PP

CDN FIRM SEEKS BUYER FOR US ASSETS

Producing Properties

All Standard Disclaimers Apply & Seller Rights Retained


CDN FIRM SEEKS BUYER FOR US ASSETS

NORTH DAKOTA WATERFLOODS

69-Active Wells. 4-PUDS. 7,900 Acres.

BOTTINEAU & RENVILLE COS., ND

IMMEDIATE INFILL DRILLING

Waterflood Production Optimization

Bluell & Sherwood Development

3-D PROPRIETARY SEISMIC COVERAGE

Pool Delineation Opportunities

~97.8% Operated WI & ~73.8% NRI

Gross Production: 368 BOPD

LONG LIFE CONVENTIONAL OIL

Shallow Decline w/ 4% Oil Cut Last 3-Yrs

Q4 2019 Net Cash Flow: ~$226,600/Mn

SELLER MUST SELL STOCK U.S. SUB

Based On Stable Op Costs:~$155,000/Mn

INFRASTRUCTURE & SWD-IN-PLACE

SALE PKG SOLD & NOTE REFINANCED

PP 1229DV

PLEASE NOTE:
Zargon Oil & Gas Ltd. (“Zargon” or the “Company”) announced April 2, 2020 that it has entered into an agreement to settle its US$3.05 million term debt through the sale of its US subsidiaries for nominal proceeds and the release of the Company from its obligations under the loan agreement.

Summary
Energy Advisors is marketing Zargon's North Dakota assets as part of a larger corporate reorganization.

Zargon Oil & Gas Ltd. ("Zargon") (Calgary) is also working with the Advisory and Capital Markets division of Macquarie Capital Markets Canada Ltd. as financial advisor to assist in seeking outcomes that will maximize value for the (whole) Company and its stakeholders. Outcomes or options may include a corporate merger, sale, recapitalization or reorganization along with consideration for the firm's North Dakota asset which Energy Advisors is marketing herein.

MOTIVATED SELLER SEEKING SALE OF U.S. SUBSIDIARY---

The underlying loan for this asset has been sold, but EAG is continuing to market the assets with offers due Wednesday April 8.

Cost Reduction Points

Annual Management Fee of $739,200 disappears with a new US purchaser

See Documents: $US Gross ND Operations Consolidated and US 201906 FS Final

Annual Management Fees in the amount of $739,200 will be eliminated.
Management fees total $61,600 per month has ties to the Ops statement which ultimately Haas bears the burden as discussed with sub feature 176 (shown on the $US Gross ND Operations Consolidated) raising the cost on OPEX $/bbl and other areas captured in sub feature 134. This is shown in the Zargon Acquisition Inc. (Consolidated) Balance Sheet as Management Fees as part of INTEREST & INTERCOMPANY EXPENSES (US 201906 FS Final).
This fee of $61,600/mth represents the intercompany management fee to Canada per month of which a portion of this fee is pushed down to subfeature 176 (Overhead Recovery US – seen in Haas) & 134 (Operator Overhead – Seen in other areas) (allowance in JV Ops Agreement) see lease operating statements. The management fee transferred to Canada on the intercompany balance sheet on a monthly basis. This cash would reside in the US with a new US purchaser.

Overhead Reduction
Overhead charges are based on one full-time employee pumper, and three contract pumpers. Operations can be carried out with a total of three, rather than four, pumpers.

Haas Unit – Sour Crude Blending Cost Reduction
Haas Oil Sweetening alternative to lower the H2S Levels within the oil to zero ppm via the use of a H2S Scavenger you would place a mixer/push tool (~$2,500) on the downstream of the dump of the treater as the injection point and have the samples tested regularly plus require a chemical pump. The incremental cost of monthly chemicals maybe in the range of $1.50-$1.80 b/d justifying blending in the US which will be offset by the potential uptick in quality discount and reduced trucking, tariffs and fees. An option that should be explored to lower differentials that allows the oil to be marketed in the US providing better pricing options.

