voting instructions must be received in each case no later than 48

5 3 hours (excluding weekends and holidays) before the time set for the holding of the Meeting or any adjournment(s) thereof or may be deposited with the Chairman of the Meeting prior to its commencement. Beneficial Holder Voting Information You are a beneficial Shareholder (a Beneficial Shareholder ) if you beneficially own Common Shares that are held in the name of an intermediary such as a bank, trust company, securities dealer or broker and trustee or administrator of a selfadministered registered retirement savings plan, registered retirement income fund, registered education savings plan and similar plan or other intermediary (each an Intermediary ). In many cases, Common Shares owned by a Beneficial Shareholder are registered either (i) in the name of an Intermediary that the Beneficial Shareholder deals with, or (ii) in the name of a clearing agency (such as CDS Clearing and Depository Services Inc.) of which the Intermediary is a participant. Common Shares registered in the names of Intermediaries can only be voted by those Intermediaries at the direction of the Beneficial Shareholders who beneficially own the shares. Without specific instructions, Intermediaries are prohibited from voting shares for an Intermediary s clients. Therefore, Beneficial Shareholders should ensure that instructions respecting the voting of their Common Shares are communicated to the appropriate person well in advance of the Meeting. In accordance with the requirements of NI 54101, Seven Generations has elected to distribute copies of the Notice of Meeting and this Circular (collectively, the Meeting Materials ) indirectly through intermediaries to the NOBOs and OBOs. The intermediaries/brokers (or their service companies) are responsible for forwarding the Meeting Materials to the NOBOs and OBOs. Intermediaries are required to forward the Meeting Materials to NOBOs and OBOs, except for NOBOs and OBOs that have waived the right to receive them. Very often, Intermediaries will use service companies to forward the Meeting Materials to Beneficial Shareholders. Generally, Beneficial Shareholders who have not waived the right to receive the Meeting Materials will either: 1. be given a form of proxy which has already been signed by the Intermediary (typically by a facsimile, stamped signature), which is restricted as to the number of Common Shares beneficially owned by the Beneficial Shareholder but which is otherwise not completed. Because the Intermediary has already signed the form of proxy, this form of proxy is not required to be signed by the Beneficial Shareholder when submitting the proxy. In this case, the Beneficial Shareholder who wishes to submit a proxy should otherwise properly complete the form of proxy and deliver it to the Transfer Agent as set out above; or 2. more typically, be given a form (often called a voting information form ) which, when properly completed and signed by the Beneficial Shareholder and returned to the Intermediary or its service company, will constitute voting instructions which the Intermediary must follow. Employees of the Corporation are eligible to participate in an employee stock purchase plan under which Common Shares are purchased and held on their behalf by a plan administrator. Participants of the employee stock purchase plan will receive the Meeting Materials together with a voting information form from the Transfer Agent and may exercise voting rights in accordance with the instructions provided on the voting information form. For additional information about the Corporation s employee stock purchase plan, see Executive Compensation Compensation Discussion and Analysis Pension, Benefits and Perquisites below. In any event, the procedures described above for Beneficial Shareholders are intended to permit Beneficial Shareholders to direct the voting of the Common Shares which they beneficially own. Should a Beneficial Shareholder who receives either a form of proxy or voting information form wish to vote at the Meeting in person, the Beneficial Shareholder should strike out the persons named in the form of proxy or voting information form and insert the Beneficial Shareholder s name in the blank space provided. Beneficial Shareholders should carefully follow the instructions of their Intermediary, including those regarding when and where the form of proxy or voting information form is to be delivered.

6 4 Revocation of Proxies A registered Shareholder who has given a proxy may revoke it prior to its use, in any manner permitted by law, including by instrument in writing executed by the Shareholder or by the Shareholder's attorney authorized in writing or, if the Shareholder is a corporation, executed by a duly authorized officer or attorney thereof, and deposited at the registered office of the Corporation at any time before 4:30 p.m. (Calgary time) on the last business day preceding 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. Beneficial Shareholders should contact their Intermediary for instructions on how to revoke their voting instructions. Only Registered Shareholders have the right to revoke a proxy. A Beneficial Shareholder who wishes to change its vote must, well in advance of the Meeting, arrange for its Intermediary to revoke a deposited instruction request or proxy on its behalf. Voting of Proxies All Common Shares represented at the Meeting by properly executed proxies will be voted in accordance with the instructions of the Shareholder on any ballot that may be called for and, where a choice with respect to any matter to be acted upon has been specified in the accompanying form of proxy, the Common Shares represented by the proxy will be voted in accordance with such instructions. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the relevant resolution. In the absence of any instruction, the persons whose names appear on the printed form of proxy will exercise such person s discretion as to whether, and if so how, such person votes. The enclosed form of proxy confers discretionary authority upon the persons named therein. If any other ordinary business or amendments or variations to matters identified in the Notice of Meeting properly come before the Meeting then discretionary authority is conferred upon the person appointed in the proxy as to whether and, if so how, to vote. As at the date hereof, the management of Seven Generations knew of no such other ordinary business, amendment or variation to matters identified in the Notice of Meeting. VOTING SHARES AND PRINCIPAL HOLDERS THEREOF As at March 30, 2015, the Corporation s issued and outstanding shares with voting rights consist of 246,139,978 Common Shares (assuming the conversion of the Class B NonVoting Shares (as defined below) into Common Shares). See Note on Share References below. Each Common Share carries the right to one vote at a general meeting of the Corporation. Shareholders at the close of business on March 30, 2015 are entitled to receive notice of the Meeting and to attend and vote thereat or at any adjournments thereof on the basis of one vote for each Common Share held. When any Common Share is held jointly by several persons, any one of them may vote at the Meeting in person or by proxy in respect of such Common Share, but if more than one of them shall be present at the Meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. Pursuant to a nomination agreement dated November 5, 2014 between the Corporation and CPPIB (as defined herein), the Corporation will, subject to certain conditions and as long as CPPIB holds at least 10% of the issued and outstanding Common Shares, include one individual designated by CPPIB among the nominees for election to the Board of Directors at each meeting of the Shareholders at which directors are to be elected. The CPPIB nominee for the Meeting is Jeff Donohue. To the knowledge of the directors and executive officers of Seven Generations, as of the date hereof, no person, firm or corporation beneficially owned, directly or indirectly, or exercised control or direction over, Common Shares carrying more than 10% of the voting rights attached to any class of outstanding voting securities of Seven Generations, except as follows:

