THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of the proposals referred to in this document or what action you should take, you are recommended to seek your own personal financial advice from a stockbroker, bank manager, solicitor, accountant, fund manager or other appropriate independent financial advisor.

If you have sold or transferred all of your common shares in Caracal Energy Inc., please forward this document, together with the accompanying documents, as soon as possible either to the purchaser or transferee or to the person who arranged the sale or transfer so they can pass these documents to the person who now holds the shares.

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

to be held on June 6, 2014

and

NOTICE OF ORIGINATING APPLICATION TO THE COURT OF QUEEN'S BENCH OF ALBERTA

and

MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT

with respect to a

PLAN OF ARRANGEMENT

involving

CARACAL ENERGY INC.

and

GLENCORE INTERNATIONAL AG

and

8682321 CANADA INC.

May 9, 2014

LETTER TO SHAREHOLDERS iv
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 6, 2014 viii
NOTICE OF ORIGINATING APPLICATION xi
MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT 1
Introduction 1
Forward-looking Information and Statements 1
Information for U.S. Shareholders 2
Currency 3
SUMMARY INFORMATION 5
GLOSSARY OF TERMS 13
BACKGROUND TO THE ARRANGEMENT 22
RECOMMENDATION OF THE BOARD OF DIRECTORS 27
REASONS FOR THE ARRANGEMENT 27
FAIRNESS OPINIONS 29
THE ARRANGEMENT 30
Summary of the Arrangement 30
Arrangement Steps 31
Interests of Directors and Caracal Executives in the Arrangement 33
Sources of Funds for the Arrangement 35
Stock Exchange Delisting 35
Procedure for the Arrangement Becoming Effective 35
Timing 36
Expenses 36
THE ARRANGEMENT AGREEMENT 37
General 37
Mutual Covenants Regarding the Arrangement 37
Covenants of Glencore and Purchaser 37
Covenants of Caracal 37
Representations and Warranties to the Conduct of Business of the Parties 38
Mutual Conditions 38
Conditions to the Obligations of Purchaser 38
Conditions to the Obligations of Caracal 39
Covenants of Caracal Regarding Non-Solicitation; Right to Accept a Superior Proposal 40
Termination 43
Termination Fees 45
Liquidated Damages 47
Voting Agreements 47
PRINCIPAL LEGAL MATTERS 48
Court Approval and Completion of the Arrangement 48
MI 61-101 48
Regulatory Approvals 49
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS 51
Currency Translation 52
Shareholders Resident in Canada 52
Shareholders Not Resident in Canada 52
CERTAIN UNITED KINGDOM TAXATION CONSIDERATIONS 53
Taxation of Chargeable Gains 54
Transactions in Securities Anti-Avoidance 54
Stamp Duty and Stamp Duty Reserve Tax 54
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS 54
Tax Consequences to U.S. Holders Relating to the Arrangement 56
Passive Foreign Investment Companies 56
RISK FACTORS 58

Risks Relating to the Arrangement 58
Risks Relating to Caracal 59
PROCEDURES FOR THE SURRENDER OF COMMON SHARES AND RECEIPT OF CONSIDERATION 59
Procedures for Shareholders 59
Currency Election 60
Cancellation of Rights of Securityholders 61
LEGAL MATTERS 61
RIGHTS OF DISSENT 61
INFORMATION CONCERNING CARACAL 63
General 63
Documents Incorporated by Reference 63
Business of Caracal 64
Recent Developments 64
Description of Share Capital 65
Consolidated Capitalization of Caracal 66
Price Range and Trading Volumes 66
Prior Sales 67
Securities Authorized for Issuance Under Equity Compensation Plans 67
Principal Securityholders 68
Indebtedness of Directors and Caracal Executives 68
Ownership of Securities for Directors and Caracal Executives 70
Interest of Informed Persons in Material Transactions 71
Auditors, Transfer Agent and Registrar 71
Additional Information 71
INFORMATION CONCERNING THE PURCHASER PARTIES 71
MATTERS TO BE CONSIDERED AT THE MEETING 72
GENERAL PROXY MATTERS 73
Solicitation of Proxies 73
Appointment and Revocation of Proxies 73
Advice to Beneficial Holders of Common Shares 73
Proxy Voting 74
Electronic Voting Instructions through the CREST Voting System 74
General 75
Voting Securities of Caracal and Principal Holders Thereof 75
CONSENTS 76
Consent of Stikeman Elliott LLP 76
Consent of RBC Dominion Securities Inc. 77
Consent of Goldman Sachs & Co. 78

LETTER TO SHAREHOLDERS

May 9, 2014

Dear Shareholders:

You are invited to attend a special meeting (the "Meeting") of holders (the "Shareholders") of common shares ("Common Shares") of Caracal Energy Inc. ("Caracal") to be held in the Westwinds Room located at 2nd Floor, 555 – 4th Avenue S.W., Calgary, Alberta, Canada, on June 6, 2014 at 10:30 a.m. (Calgary time).

At the Meeting, the Shareholders will be asked to consider and, if deemed advisable, to pass a special resolution (the "Arrangement Resolution") approving a statutory plan of arrangement (the "Arrangement") under section 192 of the Canada Business Corporations Act involving Caracal and 8682321 Canada Inc. ("Purchaser", a wholly-owned indirect subsidiary of Glencore International AG ("Glencore") and, together with Purchaser, the "Purchaser Parties"), to be carried out pursuant to an arrangement agreement dated April 14, 2014, as amended and restated April 24, 2014 among Caracal and the Purchaser Parties (the "Arrangement Agreement").

Full details of the Arrangement are set out in the accompanying Notice of Special Meeting of Shareholders and Management Information Circular and Proxy Statement (the "Circular"). Shareholders (other than dissenting holders of Common Shares) will receive, for each Common Share held, 5.50 pounds sterling, the lawful currency of the United Kingdom ("GBP") in cash (the "Consideration").

Under the Arrangement, all options to purchase Common Shares ("Caracal Options") and warrants to purchase Common Shares ("Caracal Warrants"), whether vested or unvested, will be disposed of and surrendered to Caracal and the holders thereof will receive for each Caracal Option or Caracal Warrant, as the case may be, a cash payment representing the amount by which the product of the number Common Share underlying such Caracal Option or Caracal Warrant multiplied by the Consideration exceeds the aggregate exercise price payable under such Caracal Option or Caracal Warrant, as the case may be, less applicable withholdings. In addition, each deferred share unit, restricted share unit and performance share unit will be similarly disposed of and surrendered to Caracal and the holder will receive a cash payment equal to the number of Common Shares the holder of such unit is entitled to pursuant to such unit multiplied by the Consideration, less applicable withholdings.

Upon completion of the Arrangement, Purchaser has covenanted to satisfy or cause Caracal (or any successor) to satisfy all of Caracal's obligations in respect of Caracal's convertible debentures with an aggregate principal amount of U.S.\$173.6 million (the "Caracal Debentures"). After completion of the Arrangement, holders of Caracal Debentures who exercise their conversion rights will receive from Purchaser GBP5.50 in cash for each Common Share which the holder would have otherwise received upon conversion in accordance with the terms of the indenture to be supplemented by the supplemental trust deed as described further in the Circular, governing the Caracal Debentures.

For additional details about the Arrangement, see "The Arrangement" and "The Arrangement Agreement" in the Circular which accompanies this letter.

The requisite approval for the Arrangement Resolution is at least 66Ҁ% of the votes cast on the Arrangement Resolution by the Shareholders, present in person or represented by proxy, at the Meeting, and a majority of the votes cast on the Arrangement Resolution by the Shareholders present in person or represented by proxy, at the Meeting after excluding the votes of those persons whose votes may not be included in determining minority approval of a "business combination" under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transaction. Completion of the Arrangement is also subject to customary closing conditions for a transaction of this nature, including court approval and Investment Canada Act approval and Competition Act approval.

Goldman, Sachs & Co. ("Goldman Sachs") has provided the board of directors of Caracal (the "Board") with an opinion to the effect that, as of April 14, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration to be paid to Shareholders (other than the Purchaser Parties and their affiliates) under the Arrangement was fair from a financial point of view to such Shareholders. In addition, RBC Dominion Securities Inc., a member company of RBC Capital Markets ("RBC Capital Markets"), has provided the Board with an opinion to the effect that, as of April 14, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration under the Arrangement was fair from a financial point of view to the Shareholders, other than the Purchaser Parties and their affiliates.

The Board, after consulting with its financial and legal advisors, and after careful consideration of, among other things, the fairness opinion of Goldman Sachs and the fairness opinion of RBC Capital Markets and the recommendation of a special committee of the Board, has unanimously determined that the Arrangement is in the best interests of Caracal and its Shareholders as a whole. Accordingly, the Board unanimously recommends that the Shareholders approve the Arrangement by voting in favour of the Arrangement Resolution at the Meeting.

On April 14, 2014, all of the directors and senior officers of Caracal entered into voting and support agreements with the Purchaser pursuant to which they have agreed to vote the Common Shares owned by them in favour of the Arrangement Resolution.

The accompanying Notice of Special Meeting of Shareholders and Circular describe the Arrangement and include certain additional information to assist you in considering how to vote in respect of the Arrangement Resolution. You are urged to read this information carefully and, if you require assistance, to consult your financial, legal, tax or other professional advisors.

To be represented at the Meeting, you must either attend the Meeting in person or complete and sign the applicable enclosed form of proxy. If you are a registered Shareholder (i.e., you hold a physical share certificate representing your Common Shares in your name) and are unable to attend the Meeting in person, please exercise your right to vote by dating, signing and returning the accompanying form of proxy to Computershare Investor Services Inc., Caracal's transfer agent. To be valid, completed proxy forms must be dated, completed, signed and deposited with Caracal's transfer agent, Computershare Investor Services Inc., (a) by mail to Proxy Department, 135 West Beaver Creek Road, P.O. Box 300, Richmond Hill, Ontario, L4B 4R5, or (b) by hand delivery to 100 University Avenue, 8th Floor, Toronto, Ontario, M5J 2Y1. A registered Shareholder may also vote using the internet at www.investorvote.com or telephone at 1-866-732-VOTE (8683). In order to be valid and acted upon at the Meeting, the form of proxy must be received not less than 48 hours (excluding Saturdays and holidays) before the date of the Meeting or any adjournment(s) or postponement(s) thereof or be deposited with the Chairman of the Meeting prior to its commencement. If you are unable to attend the Meeting, we encourage you to complete the enclosed form of proxy as soon as possible.

If you are a non-registered holder of Common Shares and have received these materials from your broker or another intermediary, please complete and return the form of proxy or other authorization form provided to you by your broker or intermediary in accordance with the instructions provided. Failure to do so may result in your Common Shares not being eligible to be voted at the Meeting. See "General Proxy Matters - Advice to Beneficial Holders of Common Shares" in the Circular.

Holders of depositary interests ("DI Holders") will be invited to attend the Meeting by Computershare Company Nominees Limited in its capacity as issuer of the depositary interests and trustee of the underlying Common Shares. DI Holders should fill in the Form of Instruction which will be provided and return such Form of Instruction to Computershare Investor Services PLC (the "DI Trustee"), The Pavilions, Bridgwater Road, Bristol, BS99 6ZY, United Kingdom, no later than 10:30 a.m. (Calgary time) on June 3, 2014, or in the case of an adjourned or postponed Meeting, not less than 72 hours (excluding weekends and holidays) prior to the time appointed for the adjourned or postponed Meeting. The completion and return of the Form of Instruction will not preclude a DI Holder from attending the Meeting and voting in person. DI Holders who wish to attend and vote in person in respect of Common Shares which are represented by their depositary interests should notify the DI Trustee (in accordance with the instructions set out in the Form of Instruction) so that an appropriate Letter of Representation can be issued.

CREST members who wish to give voting instructions by utilizing the CREST electronic voting instruction service may do so for the Meeting and any adjournment(s) or postponement(s) thereof by utilizing the procedures described in the CREST Manual, available at www.euroclear.com. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. See "General Proxy Matters – Electronic Voting Instructions through the CREST Voting System" in the Circular.

In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a "CREST Voting Instruction") must be properly authenticated in accordance with Euroclear UK & Ireland Limited's ("Euroclear") specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by Caracal's agent (ID number 3RA50) not less than 72 hours (excluding weekends and holidays) before the commencement of the Meeting or any adjournment or postponement thereof. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which Caracal's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Voting Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his or her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this regard, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

Caracal may treat as invalid a CREST Voting Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001 (United Kingdom).

Shareholders of record at the close of business on May 7, 2014 are entitled to notice of the Meeting and to attend and vote thereat or at any adjournment(s) or postponement(s) thereof on the basis of one vote for each Common Share held.

In order to receive the Consideration, registered Shareholders must complete and sign the Letter of Transmittal enclosed with the Circular and return it to Computershare Trust Company of Canada (or such other company as may be appointed as depositary, from time to time, the "Depositary"), together with their share certificate(s) and any other documents or instruments reasonably required by the Depositary in accordance with the procedures set out in the Letter of Transmittal. If the Arrangement is completed, registered Shareholders will receive payment of the Consideration in U.S. dollars unless a currency election is made in the Letter of Transmittal. If the Arrangement is not completed, the share certificates will be returned.

Holders of Common Shares in a nominee account in the system of CDS Clearing and Depositary Services Inc. ("CDS") should follow the instructions provided to them by their intermediary to arrange for their intermediary to complete the necessary transmittal documents and to ensure payment of the Consideration if the Arrangement is completed. Non-registered Shareholders holding Common Shares in a nominee account in CDS will receive payment of the Consideration in U.S. dollars unless other arrangements are made with their intermediary to make a currency election on their behalf. Persons who hold Common Shares through depositary interests through CREST will receive payment of the Consideration in GBP unless they make a currency election in CREST, as described in the Form of Instruction.

On behalf of the Board, I would like to express our gratitude for the support our shareholders have demonstrated with respect to our decision to move forward with the proposed Arrangement with Glencore. We look forward to seeing you at the Meeting.

Yours very truly,

(signed) "Gary Guidry" Gary Guidry President and Chief Executive Officer Caracal Energy Inc.

CARACAL ENERGY INC.

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 6, 2014

NOTICE IS HEREBY GIVEN that, pursuant to an order (the "Interim Order") of the Court of Queen's Bench of Alberta dated May 8, 2014, a special meeting (the "Meeting") of the holders (the "Shareholders") of common shares ("Common Shares") of Caracal Energy Inc. ("Caracal") will be held in the Westwinds Room located at 2nd Floor, 555 – 4th Avenue S.W., Calgary, Alberta, Canada, on June 6, 2014 at 10:30 a.m. (Calgary time) for the following purposes:

(a) to consider, pursuant to the Interim Order, and, if deemed advisable, to pass, with or without variation, a special resolution (the "Arrangement Resolution"), the full text of which is set forth in Appendix A to the accompanying management information circular and proxy statement dated May 9, 2014 (the "Circular"), to approve a statutory plan of arrangement (the "Arrangement") under section 192 of the Canada Business Corporations Act ("CBCA"), all as more particularly described in the Circular; and
(b) to transact such further or other business, as may properly be brought before the Meeting or any adjournment or postponement thereof.

The full text of the arrangement agreement dated April 14, 2014, as amended and restated April 24, 2014, among Caracal, Glencore International AG and 8682321 Canada Inc. (the "Arrangement Agreement"), and the Interim Order are attached as Appendix B and Appendix D, respectively, to the Circular. This Notice of Special Meeting of Shareholders is accompanied by the Circular and form of proxy. The Circular contains additional information relating to matters to be dealt with at the Meeting.

Caracal has set May 7, 2014 as the record date for the determination of the Shareholders entitled to receive notice of and to vote at the Meeting.

If you are a registered Shareholder who is unable to attend the Meeting in person please complete and sign the enclosed form of proxy and deliver it to Computershare Investor Services Inc. (a) by mail to Proxy Department, 135 West Beaver Creek Road, P.O. Box 300, Richmond Hill, Ontario, L4B 4R5, or (b) by hand delivery to 100 University Avenue, 8th Floor, Toronto, Ontario, M5J 2Y1. A registered Shareholder may also vote using the internet at www.investorvote.com or telephone at 1-866-732-VOTE (8683). In order to be valid and acted upon at the Meeting, the form of proxy must be received not less than 48 hours (excluding Saturdays and holidays) before the date of the Meeting or any adjournment(s) or postponement(s) thereof or be deposited with the Chairman of the Meeting prior to its commencement.

If you are not a registered Shareholder and receive these materials through your broker or through another intermediary, please complete and return the form of proxy in accordance with the instructions provided to you by your broker or by the other intermediary. Non-registered Shareholders who hold their Common Shares through a broker, investment dealer, bank, trust company, custodian, nominee or other intermediary, should carefully follow the instructions of their intermediary to ensure that their Common Shares are voted at the Meeting in accordance with such Shareholder's instructions, to arrange for their intermediary to complete the necessary transmittal documents and to ensure that they receive payment for their Common Shares if the Arrangement is completed.

Caracal may treat as invalid a CREST Voting Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001 (United Kingdom).

Pursuant to and in accordance with the Plan of Arrangement, the Interim Order and the provisions of section 190 of the CBCA (as modified or supplemented by the Interim Order, the Plan of Arrangement and any other order of the Court of Queen's Bench of Alberta) registered Shareholders have a right to dissent in respect of the Arrangement Resolution and, if the Arrangement Resolution is passed and the Arrangement is implemented, to be paid the fair value of their Common Shares in accordance with the provisions of section 190 of the CBCA, as modified by the Interim Order. A registered Shareholder's right to dissent is more particularly described in the accompanying Circular. The dissent procedures require that a registered Shareholder who wishes to dissent must send to Caracal a written objection to the Arrangement Resolution, which written objection must be received by Caracal, c/o Stikeman Elliott LLP, Suite 4300, Bankers Hall West Tower, 888 – 3rd Street S.W., Calgary AB, T2P 5C5, Attention: Geoffrey D. Holub and Keith R. Chatwin, not later than 5:00 p.m. (Calgary time) on June 4, 2014 (or 5:00 p.m. (Calgary time) on the day that is two business days immediately preceding the date that any adjourned or postponed Meeting is reconvened or held, as the case may be). Failure to strictly comply with the requirements set forth in section 190 of the CBCA, as modified by the Interim Order, may result in the loss of any right of dissent. Persons who do not hold Common Shares in their own name or who are DI Holders ("Beneficial Holders") with interests registered in the name of a broker, investment dealer, bank, trust company, custodian, nominee or other intermediary who wish to dissent should be aware that only registered holders of Common Shares are entitled to dissent. Accordingly, a Beneficial Holder desiring to exercise the right of dissent must make arrangements for the Common Shares beneficially owned by such holder to be registered in the Beneficial Holders' name prior to the time the written objection to the Arrangement Resolution is required to be received by Caracal or, alternatively, make arrangements for the registered Shareholder of such Common Shares to dissent on the Beneficial Holder's behalf. It is strongly suggested that any Shareholders wishing to dissent seek independent legal advice, as the failure to comply strictly with the provisions in section 190 of the CBCA, as modified by the Interim Order, may prejudice such Shareholder's right to dissent.

In order to receive the payment for their Common Shares, registered Shareholders must complete and sign the Letter of Transmittal enclosed with the Circular and return it to Computershare Trust Company of Canada (or such other company as may be appointed as depositary, from time to time, the "Depositary"), together with their share certificate(s) and any other documents or instruments reasonably required by the Depositary in accordance with the procedures set out in the Letter of Transmittal. If the Arrangement is completed, registered Shareholders will receive payment for their Common Shares in U.S. dollars unless a currency election is made in the Letter of Transmittal. If the Arrangement is not completed, the share certificates will be returned.

Holders of Common Shares in a nominee account in the system of CDS Clearing and Depositary Services Inc. ("CDS") should follow the instructions provided to them by their intermediary to arrange for their intermediary to complete the necessary transmittal documents and to ensure payment for their Common Shares if the Arrangement is completed. Non-registered Shareholders holding Common Shares in a nominee account in CDS will receive payment for their Common Shares in U.S. dollars unless other arrangements are made with their intermediary to make a currency election on their behalf. Persons who hold Common Shares through depositary interests through CREST will receive payment for their Common Shares in pounds sterling unless they make a currency election in CREST, as described in the Form of Instruction.

Dated at the City of Calgary, in the Province of Alberta, this 9th day of May, 2014.

BY ORDER OF THE BOARD OF DIRECTORS OF CARACAL ENERGY INC.

(Signed) "Gary Guidry"

Gary Guidry President and Chief Executive Officer Caracal Energy Inc.

IN THE COURT OF QUEEN'S BENCH OF ALBERTA JUDICIAL CENTRE OF CALGARY

IN THE MATTER OF SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, c. C-44, AS AMENDED AND IN THE MATTER OF A PROPOSED ARRANGEMENT INVOLVING CARACAL ENERGY INC., GLENCORE INTERNATIONAL AG, 8682321 CANADA INC. AND THE COMMON SHAREHOLDERS OF CARACAL ENERGY INC.

NOTICE OF ORIGINATING APPLICATION

NOTICE IS HEREBY GIVEN that an originating application (the "Application") has been filed with the Court of Queen's Bench of Alberta, Judicial Centre of Calgary (the "Court") on behalf of Caracal Energy Inc. ("Caracal") with respect to a proposed arrangement (the "Arrangement") under section 192 of the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as amended (the "CBCA"), involving Caracal, 8682321 Canada Inc. ("Purchaser"), a wholly-owned indirect subsidiary of Glencore International AG ("Glencore") and the holders of common shares of Caracal (the "Shareholders"). The Arrangement is described in greater detail in the management information circular and proxy statement of Caracal dated May 9, 2014 (the "Circular") accompanying this Notice of Originating Application.

At the hearing of the Application, Caracal intends to seek:

(a) an order approving the Arrangement pursuant to the provisions of section 192 of the CBCA;
(b) a declaration that the terms and conditions of the Arrangement, and the procedures relating thereto, are fair, substantively and procedurally, to the persons affected, including the Shareholders;
(c) a declaration that the Arrangement will, upon the filing of the Articles of Arrangement with the Director appointed under section 260 of the CBCA and the issuance of the Certificate of Arrangement pursuant to the provisions of sections 192 of the CBCA, be effective under the CBCA in accordance with its terms; and
(d) such other and further orders, declarations and directions as the Court may deem just.

AND NOTICE IS FURTHER GIVEN that the said Application was directed to be heard before a Justice of the Court at the Calgary Courts Centre, 601 - 5th Street S.W., Calgary, Alberta, on the 6th day of June, 2014 at 1:30 p.m. (Calgary time), or as soon thereafter as counsel may be heard. Any Shareholder or any other interested party desiring to support or oppose the Application may appear at the time of hearing in person or by counsel for that purpose. Any Shareholder or any other interested party desiring to appear and make submissions at the application for the final order is required to file with the Court, and serve upon Caracal on or before 5:00 p.m. (Calgary time) on May 30, 2014, a notice of intention to appear, including an address for service in the Province of Alberta, indicating whether such Shareholder or other interested party intends to support or oppose the application or make submissions thereat, together with a summary of the position such Shareholder or other interested party intends to advocate before the Court and any evidence or materials which are to be presented to the Court by such Shareholder or other interested party. Service on Caracal shall be effected by delivery to the solicitors for Caracal at the address below. If any Shareholder or any other interested party does not attend, either in person or by counsel, at that time, the Court may approve the Arrangement as presented, subject to such terms and conditions as the Court shall deem fit, without any further notice.

AND NOTICE IS FURTHER GIVEN that no further notice of the Application will be given by Caracal and that, in the event the hearing of the Application is adjourned or postponed, only those persons who have appeared before the Court for the application at the hearing, or who have filed a notice of intention to appear as described above, shall be served with notice of the adjourned or postponed date.

AND NOTICE IS FURTHER GIVEN that the Court, by the Interim Order, has given directions as to the calling and holding of a special meeting of Shareholders for the purpose of Shareholders voting upon a special resolution to approve the Arrangement and, in particular, has directed that Shareholders shall have the right to dissent with respect to the Arrangement in accordance with the provisions of section 190 of the CBCA, as modified by such Interim Order.

AND NOTICE IS FURTHER GIVEN that a copy of the said Application and other documents in the proceedings will be furnished to any Shareholder or other interested party requesting the same by the under-mentioned solicitors for Caracal upon written request delivered to such solicitors as follows:

Stikeman Elliott LLP Suite 4300, Bankers Hall West Tower 855 – 3rd Street S.W. Calgary, Alberta T2P 5C5 Attention: Geoffrey D. Holub and Keith R. Chatwin Facsimile No.: 403-266-9034

DATED at the City of Calgary, in the Province of Alberta, this 9th day of May, 2014.

BY ORDER OF THE BOARD OF DIRECTORS OF CARACAL ENERGY INC.

(Signed) "Gary Guidry"

Gary Guidry President and Chief Executive Officer Caracal Energy Inc.

MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT

Introduction

This Circular is furnished in connection with the solicitation of proxies by and on behalf of the management of Caracal Energy Inc. for use at the Meeting and any adjournments or postponements thereof. No person has been authorized to give any information or make any representation in connection with the Arrangement or any other matters to be considered at the Meeting other than those contained in this Circular and, if given or made, any such information or representation must not be relied upon as having been authorized and should not be relied upon in making a decision as to how to vote on the Arrangement Resolution.

This Circular does not constitute an offer to sell or a solicitation of an offer to purchase any securities or the solicitation of a proxy by any person in any jurisdiction in which such an offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such an offer or solicitation of an offer or a proxy solicitation. Neither the delivery of this Circular nor any distribution of the securities referred to in this Circular will, under any circumstances, create an implication that there has been no change in the information set forth herein since the date as of which such information is given in this Circular.

The information concerning Glencore contained in the "Summary Information – The Purchaser Parties" and "Information Concerning The Purchaser Parties" sections of this Circular has been provided by Glencore. Although Caracal has no knowledge that would indicate that any of such information is untrue or incomplete, save as required by applicable Law or regulation, Caracal does not assume any responsibility for the accuracy or completeness of such information or the failure by Glencore to disclose events which may have occurred or may affect the completeness or accuracy of such information but which are unknown to Caracal.

All summaries of, and references to, the Arrangement in this Circular are qualified in their entirety by reference to the complete text of the Plan of Arrangement, a copy of which is attached as Appendix C to this Circular. You are urged to carefully read the full text of the Plan of Arrangement.

This Circular and the accompanying Notice of Meeting, Notice of Originating Application and form of proxy are being sent to both registered and non-registered Shareholders. If you are a non-registered Shareholder, and Caracal or its agent has sent these materials directly to you, your name and address and information about your holdings of Common Shares have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding such Common Shares on your behalf.

All capitalized terms used in this Circular but not otherwise defined herein have the meanings set forth under "Glossary of Terms". Information contained in this Circular is given as of May 9, 2014, unless otherwise specifically stated. Details of the Arrangement are set forth under the heading "The Arrangement". For details of the matters to be considered by the Shareholders, see "Matters to be Considered at the Meeting".

Forward-looking Information and Statements

This Circular contains forward-looking statements and forward-looking information within the meaning of applicable securities Laws and which are based on the expectations, estimates and projections of management of Caracal as of the date hereof unless otherwise stated. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking statements or information. More particularly and without limitation, this Circular contains forward-looking statements and information concerning: the anticipated benefits of the Arrangement to the parties and their respective securityholders; the timing and anticipated receipt of required regulatory, court and Shareholder approvals of the Arrangement; the ability of Caracal and the Purchaser Parties to satisfy the other conditions to, and to complete, the Arrangement; and the anticipated timing for the completion of the Arrangement and delisting of the Common Shares from the Official List and from trading on the LSE.

In respect of the forward-looking statements and information concerning the anticipated benefits of the Arrangement and the anticipated timing for completion of the Arrangement, Caracal has provided such information in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the ability of the Parties to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court, Shareholder, and other third party approvals, including but not limited to the receipt of applicable foreign investment and competition approvals required in Canada; the ability of the Parties to satisfy, in a timely manner, the other conditions to the closing of the Arrangement; and other expectations and assumptions concerning the Arrangement. The anticipated dates provided may change for a number of reasons, such as the inability to secure the necessary Shareholder, regulatory, court or other third party approvals in the time assumed or the need for additional time to satisfy the other conditions to the completion of the Arrangement. Accordingly, Shareholders should not place undue reliance on the forward-looking statements and information contained in this Circular.

Although the management of Caracal considers these assumptions to be reasonable based on information currently available, they may prove to be incorrect. See "Forward-Looking Statements" in the Caracal AIF, the Caracal Annual MD&A and the Caracal Interim MD&A.

Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. Risks and uncertainties inherent in the nature of the Arrangement include the failure of Caracal and the Purchaser Parties to obtain the necessary Shareholder, regulatory, court and other third party approvals, including those noted above, or to otherwise satisfy the conditions to the completion of the Arrangement, in a timely manner, or at all. Failure to obtain such approvals, or the failure of the Parties to otherwise satisfy the conditions to or complete the Arrangement, may result in the Arrangement not being completed on the proposed terms, or at all. In addition, if the Arrangement is not completed, and Caracal continues as an independent entity, there are risks that the announcement of the Arrangement and the dedication of substantial resources of Caracal to the completion of Arrangement could have an impact on Caracal's current business relationships (including with future and prospective employees, customers, distributors, suppliers and partners) and could have a material adverse effect on the current and future operations, financial condition and prospects of Caracal. Furthermore, the failure of Caracal to comply with the terms of the Arrangement Agreement may, in certain circumstances, result in Caracal being required to pay a fee to the Purchaser Parties, the result of which could have a material adverse effect on Caracal's financial position and results of operations and its ability to fund growth prospects and current operations.

Shareholders are cautioned that the foregoing list of factors is not exhaustive. Additional information on other factors that could affect the operations or financial results of the parties are included in reports on file with applicable securities regulatory authorities.

The forward-looking statements and information contained in this Circular are made as of the date hereof and Caracal undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities Laws and readers should also carefully consider the matters discussed under "Risk Factors".

Information for U.S. Shareholders

Caracal is a corporation organized under the Laws of Canada. The solicitation of proxies and the transaction contemplated in this Circular involve securities of a Canadian issuer and are being effected in accordance with Canadian corporate and securities Laws. The solicitation of proxies for the Meeting is not subject to the requirements applicable to proxy statements under the U.S. Exchange Act. Accordingly, this Circular has been prepared solely in accordance with disclosure requirements applicable in Canada. Shareholders in the United States should be aware that such requirements are different from those of the United States applicable to proxy statements under the U.S. Exchange Act. Specifically, information contained herein has been prepared in accordance with Canadian disclosure standards, which are not comparable in all respects to U.S. disclosure standards. Shareholders should also be aware that requirements under Canadian Laws may differ from requirements under U.S. corporate and securities Laws relating to U.S. corporations.

The enforcement by Shareholders of civil liabilities under the U.S. federal or state securities Laws may be affected adversely by the fact that Caracal is organized under the Laws of Canada, that the majority of the executive officers and directors of Caracal are residents of countries other than the United States, that the experts named in this Circular are residents of countries other than the United States, and that a large portion of the assets of Caracal and such persons are, or will be, located outside the United States. In addition, the courts of Canada may not enforce judgments of U.S. courts obtained in actions against such persons predicated upon civil liabilities under the federal and state securities legislation in the United States and all rules, regulations and orders promulgated thereunder.

This transaction has not been approved or disapproved by the SEC or any other securities regulatory authority, nor has any securities regulatory authority passed upon the fairness or the merits of this transaction or upon the accuracy or adequacy of the information contained in this Circular.

Shareholders in the United States are advised to consult their independent tax advisors regarding the U.S. federal, state, local and foreign tax consequences to them of participating in the Arrangement and should carefully read the information under "Certain United States Federal Income Tax Considerations".

Currency

Unless otherwise indicated, all references in this Circular to:

"sterling", "pounds sterling", "GBP" or "£" are to the lawful currency of the United Kingdom;
"\$", "U.S. dollars", "US\$" or "U.S.\$" are to the lawful currency of the United States; and
"Canadian dollars", "CAD" or "C\$" are to the lawful currency of Canada.

The basis of translation of foreign currency for the purpose of inclusion of the financial information is set out in the Caracal Annual Financial Statements. Information derived from this financial information set out elsewhere in this Circular has been translated on the same basis.

The price of the Common Shares is quoted on the LSE in pounds sterling.

The following table sets forth, for the periods indicated, the high, low, average and period end noon (Eastern Standard Time (North America)) spot rates of exchange for one pound sterling, expressed in Canadian dollars, published by the Bank of Canada.

	Three months ended
	March 31		Year ended December 31
	2014	2013	2012	2011
			(C\$)
Highest noon rate during the period	1.8594	1.7639	1.6187	1.6332
Lowest noon rate during the period	1.7432	1.5263	1.5502	1.5297
Average noon spot rate for the period	1.8256	1.6113	1.5840	1.5861
Noon rate at the end of the period	1.8430	1.7627	1.6178	1.5799

As of the date hereof, the noon (Eastern Standard Time (North America)) buying rate for one pound sterling, expressed in Canadian dollars, as published by the Bank of Canada was C\$1.8364.

The following table sets forth, for the periods indicated, the high, low, average and period end closing spot rates of exchange for one pound sterling, expressed in U.S. dollars, as listed on Bloomberg.

	Three months ended March 31		Year ended December 31
	2014	2013	2012	2011
			(US\$)
Highest closing spot rate during the period	1.6747	1.6557	1.6279	1.6707
Lowest closing spot rate during the period	1.6305	1.4867	1.5318	1.5343
Average closing noon spot rate for the period	1.6549	1.5649	1.5852	1.6041
Closing spot rate at the end of the period	1.6566	1.6249	1.6255	1.5543

As of the date hereof, the closing spot rate of exchange for one pound sterling, expressed in U.S. dollars, as listed on Bloomberg was U.S.\$1.6851.

The following table sets forth, for the periods indicated, the high, low, average and period end noon (Eastern Standard Time (North America)) spot rates of exchange for one U.S. dollar, expressed in Canadian dollars, published by the Bank of Canada.

	Three months ended March 31		Year ended December 31
	2014	2013	2012	2011
			(US\$)
Highest rate during the period	1.1251	1.0697	1.0418	1.0604
Lowest rate during the period	1.0614	0.9839	0.9710	0.9449
Average noon spot rate for the period	1.1033	1.0299	0.9996	0.9891
Rate at the end of the period	1.1053	1.0636	0.9949	1.0170

As of the date hereof, the noon (Eastern Standard Time (North America)) buying rate for one U.S. dollar, expressed in Canadian dollars, as published by the Bank of Canada was C\$1.0900.

Caracal prepares its financial statements in U.S. dollars. Unless otherwise indicated, the financial information contained in this Circular has been expressed in U.S. dollars.

