THE HRT OIL & GAS / TNK-BRASIL CONSORTIUM WHO WE ARE The HRT OIL & GAS / TNK-BRASIL Consortium holds 21 exploration blocks/concessions in the Solimões Basin. HRT O&G is the operator with a 55% WI; TNK-Brasil holds the remaining 45% WI. HRT O&G is part of the HRT Participações Group while TNK-Brasil is the 100% wholly-owned subsidiary of the TNK-BP. SOLIMÕES BASIN ASSETS Brazil has 29 basins with potential for oil and natural gas, according to records of the National Agency of Petroleum, Natural Gas and Biofuels (ANP). The Solimões Sedimentary Basin, which covers an area of approximately 480,000 km 2 (118.6 million acres), has the second largest gas reserves in the country and the third largest oil and condensate production onshore Brazil. Since 1988, it has produced over 212 million barrels of light oil in the Urucu Oil and Gas Province. Petrobras has discovered 15 gas fields and 4 gas & oil fields in different zones within the basal, sandy reservoir of the Pennsylvanian Juruá Formation. Petrobras has also discovered two oil fields in older Devonian sandstones reservoirs. HRT O&G has discovered six potential gas fields within both reservoir intervals in its initial exploration campaign. Gas and oil are related to the hydrocarbon generation potential of the Frasnian marine, black shale of the Jandiatuba Formation, which can have total organic content (TOC) as high as 5% in the Juruá Sub-basin and 8% in the Jandiatuba Sub-basin. Eolian and tidal bar facies at the base of the Pennsylvanian sequence are the best reservoirs, with an average of 18 % porosity and 1.4 Darcys permeability. Devonian reservoirs are important in the São Mateus and Igarapé Chibata fields. The effective regional seals are halite and anhydrite layers. Traps consist of anticlines associated with reverse faults. 1
The Solimões Basin is considered underexplored despite its prominent position in the production of oil and gas in Brazil. The first seismic survey was performed in 1976 and led to the discovery of the Jurua Field, with over 1Tcf of gas. The oil, gas and condensate Province of the Urucu Field was discovered in 1986 and confirmed the potential for commercial oil; Urucu production started in 1998. Recent light oil (46º API) discoveries in the Igarapé Chibata (2010) and Leste Chibata (2011) fields confirm the hydrocarbon potential of the Solimões Basin. HRT ACTIVITIES IN THE SOLIMÕES BASIN In order to support its activities, HRT O&G as the operator utilizes a head office in Manaus, four support bases near the operation area and offices in Tefé and Carauari, in the state of Amazonas. The company s blocks in the Solimões Basin cover a 48.5 thousand km 2 area. In its first year of operations, HRT O&G leveraged logistics (including the consolidation of logistics), infrastructure (physical infrastructure to operate in Amazonia), technology (including geophysical seismic surveys, airborne gravity, high resolution magnetics), a drilling program (with complex mobilization of four heli -portable rigs) to create an unprecedented exploration campaign in the Solimões basin HRT O&G has drilled 10 wells in the Solimões Basin with 6 important gas discoveries. The 1-HRT-9-AM well had one of the largest gas flow rates of any onshore well in Brazil with a potential flow rate of up to 3.0 million cubic meters (105 million cubic feet) of natural gas per day. This discovery plays a key role in the assessment of the gas potential of the Solimões Basin. Recently HRT O&G, TNK-Brasil and Petrobras signed a Letter of Intent ( LOI ) for gas monetization in the Solimões Basin. The objective of this LOI is to combine efforts to appraise the feasibility on technical, economic, environmental, financial, legal and regulatory, as well as tax aspects for the implementation of the natural gas monetization with regards to concessions in contiguous areas to the Juruá Field. OVERVIEW HRT O&G operator of 21 blocks; HRT O&G has 55% working interest and TNK-Brasil has 45%; Gross area of 48,500 km²; 10 wells drilled in 20 months of operations; Around 3,700 km of new 2D seismic acquired and processed since 2011 and 20,000 km of old seismic reprocessed; Potential Methods: acquired and processed 39,299 Km of high resolution Grav/Mag and 48,074 Km of Magnetometry; Infrastructure established for drilling and seismic campaign; Two heli-portable rigs (QG-8 and QG-9) operating for the consortium LOI with Petrobras for gas monetization. 2
HRT/TNK-BRASIL ACTIVITIES IN THE ARUÃ CLUSTER IN 2013/2014 The next exploration campaign of HRT O&G/TNK-Brasil Consortium is to drill three exploration wells in the Aruã oil cluster beginning in the second quarter of 2013. The Aruã blocks are located in the vicinity of the Urucu, Chibata and Leste Chibata oil fields. The existing oil and gas pipelines cross block SOL-T-172 in the vicinity of the Cajazeira prospect. BUSINESS OPPORTUNITY HRT O&G/TNK-Brasil Consortium is offering a unique asset position in the Aruã area of the Solimões Basin, onshore Brazil, consisting of 3 exploration blocks: SOL-T-148 (192 km²), SOL-T-149 (1150 km²) and SOL-T-172 (959 km²) with a total gross area of 2,300 km 2. The Aruã area is the 3 rd highest producing region in Brazil. This attractive opportunity provides immediate exposure to a seismic acquisition program and a multi-well drilling campaign in a basin with a proven petroleum system. There are three ready-to-drill (RTD) oil prospects: Cajazeira (SOL-T-172), Amendoeira (SOL-T-149) and Acácia (SOL-T- 148). The QG-8 rig is being mobilized to the well site to do the spud-in of Cajazeira prospect by 2Q2013. 3
