The North Montney. North Montney Established as a World Class Gas Play. Daniel Topolinsky Executive Vice President, Exploration & Development

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1 The North Montney Daniel Topolinsky Executive Vice President, Exploration & Development Jim Stannard Senior Vice President, Development North Montney Established as a World Class Gas Play Q First vertical test Q First horizontal test Q First commercial developments producing horizontal wells 8 commercial developments 3 International joint ventures CARIBOU TOWN KOBES CYPRESS Why the Global Interest? 300 m gas charged column Top tier economics Access to North American market & LNG FARRELL SEPTIMUS PARKLAND DAWSON GROUNDBIRCH SWAN 2

2 Putting North Montney in Perspective Top Ten Montney Land Holders km 190 km Montney Land Position (Net Sections) Progress Encana CNRL Celtic Galleon ARC Shell Talisman Birchcliff Tourmaline Relative size compared to the entire Horn River Basin SOURCE Cormark Securties 3 Best Leverage in Shale Gas Play Largest Land Holder Acreage Held Enterprise Value (as of 09/30/2011) Montney Progress 825,000 acres C$ 3.4 B Horn River Imperial/Exxon 309,000 acres US$ 365 B Haynesville Chesapeake 440,000 acres US$ 29.8 B Eagleford Petrohawk 1 270,000 acres US$ 15.6 B Barnett Devon 527,000 acres US$ 24.3 B Fayetteville Southwestern 851,000 acres US$ 12.8 B Marcellus Range 1,400,000 acres US$ 11.1 B 1 Acquired by BHP Billiton 08/26/2011 US$14.8B SOURCE CIBC, EIA, Bloomberg 4

Geological Attributes 280m 280 to 360 m thick Continuous gas charged productive section Permeable siltstone Over-pressured 11-17 kpa/m Area well control of over 150 Montney penetrations 360m 5

3 Geological Attributes 280m 280 to 360 m thick Continuous gas charged productive section Permeable siltstone Over-pressured kpa/m Area well control of over 150 Montney penetrations 360m 5 Continuous Stratigraphic Section PRQ CARIBOU c-58-j/94-g-2 PRQ TOWN SOUTH c-50-j/94-b-16 PRQ KOBES D-57-H/94-B UPPER MONTNEY 75m THICK HIGH ORGANICS MIDDLE MONTNEY 225m THICK LOWER MONTNEY

Relative Thickness North Montney 300m (985ft) Haynesville 90m (300ft) Eagleford & Marcellus 60m (200ft) Fayetteville 30m (100ft) 7 Concentrated Development Microseismic used

4 Relative Thickness North Montney 300m (985ft) Haynesville 90m (300ft) Eagleford & Marcellus 60m (200ft) Fayetteville 30m (100ft) 7 Concentrated Development Microseismic used extensively Frac envelope typically 100m high and 400m wide Stagger pattern allows for up to 16 wells per section Monitoring Well Frac Height Growth >100m to surface Meters 8

Town Area DPIIP Town DPIIP Area Evaluated area represents 22% of North Montney land base Estimate of Discovered Petroleum Initially in Place (DPIIP) of 27 TCF Best estimate Contingent Resource of 8

5 Town Area DPIIP Town DPIIP Area Evaluated area represents 22% of North Montney land base Estimate of Discovered Petroleum Initially in Place (DPIIP) of 27 TCF Best estimate Contingent Resource of 8 TCF 190 km Best estimate Contingent Resource NPV 8 of $8.6B Contingent Resource W.I. Raw BCF Low Estimate 5.4 Best Estimate 8.1 High Estimate Town Area DPIIP Evaluated using 34 horizontal and 15 vertical wells TOWN NORTH TOWN SOUTH KOBES GUNDY WEST GUNDY Detailed petrophysical and core analysis Approximately the same acreage as the NMJV Progress booked 590 Bcf of P+P reserves in the December 31,