SUMMARY INFORMATION

The following is a summary of certain information contained elsewhere in this Circular, including the Appendices hereto, and is provided for convenience only and is qualified in its entirety by reference to the more detailed information contained or referred to elsewhere in this Circular or in the Appendices hereto. All capitalized terms used in this summary have the meanings set forth under "Glossary of Terms".

The Meeting

The Meeting will be held in the Westwinds Room located at 2nd Floor, 555 – 4th Avenue S.W., Calgary, Alberta, Canada, on June 6, 2014 at 10:30 a.m. (Calgary time) for the purposes set forth in the accompanying Notice of Meeting. The business of the Meeting will be for the Shareholders to consider and, if deemed advisable, to pass, with or without variation, the Arrangement Resolution. The full text of the Arrangement Resolution is set forth as Appendix A to this Circular. See "The Arrangement" and "Matters to be Considered at the Meeting".

The Record Date

The Record Date for determining Shareholders entitled to receive notice of and to vote at the Meeting is May 7, 2014. See "General Proxy Matters" for additional information.

Summary of the Arrangement

Caracal entered into the Original Arrangement Agreement on April 14, 2014 and into the Arrangement Agreement on April 24, 2014. A copy of the Arrangement Agreement is attached as Appendix B to this Circular. The Arrangement Agreement provides for the implementation of the Plan of Arrangement pursuant to which, among other things, Shareholders (other than Dissenting Shareholders) will receive the Consideration, being GBP5.50 in cash, for each Common Share held.

Under the Arrangement, all Caracal Options and Caracal Warrants, whether vested or unvested, will be disposed of and surrendered to Caracal and the holders thereof will receive for each Caracal Option or Caracal Warrant, as the case may be, a cash payment representing the amount by which the product of the number of Common Shares underlying such Caracal Option or Caracal Warrant multiplied by the Consideration exceeds the aggregate exercise price payable under such Caracal Option or Caracal Warrant, as the case may be, less applicable withholdings. In addition, each deferred share unit, restricted share unit and performance share unit will be similarly disposed of and surrendered to Caracal and the holder will receive a cash payment equal to the number of Common Shares the holder of such unit is entitled to pursuant to such unit multiplied by the Consideration, less applicable withholdings.

Upon completion of the Arrangement, all of the rights and obligations relating to the Caracal Debentures will continue to be an obligation of the successor entity of Caracal, Amalco, as an indirect wholly-owned Subsidiary of Glencore. The Arrangement will constitute a "Reorganisation Event" under the terms of the Caracal Debenture Indenture. As a result, Amalco will enter into a supplemental trust deed with the Caracal Debenture Trustee providing that holders of Caracal Debentures who exercise their conversion rights following the Effective Date will receive an Amalco Redeemable Preferred Share for each Common Share which the holder would have otherwise received upon conversion, which will immediately be purchased by the Purchaser for GBP5.50 in accordance with the terms of the Caracal Debenture Indenture. A "Potential Change of Control Notice" as such term is defined in the Caracal Debenture Indenture will be sent to holders of Caracal Debentures concurrently with the filing of this Circular.

If the Required Approval is obtained and the Arrangement is completed as contemplated by the Arrangement Agreement, Amalco will become an indirect wholly-owned Subsidiary of Glencore. See "The Arrangement".

Caracal

square kilometres (6.4 million acres) in southern Chad. This area comprises three contractual zones, the rights of which were originally granted to Caracal in 2011 pursuant to production sharing contracts that it entered into with the Government of Chad.

Caracal is a reporting issuer or the equivalent in each of the provinces of Canada other than the Province of Québec. The Common Shares are admitted to the Official List and to trading on the main market of the LSE for premium listed shares under the symbol "CRCL" and the Caracal Debentures are admitted to trading on the LuxSE.

Caracal's head and registered offices are located at Suite 2100, 555 – 4th Avenue S.W., Calgary, Alberta, T2P 3E7. Caracal's fiscal year-end is December 31. See "Information Concerning Caracal".

The Purchaser Parties

Glencore is a wholly-owned subsidiary of Glencore Xstrata, which is one of the world's largest global diversified natural resource companies. As a leading integrated producer and marketer of commodities with a well-balanced portfolio of diverse industrial assets, Glencore Xstrata is strongly positioned to capture value at every stage of the supply chain, from sourcing materials deep underground to delivering products to an international customer base. The Glencore Xstrata group's industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries and its diversified operations comprise over 150 mining and metallurgical sites, offshore oil production assets, farms and agricultural facilities. The Glencore Xstrata group employs approximately 190,000 people, including contractors.

The shares of Glencore Xstrata are listed on the LSE under the symbol "GLEN", on the Stock Exchange of Hong Kong Limited under the symbol "805" and on the Johannesburg Stock Exchange under the symbol "GLN". Glencore Xstrata has been admitted as a constituent stock of the FTSE 100 Index.

Purchaser is a corporation incorporated on November 6, 2013 under the CBCA and is an indirect wholly-owned Subsidiary of Glencore. The registered office of Purchaser is located at 100 King Street West, Suite 6900, Toronto, ON, M5X 1E3. See "Information Concerning the Purchaser Parties".

Fairness Opinions

The Board retained Goldman Sachs and RBC Capital Markets as its financial advisors to provide advice and assistance in evaluating the Arrangement, including opining on the fairness of the Consideration to be paid to Shareholders (other than the Purchaser Parties and their affiliates) under the Arrangement from a financial point of view to such Shareholders. In connection with this mandate, Goldman Sachs has prepared the Goldman Sachs Fairness Opinion and RBC Capital Markets has prepared the RBC Capital Markets Fairness Opinion. The Goldman Sachs Fairness Opinion states that, in the opinion of Goldman Sachs, as of April 14, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration to be paid to Shareholders (other than the Purchaser Parties and their affiliates) under the Arrangement was fair from a financial point of view to such Shareholders. The RBC Capital Markets Fairness Opinion states that, in the opinion of RBC Capital Markets, as of April 14, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration under the Arrangement was fair from a financial point of view to the Shareholders, other than the Purchaser Parties and their affiliates. The full text of the Goldman Sachs Fairness Opinion and the RBC Capital Markets Fairness Opinion, is attached as Appendix E and Appendix F, respectively, to this Circular and should be read carefully and in its entirety. The summaries of the Fairness Opinions in this Circular are qualified in their entirety by reference to the full text of the Fairness Opinions. The Fairness Opinions are not a recommendation as to how any Shareholder should vote with respect to the Arrangement or any other matter. See "Fairness Opinions".

Recommendation of the Board

The Board, after consulting with its financial and legal advisors, and after careful consideration of, among other things, the Goldman Sachs Fairness Opinion and the RBC Capital Markets Fairness Opinion and the recommendation of the Special Committee, has unanimously determined that the Arrangement is in the best interests of Caracal and its Shareholders as a whole. Accordingly, the Board unanimously recommends that the Shareholders approve the Arrangement by voting in favour of the Arrangement Resolution at the Meeting. See "Recommendation of the Board".

Reasons for the Arrangement

In unanimously determining that the Arrangement is in the best interests of Caracal and its Shareholders as a whole, and recommending to Shareholders that they approve the Arrangement, the Board considered and relied upon a number of factors, including, among others, the following:

x the Board carefully reviewed the terms of the Arrangement and a nearly finalized draft of the Original Arrangement Agreement and, after consultation with RBC Capital Markets, and its legal counsel, Stikeman Elliott LLP, determined that the Arrangement was a "Superior Proposal" (as defined in the TransGlobe Agreement, which was then in effect) as compared to the TransGlobe Arrangement;
x the value of the Consideration payable under the Arrangement to the Shareholders, which represents a premium of approximately 61% to the closing price of the Common Shares on the LSE on April 11, 2014 and a premium of approximately 54% to the 30 trading day volume weighted average price of the Common Shares on the LSE up to and including April 11, 2014 (being the last trading day preceding the date that Caracal and the Purchaser Parties issued a joint press release announcing the Arrangement);
x the Consideration to be paid to Shareholders pursuant to the Arrangement will be cash, which provides Shareholders with certainty of value and immediate liquidity;
x the Board's assessment of the current and anticipated future opportunities and risks associated with the business, operations, assets, financial performance and condition of Caracal should it continue as a stand-alone entity;
x the Board's assessment of the anticipated future opportunities and risks associated with the business, operations, assets, financial performance and condition of the combined entity of Caracal and TransGlobe had the TransGlobe Arrangement been completed;
x the Board's assessment of the current and anticipated future state of the credit, debt and equity markets that could be available to Caracal to provide Caracal with the full amount of funding it may require to finance its business and operations, including the risk that such funding may not be obtained in a reasonable time or in full or on terms satisfactory to Caracal, as well as the Board's assessment of current and anticipated market conditions, including commodity prices for oil, natural gas and natural gas liquids;
x the Goldman Sachs Fairness Opinion to the effect that, as of April 14, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration to be paid to Shareholders (other than the Purchaser Parties and their affiliates) under the Arrangement was fair from a financial point of view to such Shareholders;
x the RBC Capital Markets Fairness Opinion to the effect that, as of April 14, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration under the Arrangement was fair from a financial point of view to the Shareholders, other than the Purchaser Parties and their affiliates;
x Shareholders will have an opportunity to vote on the Arrangement, which must receive the Required Approval in order for Caracal to seek the Final Order and implement the Arrangement;
x the Arrangement is subject to a determination of the Court that the Arrangement is fair and reasonable, both procedurally and substantively, to Shareholders;
x the terms and conditions of the Arrangement Agreement, including the fact that Caracal's and the Purchaser Parties' representations, warranties and covenants and the conditions to completion of

the Arrangement are, in the judgment of the Board, after consultation with its legal advisors, reasonable;

x the likelihood that the transaction will receive the Regulatory Approvals under applicable Laws and on terms and conditions satisfactory to Caracal and the Purchaser Parties, including the advice of its legal and other advisors in connection with such Regulatory Approvals;
x the Purchaser Parties' obligation to complete the Arrangement is subject to a limited number of conditions, which the Board believes are reasonable under the circumstances;
x the Arrangement is not subject to a financing condition;
x the Board's belief that the Arrangement is likely to be completed in accordance with its terms and within a reasonable time, with closing of the Arrangement currently expected in the second quarter of 2014;
x the ability of the Board, in certain circumstances, to consider, accept and enter into a definitive agreement with respect to a Superior Proposal, provided that Caracal pays to Glencore the Termination Fee;
x the view of the Board that the Termination Fee would not preclude a third party from making a potential unsolicited Superior Proposal in respect of Caracal;
x the appropriateness of the Termination Fee and right to match as an inducement to the Purchaser Parties to enter into the Arrangement Agreement;
x the ability of Caracal to terminate the Arrangement Agreement and receive the Reverse Termination Fee in certain limited circumstances;
x registered Shareholders may, upon compliance with certain conditions and in certain circumstances, exercise Dissent Rights and, if ultimately successful, receive fair value for their Common Shares as determined by the Court;
x Glencore's commitment, creditworthiness, record of completing acquisition transactions and anticipated ability to complete the transactions contemplated by the Arrangement;
x the Arrangement Agreement is the result of arm's-length negotiations between Caracal and the Purchaser Parties;
x the fact that, in the Board's view, the terms of the Arrangement Agreement treat stakeholders of Caracal equitably and fairly; and
x the Arrangement is expected to benefit Caracal, its employees and other stakeholders.

The Board also considered a number of potential risks and potential negative factors relating to the Arrangement, including the following:

x the risks to Caracal if the Arrangement is not completed, including the costs to Caracal in pursuing the Arrangement, the diversion of management's attention away from conducting Caracal's business in the ordinary course, the potential crystallization of certain interest costs and expenses associated with the Caracal Debentures and the potential impact on Caracal's current business relationships (including with future and prospective employees, customers, distributors, suppliers and partners);
x the fact that, following the Arrangement, Caracal will no longer exist as an independent company and Shareholders will forego any future increase in value that might result from future growth and the potential achievement of Caracal's long-term plans;
x the conditions to the Purchaser Parties' obligation to complete the Arrangement and the right of the Purchaser Parties to terminate the Arrangement Agreement under certain limited circumstances;
x the limitations contained in the Arrangement Agreement on Caracal's ability to solicit additional interest from third parties, as well as the fact that if the Arrangement Agreement is terminated under certain circumstances, Caracal must pay the Termination Fee to Glencore, as described under "The Arrangement Agreement – Termination Fees"; and
x the fact that the Arrangement will be a taxable transaction and, as a result, Shareholders will generally be required to pay taxes on any gains that result from their receipt of the Consideration pursuant to the Arrangement.

See "Background to the Arrangement" and "Reasons for the Arrangement".

The Arrangement Agreement

The Arrangement will be effected pursuant to the Arrangement Agreement. The Arrangement Agreement contains covenants, representations and warranties of, and from each of, Glencore, Purchaser and Caracal and various conditions precedent, both mutual and in favour of the Purchaser Parties and Caracal, respectively.

The Arrangement Agreement provides that, upon the occurrence of certain termination events, Caracal is required to pay Glencore the Termination Fee and Purchaser is required to pay Caracal the Reverse Termination Fee, as the case may be. See "The Arrangement Agreement – Termination Fees".

This Circular contains a summary of certain provisions of the Arrangement Agreement and is qualified in its entirety by the full text of the Arrangement Agreement, a copy of which is attached as Appendix B to this Circular. See "The Arrangement Agreement".

Voting Agreements

On April 14, 2014, each of the directors of Caracal and each of the Caracal Executives entered into the Voting Agreements with Purchaser pursuant to which they have agreed, among other things, to vote the Common Shares beneficially owned or controlled or directed by them, directly or indirectly, at the Meeting in favour of the Arrangement Resolution and all matters related thereto. See "The Arrangement Agreement – Voting Agreements".

Procedure for the Arrangement to Become Effective

Procedural Steps

The Arrangement is proposed to be carried out pursuant to section 192 of the CBCA. The following procedural steps must be taken in order for the Arrangement to become effective:

(a) the Court must grant the Interim Order (the Interim Order was granted on May 8, 2014);
(b) the Arrangement Resolution must be approved by the Shareholders at the Meeting in the manner set forth in the Interim Order;
(c) the Court must grant the Final Order approving the Arrangement;
(d) all conditions precedent to the Arrangement, as set forth in the Arrangement Agreement, must be satisfied or waived by the appropriate Party; and
(e) the Final Order and Articles of Arrangement in the form prescribed by the CBCA must be sent to the Director.

Shareholder Approval

At the Meeting, pursuant to the Interim Order, the Shareholders will be asked to approve the Arrangement Resolution. Each Shareholder as of the Record Date shall be entitled to vote on the Arrangement Resolution. The Shareholders are entitled to one vote per Common Share. The requisite approval for the Arrangement Resolution is at least 66Ҁ% of the votes cast on the Arrangement Resolution by the Shareholders, present in person or represented by proxy, at the Meeting, and a majority of the votes cast on the Arrangement Resolution by the Shareholders, present in person or represented by proxy at the Meeting after excluding the votes of those persons whose votes may not be included in determining minority approval of a "business combination" under MI 61-101. The Arrangement Resolution must receive the Required Approval in order for Caracal to seek the Final Order and implement the Arrangement on the Effective Date in accordance with the terms of the Final Order. See "Procedure for the Arrangement to Become Effective – Shareholder Approval" and "Matters to be Considered at the Meeting".

For information with respect to the procedures for Shareholders to follow to receive the Consideration pursuant to the Arrangement, see "Procedures for the Surrender of Common Shares and Receipt of Consideration". See also "Summary of the Arrangement" above.

Court Approval

The Arrangement requires the Court to grant the Final Order. Prior to the mailing of this Circular, Caracal obtained the Interim Order authorizing and directing Caracal to call, hold and conduct the Meeting and to submit the Arrangement to Shareholders for approval. A copy of the Interim Order is attached as Appendix D to this Circular. Subject to the terms of the Arrangement Agreement and receipt of the Required Approval, Caracal will make an application to the Court for the Final Order. The hearing in respect of the Final Order is expected to take place on June 6, 2014 at 1:30 p.m. (Calgary time) or as soon thereafter as counsel may be heard at the Calgary Courts Centre, 601 - 5th Street S.W., Calgary, Alberta. See "The Arrangement – Procedure for the Arrangement Becoming Effective – Court Approval".

Conditions Precedent

The completion of the Arrangement is also subject to the receipt of the Regulatory Approvals, including, Competition Act Approval and Investment Canada Act Approval, which approvals are described in more detail under "Principal Legal Matters – Regulatory Approvals".

The implementation of the Arrangement is subject to a number of conditions being satisfied or waived by one or more of Caracal and the Purchaser Parties. See "The Arrangement Agreement – Mutual Conditions", "The Arrangement Agreement – Conditions to the Obligations of Purchaser" and "The Arrangement Agreement – Conditions to the Obligations of Caracal".

Timing

If the Meeting is held as scheduled and is not adjourned or postponed and the Required Approval is obtained, Caracal will apply for the Final Order approving the Arrangement. Subject to receipt of the Final Order in form and substance satisfactory to Caracal and the Purchaser Parties, and satisfaction or waiver of all other conditions set forth in the Arrangement Agreement, including the receipt of all required Regulatory Approvals, Caracal expects the Effective Date to occur in the second quarter of 2014. It is not possible, however, to state with certainty when the Effective Date will occur. The Effective Date could be delayed for a number of reasons, including the failure to obtain all Regulatory Approvals in the anticipated time frames. See "The Arrangement – Timing".

Dissent Rights

is two Business Days immediately preceding the date that any adjourned or postponed Meeting is reconvened or held, as the case may be).

It is a condition to Purchaser's obligation to complete the Arrangement that, as at the Effective Date, Dissent Rights validly exercised, if any, shall not represent more than 5% of the Common Shares.

The statutory provisions covering the right to dissent are technical and complex. Failure to strictly comply with the requirements set forth in section 190 of the CBCA, as modified by the Interim Order, may result in the loss of any right to dissent. Persons who are Beneficial Holders registered in the name of a broker, investment dealer, bank, trust company, custodian, nominee or other intermediary who wish to dissent should be aware that only registered holders of Common Shares are entitled to dissent. Accordingly, a Beneficial Holder desiring to exercise the right of dissent must make arrangements for the Common Shares beneficially owned by such holder to be registered in the holder's name prior to the time the written objection to the Arrangement Resolution is required to be received by Caracal or, alternatively, make arrangements for the registered Shareholder of such Common Shares to dissent on behalf of the Beneficial Holder. It is strongly suggested that any Shareholders wishing to dissent seek independent legal advice, as the failure to comply strictly with the provisions in section 190 of the CBCA, as modified by the Interim Order, may prejudice such Shareholder's right to dissent. See "Rights of Dissent".

Stock Exchange Delisting

It is intended that the LSE and the FCA will be requested respectively to cancel trading of the Common Shares on the LSE's main market for listed securities and to remove the listing of the Common Shares from the Official List, in each case, on or shortly after the Effective Date.

Canadian Federal Income Tax Considerations

Generally, a Resident Shareholder who holds Common Shares as capital property will realize a capital gain (or a capital loss) equal to the amount by which the cash received by the Resident Shareholder under the Arrangement exceeds (or is less than) the total of the adjusted cost base of the Common Shares to the Resident Shareholder and any reasonable costs of disposition.

Based in part on a certificate of an officer of Caracal as to certain factual matters, generally, a Non-Resident Shareholder will not be subject to tax under the Tax Act on any capital gain realized under the Arrangement.

This is only a brief summary of the Canadian federal income tax consequences of the Arrangement. You should carefully read the section "Certain Canadian Federal Income Tax Considerations" which qualifies the summary set forth above. It is important that you consult your own tax advisor to determine the tax consequences of the Arrangement to you.

United Kingdom Taxation Considerations

Generally, the effect of the Arrangement is that a United Kingdom tax resident person holding Common Shares or Depositary Interests beneficially as an investment will be treated as making a disposal for the purposes of United Kingdom taxation of capital gains. No United Kingdom stamp duty or stamp duty reserve tax will be payable by Shareholders or DI Holders as a result of the Arrangement.

This is only a brief summary of the United Kingdom taxation consequences of the Arrangement. You should carefully read the section "Certain United Kingdom Taxation Considerations" which qualifies the summary set forth above. It is important that you consult your own tax advisor to determine the tax consequences of the Arrangement to you.

United States Federal Income Tax Considerations

U.S. Holders (as defined under "Certain United States Federal Income Tax Considerations") whose Common Shares are exchanged for cash pursuant to the Arrangement will recognize gain or loss on the exchange for U.S. federal income tax purposes. The amount of gain or loss recognized will be equal to the difference between the "amount realized" and the U.S. Holder's aggregate adjusted tax basis in the Common Shares exchanged (each as determined in U.S. dollars). The "amount realized" will equal the amount of U.S. dollars received, or the U.S. dollar value of any Canadian dollars received. Unless certain rules for "passive foreign investment companies" apply, any gain or loss realized will be capital gain or loss.

This is only a brief summary of the U.S. federal income tax consequences of the Arrangement. You should carefully read the section "Certain United States Federal Income Tax Considerations" which qualifies the summary set forth above. It is important that you consult your own tax advisor to determine the tax consequences of the Arrangement to you.

Other Tax Considerations

This Circular does not address any tax considerations of the Arrangement other than certain Canadian, United Kingdom and United States tax considerations for Shareholders. Shareholders who are resident in jurisdictions other than Canada, the United Kingdom or the United States should consult their tax advisors with respect to the relevant tax implications of the Arrangement, including any associated filing requirements, in such jurisdictions. All Shareholders should also consult their own tax advisors regarding relevant provincial, state, territorial, or other tax considerations of the Arrangement.

Risk Factors

There is a risk that the Arrangement may not be completed. If the Arrangement is not completed, Caracal will continue to face the risks that it currently faces with respect to its affairs, business and operations and future prospects. In addition, if the Arrangement is not completed, and Caracal continues as an independent entity, there are risks that the announcement of the Arrangement and the dedication of substantial resources of Caracal to the completion of the Arrangement could have an impact on Caracal's current business relationships (including with future and prospective employees, customers, distributors, suppliers and partners) and could have a material adverse effect on the current and future operations, financial condition and prospects of Caracal. Furthermore, the failure of Caracal to comply with the terms of the Arrangement Agreement may, in certain circumstances, result in Caracal being required to pay a fee to the Purchaser Parties, the result of which could have a material adverse effect on Caracal's financial position and results of operations and its ability to fund growth prospects and current operations.

You should carefully consider the risk factors described in the section "Risk Factors" in evaluating how you should vote your Common Shares.

GLOSSARY OF TERMS

The following is a glossary of certain terms used in this Circular, including the Summary hereof:

"2011 Units" has the meaning ascribed thereto under "Information Concerning Caracal – Indebtedness of Directors and Caracal Executives".

"Acquisition Proposal" means other than the transactions contemplated by the Arrangement Agreement, any offer, proposal or inquiry (written or oral) from any Person or group of Persons other than Purchaser (or any affiliate of Purchaser or any Person acting in concert with Purchaser or any affiliate of Purchaser) after the date of the Arrangement Agreement relating to (a) any sale or disposition (or any lease, long-term supply agreement or other arrangement having the same economic effect as a sale), direct or indirect, of assets representing 20% or more of the consolidated assets or contributing 20% or more of the consolidated revenue of Caracal and its Subsidiaries, or of 20% or more of the voting or equity securities of Caracal or any of its Subsidiaries (or rights or interests in such voting or equity securities); (b) any take-over bid, exchange offer or other transaction that, if consummated, would result in such Person or group of Persons beneficially owning 20% or more of any class of voting or equity securities of Caracal or any of its Subsidiaries; (c) any plan of arrangement, merger, amalgamation, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution, winding up or exclusive license involving Caracal or any of its Subsidiaries; or (d) any other similar transaction or series of transactions Caracal or any of its Subsidiaries.

"allowable capital loss" has the meaning ascribed thereto under "Certain Canadian Federal Income Tax Considerations – Shareholders Resident in Canada – Disposition of Shares".

"Amalco" means Caracal Energy Inc., the corporation resulting from the Amalgamation.

"Amalco Redeemable Preferred Shares" has the meaning ascribed thereto under "The Arrangement – Arrangement Steps".

"Amalgamation" has the meaning ascribed thereto under "The Arrangement – Arrangement Steps".

"Application for Review" has the meaning ascribed thereto under "Principal Legal Matters – Regulatory Approvals – Investment Canada Act Approval".

"ARC" has the meaning ascribed thereto under "Principal Legal Matters – Regulatory Approvals – Competition Act Approval".

"Arrangement" means an arrangement under section 192 of the CBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations to the Plan of Arrangement made in accordance with the terms of the Arrangement Agreement or made at the direction of the Court in the Final Order with the prior written consent of Caracal and Purchaser, each acting reasonably.

"Arrangement Agreement" means the amended and restated arrangement agreement dated as of April 24, 2014 among Glencore, Purchaser and Caracal pursuant to which Glencore, Purchaser and Caracal have proposed to implement the Arrangement and have amended and restated the Original Arrangement Agreement to amend the Plan of Arrangement to implement an amended transaction structure and to address certain other minor amendments, a copy of which is attached as Appendix B to this Circular, as such agreement may be further amended or amended and restated in accordance with its terms.

"Arrangement Resolution" means the special resolution approving the Plan of Arrangement to be considered by the Shareholders at the Meeting, substantially in the form attached as Appendix A to this Circular.

"Articles of Arrangement" means the articles of arrangement of Caracal in respect of the Arrangement, required by the CBCA to be sent to the Director after the Final Order is made.

"Beneficial Holders" means Shareholders who do not hold their Common Shares in their own name or who are DI Holders.

"Bloomberg" means Bloomberg L.P.'s currency conversion service.

"Board" means the board of directors of Caracal as constituted from time to time.

"Board Recommendation" means a statement that the Board has received the Fairness Opinions, and has unanimously, after receiving legal and financial advice, determined that the Arrangement Resolution is in the best interests of Caracal and its Shareholders as a whole and unanimously recommends that Shareholders approve the Arrangement by voting in favour of the Arrangement Resolution at the Meeting.

"Business Day" means any day of the year, other than a Saturday, Sunday or any day on which major banks are closed for business in Toronto, Ontario, Calgary, Alberta, London, United Kingdom, Zurich, Switzerland or New York, New York.

"Canaccord" has the meaning ascribed thereto under "Background to the Arrangement".

"Canadian Securities Authority" means the Alberta Securities Commission and any other applicable securities commission or securities regulatory authority or a province or territory of Canada.

"CanCo" means a corporation to be incorporated under the laws of Canada as a wholly-owned subsidiary of Caracal.

"Caracal" means Caracal Energy Inc.

"Caracal 2014 AGM Circular" means the management information circular of Caracal dated April 14, 2014 in connection with the annual and special general meeting of Shareholders which has been convened for May 15, 2014.

"Caracal AIF" means the annual information form of Caracal dated March 31, 2014 for the year ended December 31, 2013.

"Caracal Annual Financial Statements" means the audited consolidated financial statements of Caracal, together with the notes thereto and the report of the independent registered public accounting firm thereon as at and for the year ended December 31, 2013.

"Caracal Annual MD&A" means management's discussion and analysis of the financial and operating results of Caracal for the year ended December 31, 2013.

"Caracal Awards" means the DSUs, PSUs and/or RSUs.

"Caracal Debenture Indenture" means the convertible debenture trust deed dated September 13, 2012, between Caracal and the Caracal Debenture Trustee, establishing and setting forth, among other things, the terms of the Caracal Debentures, as supplemented from time to time.

"Caracal Debentures" means the \$173.6 million aggregate principal amount of pre-IPO convertible bonds of Caracal with a maturity date of September 30, 2017.

"Caracal Debenture Trustee" means Citicorp Trustee Company Limited, as the trustee under the Caracal Debenture Indenture.

"Caracal Executives" means Gary Guidry, Trevor Peters, Dean Tucker, Ryan Ellson, Tina Antony, Hervé Manouan, Tim Mills, Nicholas Hands, Lawrence West and Jim Evans.

"Caracal Glencore MCR" means the material change report of Caracal dated April 24, 2014 regarding the Arrangement.

"Caracal Interim MD&A" means the management discussion and analysis of results of operations and financial conditions of Caracal for the three month period ended March 31, 2014.

"Caracal Interim Financial Statements" means the unaudited consolidated financial statements of Caracal and notes thereto as at and for the three month period ended March 31, 2014.

"Caracal Long Term Incentive Plan" means the "Griffiths Energy Incentive Compensation Plan" dated January 1, 2013, as proposed to be amended and approved at the annual and special meeting of Shareholders to be held on May 15, 2014.

"Caracal October 2013 Circular" means the management information circular of Caracal dated September 6, 2013 in connection with the special meeting of Shareholders held on October 3, 2013.

"Caracal Options" means options to purchase Common Shares granted pursuant to the Caracal Stock Option Plan.

"Caracal RBL MCR" means the material change report of Caracal dated April 17, 2014 regarding the Reserve Based Facility.

"Caracal Stock Option Plan" means Caracal's stock option plan dated June 30, 2011.

"Caracal Transaction Costs" has the meaning ascribed to the term "Company Transaction Costs" in the Arrangement Agreement.

"Caracal TransGlobe MCR" means the material change report of Caracal dated March 21, 2014 regarding the TransGlobe Agreement.

"Caracal Warrants" means the outstanding management performance warrants and employee performance warrants to purchase Common Shares.

"CBCA" means the Canada Business Corporations Act.

"CDS" means CDS Clearing and Depositary Services Inc.

"Certificate of Arrangement" means the certificate of arrangement to be issued by the Director pursuant to section 192(7) of the CBCA in respect of the Articles of Arrangement giving effect to the Arrangement.

"Chad" means the Republic of Chad.

"Circular" means this management information circular and proxy statement of Caracal dated May 9, 2014, together with all Appendices hereto, distributed by Caracal to Shareholders in connection with the Meeting.

"Code" has the meaning ascribed thereto under "Certain United States Federal Income Tax Considerations".

"Commissioner of Competition" means the Commissioner of Competition appointed pursuant to subsection 7(1) of the Competition Act or his designee.

"Common Shares" means the common shares in the capital of Caracal.

"Competition Act" means the Competition Act, R.S.C. 1985, c. C-34, as amended.

"Competition Act Approval" means that: (a) the Commissioner of Competition shall have issued an advance ruling certificate under section 102 of the Competition Act; or (b) both of (A) the waiting period under section 123 of the Competition Act shall have expired or been terminated or the obligation to provide a pre-merger notification in accordance with Part IX of the Competition Act shall have been waived in accordance with paragraph 113(c) of the Competition Act, and (B) Glencore or Purchaser shall have been advised in writing by the Commissioner of Competition that the Commissioner of Competition does not, at this time, intend to make an application under section 92 of the Competition Act in respect of the transactions contemplated by the Arrangement Agreement, and any terms and conditions attached to such advice shall be acceptable to Glencore or Purchaser, acting reasonably.

"Competition Tribunal" means the Competition Tribunal established under subsection 3(1) of the Competition Tribunal Act, R.S.C. 1985, c. 19 (2nd Supp.), as amended.

"Confidentiality Agreement" means the confidentiality agreement dated June 27, 2012, between Caracal and Glencore Energy UK LTD.

"Consideration" means GBP5.50 in cash per Common Share.

"Court" means the Court of Queen's Bench of Alberta in Calgary, Alberta, or other court as applicable.

"CREST" means the UK-based system for the paperless settlement of trades in listed securities, of which Euroclear is the operator.

"CREST Manual" means the rules governing the operation of CREST, consisting of the CREST Reference Manual, CREST International Manual, CREST Central Counterparty Service Manual, CREST Rules, Registrars Service Standards, Settlement Discipline Rules, CCSS Operations Manual, Daily Timetable, CREST Application Procedure and CREST Glossary of Terms (all as defined in the CREST Glossary of Terms promulgated by Euroclear on July 15, 1996 and as amended from time to time).

"CREST member" means a person who has been admitted to CREST as a system member (as defined in the Uncertificated Securities Regulations 2001 (SI 2001/3755) (United Kingdom)).

"Deed Poll" means the deed poll dated June 21, 2013, executed by the DI Trustee.

"Depositary" means Computershare Trust Company of Canada, appointed to act as depositary for the Arrangement.

"Depositary Interests" means the dematerialized depositary interests issued by the DI Trustee in respect of the underlying Common Shares held by it in trust for DI Holders pursuant to the Deed Poll.

"DI Holders" means holders of Depositary Interests.

"DI Trustee" means Computershare Investor Services PLC as issuer of the Depositary Interests pursuant to the Deed Poll.

"Director" means the Director appointed pursuant to section 260 of the CBCA.

"Director of Investments" means the Director of Investments appointed under section 6 of the Investment Canada Act.

"Dissent Rights" means the rights of dissent in respect of the Arrangement described in the Plan of Arrangement and the Interim Order.

"Dissenting Shareholders" means registered Shareholders who validly exercise Dissent Rights.

"DSUs" means the deferred share units granted as of April 14, 2014 under the Caracal Long Term Incentive Plan.

"Effective Date" means the date shown on the Certificate of Arrangement giving effect to the Arrangement.

"Effective Time" means 12:01 a.m. (Calgary time) on the Effective Date, or such other time as the Parties agree to in writing before the Effective Date.

"Encumbrance" includes any mortgage, pledge, assignment, charge, lien, security interest, adverse interest in property, other third party interest or encumbrance of any kind whether contingent or absolute, and any agreement, option, right or privilege (whether by Law, contract or otherwise) capable of becoming any of the foregoing.

"Euroclear" means Euroclear UK & Ireland Limited, the operator (as defined in the CREST Regulations) of CREST.

"Executive Employment Agreements" has the meaning ascribed thereto under "The Arrangement – Interests of Directors and Caracal Executives in the Arrangement – Executive Employment Agreements".

"Fairness Opinions" means, collectively, the Goldman Sachs Fairness Opinion and the RBC Capital Markets Fairness Opinion.

"FCA" means the U.K. Financial Conduct Authority.

"Final Order" means the final order of the Court in a form acceptable to Caracal and Purchaser, each acting reasonably, approving the Arrangement, as such order may be amended by the Court (with the consent of both Caracal and Purchaser, acting reasonably) at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended on appeal, as contemplated by the Arrangement Agreement.

"Form of Instruction" means the form of instruction for use by DI Holders in order to direct how the DI Trustee should cast the votes attached to the Common Shares held by the DI Trustee which are represented by the Depositary Interests at the Meeting.

"GAAP" means generally accepted accounting principles as set out in the Canadian Institute of Chartered Accountants Handbook - Accounting for an entity that prepares its financial statements in accordance with International Financial Reporting Standards, at the relevant time, applied on a consistent basis.

"GBP" means the pound sterling, the lawful currency of the United Kingdom.

"Glencore" means Glencore International AG.

"Glencore Xstrata" means Glencore Xstrata plc, the parent of Glencore.

"Goldman Sachs" means Goldman, Sachs & Co., financial advisor to Caracal.

