Read Operation Update text version

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CORPORATE PRESENTATION

Q2 2011

Teine Highlights

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· · · Senior management brings a combined 200 years of experience in oil and gas Management team with experience and proven performance Teine's management team has a proven ability to generate value both organically as well as through acquisition of assets on a meaningful scale. The team has a skill set that is well suited to its existing asset base and execution strategy Strong Management Team

Proven Performance

· · ·

Teine has developed a unique Viking exploitation strategy which results in considerably lower operating costs Teine's operating costs of less than $8.00/boe are considerably lower than most junior or intermediate producers Teine has demonstrated full cycle horizontal costs at $0.75 ­ 0.8mm per well in contrast to the industry average of $1.2mm per well (a 40% savings)

High Quality Asset Base

· · ·

Second largest holder of prospective Viking oil rights within the Dodsland area of Saskatchewan Historical F&D costs have been $19.21 which is very competitive with Teine's Canadian junior and intermediate peers NPV per Viking HZ well of $0.8mm represents an IRR of >90% assuming an oil price as low as US$70/bbl

Significant Upside Potential

· · · · ·

First to pilot 16 short leg horizontal wells per section First to pilot hz Viking gas well in Dodsland The company currently has 700 identified hz oil drilling locations on its Dodsland Viking properties Currently only 17% of prospective land base is booked, leaving significant value upside to be realized Future secondary recovery could significantly increase reserve potential

Production and Reserves

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Current Production Reserves (Sproule March 31, 2011) Oil/Gas Split (%): P+P Reserves: P+P Reserve Value (NPV10): Reserve Life Index Land Holdings: (March 31, 2011)

2000 boe/d (50% light oil)

50/50 11 MMboe $200MM 15 years 158,000 net acres

Executive Team

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David Tuer

Vice Chairman, CEO

Former President and CEO of PanCanadian Petroleum Director of Canadian Natural Resources Inc. and Daylight Energy Chairman of Altalink Management Ltd. Former Assistant Deputy Minister of Energy for the Province of Alberta

Ray Cej

President

Former President of Synenco Energy Former President, CEO and Director of Kyrgoil, Arakis Energy and Anadime Corporation 26 years experience with Shell Canada ending career as Senior Operating Officer, Resources

Gloria Fournier, CA

Chief Financial Officer

Former CFO of Alberta Electricity Balancing Pool 20 Years of Energy experience 10 years experience with TransAlta in various groups including Tax Structuring, Business Development and Financial Operations

Jason Denney, P.Eng

Chief Operating Officer

Drilling and Completions Engineer PanCanadian Petroleum EnCana Group leader for Brooks Former VP Business Development Marble Point Energy 15 years of Operations, Engineering and Acquisition experience in Canada

Key Management

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Kathy Aulstead M.Sc. P.Geol ­ VP Exploration

20 years of Exploration / Exploitation experience Former Group Leader of New Play Development EnCana/ AEC Geoscience Manager at Burlington Resources District Manager Paramount Energy Trust

Doug Dent ­ VP Production

30 years of experience Increasing roles of responsibility at AEC/EnCana finishing his career as Southern Alberta Operations Manager that entailed greater than 50,000bbl/d Former Operations Manager of Canada's largest gas storage facility

Melanie Pedersen M.Sc. P.Geol ­ VP Development

15 years experience EnCana exploitation geologist Carbonate Specialist

Dwayne Romansky - VP Engineering

26 years of industry experience Vice President of Operations Argo Energy Manager of Production Engineering at Calpine Energy Manager of Exploitation Anglo Albanian Petroleum

Jim Thomson - VP Land

25 years of industry experience VP land for Daylight Energy VP land Sequoia Energy

Willey Wong- VP Finance, CMA

30 years of Oil and gas experience Former CFO Argo Energy Former VP Finance and CFO of Western Oilfield Environment Services Former Controller of Royal Trust Energy Corporation