HRT O&G/TNK-BRASIL CONSORTIUM DRILLING CAMPAIGN RESULTS: Result of the first 10 wells: six gas discoveries, two non-commercial light oil discoveries and one non-commercial tight gas discovery. EXPLORATION PERIODS OF THE ARUÃ BLOCKS The three blocks, SOL-T-148, SOL-T- 149 and SOL-T-172 are currently in a two year-extension of the second exploration period which will expire on May 5, 2014. PROSPECTIVE RESOURCE INVENTORY IN THE ARUÃ BLOCKS: Three oil prospects have been mapped including one in each block with the following volumes and COS (HRT O&G Evaluation): Principle Prospects* Cajazeira (SOL-T-172) Amendoeira (SOL-T-149) Acácia (SOL-T-148) MMbbl + P10 Bcf ** (MMBOE) MMbbl + Pmean Bcf ** (MMBOE) Pg % 70 + 84 (14) 35 + 42 (7) 22 158 + 189 (31.6) 79 + 94.8 (15.8) 20 80 + 96 (16) 40 + 48 (8) 23 Total 308 + 369 (61.6) 154 + 184.8 (30.8) 22 COMMITMENTS TO ANP Contingent Prospects P10 MMbbl Pmean MMbbl First exploration Period: Completed; Second exploration Period: To drill one (1) well per block, including: SOL-T-148, SOL-T-149 and SOL-T-172; SOL-T-172 155 76 SOL-T-149 230 109 Total 385 185 *unrisked gross prospective recoverable resources ** Based on 220 m³/m³ GOR from Urucu Field [1 MMbbl adds 1.2 Bcf of gas] FARM-DOWN TIMELINE Effective date: 25 th of February 2013 FTP Site Information in advance of Data Room Attendance after signature of Confidentiality Agreement; Submission of a LOI: 23 rd of April 2013. COMMERCIAL TERMS Available working interest: 15% to 35% Promote on work program 2013-2014 for the Aruã cluster blocks: Firm: To drill 1 exploration well in 2013; Contingent: drill two additional exploration wells and acquire 500km of in fill seismic in the blocks; Propose an Evaluation Plan (PAD) to ANP in case of discoveries. CONTACT Milton Romeu Franke CEO HRT O&G milton@hrt.com.br +55 21 2105-9700 Nilo Chagas de Azambuja Filho CTO HRT Participações nilo@hrt.com.br +55 21 2105-9700 Kevin Broger President HRT Canada kevin.broger@hrtcanada.com +1 403 984-6437 4
IMPORTANT DISCLAIMER NOTICE HRT O&G EXPLORAÇÃO E PRODUÇÃO DE PETRÓLEO LTDA. ( HRT or the Company ) is considering a possible farmout (the Proposed Transaction ) of up to thirty five percent (35%) interest in the Solimões field, Brazil, (the Field or the Interest ). The Interest is more fully described in the [Information Memorandum], [Executive Summaries], historical operating and financial data, information summaries and/or interpretive analyses, technical and commercial data sets provided in the Virtual Data Room set up by HRT, material and information conveyed in presentations, and other supplemental evaluation material that may be provided by HRT (collectively the "Evaluation Information"). The Evaluation Information contains historical operating and financial data or obtained from public information sources. Any data on past performance, modeling or back-testing contained in the Evaluation Information is no indication as to future performance. Further, estimates of future performance, included in the Evaluation Information, reflect significant elements of subjective judgment and various assumptions and estimates that may or may not prove to be correct. Actual results could vary from the estimates provided, and such variation could be material. No representation is made as to the reasonableness of the assumptions made within or the accuracy or completeness of any modeling or backtesting or any other information contained in the Evaluation Information. All opinions and estimates are given as of the date stated therein and are subject to change and HRT assumes no obligation to update any document to reflect any such changes. The value of any investment may fluctuate as a result of market changes. The Evaluation Information is not intended to predict actual results and no assurances are given with respect thereto. Nothing in the Evaluation Information shall be deemed to constitute investment, legal, tax, financial, accounting or other advice. The Evaluation Information provided concerning the Interest is for informational purposes only. THE COMPANY, AND ITS SUBSIDIARIES, AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, ADVISORS, AGENTS AND REPRESENTATIVES, MAKE NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES AND ASSUME NO LIABILITY FOR THE ACCURACY, FAIRNESS, REASONABLENESS OR COMPLETENESS OF THE EVALUATION INFORMATION; AND THE COMPANY MAKES NO REPRESENTATIONS, EXPRESS OR IMPLIED, CONCERNING THE PRESENT OR FUTURE VALUE OF THE ANTICIPATED INCOME, COSTS OR PROFITS, IF ANY, TO BE DERIVED FROM THE INTEREST. Reliance on the Evaluation Information or any other written or oral data provided by HRT, or any of its subsidiaries, affiliates, officers, directors, employees, agents or representatives, shall not give rise to any cause, claim or action (howsoever arising) against HRT or its subsidiaries, affiliates, directors, officers, employees, advisors, agents or representatives, INCLUDING ACTIONS FOR NEGLIGENCE. Any reliance on any such Evaluation Information or