"Goldman Sachs Fairness Opinion" means the opinion of Goldman Sachs dated April 14, 2014, and set out as Appendix E to this Circular.

"Government Approval" means any consent, waiver, permit, exemption, review, order, decision or approval of, or any registration and filing with, any Governmental Entity, or the expiry, waiver or termination of any waiting period imposed by Law or a Governmental Entity, in each case in connection with the Arrangement.

"Governmental Entity" means: (a) any international, multinational, national, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau, ministry, agency or instrumentality, domestic or foreign; (b) any subdivision or authority of any of the above; (c) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing (including any Securities Authority); (d) any government-controlled corporation or similar entity; or (e) any stock exchange (including the LSE).

"Interim Order" means the interim order of the Court dated May 8, 2014 pursuant to the CBCA, containing declarations and directions with respect to the Arrangement and the Meeting, a copy of which order is attached as Appendix D to this Circular, as such order may be affirmed, amended or modified by the Court with the consent of Caracal and Purchaser, each acting reasonably.

"Investment Canada Act" means the Investment Canada Act, R.S.C. 1985, c. 28 (1st Supp.), as amended.

"Investment Canada Act Approval" means that Glencore or Purchaser shall have been advised in writing by the Minister of Industry that the Minister of Industry is satisfied that the transactions contemplated by the Arrangement Agreement are likely to be of net benefit to Canada, or that the Minister of Industry is deemed to be satisfied that the transactions contemplated by the Arrangement Agreement are likely to be of net benefit to Canada.

"IRS" has the meaning ascribed thereto under "Certain United States Federal Income Tax Considerations".

"Law" means, with respect to any Person, any and all applicable law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement, whether domestic or foreign, enacted, adopted, promulgated or applied by a Governmental Entity that is binding upon or applicable to such Person or its business, undertaking, property or securities, and to the extent that they have the force of law, policies, guidelines, notices and protocols of any Governmental Entity, as amended.

"Letter of Representation" means a letter provided by the DI Trustee for the appointment of the DI Holder as proxy for the registered owner of the relevant Common Shares.

"Letter of Transmittal" means the letter of transmittal enclosed with this Circular pursuant to which a Shareholder is required to deliver certificates representing Common Shares in order to receive the Consideration payable in respect of such Common Shares under the Arrangement and, make a currency election if desired by such Shareholder if such holder is a registered Shareholder.

"Loan Amount" has the meaning ascribed thereto under "The Arrangement – Arrangement Steps".

"LSE" means the London Stock Exchange plc.

"LuxSE" means Luxembourg Stock Exchange.

"Matching Period" has the meaning ascribed thereto under "The Arrangement Agreement – Covenants of Caracal Regarding Non-Solicitation; Right to Accept a Superior Proposal".

"Material Adverse Effect" has the meaning ascribed to it in the Arrangement Agreement.

"Meeting" means the special meeting of Shareholders to be held on June 6, 2014, and any adjournment(s) or postponement(s) thereof, to consider and to vote on the Arrangement Resolution and the other matters referred to in the Notice Meeting.

"MI 61-101" means Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions.

"Minister of Industry" has the meaning ascribed thereto under "Principal Legal Matters – Regulatory Approvals – Investment Canada Act Approval".

"net benefit ruling" has the meaning ascribed thereto under "Principal Legal Matters – Regulatory Approvals – Investment Canada Act Approval".

"No Action Letter" has the meaning ascribed thereto under "Principal Legal Matters – Regulatory Approvals – Competition Act Approval".

"Non-Resident Dissenting Shareholder" has the meaning ascribed thereto under "Certain Canadian Federal Income Tax Considerations – Shareholders Not Resident in Canada – Dissenting Shareholders".

"Non-Resident Shareholder" has the meaning ascribed thereto under "Certain Canadian Federal Income Tax Considerations – Shareholders Not Resident in Canada".

"Notice of Meeting" means the Notice of Special Meeting of Shareholders that accompanies this Circular.

"Notifiable Transactions" has the meaning ascribed thereto under "Principal Legal Matters – Regulatory Approvals – Competition Act Approval".

"Notification" has the meaning ascribed thereto under "Principal Legal Matters – Regulatory Approvals – Competition Act Approval".

"Official List" means the official list of the UKLA.

"Original Arrangement Agreement" means the arrangement agreement dated as of April 14, 2014 among Glencore, Purchaser and Caracal.

"Outside Date" means October 31, 2014 or such later date as may be agreed to in writing by the Parties.

"Parties" means, collectively, Glencore, Purchaser and Caracal, and "Party" means any one of Glencore, Purchaser or Caracal.

"Person" includes any individual, partnership, association, body corporate, organization, trust, estate, trustee, executor, administrator, legal representative, government (including Governmental Entity), syndicate or other entity, whether or not having legal status.

"Plan of Arrangement" means the plan of arrangement attached as Appendix C to this Circular, subject to any amendments or variations to such plan made in accordance with the Arrangement Agreement or made at the direction of the Court in the Final Order with the prior written consent of Caracal and Purchaser, each acting reasonably.

"Proposed Amendments" has the meaning ascribed thereto under "Certain Canadian Federal Income Tax Considerations".

"PSUs" means the performance share units granted as of April 14, 2014 under the Caracal Long Term Incentive Plan.

"Purchaser" means 8682321 Canada Inc.

"Purchaser Parties" means, collectively, Purchaser and Glencore.

"QEF" has the meaning ascribed thereto under "Certain United States Federal Income Tax Considerations – Passive Foreign Investment Companies – Consequences of Ownership and Disposition of Shares of a PFIC".

"RBC Capital Markets" means RBC Dominion Securities Inc., a member company of RBC Capital Markets, financial advisor to Caracal.

"RBC Capital Markets Fairness Opinion" means the opinion of RBC Capital Markets dated April 14, 2014, and set out as Appendix F to this Circular.

"Record Date" means May 7, 2014.

"Redemption Call Right" means the Purchaser's overriding right and obligation to purchase from the holders of Amalco Redeemable Preferred Shares (other than the Purchaser and its affiliates) at the Redemption Call Time all of the Amalco Redeemable Preferred Shares then outstanding (other than those held by the Purchaser and any of its affiliates) for GBP5.50 in cash per Amalco Redeemable Preferred Share.

"Redemption Call Time" with respect to any Amalco Redeemable Preferred Share, means the first moment in time immediately following the issuance of the Amalco Redeemable Preferred Share.

"Regulations" has the meaning ascribed thereto under "Certain Canadian Federal Income Tax Considerations".

"Regulatory Approvals" means the Competition Act Approval and the Investment Canada Act Approval.

"Required Approval" means the requisite approval of the Arrangement Resolution by the Shareholders as set forth in the Interim Order, being at least 66Ҁ% of the votes cast on the Arrangement Resolution by the Shareholders, present in person or represented by proxy, at the Meeting, and a majority of the votes cast on the Arrangement Resolution by the Shareholders, present in person or represented by proxy at the Meeting after excluding the votes of those persons whose votes may not be included in determining minority approval of a "business combination" under MI 61-101.

"Representative" means any officer, director, employee, representative (including any financial or other advisor) or agent of the Purchaser or of any of its Subsidiaries or Caracal or any of its Subsidiaries, as the case may be.

"Reserve Based Facility" means Caracal's \$140 million reserve based senior secured facility with a final maturity date of March 31, 2017.

"Resident Dissenting Shareholder" has the meaning ascribed thereto under "Certain Canadian Federal Income Tax Considerations – Shareholders Resident in Canada – Dissenting Shareholders".

"Resident Shareholder" has the meaning ascribed thereto under "Certain Canadian Federal Income Tax Considerations – Shareholders Resident in Canada".

"Reviewable Transaction" has the meaning ascribed thereto under "Principal Legal Matters – Regulatory Approvals – Investment Canada Act Approval".

"Reverse Termination Fee" has the meaning ascribed thereto under "The Arrangement Agreement - Termination Fees".

"Reverse Termination Fee Event" has the meaning ascribed thereto under "The Arrangement Agreement – Termination Fees".

"RSUs" means the restricted share units granted as of April 14, 2014 under the Caracal Long Term Incentive Plan.

"SEC" means the U.S. Securities and Exchange Commission.

"Securities Authority" means the Canadian Securities Authority, the SEC, the FCA and the LSE.

"SEDAR" means the System for Electronic Document Analysis and Retrieval.

"Shareholders" means the registered holders of the Common Shares or the Beneficial Holders, as the context requires.

"Share Purchase Loans" has the meaning ascribed thereto under "Information Concerning Caracal – Indebtedness of Directors and Caracal Executives".

"SHT" means Société des Hydrocarbures du Tchad, the national oil company of Chad.

"Special Committee" has the meaning ascribed thereto under "Background to the Arrangement".

"Subsidiary"has the meaning specified in National Instrument 45-106 – Prospectus and Registration Exemptions.

"Superior Proposal" means any unsolicited bona fide written Acquisition Proposal from a Person who is an arm's length third party to acquire not less than all of the outstanding Common Shares or all or substantially all of the assets of Caracal on a consolidated basis that: (a) complies with securities Laws and did not result from or involve a breach of Article 5 of the Arrangement Agreement; (b) is reasonably capable of being completed without undue delay, taking into account, all financial, legal, regulatory and other aspects of such proposal and the Person making such proposal; (c) in respect of which it has been demonstrated to the satisfaction of the Board acting in good faith (after receipt of advice from its financial advisors and its outside legal counsel) that any required financing to complete such Acquisition Proposal will be reasonably likely to be obtained; (d) is not subject to any due diligence condition; and (e) that the Board determines, in its good faith judgment, after receiving the advice of its outside legal counsel and financial advisors and after taking into account all the terms and conditions of the Acquisition Proposal, including all legal, financial, regulatory and other aspects of such Acquisition Proposal and the party making such Acquisition Proposal, would, if consummated in accordance with its terms, but without assuming away the risk of non-completion, result in a transaction which is more favourable, from a financial point of view, to Shareholders than the Arrangement (including any amendments to the terms and conditions of the Arrangement proposed by the Purchaser pursuant to section 5.4(2) of the Arrangement Agreement, if applicable).

"Superior Proposal Notice" has the meaning ascribed thereto under "The Arrangement Agreement – Covenants of Caracal Regarding Non-Solicitation; Right to Accept a Superior Proposal".

"Supplementary Information Request" has the meaning ascribed thereto under "Principal Legal Matters – Regulatory Approvals – Competition Act Approval".

"Tax Act" means the Income Tax Act (Canada).

"taxable capital gain" has the meaning ascribed thereto under "Certain Canadian Federal Income Tax Considerations – Shareholders Resident in Canada – Disposition of Shares".

"Taxes" means (a) any and all taxes, duties, fees, excises, premiums, assessments, imposts, levies and other charges or assessments of any kind whatsoever imposed by any Governmental Entity, whether computed on a separate, consolidated, unitary, combined or other basis, including those levied on, or measured by, or described with respect to, income, gross receipts, profits, gains, windfalls, capital, capital stock, production, recapture, transfer, land transfer, license, gift, occupation, wealth, environment, net worth, indebtedness, surplus, sales, goods and services, harmonized sales, use, value-added, excise, special assessment, stamp, withholding, business, franchising, real or personal property, health, employee health, payroll, workers' compensation, employment or unemployment, severance, social services, social security, education, utility, surtaxes, customs, import or export, and including all license and registration fees and all employment insurance, health insurance and government pension plan premiums or contributions; (b) all interest, penalties, fines, additions to tax or other additional amounts imposed by any Governmental Entity on or in respect of amounts of the type described in clause (a) above or this clause (b); (c) any liability for the payment of any amounts of the type described in clauses (a) or (b) as a result of being a member of an affiliated, consolidated, combined or unitary group for any period; and (d) any liability for the payment of any amounts of the type described in clauses (a) or (b) as a result of any express obligation to indemnify any other Person or as a result of being a transferee or successor in interest to any party.

"Termination Fee" has the meaning ascribed thereto under "The Arrangement Agreement – Termination Fees".

"Termination Fee Event" has the meaning ascribed thereto under "The Arrangement Agreement – Termination Fees".

"Termination Payment" has the meaning ascribed thereto under "The Arrangement – Interests of Directors and Caracal Executives in the Arrangement – Executive Employment Agreements".

"TransGlobe" means TransGlobe Energy Corporation.

"TransGlobe Agreement" means the arrangement agreement dated March 15, 2014 between Caracal and TransGlobe.

"TransGlobe Arrangement" means the previously contemplated business combination between Caracal and TransGlobe pursuant to the TransGlobe Agreement, which will not be proceeding as a result of the Arrangement.

"U.S. Exchange Act" means the United States Securities Exchange Act of 1934, as amended.

"UKLA" means the FCA acting in its capacity as competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000, as amended.

"Voting Agreements" means the voting and support agreements dated April 14, 2014 entered into among Purchaser, and each of the directors of Caracal and each of the Caracal Executives pursuant to which, among other things, such parties have agreed, subject to the terms and conditions of the Voting Agreements, to vote all Common Shares held by them in favour of the Arrangement Resolution.

Certain other terms used herein but not defined herein are defined in the Arrangement Agreement and, unless the context otherwise requires, shall have the same meanings herein as in the Arrangement Agreement.

BACKGROUND TO THE ARRANGEMENT

The terms of the Arrangement are the result of an unsolicited arm's length non-binding proposal from Glencore to Caracal and resulting negotiations between representatives of the Parties and their respective advisors. The following is a summary of the events leading up to the negotiation of the Arrangement Agreement, including certain events relating to the TransGlobe Arrangement, and the meeting, negotiations, discussions and actions between the Parties that preceded the execution of and public announcement of the Arrangement Agreement.

The Board and its senior management regularly assess Caracal's operating performance and opportunities with a view to providing Shareholders with the opportunity to maximize the value of their Common Shares. This assessment regularly includes discussion and review of Caracal's growth plans, potential acquisitions and dispositions and possible corporate transactions.

On June 27, 2012, Caracal and Glencore Energy UK Ltd., an affiliate of Glencore, entered into the Confidentiality Agreement in connection with the affiliate evaluating potential marketing and off-taking arrangements between the affiliate and Caracal in relation to Caracal production. The Confidentiality Agreement contained certain standstill restrictions.

Mr. Gary Guidry, President and Chief Executive Officer of Caracal, was informally approached on two occasions prior to Caracal becoming a publicly traded company by Mr. Ross Clarkson, President and Chief Executive Officer of TransGlobe, to consider a business combination of Caracal and TransGlobe. The first approach occurred on August 28, 2012 at a lunch with Mr. Clarkson and Mr. Lloyd Herrick, Vice-President and Chief Operating Officer of TransGlobe, and the second approach occurred on January 23, 2013 over coffee with Mr. Clarkson and Mr. Randy Neely, Vice-President, Finance and Chief Financial Officer of TransGlobe. On both occasions, Mr. Guidry indicated that a business combination would not be considered by Caracal at the time as Caracal had yet to become a publicly traded company or completed its analysis of preferred choices of geologic or commercial areas of interest. The Board was promptly made aware of these advances as well as the conflict of Mr. Guidry as he served as a director of TransGlobe at the time.

In December 2013, Caracal's business development team presented its Africa basin characterization work which had commenced August 2013. The business development team identified and ranked the top basins in Africa, based on the criteria communicated in Caracal's July 2013 LSE listing prospectus. Two of the top-ranked basins were located in Egypt, where TransGlobe holds attractive exploration and producing assets.

The results of the basin analysis and ranking were presented to the Board on January 10, 2014. The Board approved management's recommendation to enter into a confidentiality agreement with TransGlobe, with the intention of exploring a possible market-to-market merger. Mr. Guidry approached Mr. Clarkson on the same day with the prospect of exploring a business combination of Caracal and TransGlobe. On January 14, 2014, Caracal and TransGlobe entered into a confidentiality agreement to enable mutual due diligence on each other's business operations.

At this time, Mr. Guidry and Mr. Robert Hodgins, Chairman of the Board, approached Mr. Gord Ritchie, Vice-Chairman of RBC Capital Markets for RBC Capital Market's advice regarding a business combination of Caracal and TransGlobe. Mr. Hodgins requested that RBC Capital Markets prepare a proposal with respect to RBC Capital Markets acting as financial advisor to the Board or a special committee of the Board should the business combination be pursued. Mr. Hodgins also requested that RBC Capital Markets prepare a presentation to be made to the Board regarding its analysis of the potential business combination.

Over the last two weeks of January 2014, each of Caracal and TransGlobe and their respective legal counsel conducted a review of non-public information of the other party to the extent permitted under applicable Law and the terms of applicable confidentiality agreements with third parties. On January 28, 2014, Caracal management provided a comprehensive business presentation to TransGlobe management and its advisors. On January 30, 2014, TransGlobe management provided a comprehensive business presentation to Caracal management and its advisors.

Each of Caracal and TransGlobe's review included extensive due diligence of the other party and its assets, including with respect to potential synergies, capital structure and operations, environmental, financial, accounting, tax, human resources and corporate matters.

At the scheduled meeting of the Board on February 18, 2014, following all of the business to be conducted at the meeting other than considering the possibility of a strategic transaction, senior management of Caracal advised the Board that it was interested in pursuing a potential strategic transaction, and that TransGlobe was the potential counterparty to the transaction. Mr. Guidry, a director of both Caracal and TransGlobe disclosed the nature and extent of a conflict or potential conflict of interest, and confirmed that he would be recusing himself from participation in considering, and in voting on, matters relating to the proposed transaction. Mr. Guidry left the meeting. Senior management then presented its analysis to the remaining members of the Board regarding the possible acquisition of TransGlobe by Caracal. Management's presentation was supplemented by a presentation by RBC Capital Markets representatives. The Board discussed general trends, and Caracal's overall position in the African exploration and production industry and the advisability of entering into a combination transaction with TransGlobe. The Board, with Mr. Guidry absent, formed a special committee (the "Special Committee") for the purposes of evaluating the transaction, supervising the process, conducting and/or supervising the conduct of all negotiations, reporting its findings to the Board and making such recommendations as the Special Committee considered appropriate. The Special Committee was comprised of all of the directors of Caracal other than Mr. Guidry. Mr. Hodgins was appointed as Chair of the Special Committee.

From February 21, 2014 to February 24, 2014, representatives from Caracal and TransGlobe conducted field visits in both Chad and Egypt.

On March 3, 2014, Mr. Hodgins and Mr. Guidry met with the board of directors of TransGlobe and presented their views of the merits of the proposed combined entity.

On March 4, 2014, Mr. Hodgins engaged Canaccord Genuity Corp. ("Canaccord") to provide financial advisory services to the Special Committee regarding a possible transaction with TransGlobe, including, if requested, an opinion as to the fairness to Caracal, from a financial point of view, of the consideration to be paid by Caracal pursuant to the transaction.

On March 7, 2014, Mr. Hodgins called Mr. Clarkson and requested a meeting. On that day, Mr. Hodgins met with Mr. Clarkson and Mr. Robert Jennings, Chairman of the board of directors of TransGlobe, at the TransGlobe offices to discuss the potential terms of the TransGlobe Agreement.

On March 7, 2014, the Special Committee met with Caracal's senior management and Caracal's financial and legal advisors to receive updated financial and legal advice regarding the terms of a potential transaction with TransGlobe, including the impact of such a transaction on Shareholders and other stakeholders. At this meeting, RBC Capital Markets presented its financial analysis of the potential transaction to the Board. Stikeman Elliott LLP provided the Board with legal advice as to the structural considerations involved in a potential transaction with TransGlobe and the legal and fiduciary duties and responsibilities of the Board in evaluating the proposed transaction. Following the review, the Special Committee authorized Mr. Hodgins in his capacity as the Chairman of the Board, to contact Mr. Clarkson to inquire as to what terms would be acceptable to TransGlobe with respect to the transaction. Negotiations of the terms of the TransGlobe Agreement commenced in the first week of March, 2014.

Mr. Hodgins and Mr. Guidry met with Mr. Clarkson, Mr. Jennings and Mr. Fred Dyment, director of TransGlobe, on March 10, 2014 regarding specific aspects of Caracal's due diligence investigation of TransGlobe. Mr. Hodgins, Mr. Clarkson and Mr. Jennings continued preliminary discussions as to the financial and other parameters of a possible business combination transaction. Later in the day, Mr. Hodgins and Mr. Guidry met with two members of TransGlobe's special committee. Afterwards, Mr. Hodgins had a telephone conversation with Mr. Jennings the goal of which was to better understand what terms of the TransGlobe Agreement would be satisfactory to both the Board and the board of directors of TransGlobe.

On March 11, 2014, the Special Committee met with its legal and financial advisors to review certain operational and financial analysis performed by RBC Capital Markets and Canaccord and to continue to review the structure and terms of a potential transaction. Following this meeting, the Special Committee recommended that Mr. Hodgins and senior management continue to discuss with TransGlobe the terms of the TransGlobe Agreement. Later that day, Mr. Guidry formally resigned from the board of directors of TransGlobe.

The Special Committee met on March 13, 2014 to review and consider the specific transaction terms that had been negotiated, the merits to Caracal of entering into such a transaction and the proposed final terms of the TransGlobe Agreement that resulted from the negotiations with TransGlobe. At this meeting, management presented a summary of the due diligence work that had been completed. Stikeman Elliott LLP reviewed the material terms of the proposed TransGlobe Agreement with the Special Committee, advised the Special Committee with respect to the resolution of the final matters under negotiation and reiterated the fiduciary duties and responsibilities of Board members with respect to the proposed transaction. RBC Capital Markets and Canaccord then delivered their respective verbal opinions that, as of March 13, 2014, and based upon and subject to the assumptions, limitations and qualifications contained therein, the consideration to be paid by Caracal under the TransGlobe Arrangement was fair, from a financial point of view, to Caracal. The Special Committee reviewed the negotiation process with management and discussed the nearly final proposed terms of the TransGlobe Agreement and the verbal fairness opinions of RBC Capital Markets and Canaccord.

After the Special Committee considered, among other things, the terms of the TransGlobe Agreement, the respective verbal fairness opinions of RBC Capital Markets and Canaccord and the impact of the proposed transaction on the various stakeholders of Caracal, the Special Committee unanimously resolved to recommend to the Board that the Board authorize and approve the execution and delivery of the TransGlobe Agreement (subject to minor revisions to be made in finalizing negotiations) by Caracal, determine that the TransGlobe Arrangement was in the best interests of Caracal and its Shareholders as a whole and recommend that Shareholders vote in favour of the resolution approving the issuance of Common Shares in connection with the TransGlobe Arrangement. Following receipt of the recommendation of the Special Committee and the advice and assistance of the legal and financial advisors, the Board carefully evaluated the terms of the proposed TransGlobe Arrangement, and (with Mr. Guidry declaring his conflict and abstaining): (a) determined that the TransGlobe Arrangement and the entering into of the TransGlobe Agreement were in the best interests of Caracal; (b) approved the entering into of the TransGlobe Agreement (subject to minor revisions to be made in finalizing negotiations); and (c) resolved to recommend that Shareholders vote in favour of the resolution approving the TransGlobe Arrangement.

On March 14, 2014, Mr. Hodgins and representatives from Caracal and TransGlobe continued negotiations of the TransGlobe Agreement.

On March 15, 2014, Mr. Hodgins and representatives from Caracal and TransGlobe finalized the negotiations of the TransGlobe Agreement and RBC Capital Markets and Canaccord each confirmed their respective verbal opinions. TransGlobe and Caracal signed the TransGlobe Agreement later that day. Caracal and TransGlobe issued a joint press release on March 15, 2014 announcing the TransGlobe Arrangement.

On April 7 2014, Mr. Hodgins, on behalf of the Board, received an unsolicited non-binding proposal from Glencore to acquire all of the outstanding Common Shares, together with all shares that would be issued on the exercise of outstanding rights to acquire Common Shares at \$9.00 per Common Share. On that same date, the Board sought the advice of Stikeman Elliott LLP, RBC Capital Markets and Goldman Sachs, who had been engaged in April 2013 to provide financial advisory services in the event of an unsolicited change of control offer, such as the Arrangement. On April 8, 2014, Caracal gave notice to TransGlobe of its receipt of the proposal from Glencore and the Board also continued its discussion with its financial and legal advisors concerning the appropriate response to Glencore.

On April 9, 2014, Caracal obtained a waiver from TransGlobe from certain provisions of the TransGlobe Agreement to, among other matters, allow Caracal to consider the proposal received from Glencore and permit the Board to waive the standstill obligations under the Confidentiality Agreement. A condition of that waiver was Caracal's agreement that, if and when it entered into a definitive agreement with Glencore or any of its affiliates with respect to a "Superior Proposal" (as defined in the TransGlobe Agreement), Caracal would require Glencore or its affiliate, as the case may be, to agree in that definitive agreement to reimburse TransGlobe for out-of-pocket expenses incurred by TransGlobe and its affiliates in connection with the TransGlobe Arrangement up to a maximum of C\$1,200,000 (such agreement by Glencore was ultimately reflected in section 4.1(5) of the Arrangement Agreement). The Board also had further discussions with its legal and financial advisors.

On April 10, 2014, the Special Committee and the Board met with representatives of Caracal's senior management and Caracal's financial and legal advisors. The Special Committee received updated operational and financial information from management of Caracal. RBC Capital Markets and Goldman Sachs presented their preliminary financial analysis of the proposal from Glencore. Stikeman Elliott LLP provided the Board with legal advice as to the structural considerations involved in a potential transaction with Glencore, the legal and fiduciary duties and responsibilities of the Board in evaluating the proposed transaction and Caracal's obligations under the TransGlobe Agreement. Following such review, and discussion of, particularly, the requirements under the TransGlobe Agreement (including the definition of "Superior Proposal"), the alternatives available to Caracal in the circumstances and the relative advantages and disadvantages of the Glencore proposal, the TransGlobe Arrangement and other alternatives, the Special Committee recommended that the Board determine that the proposal from Glencore was reasonably likely to lead to a Superior Proposal under the TransGlobe Agreement and to authorize Mr. Hodgins, in his capacity as the Chairman of the Board, to contact Glencore to commence discussions or negotiations regarding the proposal received from Glencore.

On April 11, 2014, the Special Committee and the Board met with its legal and financial advisors to review certain operational and financial analysis prepared by RBC Capital Markets and Goldman Sachs and to continue to review the terms of a potential transaction with Glencore. Mr. Hodgins advised the Special Committee that after a conversation with Mr. Hodgins and Mr. Guidry, Glencore had verbally agreed to increase the proposed price per Common Share to \$9.22 (GBP5.50). Following this meeting, Mr. Hodgins and certain representatives of Caracal continued negotiations with Glencore, including the commencement of negotiations with respect to the specific terms of the Original Arrangement Agreement.

The Special Committee and the Board met on April 13, 2014 and into the early morning hours of April 14, 2014. Stikeman Elliott LLP reviewed the material terms of the nearly final proposed Original Arrangement Agreement with the Special Committee, advised the Special Committee on the resolution of the final matters under negotiation and reiterated the fiduciary duties and responsibilities of Board members with respect to the proposed transaction and Caracal's obligations under the TransGlobe Agreement. RBC Capital Markets then conditionally delivered its verbal opinion subject to certain issues in the Original Arrangement Agreement being resolved, that based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration under the Arrangement was fair from a financial point of view to the Shareholders other than the Purchaser Parties and their affiliates. The Special Committee reviewed the negotiation process with management and discussed the nearly final proposed terms of the Original Arrangement Agreement and the conditional verbal fairness opinion of RBC Capital Markets. After the Special Committee considered, among other things, the terms of the Original Arrangement Agreement (including then remaining issues), the terms of the TransGlobe Agreement, the conditional verbal fairness opinion and other advice from RBC Capital Markets, advice from Goldman Sachs, the relative advantages and disadvantages of the Glencore proposal, the TransGlobe Arrangement and other alternatives and the impact of the proposed transaction with Glencore on the various stakeholders of Caracal, the Special Committee unanimously resolved to recommend to the Board that the Board (subject to resolution of certain issues in the Original Arrangement Agreement, receipt of Goldman Sachs' verbal fairness opinion and confirmation of RBC Capital Markets' verbal fairness opinion): (a) determine that the transaction contemplated by the Original Arrangement Agreement was a "Superior Proposal" under the TransGlobe Agreement; (b) determine that the Arrangement and the entering into of the Original Arrangement Agreement are in the best interests of Caracal and its Shareholders as a whole; (c) authorize and approve the execution and delivery of the Original Arrangement Agreement by Caracal; and (d) resolve to recommend that Shareholders vote in favour of the resolution approving the Arrangement.

Following receipt of the recommendation of the Special Committee, the advice and assistance of the legal and financial advisors and further discussion, the Board (subject to resolution of certain issues in the Original Arrangement Agreement, receipt of Goldman Sachs' verbal fairness opinion and confirmation of RBC Capital Markets' verbal fairness opinion) unanimously: (a) determined that the transaction contemplated by the Original Arrangement Agreement was a "Superior Proposal" under the TransGlobe Agreement; (b) determined that the Arrangement and the entering into of the Original Arrangement Agreement are in the best interests of Caracal and its Shareholders as a whole; (c) authorized and approved the execution and delivery of the Original Arrangement Agreement by Caracal; and (d) resolved to recommend that Shareholders vote in favour of the resolution approving the Arrangement. In a subsequent call to the members of the Board in the early morning hours of April 14, 2014, the Board was advised of the resolution of most of the remaining issues in the finalization of the Original Arrangement Agreement and Mr. Hodgins received guidance in respect of a single matter to be resolved, which was later resolved. Shortly thereafter, in the early morning hours of April 14, 2014, RBC Capital Markets confirmed its verbal fairness opinion without condition and Goldman Sachs delivered its verbal opinion that, as of April 14, 2014, and based upon and subject to the assumptions, qualifications and limitations set forth in its opinion, the Consideration to be paid to the Shareholders (other than the Purchaser Parties and their affiliates) under the Arrangement was fair from a financial point of view to such Shareholders.

In addition to the foregoing, in determining that the Arrangement is in the best interests of Caracal and its Shareholders as a whole, and recommending to Shareholders that they approve the Arrangement by voting in favour of the resolution approving the Arrangement, the Board considered and relied upon a number of factors as described under "Reasons for the Arrangement".

Later, in the early morning of April 14, 2014, in accordance with the TransGlobe Agreement, Caracal provided notice to TransGlobe that the Board had determined that the transaction contemplated by the Original Arrangement Agreement was a "Superior Proposal" under the TransGlobe Agreement, that the Board intended to enter into the Original Arrangement Agreement and that Caracal was electing to terminate the TransGlobe Agreement in accordance with its terms. Enclosed with the notice was a copy of the Original Arrangement Agreement and a cheque in the amount of \$9,250,000 payable to TransGlobe, representing the reverse termination break fee under the terms of the TransGlobe Agreement.

Immediately thereafter, Caracal, Glencore and Purchaser entered into the Original Arrangement Agreement, the Caracal Executives and members of the Board entered into the Voting Agreements and the Arrangement was publicly announced. Thereafter, RBC Capital Markets and Goldman Sachs delivered the written RBC Capital Markets Fairness Opinion and Goldman Sachs Fairness Opinion, respectively, each addressed to the Board.

On April 24, 2014, after several days of consultation with its various advisors and the Purchaser Parties and their respective advisors, Caracal entered into the Arrangement Agreement to amend the Plan of Arrangement to implement an amended transaction structure and to address certain minor amendments to the Original Amendment Agreement.

On May 6, 2014 the Board met and considered this Circular and various other matters relating to the proposed Arrangement and the Meeting. At this meeting, the Board unanimously resolved to approve the contents of this Circular, the mailing of the Circular to the Shareholders and various other matters relating to the proposed Arrangement and the Meeting and confirmed the Board Recommendation.

RECOMMENDATION OF THE BOARD OF DIRECTORS

REASONS FOR THE ARRANGEMENT

In unanimously determining that the Arrangement is in the best interests of Caracal and its Shareholders as a whole, and recommending to Shareholders that they approve the Arrangement by voting in favour of the Arrangement Resolution, the Board considered and relied upon a number of factors, including, among others, the following:

x the Board carefully reviewed the terms of the Arrangement and a nearly finalized draft of the Original Arrangement Agreement and, after consultation with RBC Capital Markets, and its legal counsel, Stikeman Elliott LLP, determined that the Arrangement was a "Superior Proposal" (as defined in the TransGlobe Agreement, which was then in effect) as compared to the TransGlobe Arrangement;
x the value of the Consideration payable under the Arrangement to the Shareholders, which represents a premium of approximately 61% to the closing price of the Common Shares on the LSE on April 11, 2014 and a premium of approximately 54% to the 30 trading day volume weighted average price of the Common Shares on the LSE up to and including April 11, 2014 (being the last trading day preceding the date that Caracal and the Purchaser Parties issued a joint press release announcing the Arrangement);
x the Consideration to be paid to Shareholders pursuant to the Arrangement will be cash, which provides Shareholders with certainty of value and immediate liquidity;
x the Board's assessment of the current and anticipated future opportunities and risks associated with the business, operations, assets, financial performance and condition of Caracal should it continue as a stand-alone entity;
x the Board's assessment of the anticipated future opportunities and risks associated with the business, operations, assets, financial performance and condition of the combined entity of Caracal and TransGlobe had the TransGlobe Arrangement been completed;
x the Board's assessment of the current and anticipated future state of the credit, debt and equity markets that could be available to Caracal to provide Caracal with the full amount of funding it may require to finance its business and operations, including the risk that such funding may not be obtained in a reasonable time or in full or on terms satisfactory to Caracal, as well as the Board's assessment of current and anticipated market conditions, including commodity prices for oil, natural gas and natural gas liquids;
x the Goldman Sachs Fairness Opinion to the effect that, as of April 14, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration to be paid to Shareholders (other than the Purchaser Parties and their affiliates) under the Arrangement was fair from a financial point of view to such Shareholders;
x the RBC Capital Markets Fairness Opinion to the effect that, as of April 14, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration under the Arrangement was fair from a financial point of view to the Shareholders, other than the Purchaser Parties and their affiliates;
x Shareholders will have an opportunity to vote on the Arrangement, which must receive the Required Approval in order for Caracal to seek the Final Order and implement the Arrangement;
x the Arrangement is subject to a determination of the Court that the Arrangement is fair and reasonable, both procedurally and substantively, to Shareholders;
x the terms and conditions of the Arrangement Agreement, including the fact that Caracal's and the Purchaser Parties' representations, warranties and covenants and the conditions to completion of the Arrangement are, in the judgment of the Board, after consultation with its legal advisors, reasonable;
x the likelihood that the transaction will receive the Regulatory Approvals under applicable Laws and on terms and conditions satisfactory to Caracal and the Purchaser Parties, including the advice of its legal and other advisors in connection with such Regulatory Approvals;
x the Purchaser Parties' obligation to complete the Arrangement is subject to a limited number of conditions, which the Board believes are reasonable under the circumstances;
x the Arrangement is not subject to a financing condition;
x the Board's belief that the Arrangement is likely to be completed in accordance with its terms and within a reasonable time, with closing of the Arrangement currently expected in the second quarter of 2014;
x the ability of the Board, in certain circumstances, to consider, accept and enter into a definitive agreement with respect to a Superior Proposal, provided that Caracal pays to Glencore the Termination Fee;
x the view of the Board that the Termination Fee would not preclude a third party from making a potential unsolicited Superior Proposal in respect of Caracal;
x the appropriateness of the Termination Fee and right to match as an inducement to the Purchaser Parties to enter into the Arrangement Agreement;
x the ability of Caracal to terminate the Arrangement Agreement and receive the Reverse Termination Fee in certain limited circumstances;
x registered Shareholders may, upon compliance with certain conditions and in certain circumstances, exercise Dissent Rights and, if ultimately successful, receive fair value for their Common Shares as determined by the Court;
x Glencore's commitment, creditworthiness, record of completing acquisition transactions and anticipated ability to complete the transactions contemplated by the Arrangement;
x the Arrangement Agreement is a result of arm's-length negotiations between Caracal and the Purchaser Parties;
x the fact that, in the Board's view, the terms of the Arrangement Agreement treat stakeholders of Caracal equitably and fairly; and
x the Arrangement is expected to benefit Caracal, its employees and other stakeholders.

