OCTOBER 20, 2010 · development companies that we believe to be of interest to investors or that...

Please see important disclosures on pages 13 and 14.

OCTOBER 20, 2010

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SUMMARY We are introducing a report to focus on names not under coverage and provide notable sector updates. Similar to JCI’s “Rock Talk”, generally, the intent of this report is to highlight junior exploration and development companies that we believe to be of interest to investors or that may complement companies already under coverage.

In this inaugural edition, we introduce five companies.

RADAR SCREEN ADDITIONS CGX ENERGY INC. (TSXV-OYL) – Exploration company with

offshore concessions in the highly prospective yet underexplored Guyana-Suriname Basin.

EXALL ENERGY CORP. (TSX-EE) – Current production of ~1,450 Boe/d with assets in Alberta, B.C. and Texas. The Company has a 2010 exit production target of ~2,000 Boe/d.

PALLISER OIL & GAS CORP. (TSXV-PXL) – Targeting heavy oil in the greater Lloydminster area. Production has more than doubled in 2010, with a 2010 exit production target of 1,250 Boe/d, a 175% increase over the prior year.

PETRODORADO ENERGY LTD. (TSXV-PDQ) – Numerous blocks in Colombia, solid balance sheet and several near-term catalysts.

TAG OIL LTD. (TSXV-TAO) – Junior exploration company with interests in five concessions on the north island of New Zealand. The Company has conventional exploration and development prospects and over 14 billion barrels of potential resources (OOIP) in a shale similar to the Bakken in western Canada.

ANALYST: GREGORY CHORNOBOY, P ENG, MBA [email protected] +1.403.292.9485 ANALYST: DAVID RICCIARDI, CFA [email protected] +1.403.262.0906 ANALYST: TIM MURRAY, CFA [email protected] +1.403.292.9484 ASSOCIATE: JAMES HUMEN, CA [email protected] +1.403.292.9487

JCI COVERAGE LIST

Target Close Return ToPrice Price Target

TSXV‐ALE BUY C$0.75 C$0.61 23%TSX‐BNK BUY C$10.50 C$6.48 62%TSX‐CDH SPEC. BUY C$8.75 C$6.10 43%TSXV‐CLN SPEC. BUY C$3.25 C$1.37 137%TSXV‐CNE HOLD C$1.55 C$1.48 5%TSX‐CVI.A SPEC. BUY C$5.50 C$3.59 53%TSX‐DEE BUY C$3.25 C$2.24 45%TSX‐EQU BUY C$8.75 C$4.60 90%TSX‐GTE BUY C$8.75 C$7.49 17%TSX‐MEL BUY C$4.50 C$3.49 29%TSXV‐NVS BUY C$1.05 C$0.88 19%TSX‐PDP SPEC. BUY C$1.20 C$0.68 76%TSXV‐PEH SPEC. BUY C$0.70 C$0.29 141%TSX‐PMG BUY C$35.00 C$25.17 39%TSX‐PRE BUY C$36.00 C$29.72 21%TSXV‐PTA SPEC. BUY C$0.85 C$0.41 107%TSXV‐RPL BUY C$5.75 C$3.60 60%TSXV‐SDX SPEC. BUY C$0.60 C$0.29 107%TSXV‐SRN BUY C$0.90 C$0.48 88%TSX‐TID BUY C$1.90 C$1.29 47%TSX‐WFE BUY C$9.25 C$5.59 65%TSX‐WIX SPEC. BUY C$5.50 C$3.76 46%TSXV‐WSX BUY C$8.00 C$7.20 11%

Source: Jennings Capital Inc; Thomson Reuters

Ticker Recommendation

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The information contained in this report was obtained from sources we believe to be reliable. We do not represent that such information is accurate or complete and it should not be relied on as such. Any opinions expressed herein reflect our judgment at this date and are subject to change. Jennings Capital Inc. and/or employees from time to time may hold shares, options or warrants on any issue included in this report and may buy or sell such securities. This report is not to be construed as an offer to sell or solicitation to buy securities. Member – CIPF. Jennings Capital (USA) Inc. is a member of SIPC.

THIS ISSUE RADAR SCREEN ADDITIONS

CGX ENERGY INC. .........................................................................3

EXALL ENERGY CORP. ...................................................................5

PALLISER OIL & GAS CORP............................................................6

PETRODORADO ENERGY LTD..........................................................7

TAG OIL LTD.................................................................................9

OIL AND GAS COVERAGE UNIVERSE....................................................11

COMMODITY PRICE FORECASTS ..........................................................12

RADAR SCREEN Market Cap Close

(MM) PriceCGX Energy Inc. TSXV‐OYL C$180 C$1.07 20‐Oct‐10Exall Energy Corp. TSX‐EE C$54 C$1.04 20‐Oct‐10Palliser Oil & Gas Corp. TSXV‐PXL C$35 C$1.01 20‐Oct‐10Petrodorado Energy Ltd. TSXV‐PDQ C$138 C$0.35 20‐Oct‐10TAG Oil Ltd. TSXV‐TAO C$181 C$4.80 20‐Oct‐10Source: Thomson Reuters

Date AddedCompany Ticker

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RADAR SCREEN ADDITION – CGX ENERGY INC.