7 5 Shareholder Name Number of Common Shares Held (1) Percentage of Issued Common Shares (1) CPP Investment Board (USRE) IV Inc. 36,364, % ARC Energy Fund 5 (2) 28,602, % Note: (1) Number and percentage of Common Shares is on a postdivision basis and assumes conversion of all Class B NonVoting Shares (as defined herein). (2) As defined herein. ARC Energy Venture Fund 4, which is managed by an affiliate of the entity which manages ARC Energy Fund 5, owns 473,475 Class B NonVoting Shares and 65,250 Common Shares, which are not included in the holdings of ARC Energy Fund 5. As of the date hereof, the directors and executive officers of Seven Generations, as a group, beneficially own, directly or indirectly, 5,297,111 Common Shares, representing approximately 2.15% of the issued and outstanding Common Shares (assuming the conversion of the Class B NonVoting Shares into Common Shares). As of the date hereof, no proposed director or his associates or affiliates, beneficially owned, controlled or directed, directly or indirectly, securities carrying more than 10% of the voting rights attached to all voting securities of Seven Generations. QUORUM FOR MEETING A quorum of Shareholders will be present for the transaction of business at the Meeting if two persons are present in person, each being a Shareholder entitled to vote thereat or a duly appointed proxy for an absent Shareholder so entitled, and together holding or representing by proxy more than 20% of the outstanding shares of the Corporation entitled to vote at the Meeting. If a quorum of Shareholders is not present at the opening of the Meeting, the Shareholders present or represented by proxy may adjourn the Meeting to a fixed time and place but may not transact any other business. APPROVAL REQUIREMENTS The specific resolutions that Shareholders will be asked to approve at the Meeting include resolutions regarding the election of the directors of the Corporation and the appointment of the auditors of the Corporation. In order to be effective, the foregoing resolutions require the approval of more than 50 percent of the votes cast in respect of those resolutions by or on behalf of Shareholders present in person or represented by proxy at the Meeting. NOTE ON SHARE REFERENCES On May 29, 2014, the Corporation amended its articles of incorporation to allow holders of Class B NonVoting Shares to, at the option of such holder, convert such Class B NonVoting Shares into Common Shares and to allow the Corporation, at the option of the Corporation but subject to certain exceptions, to convert all, but not less than all, of the Class B NonVoting Shares into Common Shares. Unless otherwise specified, all quantitative references to Common Shares in this Circular assume the conversion of all Class B NonVoting Shares into Common Shares. On September 8, 2014, the Corporation amended its articles of incorporation to divide the issued and outstanding Common Shares on a twoforone basis. The Class B NonVoting Shares were not divided. On conversion of Class B NonVoting Shares into Common Shares holders will receive two Common Shares for each Class B NonVoting Share converted. As of December 1, 2014, all Options and Performance Warrants (each as defined herein) issued prior to the completion of the IPO (as defined herein) are exercisable into twice as many Common Shares as the number of Class B NonVoting Shares they were exercisable for prior to December 1, Unless otherwise specified, all references to Common Shares, the issuance of Common Shares or the exercise or conversion price of any securities to acquire Common Shares in this Circular are presented on a postdivision basis.

8 6 GLOSSARY In this Circular, unless otherwise indicated or the context otherwise requires, the following terms have the meaning set forth below: Applicable Securities Laws means all applicable securities laws, the respective regulations, rules and orders made thereunder, and all applicable policies and notices issued by the securities regulatory authorities in Canada. ARC Energy Fund 5 means ARC Energy Fund 5 Canadian Limited Partnership, ARC Energy Fund 5 United States Limited Partnership and ARC Energy Fund 5 International Limited Partnership, each of which are limited partnerships organized under the laws of Alberta. Audit and Finance Committee means the Audit and Finance Committee of the Board. Board or Board of Directors means the board of directors of the Corporation. CBCA means the Canada Business Corporations Act, R.S.C. 1985, c. C44, as amended, including the regulations promulgated thereunder. Circular means this proxy statement and information circular. Class B NonVoting Shares means the class B common shares in the capital of the Corporation as constituted on the date hereof. Except as otherwise provided by law, the holders of Class B NonVoting Shares are not entitled as such to receive notice of, or to attend, any meeting of the shareholders of Seven Generations and are not entitled to vote at any such meeting or to sign any resolution in writing in lieu thereof. The percentage of the aggregate voting rights attached to the Corporation s securities that are represented by the Class B NonVoting Shares is nil. If a takeover bid is made for Common Shares, the holders of Class B NonVoting Shares will be entitled to participate in such takeover bid to the same extent as holders of Common Shares. CEO means the Chief Executive Officer of the Corporation. CFO means the Chief Financial Officer of the Corporation. Code means the Corporation s Code of Conduct. Common Shares means the class A common shares in the capital of the Corporation as constituted on the date hereof. Compensation Committee means the Compensation Committee of the Board. CPPIB means CPP Investment Board (USRE IV) Ltd. Distribution Rights Agreement means the amended and restated distribution rights agreement dated May 17, 2012 between the Corporation and the Major Shareholders. Dividend DSU means a dividend DSU in the form of additional DSUs granted under the DSU Plan. Dividend PSU means a dividend PSU in the form of additional PSUs granted under the PRSU Plan. Dividend RSU means a dividend RSU in the form of additional RSUs granted under the PRSU Plan. Dividend Share Units means, collectively, Dividend PSUs and Dividend RSUs. DSU means a right to receive a Common Share or, in certain circumstances, the cash equivalent of a Common Share, granted under the DSU Plan. DSU Plan means the deferred share unit plan of the Corporation. Eligible Person means: (i) in respect of the PRSU Plan, any employee or officer of the Corporation, and such of its affiliates as are designated by the Board from time to time, including any such person who is on a leave of absence authorized by the Corporation or such designated affiliates; and (ii) in respect of the DSU Plan, any nonexecutive director of the Corporation. Fair Market Value means, for the purposes of the descriptions of the PRSU Plan and the DSU Plan in this Circular under the heading Executive Compensation Incentive Plan Awards only, the volume weighted average trading price of a Common Share on the principal stock exchange on which the Common Shares are traded for the five trading days immediately preceding the applicable day.