Teine Core Asset Base

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Saskatchewan Viking Oil Control approximately 60 net sections of Viking Oil rights in the Dodsland Area 35 wells drilled and completed Current hz oil production of 1000 bbl/d Potential Viking Extension in Forgan Saskatchewan Viking Gas Control over 2 net townships of Viking Gas rights 34Bcf P+P reserves ­ 15.5 year RLI Current Inventory of 200 net locations New reduced Crown Royalty in Saskatchewan for Hz Gas Drilled and piloting horizontal gas well Saskatchewan Birdbear Oil 26,000 Acres of Prospective Land

Viking Shallow Gas & Oil Fairway

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In aggregate, the SE Saskatchewan's Viking formation is estimated to contain 6 billion barrels of 38 API light oil. Since the early 1950's, over 234 million barrels of oil and 2.4 Trillion Cubic feet of gas have been produced, less than 4% of the resource in place As with other conventional oil resource plays, recent horizontal drilling and multistage hydraulic fracturing has unlocked significant remaining reserves with impressive returns Due to its shallow depth, year round accessibility and low royalty regime, Saskatchewan Viking oil development is a top quartile resource play

Viking Horizontal Oil Development

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16 short leg horizontal oil wells Minimal disturbance pads Single section battery Onsite power generation Expect 8%-10% OOIP recovery on primary Future high density waterflood potential Full Cycle cost of $750k ­ $800k/well Opex < $8.00/bbl Teine has a 700+ HZ well inventory and access to 300 MMbbl of OOIP

Viking Horizontal Oil Development

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Dodsland/Kerrobert Area HZ Viking Normalized Production All Teine Wells

90 Oil Production Rate (bbls/d) 80 70 60 50 40 30 20 10 0

Month 1 Month 3 Month 5 Month 7 Month 9 Month 11 Month 13 Month 15

Average

Teine Viking Oil Primary Recoverable Resource

200 17% IRR (%) 150 100 50 0 0

First 8 wells were placed online in Q1 2010. Currently producing 35 wells. Statistical Teine horizontal wells continue to exceed booked type-curve Evolving completion experience has increased initial rates and reduced Teine's costs Teine has built production to 1000bbl/d with a capital efficiency of $21,000/flowing bbl Effective project management Effective cost control Industry leading operating costs

Viking Oil HZ IRR Sensitivity

83%

March 31 P+P Reserves Estimated Unbooked Remaining Recoverable

10

20

30

40

50

60

70

80

90

100

Wellhead Oil Price ($CAD)

Viking Gas Strategy

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Current Portfolio and Landbase Current undeveloped gas reserves are booked using vertical development 120 wells drilled and online within 3 months Very good reservoir response after initial infill drilling was brought online. Teine reduced full cycle capital costs by 45% after the purchase of the asset from True Energy Trust Cost control and proper project management have dramatically increased returns from this resource style play Strategy - Moving to Horizontal Wells Hz development will have a large impact reshaping the booked value and potential recoverability New Crown incentives with virtually no royalty on Hz gas wells. Preferential development on these lands may spur freehold royalty owners to reduce their flat 17% royalty structure Teine has drilled Saskatchewan's first hz gas well in Aug of 2010. Initial production rate of 500 mmcf/d ­ 5X IP of vertical well

Current Vertical Viking Gas Development

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Low risk development play 700 meters (2,300 ft) deep No geological risk Pmean type-curve based on 125 most recent wells Demonstrated all in vertical development costs of $220k ­ $250k/well $4.00/MCF break even cost - Vertical

Inst. Calendar Day Gas Rate (mcf/d)

Recent Hz success in oil may be applicable to Viking gas

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Raw Inst. CDGR

Raw PDGR

120

Producing Day Gas Rate (mcf/d)

90

90

60

60

30

30

0 0 20 40 60 80 100 120 Cumulative Raw Gas Production (mmcf) 140 160

0

Birdbear Oil Play Exposure

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Teine land holdings 26,000 acres Birdbear carbonate (Nisku) truncated by sub-Cretacous unconformity Active companies drilling Birdbear Horizontals include NuVista and Talisman HZ well IP 100-200 bbl/d Talisman well licensed south of Teine lands Resolvable on 3-D Seismic Recent Nuvista reported results:

· 15 API Oil · 2.5% royalty on 100 Mboe · Payout < 6 months · Recycle ratio > 2x · 6-12 wells/section

Indicative Birdbear Economics

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LOW Initial Production (bbl/d) Recoverable Oil (MBBL) Full cycle well cost $mm) ROR (%) NPV10 ($mm) F&D ($/BBL) Netback* ($/bbl) *based on $59 wellhead Hardisty Heavy Oil price 100 115 1.1 153 2.7 9.25

MEDIUM 150 150 1.1 200 4.6 7.71

HIGH 200 160 1.1 >200 6.1 7.23

$ 46.00 $ 46.00 $ 46.00

Teine Inventory Value Assessment

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1400

Inventory of over 700 Hz Viking well locations. Currently in early stage development with minimal reserves booked in proportion with portfolio

$MM (NPV10)

1200 312

1000

Birdbear (risked 40% COS)*

2011-2012 drilling program is designed to prove up, and earn lands within current inventory 2012 ­ accelerated Viking production growth, delineation of our exploration lands

800

Unbooked Viking lands*

600 680 400

Current Reserves (P+P)

200 200 0

*Management resource estimate

Contact Information

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David Tuer Chief Executive Officer (403) 698-8301 [email protected] Gloria Fournier Senior Vice President & Chief Financial Officer (403) 698-8322 [email protected] Corporate Office 1900 700 4TH Avenue SW Calgary AB T2P3J4

Disclaimers

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Forward Looking Statements This document contains statements that constitute "forward-looking information" within the meaning of applicable securities legislation as to Teine Energy internal projections, expectations and beliefs relating to future events or future performance. This forward-looking information includes, among others, statements regarding: Teine's strategic focus, business strategy and plans and budgets; business plans for drilling, exploration and development, including drilling locations; estimates of production and operations performance; forecasted commodity price estimates of future sales; estimated amounts, allocation and timing of capital expenditures; estimates of operating costs and unit operating costs; the estimated timing and results of new development programs; estimates of anticipated funds from operations, cash flow, netbacks, dividends, working capital and debt levels; estimated rates of return; Teine's prospect inventory; and other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. Various assumptions were used in drawing the conclusions or making the forecasts and projections contained in the forward-looking information contained in this presentation including, without limitation, with respect to commodity prices, interest rates, exchange rates, royalty rates, general and administrative expenses, the success of Teine's drilling programs and the production profile of Teine's oil and natural gas reserves. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Teine and described in the forward-looking information contained in this document. Undue reliance should not be placed on forward-looking information. The material risk factors include, but are not limited to: the risks of the oil and gas industry, such as operational risks in exploring for, developing and producing oil and natural gas, market demand and unpredictable facilities outages; risks and uncertainties involving the geology of oil and gas deposits; the uncertainty of estimates and projections relating to production, costs and expenses; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; risk that adequate pipeline capacity to transport oil and natural gas to market may not be available; fluctuations in oil and gas prices, foreign currency exchange rates and interest rates; the outcome and effects of any future acquisitions and dispositions; safety and environmental risks; uncertainties as to the availability and cost of financing and changes in capital markets; competitive actions of other industry participants; changes in general economic and business conditions; the possibility that government policies or laws may change or governmental approvals may be delayed or withheld; changes in tax laws; changes in royalty rates; the results of Teine's risk mitigation strategies, including insurance; and Teine's ability to implement its business strategy. Readers are cautioned that the foregoing list of risk factors is not exhaustive. Forward-looking information is based on the estimates and opinions of Teine's management at the time the information is released. Boe Conversion Throughout this document, the calculation of barrels of oil equivalent (boe) is based on the widely recognized conversion rate of six thousand cubic feet (mcf) of natural gas for one barrel (bbl) of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalence conversion method primarily applicable at the burner tip and does not represent a value equivalence at the wellhead. All dollar amounts in Canadian dollars, unless otherwise stated.

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Operation Update

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