CGX ENERGY INC. (TSXV-OYL $1.07); NOT RATED Previously, we had provided full research coverage on this Company, but due to a refocusing of the analyst’s coverage area, we are moving it to our Radar Screen instead. CGX Energy Inc. is a junior exploration company with interests in both offshore and onshore Guyana. Two blocks in particular, Corentyne (OYL 100%) and Georgetown (OYL 25%) have multiple prospects with the potential for multi-billion barrel discoveries. We are anticipating the first well to be drilled during the first half of 2011 on Georgetown.

The prospects in the Corentyne and Georgetown blocks have been defined by 3D seismic data, calibrated to previous wells which had varying degrees of oil shows. These previous wells include Shell’s Abary-1 well which was drilled in 1975. Abary-1 recovered 37° oil from the Maastrichtian zone, but was abandoned before reaching its primary target due to lost circulation and drilling problems. Other wells, including the Noble/Repsol West Tapir-1 well drilled in June 2008, had hydrocarbon shows, but not in commercial quantities. There is clearly a source rock – the trick will be finding the reservoirs and traps.

CATALYSTS Mid Q3 2011: Results from Jaguar-1 well. Late Q4 2011 – early Q1 2012: Results from Eagle-1 well.

PROPERTIES/PROJECTS Georgetown (OYL 25%)

• Covers approximately 2.06 million acres. • Partners are Repsol/YPF (45% and operator), and Tullow Oil

(30%). • Jaguar-1 well to be spud in Q2 2011, targeting gross Turonian

potential resources of 700 MMBbl. Gross costs are estimated to be $80 million.

• Prospects on both Georgetown and Corentyne have been defined by 3D seismic.

Corentyne (OYL 100%)

• Covers approximately 2.26 million acres. • Prospective resources of 2.8 billion Bbl (P50) from three zones –

Eocene, Upper and Lower Turonian. • Additional exploration potential in the Early Cretaceous Aptian

which has been successful in the Campos Basin offshore Brazil. • First well (Eagle-1) expected to be drilled in late 2011. Will test

the shallow Eocene prospect (300 MMBbl), at a gross cost of $35 million.

• If Jaguar-1 well in Georgetown block is successful in de-risking the Turonian, Eagle-1 could be deepened and the well could test all three zones.

GREGORY CHORNOBOY, P. ENG, MBA Senior Oil & Gas Analyst [email protected] +1.403.292.9485 JAMES HUMEN, CA Research Associate [email protected] +1.403.292.9487

Management & DirectorsKerry E. Sully President & CEOJames N. Fairbairn CFO, Secretary

& TreasurerDenis Clement DirectorWarren G. Workman VP, Exploration

Reserves & Resources(MMBbl, P50)

2P Reserves nilEagle Prospect 2,800

Company StatisticsMarket Cap $180 MMBasic Shares O/S 167.8 MMFully Diluted Shares O/S 170.1 MM52-Week Range $0.45 - $1.99Cash (06/30/10 act.) US$11.1 MMLT Debt (06/30/10 act.) US$0.0 MMWorking Capital (06/30/10 act.) US$13.8 MMEnterprise Value US$165.8 MMMajor ShareholdersSprott Asset Management LP 7.5%ValuationEV/BOE/d n/aEV/BOE n/aWebsite & Contact Infowww.cgxenergy.ca (416) 364 5569

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RADAR SCREEN ADDITION – CGX ENERGY INC.


OTHER PROPERTIES Corentyne Annex (OYL 100%), 0.98 million acres, offshore. Pomeroon (OYL 100%), 2.78 million acres, offshore. Berbice (OYL 62%), 0.78 million acres, onshore.

RISKS This is a pure exploration company. Although the science supporting

the quality of the prospects appears to be strong, there can be no assurance that commercial quantities of oil will be found.

CGX is sufficiently funded for its share of the Jaguar-1 well, but will have to raise additional funds to drill Eagle-1. The Company is actively seeking joint venture partners and, if successful, would provide additional funding but reduce its working interests in Georgetown and/or Corentyne.

Borders and jurisdiction only partially resolved. A dispute between Guyana and Suriname over parts of the Corentyne block was resolved by the International Tribunal of the Law of the Sea in 2007. Both countries subsequently re-affirmed their intentions to abide by that ruling. Still outstanding however are:

o The Pomeroon block falls within waters under dispute with Venezuela

o Suriname claims a triangle of land in the southeast corner of Guyana (although this does not encompass any of CGX’s blocks)

o Venezuela also claims almost three quarter of Guyana’s land area. The case is weak – it agreed to the current borders in 1899, but revived the dispute in the 1960s.