P&A / Site Reclamation Delay
Currently three idle wells are scheduled for plugging and reclamation at an estimated cost of $70,000/well. Zargon has Bonds of $349,980 cash deposit with the NDIC which would transfer with the asset.

Royalty Reduction Proposal
The properties are burdened with a 18.8% royalty. In the current low-price environment, the asset purchaser could proposal to reduce the landowner’s royalty, and overriding royalties, either temporarily or permanently. A one-half reduction in royalty burdens would promote longer-term commercial production operations.

Zargon Waterflood Upside Opportunities

-- Today's production is 347 BOPD. The Mackobee Coulee 9-21 well is down due to a tubing leak. Was making 25 BOPD. The well can be returned to production by replacing bad tubing joint and assess pump.
-- Wells that produce 3-5 BOPD are currently shut in. Can be put back into production upon downhole repair.
-- Production forecast for 2020 is 360 BOPD Baseline production.
-- Mackobee Coulee Area has by-passed pay.
-- Mackobee Coulee Unit is located in the Southern 1/3 of the acreage block. Zargon had planned to expand the waterflood to the Northern 2/3. LOTS OF UPSIDE HERE with associated waterflood development.
-- Truro Madison pool is not fully delineated; The hydrocarbon pool extends to the Southwest, potential for stepout hz wells.
-- Opportunity to downspace the well density in their waterfloods. Well density can be reduced in these units, improving ultimate recoveries.
-- No capital investment has occurred on the fields in several years. There is further field optimization work to be done. Last drilling occurred in 2014.
-- Preventative Maintenance on HPS (High Pressure) water injection pump conducted in 2018 stripped down at a cost of $16k - $18k requird every 5 years. The remaining triplex pumps at the flood plant require annual maintenance costs ~$1,500 - $2,000.
-- The Mackobee Saltwater Disposal Well has comingled perforations in 3 horizons, is taking 1,000 BWPD with 100 psi Wellhead injection pressure, and is capable of significantly more water. For expanded waterflood operations, the SWD could be reversed for future water source for Waterflood operations.
-- 3D Seismic Coverage is available for review on Haas, Mackobee and Truro.
-- There is a Northern / Northeastern permeability barrier that exists for the Truro and Haas waterflood unit that acts as an effective seal preventing oil migration; Partial Edgewater aquifer support exists for each reservoir, however requires water injection to augment production and improve reservoir conformance. Stratigraphic barriers between reservoir units act as a baffle to underlying water and pattern injection enhances flood efficiency.
-- Closing inventory 29 February approx. 2,950 BBLS of crude oil in stock tanks.

Unit Recovery Factors---
-- Enhanced Recovery factor for Mackobee Coulee Unit is expected to be 15% - 20% (Waterflood).
-- Enhanced Recovery factor for Truro Madison Unit is expected to be 25% - 30% (Waterflood).
-- Enhanced Recovery factor for Haas Madison Unit is expected to be as high as 50% (Waterflood).
-- Conservatively, McDaniels estimates Haas to have a confirmed EUR of 12,969 MBO when the waterflood is done, (26% recovery)
-- Haas Unit is a very good candidate for a CO2 tertiary flood.
-- Based on an IHS study of North Dakota CO2 flooding, the Madison Reservoir will produce incremental oil of 6.5% to 13.3% of Original Oil in Place.
-- With 50 MMBBLs OOIP, the incremental oil range of Haas Unit is 3.3 to 6.7 MMBBLs from a CO2 flood.
-- Dakota formation is the makeup water supply source for waterflood, an up-hole zone. Plenty of source water is available for expanding waterflood operations, and the water is compatible with the producing zones.
-- Haas Oil Sweetening alternative to lower the H2S Levels within the oil to zero ppm via the use of a H2S Scavenger you would place a mixer/push tool (~$2,500) on the downstream of the dump of the treater as the injection point and have the samples tested regularly plus require a chemical pump. The incremental cost of monthly chemicals maybe in the range of $1.50-$1.80 b/d justifying blending in the US which will be offset by the potential uptick in quality discount and reduced trucking, tariffs and fees. An option to explore lowering differentials and keeping the oil in the US vs trucking into Canada.
-- Other marketing options for oil have not been explored fro crude sales. Trafigura Trading LLC has been a legacy oil purchaser.

