Overview

Oil and Gas Properties and Wells

Cougar-Trout-Core-Area-Operations

TROUT CORE PROPERTIES
Over a period of 6 months in 2009 Cougar Energy, Inc negotiated commercial terms for properties that have the greatest upside through normal maintenance and enhanced recovery programs as well as future potential with additional drilling. These negotiations culminated at the end of September and beginning of October 2009 with Cougar Energy, Inc successfully acquiring the Trout Core Area properties from two private oil and gas companies. The Cougar team had already high graded many of the properties within these acquisitions and could foresee considerable potential to increase existing production in the first round of development – the proverbial “low hanging fruit”. Operations commenced on these properties during the winter of 2009/10 consisting of a maintenance and work over programs. By December 31, 2009 we had reactivated 4 wells that were previously suspended.. By July 31, 2010 we had reactivated an additional 2 wells that per previously suspended and completed a substantial geological evaluation on the properties.

The following represents a summary of the acquisitions completed over calendar year of 2009 – 2010 of producing and non-producing properties:

A

  • 2560 gross acres of land – 65% working interest in six wells — 2 producing wells and 4 suspended wells located in the Kidney and Equisetum fields.
  • Approximately 12 barrels per day (bbl/d) net production (20 bbl/d gross) of light oil at time of acquisition

B

  • 7,100 gross acres of mineral rights with an average 85% working interest (all continued through production, no expiries)
  • Approximately 125 barrels per day (bbl/d) net production (170 bbl/d gross) — 85 bbl/d at time of acquisition
  • 11 pumping wellbores — 8 at time of acquisition — 3 workovers pending partner approval of AFE’s
    1 observation wellbore and 21 suspended wellbores
  • 8 single well batteries, 3 water disposal wellbores with associated facilities, 2 multi well batteries with existing fluid handling capacity in excess of 2500bbl/day (oil, gas and water handling and treating capability
  • Approximately 38.7 km of pipelines (oil and produced water)
  • Approximately 13 km2 of 3D seismic over the properties and approximately 84 km of 2D seismic over the properties and adjacent lands
  • The majority of this acquisition is outside the boundary of the Peerless Trout Lake land claim. The current surface facilities have a replacement value of CAD$6,500,000 with a depreciated value of CAD$1,000,000. The overall project has an estimated CAD$50,000,000 in sunk costs to date including wells, facilities, pipelines, roads and power lines.

This was a critical mass property acquisition as there is substantial infrastructure, resulting in lower overall operating costs, lower development costs and giving our schedule an enormous leap forward to achieve our goals of creating a 3- 5,000 bbl/d company in a short period of time.

Additional details on the Trout Core page.

Production from the Company’s new proved reserves commenced on October 1, 2009 and recognition of the associated revenue and cash flow began on that date.

LUCY, British Columbia (HORN RIVER BASIN)
Resources Shale Gas
Gross Acreage ~1,920
Working Interest 80%
Status 2 wells drilled and cased; proposed work program of Phase I — perform a
vertical frac on one well, tie-in and production test; upon successful
of Phase 1, implement Phase II — drill a horizontal leg from the second well
and perform a staged horizontal frac

Substantial long term upside through developing a high impact Muskwa/Evie shale gas play
Close to existing infrastructure — pipeline, roads
Estimated 123 Bcf of gas in place and 60m pay zone, according to engineering report

COUGAR CENTRAL ALBERTA PRODUCING PROPERTIES, Alberta

  • Private Company Production and Property Acquisition (completed October 1, 2009)
  • In August, 2009, it was determined that Cougar’s working interest partner in the Lucy, B.C. project was unable to complete the financing as required in the farm-out agreement and as a result, in October after due diligence and environmental reviews, Cougar has accepted the transfer of the partner’s Alexander and Crossfield, Alberta properties as a penalty payment. The properties received are valued at approximately $500,000 CAD (NPV 10% escalated pricing).. The properties have an estimated potential average production of 15 boe/d.
    1. 2 producing oil properties in the Crossfield and Alexander fields in Central Alberta.
    2. 100% working interest in the Crossfield property — 1 producing well with single well
    battery with approximately 5 barrels per day (bbl/d) net production — production
    continues to be stable with no capital commitment required.

3. 100% working interest in the Alexander property (before payout, 55% after payout) — 1 shut in oil well with a
single well battery, 1 suspended well. Production of about 15 bbl/d oil was achieved after start up in June,
2010.

  • In September of 2010, Cougar reached an agreement to divest the Crossfield property for $210,000 — the P1 reserve value to a third party Canadian company. The transaction closed in mid October, 2010. Proceeds from the sale were used to invest in added production on the Trout Core Project.
This information on this website or discussion documents contains the terms "estimated reserves based on escalating pricing" and "contingent resources". The Company advises investors that although these terms are recognized and required by Canadian securities regulations (under National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities), the US Securities and Exchange Commission does not recognize these terms. . In addition, "estimated reserve value" has an amount of uncertainty as to their existence, and economic and legal feasibility In addition, "prospective or contingent resources" have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that any part of a prospective or contingent resource will ever be upgraded to a higher category. Under Canadian rules, estimates of prospective or contingent resources may not form the basis of feasibility or pre-feasibility studies, or economic studies except for a "preliminary assessment" as defined under National Instrument 51-101. CAUTIONARY NOTE TO U.S. INVESTORS - The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions and constant pricing. We use certain terms on this management discussion, such as prospective resource or economic forecast based on escalating pricing, that the SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 10K. You can also obtain this form from the SEC by calling 1-800-SEC-0330.