Balance Sheet (FYE Dec 31)As at June 30, 2010Assets (US$MM)

Cash & equivalents $12.36Receivables & other $0.36Deferred Tranaction Costs $0.44Current Assets $13.16PP&E $30.63

Total Assets $43.79Liabilities

Accounts Payable $1.89Current Liabilities $1.89Shareholders Equity $41.90

Total Liabilities and Equity $43.79

Most Recent FinancingDate Aug 17,2010Type Public OfferingNumber of Shares (MM) 40.00Price $0.50Gross Proceeds ($MM) $20.00

Source: Company Reports

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RADAR SCREEN ADDITION – EXALL ENERGY CORP.


EXALL ENERGY CORP. (TSX-EE $1.04); NOT RATED

Exall Energy Corp. is a junior exploration company with properties in Alberta, British Columbia and Texas, although its key focus is on developing a new oil discovery at Marten Mountain in north-central Alberta.

RECENT NEWS On October 4, 2010, Exall signed gas handling and operating

agreements to alleviate the Marten Mountain gas production constraints.

On September 2, 2010, Exall negotiated a new revolving demand credit facility of $15 million and repaid the Company’s $1.8 million non-revolving bridge loan.

On August 13, 2010, Exall announced results of the first well on the Marten Mountain “B” Sand trend. The first well had an initial test rate of 450 Bbl/d of light sweet crude and 127 Mcf/d of solution gas. At that time, the second well was undergoing completion operations.

CATALYSTS Remaining wells to be drilled at Marten Mountain and meeting 2010

exit production guidance of ~2,000 Boe/d.

KEY PROPERTIES: Mitsue - Alberta (Operated 66% - 72%)

• Spanning 6,150 net acres and has current production of 1,300 Boe/d.

• Exall expects to add ~500 Boe/d from new wells drilled in the remainder of 2010.


TIM MURRAY, CFA Research Analyst [email protected] +1.403.262.0904 JAMES HUMEN, CA Research Associate [email protected] +1.403.292.9487

ManagementStephen G. Roman Executive Chairman, DirectorFrank S. Rebeyka Vice Chairman & CEO, DirectorRoger Dueck President & COO, DirectorWarren F.E. Coles VP Finance & CFO

Board of DirectorsStephen G. Roman Executive Chairman, DirectorFrank S. Rebeyka DirectorRoger Dueck DirectorWayne Egan DirectorBernard A. Lang DirectorD. Allan Menzies DirectorRoderick Phipps Director

Company StatisticsMarket Cap $54 MMBasic Shares O/S 52.4 MMFully Diluted Shares O/S 60.0 MM52-Week Range $0.49 - $1.34Cash (06/30/10 act.) $0.0 MMDebt (06/30/10 act.) $7.5 MMWorking Capital (06/30/10 act.) -$8.8 MMMajor ShareholdersRoman, Stephen G (Management) 8.6%Dueck, Roger (Management) 6.5%Goodman & Co Investment Counsel 3.6%Website www.exall.com

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RADAR SCREEN ADDITION – PALLISER OIL & GAS CORP.


PALLISER OIL & GAS CORP. (TSXV-PXL $1.01); NOT RATED

Palliser Oil & Gas Corp. is a junior exploration company focusing on heavy oil in Alberta and Saskatchewan. Average production for the month of September 2010 was 840 Boe/d weighted 92% to oil.

RECENT NEWS - EXCITING JUNIOR HEAVY OIL PLAY On October 7, 2010, Palliser provided an operational update.

Annual production figures are estimated at 650 – 750 Boe/d and exit production at 1,150 – 1,250 Boe/d. To date in 2010, Palliser has reactivated two wells and drilled nine heavy oil wells with a 90% success rate.

CATALYSTS – MULTITUDE OF PROSPECTS Drill results for the remainder of 2010 and hitting 2010 exit

production guidance. KEY PROPERTY Edam, Saskatchewan (100% W.I.)

• Palliser has drilled six wells in 2010 increasing production to its current September 2010 average of 700 Bbl/d.

• The Company plans to drill six more wells in 2010 and has identified 33 – 38 contingent locations.

• At Edam, the targets are Waseca, Sparky and GP heavy oil. OTHER PROPERTIES Other properties include Lloydminster, Tangleflags/Frenchman,

Manitou and Medicine, covering a combined area of ~38,000 net acres.

RISKS Heavy oil differentials have varied over the past year which will

impact Palliser’s realized prices for its crude as it is predominately heavy oil.