9 7 Governance and Nominating Committee means the Governance and Nominating Committee of the Board. HSE and Community Engagement Committee means the Health, Safety, Environment and Community Engagement Committee of the Board. IPO means the initial public offering of million Common Shares at $18 per Common Share for aggregate gross proceeds of $931.5 million on November 5, KERN means, collectively, KERN Energy Partners II, L.P. and KERN Energy Partners II U.S., L.P., each of which are limited partnerships organized under the laws of Alberta and managed by affiliates of KERN Partners Ltd. LTIP means the longterm incentive plan of the Corporation, which has historically been comprised of Options and Performance Warrants and which, commencing in 2015, will be comprised of a combination of Options, PSUs, RSUs and DSUs. Major Shareholders means, collectively, ARC Energy Fund 5, CPPIB, KERN, NGP IX Holdings I, S.à r.l. and ZAM Ventures Luxembourg II, S.à r.l. Market Price means, in respect of Options only, for any particular day, the volume weighted average trading price of the Common Shares on the TSX or such other exchange on which the Common Shares are listed and posted for trading and on which the majority of the trading volume and value of the Common Shares occurs for the five trading days immediately preceding the date on which the Option is granted. In the event that the Common Shares are not traded on an exchange, then the Market Price shall be the fair market value of the Common Shares as determined by the Board in its sole discretion, acting reasonably and in good faith. Meeting means the annual general and special meeting of the Shareholders of Seven Generations scheduled for May 6, Named Executive Officers or NEOs means the CEO, the CFO, and each of the Corporation s three most highly compensated executive officers, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, who served as an executive officer in the most recently completed financial year and whose total salary and bonus exceeded $150,000. NI means National Instrument Standards of Disclosure for Oil and Gas Activities. NI means National Instrument Continuous Disclosure Obligations. NI means National Instrument Disclosure of Corporate Governance Practices. Notice of Meeting means the notice of meeting accompanying the Circular. Option means an option to purchase a Common Share granted under the Option Plan. See Executive Compensation Long Term Incentive Plan for details of the December 1, 2014 amendments to Options and Performance Warrants outstanding on that date. Option Plan means the stock option plan of the Corporation, which was amended and restated on August 27, Performance Warrants means the performance warrants issued to directors, officers, employees and consultants of the Corporation. Each whole performance warrant is exercisable for one Common Share upon the payment of the applicable exercise price. The performance warrants issued prior to May 1, 2012 were issued in series, and, as a result of the amendments made on December 1, 2014, have an exercise price of $3.75 for Series 1; $4.50 for Series 2; $5.25 for Series 3; $6.00 for Series 4; and $6.75 for Series 5. The performance warrants issued between May 2, 2012 and November 11, 2013 were issued in series, and, as a result of the amendments made on December 1, 2014, have an exercise price of $5.50 for Series 1, 2 and 3; $6.00 for Series 4; and $6.75 for Series 5. The performance warrants issued after November 11, 2013 and prior to May 28, 2014 were issued in series, and, as a result of the amendments made on December 1, 2014, have an exercise price of $12.50 for Series 1, 2, 3, 4 and 5. The performance warrants issued on May 28, 2014 were issued in series, and, as a result of the amendments made on December 1, 2014, have an exercise price of $17.50 for Series 1, 2, 3, 4 and 5. See Executive Compensation Long Term Incentive Plan for details of the December 1, 2014 amendments to Options and Performance Warrants outstanding on that date. PRSU Plan means the performance and restricted share unit plan of the Corporation. PSU means a right to receive a Common Share or, in certain circumstances, the cash equivalent of a Common Share, based on the achievement of certain performance criteria and granted under the PRSU Plan. Reserves and Risk Management Committee means the Reserves and Risk Management Committee of the Board.

10 8 RSU means a right to receive a Common Share or, in certain circumstances, the cash equivalent of a Common Share granted under the PRSU Plan. SEDAR means the System for Electronic Document Analysis and Retrieval maintained by the Canadian Securities Administrators. Seven Generations or the Corporation means Seven Generations Energy Ltd. Share Units means, collectively, PSUs and RSUs. Shareholders means the holders of Common Shares. Termination Date means: (i) with respect to the PRSU Plan, the date a participant in the PRSU Plan ceases to be an Eligible Person; and (ii) with respect to the DSU Plan, the date a participant in the DSU Plan ceases to be a nonexecutive director of the Corporation and ceases to hold any other position with the Corporation. TSX means the Toronto Stock Exchange. U.S. or United States means the United States of America, its territories and possessions, any state of the United States and the District of Columbia. U.S. Tax Code means the U.S. Internal Revenue Code of 1986, as amended.