6 Progress North Montney Advantages Sweet Gas lower processing costs High heat content Liquids-rich stream significant revenue lift (~20 bbls/mmcf) BC deep drilling credit royalty free production for 1 to 3 years Few surface stakeholders North Montney is Progress backyard operating in the area for ten years Extensive 3D seismic in the area 11 Among the Best Economics in Shale $6.00 US$/mmbtu Required Strip for 10% IRR $5.00 $4.00 $3.00 $2.00 $1.00 $- SOURCE Morgan Stanley Group Average Marcellus Wet Pinedale Marcellus Dry Fayetville Granite Wash Montney Huron Shale Deep Bossier Eagle Ford Horn River Cordova Embayment Cana-Woodford Nikanassin Piceance Barnett Appalachian Haynesville Marcellus Dry (Tier Eagle Ford Montney-AB Fayetteville Jonah AB Deep Basin Woodford Cardium Wattenburg Uinta Piceance Raton GoM Shelf AB Shallow Gas Warwick Barnett (Tier 2) 12

7 North Montney has Strong Economics $5.00 Hzl Montney Breakeven Prices-Half Cyle (C$/mcf) $4.00 $3.00 $2.00 $1.00 $- Kaybob PRQ Town South Dawson/Parkland Greater Town Kobes Pouce Coupe Swan Groundbirch SOURCE Peters & Co. Limited estimates. Liquids are converted at 6:1. 13 B.C. Deep Drilling Credit EAST/WEST ROYALTY LINE East/West line to account for higher cost to the West Progress receives a credit of ~$2MM per well on the West side Results in 1-3 years of royalty free production East Montney credit is ~$0.8-1MM per well Majority of Progress developments qualify for the higher West credit 14

8 Production Compares Favorably Rate (mmcf/d) Months PRQ Town Dawson/Parkland Groundbirch PRQ Kobes Pouce Coupe Swan SOURCE Peters & Co. Limited, Accumap 15 High Netback Growth AECO (C$/GJ) 4.00 Typical Station 2 to AECO Differential (0.25) Station #2 ($/GJ) 3.75 Station #2 ($/mcf) 4.04 High Sales Stream Heat Premium ($/mcf) 0.63 Liquids Sales Premium ($/mcf) 0.70 Plant Gate Price ($/mcf including liquids) 5.37 Initial After Royalty Credit Average Royalty (@ $4.00/GJ) 0% 14% Field Op Costs ($/mcf) Processing and Transportation ($/mcf) Operating Netback ($/mcf) High Heat Content Gas Significant price lift from liquids production Royalty free production for 1 to 3 years 16

9 High Return North Montney Projects Reserves (bcf) $4.00/GJ Case Initial Rate (mcf/d) Risked Payout (years) Rate of Return F&D ($/BOE) Cost of Production ($BOE/D) PIR NPV10 ($MM) Months Royalty Free % $7.87 $8, % $6.24 $6, $5.00/GJ Case % $7.87 $8, % $6.24 $6, Attractive Full Cycle Economics Typical 50 MMcf/d Development Pod Wells required ~23 Capital to 50 mmcf/d $145 million All-in cost of production $17,000/boepd At Full Production ($4.00/GJ) Royalty rate 14% Operating Netback (per year) $72 million Annual maintenance capex $33 million Free cash flow (per year) $39 million Remaining drilling inventory 10+ years C$4.00/GJ $264 million 18

10 Real Production Growth 120 Gross Production (mmcf) September 2011 > 100 mmcf/d McMahon Plant Turnaround 0 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 PRQ Gross Montney 19 Ten Active Development Pods KAHTA JV CARIBOU LILY JV TOWN NORTH NIG WEST GUNDY TOWN SOUTH KOBES GUNDY ALTARES JV 20

Pod Developments Phases Town South Kobes Gundy Town North JVs Caribou West Gundy Nig 21 Development Timeline HORIZONTAL PILOT PHASE (Horizontal follow-up of successful vertical) PHASE 1 DEVELOPMENT

11 Pod Developments Phases Town South Kobes Gundy Town North JVs Caribou West Gundy Nig 21 Development Timeline HORIZONTAL PILOT PHASE (Horizontal follow-up of successful vertical) PHASE 1 DEVELOPMENT (multiple Horizontal wells & initial facilities) FULL DEVELOPMENT PHASE (drilling to fill expanded facilities) MAINTENANCE PHASE (drilling to offset declines, keep facilities full) Town South Q Q Q Q Kobes Q Q Q Q Town North Q Q Q Q Gundy Q Q Q Q West Gundy Q Q Q Q Caribou Q Q Q Q Nig Q Q Q Q

