Leucrotta Exploration Corporate Update - Seite 2

Leucrotta is now fully funded to carry out its plans to delineate and develop its extensive Montney land base.

Between now and the end of Q116, Leucrotta intends to:

• Tie-in the 13-07 Montney oil discovery (IP30 447 boepd - 61% light oil and ngls)
• Construct a battery and water handling facility to produce the Baldonnel light oil discovery (14 day test at 315 bopd with low drawdown on well)
• Drill 4 Montney Development wells at Doe into the Lower Montney Turbidite play; the wells will be drilled off of pads and will be adjacent to Leucrotta's original well that has produced for over a year and is still producing 560 boepd (21% liquids)
• Drill up to 3 Montney horizontal step-out wells in the Greater Dawson area for liquids-rich gas
• Drill up to 2 exploratory vertical wells to gather information on the Upper and Lower Montney on Leucrotta lands located north of the Peace River
• Develop a pipeline and infrastructure plan pending results of the step-out and exploratory wells

The capital program outlined above would cost approximately $40 million and is flexible in both scope and timing.

After testing and production data is collected on the program above, Leucrotta expects the direction for the remainder of 2016 to continue as follows:

• Construct appropriate additional pipelines and facilities to maximize return on all subsequent drilling
• Drill additional wells on the Montney light oil discovery (possibly changing completion and/or length of well)
• Drill additional wells for Montney liquids-rich gas offsetting successful step-out and/or development wells noted above
• Drill horizontal Montney well offsetting one of the exploratory verticals noted above

Long Term Strategic Focus

The Montney in the Greater Dawson area is a regional play that contains very large resources of liquids-rich gas and oil per section of land as a result of the pay thickness of the zone and the overpressured nature of the Greater Dawson area. The liquids-rich Montney in the Greater Dawson area has up to 45 bcf of OGIP per section (plus ngls at 40-100 bbls/mmcf) and the Montney Oil has an estimated 26 million barrels of OOIP (plus 36 bcf of liquids-rich solution gas in place) per section. As demonstrated by the sale of the property noted above, significant value can be realized if reserves are proved up.