11 9 BUSINESS OF THE MEETING Financial Statements The audited financial statements of the Corporation for the year ended December 31, 2014 and the auditor s reports thereon (collectively, the Financial Statements ) will be received at the Meeting. The Financial Statements were provided to each Shareholder entitled to receive a copy of the Notice of Meeting and the Circular. Fixing the Number of Directors The Corporation s articles authorize a minimum of one (1) and a maximum of ten (10) directors. There are presently nine (9) directors. It is proposed that the number of directors to be elected to the Board of Directors at the Meeting be nine (9), as may be adjusted between Shareholder meetings by way of resolution of the Board. Accordingly, unless otherwise directed, it is the intention of management to vote proxies in the accompanying form in favor of fixing the number of directors to be elected at the Meeting at nine (9). The Board unanimously recommends that the Shareholders vote FOR fixing the number of directors to be elected at the Meeting at nine (9). Unless otherwise directed by the Shareholders appointing them as proxyholder, the persons named in the accompanying form of proxy will vote FOR fixing the number of directors to be elected at the Meeting at nine (9). Election of Directors The Board currently consists of nine (9) directors, the terms of office of each of which will expire immediately prior to the Meeting or any adjournment thereof. Shareholders will vote for each proposed director individually as opposed to voting for the directors as a slate. In addition, the Corporation has adopted a majority voting policy, which requires that any nominee for director who receives a greater number of votes withheld than for his or her election shall tender his or her resignation to the Chairman of the Board following the Corporation s annual meeting. This policy applies only to uncontested elections, meaning elections where the number of nominees for director is equal to the number of directors to be elected. The Governance and Nominating Committee and the Board shall consider the resignation, and whether or not it should be accepted. In doing so, the Governance and Nominating Committee may consider any stated reasons as to why Shareholders withheld votes from the election of the relevant director, the length of service and the qualifications of the director, the director s contributions to the Corporation, the effect such resignation may have on the Corporation s ability to comply with any applicable governance rules and policies, the dynamics of the Board, and any other factors that the members of the Governance and Nominating Committee consider relevant. The nominee shall not participate in any committee or Board deliberations on the resignation offer. Resignations are expected to be promptly accepted except in situations where extraordinary circumstances warrant the applicable director continuing to serve as a member of the Board. The Board shall disclose its election decision, via press release, within 90 days of the applicable annual meeting. If a resignation is accepted, the Board may appoint a new director to fill the vacancy created by the resignation. If a director nominee that is an employee of the Corporation receives a greater number of votes withheld than in favour during an uncontested election of directors and is required to tender his or her resignation as director pursuant to the majority voting policy, then to the extent that no events or circumstances have otherwise occurred that would be grounds for termination for cause, such individual may opt to be deemed to have been terminated from his or her employment without cause and be entitled to the rights and benefits arising under the terms of his or her employment agreement or that may otherwise arise pursuant to applicable laws. The nine (9) persons listed in the table below are the nominees proposed by the Corporation for election to the Board to serve until the next annual meeting of Shareholders or until their successors are duly elected or appointed. The Board unanimously recommends that the Shareholders vote FOR electing each of the nominees listed below as a director of the Corporation. Unless otherwise directed by the Shareholders appointing them as proxyholder, the persons named in the accompanying form of proxy will vote FOR electing each of the nominees listed below as a director of the Corporation. If, for any reason, any of the proposed nominees does not stand for election or is unable to serve as such, the persons named in the accompanying form of proxy reserve the right to vote for any other nominee in their sole discretion unless the Shareholder has specified therein that its Common Shares are to be withheld from voting on the election of directors.

12 10 Name, Province and Country of Residence Position Held Principal Occupation for the Last Five Years Director Since Common Share Ownership and Percentage (17)(18) Patrick Carlson Calgary, AB Canada Chief Executive Officer and Director Patrick Carlson is currently Chief Executive Officer of the Corporation. He was also President of the Corporation until May May 16, ,792,809 (1) (0.7283%) C. Kent Jespersen Calgary, AB Canada Director (Chairman) Kent Jespersen has been the Chair and Chief Executive Officer of LaJolla Resources International Ltd. since May 16, ,070 (0.1678%) Michael Kanovsky (10)(12) Calgary, AB Canada Director Michael Kanovsky has been President of Sky Energy Corporation since May 16, ,325,806 (2) (0.9449%) Kaush Rakhit (9)(16) Calgary, AB Canada Director Kaush Rakhit has been President of Canadian Discovery Ltd. since December Mr. Rakhit is also a member of the Independent Advisory Board for the private equity funds that are managed by affiliates of KERN Partners Ltd. May 16, ,000 (3) (0.1381%) Kevin Brown (7)(14)(16) Calgary, AB Canada Director Kevin Brown is CoChief Executive Officer and Director of ARC Financial Corp. He has been with ARC Financial Corp. since September 17, 2010 (4) ( %) Jeff van Steenbergen (8)(15) Calgary, AB Canada Director Jeff van Steenbergen is a General Partner with KERN Partners Ltd. and has held this position since May 16, 2008 (5) ( %) Jeff Donahue (8)(12) Toronto, ON Canada Director Jeff Donahue has been Managing Director of CPPIB Equity Investments Inc. since October, Previously, he was Vice President, Strategy and Business Development at BHP Billiton PLC in London. May 25, 2012 (6) ( %) Dale Hohm (11)(14) Calgary, AB Canada Director Dale Hohm has been engaged by KERN on a parttime basis as a Senior Advisor since September Previously, he was Chief Financial Officer of MEG Energy Corp. from 2004 to May 29, ,000 (0.0187%) W.J. (Bill) McAdam (10)(13) Naperville, Illinois U.S.A. Director W.J. (Bill) McAdam was President and Chief Executive Officer of Aux Sable Canada L.P. ( Aux Sable ) in the United States and Canada from 2000 to year end 2013 when he retired from Aux Sable. August 6, ,000 (0.0122%) Notes: (1) Includes 1,147,942 Common Shares owned by the spouse of Mr. Carlson. (2) Includes 2,235,806 Common Shares which are registered in the name of a trust, of which Mr. Kanovsky is a trustee and the sole beneficiary. Mr. Kanovsky is also a director of Kanovsky Family Foundation, which owns 90,000 Common Shares. (3) Includes 20,000 Common Shares owned by a child of Mr. Rakhit. (4) Mr. Brown is CoChief Executive Officer and Director of ARC Financial Corp., the employees of which also own the general partner of ARC Energy Fund 5, a principal Shareholder holding 28,602,320 Common Shares. Another corporation owned by certain employees of ARC Financial Corp. is the fund manager of ARC Energy Venture Fund 4, which exercises control or direction over 65,250 Common Shares and 473,475 Class B NonVoting Shares. See Note on Share References. (5) Mr. van Steenbergen is a general partner of KERN Partners Ltd., an affiliate of KERN Energy Partners Management II Ltd., which on behalf of KERN Energy Partners II, L.P. and KERN Energy Partners II U.S., L.P. holds 20,157,338 Common Shares. (6) Mr. Donahue is Vice President of Canada Pension Plan Investment Board, an affiliate of CPPIB, which owns 36,364,000 Common Shares. (7) Chair of Governance and Nominating Committee. (8) Member of Governance and Nominating Committee. (9) Chair of Reserves and Risk Management Committee. (10) Member of Reserves and Risk Management Committee. (11) Chair of Audit and Finance Committee. (12) Member of Audit and Finance Committee. (13) Chair of HSE and Community Engagement Committee. (14) Member of HSE and Community Engagement Committee. (15) Chair of Compensation Committee. (16) Member of Compensation Committee. (17) Represents Common Shares and other securities beneficially owned, controlled or directed (directly or indirectly) by the director or officer (on a postdivision basis) as of the date hereof based on information provided by such individuals. Assumes conversion of all Class B Non Voting Shares. (18) Does not include Options or Performance Warrants held by these individuals and/or their spouses and holding companies.