12 2012 Development Wells TOWN NORTH Number of Horizontal Wells End Drills TOWN SOUTH Town North 10 2 Town South KOBES WEST GUNDY GUNDY Gundy West Gundy Kobes 7 4 Total Town South Development Pod Production (mmcf) Target Actual Total cost ($MM) Prod Cost ($/boepd) 16,667 19, Wells Days Rate Wells on Production 24

Well Developed Infrastructure PRQ Town North 25 mmcf/d PRQ Town South 50 mmcf/d Spectra Highway Plant T-North Pipeline PRQ West Gundy Q1 2012 25 mmcf/d

13 Well Developed Infrastructure PRQ Town North 25 mmcf/d PRQ Town South 50 mmcf/d Spectra Highway Plant T-North Pipeline PRQ West Gundy Q mmcf/d PRQ Kobes 25 mmcf/d Spectra Aitken Creek Plant Gundy Facility 50 mmcf/d Spectra RGT Pipeline Non-operated Kobes 25 mmcf/d 25 North Montney Infrastructure 26

$over 15km of pipeline to interconnect the pods 2012 SOURCE FORECAST 40% Runoff capture 20% Re-used frac water 25% Recycled produced water 15% Other sources 27 West Gundy New Pod Development TOWN$

14 Leader in Water Management TOWN AREA 280,000m 3 of water storage in twelve reservoirs Reservoirs constructed to capture spring runoff big rain barrels 35,000m 3 of recycled water storage Constructing over 15km of pipeline to interconnect the pods 2012 SOURCE FORECAST 40% Runoff capture 20% Re-used frac water 25% Recycled produced water 15% Other sources 27 West Gundy New Pod Development TOWN NORTH 20 sections of 100% land TOWN SOUTH Close proximity to our existing Kobes and Gundy pods GUNDY First 25 MMcf/d phase of facility planned for Q WEST GUNDY KOBES 28

15 Nig New Pod Development Updated graphic 25 km east of Town 50% working interest Pipeline to McMahon Plant First horizontal 4.2 mmcf/d with 25 bbls/mmcf of liquids Three additional horizontals in Cost Structure Continuing to Improve Drill ($MM) Completion ($MM) Tie-in ($MM) Total ($MM) Q Q Q TARGET Potential Cost Saving Measures Cost Savings ($MM) Drilling Top drive rigs, bit selection 0.2 Completion Toe fracs, fluid optimization 0.2 Completion Flow through plugs 0.3 Completion Open hole packer completion

16 Managing Cost Inflation Long term relationships with service companies - Working together through the best and worst times Load levelled program - Maintain an active program Continuous improvement - Detailed tracking of costs and results Repeatable model for facilities and well design - Improvement through repetition Developing New Solutions - Centralized frac water handling 31 Progress North Montney Expertise Microseismic - Over 160 fracs monitored 3-D Seismic - 3,300 square kilometres to date with 650 planned for H Completions practices - Over 400 fracs Facilities Construction - 15 compressor stations constructed over 10 years Water handling - Setting new standards for the Canadian industry 32

Cutting Edge Use of Seismic Information Utilize 3-D seismic to better position well path Monitor Well North Well 5.6 mmcf/d ~3.2 km South Well 4.0 mmcf/d 33 Completion Optimization 6.00 5.

17 Cutting Edge Use of Seismic Information Utilize 3-D seismic to better position well path Monitor Well North Well 5.6 mmcf/d ~3.2 km South Well 4.0 mmcf/d 33 Completion Optimization Rate (mmcf/d) Days Town South Single Perf Town South Cluster 5 Bcf Curve 4 Bcf Base Case 34

18 North Montney Delineation 350,000 acres outside of NMJV and development pods 7 wells planned in 2012 Focus at Caribou, Bubbles and Blueberry GREATER CARIBOU BUBBLES BLUEBERRY Recent landsale prices in the $1,000-2,000/acre range 35

NOVEMBER 2015 UPDATE

NOVEMBER 2015 UPDATE 1 Started Sept 2010, fourth Storm since Nov 1998 history of per share growth in prod n & asset value 119.3 MM shares + 6.0 MM options, TSX-V symbol SRX management, Board ownership