Energy Advisors Is Marketing US Assets---
The North Dakota Production and Waterflood properties include the following attributes.

-- Immediate and Improving Cash Flows
-- High Operated WI Ownership; Concentrated Asset Base;
-- Large OOIP. Bypass Pay Opportunities
-- Established Waterflood - Unitized Production
-- Long Life Reserves - 3rd Party Engineering Evaluation
-- 3-D Proprietary Seismic Coverage
-- 4-PUD Locations & 3-Probable Locations
-- Water Disposal & Infrastructure in place
-- Oil Focused Asset Base, 28° API Crude
-- Upside & Development Potential - Properties that exhibit flat production

As discussed above, the U.S. North Dakota assets include high operated working interest across 5 units:

-- Haas Madison Unit: (99% Operated WI; 75.1% NRI) 59 Total Wells. 27.5 API Oil
-- North Haas: ~60.74% & 45.7% NRI (Non-Unit); 50 MMBO In Place;
-- Smith Unit: (74.75% WI; 60.7% NRI; 1 Well;)
-- Truro Madison: 97.6% WI; 73.3% NRI; 21 Wells. 26.9 API; Expand Waterflood; Premium Flood In Low Price Environment;
-- Mackobee Coulee: 100% Operated WI; 75.3% NRI; 10 Wells; 27.4 Degree API

Other North Dakota Attributes--
-- Bottineau & Renville Cos., ND
-- 8,253 gross / 7,905 net acres of Zargon, 100% operated land in North Dakota with high working interest ownership;

Strong Company Volumes:
-- 370 boe/d gross production from Williston Basin; Madison reservoir units; No Bakken rights

U.S. Well Counts---
-- 111 total Zargon Oil (ND) Inc. licensed wells including 72 active wells (52 producing, 16 water injection, 3 water source and 1 salt water disposal);

Investment Opportunity---
-- Opportunity to increase recovery factor through optimization of waterflood and undeveloped land;
-- Unitized oil production with infill drilling potential;
-- 7 proved and probable locations at Mackobee Coulee, Truro and Haas;
-- Potential waterflood expansion project at Truro provides opportunity to ramp up production with minimal associated costs
-- Drill ready locations at Truro and Mackobee
-- Oil handling infrastructure and water disposal with capacity for increased production levels

U.S. Deal Structure
As described above, Zargon will consider the sale of the U.S. assets or the U.S. subsidiary in proportion to the total review of options available for the total company.

U.S. Acreage---
U.S. Long Life, Low Decline Conventional Oil Properties
Properties consist of ~8,293-gross acres (~7,905-net) both unitized and non-unitized production. The U.S. Acreage is a mix of HBP/HBU & primary term leaseholds.

In the U.S., there are 52-active producers, 16-active injectors, 1-SWD, 13-Shut-Ins & 5-TA'd wells across 5-fields (Haas & N. Haas, Truro, Mackobee Coulee & Smith).

To date, the U.S. assets have produced approximately 16 MMBO.

Significant U.S. Oil in Place---
Opportunity to increase oil recovery through infill drilling at each property by increasing drilling density (no downspacing regulations). Waterflood expansion/rework opportunities through further optimization and rebalancing work to augment existing flat production life.

U.S. Geology---
North Dakota Williston Basin geology is directly analogous to the offsetting Southeast Saskatchewan Williston Basin geology

U.S. Subsidiary---
During January 2020, gross production for the properties was 368 BOPD. The latest complete month generated a net cash flow of $234,952/Mn receiving a sales price of $46.57/bbl. It bears noting that in 2018 the assets cash flowed $300,000-$400,000/Mn on higher crude prices.

Zargon owns a Canadian subsidiary, Zargon US Holdings which owns two U.S. subsidiaries including the operating company, Zargon Oil ND.

