ASP Project Update - Zargon

1 ASP Project Update April 18, 2013. Advisory Forward-Looking Information Forward-Looking Statements - This presentation offers our assessment of Zargon 's future plans and operations as at April 18, 2013, and contains forward-looking statements. Such statements are generally identified by the use of words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", " Project ", "should", "plan", "intend", "believe" and similar expressions (including the negatives thereof). In particular, this presentation contains forward-looking information as to Zargon 's corporate strategy and business plans, Zargon 's oil exploration Project inventory and development plans, Zargon 's dividend policy and the amount of future dividends, future commodity prices, Zargon 's expectation for uses of funds from financing, Zargon 's capital expenditure program and the allocation and the sources of funding thereof, Zargon 's cash flow and dividend model and the assumptions contained therein and the results there from, anticipated payout rates, 2012.

2 Production and other guidance and the assumptions contained therein, estimated tax pools, Zargon 's reserve estimates, Zargon 's hedging policies, Zargon 's drilling, development and exploitation plans and projects and the results there from and Zargon 's ASP Project plans, capital expenditures, costs and the results therefrom. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond our control, including such as those relating to results of operations and financial condition, general economic conditions, industry conditions, changes in regulatory and taxation regimes, volatility of commodity prices, escalation of operating and capital costs, currency fluctuations, the availability of services, imprecision of reserve estimates, geological, technical, drilling and processing problems, environmental risks, weather, the lack of availability of qualified personnel or management, stock market volatility, the ability to access sufficient capital from internal and external sources and competition from other industry participants for, among other things, capital, services, acquisitions of reserves.

3 Undeveloped lands and skilled personnel. Risks are described in more detail in our Annual Information Form, which is available on our website. Forward- looking statements are provided to allow investors to have a greater understanding of our business. You are cautioned that the assumptions, including, among other things, future oil and natural gas prices; future capital expenditure levels; future production levels;. future exchange rates; the cost of developing and expanding our assets; our ability to obtain equipment in a timely manner to carry out development activities; our ability to market our oil and natural gas successfully to current and new customers; the impact of increasing competition; our ability to obtain financing on acceptable terms; and our ability to add production and reserves through our development and acquisition activities used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.

4 Our actual results, performance, or achievement could differ materially from those expressed in, or implied by, these forward-looking statements. We can give no assurance that any of the events anticipated will transpire or occur, or if any of them do, what benefits we will derive from them. The forward-looking information contained in this presentation is expressly qualified by this cautionary statement. Our policy for updating forward-looking statements is that Zargon disclaims, except as required by law, any intention or obligation to Update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Barrels of Oil Equivalent - Natural gas is converted to a barrel of oil equivalent ( Boe ) using six thousand cubic feet of gas to one barrel of oil. In certain circumstances, natural gas liquid volumes have been converted to a thousand cubic feet equivalent ( Mcfe ) on the basis of one barrel of natural gas liquids to six thousand cubic feet of gas.

5 Boes and Mcfes may be misleading, particularly if used in isolation. A conversion ratio of one barrel to six thousand cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion ratio on a 6:1 basis may be misleading as an indication of value. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation. Estimated reserve values disclosed in this presentation do not represent fair market value.

6 Discovered Petroleum Initially-In-Place ( DPIIP ) is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially in place includes production, reserves, and contingent resources; the remainder is unrecoverable. The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year. 1. Little Bow ASP. Enhanced Oil Recovery Project Oil rate today: 400 bpd ASP Capital (Non Chemical): $ 60 Million Forecast Oil Rate in 2016: 1,500 bopd Forecast Oil Rate in 2018: 1,800 bopd Forecast Oil Recovery: Million Barrels Project Evolution 2009 Little Bow assets acquired from Masters Energy Inc.