The Board also considered a number of potential risks and potential negative factors relating to the Arrangement, including the following:

x the risks to Caracal if the Arrangement is not completed, including the costs to Caracal in pursuing the Arrangement, the diversion of management's attention away from conducting Caracal's business in the ordinary course, the potential crystallization of certain interest costs and expenses associated with the Caracal Debentures and the potential impact on Caracal's current business relationships (including with future and prospective employees, customers, distributors, suppliers and partners);
x the fact that following the Arrangement, Caracal will no longer exist as an independent company and Shareholders will forego any future increase in value that might result from future growth and the potential achievement of Caracal's long-term plans;
x the conditions to the Purchaser Parties' obligation to complete the Arrangement and the right of the Purchaser Parties to terminate the Arrangement Agreement under certain limited circumstances;
x the limitations contained in the Arrangement Agreement on Caracal's ability to solicit additional interest from third parties, as well as the fact that if the Arrangement Agreement is terminated under certain circumstances, Caracal must pay the Termination Fee to Glencore, as described under "The Arrangement Agreement – Termination Fees"; and
x the fact that the Arrangement will be a taxable transaction and, as a result, Shareholders will generally be required to pay taxes on any gains that result from their receipt of the Consideration pursuant to the Arrangement.

The foregoing discussion of the information and factors considered and given weight by the Board is not intended to be exhaustive. In reaching the determination to approve and recommend the Arrangement, the Board did not assign any relative or specific weights to the foregoing factors, and individual directors may have given different weights to different factors. The full Board was present at the April 14, 2014 meeting of the Board at which the Arrangement was approved and the Board was unanimous in its recommendation that the Shareholders vote in favour of the Arrangement Resolution. At a meeting of the Board held on May 6, 2014, at which, among other matters, the contents of this Circular were approved, the Board unanimously confirmed its recommendation that the Shareholders vote in favour of the Arrangement Resolution.

FAIRNESS OPINIONS

The Goldman Sachs Fairness Opinion states that, in the opinion of Goldman Sachs, as of April 14, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration to be paid to Shareholders (other than the Purchaser Parties and their affiliates) under the Arrangement was fair from a financial point of view to such Shareholders. The RBC Capital Markets Fairness Opinion states that, in the opinion of RBC Capital Markets, as of April 14, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration under the Arrangement was fair from a financial point of view to the Shareholders, other than the Purchaser Parties and their affiliates. This summary is qualified in its entirety by reference to the full text of the Fairness Opinions. The Board urges Shareholders to read the Fairness Opinions carefully and in their entirety.

The full text of the written Goldman Sachs Fairness Opinion, dated April 14, 2014, setting out the assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Goldman Sachs in connection with the Goldman Sachs Fairness Opinion, is attached as Appendix E. Goldman Sachs (which has given and not withdrawn written consent to the inclusion of the references to its name in this Circular in the form and context in which they are included) provided the Goldman Sachs Fairness Opinion solely for the information and assistance of the Board in connection with its consideration of the transaction contemplated therein and it is not to be used, circulated, quoted or otherwise referred to for any other purpose, nor is it to be filed with, included in or referred to in whole or in part in any registration statement, proxy statement, information circular or any other document, except in accordance with Goldman Sachs' prior written consent. The Goldman Sachs Fairness Opinion addresses only the fairness, from a financial point of view, of the Consideration to be paid to Shareholders (other than the Purchaser Parties and their affiliates) under the Arrangement. The Goldman Sachs Fairness Opinion is not a recommendation as to how any Shareholder should vote with respect to the Arrangement or any other matter.

The full text of the written RBC Capital Markets Fairness Opinion, dated April 14, 2014, setting out the assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by RBC Capital Markets, in connection with the RBC Capital Markets Fairness Opinion is attached as Appendix F. RBC Capital Markets (which has given and not withdrawn written consent to the inclusion of the references to its name in this Circular in the form and context in which they are included) provided the RBC Capital Markets Fairness Opinion solely for the information and assistance of the Board in connection with its consideration of the transaction contemplated therein, and it is not to be used, circulated, quoted or otherwise referred to for any other purpose, nor is it to be filed with, included in or referred to in whole or in part in any registration statement, proxy statement, information circular or any other document, except in accordance with RBC Capital Markets' prior written consent. The RBC Capital Markets Fairness Opinion addresses only the fairness of the Consideration under the Arrangement from a financial point of view to the Shareholders, other than the Purchaser Parties and their affiliates. The RBC Capital Markets Fairness Opinion is not a recommendation as to how any Shareholder should vote with respect to the Arrangement or any other matter.

Goldman Sachs was engaged by Caracal as a financial advisor to provide the Board with various financial advisory services, including advice and assistance in evaluating the Arrangement. Pursuant to the terms of its engagement with Caracal, Goldman Sachs is to be paid a fee for its services as financial advisor. A portion of the fees payable to Goldman Sachs are contingent upon the closing of the Arrangement. Caracal has also agreed to indemnify Goldman Sachs in certain circumstances.

RBC Capital Markets was engaged by Caracal as a financial advisor to provide the Board with financial advisory services in connection with the Arrangement, including advice and assistance in evaluating the Arrangement. Pursuant to the terms of its engagement with Caracal, RBC Capital Markets is to be paid a fee for its services as financial advisor. Caracal has also agreed to reimburse RBC Capital Markets for its reasonable out-of-pocket expenses and to indemnify RBC Capital Markets in certain circumstances.

THE ARRANGEMENT

Summary of the Arrangement

The following is a summary only of certain of the material terms of the Plan of Arrangement and is qualified in its entirety by the full text of the Plan of Arrangement attached as Appendix C to this Circular.

The Arrangement Resolution approving the Arrangement must receive the Required Approval. See "The Arrangement Agreement".

Arrangement Steps

The following summarizes the steps that will occur under the Plan of Arrangement on the Effective Date, if all conditions to the completion of the Arrangement have been satisfied or waived. The following description is qualified in its entirety by reference to the full text of the Plan of Arrangement attached as Appendix C to this Circular and any amendments that may be made to the Plan of Arrangement in accordance with its terms after the date of this Circular.

The Arrangement involves a number of steps, including each of the events set out below, which shall occur and be deemed to occur in the following order commencing at the Effective Time, without any further act or formality, except as otherwise expressly provided in the Plan of Arrangement:

(a) the Purchaser shall make a loan to Caracal in an amount equal to the aggregate amount of the payments that are to be made, pursuant to subsection (b) below, to the holders of Caracal Options, Caracal Warrants and Caracal Awards (the "Loan Amount") and such amount shall be deposited by the Purchaser with the Depositary in accordance with Section 4.1(a) of the Plan of Arrangement;
(b) notwithstanding any vesting or exercise provisions to which a Caracal Option, Caracal Warrant or Caracal Award might otherwise be subject (whether by contract, conditions of a grant, Law or terms of the Caracal Stock Option Plan or the Caracal Long Term Incentive Plan, as the case may be), all of the outstanding Caracal Options, Caracal Warrants and Caracal Awards, without any further action on behalf of the holder thereof and without any payment except as provided in the Plan of Arrangement and notwithstanding the terms of the applicable Caracal Stock Option Plan, Caracal Warrant or Caracal Long Term Incentive Plan, shall be disposed of and surrendered by the holders thereof to Caracal without any act or formality on its or their part in exchange for a cash payment equal to:
(i) with respect to each outstanding Caracal Option and Caracal Warrant, the amount (if any) by which (A) the product of the number of Common Shares underlying such Caracal Option or Caracal Warrant, multiplied by the Consideration exceeds (B) the aggregate exercise price payable under such Caracal Option or Caracal Warrant, if such exercise price is in GBP, or the GBP equivalent calculated using the Canadian dollar/GBP exchange rate as of 12:00 p.m. Eastern Time on the Business Day prior to the Effective Date published by the Bank of Canada on its website, if such exercise price is in Canadian dollars, by the holder to acquire the Common Shares underlying such Caracal Option or Caracal Warrant;
(ii) with respect to each outstanding Caracal Award, the number of Common Shares the holder of such Caracal Award is entitled to pursuant to such Caracal Award, multiplied by the Consideration;
(c) all of the outstanding Caracal Options, Caracal Warrants and Caracal Awards shall be cancelled and each of the Caracal Stock Option Plan and Caracal Long Term Incentive Plan shall be terminated;
(d) CanCo and Caracal shall amalgamate to form Amalco under the CBCA (the "Amalgamation"), with the effect described below:
(i) Name. The name of Amalco shall be Caracal Energy Inc.
(ii) Registered Office. The registered office of Amalco shall be located in Canada in the Province of Alberta. The address of the registered office shall be Suite 2100, 555 – 4th Avenue S.W., Calgary, Alberta, T2P 3E7.
(iii) Business and Powers. There shall be no restrictions on the business that Amalco may carry on or on the powers it may exercise.
(iv) Authorized Share Capital. Amalco shall be authorized to issue an unlimited number of common shares and an unlimited number of shares designated as "Class A Preferred Shares" ("Amalco Redeemable Preferred Shares").
(v) Share Provisions. The Amalco Redeemable Preferred Shares shall have the terms set forth in Schedule I of the Plan of Arrangement. Certificates representing Common Shares will represent the Amalco Redeemable Preferred Shares received on the Amalgamation.
(vi) Shares. Each common share in the capital of CanCo shall be cancelled without any repayment of capital in respect thereof. Each Common Share (including any Common Share issued prior to the Effective Time pursuant to (A) Caracal Options, Caracal Warrants, Caracal Awards or (B) the conversion of any Caracal Debentures), including Common Shares in respect of which Dissent Rights have been exercised, shall be converted into one fully paid and non-assessable Amalco Redeemable Preferred Share and the shares so converted shall be added to the register of shareholders of Amalco.
(vii) Restrictions on Transfer. The transfer of Amalco Redeemable Preferred Shares shall be restricted, other than pursuant to the Arrangement or the Redemption Call Right, and no holder of Amalco Redeemable Preferred Shares shall transfer any such share without either: (A) the approval of the directors of Amalco passed at a meeting of the board of directors or by an instrument or instruments in writing signed by a majority of the directors; or (B) the approval of the holders of at least a majority of the shares of Amalco entitling the holders thereof to vote in all circumstances (other than holders of shares who are entitled to vote separately as a class) for the time being outstanding, expressed by a resolution passed at a meeting of the holders of such shares or by an instrument or instruments in writing signed by the holders of a majority of such shares.
(viii) Number of Directors. The number of directors of Amalco shall not be less than 1 and not more than 10, and otherwise as the shareholders of Amalco may from time to time determine by special resolution.
(ix) Initial Directors. The initial directors of Amalco shall be the directors of Caracal immediately prior to the Amalgamation.
(x) By-laws. The by-laws of Amalco shall be the same as the by-laws of Caracal.
(xi) Articles. The Articles of Arrangement filed shall be deemed to be the articles of amalgamation of Amalco and any certificate issued in respect of such Articles of Arrangement by the Director under the CBCA giving effect to the Arrangement shall be deemed to be the Certificate of Amalgamation of Amalco.
(xii) Stated Capital. The aggregate of the stated capital of the issued and outstanding Amalco Redeemable Preferred Shares shall be equal to the aggregate of the stated capital of the issued and outstanding Common Shares immediately prior to the Amalgamation.
(xiii) Effect of Amalgamation. Upon the amalgamation of CanCo and Caracal to form Amalco:
(A) the property of each of CanCo and Caracal shall continue to be the property of Amalco;
(B) Amalco shall continue to be liable for the obligations of CanCo and Caracal;
(C) all existing causes of action, claims or liabilities to prosecution with respect to CanCo and Caracal shall be unaffected;
(D) all civil, criminal or administrative actions or proceedings pending by or against CanCo and Caracal may be continued to be prosecuted by or against Amalco; and
(E) all convictions against, or rulings, orders or judgments in favour of or against CanCo and Caracal may be enforced by or against Amalco.
(e) one common share of Amalco shall be issued to Purchaser for a subscription price of GBP5.50;
(f) at the Redemption Call Time:
(i) each Amalco Redeemable Preferred Share issued in exchange for Common Shares in respect of which Dissent Rights have been validly exercised shall be transferred and deemed to be transferred by the holder thereof, without any further act or formality on its part, free and clear of all Encumbrances, to the Purchaser in consideration for a debt claim against Purchaser in an amount determined and payable in accordance with Section 5.1 of the Plan of Arrangement, and the name of such holder will be removed from the register of holders of Amalco Redeemable Preferred Shares (in respect of the Amalco Redeemable Preferred Shares issued in exchange for Caracal Shares for which Dissent Rights have been validly exercised), and the Purchaser shall be recorded as the registered holder of Amalco Redeemable Preferred Shares so transferred and shall be deemed to be the legal and beneficial owner of such Amalco Redeemable Preferred Shares free and clear of any Encumbrances;
(ii) the Purchaser will be deemed to exercise the Redemption Call Right such that each Amalco Redeemable Preferred Share (other than those held by the Purchaser or any of its affiliates), shall be transferred and deemed to be transferred by the holder thereof, without any further act or formality on its part, free and clear of all Encumbrances, to the Purchaser in exchange for a payment in cash equal to the Consideration, and the name of such holder will be removed from the register of holders of Amalco Redeemable Preferred Shares and the Purchaser shall be recorded as the registered holder of Amalco Redeemable Preferred Shares so transferred and shall be deemed to be the legal and beneficial owner thereof, free and clear of any Encumbrances; and
(iii) Amalco shall repay the Loan Amount by issuing to the Purchaser such number of Amalco common shares as is equal to the quotient obtained when the Loan Amount is divided by the Consideration.

Completion of the Arrangement is subject to a number of conditions including, among other things, the approval of the Arrangement Resolution by Shareholders, the receipt of all Regulatory Approvals and the granting of the Final Order. Glencore and Caracal expect the Effective Date to occur in the second quarter of 2014. See "Timing".

Interests of Directors and Caracal Executives in the Arrangement

Cash Payments to Directors and Caracal Executives

As of the date hereof, the directors and the Caracal Executives beneficially owned or exercised control or direction over an aggregate of 5,013,076 Common Shares (not including any Common Shares that may be issued prior to the Effective Time pursuant to the exercise of outstanding Caracal Options, Caracal Awards, Caracal Warrants or Caracal Debentures). The Common Shares held by the directors and the Caracal Executives will be exchanged for cash under the Arrangement on the same terms and conditions as applicable to all other Shareholders. The directors and the Caracal Executives will receive an aggregate of \$45,675,639 in cash for all of their Common Shares if the Arrangement is completed.

As of the date hereof, the directors and the Caracal Executives held, in aggregate:

(a) 2,300,000 Caracal Options, with exercise prices ranging from £3.20 to £4.00 and an aggregated weighted average exercise price of £3.79 per Common Share;
(b) 4,000,000 management performance warrants, each with an exercise price of C\$5.50 and an aggregated weighted average exercise price of C\$5.50 per Common Share;
(c) 807,500 employee performance warrants, each with an exercise price of £3.84 and an aggregated weighted average exercise price of £3.84 per Common Share;
(d) 359,448 RSUs;
(e) 1,915,086 PSUs; and
(f) 45,680 DSUs.

If all such securities are exchanged for cash, as is contemplated under the Plan of Arrangement, the directors and the Caracal Executives would receive an aggregate of approximately \$92,222,070.

Executive Employment Agreements

Caracal has entered into executive employment agreements with change of control provisions with each of the Caracal Executives, being Mr. Gary Guidry (President and Chief Executive Officer), Mr. Trevor Peters (Chief Financial Officer), Mr. Dean Tucker (Chief Operating Officer), Mr. Lawrence West (Vice President, Exploration), Mr. Nicholas Hands (Vice President, Asset Management), Mr. Tim Mills (Vice President, Engineering & Project Management), Mr. Jim Evans (Vice President, Human Resources, Administration & Compliance), Mr. Ryan Ellson (Vice President, Finance), Mr. Hervé Manouan (Vice President, Country Manager, Chad) and Ms. Tina Antony (Vice President, Legal and General Counsel), (collectively, the "Executive Employment Agreements").

The Executive Employment Agreements provide that Caracal will make a payment to each Caracal Executive equal to the sum of: (a) 12 months base salary of the Caracal Executive for each of Messrs. Manouan, West, Hands, Mills, Evans, Ellson and Ms. Antony, and 24 months base salary of the Caracal Executive for each of Messrs. Guidry, Peters, Tucker, and all outstanding and accrued regular and special vacation pay; and (b) for a period of six months following the date of termination, all benefits the officer was entitled to immediately prior to the date of termination (collectively, the "Termination Payment") in the event of a "change of control" such as in the case of the Arrangement or in the event of "constructive dismissal" of the Caracal Executive.

If the Arrangement is completed, Caracal will pay the Termination Payments to the Caracal Executives in connection with the Arrangement equal to an aggregate amount of approximately \$4.5 million.

Continuing Insurance Coverage for Directors and Executive Officers of Caracal

The Arrangement Agreement provides that, prior to the Effective Date, Caracal shall purchase customary "tail" policies of directors' and officers' liability insurance providing protection no less favourable in the aggregate than the protection provided by the policies maintained by Caracal which are in effect immediately prior to the Effective Date and providing protection in respect of claims arising from facts or events which occurred on or prior to the Effective Date. The Arrangement Agreement also provides that Glencore will, or will cause Caracal to, maintain such tail policies in effect without any reduction in scope or coverage for six years from the Effective Date; provided that neither Glencore nor the Purchaser shall be required to pay any amounts in respect of such coverage prior to the Effective Time and provided further that the cost of such policies shall not exceed 250% of Caracal's current annual aggregate premium for policies currently maintained by Caracal or its Subsidiaries.

Sources of Funds for the Arrangement

Purchaser is expected to pay an aggregate amount of approximately \$1,203,673,000 to acquire all of the outstanding Common Shares, assuming that no Shareholders validly exercise their Dissent Rights.

The Purchaser Parties have represented and warranted to Caracal that Purchaser shall have sufficient funds available to satisfy the aggregate Consideration payable pursuant to the Arrangement in accordance with the terms of the Arrangement Agreement and the Plan of Arrangement and to satisfy all other obligations payable as a result of the transactions contemplated by the Arrangement Agreement.

Stock Exchange Delisting

Procedure for the Arrangement Becoming Effective

The Arrangement is proposed to be carried out pursuant to section 192 of the CBCA. The following procedural steps must be taken for the Arrangement to become effective:

(a) the Court must grant the Interim Order (the Interim Order was granted on May 8, 2014);
(b) the Arrangement Resolution must be approved by the Shareholders at the Meeting in the manner set forth in the Interim Order;
(c) the Court must grant the Final Order approving the Arrangement;
(d) all conditions precedent to the Arrangement, as set forth in the Arrangement Agreement, must be satisfied or waived by the appropriate Party; and
(e) the Final Order and Articles of Arrangement in the form prescribed by the CBCA must be sent to the Director.

Shareholder Approvals

For information with respect to the procedures for Shareholders to follow to receive the Consideration pursuant to the Arrangement, see "Procedures for the Surrender of Common Shares and Receipt of Consideration". See also "The Arrangement" and "General Proxy Matters".

Court Approval

Interim Order

On May 8, 2014, the Court granted the Interim Order directing the calling of the Meeting and prescribing the conduct of the Meeting and other matters. The Interim Order is attached as Appendix D to this Circular.

Final Order

The CBCA provides that a plan of arrangement requires court approval. Subject to the terms of the Arrangement Agreement, and if the Arrangement Resolution is approved by the Shareholders at the Meeting in the manner required by the Interim Order, Caracal will make an application to the Court for the Final Order.

The application for the Final Order approving the Arrangement is scheduled for June 6, 2014 at 1:30 p.m. (Calgary time), or as soon thereafter as counsel may be heard, at the Calgary Courts Centre, 601 – 5th Street S.W., Calgary, Alberta. At the hearing, any Shareholder and any other interested party who wishes to participate or to be represented or to present evidence or argument may do so, subject to filing with the Court and serving upon Caracal a Notice of Intention to Appear together with any evidence or materials that such party intends to present to the Court on or before 5:00 p.m. (Calgary time) on May 30, 2014. Service of such notice shall be effected by service upon the solicitors for Caracal: Stikeman Elliott LLP, Suite 4300, Bankers Hall West Tower, 855 – 3rd Street S.W., Calgary, Alberta T2P 5C5, Attention: Geoffrey D. Holub and Keith R. Chatwin. See the Notice of Originating Application accompanying this Circular.

Caracal has been advised by its counsel, Stikeman Elliott LLP, that the Court has broad discretion under the CBCA when making orders with respect to plans of arrangement and that the Court will consider, among other things, the fairness and reasonableness of the Arrangement, both from a substantive and a procedural point of view. The Court may approve the Arrangement either as proposed or as amended in any manner the Court may direct, subject to compliance with such terms and conditions, if any, as the Court thinks fit.

Any amendment to the Arrangement required by the Court pursuant to the Final Order must be acceptable to Caracal and the Purchaser Parties, acting reasonably.

Regulatory Approvals

The Arrangement Agreement provides that receipt of the Regulatory Approvals is a condition precedent to the Arrangement becoming effective. See "Principal Legal Matters – Regulatory Approvals".

Timing

If the Meeting is held as scheduled and is not adjourned or postponed and the Required Approval is obtained, Caracal will apply for the Final Order approving the Arrangement. Subject to receipt of the Final Order in form and substance satisfactory to Caracal and the Purchaser Parties, and satisfaction or waiver of all other conditions set forth in the Arrangement Agreement, including the receipt of all required Regulatory Approvals, Caracal expects the Effective Date to occur in the second quarter of 2014. It is not possible, however, to state with certainty when the Effective Date will occur. The Effective Date could be delayed for a number of reasons, including the failure to obtain the Regulatory Approvals in the anticipated time frames.

The Arrangement will become effective upon the sending to the Director of the Articles of Arrangement and a copy of the Final Order, together with such other materials as may be required by the Director.

Expenses

The estimated fees, costs and expenses of Caracal in connection with the Arrangement contemplated herein including, without limitation, financial advisors' fees, filing fees, legal and accounting fees, and printing and mailing costs, are anticipated to be approximately \$18.5 million based on certain assumptions.

THE ARRANGEMENT AGREEMENT

The following is a summary only of the material terms of the Arrangement Agreement, including the Plan of Arrangement and is qualified in its entirety by the full text of the Arrangement Agreement including the Plan of Arrangement. Shareholders are urged to read the Arrangement Agreement including the Plan of Arrangement in its entirety. A copy of the Arrangement Agreement and Plan of Arrangement is attached as Appendix B and Appendix C to this Circular, respectively.

General

The Arrangement will be effected pursuant to the Arrangement Agreement. The Arrangement Agreement contains covenants, representations and warranties of and from each of Glencore, Purchaser and Caracal and various conditions precedent, both mutual and as applicable to the Purchaser Parties and Caracal, respectively.

Unless all of such conditions are satisfied or waived by the Party for whose benefit such conditions exist, to the extent they may be capable of waiver, the Arrangement will not proceed. There is no assurance that the conditions will be satisfied or waived on a timely basis, or at all.

Mutual Covenants Regarding the Arrangement

Each of the Parties has given usual and customary mutual covenants for an agreement of the nature of the Arrangement Agreement, including to use all of their respective reasonable commercial efforts to satisfy (or cause the satisfaction of) the conditions precedent to their respective obligations under the Arrangement Agreement, to cooperate with the other Party in connection with the Arrangement Agreement and to take all other action, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate the Arrangement.

Covenants of Glencore and Purchaser

Glencore and Purchaser have given, in favour of Caracal, usual and customary covenants for an agreement of the nature of the Arrangement Agreement, including: (a) a covenant to use their reasonable commercial efforts to obtain and maintain the Regulatory Approvals; (b) a covenant to oppose, lift or rescind any injunction, restraining or other order, decree or ruling seeking to restrain, enjoin or otherwise prohibit or adversely affect the consummation of the Arrangement and defend, or cause to be defended, any proceedings to which it is a party or brought against it or its directors or officers challenging the Arrangement or the Arrangement Agreement; (c) a covenant to make all necessary filings and applications under Law, including securities Laws, required to be made on the part of Glencore and Purchaser, respectively, in connection with the transactions contemplated in the Arrangement Agreement and to take all reasonable action necessary to be in compliance with such Law; (d) a covenant to satisfy or cause Caracal to satisfy all of Caracal's obligations under the Caracal Debenture Indenture arising in connection with or at any time following the implementation of the Arrangement; and (e) a covenant to pay TransGlobe within ten days of having received an invoice from TransGlobe in respect of certain out-of-pocket expenses incurred by TransGlobe and its affiliates in connection with the "Arrangement" (as defined in the TransGlobe Agreement), the amount reflected on such invoice, provided that in no event shall such amount exceed C\$1.2 million.

Covenants of Caracal

Caracal has given, in favour of Glencore and Purchaser, usual and customary covenants for an agreement of the nature of the Arrangement Agreement, including: (a) a covenant to carry on business in the ordinary course of business consistent with past practice between the date of the Arrangement Agreement and the earlier of the Effective Time and the time that the Arrangement Agreement is terminated; (b) covenants not to undertake certain actions without the prior written consent of Purchaser; (c) a covenant to use its reasonable commercial efforts to obtain and maintain the Regulatory Approvals; (d) a covenant to use, subject to certain conditions, all commercially reasonable efforts to effect any pre-closing reorganizations of Caracal's business, operations and assets as Purchaser may request, acting reasonably; and (e) reasonable commercial efforts to oppose, lift or rescind any injunction, restraining or other order, decree or ruling seeking to restrain, enjoin or otherwise prohibit or adversely affect the consummation of the Arrangement and defend, or cause to be defended, any proceedings to which it is a party or brought against it or its directors or officers challenging the Arrangement or the Arrangement Agreement.

Representations and Warranties to the Conduct of Business of the Parties

The Arrangement Agreement contains certain customary representations and warranties of each of Caracal, Glencore and Purchaser relating to, among other things, their respective organization, execution and binding obligation, no-conflict and other matters, including their authority to enter into the Arrangement Agreement and to consummate the Arrangement. For the complete text of the applicable provisions, see Schedule C and Schedule D of the Arrangement Agreement.

Mutual Conditions

The respective obligations of Purchaser and Caracal to complete the Arrangement are subject to the satisfaction of the following conditions, any of which may be waived by the mutual consent of Purchaser and Caracal, without prejudice to their right to rely on any other of such conditions:

(a) the Arrangement Resolution will have been approved and adopted by the Shareholders at the Meeting in accordance with the Interim Order;
(b) the Interim Order and the Final Order will have each been obtained on terms consistent with the Arrangement Agreement and have not been set aside or modified in a manner unacceptable to either Caracal or Purchaser, each acting reasonably, on appeal or otherwise;
(c) the Regulatory Approvals shall have been obtained; and
(d) no Law is in effect that makes the consummation of the Arrangement illegal or otherwise prohibits or enjoins TransGlobe or Caracal from consummating the Arrangement.

Conditions to the Obligations of Purchaser

The obligation of Purchaser to complete the Arrangement at the Effective Date is subject to the satisfaction or waiver of the following conditions:

(a) (i) the representations and warranties of Caracal set forth in the Arrangement Agreement were true and correct as of the date of the Arrangement Agreement and are true and correct as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of such specified date), except to the extent that the failure or failures of such representations and warranties to be so true and correct, individually or in the aggregate, would not have a Material Adverse Effect (and, for this purpose, any reference to "material", "Material Adverse Effect" or other concepts of materiality in such representations and warranties shall be ignored) and (ii) the representations and warranties of Caracal set forth in sections (1), (2), (3), (5), (6) and (8) of Schedule C of the Arrangement Agreement were true and correct as of the date of the Arrangement Agreement and are true and correct as of the Effective Time: (A) to the extent qualified by "Material Adverse Effect", in all respects; and (B) in all other cases, in all material respects (and, for this purpose, any reference to "material" or other concepts of materiality in such representations and warranties shall be ignored) in each case, except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of such specified date; and Caracal has delivered a certificate confirming same to Purchaser, executed by two senior officers of Caracal (in each case without personal liability) addressed to Purchaser and dated the Effective Date;
(b) Caracal has fulfilled or complied in all material respects with each of the covenants of Caracal contained in the Arrangement Agreement to be fulfilled or complied with by it on or prior to the Effective Time, and has delivered a certificate confirming same to Purchaser, executed by two

senior officers of Caracal (in each case without personal liability) addressed to Purchaser and dated the Effective Date;

(c) there is no action or proceeding pending or threatened by any Person (other than Purchaser) in any jurisdiction that is reasonably likely to:
(i) cease trade, enjoin, prohibit, or impose any limitations, damages or conditions on, Purchaser's ability to acquire, hold, or exercise full rights of ownership over, any Common Shares, including the right to vote the Common Shares;
(ii) prohibit or restrict the Arrangement, or the ownership or operation by Caracal of a material portion of the business or assets of Purchaser or any of its affiliates or Caracal or any of its Subsidiaries, or compel Purchaser to dispose of or hold separate any material portion of the business or assets of Purchaser or any of its affiliates or Caracal or any of its Subsidiaries as a result of the Arrangement; or
(iii) prevent or materially delay the consummation of the Arrangement, or if the Arrangement is consummated, have a Material Adverse Effect;
(d) Dissent Rights have not been exercised with respect to more than 5% of the issued and outstanding Common Shares;
(e) the Caracal Stock Option Plan shall have terminated; and
(f) The Caracal Transaction Costs do not exceed \$27,600,000.

The foregoing conditions are for the exclusive benefit of Purchaser and may only be waived by Purchaser in its sole discretion, in whole or in part.

Conditions to the Obligations of Caracal

The obligation of Caracal to complete the Arrangement at the Effective Date is subject to the satisfaction or waiver of the following conditions:

(a) the representations and warranties of Purchaser set forth in the Arrangement Agreement were true and correct as of the date of the Arrangement Agreement and are true and correct as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of such specified date), except to the extent that the failure or failures of such representations and warranties to be so true and correct, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the ability of Purchaser to consummate the Arrangement and perform its obligations thereunder (and, for this purpose, any reference to "material", "material adverse effect" or other concepts of materiality in such representations and warranties shall be ignored) and Purchaser has delivered a certificate confirming same to Caracal, executed by two senior officers of Purchaser (in each case without personal liability) addressed to Caracal and dated the Effective Date;
(b) Purchaser has fulfilled or complied in all material respects with each of the covenants of Purchaser contained in the Arrangement Agreement to be fulfilled or complied with by it on or prior to the Effective Time, and has delivered a certificate confirming same to Caracal, executed by two senior officers of Purchaser (in each case without personal liability) addressed to Caracal and dated the Effective Date; and
(c) there is no action or proceeding pending or threatened by any Person (other than Caracal) in any jurisdiction that is reasonably likely to prohibit or restrict the Arrangement, or prevent or materially delay the consummation of the Arrangement.

The foregoing conditions are for the exclusive benefit of Caracal and may only be waived by Caracal in its sole discretion, in whole or in part.

Covenants of Caracal Regarding Non-Solicitation; Right to Accept a Superior Proposal

Under the Arrangement Agreement, Caracal has agreed to certain non-solicitation covenants as follows:

(a) Caracal shall not, directly or indirectly, through any Representative, or otherwise, and shall not permit any such Person to:
(i) solicit, initiate, encourage or otherwise facilitate, (including by way of furnishing or providing copies of, access to, or disclosure of, any confidential information, properties, facilities, books or records of Caracal or any of its Subsidiaries or entering into any form of agreement, arrangement or understanding) any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to, an Acquisition Proposal;
(ii) enter into or otherwise engage or participate in any discussions or negotiations with any Person (other than Purchaser) regarding any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to, an Acquisition Proposal;
(iii) withdraw, amend, modify or qualify, or publicly propose or state an intention to withdraw, amend, modify or qualify, the Board Recommendation;
(iv) accept, approve, endorse or recommend, or publicly propose to accept, approve, endorse or recommend, or take no position or remain neutral with respect to, any Acquisition Proposal (it being understood that publicly taking no position or a neutral position with respect to any Acquisition Proposal for a period of no more than three Business Days following the formal announcement of such Acquisition Proposal will not be considered to be in violation of any provisions of the Arrangement Agreement respecting nonsolicitation covenants provided the Board has rejected such Acquisition Proposal and affirmed the Board Recommendation before the end of such three Business Day period); or
(v) enter into or publicly propose to enter into any agreement in respect of an Acquisition Proposal;
(b) Caracal shall, and shall cause its Subsidiaries and Representatives to, immediately cease and terminate, and cause to be terminated, any solicitation, encouragement, discussion, negotiations, or other activities commenced prior to the date of the Arrangement Agreement with any Person (other than Purchaser), including TransGlobe (except as may be required to discharge Caracal's obligations to TransGlobe pursuant to the TransGlobe Agreement in connection with the termination thereof) with respect to any inquiry, proposal or offer that constitutes, or may reasonably be expected to constitute or lead to, an Acquisition Proposal, and in connection with such termination shall:
(i) immediately discontinue access to and disclosure of all information, including any confidential information, properties, facilities, books and records of Caracal or any of its Subsidiaries; and
(ii) within five Business Days request, and exercise all rights it has to require (A) the return or destruction of all copies of any confidential information regarding Caracal or any of its Subsidiaries provided to any Person, including TransGlobe, other than the Purchaser, and (B) the destruction of all material including or incorporating or otherwise reflecting such confidential information regarding Caracal or any of its Subsidiaries (except as may have

already been publically disclosed in, or as a result of, the TransGlobe Agreement prior to the date hereof) using its reasonable commercial efforts to ensure that such requests are fully complied with in accordance with the terms of such rights or entitlements;

(c) Caracal represented and warranted that it had not waived any confidentiality, standstill, nondisclosure or similar agreement or restriction to which Caracal or any of its Subsidiaries is a party, except to permit submissions of expressions of interest prior to the date of the Arrangement Agreement, and covenants and agrees that (i) Caracal shall take all necessary action to enforce each confidentiality, standstill, nondisclosure or similar agreement or restriction to which Caracal or any of its Subsidiaries is a party, and (ii) neither Caracal, nor any of its Subsidiaries nor any of their respective Representatives have released or will, without the prior written consent of Purchaser (which may be withheld or delayed in Purchaser's sole and absolute discretion), release any Person from, or waive, amend, suspend or otherwise modify such Person's obligations respecting Caracal, or any of its Subsidiaries, under any confidentiality, standstill, non-disclosure or similar agreement or restriction to which Caracal or any of its Subsidiaries is a party; and
(d) Caracal acknowledged and agreed that Purchaser and its affiliates will be entitled to acquire additional Common Shares through purchases over a stock exchange provided (i) that Purchaser does not acquire more than an additional 4.1% of the outstanding Common Shares on a nondiluted basis, (ii) such purchases do not commence before April 16, 2014 and (iii) the purchase price paid for any such additional Common Share shall not exceed the Consideration. Caracal also waived the standstill provisions of the Confidentiality Agreement to the extent necessary for Purchaser and its affiliates to enter into the Arrangement Agreement and make such purchases.