Canadian Assets---
Changing gears here are some thoughts on Zargon's Canadian (Alberta) assets as represented by Macquarie. The Canadian assets generated $42.95/boe in 2018; paid $4.34/boe in royalty and experienced $28.86/boe in operating costs netback $9.75/boe in Cdn dollars.

Canadian Asset Attributes---
-- 206,074 gross / 117,685 net acres of total Zargon land in Alberta (Crown and Freehold)
-- 1,397 boe/d of low decline (12%) production primarily from the Cretaceous Mannville Group
-- 60% of production concentrated in Little Bow, Taber South and Retlaw assets in SE Alberta
-- 692 total Zargon wells in Alberta including 189 producing and 261 suspended wells (AB LMR 1.12)
-- The AER’s voluntary Area Based Closure liability program requires companies to spend 4% of deemed inactive liability per year
-- For 2019, Zargon is required to spend $1.2 mm, which compares with Zargon’s 2019E budgeted spend of $2.0 - $2.5 mm
-- Production and injection facilities associated with the ASP flood at Little Bow
-- 8 proved and probable locations at Taber and Bellshill Lake
-- Little Bow provides material upside opportunity through:
-- Non-ASP waterflood reactivation and expansion projects along with well reactivations
-- ASP project well reactivations

Canadian Fields Include
-- Little Bow (Upper Mannville Pools); 21-32 Degree API;
-- Retlaw (Manville Pools); 17-24 Degree API;
-- Taber South (Mannville Pool) 19-26 Degree API;

Updates
Macquarie Opportunity Overview
Macquarie Confidentiality Agreement
2017-2018 Fluid Level Summary added to 05. Operations
Facility Inspection 2018 Reports added to 05. Operations
Plains & Trafigura WI Oil Sales Marketing Statements added to 05. Operations

TO LEARN MORE
Energy Advisors Group
Mr. Steve Henrich
Director
1580, 727 - 7th Avenue SW
Calgary, AB T2P 0Z3
CANADA
Direct: 403-294-1906 Cell: 403-874-7801
Email: [email protected]

Questions Regarding This Asset? Email Steve Henrich or call EAG at 403-294-1906
Virtual Data Room

NORTH DAKOTA WATERFLOODS

69-Active Wells. 4-PUDS. 7,900 Acres.

BOTTINEAU & RENVILLE COS., ND

IMMEDIATE INFILL DRILLING

Waterflood Production Optimization

Bluell & Sherwood Development

3-D PROPRIETARY SEISMIC COVERAGE

Pool Delineation Opportunities

~97.8% Operated WI & ~73.8% NRI

Gross Production: 368 BOPD

LONG LIFE CONVENTIONAL OIL

Shallow Decline w/ 4% Oil Cut Last 3-Yrs

Q4 2019 Net Cash Flow: ~$226,600/Mn

SELLER MUST SELL STOCK U.S. SUB

Based On Stable Op Costs:~$155,000/Mn

INFRASTRUCTURE & SWD-IN-PLACE

SALE PKG SOLD & NOTE REFINANCED

PP 1229DV

PLEASE NOTE:
Zargon Oil & Gas Ltd. (“Zargon” or the “Company”) announced April 2, 2020 that it has entered into an agreement to settle its US$3.05 million term debt through the sale of its US subsidiaries for nominal proceeds and the release of the Company from its obligations under the loan agreement.

Summary
Energy Advisors is marketing Zargon's North Dakota assets as part of a larger corporate reorganization.

Zargon Oil & Gas Ltd. ("Zargon") (Calgary) is also working with the Advisory and Capital Markets division of Macquarie Capital Markets Canada Ltd. as financial advisor to assist in seeking outcomes that will maximize value for the (whole) Company and its stakeholders. Outcomes or options may include a corporate merger, sale, recapitalization or reorganization along with consideration for the firm's North Dakota asset which Energy Advisors is marketing herein.

MOTIVATED SELLER SEEKING SALE OF U.S. SUBSIDIARY---

The underlying loan for this asset has been sold, but EAG is continuing to market the assets with offers due Wednesday April 8.