TIM MURRAY, CFA Research Analyst [email protected] +1.403.262.0904 JAMES HUMEN, CA Research Associate [email protected] +1.403.292.9487

ManagementKevin Gibson President, CEO and DirectorIvan J. Condic VP Finance and CFOAllan Carswell VP ExplorationRobert Padget VP EngineeringGlenn Taylor VP Production & Operations

Board of DirectorsDaryl Fridhandler ChairmanKevin Gibson DirectorWayne Toole DirectorKen Crowther DirectorStephen C. Hayden Director

Company StatisticsMarket Cap $35 MMBasic Shares O/S 34.4 MMFully Diluted Shares O/S 37.4 MM52-Week Range $0.60 - $1.40Cash (06/30/10 act.) $4.1 MMLong-term Debt (06/30/10 act.) $0.0 MMWorking Capital (06/30/10 act.) $2.8 MMMajor ShareholdersSilver Strand Energy Corp. 9.2%Mackenzie Financial Corp. 5.8%Daryl Fridhanlder 4.9%Website www.palliserogc.com

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RADAR SCREEN ADDITION – PETRODORADO ENERGY LTD.


PETRODORADO ENERGY LTD. (TSXV-PDQ $0.35); NOT RATED

Petrodorado Energy Ltd. is a junior exploration company with six blocks in Colombia, two in Peru and one in Paraguay.

SOLID BALANCE SHEET - FULLY FUNDED CAPITAL PROGRAM According to Petrodorado’s September 2010 presentation, capital

spending for the remainder of 2010 amounts to $26 million leaving Petrodorado with $29 million in cash at YE-2010.

Potential additional funding includes 215 million warrants with a strike price of $0.35 and 29 million warrants with a strike price of $0.49. If all are exercised, this would result in an additional $88 million in cash to fund Petrodorado’s 2011/2012 capital program.

CATALYSTS - AGGRESSIVE 2010 DRILL PROGRAM Scheduled exploration wells in the second half of 2010 include one

at La Maye, two at the Buganviles, one at Talora and one at Moriche. KEY PROPERTIES Moriche – Llanos Basin, Colombia (49.5% W.I.)

• The Moriche block covers 15,392 net acres and is currently producing 350 Bbl/d (net) of 14° API oil.

• The block has a net P50 resource estimate of 2.9 MMBbl with prospects in the Carbonera C5, C7 and Mirador formations.

• The operator and partner of the block is Pacific Rubiales.

Buganviles – Upper Magdalena Basin, Colombia (49.5% W.I.)

• Buganviles block covers 54,678 net acres targeting light oil. • Net P50 resources are estimated at 45 MMBbl. • The operator and partner of the block is Pacific Rubiales.

Talora – Upper Magdalena Basin, Colombia (55% W.I.)

• Talora block covers 163,017 net acres primarily targeting medium to light oil.

• Net P50 resources are estimated at 63 MMBbl. • Petrodorado is the operator partnered with PetroSouth.

CPO-5 – Llanos Basin, Colombia (30% W.I.)

• CPO-5 Block covers 147,705 net acres with a range of targets from heavy to light oil.

• Net P50 resources are 78 MMBbl. • The operator and partner is ONGC Videsh Ltd.

DAVID RICCIARDI, CFA Research Analyst [email protected] +1.403.262.0906 JAMES HUMEN, CA Research Associate [email protected] +1.403.292.9487

ManagementKrishna Vathyam President, CEO and DirectorAlan Beaulieu CFOMax Rolla VP Exploration - BogotaArturo Lara Chief Geoscientist - BogotaEmir Arzola Chief Reservoir Manager - BogotaV.C. Mohan Consulting Chief Geophysicist (India)

Board of DirectorsRobert Cross ChairmanDoug Urch DirectorGregg Vernon DirectorYoung Bae Ku DirectorKrishna Vathyam Director

Company StatisticsMarket Cap $138 MMBasic Shares O/S 395.0 MMFully Diluted Shares O/S 639.0 MM52-Week Range $0.20 - $0.60Cash (06/30/10 act.) $53.0 MMLong-term Debt (06/30/10 act.) $0.0 MMWorking Capital (06/30/10 act.) $42.0 MMMajor ShareholdersColumbia Wanger ASA 12%Cambrian Capital LP 11%KU Young BAE 9%Website www.petrodorado.com

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RADAR SCREEN ADDITION – PETRODORADO ENERGY LTD.


OTHER PROPERTIES Tacacho – Caguan Putumayo Basin, Colombia (49.5% W.I.)

• The block covers 294,500 net acres targeting heavy oil.

La Maye – Lower Magdalena Basin, Colombia (20% W.I.)

• The block covers 14,800 net acres targeting light oil.

Peru 135 – Maranon Basin, Peru (45% W.I.)

• The block covers 1,134,100 net acres targeting ~20° API oil.

Peru 138 – Ucayali Basin, Peru (45% W.I.)

• The block covers 460,400 net acres targeting ~20° API oil.