13 11 Biographies of Proposed Directors Patrick Carlson Chief Executive Officer and Director Mr. Carlson has served as Chief Executive Officer and a director of the Corporation since its inception in May He was also President of the Corporation from May 2008 until May Previously, he was the President, Chief Executive Officer and a director of North American Oil Sands Corporation from October 2001 until June 2007 and was the President of Krang Energy Ltd. from December 2001 to July Mr. Carlson received a Bachelor of Science in Chemical Engineering from the University of Calgary (1975). Mr. Carlson is a Professional Engineer and an active member of the Association of Professional Engineers and Geoscientists of Alberta ( APEGA ). In 2008, Mr. Carlson received the ICD.D designation from the Institute of Corporate Directors. Kent Jespersen Chairman of the Board and Director Mr. Jespersen has served as Chairman of the Board and a director of the Corporation since its inception in May Mr. Jespersen has been the Chair and Chief Executive Officer of LaJolla Resources International Ltd. since He has also held senior executive positions with NOVA Corporation of Alberta, Foothills Pipe Lines Ltd., and Husky Oil Limited before assuming the presidency of Foothills Pipe Lines Ltd. and later, NOVA Gas International Ltd. ( NOVA ). At NOVA, he led the nonregulated energy services business (including energy trading and marketing) and all international activities. Mr. Jespersen is a director of TransAlta Corporation, Axia NetMedia Corporation, PetroFrontier Corp., MATRRIX Energy Technologies Inc. and CanElson Drilling Ltd. Mr. Jespersen was also Chairman of the Board and a director of North American Oil Sands Corporation. Mr. Jespersen received a Bachelor of Science in Education (1969) and a Master of Science in Education (1970), both from the University of Oregon. Michael Kanovsky Director Mr. Kanovsky has served as a director of the Corporation since its inception in May Mr. Kanovsky cofounded Northstar Energy Corp. s parent in 1978 and Bonavista Energy in Mr. Kanovsky is President of Sky Energy Corporation, which position he has held since 1993, and also serves as a director of Bonavista Energy Corporation, Pure Technologies Ltd., Devon Energy Corporation and TransAlta Corporation (retiring in April 2015). Mr. Kanovsky received a Bachelor of Applied Science with Honours in Mechanical Engineering from Queen s University (1970) and an MBA from Ivey School of Business, Western University (1973). Mr. Kanovsky is a Professional Engineer. Kaush Rakhit Director Mr. Rakhit has served as a director of the Corporation since its inception in May Mr. Rakhit is a member of the Independent Advisory Board for the private equity funds that are managed by affiliates of KERN Partners Ltd. Mr. Rakhit has been the President of Rakhit Petroleum Consulting Ltd. since September 1990 and the President of Canadian Discovery Ltd. since December He also held the position of VicePresident, New Initiatives with Trident Exploration Corp. from March 2006 to May Mr. Rakhit currently serves as a director of Kinwest Resources 2008 Inc., Matrix Solutions Inc., Canadian Discovery Ltd., Coda Petroleum Inc. and Petrofeed Inc. Mr. Rakhit received a Bachelor of Science in Earth Sciences from the University of Waterloo (1983) and a Master of Science in Petroleum Hydrogeology from the University of Alberta (1987). Mr. Rakhit is a Professional Geologist and an active member of APEGA. Kevin Brown Director Mr. Brown has served as a director of the Corporation since September Mr. Brown is CoChief Executive Officer and Director of ARC Financial Corp. He has been with ARC Financial Corp. since April 1989 and currently represents the ARC Energy Funds on the boards of Unconventional Resources Canada, LP, Unconventional Resources, LLC, and Kanata Energy Group. Mr. Brown received a Master of Arts in Economics (1984) and a Bachelor of Science in Chemical Engineering (1982), both from the University of Alberta.

14 12 Jeff van Steenbergen Director Mr. van Steenbergen has served as a director of the Corporation since its inception in May Mr. van Steenbergen is a CoFounder and the Managing Partner of KERN Partners Ltd. He joined KERN Partners Ltd. in Mr. van Steenbergen also serves as a director for Steelhead LNG Corp., Altex Energy Ltd., Cobalt International Energy L.P., Magma Global Ltd., Fairfield Energy Limited and Osum Oil Sands Corp. He has 37 years of diverse Canadian and global energy sector experience. Mr. van Steenbergen received a Bachelor of Applied Science with honors in Civil Engineering from Queen s University (1977) and a Master of Business Administration in International Business and Finance from Dalhousie University (1988). He is a Professional Engineer and a member of the Association of Professional Engineers of Nova Scotia. Jeff Donahue Director Mr. Donahue has served as a director of the Corporation since May Mr. Donahue is Managing Director, Natural Resources Principal Investing of CPPIB, and is focused on CPPIB s private equity activities focused on the natural resources industries including oil and natural gas and mining. Mr. Donahue also serves as director on behalf of CPPIB for Black Swan Energy, Quantum Utility Generation and Teine Energy. Prior to joining CPPIB, Mr. Donahue was Vice President, Strategy and Business Development at BHP Billiton PLC in London. Previously, he had a range of senior corporate development roles at Enron Corp. and spent several years as both an investment banker and consultant to natural resource companies. Mr. Donahue received a Bachelor of Arts from Harvard University (1984) and a Master of Business Administration from the University of Chicago (1990). Dale Hohm Director Mr. Hohm has served as a director of the Corporation since May Mr. Hohm has been engaged by KERN on a parttime basis as a Senior Advisor since September Mr. Hohm served as the Chief Financial Officer of MEG Energy Corp. from March 2004 to July 2013 and served as a director of Lone Pine Resources Inc. from November 2011 to January Before entering the energy sector, Mr. Hohm worked in the audit and assurance practice of Deloitte LLP, where he earned his Chartered Accountant designation. Mr. Hohm received a Bachelor of Commerce degree from the University of Alberta (1980). W.J. (Bill) McAdam Director Mr. McAdam was President and Chief Executive Officer of Aux Sable in the United States and Canada from 2000 to year end 2013 when he retired from Aux Sable. Prior to joining Aux Sable, Mr. McAdam held progressively more senior positions with Imperial Oil and Exxon Chemical from 1974 to 1994 in the Engineering, Refining, Fertilizer, Petrochemicals, Planning and Natural Gas Liquids businesses in Sarnia, Toronto, New York, Edmonton and Calgary. He began working with Aux Sable in 1995 during its development phase until 1998, and was President of Mapco Canada Energy Inc. from 1998 until He joined Aux Sable in late 1999 to lead the startup and development of the Aux Sable business in conjunction with the construction and commissioning of the $3.5 billion Alliance pipeline/aux Sable rich gas system in December, Mr. McAdam also serves as a director for Canexus Corporation. Mr. McAdam received a Bachelor of Science in Chemical Engineering from Queen s University (1974) and a Master of Business Administration from McMaster University (1980). He has served on several industry association boards over his career. Cease Trade Orders, Bankruptcies, Penalties or Sanctions Cease Trade Orders and Bankruptcies Except as described below, to the knowledge of the Corporation, no proposed director of the Corporation (nor any personal holding company of any of such proposed directors) is, as of the date of this Circular, or has been within ten (10) years before the date of this Circular, a director, chief executive officer or chief financial officer of any company (including the Corporation), that: (i) 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, an Order ), that was issued while the proposed director was acting in the capacity as director, chief executive officer or chief financial officer; or (ii) was subject to an Order that was issued after the proposed director ceased to be a