Cost Reduction Points

Annual Management Fee of $739,200 disappears with a new US purchaser

See Documents: $US Gross ND Operations Consolidated and US 201906 FS Final

Annual Management Fees in the amount of $739,200 will be eliminated.
Management fees total $61,600 per month has ties to the Ops statement which ultimately Haas bears the burden as discussed with sub feature 176 (shown on the $US Gross ND Operations Consolidated) raising the cost on OPEX $/bbl and other areas captured in sub feature 134. This is shown in the Zargon Acquisition Inc. (Consolidated) Balance Sheet as Management Fees as part of INTEREST & INTERCOMPANY EXPENSES (US 201906 FS Final).
This fee of $61,600/mth represents the intercompany management fee to Canada per month of which a portion of this fee is pushed down to subfeature 176 (Overhead Recovery US – seen in Haas) & 134 (Operator Overhead – Seen in other areas) (allowance in JV Ops Agreement) see lease operating statements. The management fee transferred to Canada on the intercompany balance sheet on a monthly basis. This cash would reside in the US with a new US purchaser.

Overhead Reduction
Overhead charges are based on one full-time employee pumper, and three contract pumpers. Operations can be carried out with a total of three, rather than four, pumpers.

Haas Unit – Sour Crude Blending Cost Reduction
Haas Oil Sweetening alternative to lower the H2S Levels within the oil to zero ppm via the use of a H2S Scavenger you would place a mixer/push tool (~$2,500) on the downstream of the dump of the treater as the injection point and have the samples tested regularly plus require a chemical pump. The incremental cost of monthly chemicals maybe in the range of $1.50-$1.80 b/d justifying blending in the US which will be offset by the potential uptick in quality discount and reduced trucking, tariffs and fees. An option that should be explored to lower differentials that allows the oil to be marketed in the US providing better pricing options.

P&A / Site Reclamation Delay
Currently three idle wells are scheduled for plugging and reclamation at an estimated cost of $70,000/well. Zargon has Bonds of $349,980 cash deposit with the NDIC which would transfer with the asset.

Royalty Reduction Proposal
The properties are burdened with a 18.8% royalty. In the current low-price environment, the asset purchaser could proposal to reduce the landowner’s royalty, and overriding royalties, either temporarily or permanently. A one-half reduction in royalty burdens would promote longer-term commercial production operations.

Zargon Waterflood Upside Opportunities

-- Today's production is 347 BOPD. The Mackobee Coulee 9-21 well is down due to a tubing leak. Was making 25 BOPD. The well can be returned to production by replacing bad tubing joint and assess pump.
-- Wells that produce 3-5 BOPD are currently shut in. Can be put back into production upon downhole repair.
-- Production forecast for 2020 is 360 BOPD Baseline production.
-- Mackobee Coulee Area has by-passed pay.
-- Mackobee Coulee Unit is located in the Southern 1/3 of the acreage block. Zargon had planned to expand the waterflood to the Northern 2/3. LOTS OF UPSIDE HERE with associated waterflood development.
-- Truro Madison pool is not fully delineated; The hydrocarbon pool extends to the Southwest, potential for stepout hz wells.
-- Opportunity to downspace the well density in their waterfloods. Well density can be reduced in these units, improving ultimate recoveries.
-- No capital investment has occurred on the fields in several years. There is further field optimization work to be done. Last drilling occurred in 2014.
-- Preventative Maintenance on HPS (High Pressure) water injection pump conducted in 2018 stripped down at a cost of $16k - $18k requird every 5 years. The remaining triplex pumps at the flood plant require annual maintenance costs ~$1,500 - $2,000.
-- The Mackobee Saltwater Disposal Well has comingled perforations in 3 horizons, is taking 1,000 BWPD with 100 psi Wellhead injection pressure, and is capable of significantly more water. For expanded waterflood operations, the SWD could be reversed for future water source for Waterflood operations.
-- 3D Seismic Coverage is available for review on Haas, Mackobee and Truro.
-- There is a Northern / Northeastern permeability barrier that exists for the Truro and Haas waterflood unit that acts as an effective seal preventing oil migration; Partial Edgewater aquifer support exists for each reservoir, however requires water injection to augment production and improve reservoir conformance. Stratigraphic barriers between reservoir units act as a baffle to underlying water and pattern injection enhances flood efficiency.
-- Closing inventory 29 February approx. 2,950 BBLS of crude oil in stock tanks.