Pirity – Olmedo Pirity Basin, Paraguay (60% W.I.)

• The block covers 1,200,000 net acres targeting light oil.

RISKS Petrodorado has a very active exploration program, subject to

exploration risk, which is the risk of drilling a dry hole and generating zero returns.

Petrodorado operates in Colombia, Peru and Paraguay, where political and legal standards are considered to be below those of developed nations. Socialist movements and local terrorism could pose a serious threat to the oil and gas establishment.

Colombia Blocks


2010 Drilling ProgramBlock 1H/10A Q3/10 Q4/10 2010La Maye - 1 - 1Buganviles - 1 1 2Talora - 1 - 1Moriche 1 - 1 2Total 1 3 2 6

Asset Summary

Block Country W.I.

Net Acres ('000)

La Maye Colombia 20% 15Bugaviles Colombia 49.5% 55Talora Colombia 55% 163Moriche Colombia 49.5% 15Tacacho Colombia 49.5% 295CPO-5 Colombia 30% 148Peru 135 Peru 45% 1134Peru 138 Peru 45% 460Pirity Paraguay 60% 1200*Unrisked net P50 resources


Recent FinancingsDate December 3, 2009Type Private PlacementGross Proceeds $75 millionCommon Shares

Number 215 millionPrice $0.35

WarrantsNumber 215 millionPrice (Callable if price >$0.90 for 20 days) $0.35

Net P50 Resources*

(MMbbl)44563

121180

332378

115

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RADAR SCREEN ADDITION – TAG OIL LTD.


TAG OIL LTD. (TSXV-TAO $4.80); NOT RATED

TAG Oil Ltd. is a junior exploration company with interests in five concessions on the north island of New Zealand. The Company had modest 2P reserves of 753 MBOE in the Cheal field at its last year-end evaluation (March 31), but has the potential to increase that several fold over this year and next, through an evenly balanced combination of development, exploration and acquisition.

In addition, the Company has over 14 billion barrels of potential resources (OOIP) in its three eastern permit blocks, the vast majority of which is contained in two shale formations which compare favourably to the Bakken in western Canada. RECENT EVENTS: On September 29, TAG announced the success of its Sidewinder-1

exploration well on the western part of the island. This appears to have tapped an accumulation from which the Company should be able to recover 1.3 MMBbl.

On September 15, the Company announced that it had acquired a 100% interest in the Cardiff gas/condensate field. Cardiff was discovered by Shell, who originally estimated ~500 Bcf and 10 MMBbl of condensate in place in three zones.

On May 13, TAG announced that a 17 ton frac’ on the Cheal A7 well was successful in increasing production from the Miocene Mt. Messenger formation from 80 BOE/d to 292 BOE/d. This was a single frac’ in a vertical well.

CATALYSTS November 2010:

• Results Cheal BH-1 horizontal well • Frac’ results on Cheal B3 well

Q1 2011: • 5 development/appraisal wells (3 firm, 2 contingent)

KEY PROPERTIES PMPs 38156-S and 38156-D, Taranaki Basin (TAO 100%)

• Contains the Cheal oil field and the newly acquired Cardiff gas/condensate field.

• The recovery factor for Cheal could double through the application of modern completion technology. The Company will drill a horizontal well into the Mt. Messenger formation in October-November and complete it with a multi-stage frac’. If the results are commensurate to those experienced in Cheal A7, the horizontal well might have an IP rate of 500 – 1,000 Bbl/d.

• The shallower Urenui formation had previously been considered non-commercial due to wax precipitation and plugging. TAG recently installed new wax control technology on two wells which are now producing 200 Bbl/d plus 350 Mcf/d of solution gas. The

GREGORY CHORNOBOY, P. ENG, MBA Senior Oil & Gas Analyst [email protected] +1.403.292.9485 JAMES HUMEN, CA Research Associate [email protected] +1.403.292.9487

Management & DirectorsGarth Johnson CEODrew Cadenhead COOBlair Johnson CFOAlex Guidi Director

Reserves & Resources(MMBOE, 2P, or P50)

2P Reserves 0.75 Prospective Resources (OOIP) 14,390

Company StatisticsMarket Cap $181 MMBasic Shares O/S 37.6 MMFully Diluted Shares O/S 43.6 MM52-Week Range $0.64 - $4.99Cash (06/30/10 act.) $25.9LT Debt (06/30/10 act.) $0.0Working Capital (06/30/10 act.) $25.8Enterprise Value $154.9Major ShareholdersAlex Guidi 12.7%Peter Loretto 11.5%ValuationEV/BOE/d $462,657EV/BOE $205.76Website & Contact Infowww.tagoil.com (604) 682-6496

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RADAR SCREEN ADDITION – TAG OIL LTD.


Urenui is extensive and could double the Mt. Messenger reserves.