If Caracal or any of its Subsidiaries or any of their respective Representatives, receives or otherwise becomes aware of any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to an Acquisition Proposal, or any request for copies of, access to, or disclosure of, confidential information relating to Caracal or any of its Subsidiaries, including but not limited to information, access, or disclosure relating to the properties, facilities, books or records of Caracal or any of its Subsidiaries, Caracal shall immediately notify Purchaser, at first orally, and then promptly and in any event within 24 hours in writing, of:

(a) such Acquisition Proposal, inquiry, proposal, offer or request, including a description of its material terms and conditions, the identity of all Persons making the Acquisition Proposal, inquiry, proposal, offer or request; and
(b) at Purchaser's reasonable request, the status of developments and negotiations with respect to such Acquisition Proposal, inquiry, proposal, offer or request, including any changes, modifications or other amendments to any such Acquisition Proposal, inquiry, proposal, offer or request.

Notwithstanding certain other provisions in the Arrangement Agreement, or any other agreement between the Parties or between Caracal and any other Person, including without limitation the Confidentiality Agreement, if at any time, prior to obtaining the approval by the Shareholders of the Arrangement Resolution, Caracal receives a written Acquisition Proposal Caracal may:

(a) contact the Person making such Acquisition Proposal and its Representatives solely for the purposes of clarifying the terms and conditions of such Acquisition Proposal and the likelihood of its consummation so as to determine whether such Acquisition Proposal is, or could reasonably be expected to lead to, a Superior Proposal;
(b) engage in or participate in discussions or negotiations with such Person regarding such Acquisition Proposal, and may provide copies of, access to or disclosure of confidential information, properties, facilities, books or records of Caracal or its Subsidiaries, if and only if:
(i) the Board first determines in good faith, after consultation with its financial advisors and its outside legal counsel, that such Acquisition Proposal constitutes or is reasonably likely to lead to a Superior Proposal;
(ii) such Person was not restricted from making such Acquisition Proposal pursuant to an existing confidentiality, standstill, nondisclosure, use, business purpose or similar restriction with Caracal or any of its Subsidiaries;
(iii) Caracal has been, and continues to be, in compliance with its obligations under the provisions of the Arrangement Agreement respecting non-solicitation covenants;
(iv) prior to providing any such copies, access, or disclosure, Caracal enters into a confidentiality and standstill agreement with such Person on terms no more favourable to such Person than the Confidentiality Agreement and any copies, access or disclosure provided to such Person shall have already been (or simultaneously be) provided to Purchaser; and
(v) Caracal promptly provides Purchaser with:
(A) two Business Days prior written notice stating Caracal's intention to participate in such discussions or negotiations and to provide such copies, access or disclosure; and
(B) prior to providing any such copies, access or disclosure, a true, complete and final executed copy of the confidentiality and standstill agreement referred to above;
(c) Nothing contained in the Arrangement Agreement shall prevent the Board from complying with section 2.17 of Multilateral Instrument 62-104 – Takeover Bids and Issuer Bids and similar provisions under securities Laws relating to the provision of a directors' circular in respect of an Acquisition Proposal.

If Caracal receives an Acquisition Proposal that constitutes a Superior Proposal prior to the approval of the Arrangement Resolution by the Shareholders, the Board may, subject to compliance with the termination fees provisions of the Arrangement Agreement, enter into a definitive agreement with respect to such Acquisition Proposal, if and only if:

(a) the Person making the Superior Proposal was not restricted from making such Superior Proposal pursuant to an existing confidentiality, standstill, non-disclosure or similar restriction;
(b) Caracal has been, and continues to be, in compliance with its obligations under the provisions of the Arrangement Agreement respecting non-solicitation covenants;
(c) Caracal has delivered to Purchaser a written notice of the determination of the Board that such Acquisition Proposal constitutes a Superior Proposal and of the intention of the Board to enter into such definitive agreement with respect to such Superior Proposal, together with a written notice regarding the value and financial terms that the Board in consultation with its financial advisors, has determined should be ascribed to any non-cash consideration offered under the Acquisition Proposal (the "Superior Proposal Notice");
(d) Caracal has provided Purchaser with a copy of the definitive agreement for the Superior Proposal and all supporting agreements, if any;
(e) at least five Business Days (the "Matching Period") have elapsed from the date that is the later of the date on which Purchaser received the Superior Proposal Notice and the date on which it received all of the materials set forth in (c) above;
(f) during any Matching Period, Purchaser has had the opportunity (but not the obligation), to offer to amend the Arrangement Agreement and the Arrangement in order for such Acquisition Proposal to cease to be a Superior Proposal;
(g) if Purchaser has offered to amend the Arrangement Agreement and the Arrangement, the Board has determined in good faith, after consultation with their outside legal counsel and financial advisors, that such Acquisition Proposal continues to constitute a Superior Proposal compared to the terms of the Arrangement as proposed to be amended by Purchaser;
(h) after the Matching Period, the Board has determined in good faith, after consultation with outside legal counsel that it is necessary for the Board to enter into a definitive agreement with respect to such Superior Proposal in order to properly discharge its fiduciary duties; and
(i) prior to or concurrently with entering into such definitive agreement Caracal terminates the Arrangement Agreement because prior to the approval by the Shareholders of the Arrangement Resolution, the Board authorizes Caracal to enter into a written agreement (other than a permitted confidentiality agreement) with respect to a Superior Proposal provided Caracal is then in compliance with the non-solicitation covenants of the Arrangement Agreement and that prior to or concurrent with such termination Caracal pays the Termination Fee in accordance with the Arrangement Agreement.

During the Matching Period, or such longer period as Caracal may approve in writing for such purpose: (a) the Board shall review any offer under (f) directly above to amend the terms of the Arrangement Agreement and the Arrangement in good faith in order to determine whether such proposal would, upon acceptance, result in the Acquisition Proposal previously constituting a Superior Proposal ceasing to be a Superior Proposal; and (b) Caracal shall negotiate in good faith with the Purchaser to make such amendments to the terms of the Arrangement Agreement and the Arrangement as would enable the Purchaser to proceed with the transactions contemplated by the Arrangement Agreement on such amended terms. If the Board determines that such Acquisition Proposal would cease to be a Superior Proposal, it shall promptly so advise the Purchaser and the parties shall amend the Arrangement Agreement to reflect such offer, and shall take and cause to be taken all such actions as are necessary to give effect to the foregoing.

Each successive amendment to any Acquisition Proposal shall constitute a new Acquisition Proposal for the purposes of the Superior Proposal Notice and Matching Period provisions of the Arrangement Agreement, and, if applicable, the Purchaser shall be afforded a new five Business Day Matching Period from the later of the date on which the Purchaser received the Superior Proposal Notice and a copy of the proposed definitive agreement for the new Superior Proposal from Caracal.

The Board shall promptly reaffirm the Board Recommendation by press release after any Acquisition Proposal which is not determined to be a Superior Proposal is publicly announced or it determines that a proposed amendment to the terms of this Agreement would result in an Acquisition Proposal no longer being a Superior Proposal.

If Caracal provides a Superior Proposal Notice to the Purchaser after a date that is less than five Business Days before the Meeting, Caracal shall either proceed with or shall postpone the Meeting, as directed by the Purchaser, acting reasonably, to a date that is not more than five Business Days after the scheduled date of the Meeting but before the Outside Date, to the extent permitted by Law.

Termination

The Parties have agreed that the Arrangement Agreement may be terminated prior to the Effective Time by:

(a) the mutual written agreement of the Parties; or
(b) either Caracal or Purchaser if:
(i) the Required Approval is not obtained at the Meeting in accordance with the Interim Order provided that a Party may not terminate the Arrangement Agreement in this respect if the failure to obtain the Required Approval has been caused by, or is a result of, a breach by such Party of any of its representations or warranties or the failure of such Party to perform any of its covenants or agreements under the Arrangement Agreement;
(ii) after the date of the Arrangement Agreement, any Law is enacted, made, enforced or amended, as applicable, that makes the consummation of the Arrangement illegal or otherwise permanently prohibits or enjoins Caracal or Purchaser from consummating the Arrangement, and such Law has, if applicable, become final and non-appealable; or
(iii) the Effective Time does not occur on or prior to the Outside Date, provided that a Party may not terminate the Arrangement Agreement in this respect if the failure of the Effective Time to so occur has been caused by, or is a result of, a breach by such Party of any of its representations or warranties or the failure of such Party to perform any of its covenants or agreements under the Arrangement Agreement;
(c) Purchaser if:
(i) a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Caracal under the Arrangement Agreement occurs that would cause any mutual condition precedent or conditions precedent to the obligations of Purchaser not to be satisfied, and such breach or failure is incapable of being cured on or prior to the Outside Date or is not cured in accordance with the notice and cure provisions of the Arrangement Agreement; provided that Purchaser is not then in breach of the Arrangement Agreement so as to cause any condition regarding the accuracy of any of its representations and warranties or the performance of any of its covenants not to be satisfied;
(ii) Caracal is in material breach of any representation or warranty regarding Money Laundering and Foreign Corrupt Practices or Sanctions Legislation as more fully described at section (18) and section (19) of Schedule C of the Arrangement Agreement, respectively;
(iii) the Board or any committee of the Board fails to unanimously recommend or withdraws, amends, modifies or qualifies, publicly proposes or states its intention to do so, or fails to publicly reaffirm (without qualification) within two Business Days after having been requested in writing by Purchaser to do so, the Board Recommendation, or takes no position or a neutral position with respect to an Acquisition Proposal in respect of Caracal for more than two Business Days after first learning of an Acquisition Proposal, or takes any other action that is or becomes disclosed publicly and which can reasonably be interpreted to indicate that the Board or a committee of the Board does not support the Arrangement and the Arrangement Agreement or does not believe that the Arrangement and the Arrangement Agreement are in the best interests of the Shareholders, or Caracal willfully or intentionally breaches the non-solicitation covenants of the Arrangement Agreement in any respect or, the Board or any committee of the Board resolves or proposes to take any of the foregoing actions;
(iv) any event occurs as a result of which the conditions regarding:
(A) Dissent Rights not having been exercised with respect to more than 5% of issued and outstanding Common Shares;
(B) the termination of the Caracal Stock Option Plan; or
(C) Caracal Transaction Costs not exceeding \$27,600,000, are not capable of being satisfied by the Outside Date; or
(v) there has occurred a Material Adverse Effect in respect of Caracal;
(d) Caracal if:
(i) a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Glencore or Purchaser under the Arrangement Agreement occurs that would cause any mutual condition or condition to the obligation of Caracal not to be satisfied, and such breach or failure is incapable of being cured or is not cured on or prior to the Outside Date in accordance with the notice and cure provisions of the Arrangement Agreement; provided that Caracal is not then in breach of the Arrangement Agreement so as to cause any condition regarding the accuracy of its representation and warranties and or the performance of any of its covenants not to be satisfied;
(ii) prior to the approval by the Shareholders of the Arrangement Resolution, the Board authorizes Caracal to enter into a written agreement (other than a permitted confidentiality agreement) with respect to a Superior Proposal, provided Caracal is then in compliance with the non-solicitation covenants of the Arrangement Agreement and that prior to or concurrent with such termination Caracal pays the Termination Fee in accordance with the Arrangement Agreement.

Under the provisions of the Arrangement Agreement, in the event of the termination of the Arrangement Agreement in the circumstances set out above, the Arrangement Agreement will become void and of no further force or effect without liability of any Party (or any shareholder, director, officer, employee, agent, consultant or representative of such Party) to any other Party to the Arrangement Agreement, except with respect to: (a) certain personal information obligations set forth in the Arrangement Agreement, and (b) certain other obligations, including the payment of fees outlined below under the heading "Termination Fees". However, no Party shall be relieved of any liability for any wilful and material breach of the Arrangement Agreement and no termination of the Arrangement Agreement will affect the obligations of the Parties pursuant to the Confidentiality Agreement entered into between the Parties, except to the extent specified therein. The Arrangement Agreement provides that, upon the occurrence of certain termination events, either of Purchaser or Caracal, as the case may be, may be required to pay the other the Termination Fee or the Reverse Termination Fee. For the complete text of the applicable provisions, see section 7.1 and section 7.2 of the Arrangement Agreement.

Termination Fees

Despite any other provision in the Arrangement Agreement relating to the payment of fees and expenses, including the payment of brokerage fees, if a Termination Fee Event occurs, Caracal shall pay Glencore a termination fee of \$15,000,000 (the "Termination Fee") in accordance with the provisions of the Arrangement Agreement respecting the payment of the Termination Fee, and if a Reverse Termination Fee Event occurs, Purchaser shall pay Caracal a reverse termination fee of \$15,000,000 (the "Reverse Termination Fee") in accordance with the provisions of the Arrangement Agreement respecting the payment of the Reverse Termination Fee.

A "Termination Fee Event" means the termination of the Arrangement Agreement:

(a) by Purchaser, in the event (i) Caracal is in material breach of any representation or warranty regarding Money Laundering and Foreign Corrupt Practices or Sanctions Legislation as more fully described in section (18) and section (19) of Schedule C of the Arrangement Agreement or (ii) the Board or any committee of the Board fails to unanimously recommend or withdraws, amends, modifies or qualifies, publicly proposes or states its intention to do so, or fails to publicly reaffirm (without qualification) within two Business Days after having been requested in writing by Purchaser to do so, the Board Recommendation, or takes no position or a neutral position with respect to an Acquisition Proposal in respect of Caracal for more than two Business Days after first learning of an Acquisition Proposal, or takes any other action that is or becomes disclosed publicly and which can reasonably be interpreted to indicate that the Board or a committee of the Board does not support the Arrangement and the Arrangement Agreement or does not believe that the Arrangement and the Arrangement Agreement are in the best interests of the Shareholders, or Caracal wilfully or intentionally breaches the non-solicitation covenants of the Arrangement Agreement in any respect, or the Board or any committee of the Board resolves or proposes to take any of the foregoing actions;
(b) by Caracal, in the event prior to the approval by the Shareholders of the Arrangement Resolution, the Board authorizes Caracal to enter into a written agreement (other than a permitted confidentiality agreement) with respect to a Superior Proposal, provided Caracal is then in compliance with the non-solicitation covenants of the Arrangement Agreement and that prior to or concurrent with such termination Caracal pays the Termination Fee in accordance with the Arrangement Agreement;
(c) by Caracal or Purchaser in the event the Required Approval is not obtained at the Meeting in accordance with the Interim Order provided that a Party may not terminate the Arrangement Agreement in this respect if the failure to obtain the Required Approval has been caused by, or is a result of, a breach by such Party of any of its representations or warranties or the failure of such Party to perform any of its covenants or agreements under the Arrangement Agreement if, prior to such termination, an Acquisition Proposal in respect of Caracal is publicly announced by any Person other than Purchaser or any of its affiliates and within 365 days following the date of such termination, (i) an Acquisition Proposal (whether or not such Acquisition Proposal is the same Acquisition Proposal referred to in this paragraph above) is consummated, in respect of Caracal, or (ii) Caracal or one or more of its Subsidiaries, directly or indirectly, in one or more transactions, enters into a contract in respect of an Acquisition Proposal;
(d) by Purchaser in the event a breach of any representation or warranty on the part of Caracal under the Arrangement Agreement that would cause any mutual condition precedent or conditions precedent to the obligations of Purchaser not to be satisfied, and such breach is incapable of being cured on or prior to the Outside Date or is not cured in accordance with the notice and cure provisions of the Arrangement Agreement; provided that Purchaser is not then in breach of the Arrangement Agreement so as to cause any condition regarding the accuracy of its representations and warranties or performance of its covenants not to be satisfied under the Arrangement Agreement; or
(e) by Purchaser in the event of a failure to perform any covenant or agreement on the part of Caracal under the Arrangement Agreement that would cause any mutual condition precedent or conditions precedent to the obligations of Purchaser not to be satisfied, and such failure is incapable of being cured on or prior to the Outside Date or is not cured in accordance with the notice and cure provisions of the Arrangement Agreement; provided that Purchaser is not then in breach of the Arrangement Agreement so as to cause any condition regarding accuracy of its representations and warranties or the performance of its covenants not to be satisfied under the Arrangement Agreement; and, the failure (i) individually or in the aggregate, causes or would reasonably be expected to cause a Material Adverse Effect in respect of Caracal or (ii) was wilful and intentional.

A "Reverse Termination Fee Event" means the termination of the Arrangement Agreement:

(a) by Caracal in the event a breach of any representation or warranty on the part of Glencore or Purchaser under the Arrangement Agreement occurs that would cause any mutual condition precedent or conditions precedent to the obligations of Caracal not to be satisfied, and such breach is incapable of being cured on or prior to the Outside Date or is not cured in accordance with the notice and cure provisions of the Arrangement Agreement; provided that Caracal is not then in breach of the Arrangement Agreement so as to cause any condition regarding the accuracy of its representations and warranties or performance of its covenants not to be satisfied under the Arrangement Agreement;
(b) by Caracal in the event of a failure to perform any covenant or agreement on the part of Glencore or Purchaser under the Arrangement Agreement that would cause any mutual condition precedent or conditions precedent to the obligations of Caracal not to be satisfied, and such failure is incapable of being cured on or prior to the Outside Date or is not cured in accordance with the notice and cure provisions of the Arrangement Agreement; provided that Caracal is not then in breach of the Arrangement Agreement so as to cause any condition regarding the accuracy of its representations and warranties or the performance of its covenants not to be satisfied under the Arrangement Agreement; and, the failure, (i) individually or in the aggregate, has or would reasonably be expected to have a material adverse effect on the ability of Purchaser to consummate the Arrangement and perform its obligations thereunder, or (ii) was willful and intentional; or
(c) by Caracal in the event the Effective Time does not occur on or prior to the Outside Date as a result of the failure of Glencore or Purchaser to obtain the Investment Canada Act Approval;, provided that Caracal may not terminate the Arrangement Agreement in this respect if the failure of the Effective Time to so occur has been caused by, or is a result of, a breach by Caracal of any of its representations or warranties or the failure of Caracal to perform any of its covenants or agreements under the Arrangement Agreement.

Liquidated Damages

Purchaser and Caracal each acknowledged and agreed that payment of the Termination Fee or the Reverse Termination Fee, as applicable, are payments of liquidated damages which are a genuine pre-estimate of the damages, including opportunity costs, which Glencore will suffer or incur as a result of the event giving rise to such damages and resultant termination of the Arrangement Agreement, and is not a penalty. Each Party irrevocably waived any right it may have to raise as a defence that any such liquidated damages are excessive or punitive.

Voting Agreements

On April 14, 2014, each of the directors of Caracal and each of the Caracal Executives, holding an aggregate of 5,013,076 Common Shares entered into the Voting Agreements with Purchaser pursuant to which they agreed, among other things, to vote the Common Shares beneficially owned or controlled or directed by them, directly or indirectly, at the Meeting in favour of the Arrangement Resolution and all matters related thereto.

Pursuant to the Voting Agreements, each of the directors of Caracal and each of the Caracal Executives agree, among other things, to vote all of the Common Shares beneficially owned or controlled or directed by them, directly or indirectly, in favour of the Arrangement Resolution and to vote, or cause to be voted, all of the Common Shares beneficially owned or controlled or directed by them, directly or indirectly, against any matter which could reasonably be expected to prevent, delay or frustrate the completion of the Arrangement. In addition, each of the directors of Caracal and each of the Caracal Executives have agreed not to: (a) solicit, knowingly facilitate, initiate or encourage any Acquisition Proposal; (b) enter into, continue or participate in any substantive discussions or negotiations regarding an Acquisition Proposal; (c) requisition or join in the requisition of any meeting of the securityholders of Caracal for the purpose of considering any resolution; or (d) solicit or arrange or provide assistance to any other person to arrange for the solicitation of, proxies relating to or purchases of or offers to sell Common Shares or securities convertible into or exchangeable or exercisable for, or representing, Common Shares or act in concert or jointly with any other person for the purpose of acquiring any Common Shares or securities convertible into or exchangeable or exercisable for, or representing, Common Shares for the purpose of influencing the voting of Common Shares or affecting the control of Caracal, other than, in the case of proxy solicitation, in support of the Arrangement.

PRINCIPAL LEGAL MATTERS

Court Approval and Completion of the Arrangement

An arrangement under the CBCA requires court approval. See "The Arrangement — Procedure for the Arrangement Becoming Effective — Court Approval".

Assuming that the Final Order is granted, and that the other conditions set forth in the Arrangement Agreement are satisfied or waived by the Party or Parties for whose benefit they exist, the Articles of Arrangement will then be sent to the Director to give effect to the Arrangement and all other arrangements and documents necessary to complete the Arrangement will be delivered as soon as reasonably practicable thereafter. Subject to receipt of the Final Order in form and substance satisfactory to Caracal and the Purchaser Parties, and satisfaction or waiver of all other conditions set forth in the Arrangement Agreement, including the receipt of the Regulatory Approvals, Caracal expects the Effective Date to occur in the second quarter of 2014.

MI 61-101

MI 61-101 is intended to regulate certain transactions to ensure equality of treatment among securityholders, generally requiring enhanced disclosure, approval by a majority of securityholders excluding interested or related parties, independent valuations and, in certain instances, approval and oversight of the transaction by a special committee of independent directors. The protections of MI 61-101 apply to, among other transactions, "business combinations" (as defined in MI 61-101) pursuant to which the interests of holders of equity securities are terminated without their consent. MI 61-101 provides that, in certain circumstances, where a related party of an issuer is entitled to receive a "collateral benefit" (as defined in MI 61-101) in connection with a transaction (such as the Arrangement), such transaction may be considered a business combination for the purposes of MI 61-101 and subject to minority approval requirements.

Under MI 61-101, benefits received by a related party are not considered to be collateral benefits if they are received solely in connection with the related party's services as a director, officer, employee or consultant of the issuer if: (a) the benefit is not conferred for the purpose, in whole or in part, of increasing the value of the consideration paid to the related party for securities relinquished under the transaction; (b) the conferring of the benefit is not, by its terms, conditional on the related party supporting the transaction in any manner; (c) full particulars of the benefit are disclosed in the disclosure document for the transaction and (d) either (i) the related party and his or her associated entities beneficially own, or exercise control or direction over, less than 1% of the outstanding securities of each class of equity securities of the issuer, or (ii) the related party discloses to an independent committee of the issuer the amount of consideration that he or she expects to be beneficially entitled to receive, under the terms of the transaction, in exchange for the equity securities he or she beneficially owns and the independent committee, acting in good faith determines that the value of the benefit, net of any offsetting costs to the related party, is less than 5% of the value of the consideration the related party will receive pursuant to the terms of the transaction for the equity securities he or she beneficially owns, and the independent committee's determination is disclosed in the disclosure document for the transaction.

As disclosed in this Circular, in connection with the Arrangement, certain directors of Caracal and the Caracal Executives will receive compensation in the form of Termination Payments and cash payments for outstanding Caracal Options, Caracal Warrants and Caracal Awards. See "The Arrangement — Interests of Directors and Caracal Executives in the Arrangement" for detailed information regarding the benefits and other payments to be received by the directors of Caracal and the Caracal Executives in connection with the Arrangement.

Mr. Gary Guidry, Mr. Trevor Peters and Mr. Dean Tucker each beneficially owns or exercises control or direction over, more than 1% of the outstanding Common Shares based on there being 146,733,856 Common Shares outstanding as of the date of this Circular. The value of the Termination Payment to be received in connection with the Arrangement by each of these officers will be greater than 5% of the value of the consideration each of the officers will receive pursuant to the terms of the Arrangement for the Common Shares each officer beneficially owns or exercises control or direction over, and therefore may be considered "collateral benefits" under MI 61-101. As a result, the votes attaching to Common Shares owned, or over which control or direction is exercised by, Messrs. Guidry, Peters and Tucker will be excluded in determining whether minority approval of the Arrangement Resolution has been obtained. The remaining Caracal Executives own or exercise control or direction over less than 1% of the Common Shares and so the severance that they will receive in connection with the Arrangement will not be considered a "collateral benefit" under MI 61-101.

The table below set out the interest of the foregoing officers in the Arrangement.

Name and Principal Position	Common Shares Held(1)(2)	Termination Payment (\$)
Gary Guidry President and Chief Executive Officer	1,674,173	\$1,119,116
Trevor Peters Chief Financial Officer	770,000	\$808,250
Dean Tucker Chief Operating Officer	750,000	\$808,250

Notes:

(1) Each Shareholder will receive the Consideration in connection with the Arrangement.

(2) Includes Common Shares owned or over which control or direction is exercised.

No formal valuation is required in respect of the Arrangement under MI 61-101, as no "interested party" (as defined in MI 61-101), whether alone or with joint actors, would, as a consequence of the Arrangement, directly or indirectly, acquire Caracal and no interested party is a party to any connected transaction of the Arrangement for which Caracal is required to obtain a formal valuation.

Regulatory Approvals

The following is a summary of the Regulatory Approvals required to complete the Arrangement.

Investment Canada Act Approval

Subject to limited exemptions, the direct acquisition of control of a Canadian business by a non-Canadian that exceeds a financial threshold prescribed under Part IV of the Investment Canada Act (a "Reviewable Transaction") is subject to review. In the case of a Reviewable Transaction, a non-Canadian investor must submit an application to the Director of Investments under the Investment Canada Act (an "Application for Review") seeking approval of the Reviewable Transaction and cannot complete the transaction until the transaction has been reviewed by the Minister responsible for the Investment Canada Act (the "Minister of Industry") and the Minister of Industry is satisfied or is deemed to be satisfied that the transaction is likely to be of net benefit to Canada (the "net benefit ruling"). The submission of the Application for Review triggers an initial review period of up to 45 days. If the Minister of Industry has not completed the review by that date, the Minister of Industry may unilaterally extend the review period for up to a further 30 days, with further extensions of the review period possible with the consent of the non-Canadian investor.

In determining whether to issue a net benefit ruling, the Minister of Industry is required to consider, among other things, the Application for Review and any written undertakings offered by the non-Canadian investor to Her Majesty in right of Canada. The prescribed factors that the Minister of Industry must consider when determining whether to issue a net benefit ruling include, among other things, the effect of the investment on economic activity in Canada (including the effect on employment, resource processing, utilization of Canadian products and services and exports), on participation by Canadians in the acquired business, on productivity, industrial efficiency, technological development, product innovation, product variety and competition in Canada, and the compatibility of the investment with national and provincial industrial, economic and cultural policies, as well as the contribution of the investment to Canada's ability to compete in world markets.

If, following his review, the Minister of Industry is not satisfied or deemed to be satisfied that the Reviewable Transaction is likely to be of net benefit to Canada, the Minister of Industry is required to send a notice to that effect to the non-Canadian investor, advising the non-Canadian investor of its right to make further representations and submit (additional) undertakings within 30 days from the date of such notice or any further period that may be agreed to by the non-Canadian investor and the Minister of Industry. Within a reasonable period of time after receiving any such additional representations and proposed written undertakings, the Minister of Industry must send a notice to the non-Canadian investor stating either that the Minister of Industry is satisfied that the investment is likely to be of net benefit to Canada, in which case the transaction may be completed, or confirming that the Minister of Industry is not satisfied that the investment is likely to be of net benefit to Canada, in which case the completion of the transaction is prohibited.

Glencore, which is a non-Canadian investor, is acquiring control of Caracal, a Canadian business, under and for the purposes of the Investment Canada Act. Accordingly, as the relevant financial threshold is exceeded, the Arrangement is a Reviewable Transaction. Glencore filed an Application for Review on May 7, 2014 to commence the Minister of Industry's review of the Arrangement

Competition Act Approval

Part IX of the Competition Act requires that the parties to certain classes of transactions provide prescribed information to the Commissioner of Competition where the applicable thresholds set out in sections 109 and 110 of the Competition Act are exceeded and no exemption applies ("Notifiable Transactions").

Subject to certain limited exemptions, a Notifiable Transaction cannot be completed until the parties to the transaction have each submitted the information prescribed pursuant to subsection 114(1) of the Competition Act (a "Notification") to the Commissioner of Competition and the applicable waiting period has expired or been terminated early by the Commissioner of Competition.

The initial statutory waiting period is 30 days after the day on which the parties to the Notifiable Transaction have both submitted their respective Notifications. The parties are entitled to complete their Notifiable Transaction at the end of the 30-day waiting period, unless the Commissioner of Competition notifies the parties, pursuant to subsection 114(2) of the Competition Act, that the Commissioner of Competition requires additional information that is relevant to the Commissioner of Competition's assessment of the Notifiable Transaction (a "Supplementary Information Request"). In the event that the Commissioner of Competition issues a Supplementary Information Request to each of the parties, a new 30-day waiting period will commence following compliance with such Supplementary Information Request. The Commissioner of Competition's review of a notifiable transaction for substantive competition law considerations may take longer than the statutory waiting period.

A Notifiable Transaction may be completed before the end of the applicable waiting period if the Commissioner of Competition notifies the parties that he does not, at that time, intend to challenge the transaction by making an application under section 92 of the Competition Act (a "No Action Letter"). In such a case, the Commissioner of Competition will reserve the right to challenge the transaction before the Competition Tribunal at any time within one year of the transaction being completed. Alternatively, or in addition to filing a Notification, the parties to a Notifiable Transaction may apply to the Commissioner of Competition under subsection 102(1) of the Competition Act for an advance ruling certificate (an "ARC") formally confirming that the Commissioner of Competition is satisfied that he does not have sufficient grounds on which to apply to the Competition Tribunal for an order under section 92 of the Competition Act to prohibit the completion of the transaction. Upon the issuance of an ARC, the parties to a Notifiable Transaction are legally entitled to complete their transaction.

Whether or not a merger is subject to notification under Part IX of the Competition Act, the Commissioner of Competition can apply to the Competition Tribunal for a remedial order under section 92 of the Competition Act at any time before the merger has been completed or, if completed, within one year after it was substantially completed, provided that, subject to certain exceptions, the Commissioner of Competition did not issue an ARC in respect of the merger. On application by the Commissioner of Competition under section 92 of the Competition Act, the Competition Tribunal may, where it finds that the merger prevents or lessens, or is likely to prevent or lessen, competition substantially, order that the merger not proceed or, if completed, order its dissolution or the disposition of the assets or shares acquired; in addition to, or in lieu thereof, with the consent of the person against whom the order is directed and the Commissioner of Competition, the Competition Tribunal may order a person to take any other action. The Competition Tribunal is prohibited from issuing a remedial order where it finds that the merger or proposed merger has brought or is likely to bring about gains in efficiency that will be greater than, and will not offset, the effects of any prevention or lessening of competition that will result or is likely to result from the merger and that the gains in efficiency would not likely be attained if the order were made.

The Arrangement is a Notifiable Transaction. The Parties intend to submit a request to the Commissioner of Competition for an ARC or, in the alternative, a No Action Letter, shortly after the date of this Circular to commence the Commissioner of Competition's review of the Arrangement.

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

In the opinion of Stikeman Elliott LLP, Canadian counsel to Caracal, the following summary describes the principal Canadian federal income tax considerations generally applicable to a Shareholder who, for the purposes of the Tax Act and at all relevant times, holds Common Shares as capital property, deals at arm's length with Caracal and the Purchaser Parties, and is not affiliated with Caracal or the Purchaser Parties. Generally, the Common Shares will be capital property to a Shareholder unless the Common Shares are held or were acquired in the course of carrying on a business or as part of an adventure or concern in the nature of trade. Certain Shareholders who are residents of Canada for purposes of the Tax Act and whose Common Shares might not otherwise be capital property may, in some circumstances, be entitled to make an irrevocable election in accordance with subsection 39(4) of the Tax Act to have such Common Shares and every other "Canadian security" (as defined in the Tax Act) owned by them in the taxation year of the election and in all subsequent taxation years deemed to be capital property. Such Shareholders should consult their own tax advisors for advice with respect to whether an election under subsection 39(4) of the Tax Act is available or advisable in their particular circumstances.

This summary is based upon the current provisions of the Tax Act, the regulations thereunder (the "Regulations"), a certificate of an officer of Caracal as to certain factual matters and counsel's understanding of the current published administrative policies and assessing practices of the Canada Revenue Agency. This summary also takes into account all specific proposals to amend the Tax Act and the Regulations publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the "Proposed Amendments") and assumes that all Proposed Amendments will be enacted in the form proposed. However, no assurances can be given that the Proposed Amendments will be enacted as proposed, or at all. This summary does not otherwise take into account or anticipate any changes in law or administrative policies or assessing practices, whether by legislative, regulatory, administrative or judicial action or decision, nor does it take into account provincial, territorial or foreign tax legislation or considerations, which may be different from those discussed in this summary. This summary assumes that the Common Shares will be listed on the LSE at the time that the Common Shares are acquired by Purchaser pursuant to the Arrangement (the "Acquisition Time").

This summary is not applicable to a Shareholder (a) that is, for the purposes of certain rules in the Tax Act applicable to securities held by financial institutions, a "financial institution" (as defined in the Tax Act), (b) an interest in which is a "tax shelter investment" (as defined in the Tax Act), or (c) who reports its "Canadian tax results" within the meaning of section 261 of the Tax Act in a currency other than Canadian currency. Such Shareholders should consult their own tax advisors with respect to their particular circumstances.

This summary is not, and is not intended to be, legal or tax advice to any particular Shareholder. This summary is not exhaustive of all Canadian federal income tax considerations. Accordingly, Shareholders should consult their own tax advisors with respect to the Canadian federal income tax consequences of the Arrangement having regard to their own particular circumstances.