Unit Recovery Factors---
-- Enhanced Recovery factor for Mackobee Coulee Unit is expected to be 15% - 20% (Waterflood).
-- Enhanced Recovery factor for Truro Madison Unit is expected to be 25% - 30% (Waterflood).
-- Enhanced Recovery factor for Haas Madison Unit is expected to be as high as 50% (Waterflood).
-- Conservatively, McDaniels estimates Haas to have a confirmed EUR of 12,969 MBO when the waterflood is done, (26% recovery)
-- Haas Unit is a very good candidate for a CO2 tertiary flood.
-- Based on an IHS study of North Dakota CO2 flooding, the Madison Reservoir will produce incremental oil of 6.5% to 13.3% of Original Oil in Place.
-- With 50 MMBBLs OOIP, the incremental oil range of Haas Unit is 3.3 to 6.7 MMBBLs from a CO2 flood.
-- Dakota formation is the makeup water supply source for waterflood, an up-hole zone. Plenty of source water is available for expanding waterflood operations, and the water is compatible with the producing zones.
-- Haas Oil Sweetening alternative to lower the H2S Levels within the oil to zero ppm via the use of a H2S Scavenger you would place a mixer/push tool (~$2,500) on the downstream of the dump of the treater as the injection point and have the samples tested regularly plus require a chemical pump. The incremental cost of monthly chemicals maybe in the range of $1.50-$1.80 b/d justifying blending in the US which will be offset by the potential uptick in quality discount and reduced trucking, tariffs and fees. An option to explore lowering differentials and keeping the oil in the US vs trucking into Canada.
-- Other marketing options for oil have not been explored fro crude sales. Trafigura Trading LLC has been a legacy oil purchaser.

Energy Advisors Is Marketing US Assets---
The North Dakota Production and Waterflood properties include the following attributes.

-- Immediate and Improving Cash Flows
-- High Operated WI Ownership; Concentrated Asset Base;
-- Large OOIP. Bypass Pay Opportunities
-- Established Waterflood - Unitized Production
-- Long Life Reserves - 3rd Party Engineering Evaluation
-- 3-D Proprietary Seismic Coverage
-- 4-PUD Locations & 3-Probable Locations
-- Water Disposal & Infrastructure in place
-- Oil Focused Asset Base, 28° API Crude
-- Upside & Development Potential - Properties that exhibit flat production

As discussed above, the U.S. North Dakota assets include high operated working interest across 5 units:

-- Haas Madison Unit: (99% Operated WI; 75.1% NRI) 59 Total Wells. 27.5 API Oil
-- North Haas: ~60.74% & 45.7% NRI (Non-Unit); 50 MMBO In Place;
-- Smith Unit: (74.75% WI; 60.7% NRI; 1 Well;)
-- Truro Madison: 97.6% WI; 73.3% NRI; 21 Wells. 26.9 API; Expand Waterflood; Premium Flood In Low Price Environment;
-- Mackobee Coulee: 100% Operated WI; 75.3% NRI; 10 Wells; 27.4 Degree API

Other North Dakota Attributes--
-- Bottineau & Renville Cos., ND
-- 8,253 gross / 7,905 net acres of Zargon, 100% operated land in North Dakota with high working interest ownership;

Strong Company Volumes:
-- 370 boe/d gross production from Williston Basin; Madison reservoir units; No Bakken rights

U.S. Well Counts---
-- 111 total Zargon Oil (ND) Inc. licensed wells including 72 active wells (52 producing, 16 water injection, 3 water source and 1 salt water disposal);

Investment Opportunity---
-- Opportunity to increase recovery factor through optimization of waterflood and undeveloped land;
-- Unitized oil production with infill drilling potential;
-- 7 proved and probable locations at Mackobee Coulee, Truro and Haas;
-- Potential waterflood expansion project at Truro provides opportunity to ramp up production with minimal associated costs
-- Drill ready locations at Truro and Mackobee
-- Oil handling infrastructure and water disposal with capacity for increased production levels

U.S. Deal Structure
As described above, Zargon will consider the sale of the U.S. assets or the U.S. subsidiary in proportion to the total review of options available for the total company.