• There are several analogous structures to Cheal immediately to the northwest, some of which were drilled in the 1960s and have bypassed oil shows in both the Mt. Messenger and Urenui formations.

Broadside – PEP 38748, Taranaki Basin (TAO 100%)

• TAG recently drilled the successful Sidewinder-1 exploration well. This discovery is analogous to the Ngatoro field immediately to the west, which is estimated to have EUR of 8.2 MMBbl and 29 Bcf. Sidewinder has a smaller areal extent, but should still recover 1.3 MMBbl.

• The Company has four similar drillable prospects which have the potential for an additional 24 MMBbl of OOIP. They are also working on an inventory of additional leads which could eventually mature to 5 - 10 more prospects.

PEPs 38348, 38349 and 50940, East Coast Basin (TAO 100%)

• Prospective resources in three categories, shallow conventional oil, deep conventional oil and oil shale.

• The Pliocene Waitangi Hill prospect was first drilled in 1912, with a bore hole that continues to bubble 50° sweet crude and natural gas today. TAG has recently drilled three new core holes which encountered oil and gas at high pressures. The Company believes it has up to 15 drillable locations.

• There are deeper conventional plays in the Miocene through to the Paleocene formations, identified through seismic and supported with oil (50°) and gas seeps. Sproule International Limited assigned 1.74 billion barrels (OOIP, P50) of potential resources in a 2008 study. These plays are extremely overpressured (~3,100 psi at 1,000 metres), which suggests very good productivity and recovery factors.

• The deep unconventional play is in the Waipawa and Whangai shales which are also the source rock for the shallower plays mentioned above. Both compare favourably to the Bakken in western Canada on key parameters such as thickness, TOC, porosity and primary permeability. AJM Petroleum Consultants has assigned potential resources of 12.65 billion barrels (OOIP, P50) to TAG’s lands.

RISKS This is an exploration and production company with risks pertaining

to, among other things, commodity price and foreign exchange fluctuation, geological factors, reliance on third parties and services and access to markets.

There is no long-term production history for the recently frac’ed Cheal A7 well or the two Urenui wells with the wax control technology.

Balance Sheet (FYE Mar 31)As at June 30, 2010Assets (C$MM)

Cash & equivalents $25.92Receivables & other $0.49Inventory $0.95Current Assets $27.36Restricted Cash $0.12Investments $0.70PP&E $11.37

Total Assets $39.55Liabilities

Accounts Payable $1.29Asset Retirement $0.35Current Liabilities $1.64Asset Retirement $1.87Shareholders Equity $36.03

Total Liabilities and Equity $39.55

Most Recent FinancingDate May 5, 2010Type Public OfferingNumber of Units (MM) 7.70 (1 unit = 1 common sh + 0.5 wt @ $3.60)Price $2.60Gross Proceeds ($MM) $20.02


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OIL AND GAS COVERAGE UNIVERSE


OIL AND GAS COVERAGE UNIVERSE ANALYST: GREGORY CHORNOBOY, P ENG, MBA [email protected] +1.403.292.9485 Company Ticker Year Price Mkt. 12 Mo Rec.

End Cap. Target 2010E 2011E($MM) ($/Sh)

Bankers Petroleum BNK-T 31-Dec $6.48 1,579 $10.50 Buy US$0.30 US$0.67Calvalley Petroleum CVI'A-T 31-Dec $3.59 352 $5.50 Spec. Buy US$0.18 US$0.79Corridor Resources CDH-T 31-Dec $6.10 535 $8.75 Spec. Buy $0.18 $0.29Petrolifera Petroleum PDP-T 31-Dec $0.68 99 $1.20 Spec. Buy $0.17 $0.13Primeline Energy PEH-V 31-Mar $0.29 27 $0.70 Spec. Buy ($0.03) ($0.01)Sea Dragon Energy SDX-V 31-Dec $0.29 102 $0.60 Spec. Buy $0.01 $0.09Winstar Resources WIX-T 31-Dec $3.76 129 $5.50 Spec. Buy $0.78 $1.11

CFPS

($/Sh)

ANALYST: DAVID RICCIARDI, CFA [email protected] +1.403.262.0906 Company Ticker Year Price Mkt. 12 Mo Rec.


Alange Energy ALE-V 31-Dec $0.61 456 $0.75 Buy US$0.03 US$0.10Canacol Energy CNE-V 30-Jun $1.48 613 $1.55 Hold $0.00 $0.13Culane Energy CLN-V 31-Dec $1.37 34 $3.25 Spec. Buy $0.33 $2.04Gran Tierra Energy GTE-T 31-Dec $7.49 1,900 $8.75 Buy US$0.82 US$1.31Pacific Rubiales Energy PRE-T 31-Dec $29.72 7,836 $36.00 Buy US$2.65 US$4.37Petroamerica Oil PTA-V 31-Dec $0.41 141 $0.85 Spec. Buy US$(0.01) US$0.01Petrominerales PMG-T 31-Dec $25.17 2,501 $35.00 Buy US$5.78 US$6.27Suroco Energy SRN-V 31-Dec $0.48 58 $0.90 Buy $0.10 $0.20Tuscany International TID-T 31-Dec $1.29 208 $1.90 Buy US$0.06 US$0.22

($/Sh)

CFPS

ANALYST: TIM MURRAY, CFA [email protected] +1.403.292.9484 Company Ticker Year Price Mkt. 12 Mo Rec.