Currency Translation

In general, amounts relevant to the computation of income under the Tax Act are required to be reported in Canadian dollars. Any amount that is expressed or denominated in a currency other than Canadian dollars, including adjusted cost base and proceeds of disposition, must be converted into Canadian dollars based on the exchange rate prevailing on the date each such amount arises.

Shareholders Resident in Canada

The following portion of this summary is generally applicable to a holder who, for the purposes of the Tax Act and any applicable income tax treaty or convention, and at all relevant times, is resident or deemed to be resident in Canada (a "Resident Shareholder").

Disposition of Shares

Generally, a Resident Shareholder who disposes of Common Shares and Amalco Redeemable Preferred Shares under the Arrangement will realize a capital gain (or capital loss) equal to the amount by which the cash received by the Resident Shareholder under the Arrangement exceeds (or is less than) the aggregate of the adjusted cost base of the Common Shares to the Resident Shareholder and any reasonable costs of disposition.

Generally, a Resident Shareholder is required to include in computing its income for a taxation year one-half of the amount of any capital gain (a "taxable capital gain") realized by the Resident Shareholder in the year. A Resident Shareholder is required to deduct one-half of the amount of any capital loss (an "allowable capital loss") realized in a taxation year from taxable capital gains realized in the year. Allowable capital losses in excess of taxable capital gains for a taxation year generally may be carried back and deducted in any of the 3 preceding taxation years or carried forward and deducted in any subsequent taxation year against net taxable capital gains realized by the Resident Shareholder in such years, to the extent and in the circumstances described in the Tax Act.

A Resident Shareholder that is throughout the year a "Canadian-controlled private corporation"(as defined in the Tax Act) may be liable for a refundable tax of 6 Ҁ% on its "aggregate investment income", which is defined to include an amount in respect of taxable capital gains.

Capital gains realized by an individual or a trust, other than certain trusts, may give rise to alternative minimum tax under the Tax Act. Resident Shareholders should consult their own advisors with respect to the potential application of alternative minimum tax.

Dissenting Shareholders

A Resident Shareholder who validly exercises Dissent Rights (a "Resident Dissenting Shareholder") will be deemed to transfer such holder's Amalco Redeemable Preferred Shares to Purchaser in exchange for payment of the fair value of such shares. In general, a Resident Dissenting Shareholder will realize a capital gain (or capital loss) equal to the amount by which the cash received in respect of the fair value of the holder's Amalco Redeemable Preferred Shares (other than in respect of interest awarded by a court) exceeds (or is less than) the adjusted cost base of the Resident Dissenting Shareholder's Common Shares and any reasonable costs of disposition. See "Certain Canadian Federal Income Tax Considerations – Shareholders Resident in Canada – Disposition of Shares" above. Interest awarded by a court to a Resident Dissenting Shareholder is required to be included in the holder's income for the purposes of the Tax Act.

Shareholders Not Resident in Canada

The following portion of this summary is applicable to a holder who, for the purposes of the Tax Act and any applicable income tax treaty or convention, and at all relevant times, is not and has not been resident or deemed to be resident in Canada and does not use or hold, and is not deemed to use or hold, Common Shares in connection with carrying on a business in Canada (a "Non-Resident Shareholder"). Special rules, which are not discussed in this summary, may apply to a Non-Resident Shareholder that is an insurer carrying on business in Canada and elsewhere. Such Non-Resident Shareholders should consult their own tax advisors.

Disposition of Shares

A Non-Resident Shareholder will not be subject to tax under the Tax Act on any capital gain realized on the disposition of Common Shares or Amalco Redeemable Preferred Shares under the Arrangement unless the Common Shares are "taxable Canadian property" (within the meaning of the Tax Act) to the Non-Resident Shareholder at the Acquisition Time and such gain is not otherwise exempt from tax under the Tax Act pursuant to the provisions of an applicable income tax treaty.

Based upon a certificate of an officer Caracal as to certain factual matters, the Common Shares and Amalco Redeemable Preferred Shares should not be "taxable Canadian property" to any Non-Resident Shareholder.

Even if Common Shares are considered to be taxable Canadian property of a Non-Resident Shareholder, the Non-Resident Shareholder may be exempt from tax under the Tax Act on any gain from the disposition of Common Shares if the Common Shares constitute "treaty protected property". Common Shares owned by a Non-Resident Shareholder will generally be treaty protected property if the gain from the disposition of such Common Shares would, because of an applicable income tax treaty, be exempt from tax under the Tax Act.

In the event that the Common Shares constitute taxable Canadian property but not treaty protected property to a non-Resident Shareholder, then the tax consequences described above under "Certain Canadian Federal Income Tax Considerations – Shareholders Resident in Canada – Disposition of Shares" will generally apply. Non-Resident Shareholders should consult their own tax advisors regarding any Canadian reporting requirement arising from this transaction.

Dissenting Shareholders

A Non-Resident Shareholder who validly exercises Dissent Rights (a "Non-Resident Dissenting Shareholder") will be deemed to transfer such Shareholder's Common Shares to Purchaser in exchange for payment of the fair value of such shares. A Non-Resident Dissenting Shareholder may realize a capital gain (or capital loss) equal to the amount by which the cash received in respect of the fair value of the holder's Common Shares (other than in respect of interest awarded by a court) exceeds (or is less than) the aggregate of the adjusted cost base of the Non-Resident Dissenting Shareholder's Common Shares and any reasonable cost of disposition. The taxation of capital gains and losses is described above under "Certain Canadian Federal Income Tax Considerations – Shareholders Not Resident in Canada – Disposition of Shares". The amount of any interest awarded by a court to a Non-Resident Dissenting Shareholder will not be subject to Canadian withholding tax.

CERTAIN UNITED KINGDOM TAXATION CONSIDERATIONS

The following paragraphs, which are intended as a general guide only, are based on current United Kingdom legislation, as applied in England and Wales and the practice of HM Revenue & Customs (which may not be binding) both of which are subject to change, possibly with retrospective effect. They summarize certain limited aspects of the United Kingdom taxation consequences of the Arrangement, and relate only to Shareholders (including Persons who hold Depositary Interests representing Common Shares through CREST) who hold their Common Shares or Depositary Interest, as applicable, beneficially as an investment (other than under an individual savings account) and who are resident and, in the case of individuals, domiciled in (and only in) the United Kingdom for taxation purposes at all relevant times. The paragraphs assume that the DI Holders are the Beneficial Holders of the underlying Common Shares, that no share register of Amalco is kept in the United Kingdom and that any Letter of Transmittal will be executed and retained outside the United Kingdom. The tax position of certain classes of Shareholders and DI Holders, such as those who have (or are deemed to have) acquired or acquire their Common Shares or Depositary Interests, as applicable, in connection with an office or employment is not considered. In addition, these comments may not apply to certain classes of Shareholders and DI Holders including those who hold 10% or more of the issued share capital of Caracal, dealers in securities, insurance companies, collective investment schemes and persons who are exempt from taxation. The tax position of holders of Caracal Options, Caracal Warrants or Caracal Awards is not considered.

If you are in any doubt as to your taxation position, or if you are subject to taxation in any jurisdiction other than the United Kingdom, you should consult an appropriate professional advisor without delay.

Taxation of Chargeable Gains

Liability to United Kingdom taxation of chargeable gains will depend on the individual circumstances of Shareholders and DI Holders.

The Arrangement will, give rise to a disposal by a Shareholder or DI Holder for the purposes of United Kingdom taxation of chargeable gains. Such disposal may, depending on his personal circumstances (including the availability of exemptions, reliefs and/or allowable losses), give rise to a liability to United Kingdom taxation on chargeable gains.

For individual Shareholders and DI Holders, the capital gains annual exempt amount (which is £11,000 for the 2014/15 tax year) will be available to prevent a charge to capital gains tax arising on the first £11,000 of any chargeable gain (to the extent it has not already been utilized).

Special rules apply to a disposal by an individual at a time when he is temporarily not resident in the United Kingdom. An individual Shareholder or DI Holder who has ceased to be resident for tax purposes in the United Kingdom for a period of less than five tax years and who makes a disposal or is treated as making a disposal during that period may be liable to capital gains tax on his return to the United Kingdom, subject to any available exemptions or reliefs.

A disposal by Shareholders and DI Holders within the charge to United Kingdom corporation tax which does not qualify for the substantial shareholdings exemption may give rise to a chargeable gain or allowable loss for the purposes of United Kingdom corporation tax on chargeable gains. Indexation allowance will normally be available in respect of the full period of ownership to reduce any chargeable gain arising. It is unclear to what extent the issue of the Amalco Redeemable Preferred Shares may constitute a distribution for United Kingdom tax purposes. Any such distribution would be treated in the same way as a dividend for Shareholders and DI Holders within the charge to United Kingdom corporation tax and it would normally be expected that any such distribution would be exempt from tax.

Transactions in Securities Anti-Avoidance

Under the provisions of Chapter 1 of Part 13 Income Tax Act 2007 (for Shareholders or DI Holders within the charge to income tax) and Part 15 Corporation Tax Act 2010 (for Shareholders or DI Holders within the charge to corporation tax), HM Revenue & Customs can, in certain circumstances, counteract tax advantages arising in relation to certain transactions in securities. No clearance has been or will be sought by Caracal in relation to the applicability of those provisions in respect of the Arrangement. However, it is not expected that they will, as a general matter, affect the taxation treatment of a Shareholder or DI Holder receiving cash under the Arrangement.

Stamp Duty and Stamp Duty Reserve Tax

No stamp duty or stamp duty reserve tax will be payable by Shareholders or DI Holders as a result of the Arrangement.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following is a summary of certain U.S. federal income tax considerations arising from the Arrangement that are applicable to a U.S. Holder (as defined below) of Common Shares that holds such Common Shares as a capital asset within the meaning of section 1221 of the Internal Revenue Code of 1986, as amended (the "Code"). This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential

U.S. federal income tax considerations that may apply to a U.S. Holder as a result of the Arrangement. In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax considerations applicable to a U.S. Holder. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any U.S. Holder. Moreover, this summary is not binding on the Internal Revenue Service (the "IRS") or the U.S. courts, and no assurance can be provided that the conclusions reached in this summary will not be challenged by the IRS or will be sustained by a U.S. court if so challenged. Caracal has not requested, and does not intend to request, a ruling from the IRS or an opinion from legal counsel regarding any of the U.S. federal income tax consequences of the Arrangement. Each U.S. Holder should consult its own tax advisor regarding the U.S. federal, U.S. state and local, and foreign tax consequences of the Arrangement.

TO ENSURE COMPLIANCE WITH U.S. TREASURY DEPARTMENT CIRCULAR 230, U.S. HOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES IN THIS DOCUMENT IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON BY A U.S. HOLDER, FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER THE INTERNAL REVENUE CODE; (B) THIS SUMMARY WAS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED IN THIS DOCUMENT; AND (C) EACH U.S. HOLDER SHOULD SEEK ADVICE BASED ON SUCH U.S. HOLDER'S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

This summary is based on the Code, Treasury Regulations (final, temporary, and proposed), U.S. court decisions, published IRS rulings and published administrative positions of the IRS, and the Canada-U.S. Treaty, that are applicable and, in each case, as in effect and available, as of the date of this document. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive basis and could affect the U.S. federal income tax considerations described in this summary.

For purposes of this summary, a "U.S. Holder" is an owner of Common Shares participating in the Arrangement that is (a) an individual who is a citizen or resident of the United States for U.S. federal income tax purposes, (b) a corporation, or other entity classified as a corporation for U.S. federal income tax purposes, that is created or organized in or under the laws of the United States or any state in the United States, including the District of Columbia, (c) an estate if the income of such estate is subject to U.S. federal income tax regardless of the source of such income, or (d) a trust if (i) such trust has validly elected to be treated as a United Sates person for U.S. federal income tax purposes or (ii) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of such trust.

For purposes of this summary, a "Non-U.S. Holder" is an owner of Common Shares participating in the Arrangement that is not a U.S. Holder and is not a partnership (or other "pass through" entity) as described below. This summary does not address the U.S. federal income tax considerations applicable to Non-U.S. Holders arising from the Arrangement. Accordingly, a Non-U.S. Holder should consult its own tax advisor regarding the potential U.S. federal, U.S. state and local, and foreign tax consequences (including the potential application of and operation of any tax treaties) of the Arrangement.

This summary does not address the U.S. federal income tax considerations of the Arrangement to U.S. Holders that are subject to special provisions under the Code, including U.S. Holders: (a) that are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax deferred accounts; (b) that are financial institutions, insurance companies, real estate investment trusts, or regulated investment companies or that are broker dealers, dealers or traders in securities or currencies that elect to apply a mark-to-market accounting method; (c) that have a "functional currency" other than the U.S. dollar; (d) that own Common Shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (e) that acquired Common Shares in connection with the exercise of employee stock options or otherwise as compensation for services; (f) who are U.S. expatriates or former long term residents of the United States; and (g) that own, directly, indirectly, or by attribution, 10% or more, by voting power or value, of the Common Shares. U.S. Holders that are subject to special provisions under the Code, including U.S. Holders described immediately above,

should consult their own tax advisors regarding the U.S. federal, U.S. state and local, and foreign tax consequences of the Arrangement.

If an entity that is classified as a partnership (or other "pass through" entity) for U.S. federal income tax purposes holds Common Shares, the U.S. federal income tax consequences to such partnership (or other "pass through" entity) and the partners of such partnership (or owners of such other "pass through" entity) participating in the Arrangement generally will depend on the activities of the partnership (or other "pass through" entity) and the status of such partners (or owners). Partners of entities that are classified as partnerships (and owners of other "pass through" entities) for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences of the Arrangement.

This summary does not address the U.S. state and local, U.S. federal alternative minimum tax, estate and gift, or foreign tax consequences to U.S. Holders of the Arrangement. U.S. Holders are urged to consult their tax advisors with respect to the U.S. federal, state and local tax, estate and gift tax consequences and the non-U.S. tax consequences of the transaction, including the receipt of cash pursuant to the Arrangement.

Tax Consequences to U.S. Holders Relating to the Arrangement

Sale of Common Shares

U.S. Holders whose Common Shares are exchanged for cash pursuant to the Arrangement will recognize gain or loss on the exchange for U.S. federal income tax purposes. The amount of gain or loss recognized will be equal to the difference between the "amount realized" and the U.S. Holder's aggregate adjusted tax basis in the Common Shares exchanged, in each case as determined in U.S. dollars. The "amount realized" will equal the amount of U.S. dollars received, or the U.S. dollar value of any Canadian dollars or GBP received. Subject to the passive foreign investment company rules discussed below, any gain or loss realized will be capital gain or loss and will be long term capital gain or loss if the Common Shares disposed of are held for more than one year. Preferential tax rates apply to long term capital gains of a U.S. Holder that is an individual, estate, or trust. Deductions for capital losses are subject to complex limitations under the Code.

Certain U.S. Holders that are individuals, estates or certain trusts are subject to an additional tax at the rate of 3.8% on all or a portion of their "net investment income", which may include all or a portion of such U.S. Holders' gain upon the exchange of Common Shares.

U.S. Holders Exercising Dissent Rights

A U.S. Holder that exercises Dissent Rights in the Arrangement and is paid cash in exchange for all of such U.S. Holder's Common Shares generally will recognize gain or loss in an amount equal to the difference, if any, between the amount realized (as defined above) by such U.S. Holder in exchange for such U.S. Holder's Shares and the tax basis of such U.S. Holder in the Common Shares surrendered. Subject to the passive foreign investment company rules discussed below, such gain or loss generally will be capital gain or loss and will be long term capital gain or loss if the Common Shares are held for more than one year. Preferential tax rates apply to long term capital gains of a U.S. Holder that is an individual, estate, or trust. Deductions for capital losses are subject to complex limitations under the Code.

Passive Foreign Investment Companies

Definition of a Passive Foreign Investment Company

A foreign corporation generally will be considered a passive foreign investment company ("PFIC") if, for any taxable year, 75% or more of its gross income constituted "passive income" or 50% or more of the value of its assets

held during any taxable year either produce passive income or are held for the production of passive income, based on the fair market value of such assets. With respect to sales by a corporation, "gross income" generally means sales revenues less cost of goods sold. For purposes of the PFIC income and asset tests described above, if a corporation owns, directly or indirectly, 25% or more of the total value of the outstanding shares of another corporation, it will be treated as if it (a) held a proportionate share of the assets of such other corporation and (b) received directly a proportionate share of the income of such other corporation.

"Passive income" includes, for example, dividends, interest, rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities hedging transactions. Net gains from commodities hedging transactions will not be included in the definition of passive income if they are active business gains or losses from the sale of commodities. However, this exception will only apply if substantially all of the corporation's commodities are stock in trade or inventory of the corporation, property used in the trade or business of the corporation, or supplies used in the ordinary course of a trade or business of the corporation. In addition, "passive income" does not include any interest, dividends, rents, or royalties that are received or accrued by a corporation from a "related person," to the extent such items are properly allocable to the income of such related person that is not passive income.

PFIC Status of Caracal

Based on available financial information and the nature of Caracal operations, Caracal does not expect to be a PFIC for the tax year in which the Arrangement occurs. Additionally, Caracal does not believe it has been a PFIC in any year of its existence although it has not conducted an analysis of its PFIC status with respect to any tax year prior to 1998. However, PFIC status is fundamentally factual in nature, generally cannot be determined until the close of the taxable year in question and is determined annually. Additionally, the analysis depends, in part, on complex U.S. federal income tax rules which are subject to varying interpretations and with respect to which there is limited authoritative guidance from the IRS. Consequently, there can be no assurances regarding the PFIC status of Caracal for any prior tax year or the current year. If Caracal was a PFIC at any time during a U.S. Holder's holding period for the Common Shares, then the tax consequences of disposing of such Common Shares, as discussed above, will be significantly modified, and generally worsened, by the PFIC rules discussed below.

Consequences of the Ownership and Disposition of Common Shares of a PFIC

A U.S. Holder of Common Shares would be subject to special, adverse tax rules in respect of the Arrangement if Caracal were classified as a PFIC for any taxable year during which a U.S. Holder holds or held Common Shares. In such event:

x any gain on the exchange of Common Shares for cash would be allocated ratably over such U.S. Holder's holding period for the Common Shares;
x the amounts allocated to the current taxable year and to any taxable year prior to the first year in which Caracal was classified as a PFIC would be taxed as ordinary income in the current taxable year;
x the amounts allocated to other taxable years would be subject to tax in the current taxable year at the highest rate of tax that was in effect for the applicable class of taxpayer for each respective taxable year; and
x an interest charge for a deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year, which interest charge is not deductible by noncorporate U.S. Holders.

The rules described above would not apply to the disposition of Common Shares if Caracal were a PFIC to a U.S. Holder that had made a "mark-to-market" election, or a qualified electing fund ("QEF") election with respect to its Common Shares. It is not expected that a U.S. Holder will have made or be able to make a QEF election because Caracal has not provided U.S. Holders with the information necessary to make a QEF election. Any U.S. Holder that made either such election should consult with its own tax advisor.

The PFIC rules are complex, and each U.S. Holder should consult its own tax advisor regarding the PFIC rules, the elections which may be available to it and how the PFIC rules may affect the U.S. federal income tax consequences relating to the ownership of the Common Shares and the Arrangement.

RISK FACTORS

In evaluating whether to approve the Arrangement Resolution, the Shareholders should carefully consider the following risk factors. Additional risks and uncertainties, including those currently unknown to or considered immaterial by Caracal may also adversely affect the Arrangement. The following risk factors are not a definitive list of all risk factors associated with the Arrangement.

Risks Relating to the Arrangement

Completion of the Arrangement is subject to several conditions that must be satisfied or waived

The completion of the Arrangement is subject to a number of conditions precedent, some of which are outside of the control of Caracal and the Purchaser Parties, including receipt of the required Regulatory Approvals, approval of the Shareholders and the granting of the Final Order. There can be no certainty, nor can Caracal or the Purchaser Parties provide any assurance, that these conditions will be satisfied or, if satisfied, when they will be satisfied. Moreover, a substantial delay in obtaining satisfactory approvals could result in the Arrangement not being completed. If the Arrangement is not completed for any reason, there are risks that the announcement of the Arrangement and the dedication of substantial resources of Caracal to the completion thereof could have a negative impact on Caracal's current business relationships (including with future and prospective employees, customers, distributors, suppliers and partners) and could have a material adverse effect on the current and future operations, financial condition and prospects of Caracal. In addition, failure to complete the Arrangement for any reason could materially negatively impact the trading price of the Common Shares.

The Arrangement Agreement may be terminated by the Purchaser, in which case an alternative transaction may not be available

The Purchaser has the right to terminate the Arrangement Agreement in certain circumstances. Accordingly, there is no certainty that the Arrangement Agreement will not be terminated by the Purchaser before the completion of the Arrangement. If the Arrangement Agreement is terminated, there is no guarantee that equivalent or greater purchase prices for the Common Shares will be available from an alternative party.

Caracal will incur costs and may have to pay a termination fee

Certain costs relating to the Arrangement, such as legal, accounting and certain financial advisor fees, must be paid by Caracal even if the Arrangement is not completed. If the Arrangement is not completed, Caracal may also be required to pay the Termination Fee to Purchaser. If Caracal is required to pay the Termination Fee under the Arrangement Agreement, the financial condition of Caracal could be materially adversely affected.

The Termination Fee may discourage other parties from proposing a significant business transaction with Caracal

Under the Arrangement, Caracal is required to pay the Termination Fee in the event that the Arrangement Agreement is terminated in circumstances related to a possible alternative transaction to the Arrangement. The Termination Fee may discourage other parties from attempting to propose a business transaction, even if such a transaction could provide better value to Shareholders than the Arrangement.

Caracal will be required to make payments pursuant to the Caracal Debentures

As a result of entering into the Arrangement Agreement and in accordance with the Caracal Debenture Indenture, even if the Arrangement is not completed Caracal must pay to a holder of a Caracal Debenture exercising his conversion right certain interest payments calculated pursuant to the Caracal Debenture Indenture. If Caracal continues as an independent entity, the payment of these interest payments will materially adversely affect the financial condition of Caracal.

Risks Relating to Caracal

If the Arrangement is not completed, Caracal will continue to face the risks that it currently faces with respect to its affairs, business and operations and future prospects. Such risk factors are set forth and described in the Caracal AIF and other filings of Caracal filed with the securities regulatory authorities which have been filed on SEDAR at www.sedar.com.

PROCEDURES FOR THE SURRENDER OF COMMON SHARES AND RECEIPT OF CONSIDERATION

Procedures for Shareholders

Only registered Shareholders are eligible to submit a Letter of Transmittal. If you are a non-registered Shareholder holding your Common Shares through Depositary Interests or a nominee such as a broker, investment dealer, bank, trust company, custodian or other nominee, you should carefully follow any instructions provided to you by such nominee.

The details of the procedures for the deposit of physical Common Share certificates and the delivery by the Depositary of the Consideration payable to former registered holders of Common Shares will be set out in the Letter of Transmittal. Registered Shareholders who have not received a Letter of Transmittal should contact Computershare Trust Company of Canada at 1-800-564-6253 (North America Toll Free) or 1-514-982-7555 (Outside North America) or by email at [email protected]. The Letter of Transmittal will also be filed under Caracal's profile at www.sedar.com.

Registered Shareholders must validly complete, duly sign and return the Letter of Transmittal, together with the share certificate(s) representing their Common Shares, to the Depositary at one of the offices specified in the Letter of Transmittal.

Registered Shareholders who deposit a validly completed and duly signed Letter of Transmittal, together with accompanying share certificate(s) and any other documents or interests as the Depositary may reasonably require, will be forwarded the Consideration to which they are entitled as soon as practicable after the later of the Effective Date and the date of receipt by the Depositary of the Letter of Transmittal and accompanying Common Share certificates. Once registered Shareholders surrender their share certificates, they will not be entitled to sell the Common Shares to which those certificates relate.

Registered Shareholders who do not forward to the Depositary a validly completed and duly signed Letter of Transmittal, together with their share certificate(s) and any other document or interests as the Depositary may reasonably require, will not receive the Consideration to which they are otherwise entitled until deposit is made. Whether or not Shareholders forward their share certificate(s) upon the completion of the Plan of Arrangement on the Effective Date, Shareholders will cease to be shareholders of Caracal as of the Effective Time and will only be entitled to receive the Consideration to which they are entitled under the Plan of Arrangement or, in the case of registered Shareholders who properly exercise Dissent Rights, the right to receive fair value for their Common Shares in accordance with section 190 of the CBCA, as modified by the Interim Order.

The method of delivery of certificates representing Common Shares and all other required documents is at the option and risk of the person depositing their Common Shares. Any use of the mail to forward certificates representing Common Shares and/or the related Letters of Transmittal shall be at the election and sole risk of the person depositing Common Shares, and documents so mailed shall be deemed to have been received by Caracal only upon actual receipt by the Depositary. If such certificates and other documents are to be mailed, Caracal recommends that registered mail be used with proper insurance and an acknowledgement of receipt requested.

Unless otherwise specified in the Letter of Transmittal, a cheque representing the aggregate Consideration payable under the Arrangement to a former registered holder of Common Shares who has complied with the procedures set out above and in the Letter of Transmittal will be, as soon as practicable after the Effective Date and after the receipt of all required documents: (a) forwarded to the former Shareholder at the address specified in the Letter of Transmittal by first-class mail; or (b) made available at the office of the Depositary at which the Letter of Transmittal and the certificate(s) for Common Shares were delivered for pick-up by the Shareholder, as requested by the Shareholder in the Letter of Transmittal. If no address is provided on the Letter of Transmittal, cheques will be forwarded to the address of the holder as shown on the register maintained by Computershare Investor Services Inc. Under no circumstances will interest accrue or be paid by Caracal, Purchaser, Glencore or the Depositary on the Consideration for the Common Shares to persons depositing Common Shares with the Depositary, regardless of any delay in making any payment of the Consideration. The Depositary will act as the agent of persons who have deposited Common Shares pursuant to the Arrangement for the purpose of receiving and transmitting the Consideration to such persons, and receipt of the Consideration by the Depositary will be deemed to constitute receipt of payment by persons depositing Common Shares.

Where a Common Share certificate has been lost or destroyed, the registered holder of that Common Share certificate should immediately complete the Letter of Transmittal as fully as possible and forward it, together with a letter describing the loss, to the Depositary in accordance with instructions in the Letter of Transmittal. The Depositary has been instructed to respond with replacement Common Share certificate requirements, which are also set out in section 4.2 of the Plan of Arrangement. A copy of the Plan of Arrangement is attached as Appendix C to this Circular. All required documentation must be completed and returned to the Depositary before a payment will be made.

Holders of Common Shares in a nominee account in CDS should contact their intermediary for instructions and assistance in delivering share certificates representing those Common Shares. DI Holders will receive the Consideration to which they are entitled through CREST in accordance with the usual procedures of CREST. There is no requirement for non-registered Shareholders to complete the Letter of Transmittal.

Currency Election

Registered Shareholders will receive payment in U.S. dollars unless an election is made to receive the Consideration in CAD or GBP in the Letter of Transmittal. Registered Shareholders will be required to make their currency election by no later than 5:00 p.m. (Toronto time) on the Business Day following the Effective Date. Any currency election received after this time will be invalid and the registered Shareholder in question will receive payment of the Consideration in U.S. dollars.

Holders of Common Shares in a nominee account in CDS will receive payment in U.S. dollars unless an election is made to receive the Consideration in CAD. If a non-registered Shareholder holding Common Shares in a nominee account in CDS wishes to make this election, such Shareholder must contact the intermediary in whose names its Common Shares are registered and request that the intermediary make an election on its behalf. If the intermediary does not make an election on its behalf, the non-registered Shareholder holding Common Shares in a nominee account in CDS will receive payment in U.S. dollars. Intermediaries are required to make this currency election by no later than 5:00 p.m. (Toronto Time) on the Business Day following the Effective Date. Intermediaries likely have established cut-off times for receiving instructions from non-registered Shareholders holding Common Shares in a nominee account in CDS that are earlier than this cut-off time. Any currency election received after the cut-off time will be invalid and the Shareholder in question will receive payment of the Consideration in U.S. dollars.

Persons who hold Depositary Interests through CREST will receive payment in GBP unless an election is made to receive the Consideration in U.S. dollars. If a DI Holder wishes to make this election, such DI Holder must make an election through CREST, as detailed in the Form of Instruction. If an election is not made in CREST, the DI Holder will receive payment in GBP. DI Holders are required to make their election in CREST by no later than 5:00 p.m. (London time) on the Business Day following the Effective Date. Any currency election received after the cut-off time will be invalid and the DI Holder will receive payment of the consideration in GBP.

The exchange rate that will be used to convert the Consideration from GBP into CAD or U.S. dollars, as the case may be, will be the prevailing market rate on the date the funds are converted, which is expected to be on or about the Business Day following the deadline for currency elections to be made by Shareholders. The risk of any fluctuations in such rates, including risks relating to the particular date and time at which funds are converted, will be solely borne by the Shareholder.

Cancellation of Rights of Securityholders

From and after the Effective Time, each certificate that immediately prior to the Effective Time represented Common Shares, which were exchanged for the Amalco Redeemable Preferred Shares in the Amalgamation, shall be deemed to represent only the right to receive the consideration in respect of the Amalco Redeemable Preferred Shares acquired under the Plan of Arrangement, less any amounts withheld in accordance with the Plan of Arrangement. Any such certificate formerly representing Common Shares not duly surrendered on or before the day that is two years less one day from the Effective Date shall cease to represent a claim by or interest of any kind or nature against or in any of Caracal, Amalco or the Purchaser. On such date, any and all consideration to which such former holder was entitled shall be deemed to have been surrendered to the Purchaser or Amalco, as applicable.

Any payment made by way of cheque by Caracal, the Depositary or the Purchaser pursuant to the Plan of Arrangement that has not been deposited or has been returned to Caracal, the Depositary or the Purchaser or that otherwise remains unclaimed, in each case, on or before the second anniversary of the Effective Time shall be returned by the Depositary to the Purchaser, and any right or claim to payment under the Plan of Arrangement that remains outstanding on the day that is two years less one day from the Effective Date shall cease to represent a right or claim by or interest of any kind or nature and the right of a former holder of Common Shares to receive the consideration for the Amalco Redeemable Preferred Shares for which such Common Shares were exchanged pursuant to the Plan of Arrangement shall terminate and be deemed to be surrendered and forfeited to the Purchaser or Amalco, as applicable, for no consideration.

LEGAL MATTERS

Certain legal matters in connection with the Arrangement will be passed upon for Caracal by Stikeman Elliott LLP insofar as Canadian legal matters are concerned, Stikeman Elliott (London) LLP and Linklaters LLP insofar as United Kingdom legal matters are concerned and Davis, Malm & D'Agostine, P.C. insofar as United States legal matters are concerned.

Certain legal matters in connection with the Arrangement will be passed upon for the Purchaser Parties by Torys LLP and McCarthy Tétrault LLP insofar as Canadian legal matters are concerned and by Clifford Chance LLP insofar as United Kingdom legal matters are concerned.

RIGHTS OF DISSENT

The following description of the rights of Dissenting Shareholders is not a comprehensive statement of the procedures to be followed by a Dissenting Shareholder who seeks payment of the fair value of its Common Shares and is qualified in its entirety by the reference to the full text of the Interim Order, which is attached to this Circular as Appendix D, and the text of section 190 of the CBCA, which is attached to this Circular as Appendix G. Pursuant to the Interim Order, Dissenting Shareholders are given rights analogous to rights of dissenting shareholders under the CBCA, as modified by the Interim Order. A Dissenting Shareholder who intends to exercise the right to dissent should carefully consider and comply with the provisions of section 190 of the CBCA, as modified by the Interim Order. Failure to comply with the provisions of that section, as modified by the Interim Order, and to adhere to the procedures established therein may result in the loss of all rights thereunder.

The Court hearing the application for the Final Order has the discretion to alter the Dissent Rights described herein based on the evidence presented at such hearing.

Under the Interim Order, each registered Shareholder is entitled, in addition to any other rights the holder may have, to dissent and to be paid by Caracal the fair value of the Common Shares held by the holder in respect of which the holder dissents, determined as of the close of business on the last Business Day before the day on which the resolution from which such holder dissents was adopted. Persons who are Beneficial Holders of Common Shares

registered in the name of a broker, investment dealer, bank, trust company, custodian, nominee or other intermediary who wish to dissent should be aware that only registered holders of Common Shares are entitled to dissent. Accordingly, Beneficial Holders desiring to exercise the right of dissent must make arrangements for the Common Shares beneficially owned by such holder to be registered in the holder's name prior to the time the written objection to the Arrangement Resolution is required to be received by Caracal or, alternatively, make arrangements for the registered Shareholder of such Common Shares to dissent on behalf of the Beneficial Holder. It is strongly suggested that any Shareholders wishing to dissent seek independent legal advice, as the failure to comply strictly with the provisions in section 190 of the CBCA, as modified by the Interim Order, may prejudice such Shareholder's right to dissent.

A Dissenting Shareholder must send to Caracal a written objection to the Arrangement Resolution which written objection must be received by Caracal, c/o Stikeman Elliott LLP, Suite 4300, Bankers Hall West Tower, 855 – 3rd Street S.W., Calgary AB, T2P 5C5, Attention: Geoffrey D. Holub and Keith R. Chatwin, by 5:00 p.m. (Calgary time) on June 4, 2014 (or by 5:00 p.m. (Calgary time) on the Business Day that is two Business Days prior to the date of the Meeting if it is not held on June 6, 2014). No Shareholder who has voted Common Shares in favour of the Arrangement Resolution shall be entitled to exercise Dissent Rights with respect to such Common Shares. Pursuant to the Interim Order, a registered Shareholder may not exercise the right to dissent in respect of only a portion of such holder's Common Shares.

An application may be made to the Court by Caracal or by a Dissenting Shareholder to fix the fair value of the Dissenting Shareholder's Common Shares. If such an application to the Court is made by either Caracal or a Dissenting Shareholder, Caracal must, unless the Court otherwise orders, send to each Dissenting Shareholder a written offer to pay such person an amount considered by Caracal to be the fair value of the Common Shares held by such Dissenting Shareholders. The offer, unless the Court otherwise orders, will be sent to each Dissenting Shareholder at least 10 days before the date on which the application is returnable, if Caracal is the applicant, or within 10 days after Caracal is served with notice of the application, if a Dissenting Shareholder is the applicant. The offer will be made on the same terms to each Dissenting Shareholder and will be accompanied by a statement showing how the fair value was determined.

In such circumstances, a Dissenting Shareholder may make an agreement with Caracal for the purchase of its Common Shares in the amount of Caracal's offer (or otherwise) at any time before the Court pronounces an order fixing the fair value of the Common Shares.