15 13 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 described below, to the knowledge of the Corporation no proposed director of the Corporation (nor any personal holding company of any of such proposed directors): (i) is, as of the date of this Circular, or has been within the ten (10) years before the date of this Circular, a director or executive officer of any company (including the Corporation) 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; or (ii) has, within the ten (10) years before the date of this Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director. Kent Jespersen, a director of the Corporation, was a director of CCR Technologies Ltd. ( CCR ) from May 1999 to February On December 10, 2010, CCR filed with the Court of Queen s Bench of Alberta a proposal under the Bankruptcy and Insolvency Act (Canada) to restructure and reorganize the affairs of CCR, to compromise the claims of unsecured creditors, to restructure the equity of CCR and to allow CCR to otherwise continue on a going concern basis. The proposal was approved by the unsecured creditors of CCR on December 22, 2010 and by the Court of Queen s Bench on January 13, In connection with the foregoing, the Alberta Securities Commission issued a cease trade order in respect of CCR on May 7, 2010, which was varied on February 14, 2011, to partially revoke the cease trade order to permit the implementation of the proposal. Dale Hohm, a director of the Corporation, was a director and audit and reserves committee chair of Lone Pine Resources Inc. ( Lone Pine ), an oil and natural gas company, from November 2011 to January On September 25, 2013, Lone Pine commenced proceedings in the Court of Queen s Bench of Alberta under the Companies Creditors Arrangement Act ( CCAA ) and ancillary proceedings under Chapter 15 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. On January 31, 2014, Lone Pine completed its emergence from creditor protection under the CCAA and Chapter 15 of the United States Bankruptcy Code. Lone Pine, Lone Pine Resources Canada Ltd. and all other subsidiaries of Lone Pine were parties to the CCAA and Chapter 15 proceedings. Penalties or Sanctions To the knowledge of the Corporation, no proposed director of the Corporation (nor any personal holding company of any of such proposed directors) has been subject to: (i) 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 (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a proposed director. Appointment of Auditor At the Meeting, Shareholders will be asked to appoint PricewaterhouseCoopers LLP ( PwC ) as the auditor of the Corporation until the close of the next annual meeting and to authorize the Board to fix the remuneration to be paid to the auditor of the Corporation. The Board unanimously recommends that the Shareholders vote FOR appointing PwC as the auditor of the Corporation and authorizing the Board to fix the remuneration to be paid to PwC. Unless otherwise directed by the Shareholders appointing them as proxyholder, the persons named in the accompanying form of proxy will vote FOR appointing PwC as the auditor of the Corporation and authorizing the Board to fix the remuneration to be paid to PwC, as auditors of the Corporation. Effective March 11, 2015, Deloitte LLP, Chartered Accountants ( Deloitte ), the former auditor of the Corporation, resigned at the request of the Corporation and PwC was appointed as the Corporation s new auditor. On August 5, 2014, Deloitte acquired Visser Consulting Ltd. ( Visser ), which provides regulatory, safety and environmental compliance consulting services to the Corporation. Deloitte implemented safeguards to address any concerns regarding its independence from the Corporation following the acquisition of Visser, and the services performed by Visser were curtailed by the Corporation and were subject to the approval of the Audit and Finance Committee following the acquisition. In order to be able to utilize the services of Visser to the extent desired in the future without

16 14 giving rise to any actual or perceived impairment to the independence of the Corporation s auditor, the Corporation asked Deloitte to resign as auditors and appointed PwC in its stead. In accordance with NI 51102, a copy of the Corporation s reporting package, which included the notice of change of auditor, letter from Deloitte and letter from PwC, is attached as Schedule A to this Circular. The reporting package was filed on the SEDAR website at on March 24, Compensation Discussion and Analysis Compensation Philosophy EXECUTIVE COMPENSATION The Board of Directors acknowledges that social license to operate is critical to an expectation of strong value growth performance over the long term. The Board of Directors looks to the CEO, presently Patrick Carlson, to advance the Corporation s business, in accordance with the Code, in a way that the directors expect to differentiate the Corporation s performance, relative to its peers, with respect to all of the Corporation s stakeholders which include: the environment, the regulators and legislators, the communities where the Corporation operates, the Corporation s partners, the Corporation s suppliers and service providers, the Corporation s employees and the Corporation s shareholders. In performance of this duty, the CEO identifies for the Board of Directors the Corporation s advantages and disadvantages with respect to each stakeholder and then identifies risks, the means to maximize the probability of avoiding such risks, the means to minimize negative impacts if the risks do occur and opportunities arising from the Corporation s advantages, and the means to capture the best opportunities and to maximize the value to the Corporation as seen by any and all of its stakeholders. From the CEO s analysis, the Board of Directors deliberates and approves a business strategy, the implementation of which is overseen by the CEO. This oversight includes, among other responsibilities, staffing, deployment of the capital investment program, oversight of operations, development and implementation of a corporate culture including, policies, practices, procedures and measures to provide alignment between the strategy and the Corporation s activities. In measuring the CEO s performance, the Board of Directors considers statistics such as staffing growth and productivity, production growth, safety operating statistics, capital deployment, measureable cost improvements, and reserves and resources value growth. The CEO relies on various members of the management team to help devise the underlying arguments for the business strategy, to help guide the Board of Directors to adoption of a strategy designed to differentiate the Corporation in the eyes of its stakeholders, as defined by the Code, and then to implement that strategy. Key performance indicators include measurement of capital investment performance by cost, capacity gained, reserves and resources value gained, vulnerabilities reduced and eliminated, and timing; measurement of operating by safety statistics, environmental differentiation, and operating cost and production performance data; and measurement of stakeholder engagement by review of the stakeholder engagement log. Within the foregoing context, the purposes of the Corporation s compensation policy are: (i) to attract and retain individuals of high calibre to serve as executive officers and employees of the Corporation; (ii) to motivate the performance of executive officers and employees of the Corporation in order to achieve strategic objectives; and (iii) to align the interests of executive officers and employees of the Corporation with the longterm interest of shareholders. The Corporation recognizes the need to deliver a compensation package that recognizes top performance and the ability to attract and retain top performers. Compensation for all executive officers is reviewed against a comparator group of similarly sized oil and gas companies and is considered in the context of the Corporation s performance relative to performance goals and relative to the performance of its peers. See Executive Compensation Compensation Discussion and Analysis Comparator Group. The Corporation s executive compensation philosophy reflects the following principles. Compensation should be related to performance A significant portion of the compensation of the executive officers should be based on corporate and individual performance. During periods when performance meets or exceeds expectations, executive officers should receive compensation at levels