Delphi Energy DEE-T 31-Dec $2.24 252 $3.25 Buy $0.52 $0.62Equal Energy EQU-T 31-Dec $4.60 127 $8.75 Buy $2.03 $2.32Midway Energy MEL-T 31-Dec $3.49 235 $4.50 Buy $0.30 $0.67Novus Energy NVS-V 31-Dec $0.88 146 $1.05 Buy $0.02 $0.16Renegade Petroleum RPL-V 31-Dec $3.60 199 $5.75 Buy $0.37 $0.88Westfire Energy WFE-T 31-Dec $5.59 218 $9.25 Buy $0.55 $1.29Wild Stream Exploration WSX-V 31-Dec $7.20 266 $8.00 Buy $0.61 $1.13

CFPS

($/Sh)

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COMMODITY PRICE FORECASTS


COMMODITY PRICE FORECASTS

Q1/10A Q2/10A Q3/10A Q4/10E 2010E 2011E 2012E 2013E 2014EWTI (US$/Bbl) 78.84 77.88 76.09 80.50 78.50 84.00 87.00 89.00 91.00 Brent (US$/Bbl) 76.78 78.63 76.41 80.00 78.15 83.00 86.00 88.00 90.00 Henry Hub (US$/MMBtu) 5.09 4.33 4.28 4.00 4.50 4.75 5.25 5.75 6.25 AECO (CDN$/MMBtu) 4.92 3.91 3.54 3.50 4.00 4.25 5.00 5.50 6.00

Jennings Price ForecastsAs of October 19, 2010

NYMEX WTI Futures

65.00

70.00

75.00

80.00

85.00

90.00

Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11

US$

/Bbl

NYMEX Futures

Jennings Forecast

EIA Forecast

NYMEX Henry Hub Natural Gas Futures

2.00

3.00

4.00

5.00

6.00

7.00

Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11

US$

/MM

Btu

NYMEX Futures

Jennings Forecast

EIA Forecast

13

Jennings Capital Inc. Research Disclosures

I, Gregory Chornoboy, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report. I, David Ricciardi, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report. I, Tim Murray, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report.

U.S. Client Disclosures

This research report was prepared by Jennings Capital Inc., a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund and a Participating Organization of the Toronto Stock Exchange and the TSX Venture Exchange. Jennings Capital Inc. is an affiliate of Jennings Capital (USA) Inc. Jennings Capital (USA) Inc. accepts responsibility for the contents of this research report, subject to the terms and limitations as set out above. Jennings Capital (USA) Inc. is a registered broker-dealer with the Securities and Exchange Commission and a member of the National Association of Securities Dealers Inc. THE FIRM THAT PREPARED THIS REPORT MAY NOT BE SUBJECT TO U.S. RULES WITH REGARD TO THE PREPARATION OF RESEARCH REPORTS AND THE INDEPENDENCE OF ANALYSTS. This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein. Any transaction in these securities by U.S. persons must be effected through either Westminster Securities Corporation, a U.S. broker-dealer registered with the Securities and Exchange Commission and a member of the National Association of Securities Dealers Inc. and the New York Stock Exchange Inc. or through Jennings Capital (USA) Inc., A U.S. broker-dealer registered with the Securities and Exchange Commission and a member of the National Association of Securities Dealers Inc. U.S. PERSONS This research report was prepared by an affiliate of Jennings Capital (USA) Inc. or other person that may not be registered as a broker-dealer in the United States. The firm that prepared this report may not be subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. Subject to the limitations on liability described above, Jennings Capital (USA) Inc. takes responsibility for the content of this research report in accordance with Rule 15a-6 under the U.S. Securities Exchange Act of 1934, as amended. All transactions by U.S. persons in securities discussed in this report must be performed through Jennings Capital (USA) Inc.

U.K. Client Disclosures

This research report was prepared by Jennings Capital Inc., a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund and a Participating Organization of the Toronto Stock Exchange and the TSX Venture Exchange. JENNINGS CAPITAL IS NOT SUBJECT TO U.K. RULES WITH REGARD TO THE PREPARATION OF RESEARCH REPORTS AND THE INDEPENDENCE OF ANALYSTS. The contents hereof are intended solely for the use of, and may only be issued or passed onto persons described in part VI of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001. This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein.