other data shall be at the potential bidder's sole risk and expense. Any translations from Portuguese to English provided are for convenience only. Such translations were not prepared by a professional legal translator and no confirmatory Brazilian legal advice was sought. Because the documents translated were originally drafted in Portuguese, the Portuguese version of the terms and conditions of such documents governs. HRT does not make any representation or warranty regarding the accuracy of the translations provided. The recipients are strongly encouraged to prepare its own translations of any documents originally drafted in Portuguese. The Evaluation Information has been prepared to assist interested parties in making their own evaluations of the Interest. HRT does not represent or warrant that the Evaluation Information contains all the data each recipient might require in order to make an informed decision as to whether to pursue the Proposed Transaction. Interested parties shall rely solely on their own independent estimates, computations, evaluations, reports, studies, knowledge and judgment with respect to their analysis of the Interest and decision whether or not to submit a bid for the Interest. By accepting this Evaluation Information, the recipient acknowledges that: (i) all of the Evaluation Information is expressly subject to a [Confidentiality Agreement] previously executed by the recipient (the Confidentiality Agreement ) and (ii) the Evaluation Information is being furnished solely for use by the recipient in considering its interest in submitting a bid for the Interest. Except as set forth in the [Confidentiality Agreement], the Evaluation Information may not be disclosed to any other person or entity without HRT s prior written consent, which consent may be withheld, delayed, denied or conditioned in HRT s sole discretion. Provision of this Evaluation Information does not constitute an offer, an acceptance, or a contract to negotiate or enter into a possible transaction involving the Interest, nor shall the Evaluation Information be relied upon in connection with any contract that may or may not be executed with respect to the Proposed Transaction. The Evaluation Information may be amended, superseded or replaced by subsequent postings to the Virtual Data Room. The eventual purchaser (if any) must rely on terms contained in a definitive written farmout agreement ( FOA ) to be agreed separately with HRT, subject to the limitations and restrictions that may be contained therein. By accepting the Evaluation Information, the recipient acknowledges that until such FOA is executed with HRT (if ever) or any other written agreement is entered into, HRT makes and has no commitment to consummate the Proposed Transaction and the recipient bears all of its own costs and risks associated with no Proposed Transaction taking place, or with a Proposed Transaction taking place with another participant. HRT has the sole and absolute discretion to direct the conduct of any discussions with potential purchasers, to accept or reject the terms and conditions of any proposed divestment transaction, or to consummate or refuse to consummate any such divestment transaction. The Company reserves the right to, with or without notice to any potential or actual bidder, (1) accept any bid at any time, (2) reject any and all bids and proposals, (3) withdraw this solicitation or modify the transaction process prior to the execution of a FOA, and (4) after execution of the FOA, withdraw from the Proposed Transaction under conditions set forth in the FOA. Under no circumstances, and at no time, should any interested party infer or consider that a transaction relating to the Interest has occurred, or will occur, until a FOA with HRT has been properly executed. The Evaluation Information does not disclose all the risks and other significant issues related to an investment in the Proposed Transaction. Prior to transacting, potential bidders should ensure that they fully understand the terms of the Proposed Transaction and any applicable risks IRS Circular 230 Disclosure: HRT and its affiliates do not provide tax advice. Please note that (i) any discussion of U.S. tax matters contained in the Evaluation Information cannot be used by you for the purpose of avoiding tax penalties; (ii) this communication was written to support the promotion or marketing of the matters addressed herein; and (iii) you should seek advice based on your particular circumstances from an independent tax advisor. Notwithstanding anything herein to the contrary, each recipient hereof (and their employees, representatives, and other agents) may disclose to any and all persons, without limitation of any kind from the commencement of discussions, the U.S. federal and state income tax treatment and tax structure of the proposed transaction described herein and all materials of any kind (including opinions or other tax analyses) that are provided relating to such tax treatment and tax structure. For this purpose, "tax structure" is limited to facts relevant to the U.S. federal and state income tax treatment of the proposed transaction described herein and does not include information relating to the identity of the parties, their affiliates, agents or advisors. 5