17 15 that are above market. When performance is below expectations, incentive award payments, if any, and compensation generally should be lower. Compensation at risk should represent a significant percentage of an executive officer s total compensation A significant percentage of compensation should be paid in the form of shortterm and longterm incentives, calculated and paid based on financial and operational results including profitability and shareholder value creation. Executive officers incentives must be aligned with increases in sustained corporate profitability and shareholder returns. Compensation levels should be competitive A competitive compensation program is vital to the Corporation s ability to attract and retain high quality executives that are critical to the success of the business. The Corporation assesses comparator group compensation to ensure that the compensation program is competitive. Incentive compensation should balance shortterm and longterm performance Executive officers receive both shortterm and longterm incentives. Shortterm incentives focus on achievements for the current year, while equitybased compensation creates a focus on increasing longterm shareholder value. Managing Compensation Risk The Board provides regular oversight of Seven Generations risk management practices, and delegates to the Compensation Committee the responsibility to provide risk oversight of Seven Generations compensation policies and practices, and to identify and mitigate compensation policies and practices that could encourage inappropriate or excessive risk taking by members of senior management. The Compensation Committee and the Board considered the implications of the risks associated with Seven Generations compensation practices and did not identify any risks from Seven Generations compensation policies or practices that are likely to have a material adverse effect on Seven Generations. The Compensation Committee and the Board have concluded that Seven Generations has policies and practices to ensure that employees do not have incentives to take inappropriate or excessive risks, including the following: a mix of fixed and variable compensation, and an appropriate weighting of longterm equitybased compensation; graduated vesting of longterm equitybased compensation; a share ownership policy for directors and officers (as described below); annual incentive awards to Named Executive Officers are awarded based on a qualitative assessment of performance which takes into account corporate and individual performance and the risks undertaken to achieve corporate and individual goals; periodic awards of equitybased compensation with overlapping vesting periods to retain management and provide ongoing exposure to share price performance; annual incentive awards are not determined until the completion of the audit of Seven Generations consolidated annual financial statements by Seven Generations independent auditors; a prohibition against hedging of the Common Shares and equitybased incentives held by directors and officers (as described below); a comprehensive Code and a Whistleblower Policy that encourages reporting of imprudent corporate behavior; and

18 16 all members of the Compensation Committee are independent directors, and the Compensation Committee retains an independent compensation consultant to assist it in its review of the Corporation s compensation programs. Share Ownership Requirements On August 27, 2014, the Corporation implemented share ownership requirements for its directors and officers as follows: CEO Participant Other Named Executive Officers upon recommendation by the CEO, as approved by the Compensation Committee Other Executives, as determined by the CEO NonExecutive Directors Target Ownership Level 5 times base salary 1.5 times base salary 0.5 times base salary 3 times annual retainer Common Shares, DSUs, any PSUs or RSUs and any other fully vested share awards are counted towards share ownership requirements and are valued at the higher of value at the time of award or acquisition and current value. The Corporation s directors and executives have five years from the later of the introduction of the share ownership requirements and their election or appointment as a director or officer, respectively, to meet the share ownership requirements. Current directors and officers of the Corporation have until August 27, 2019 to satisfy the share ownership requirements. Nonexecutive directors must elect to take at least 25% of their annual retainer in the form of DSUs until the target ownership level is met. Hedging Prohibition The Corporation is of the view that its securities should be purchased for investment purposes only. To that end, Seven Generations has adopted a Disclosure, Trading and Confidentiality Policy which prohibits the Corporation s directors, NEOs and other insiders from participating in transactions that could be perceived as speculative or influenced by positive or negative perceptions of the Corporation s prospects. Such prohibited speculative transactions include the use of puts, calls, collars, spread bets, contracts for difference, engaging in short selling (i.e. selling securities not owned or not fully paid for) and engaging in hedging activities of any kind. Oversight of Executive Compensation The Compensation Committee oversees the compensation of the NEOs. See Executive Compensation Compensation Discussion and Analysis Named Executive Officers for a list of the Corporation s NEOs for The Compensation Committee is comprised of three directors: Jeff van Steenbergen (Chair), Kevin Brown and Kaush Rakhit, all of whom are independent. The Compensation Committee monitors the compensation practices of the Corporation to ensure that its compensation practices allow the Corporation to attract and retain high performing executive officers and employees. Each of the Compensation Committee members have served as a senior executive officer and/or as a director of numerous organizations and have direct experience in executive and corporate compensation programs, which provide them with the necessary skills and experience to make decisions on the suitability of the Corporation s compensation policies and practices. See Statement of Corporate Governance Practices Board Committees Compensation Committee for additional information on the Compensation Committee s mandate and see Business of the Meeting Election of Directors Biographies of Proposed Directors for the biographies of each of the Compensation Committee members. Annual compensation awards made to the CEO and other executive officers are based on current year corporate and individual performance. The ultimate value from longterm components of compensation is linked to and dependent on the Corporation s ability to grow, replicate, and sustain annual performance over the longterm. Historically, the Compensation Committee has relied on various external sources of information, including annual compensation surveys which provide market data on executive and nonexecutive compensation and a technical analysis of market data. In 2014, the Compensation Committee also considered a report from its independent