7 2010 Reservoir Studies 2011 Lab Work, Facilities Scoping Studies 2012 Well workovers, Detailed Engineering, Key Equipment Orders; Reservoir Study Update 2013 Construction: Facilities and Pipelines, Chemical Supply 2014 Startup 2. Little Bow Mannville I and P Pools Little Bow ASP: Phase 1&2 Development Alberta 15-18W4. High Quality Upper Mannville Reservoir Zargon WI: 100 %. Little Bow Mannville P Pool First Production: 1974. Little Bow Mature Waterflood (initiated 1983). Permeability (Avg): 1,500 mD. Little Bow Mannville I Pool Depth: 3,600 ft Porosity (Avg.): 23%. Phased ASP Development Zargon Land Zargon Wells Phase 1 Area Phase 2 Area What is ASP? A dilute chemical blend (Alkali, Surfactant and Polymer). added to an existing waterflood to scrub out oil that waterflooding alone cannot recover Rock Rock Contact more reservoir, and get more oil from reservoir that is contacted.

8 Water Injection Trapped Oil Water Alkali &. Surfactant Mobilized Oil Solution Surfactants (Detergent): mobilizes trapped oil a) Water Injection: More than half of oil is trapped . b) Alkali / Surfactant Mobilizes trapped oil Alkali: Increases effectiveness of the Alkali and Surfactant act together to mobilize oil trapped in the reservoir. The injected fluids must contact the trapped oil to be effective. surfactant Polymer: Thickener. Thickened water is Injector Producer Injector Producer able to contact more reservoir Water Polymer Increased Solution Contact Volume a) Water Injection b) Polymer Injection Polymer thickens the injected fluid to increase the volume of reservoir contacted. 3. ASP Chemical Flooding Injection Sequence Injection Sequence 1) ASP: A blend of Alkali, Surfactant and Polymer mobilizes trapped oil 2) Polymer Push : Polymer solution displaces mobilized oil to producing wells 3) Terminal Waterflood: Completes the displacement 2013 2014 2015 2016 2017 2018 2019 2020 2021.

9 Phase 1 ASP Polymer Waterflood Phase 2 ASP Polymer Waterflood Canadian ASP Projects Alberta Sask. Grande Prairie Mooney (Black Pearl). 2011. In Progress Scheme Approved Edmonton Coleville (Penn West). 2011. Strathmore Suffield (Terrex) (Cenovus). 2007 Battrum Calgary (Hyak Energy). Fosterton (Husky). Little Bow ( Zargon ) 2012 Gull Lake (Husky). Bone Creek 2009. (Husky). Taber (Husky) Medicine Hat 2008 Lethbridge Instow Taber South (Husky) Grand Forks (Talisman). 2006 (CNRL) 2007/11. 4. Husky Taber and Zargon Little Bow Mannville Pools Analogous Production History Zargon Little Bow Production History 100,000 100%. Oil Production & Water Injection (bpd). Oil Cut 10,000 Injection 10%. Little Bow Upper Mannville Oil Cut (%). I' and P Pool ( Zargon ). 1,000 1%. Oil Rate 100 0%. 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014. Data to Jan-2013.

10 100,000. Husky Taber Production History 100%. Taber Oil Production & Water Injection (bpd). Injection 10,000 10%. Taber Mannville B'. Oil Cut (%). Lethbridge Pool (Husky). Oil Cut 1,000 1%. 6 miles Oil Rate 100 0%. 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012. Data to Jan - 2013. Husky ASP Flood Initiated Husky Taber Mannville B ASP Flood Maintaining Strong Performance ASP Injection Polymer Injection 100,000 Peak Oil Cut: 13%. 10,000 Oil Production (bpd). Initial Oil Cut: 2%. Oil Cut (%). Peak Oil: 1814 bpd Oil Cut 1,000 Oil Rate Initial Oil: 300 bpd 100 2000 2002 2004 2006 2008 2010 2012 2014. Data to Jan-2013. 5. Husky Taber Mannville B ASP Flood ASP Flood Reserves ASP Polymer Terminal 100%. Waterflood Oil Cut Oil Cut (%). 10%. ASP Flood Decline Base Waterflood Decline 12% DPIIP. 1%. 20% 25% 30% 35% 40% 45% 50% 55%.