Stock Ratings

Speculative Buy: The stock is expected to provide a total return in excess of 10% over the current trading price over the next 12 months; however, there is material event risk associated with the investment.

Buy: The stock is expected to provide a total return in excess of 10% over the current trading price over the next 12 months.

Hold: The stock is expected to provide a total return of 0% to 10% over the current trading price over the next 12 months.

Sell: The stock is expected to provide a negative total return over the next 12 months.

Risk Ratings

Low/Average Risk — Stocks with less volatility than the market as a whole, with solid balance sheets and dependable earnings.

Above Average Risk — Stocks with more volatility than the market. Financial leverage is considerable but not threatening, earnings are more erratic, or other quality concerns regarding accounting, management track record, and similar issues.

Speculative — Stocks of unproven companies or ones with very high financial leverage, suspicious accounting, or with other significant quality concerns. A speculative risk rating implies at least the possibility of financial distress leading to a restructuring.

14

Distribution Ratings: Out of approximately 77 stocks in the Jennings Capital Inc. coverage universe, the ratings distribution is as follows:

BUY 49%SPECULATIVE BUY 45%HOLD 5%RESTRICTED 0%SELL 0%

Revised Monthly

Security Abbreviations: NVS (non-voting shares); RVS (restricted voting shares); RS (restricted shares); SVS (subordinate voting shares); MV (multiple voting shares). Quarterly Recommendation Hierarchy: Is a ranking distribution identifying the percentage of total, number, and the investment banking relationship (%) for all recommendation categories that can be found on the Jennings Capital Inc. website (www.JenningsCapital.com). Analyst Stock Holdings: Equity Research analysts, associates and members of their households are permitted to invest in securities covered by them. No Jennings Capital Inc. analyst, associate or employee involved in the preparation of an analyst report is permitted to effect a trade in the security of an issuer whereby there is an outstanding recommendation for a period of 30 calendar days before and 5 calendar days after issuance of the research report Compensation: The compensation of the analyst and/or associate who prepared this research report is based upon in part, the overall revenues and profitability of Jennings Capital Inc. Analysts are compensated on a salary and bonus system. Some factors affecting compensation including the productivity and quality of research, support to institutional, retail and investment bankers, net revenues to the equity and investment banking revenue as well as compensation levels for analysts at competing brokerage dealers. Analysts are not directly compensated for specific Investment Banking transactions. Jennings Capital Inc. Relationships: Jennings Capital Inc. may receive or seek compensation for investment banking services from all issuers under research coverage within the next 3 months. Jennings Capital Inc. or its officers, employees or affiliates may execute transactions in securities mentioned in this report that may not be consistent with the report’s conclusions. Of the companies included in this report, the following Important Disclosures apply.

Company Name Ticker/Exchange Discl.Alange Energy Corp. TSXV-ALE 3Bankers Petroleum Ltd. TSX-BNK 1,2Calvalley Petroleum Inc. TSX-CVI.A 1Canacol Energy Ltd. TSXV-CNECorridor Resources Inc. TSX-CDH 1,3Culane Energy Corp. TSXV-CLN 1Delphi Energy Corp. TSX-DEEEqual Energy Ltd. TSX-EQU 2Gran Tierra Energy Inc. TSX-GTEMidway Energy Ltd. TSX-MELNovus Energy Inc. TSXV-NVS 2Pacific Rubiales Energy Corp. TSX-PRE 3Petroamerica Oil Corp. TSXV-PTAPetrolifera Petroleum Limited TSX-PDP 1,3Petrominerales Ltd. TSX-PMGPrimeline Energy Holdings Inc. TSXV-PEH 1Renegade Petroleum Ltd. TSXV-RPLSea Dragon Energy Inc. TSXV-SDXSuroco Energy Inc. TSXV-SRNTuscany International Drilling Inc. TSX-TID 2,3WestFire Energy Ltd. TSX-WFEWild Stream Exploration Inc. TSXV-WSXWinstar Resources Ltd. TSX-WIX 1

1 The Analyst or a member of the Analyst’s household has a financial interest in the securities of this Company.2 Jennings Capital Inc., Jennings Capital (USA) Inc. and/or any of their affiliates has managed or co-managed an offering of securities or has been engaged for a fee by this Company in the last 12 months.3 The Analyst has had an onsite visit with this Company. (The extent to which the Analyst has viewed the material operations of this Company is available on request.)4 The Analyst has been compensated for travel expenses incurred as a result of an onsite visit with this Company.5 Jennings Capital Inc. or Jennings Capital (USA) Inc. is a market maker for the securities of the subject issuer.6 Jennings Capital Inc. or Jennings Capital (USA) Inc. beneficially owns more than 1% of any class of common equity of this Company.7 Jennings Capital Inc. is restricted on this company at the time of publication.

OCTOBER 20, 2010 · development companies that we believe to be of interest to investors or that...

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