A Dissenting Shareholder is not required to give security for costs in respect of an application and, except in special circumstances, will not be required to pay the costs of the application and appraisal. On the application, the Court will make an order fixing the fair value of the Common Shares of all Dissenting Shareholders who are parties to the application, giving judgment in that amount against Caracal and in favour of each of those Dissenting Shareholders, and fixing the time within which Caracal must pay that amount payable to the Dissenting Shareholders. The Court may in its discretion allow a reasonable rate of interest on the amount payable to each Dissenting Shareholder calculated from the date on which the Dissenting Shareholder ceases to have any rights as a Shareholder until the date of payment.

On the Arrangement becoming effective, or upon the making of an agreement between Caracal and the Dissenting Shareholder as to the payment to be made by Caracal to the Dissenting Shareholder, or the pronouncement of a Court order, whichever first occurs, the Dissenting Shareholder will cease to have any rights as a Shareholder other than the right to be paid the fair value of such Shareholder's Common Shares in the amount agreed to between Caracal and the Shareholder or in the amount of the judgment, as the case may be. Until one of these events occurs, the Shareholder may withdraw its dissent, or if the Arrangement has not yet become effective Caracal may rescind the Arrangement Resolution, and in that event the dissent and appraisal proceedings in respect of that Shareholder will be discontinued.

Caracal shall not make a payment to a Dissenting Shareholder if there are reasonable grounds for believing that Caracal is or would after the payment be unable to pay its liabilities as they become due, or that the realizable value of the assets of Caracal would thereby be less than the aggregate of its liabilities. In such event, Caracal shall notify each Dissenting Shareholder that it is lawfully unable to pay Dissenting Shareholders for their Common Shares in which case the Dissenting Shareholder may, by written notice to Caracal within 30 days after receipt of such notice, withdraw its written objection, in which case such Shareholder shall, in accordance with the Interim Order, be deemed to have participated in the Arrangement as a Shareholder. If the Dissenting Shareholder does not withdraw its written objection, it retains its status as a claimant against Caracal to be paid as soon as Caracal is lawfully entitled to do so or, in a liquidation, to generally be ranked subordinate to creditors but prior to its common shareholders.

All Common Shares held by registered Shareholders who exercise their Dissent Rights in respect of that class of Common Shares will, if the holders are ultimately entitled to be paid the fair value thereof, be deemed to be transferred to Purchaser in exchange for a debt claim against Purchaser for the fair value of such Common Shares which fair value, notwithstanding anything to the contrary contained in Part XV of the CBCA, shall be determined as of the close of business, on the day before the Arrangement Resolution was adopted. If such Shareholders ultimately are not entitled, for any reason, to be paid fair value for such Common Shares they shall be deemed to have participated in the Arrangement on the same basis as a non-dissenting holder of Common Shares.

The above summary does not purport to provide a comprehensive statement of the procedures to be followed by Dissenting Shareholders who seek payment of the fair value of their Common Shares. Section 190 of the CBCA requires adherence to the procedures established therein and failure to do so may result in the loss of all rights thereunder. Accordingly, each Dissenting Shareholder who is considering exercising Dissent Rights should carefully consider and comply with the provisions of Section 190 of the CBCA, the full text of which is set out in Appendix G to this Circular, as modified by the Interim Order, and consult their own legal advisor.

INFORMATION CONCERNING CARACAL

General

Caracal is a corporation incorporated under the CBCA. Caracal's head and registered offices are located at Suite 2100, 555 – 4th Avenue S.W., Calgary, Alberta, T2P 3E7. Caracal's fiscal year-end is December 31.

Documents Incorporated by Reference

Information has been incorporated by reference in this Circular from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Corporate Secretary of Caracal at Suite 2100, 555 – 4th Avenue S.W., Calgary, Alberta T2P 3E7. In addition, copies of the documents incorporated herein by reference may be obtained by accessing the disclosure documents available through the Internet on the SEDAR website at www.sedar.com.

The following documents of Caracal filed with the various securities commissions or similar authorities in the jurisdictions where Caracal is a reporting issuer, are specifically incorporated by reference into and form an integral part of this Circular:

(a) the Caracal AIF;
(b) the Caracal Annual Financial Statements;
(c) the Caracal Interim Financial Statements;
(d) the Caracal Annual MD&A;
(e) the Caracal Interim MD&A;
(f) the Caracal October 2013 Circular;
(g) the Caracal 2014 AGM Circular;
(h) the Caracal TransGlobe MCR;
(i) the Caracal RBL MCR; and
(j) the Caracal Glencore MCR.

Any documents of the type required by National Instrument 44-101 – Short Form Prospectus Distributions to be incorporated by reference in a short form prospectus, including any material change reports (except confidential material change reports), interim financial statements, annual financial statements and the auditors' report thereon, information circulars, annual information forms and business acquisition reports (excluding those portions that are not required pursuant to National Instrument 44-101 – Short Form Prospectus Distributions of the Canadian Securities Administrators to be incorporated by reference herein) filed by Caracal with the securities commissions or similar authorities in Canada subsequent to the date of the Circular and prior to the completion of the Arrangement will be deemed to be incorporated by reference in the Circular.

Any statement contained in a document incorporated or deemed to be incorporated by reference herein will be deemed to be modified or superseded for the purposes of this Circular to the extent that a statement contained herein or in any other subsequently filed document which also is, or is deemed to be, incorporated by reference herein modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement will not be deemed an admission for any purpose that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this Circular.

Business of Caracal

Caracal is a corporation incorporated under the CBCA. Founded in 2009, Caracal is an independent oil and gas exploration, appraisal and development group of companies which, together with Glencore Xstrata plc and SHT, has exclusive rights to explore and develop oil and gas reserves and resources over an area of approximately 26,103 square kilometres (6.4 million acres) in southern Chad. This area comprises three contractual zones, the rights of which were originally granted to Caracal in 2011 pursuant to production sharing contracts that it entered into with the Government of Chad.

Caracal is a reporting issuer or the equivalent in each of the provinces of Canada other than the Province of Québec. The Common Shares are listed and posted for trading on the LSE under the symbol "CRCL" and the Caracal Debentures are listed and posted for trading on the LuxSE.

For further information regarding Caracal and its business activities, see "Intercorporate Relationships" and "General Development of the Business" in the Caracal AIF.

Recent Developments

On April 7, 2014, Caracal, through its wholly owned Subsidiary PetroChad Mangara Limited, entered into the Reserve Based Facility with a syndicate of lenders led by Natixis and Société Generale Corporate & Investment Banking as initial mandated lead arrangers and bookrunners and ING Bank as mandated lead arranger. Caracal has an option to increase the Reserve Based Facility up to \$250 million subject to receipt of further lender commitments.

On March 24, 2014, Caracal announced that the first shipment of oil for export sales from the Badila Field was loaded at the Kribi Terminal. The total cargo size of the lifting was approximately 950,000 barrels of oil and Caracal's net entitlement share was 560,000 barrels of oil with the balance of the cargo belonging to Glencore.

On March 15, 2014, Caracal entered into the TransGlobe Agreement, pursuant to which Caracal agreed to acquire all of the issued and outstanding common shares of TransGlobe by way of a plan of arrangement under the Business Corporations Act (Alberta). For further information, see the Caracal TransGlobe MCR.

Description of Share Capital

Common Shares

Caracal is authorized to issue an unlimited number of Common Shares without nominal or par value. Holders of Common Shares are entitled to one vote per share at meetings of Shareholders, to receive dividends if, as and when declared by the Board, to receive the remaining property and assets of Caracal upon its dissolution or winding-up, subject to the rights of shares having priority over Common Shares and to first be offered, subject to certain exceptions, equity securities in proportion to their existing holdings upon the issue for cash of equity securities by Caracal.

Caracal has never declared or paid any dividends on its Common Shares and Caracal does not anticipate that it will pay dividends in the near future.

The Common Shares are admitted to listing on the premium listing segment of the Official List and to trading on the LSE's main market for listed securities under the symbol "CRCL".

Caracal Options

Pursuant to the Caracal Stock Option Plan, officers, directors and employees of Caracal or its Subsidiaries and any person or company engaged to provide ongoing consulting services to Caracal or its Subsidiaries are entitled to receive grants of Caracal Options to purchase Common Shares. Caracal Options may be granted in such numbers as the Board may determine subject to certain restrictions.

Caracal Awards

Pursuant to the Caracal Long Term Incentive Plan, officers, directors and employees of Caracal or its Subsidiaries and certain persons engaged to provide ongoing consulting services to Caracal or its Subsidiaries are entitled to receive grants of Caracal Awards. Caracal Awards may be granted in such numbers as the Board may determine subject to certain restrictions.

Shareholders have been requested to approve the Caracal Long Term Incentive Plan with amendments at the annual and special meeting of Shareholders to be held on May 15, 2014. For further information, see the Caracal 2014 AGM Circular.

Caracal Warrants

On July 1, 2011 and on August 1, 2011, Caracal issued a total of 4,400,000 Caracal Warrants to certain members of the management team of Caracal to purchase one Common Share at a price of C\$5.50 per Common Share for five years from the date of grant, subject to vesting. These Caracal Warrants shall vest and become exercisable by the holder if the 10 day volume-weighted average trading price of the Common Shares at any time, on any stock exchange upon which such Common Shares are listed, meets or exceeds C\$15.00 or if a liquidity event (as defined in the certificates representing the Caracal Warrants) occurs.

In March 2012, Caracal issued 1,700,000 Caracal Warrants to certain employees, senior manager and directors. Each of these Caracal Warrants entitles the holder thereof to purchase one Common Share at a price of C\$6.00 per Common Share for five years from the date of grant, subject to vesting. These Caracal Warrants vest in 1/3 increments and become exercisable by the holder if the 10 day volume-weighted average trading price of the Common Shares at any time, on any stock exchange upon which such Common Shares are traded, meets or exceeds C\$7.50, C\$9.00 and C\$12.00, respectively, or if a change of control of Caracal occurs.

Caracal Debentures

On September 13, 2012, Caracal completed a financing through the issuance of the Caracal Debentures. The Caracal Debentures are convertible at any time up to 14 days prior to the maturity date at an initial conversion price of \$6.07 per Common Share. The conversion price of the Caracal Debentures is subject to adjustment on or following the occurrence of certain corporate events relating to the share capital of Caracal. The Caracal Debentures are admitted to the official list of the LuxSE and are admitted to trading on the Euro MTF Market.

For further information regarding Caracal's existing share capital, see "Description of Share Capital" in the Caracal AIF.

Consolidated Capitalization of Caracal

Except as set forth below, there have been no material changes in the consolidated share and loan capital of Caracal from March 31, 2014 to the date of this Circular.

The following table sets forth the consolidated capitalization of Caracal as at March 31, 2014 both before and after giving effect to the Arrangement.

Designation	As at March 31, 2014 (\$)	As at March 31, 2014 after giving effect to the Arrangement (\$)
Long Term Debt
Reserve Based Facility	Nil(1)	Nil
Share Capital
Common Shares	146,703,856 Common Shares	146,703,856 Common Shares

Notes:

(1) As of May 9, 2014, Caracal's existing indebtedness under the Reserve Based Facility was approximately \$43 million.

Price Range and Trading Volumes

The Common Shares are admitted to the Official List and to trading on the LSE under the symbol "CRCL" and the Caracal Debentures are admitted to trading on the LuxSE.

Common Shares

Common Shares (CRCL)	High (£)	Low (£)	Close (£)	Volume
2014
May (to May 9, 2014)	5.45	5.41	5.42	19,354,011
April	5.47	3.31	5.43	81,864,234
March	4.20	3.36	3.47	30,158,266
February	4.40	3.98	4.05	6,480,120
January	4.65	4.33	4.37	9,735,722

Common Shares (CRCL)	High (£)	Low (£)	Close (£)	Volume

2013
December	4.70	4.26	4.42	9,784,604
November	4.90	4.25	4.41	8,989,523
October	5.19	4.56	4.80	15,826,375
September	4.98	3.85	4.60	21,555,072
August	4.20	3.95	4.00	24,081,110
July (July 9, 2013 – July 31, 2013)	4.07	3.68	4.05	10,541,225

On April 11, 2014, the last trading day on which the Common Shares traded prior to announcement of the Arrangement, the closing price of the Common Shares on the LSE was £3.42. As of the date hereof, the closing price of the Common Shares on the LSE was £5.42.

Caracal Debentures

The Caracal Debentures are admitted to trading on the LuxSE. Information regarding the monthly range of high and low prices and total monthly volumes traded on the LuxSE is not made available.

Prior Sales

Caracal has not issued or sold any Common Shares or securities convertible into Common Shares during the 12 months prior to the date hereof other than as set forth below.

Type of security	Date of issuance/grant	Number	Issue price/exercise price per security
Common Shares	November 13, 2013	5,782,880	\$7.24 or £4.50
	December 3, 2013	11,666	C\$6.00
	December 5, 2013	22,080,114	\$7.24 or £4.50
Caracal Options	May 9, 2013	4,310,400	£4.29

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth, as of December 31, 2013, the number of Common Shares which are authorized for issuance with respect to equity compensation plans of Caracal. The only compensation plans of Caracal under which Common Shares are currently authorized for issuance is the Caracal Stock Option Plan and the Caracal Long Term Incentive Plan.

Plan Category	Number Of Securities To Be Issued Upon Exercise Of Outstanding Caracal Options, Caracal Warrants And Caracal Awards (a) (2)	Weighted-Average Exercise Price Of Outstanding Caracal Options, Caracal Warrants And Caracal Awards (b)	Number Of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected In Column (a)) (c) (3)
Equity compensation plans approved by securityholders	10,066,333	£3.78	12,801,319
Equity compensation plans not approved by securityholders(1)	1,147,099	C\$6.41	1,147,634
Total	11,213,432	£3.78	13,948,953

Notes:

(1) See "Executive Compensation – LTIP" in the Caracal 2014 AGM Circular for a description of the Caracal Long Term Incentive Plan.

(2) As at December 31, 2013: (a) the total number of Common Shares issued and reserved for issuance under all security based compensation arrangements of Caracal (including pre- and post-admission of the Common Shares to trading on the LSE in July 2013 (the "Admission")) was 11,213,432, which represents approximately 7.7% of the issued and outstanding Common Shares on a non-diluted basis; (b) the number of Common Shares issued and reserved for issuance under all security based compensation arrangements of Caracal prior to Admission was 10,512,782, which represents approximately 7.2% of the issued and outstanding Common Shares on a non-diluted basis; and (c) the number of Common Shares issued and reserved for issuance under all security based compensation arrangements of Caracal post-Admission was 700,650, which represents approximately 0.5% of the issued and outstanding Common Shares on a non-diluted basis.

(3) Any Common Shares issued or reserved for issuance pursuant to any Caracal Option or Caracal Award granted by Caracal prior to Admission is excluded from the total number of securities remaining available for future issuance under Caracal's security based compensation arrangements.

Principal Securityholders

As of the date hereof, Caracal's issued and outstanding voting shares consist of 146,733,856 Common Shares. Shareholders at the close of business on May 7, 2014 are entitled to receive notice of the Meeting and to vote thereat or at any adjournments thereof on the basis of one vote for each Common Share held.

To the knowledge of the directors and executive officers of Caracal, as of the date hereof, no person, firm or corporation beneficially owns, directly or indirectly, or exercises control or direction over, Common Shares carrying more than 10% of the voting rights attached to all of the Common Shares, except as set forth below:

Name	Ownership	Common Shares Held	Percentage of Common Shares Held
Glencore International AG(1)	Direct and Indirect	14,596,128	9.95%(2)

Notes:

(1) Pursuant to the Arrangement Agreement, Glencore and its affiliates are entitled to acquire additional Common Shares through purchases over a stock exchange up to 8.6% of the outstanding Common Shares on a non-diluted basis, provided that such purchases are not made at a price above GBP5.50. Between April 14, 2014 and April 30, 2014, Glencore acquired 12,400,000 Common Shares through such purchases.

(2) Glencore also beneficially owns \$40 million principal amount of Caracal Debentures which are convertible into an additional 6,589,786 Common Shares and if converted would increase Glencore's Common Share holdings to 21,185,914 (or 13.82% of the outstanding Common Shares).

As of the date hereof, the directors and Caracal Executives, as a group, beneficially own, directly or indirectly, 5,013,076 Common Shares.

Indebtedness of Directors and Caracal Executives

As of the date hereof, there were outstanding loans equal to C\$6,250,000 granted by Caracal to certain Caracal Executives in July and August 2011 (the "Share Purchase Loans") in order for them to purchase, in aggregate, 2,000,000 units at a price of C\$5.00, with each unit comprised of one Common Share and two Caracal Warrants (the "2011 Units"). The Share Purchase Loans were provided to enable the recipients to make a meaningful equity investment in Caracal so as to better align their interests with the interests of the Shareholders. The Share Purchase Loans bear interest at the rate equal to that prescribed for the purposes of subsection 80.4(1) of the Income Tax Act (Canada) and are secured by the Common Shares and Caracal Warrants of each person, respectively. Share Purchase Loans were made to Gary Guidry, Trevor Peters, Dean Tucker, Lawrence West and Jim Evans to purchase 2011 Units on July 1, 2011, which Share Purchase Loans are due and payable in full on or before July 1, 2016. The other Share Purchase Loan was made to Nicholas Hands to purchase 2011 Units on August 1, 2011, which Share Purchase Loan is due and payable on August 1, 2016.

Name and Principal Position	Largest Amount amount outstanding as outstanding at May 9, during 2013 2014		Financially assisted securities purchased during 2013	Security for current indebtedness	Amount forgiven during 2013
	(C\$)	(C\$)	(Shares)	(Shares)	(C\$)
Gary Guidry President and Chief Executive Officer	3,500,000	-	-	-	-
Trevor Peters Chief Financial Officer	1,750,000	1,500,000	-	300,000	-
Dean Tucker Chief Operating Officer	1,750,000	1,750,000	-	350,000	-
Jim Evans
Vice President, Corporate Services & Compliance	1,000,000	1,000,000	-	200,000	-
Nicholas Hands Vice President, Asset Management	1,000,000	1,000,000	-	200,000	-
William (Joe) Taylor(1) Vice President, Engineering and Project Management	1,000,000	-	-	-	-
Lawrence West Vice President, Exploration	1,000,000	1,000,000	-	200,000	-
Hervé Manouan Vice President and Country Manager, Chad	-	-	-	-	-
Tina Antony Vice President, Legal and General Counsel	-	-	-	-	-
Ryan Ellson Vice President, Finance	-	-	-	-	-
Tim Mills Vice President, Engineering and Project Management	-	-	-	-	-

Note:

(1) Mr. Taylor resigned from Caracal on December 10, 2013 and is therefore not considered a Caracal Executive.

Save as set out above, as at the date hereof, no person who is, or at any time during the most recently completed financial year was, a director, nominee for election as a director or executive officer of Caracal, or any associate of any such director, nominee or executive officer, (a) is, or has been at any time since the beginning of the most recently completed financial year of Caracal, indebted to Caracal or any of its subsidiaries, or (b) has any indebtedness to another entity that is, or at any time since the beginning of the most recently completed financial year of Caracal has been, the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by Caracal or any of its Subsidiaries.

Ownership of Securities for Directors and Caracal Executives

The chart below sets out for each director and Caracal Executive: (a) the number of Common Shares; (b) Caracal Options; (c) Caracal Warrants; (d) RSUs; (e) PSUs; (f) DSUs; and, (g) Caracal Debentures, beneficially owned by such director or Caracal Executive, as of the date hereof.

Name and Principal Position	Common Shares	Caracal Options	Caracal Warrants	RSUs	PSUs	DSUs	Caracal Debentures (Aggregate Principal) (\$)
Carol Bell Director	10,256	130,000	-	25,734	-	-	-
John Bentley Director	9,837	130,000	-	25,734	-	-	-
Robert Hodgins Director	195,000	100,000	100,000	78,096	-	-	-
Ron Royal Director	218,636	100,000	70,000	51,466	-	-	-
Brooke Wade Director	313,181	100,000	70,000	51,466	-	-	\$1,000,000
Peter Dey Director	5,903	130,000	-	-	-	45,680	-
Gary Guidry Director, President and Chief Executive Officer	1,674,173	300,000	1,550,000	39,209	447,190	-	\$1,000,000
Trevor Peters Chief Financial Officer	770,000	150,000	775,000	16,247	230,693	-	\$200,000
Dean Tucker Chief Operating Officer	750,000	150,000	775,000	16,055	230,693	-	-
Jim Evans
Vice President, Corporate Services & Compliance	325,000	125,000	462,500	8,763	150,483	-	-
Nicholas Hands Vice President, Asset Management	319,000	125,000	462,500	8,315	150,483	-	-
Lawrence West Vice President, Exploration	325,000	125,000	462,500	8,315	150,483	-	-
Hervé Manouan Vice President and Country Manager, Chad	-	150,000	-	10,859	177,778	-	-

Name and Principal Position	Common Shares	Caracal Options	Caracal Warrants	RSUs	PSUs	DSUs	Caracal Debentures (Aggregate Principal) (\$)
Tina Antony Vice President, Legal and General Counsel	7,090	150,000	-	9,211	159,000	-	-
Ryan Ellson Vice President, Finance	90,000	185,000	80,000	9,594	150,483	-	-
Tim Mills Vice President, Engineering and Project Management	-	150,000	-	384	67,800	-	-

Interest of Informed Persons in Material Transactions

There were no material interests, direct or indirect, of any informed person (as defined in National Instrument 51-102 – Continuous Disclosure Obligations of the Canadian Securities Administrators) of Caracal, any proposed director of Caracal or any associate or affiliate of any informed person or proposed director of Caracal, in any transaction since the commencement of Caracal's most recently completed financial year or in any proposed transaction which has materially affected or would materially affect Caracal or any of its Subsidiaries.

Auditors, Transfer Agent and Registrar

The auditors of Caracal are KPMG LLP, Chartered Accountants, Suite 2700, 205 – 5th Avenue S.W., Calgary, Alberta T2P 4B9.

The transfer agent and registrar for the Common Shares is Computershare Investor Services PLC at its principal offices in Bristol, United Kingdom and Computershare Investor Services Inc. at its principal offices in Calgary, Canada and Toronto, Canada.

Additional Information

Additional information respecting Caracal is available on SEDAR at www.sedar.com. Financial information respecting Caracal is provided in the Caracal Annual Financial Statements, the Caracal Interim Financial Statements, the Caracal Annual MD&A and the Caracal Interim MD&A. Shareholders can access this information on SEDAR, on Caracal's website at www.carcalenergy.com or by request to the Corporate Secretary, Caracal Energy Inc., 2100, 555 – 4 Avenue S.W., Calgary, Alberta, T2P 3E7, Canada.

INFORMATION CONCERNING THE PURCHASER PARTIES

MATTERS TO BE CONSIDERED AT THE MEETING

At the Meeting, Shareholders will be asked to consider the Arrangement Resolution in the form set forth in Appendix A of this Circular. The Arrangement Resolution must be approved by at least 66Ҁ% of the votes cast by the Shareholders, present in person or represented by proxy at the Meeting, and a majority of the votes cast by Shareholders present in person or represented by proxy at the Meeting after excluding the votes of those persons whose votes may not be included in determining minority approval of a "business combination" under MI 61-101. Shareholders are urged to review the various sections of this Circular when considering the Arrangement Resolution.

GENERAL PROXY MATTERS

Solicitation of Proxies

This Circular is provided in connection with the solicitation of proxies by the management of Caracal for use at the Meeting and the associated costs thereof will be borne by Caracal. In addition to solicitation by mail, proxies may be solicited by personal interviews, telephone or other means of communication and by directors, officers and employees of Caracal (who will not be specifically remunerated therefore).

The Meeting is being called to seek the requisite approval of Shareholders of the Arrangement Resolution. See "The Arrangement" and "Matters to be Considered at the Meeting".

Appointment and Revocation of Proxies

Enclosed herewith is a form of proxy for use at the Meeting. The persons named in the form of proxy are directors and/or executive officers of Caracal. A Shareholder submitting a proxy has the right to appoint a nominee (who need not be a Shareholder) to represent him or her at the Meeting other than the persons designated in the enclosed form of proxy by inserting the name of his or her chosen nominee in the space provided for that purpose on the form and by striking out the printed names.

If you are a registered Shareholder who is unable to attend the Meeting in person please complete and sign the enclosed form of proxy and deliver it to Computershare Investor Services Inc. (a) by mail to Proxy Department, 135 West Beaver Creek Road, P.O. Box 300, Richmond Hill, Ontario, L4B 4R5, or (b) by hand delivery to 100 University Avenue, 8th Floor, Toronto, Ontario, M5J 2Y1. A registered Shareholder may also vote using the internet at www.investorvote.com or telephone at 1-866-732-VOTE (8683). In order to be valid and acted upon at the Meeting, the form of proxy must be received not less than 48 hours (excluding Saturdays and holidays) before the date of the Meeting or any adjournment(s) or postponement(s) thereof or be deposited with the Chairman of the Meeting prior to its commencement.

A Shareholder who has given a proxy may revoke it prior to its use, in any manner permitted by law, including by instrument in writing executed by a Shareholder or by a Shareholder's attorney authorized in writing or, if a Shareholder is a corporation, executed by a duly authorized officer or attorney thereof, and deposited at the registered office of Caracal at any time before 4:30 p.m. (Calgary time) on the last Business Day preceding the day of the Meeting, or any adjournment or postponement thereof, at which the proxy is to be used or with the Chairman of the Meeting on the day of the Meeting or any adjournment or postponement thereof.

Advice to Beneficial Holders of Common Shares

The information set forth in this section is of significant importance to many Shareholders, as a number of Shareholders do not hold Common Shares or Depositary Interests representing the underlying Common Shares in their own name. Beneficial Holders should note that only proxies deposited by Shareholders whose names appear on the records of Caracal as the registered Shareholders can be recognized and acted upon at the Meeting. If Common Shares are listed in an account statement provided to a Shareholder by a broker or the Shareholder holds Depositary Interests, then in almost all cases the Common Shares will not be registered in the Shareholder's name on the records of Caracal. Such Common Shares will more likely be registered under the names of the Shareholder's broker or an agent of that broker, or, in the case of Depositary Interests, in a nominee account of the Computershare Company Nominees Limited. Shares held by brokers or their agents or nominees can only be voted (for or against resolutions) upon the instructions of the Beneficial Holder. Without specific instructions, brokers and their agents and nominees are prohibited from voting shares for the broker's clients. Therefore, Beneficial Holders should ensure that instructions respecting the voting of their Common Shares or their Depositary Interests are communicated to the appropriate person.

Although a Beneficial Holder may not be recognized directly at the Meeting for the purposes of voting Common Shares registered in the name of his or her broker (or agent of the broker), a Beneficial Holder may attend at the Meeting as proxyholder for a registered Shareholder and vote the Common Shares in that capacity. Beneficial Holders who wish to attend at the Meeting and indirectly vote their Common Shares as proxyholder for a registered Shareholder should enter their own names in the blank space on the form of proxy provided to them and return the same to their broker (or the broker's agent) in accordance with the instructions provided by such broker (or agent), well in advance of the Meeting.

DI Holders will be invited to attend the Meeting by Computershare Company Nominees Limited in its capacity as issuer of the Depositary Interests and trustee of the underlying Common Shares. DI Holders should fill in the Form of Instruction which will be provided and return such form of instruction to the DI Trustee, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY, United Kingdom, not less than 72 hours (excluding weekends and holidays) no later than 10:30 a.m. (Calgary time) on June 3, 2014, or in the case of an adjourned or postponed Meeting, not less than 72 hours (excluding weekends and holidays) prior to the time appointed for the adjourned or postponed Meeting. The completion and return of the Form of Instruction will not preclude a DI Holder from attending the Meeting and voting in person. DI Holders who wish to attend and vote in person in respect of Common Shares which are represented by their Depositary Interests should notify the DI Trustee (in accordance with the instructions set out in the Form of Instruction) so that an appropriate Letter of Representation can be issued.

Proxy Voting

All Common Shares represented at the Meeting by properly executed proxies will be voted on any matter that may be called for and, where a choice with respect to any matter to be acted upon has been specified in the accompanying form of proxy, Common Shares represented by the proxy will be voted in accordance with such instructions. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the relevant resolution. In the absence of any instruction, the persons whose names appear on the printed form of proxy will exercise such person's discretion as to whether, and if so how, such person votes. The enclosed form of proxy confers discretionary authority upon the persons named therein. If any other business or amendments or variations to matters identified in the Notice of Meeting properly comes before the Meeting then discretionary authority is conferred upon the person appointed in the proxy as to whether and, if so how, to vote.

As at the date hereof, the management of Caracal knew of no such amendment, variation or other matter to come before the Meeting other than the matters referred to in the Notice of Meeting.

Electronic Voting Instructions through the CREST Voting System

CREST members who wish to give voting instructions by utilizing the CREST electronic proxy appointment service may do so for the Meeting and any adjournment(s) or postponement(s) thereof by utilizing the procedures described in the CREST Manual, available at www.euroclear.com. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a "CREST Voting Instruction") must be properly authenticated in accordance with Euroclear specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by Caracal's agent (ID number 3RA50) not less than 72 hours (excluding weekends and holidays) before the commencement of the Meeting or any adjournment or postponement thereof. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which Caracal's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

Caracal may treat as invalid a CREST Voting Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001 (United Kingdom).

General

Caracal is not using "notice-and-access" to send its proxy-related materials to Shareholders, and paper copies of such materials will be sent to all Shareholders. Caracal will not send proxy-related materials directly to nonobjecting Beneficial Holders and such materials will be delivered to non-objecting Beneficial Holders through their intermediaries. Management of Caracal does not intend to pay for intermediaries to forward to objecting beneficial owners under National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer the proxy-related materials and Form 54-101F7 – Request for Voting Instructions Made by Intermediary, and in the case of an objecting Beneficial Holders, the objecting Beneficial Holder will not receive the materials unless the objecting Beneficial Holder's intermediary assumes the cost of delivery.

Voting Securities of Caracal and Principal Holders Thereof

As of the date hereof, Caracal's issued and outstanding shares with voting rights consist of 146,733,856 Common Shares. Each Common Share carries the right to one vote at a general meeting of Caracal. Shareholders and DI Holders at the close of business on the Record Date are entitled to receive notice of the Meeting and to attend and vote thereat or at any adjournment(s) or postponement(s) thereof on the basis of one vote for each Common Share held.

The by-laws of Caracal provide that a quorum at the Meeting shall be two individuals present in person, each of whom is either a Shareholder entitled to attend and vote at the Meeting or a proxyholder appointed by such a Shareholder, holding or representing by proxy not less than 5% of the total number of the issued Common Shares for the time being enjoying voting rights at the Meeting. In the event of a quorum not being present within 30 minutes after the time fixed for the holding of the Meeting, the Meeting will be adjourned to such day being not less than two days later and to such place and time as may be appointed by the Chairman of the Meeting. No notice of the adjourned Meeting will be required and if at such adjourned Meeting a quorum is not present, the Shareholders then present either personally or by proxy shall form a quorum.

Except as otherwise disclosed in this Circular, to the knowledge of the directors and executive officers of Caracal, as of the date hereof, no person or company beneficially owns, or exercises control or direction over, directly or indirectly, more than 10% of the voting rights attached to all of the outstanding Common Shares.

CONSENTS

Consent of Stikeman Elliott LLP

We have read the management information circular and proxy statement (the "Circular") of Caracal Energy Inc. ("Caracal") dated May 9, 2014 relating to the special meeting of shareholders to approve an arrangement under the Canada Business Corporations Act involving Caracal, Glencore International AG and 8682321 Canada Ltd. and the common shareholders of Caracal. We consent to the inclusion in the Circular of our opinion contained under "Certain Canadian Federal Income Tax Considerations" and references to our firm name and our opinion therein.

(signed) "Stikeman Elliott LLP"

Calgary, Canada May 9, 2014

Consent of RBC Dominion Securities Inc.

To the Board of Directors of Caracal Energy Inc:

We refer to the written fairness opinion dated April 14, 2014 which we prepared solely for the information of the Board of Directors of Caracal Energy Inc. ("Caracal") in connection with the plan of arrangement involving Caracal, Glencore International AG and 8682321 Canada Ltd.

We consent to the inclusion of the fairness opinion and references to our firm name and a summary of our fairness opinion in the management information circular and proxy statement of Caracal dated May 9, 2014.

(signed) "RBC Dominion Securities Inc."

Toronto, Canada May 9, 2014

200 West Street | New York, New York 10282-2198 Tel: 212-902-1000 | Fax: 212-902-3000

May 9, 2014

Board of Directors Caracal Energy Inc. Suite 2100, 555-4th Avenue SW Calgary AB T2P 3E7

Madame and Gentlemen:

Reference is made to our opinion letter, dated April 14, 2014 (the "Opinion Letter"), with respect to the fairness from a financial point of view to the holders (other than Glencore International AG ("Glencore") and its affiliates) of the outstanding common shares (the "Shares"), of Caracal Energy Inc. (the "Company") of the £5.50 per Share in cash proposed to be paid to such holders pursuant to the Arrangement Agreement, dated as of April 14, 2014, by and among Glencore, 8682321 Canada Inc., a wholly owned subsidiary of Glencore, and the Company.

The foregoing opinion letter was provided for the information and assistance of the Board of Directors of the Company in connection with their consideration of the transaction contemplated therein, and is not to be used, circulated, quoted or otherwise referred to for any other purpose, nor is it to be filed with, included in or referred to in whole or in part in any registration statement, proxy statement, information circular (or any amendment thereto) or any other document, except in accordance with our prior written consent. We understand that the Company has determined to include our opinion in the Management Information Circular and Proxy Statement of the Company, dated May 9, 2014 (the "Information Circular").

In that regard, we hereby consent to the reference to our Opinion Letter in the Letter to Shareholders and under the captions ''Summary Information — Fairness Opinions'', ''Summary Information — Recommendation of the Board'', ''Summary Information — Reasons for the Arrangement'', ''Background to the Arrangement'', ''Recommendation of the Board of Directors'', ''Reasons for the Arrangement'' and ''Fairness Opinions'' in the Information Circular and to the inclusion of the Opinion Letter in the Information Circular.

Very truly yours,

(signed) "Goldman, Sachs & Co."