U.S. Acreage---
U.S. Long Life, Low Decline Conventional Oil Properties
Properties consist of ~8,293-gross acres (~7,905-net) both unitized and non-unitized production. The U.S. Acreage is a mix of HBP/HBU & primary term leaseholds.

In the U.S., there are 52-active producers, 16-active injectors, 1-SWD, 13-Shut-Ins & 5-TA'd wells across 5-fields (Haas & N. Haas, Truro, Mackobee Coulee & Smith).

To date, the U.S. assets have produced approximately 16 MMBO.

Significant U.S. Oil in Place---
Opportunity to increase oil recovery through infill drilling at each property by increasing drilling density (no downspacing regulations). Waterflood expansion/rework opportunities through further optimization and rebalancing work to augment existing flat production life.

U.S. Geology---
North Dakota Williston Basin geology is directly analogous to the offsetting Southeast Saskatchewan Williston Basin geology

U.S. Subsidiary---
During January 2020, gross production for the properties was 368 BOPD. The latest complete month generated a net cash flow of $234,952/Mn receiving a sales price of $46.57/bbl. It bears noting that in 2018 the assets cash flowed $300,000-$400,000/Mn on higher crude prices.

Zargon owns a Canadian subsidiary, Zargon US Holdings which owns two U.S. subsidiaries including the operating company, Zargon Oil ND.

Canadian Assets---
Changing gears here are some thoughts on Zargon's Canadian (Alberta) assets as represented by Macquarie. The Canadian assets generated $42.95/boe in 2018; paid $4.34/boe in royalty and experienced $28.86/boe in operating costs netback $9.75/boe in Cdn dollars.

Canadian Asset Attributes---
-- 206,074 gross / 117,685 net acres of total Zargon land in Alberta (Crown and Freehold)
-- 1,397 boe/d of low decline (12%) production primarily from the Cretaceous Mannville Group
-- 60% of production concentrated in Little Bow, Taber South and Retlaw assets in SE Alberta
-- 692 total Zargon wells in Alberta including 189 producing and 261 suspended wells (AB LMR 1.12)
-- The AER’s voluntary Area Based Closure liability program requires companies to spend 4% of deemed inactive liability per year
-- For 2019, Zargon is required to spend $1.2 mm, which compares with Zargon’s 2019E budgeted spend of $2.0 - $2.5 mm
-- Production and injection facilities associated with the ASP flood at Little Bow
-- 8 proved and probable locations at Taber and Bellshill Lake
-- Little Bow provides material upside opportunity through:
-- Non-ASP waterflood reactivation and expansion projects along with well reactivations
-- ASP project well reactivations

Canadian Fields Include
-- Little Bow (Upper Mannville Pools); 21-32 Degree API;
-- Retlaw (Manville Pools); 17-24 Degree API;
-- Taber South (Mannville Pool) 19-26 Degree API;

Updates
Macquarie Opportunity Overview
Macquarie Confidentiality Agreement
2017-2018 Fluid Level Summary added to 05. Operations
Facility Inspection 2018 Reports added to 05. Operations
Plains & Trafigura WI Oil Sales Marketing Statements added to 05. Operations

TO LEARN MORE
Energy Advisors Group
Mr. Steve Henrich
Director
1580, 727 - 7th Avenue SW
Calgary, AB T2P 0Z3
CANADA
Direct: 403-294-1906 Cell: 403-874-7801
Email: [email protected]

Questions Regarding This Asset? Email Steve Henrich or call EAG at 403-294-1906