19 17 compensation consultant benchmarking compensation relative to the compensation disclosed in proxy circulars for a comparator group. See Executive Compensation Comparator Group below. The Compensation Committee took into account the survey and proxy circular based information and other factors in determining executive and nonexecutive base salaries, bonuses and longterm incentive awards for For 2014, the Board reviewed and was satisfied with the compensation for the NEOs. In addition, several of the executive officers and members of senior management of the Corporation have a material personal investment in the Corporation that aligns their interests with the interests of shareholders. In determining the CEO s compensation, the Compensation Committee annually evaluates the CEO s performance and considers the Corporation s performance and shareholder return relative to business competitors, the compensation of chief executive officers at comparable companies and other relevant factors. In determining the compensation of the other NEOs, the Compensation Committee evaluates each individual s performance and considers recommendations of the CEO, the Corporation s overall performance and compensation paid to similarly situated officers in peer companies. The Compensation Committee reviews, on an annual basis, compensation of each NEO. In each case, the Compensation Committee takes into account the scope of responsibilities and experience of the NEO and balances these against competitive compensation levels. In connection with this annual review by the Compensation Committee, the CEO presents to the Compensation Committee his evaluation of each NEO, which includes a review of each NEO s contribution and performance over the past year, strengths, weaknesses, development plans and succession potential. The Compensation Committee members also have the opportunity to interface with the NEOs during the year. The Corporation may change the timing of its annual compensation cycle from an April 1 st to March 31 st review period to a January 1 st to December 31 st review period, beginning at the end of The rationale for this change would be to better align the Corporation s performance review cycle with annual corporate planning and budgeting and the reporting of the Corporation s financial results. If this change is made, the Corporation will have a shortened review period for May 2015 to December Comparator Group In 2014, Seven Generations, with advice from Meridian Compensation Partners, its independent compensation consultant, reviewed its compensation comparator group. Seven Generations developed a new comparator group, taking into account direct competitors for talent, especially for industry specific roles. The comparator group is comprised of publicly traded Canadian organizations that are direct business competitors in the energy and petroleum sector and which range in size (based on a primary screen using asset size, which reflects the capital intensive nature of the Corporation s business) of approximately one third of to three times Seven Generations assets. Revenue was used as a secondary screen. Seven Generations is positioned at approximately the median of the comparator group in terms of assets. The companies comprising the comparator group are as follows: Advantage Oil & Gas Ltd. Cequence Energy Ltd. Perpetual Energy Inc. ARC Resources Ltd. Crew Energy Inc. Peyto Exploration & Development Corp. Arcan Resources Ltd. Enerplus Corporation Torc Oil & Gas Ltd. Athabasca Oil Corporation Lightstream Resources Ltd. Tourmaline Oil Corp. Baytex Energy Corp. Long Run Exploration Ltd. Trilogy Energy Corp. Bellatrix Exploration Ltd. Nuvista Energy Ltd. Twin Butte Energy Ltd. Birchcliff Energy Ltd. Painted Pony Petroleum Ltd. Vermilion Energy Inc. Bonavista Energy Corporation Paramount Resources Ltd. Whitecap Resources Inc. Pay Positioning Seven Generations generally positions pay competitive to the median of the comparator group when performance is at target. Pay can be above median when performance is exceptional and is expected to be below median when performance is below expectations.

20 18 Named Executive Officers In 2014 the Corporation s NEOs were: Patrick Carlson, CEO; Marty Proctor, President and Chief Operating Officer; Harry Cupric, CFO; Steve Haysom, Senior Vice President; and Christopher Law, Vice President, Corporate Planning. Prior to May 26, 2014, when the role of President was assumed by Mr. Proctor, Mr. Carlson held the title of President and CEO. Effective March 31, 2015, Mr. Cupric will resign as CFO and Mr. Law will be promoted to CFO. Compensation Components The components of Seven Generations executive compensation program are base salary, annual incentive, longterm incentive and benefits as described below. Component Form of Compensation Applies To Performance Period Purpose of Compensation Base Salary Cash All employees 1 year NEO base salaries are paid to attract and retain key executives. Salaries are determined by evaluating the scope of the NEO s role, the NEO s performance, general economic conditions and market compensation. Annual Incentive Cash Eligible employees LongTerm Incentives (under the LTIP) Equity based Senior Management Benefits NA All eligible employees 1 year The annual incentive provides each NEO with the opportunity to earn a bonus based on companywide and individual performance. 3 to 7 years The LTIP provides NEOs with longterm incentive award opportunities that are aligned with longterm share price performance. For 2014, longterm incentives were in the form of Options and Performance Warrants. For 2015 longterm incentives are expected to be in the form of Options and also potentially in the form of PSUs. The PSUs, if granted, will vest based on relative total shareholder return and other metrics aligned with the Corporation s longterm strategy. 1 year The Corporation offers health and welfare programs to all employees. Effective January 1, 2015, the Corporation introduced an employee savings plan (which is described below). The NEOs generally are eligible for the same benefit programs and on the same basis as the rest of the managerial workforce. The health and welfare programs are intended to protect employees against catastrophic loss and encourage a healthy lifestyle. In addition to the foregoing, the Corporation adopted an employee retention plan under which the Corporation intends to provide further incentives to its employees to remain with Seven Generations following completion of the IPO. Under the retention plan, the Corporation may use a combination of: (i) grants of equitybased compensation; (ii) deferred cash bonuses; and (iii) the deferred payment of the obligations of the Corporation in respect of certain Options and Performance Warrants, relating to the gainsharing arrangements agreed to with the initial shareholders of the Corporation at the time of the initial financing of Seven Generations in See Notes 6 and 7 under the heading Executive Compensation Compensation Discussion and Analysis 2014 Compensation Details Summary Compensation Table below and Notes 18 and 24 to the audited financial statements of Seven Generations for the years ended December 31, 2014 and 2013, which are available on the SEDAR website at