APPENDIX A

ARRANGEMENT RESOLUTION

BE IT RESOLVED THAT:

1. The arrangement (the "Arrangement") under Section 192 of the Canada Business Corporations Act (the "CBCA") of Caracal Energy Inc. (the "Company"), as more particularly described and set forth in the management information circular (the "Circular") dated May 9, 2014 of the Company accompanying the notice of this meeting (as the Arrangement may be amended, modified or supplemented in accordance with the amended and restated arrangement agreement (the "Arrangement Agreement") made as of April 24 , 2014 between the Company, 8682321 Canada Inc. and Glencore International AG), is hereby authorized, approved and adopted.
1. The plan of arrangement of the Company (as it has been or may be amended, modified or supplemented in accordance with the Arrangement Agreement (the "Plan of Arrangement")), the full text of which is set out in Appendix C to the Circular, is hereby authorized, approved and adopted.
1. The (a) Arrangement Agreement and related transactions, (b) actions of the directors of the Company in approving the Arrangement Agreement, and (c) actions of the directors and officers of the Company in executing and delivering the Arrangement Agreement, and any amendments, modifications or supplements thereto, are hereby ratified and approved.
1. The Company be and is hereby authorized to apply for a final order from the Alberta Court of Queen's Bench to approve the Arrangement on the terms set forth in the Arrangement Agreement and the Plan of Arrangement (as they may be amended, modified or supplemented and as described in the Circular).
1. Notwithstanding that this resolution has been passed (and the Arrangement adopted) by the shareholders of the Company or that the Arrangement has been approved by the Alberta Court of Queen's Bench, the directors of the Company are hereby authorized and empowered to, without notice to or approval of the shareholders of the Company, (a) amend, modify or supplement the Arrangement Agreement or the Plan Arrangement to the extent permitted by the Arrangement Agreement and (b) subject to the terms of the Arrangement Agreement, not to proceed with the Arrangement and related transactions.
1. Any officer or director of the Company is hereby authorized and directed for and on behalf of the Company to execute and deliver for filing with the Director under the CBCA articles of arrangement and such other documents as are necessary or desirable to give effect to the Arrangement and the Plan of Arrangement and transactions contemplated thereby in accordance with the Arrangement Agreement, such determination to be conclusively evidenced by the execution and delivery of such articles of arrangement and any such other documents.
1. Any officer or director of the Company is hereby authorized and directed for and on behalf of the Company to execute or cause to be executed and to deliver or cause to be delivered all such other documents and instruments and to perform or cause to be performed all such other acts and things as such person determines may be necessary or desirable to give full effect to the foregoing resolution and the matters authorized thereby, such determination to be conclusively evidenced by the execution and delivery of such document or instrument or the doing of any such act or thing.

APPENDIX B

ARRANGEMENT AGREEMENT

GLENCORE INTERNATIONAL AG

as the Parent

and

8682321 CANADA INC.

as the Purchaser

and

CARACAL ENERGY INC.

as the Company

AMENDED AND RESTATED ARRANGEMENT AGREEMENT

APRIL 24, 2014

ARTICLE	1 INTERPRETATION	6
1.1	Defined Terms.	6
1.2	Certain Rules of Interpretation	18
1.3	Schedules.	19
ARTICLE	2 THE ARRANGEMENT	19
2.1	Arrangement.	19
2.2	Interim Order.	20
2.3	The Company Meeting.	20
2.4	The Company Circular	22
2.5	Final Order	24
2.6	Court Proceedings	24
2.7	Treatment of Company Options, RSUs, PSUs, DSUs and Company
	Warrants	25
2.8	Employment Matters	26
2.9	Articles of Arrangement and Effective Date.	26
2.10	Tax Considerations.	27
2.11	List of Securityholders	27
ARTICLE	3 REPRESENTATIONS AND WARRANTIES	27
3.1	Representations and Warranties of the Company	27
3.2	Representations and Warranties of the Parent and Purchaser	28
ARTICLE	4 COVENANTS	28
4.1	Covenants of the Purchaser	28
4.2	Covenants of the Company	29
4.3	Mutual Covenants.	34
4.4	Access to Information; Confidentiality	37
4.5	Public Communications	38
4.6	Notice and Cure Provisions.	38
4.7	Personal Information	39
4.8	Insurance and Indemnification	41
4.9	Dividends	41
4.10	Pre-Acquisition Reorganization	42
4.11	Treatment of Convertible Bonds	43
4.12	Performance of Purchaser	43
ARTICLE	5 ADDITIONAL COVENANTS REGARDING NON-SOLICITATION	43
5.1	Non-Solicitation	43
5.2	Notification of Acquisition Proposals	45
5.3	Responding to an Acquisition Proposal	45
5.4	Superior Proposal Notice and Purchaser's Right to Match.	46
5.5	Breach by Subsidiaries and Representatives	48
ARTICLE	6 CONDITIONS	48
6.1	Mutual Conditions Precedent	48
6.2	Additional Conditions Precedent to the Obligations of the Purchaser.	49
6.3	Additional Conditions Precedent to the Obligations of the Company	50

6.4	Satisfaction of Conditions	51
ARTICLE 7	TERM AND TERMINATION	51
7.1	Termination	51
7.2	Termination Fees.	53
7.3	Effect of Termination/Survival	54
ARTICLE 8	GENERAL PROVISIONS	55
8.1	Amendments.	55
8.2	Expenses and Expense Reimbursement	55
8.3	Notices.	55
8.4	Time is of the Essence.	57
8.5	Injunctive Relief	57
8.6	Third Party Beneficiaries.	57
8.7	Waiver	58
8.8	Entire Agreement	58
8.9	Successors and Assigns	58
8.10	Severability.	58
8.11	Governing Law.	59
8.12	Rules of Construction.	59
8.13	No Liability	59
8.14	Language	59
8.15	Counterparts	59

AMENDED AND RESTATED ARRANGEMENT AGREEMENT

THIS AGREEMENT is made as of April 14, 2014, and amended and restated as of April 24, 2014,

BETWEEN:

GLENCORE INTERNATIONAL AG, a corporation existing under the laws of Switzerland

(the "Parent")

and –

8682321 CANADA INC., a corporation existing under the laws of Canada

(the "Purchaser")

and -

CARACAL ENERGY INC., a corporation existing under the laws of Canada

(the "Company").

RECITALS:

A. The Parties originally entered into an arrangement agreement dated as of April 14, 2014 (the "Original Agreement") and now desire to give effect to certain changes to the Original Agreement and the Plan of Arrangement as set forth herein with effect as at April 14, 2014.
B. The Parent desires to acquire all of the Company Shares through its wholly-owned Subsidiary, the Purchaser, by way of the Arrangement.
C. After receiving financial and legal advice, the members of the Company Board have unanimously determined that the Consideration to be received by the Company Shareholders pursuant to the Arrangement is fair to the Company Shareholders from a financial point of view and that the Arrangement is in the best interests of the Company, and have unanimously resolved to support the Arrangement and to recommend that the holders of the Company Shares vote in favour of the Arrangement, all subject to the terms and conditions contained herein.
D. The Purchaser has entered into the Company Voting Agreements, each dated as of the date of this Agreement, with each of the directors of the Company and each of the Company Executives.
E. In furtherance of the foregoing, the Parties have entered into this Agreement to provide for the matters referred to in these recitals and for other matters relating to the Arrangement.

THEREFORE the Parties agree as follows:

ARTICLE 1 INTERPRETATION

1.1 Defined Terms.

As used in this Agreement, the following terms have the following meanings:

"Acquisition Proposal" means other than the transactions contemplated by this Agreement, any offer, proposal or inquiry (written or oral) from any Person or group of Persons other than the Purchaser (or any affiliate of the Purchaser or any Person acting in concert with the Purchaser or any affiliate of the Purchaser) after the date of this Agreement relating to (a) any sale or disposition (or any lease, long-term supply agreement or other arrangement having the same economic effect as a sale), direct or indirect, of assets representing 20% or more of the consolidated assets or contributing 20% or more of the consolidated revenue of the Company and its Subsidiaries, or of 20% or more of the voting or equity securities of the Company or any of its Subsidiaries (or rights or interests in such voting or equity securities); (b) any take-over bid, exchange offer or other transaction that, if consummated, would result in such Person or group of Persons beneficially owning 20% or more of any class of voting or equity securities of the Company or any of its Subsidiaries; (c) any plan of arrangement, merger, amalgamation, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution, winding up or exclusive license involving the Company or any of its Subsidiaries; or (d) any other similar transaction or series of transactions the Company or any of its Subsidiaries.

"affiliate" has the meaning specified in National Instrument 45-106 - Prospectus and Registration Exemptions.

"Agreement" means this amended and restated arrangement agreement.

"Arrangement" means an arrangement under Section 192 of the CBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations to the Plan of Arrangement made in accordance with the terms of this Agreement or made at the direction of the Court in the Final Order with the prior written consent of the Company and the Purchaser, each acting reasonably.

"Arrangement Resolution" means the special resolution approving the Plan of Arrangement to be considered at the Company Meeting, substantially in the form of Schedule B.

"Articles of Arrangement" means the articles of arrangement of the Company in respect of the Arrangement required by subsection 192(6) of the CBCA to be sent to the Director after the Final Order is made, which shall include the Plan of Arrangement and otherwise be in a form and content satisfactory to the Company and the Purchaser, each acting reasonably.

"Authorization" means, with respect to any Person, any order, permit, approval, consent, waiver, licence or similar authorization of any Governmental Entity having jurisdiction over the Person.

"authorized authority" has the meaning specified in Section 4.7.

"Breaching Party" has the meaning specified in Section 4.6(3).

"Canadian Securities Authority" means the Alberta Securities Commission and any other applicable securities commission or securities regulatory authority of a province or territory of Canada.

"Canadian Securities Laws" means the Securities Act (Alberta) and any other applicable provincial securities Laws.

"CBCA" means the Canada Business Corporations Act.

"Certificate of Arrangement" means the certificate of arrangement to be issued by the Director pursuant to subsection 192(7) of the CBCA in respect of the Articles of Arrangement giving effect to the Arrangement.

"Chad" means the Republic of Chad.

"Collective Agreements" means all collective bargaining agreements or union agreements currently applicable to the Company and/or any of its Subsidiaries and all related documents, including letters or memorandums of understanding, letters of intent or other written communications with bargaining agents for any Company Employee which impose any obligations upon the Company and/or any of its Subsidiaries.

"Company" means Caracal Energy Inc.

"Company Awards" means the DSUs, PSUs and/or RSUs.

"Company Board" means the board of directors of the Company as constituted from time to time.

"Company Board Recommendation" has the meaning specified in Section 2.4(2).

"Company Budget" means the Company Board approved Company capital budget for 2014 as appended to the Company Disclosure Letter.

"Company Change of Control Payments" means obligations of the Company pursuant to all employment or consulting services agreements, director compensation programs, termination, severance, change of control, bonus and retention plans or policies for severance, termination, change of control, vacation pay, bonus or retention payments, and any payments related to any incentive plan, arising out of or in connection with the Arrangement, which obligations and payments (including any withholding Taxes in relation thereto) shall not exceed the amount set out in Section 1.1(a) of the Company Disclosure Letter.

"Company Circular" means the notice of the Company Meeting and accompanying management information circular, including all schedules, appendices and exhibits to, and information incorporated by reference in, such management information circular, to be sent to the Company Shareholders in connection with the Company Meeting, as amended, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement.

"Company Debenture Indenture" means the convertible debenture indenture dated September 13, 2012, between the Company and the Company Debenture Trustee, establishing and setting forth, among other things, the terms of the Company Debentures.

"Company Debentures" means the USD\$173.6 million aggregate principal amount of pre-IPO convertible bonds of the Company with a maturity date of September 30, 2017.

"Company Debentureholders" means the holders of Company Debentures shown from time to time on the registers or accounts maintained by or on behalf of the Company Debenture Trustee or any Person in possession of Company Debentures in bearer form.

"Company Debenture Trustee" means Citicorp Trustee Company Limited, as the trustee under the Company Debenture Indenture.

"Company Disclosure Letter" means the disclosure letter dated the date of this Agreement and delivered by the Company to the Purchaser and Parent with this Agreement.

"Company Employee Amounts" has the meaning specified in Section 2.8(3);

"Company Employees" means the employees of the Company and its Subsidiaries.

"Company Executives" means Gary Guidry, Trevor Peters, Dean Tucker, Ryan Ellson, Tina Antony, Herve Manouan, Tim Mills, Nick Hands, Lawrence West and Jim Evans.

"Company Fairness Opinions" means the opinion of Goldman, Sachs & Co. to the effect that, as of the date of such opinion, and subject to the assumptions, limitations and qualifications contained therein, the Consideration to be received by the Company Shareholders is fair, from a financial point of view, to such holders, and the opinion of RBC Capital Markets to the effect that, as of the date of such opinion, and subject to the assumptions, limitations and qualifications contained therein, the Consideration to be received by the Company Shareholders is fair, from a financial point of view, to such holders.

"Company Filings" means all documents publicly filed under the profile of the Company on SEDAR and all other documents required to be filed by it with any Securities Authority.

"Company Long Term Incentive Plan" means the "Griffiths Energy Incentive Compensation Plan" dated January 1, 2013, as proposed to be amended at the annual general meeting of Company Shareholders to be held on May 14, 2014.

"Company Material Contract" means any Contract: (a) that if terminated or modified or if it ceased to be in effect, would reasonably be expected to have a Material Adverse Effect; (b) relating directly or indirectly to the guarantee of any liabilities or obligations or to indebtedness for borrowed money in excess of \$2,000,000 in the aggregate; (c) restricting the incurrence of indebtedness by the Company or any of its Subsidiaries (including by requiring the granting of an equal and rateable Lien) or the incurrence of any Liens on any properties or assets of the Company or any of its Subsidiaries, or restricting the payment of dividends by the Company; (d) under which the Company or any of its Subsidiaries is obligated to make or expects to receive payments in excess of \$2,000,000 over the remaining term; (e) providing for the establishment, investment in, organization or formation of any joint venture, limited liability company or partnership in which the interest of the Company and/or its Subsidiaries has a fair market value which exceeds \$2,000,000; (f) that creates an exclusive dealing arrangement or right of first offer or refusal; (g) with a Governmental Entity; (h) providing for employment, severance or change in control payments; (i) providing for the purchase, sale or exchange of, or option to purchase, sell or exchange, any property or asset where the purchase or sale price or agreed value or fair market value of such property or asset exceeds \$2,000,000; (j) that limits or restricts (A) the ability of the Company or any Subsidiary to engage in any line of business or carry on business in any geographic area, or (B) the scope of Persons to whom the Company or any of its Subsidiaries may sell products or deliver services; (k) that is made out of the Ordinary Course; or (l) that is otherwise material to the Company and its Subsidiaries, taken as a whole.

"Company Meeting" means the special meeting of Company Shareholders, including any adjournment or postponement of such special meeting in accordance with the terms of this Agreement, to be called and held in accordance with the Interim Order to consider the Arrangement Resolution and for any other purpose as may be set out in the Company Circular and agreed to in writing by the Purchaser.

"Company Optionholders" means the holders of Company Options.

"Company Options" means the outstanding options to purchase Company Shares issued pursuant to the Company Stock Option Plan.

"Company Shareholders" means the registered or beneficial holders of the Company Shares, as the context requires.

"Company Shares" means the common shares in the capital of the Company.

"Company Special Committee" means the committee of independent directors established by the Company Board to consider whether the Arrangement would be in the best interests of the Company and to supervise the Arrangement.

"Company Stock Option Plan" means the Company's stock option plan dated June 30, 2011.

"Company Transaction Costs" means, collectively, all costs of the Company (where incurred, accrued or billed) in connection with the Arrangement including the Company Change of Control Payments, the Company Employee Amounts and including, without limitation, fees and expenses of financial advisors, legal advisors, auditors, engineers or other professionals or consultants, and printing, mailing and other costs and expenses related to the Company Meeting, but excluding any costs related to any litigation or proceedings before the Court or any authorized authority other than in respect of the initial applications for, and receipt of, the Interim Order and Final Order.

"Company Voting Agreements" means the voting and support agreements entered into among the Purchaser and each of the directors of the Company and each of the Company Executives pursuant to which, among other things, such parties have agreed, subject to the terms and conditions of this Agreement, to vote all Company Shares held by them in favour of the Arrangement.

"Company Warrants" means the outstanding management performance warrants and employee performance warrants to purchase Company Shares.

"Confidentiality Agreement" means the confidentiality agreement dated June 27, 2012, between the Company and Glencore Energy UK LTD.

"Consideration" has the meaning specified in Section 2.1.

"Constating Documents" means articles of incorporation, amalgamation, or continuation, as applicable, by-laws and all amendments to such articles or by-laws.

"Contract" means any legally binding agreement, commitment, engagement, contract, franchise, licence, obligation or undertaking (written or oral) to which the Purchaser or any of its Subsidiaries or the Company or any of its Subsidiaries, as the case may be, is a party or by which either Party or any of its Subsidiaries is bound or affected or to which any of their respective properties or assets is subject.

"Corruption Acts" has the meaning specified in Section (18) of Schedule C.

"Court" means the Court of Queen's Bench of Alberta in Calgary, Alberta, or other court as applicable.

"Depositary" means such Person as the Purchaser may appoint to act as depositary for the Arrangement, with the approval of the Company, acting reasonably.

"Director" means the Director appointed pursuant to Section 260 of the CBCA.

"Dissent Rights" means the rights of dissent in respect of the Arrangement described in the Plan of Arrangement.

"DSUs" means the deferred share units granted under the Company Long Term Incentive Plan.

"Effective Date" means the date shown on the Certificate of Arrangement giving effect to the Arrangement.

"Effective Time" means 12:01 a.m. on the Effective Date, or such other time as the Parties agree to in writing before the Effective Date.

"Employee Plans" has the meaning specified in Section (31) of Schedule C.

"English Securities Laws" means the Financial Services and Markets Act 2000, the Financial Services Act 2012, the Listing Rules, the Standards and all rules, regulations, orders and statutory instruments promulgated thereunder.

"Environmental Laws" means all Laws and agreements with Governmental Entities and all other statutory requirements relating to public health or the protection of the environment and all Authorizations issued pursuant to such Laws, agreements or other statutory requirements.

"Executive Officers" has the meaning specified in Section 1.2(6).

"FCA" means the Financial Conduct Authority.

"Final Order" means the final order of the Court in a form acceptable to the Company and the Purchaser, each acting reasonably, approving the Arrangement, as such order may be amended by the Court (with the consent of both the Company and the Purchaser, each acting reasonably) at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended (provided that any such amendment is acceptable to both the Company and the Purchaser, each acting reasonably) on appeal.

"GBP" means the pound sterling, the lawful currency of the United Kingdom.

"Hazardous Substances" means any pollutant, contaminant, waste of any nature, hazardous substance, hazardous material, hazardous recyclable, toxic substance, dangerous substance or dangerous good as defined, judicially interpreted, or identified in or regulated by any Environmental Laws.

"Indemnified Person" has the meaning specified in Section 8.6(1).

"Interim Order" means the interim order of the Court in a form acceptable to the Company and the Purchaser, each acting reasonably, providing for, among other things, the calling and holding of the Company Meeting, as such order may be amended by the Court with the consent of the Company and the Purchaser, each acting reasonably.

"Investment Canada Act Approval" has the meaning specified in Schedule E.

"Lien" means any mortgage, charge, pledge, hypothec, security interest, prior claim, encroachments, option, right of first refusal or first offer, occupancy right, covenant, assignment, lien (statutory or otherwise), defect of title, or restriction or adverse right or claim, or other third party interest or encumbrance of any kind or nature whatsoever and any agreement, option, right or privilege (whether by law, Contract or otherwise) capable of becoming any of the foregoing, in each case, whether contingent or absolute.

"Listing Rules" means the listing rules of the UKLA made pursuant to Part 1V of the Financial Services and Markets Act 2000, as amended.

"LSE" means the London Stock Exchange plc.

"Matching Period" has the meaning specified in Section 5.4(1)(e).

"Material Adverse Effect" means any change, event, occurrence, effect or circumstance that, individually or in the aggregate with other such changes, events, occurrences, effects or circumstances:

(a) is or could reasonably be expected to be material and adverse to the business, operations, results of operations, assets, properties, capitalization, financial condition, liabilities (contingent or otherwise), of the Company and its Subsidiaries, taken as a whole, except any such change, event, occurrence, effect, or circumstance resulting from or arising in connection with:
(i) any change affecting the oil and gas industry as a whole;
(ii) any changes in currency exchange, interest or inflation rates or commodity, securities or general economic, financial, or credit market conditions in Canada or elsewhere;
(iii) any changes in the market price of crude oil, natural gas or related hydrocarbons;
(iv) any change in global, national or regional political conditions (including the outbreak or escalation of war or acts of terrorism);
(v) any change in Law;
(vi) any change in GAAP;
(vii) any natural disaster;
(viii) any action taken by the Purchaser or any of its Subsidiaries or the Company or any of its Subsidiaries, as the case may be, which is required to be taken pursuant to this Agreement;
(ix) the announcement or performance of this Agreement or consummation of the Arrangement;
(x) any change in the market price or trading volume of any securities of the the Company (it being understood that the causes underlying such change in market price may be taken into account in determining whether a Material Adverse Effect has occurred); or
(xi) any matter that has been expressly disclosed by the Company in Section 1.1(a) of the Company Disclosure Letter;

provided, however, that with respect to clauses (i) through to and including (v), such matter does not have a materially disproportionate effect on the Company and its Subsidiaries, taken as a whole, relative to other comparable companies and entities operating in the industries in which the Company and/or its Subsidiaries operate; or

(b) prevents or materially impairs or materially delays or could reasonably be expected to prevent or materially impair or delay the ability of the Company to consummate the transactions contemplated by this Agreement by the Outside Date,

and unless expressly provided in any particular section of this Agreement, references in certain sections of this Agreement to dollar amounts are not intended to be, and shall not be deemed to be, illustrative or interpretive for purposes of determining whether a "Material Adverse Effect" has occurred.

"McDaniel" means McDaniel & Associates, independent petroleum consultants.

"McDaniel Report" means the report of McDaniel dated February 14, 2014 evaluating Chad crude oil reserves and resources of the Company as at December 31, 2013.

"MI 61-101" means Multilateral Instrument 61-101 Protection of Minority Shareholders in Special Transactions.

"Misrepresentation" means an untrue statement of a material fact or an omission to state a material fact required or necessary to make the statements contained therein not misleading in light of the circumstances in which they are made.

"Money Laundering Laws" has the meaning specified in Section (18) of Schedule C.

"officer" has the meaning specified in the Securities Act (Alberta).

"Ordinary Course" means, with respect to an action taken by the Company that such action is consistent with the past practices of the Company and is taken in the ordinary course of the normal day-to-day operations of the business of the Company.

"Outside Date" means October 31, 2014 or such later date as may be agreed to in writing by the Parties.

"Parent" means Glencore International AG.

"Parties" means the Company, the Parent and the Purchaser and "Party" means any one of them.

"Permit" means any license, permit, certificate, consent, order, grant, approval, classification, registration, flagging or other authorization of and from any Governmental Entity.

"Personal Information" has the meaning specified in Section 4.7.

"Petroleum and Natural Gas Interests" means all of the right, title, estate and interest, whether absolute or continent, legal or beneficial, present or future, vested or not, and whether or not an "interest in land" in or to any of the following, by whatever name the same are known:

(a) rights to explore for, drill for, extract, win, produce, take, save or market Petroleum Substances;
(b) rights to a share of the production of Petroleum Substances;
(c) rights to a share of the proceeds of, or to receive payment calculated by reference to, the quantity or value of the production of Petroleum Substances;
(d) rights to acquire any of the rights described in paragraphs (a) to (c) of this definition; and
(e) interests in any rights described in paragraphs (a) to (c) of this definition;

including all interests and rights known as working interests, royalty interests, overriding royalty interests, gross overriding royalty interests, production payments, profits interests, net profits interests, revenue interests, net revenue interests, economic interests and other interests, fractional or undivided interests in any of the foregoing, and all fee simple, leasehold or other interests in any lands.

"Petroleum Substances" means petroleum, natural gas and all related hydrocarbons including all liquid hydrocarbons and all other mineral substances, whether liquid, solid or gaseous and whether hydrocarbons or not (including sulphur and hydrogen sulphide), produced in association with such petroleum, natural gas or related hydrocarbons or found in any water.

"Plan of Arrangement" means the plan of arrangement, substantially in the form of Schedule A, subject to any amendments or variations to such plan made in accordance with Section 8.1 or made at the direction of the Court in the Final Order with the prior written consent of the Company and the Purchaser, each acting reasonably.

"Pre-Acquisition Reorganization" has the meaning specified in Section 4.10.

"PSUs" means the performance share units granted under the Company Long Term Incentive Plan.

"Purchaser" means 8682321 Canada Inc.

"Regulatory Approval" means the approvals listed in Schedule E together with any material Government Approval necessary to complete the Arrangement identified by the Purchaser within ten (10) Business Days following the date hereof.

"Regulatory Approvals and Consents" means the Regulatory Approvals and such other consents and approvals as may be agreed to by the Parties in writing.

"Representative" means any officer, director, employee, representative (including any financial or other adviser) or agent of the Purchaser or of any of its Subsidiaries or the Company or of any of its Subsidiaries, as the case may be.

"Required Approval" has the meaning specified in Section 2.2(b).

"Reverse Termination Fee" has the meaning specified in Section 7.2(4).

"Reverse Termination Fee Event" has the meaning specified in Section 7.2(4).

"RSUs" means the restricted share units granted under the Company Long Term Incentive Plan.

"Sanctioned Country" has the meaning specified in Section (19) of Schedule C.

"Sanctioned Person" has the meaning specified in Section (19) of Schedule C.

"Sanctions" has the meaning specified in Section (19) of Schedule C.

"Sanctions Authority" means the Department of Foreign Affairs and International Trade Canada, the Office of Foreign Assets Control of the U.S. Department of the Treasury, the United Nations Security Council, the European External Action Service of the European Union, Her Majesty's Treasury of the United Kingdom, or any other relevant sanctions authority.

"SEC" means the United States Securities and Exchange Commission.

"SEDAR" means the System for Electronic Document Analysis Retrieval.

"Securities Authority" means the Canadian Securities Authority, the SEC, the FCA and the LSE.

"Securities Laws" means the Canadian Securities Laws, the U.S. Securities Laws and the English Securities Laws, and all other applicable Canadian, U.S. and/or English securities laws, rules and regulations and published policies thereunder and the rules of the LSE.

"Standards" means the admission and disclosure standards made by the LSE and published in its publication entitled "Admission and Disclosure Standards" (as from time to time amended).

"Subsidiary" has the meaning specified in National Instrument 45-106 - Prospectus and Registration Exemptions as in effect on the date of this Agreement.

"Superior Proposal" means any unsolicited bona fide written Acquisition Proposal from a Person who is an arm's length third party to acquire not less than all of the outstanding Company Shares or all or substantially all of the assets of the Company on a consolidated basis that: (a) complies with Securities Laws and did not result from or involve a breach of Article 5; (b) is reasonably capable of being completed without undue delay, taking into account, all financial, legal, regulatory and other aspects of such proposal and the Person making such proposal; (c) in respect of which it has been demonstrated to the satisfaction of the Company Board acting in good faith (after receipt of advice from its financial advisers and its outside legal counsel) that any required financing to complete such Acquisition Proposal will be reasonably likely to be obtained; (d) is not subject to any due diligence condition; and (e) that the Company Board determines, in its good faith judgment, after receiving the advice of its outside legal counsel and financial advisers and after taking into account all the terms and conditions of the Acquisition Proposal, including all legal, financial, regulatory and other aspects of such Acquisition Proposal and the party making such Acquisition Proposal, would, if consummated in accordance with its terms, but without assuming away the risk of non-completion, result in a transaction which is more favourable, from a financial point of view, to the Company Shareholders than the Arrangement (including any amendments to the terms and conditions of the Arrangement proposed by the Purchaser pursuant to Section 5.4(2), if applicable).

"Superior Proposal Notice" has the meaning specified in Section 5.4(1)(c).

"Take or Pay Obligations" means, as of a particular time, all obligations (including the future obligations of the Company or any of its Subsidiaries under "take or pay" or similar provisions) in respect of contracts for the sale of Petroleum Substances allocable to the Petroleum and Natural Gas Interests of the Company or any of its Subsidiaries at such time arising under, in

respect of or related to such contracts whereby the Company or any of its Subsidiaries is obligated to:

(a) sell or deliver Petroleum Substances allocable to any of the Petroleum and Natural Gas Interests of the Company or any of its Subsidiaries without in due course receiving or being entitled to retain full payment therefor at the full price which would otherwise be applicable thereunder; or
(b) pay any Person an amount on account of payments previously made in respect of quantities of Petroleum Substances allocable to the Petroleum and Natural Gas Interests of the Company or any of its Subsidiaries which were not previously delivered.

"Tax Act" means the Income Tax Act (Canada).

"Tax Returns" means any and all returns, reports, declarations, elections, notices, forms, designations, filings, and statements (including estimated tax returns and reports, withholding tax returns and reports, and information returns and reports) filed or required to be filed in respect of Taxes, including any attachment thereto or amendment thereof.

"Terminating Party" has the meaning specified in Section 4.6(3).

"Termination Fee" has the meaning specified in Section 7.2(2).

"Termination Fee Event" has the meaning specified in Section 7.2(2).

"Termination Notice" has the meaning specified in Section 4.6(3).

"TransGlobe" means TransGlobe Energy Corporation.

"TransGlobe Agreement" means the arrangement agreement dated March 15, 2014 by and between the Company and TransGlobe.

"UKLA" means the United Kingdom Listing Authority, a division of the Financial Conduct Authority acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000, as amended.

"U.S. Exchange Act" means the United States Securities Exchange Act of 1934, as amended.

"U.S. Securities Act" means the United States Securities Act of 1933, as amended.

"U.S. Securities Laws" means the U.S. Exchange Act, the U.S. Securities Act or any federal or state securities legislation of the United States and all rules, regulations and order promulgated thereunder.

1.2 Certain Rules of Interpretation.

In this Agreement, unless otherwise specified:

(1) Headings, etc. The provision of a Table of Contents, the division of this Agreement into Articles and Sections and the insertion of headings are for convenient reference only and do not affect the construction or interpretation of this Agreement.
(2) Currency. All references to dollars or to \$ are references to United States dollars unless otherwise specified.
(3) Gender and Number. Any reference to gender includes all genders. Words importing the singular number only include the plural and vice versa.
(4) Certain Phrases and References, etc. The words "including", "includes" and "include" mean "including (or includes or include) without limitation," and "the aggregate of", "the total of", "the sum of", or a phrase of similar meaning means "the aggregate (or total or sum), without duplication, of." Unless stated otherwise, "Article", "Section", and "Schedule" followed by a number or letter mean and refer to the specified Article or Section of or Schedule to this Agreement. The term "Agreement" and any reference in this Agreement to this Agreement or any other agreement or document includes, and is a reference to, this Agreement or such other agreement or document as it may have been, or may from time to time be, amended, restated, replaced, supplemented or novated and includes all schedules to it.
(5) Capitalized Terms. All capitalized terms used in any Schedule or the Company Disclosure Letter have the meanings ascribed to them in this Agreement.
(6) Knowledge. Where any representation or warranty is expressly qualified by reference to the knowledge of the Company, it is deemed to refer to the knowledge of the Executive Officers of the Company, as the case may be, after reasonable inquiry, and such officers shall make such inquiry as is reasonable in the circumstances. For purposes of this

Section 1.2(6) "Executive Officers" of the Company means Gary Guidry, Trevor Peters, Dean Tucker, Ryan Ellson, Tina Antony and Jim Evans.

(7) Accounting Terms. All accounting terms are to be interpreted in accordance with GAAP and all determinations of an accounting nature in respect of the Company required to be made shall be made in a manner consistent with GAAP.
(8) Statutes. Any reference to a statute refers to such statute and all rules and regulations made under it, as it or they may have been or may from time to time be amended or reenacted, unless stated otherwise.
(9) Computation of Time. A period of time is to be computed as beginning on the day following the event that began the period and ending at 4:30 p.m. on the last day of the period, if the last day of the period is a Business Day, or at 4:30 p.m. on the next Business Day if the last day of the period is not a Business Day.
(10) Time References. References to time are to local time, Calgary, Alberta.
(11) Subsidiaries. To the extent any covenants or agreements relate, directly or indirectly, to a Subsidiary of the Company each such provision shall be construed as a covenant by the Company to cause (to the fullest extent to which it is legally capable) such Subsidiary to perform the required action.
(12) Consent. If any provision requires approval or consent of a Party and such approval or consent is not delivered within the specified time limit, the Party whose consent or approval is required shall be conclusively deemed to have withheld its approval or consent.

1.3 Schedules.

(1) The schedules attached to this Agreement form an integral part of this Agreement for all purposes of it.
(2) The Company Disclosure Letter itself and all information contained in it is confidential information and may not be disclosed unless (a) it is required to be disclosed pursuant to Law unless such Law permits the Parties to refrain from disclosing the information for confidentiality or other purposes or (b) a Party needs to disclose it in order to enforce or exercise its rights under this Agreement.

ARTICLE 2 THE ARRANGEMENT

2.1 Arrangement.

The Company and the Purchaser agree that the Arrangement, pursuant to which, among other things, the Company Shareholders will receive a cash payment equal to 5.50 GBP for each Company Share held (the "Consideration"), will be implemented in accordance with and subject to the terms and conditions of this Agreement and the Plan of Arrangement.

2.2 Interim Order.

As soon as reasonably practicable after the date of this Agreement, the Company shall apply in a manner reasonably acceptable to the Purchaser pursuant to Section 192 of the CBCA (and the Company will use its reasonable commercial efforts to do so on or before May 8, 2014) and, in cooperation with the Purchaser, prepare, file and diligently pursue an application for the Interim Order, which must provide, among other things:

(a) for the class of persons to whom notice is to be provided in respect of the Arrangement and the Company Meeting and for the manner in which such notice is to be provided;
(b) that the required level of approval (the "Required Approval") for the Arrangement Resolution shall be 662 /3% of the votes cast on the Arrangement Resolution by Company Shareholders present in person or represented by proxy at the Company Meeting;
(c) that, in all other respects, the terms, restrictions and conditions of the Company's Constating Documents, including quorum requirements and all other matters, shall apply in respect of the Company Meeting;
(d) for the grant of the Dissent Rights to those Company Shareholders who are registered Company Shareholders;
(e) for the notice requirements with respect to the presentation of the application to the Court for the Final Order;
(f) that the Company Meeting may be adjourned or postponed from time to time by the Company in accordance with the terms of this Agreement without the need for additional approval of the Court;
(g) that the record date for the Company Shareholders entitled to notice of and to vote at the Company Meeting will not change in respect of any adjournment(s) of the Company Meeting, unless required by Law; and
(h) for such other matters as the Purchaser may reasonably require, subject to obtaining the prior consent of the Company, such consent not to be unreasonably withheld or delayed.

2.3 The Company Meeting.

(1) The Company shall:
(a) convene and conduct the Company Meeting in accordance with the Interim Order, the Company's Constating Documents, Law and the Listing Rules as soon as reasonably practicable (and the Company will use its reasonable commercial efforts to do so on or before June 8, 2014), and not adjourn, postpone or cancel

(or propose the adjournment, postponement or cancellation of) the Company Meeting without the prior written consent of the Purchaser, except:

(i) in the case of an adjournment, as required for quorum purposes; or
(ii) as required or permitted under Section 2.3(1)(j), Section 4.6(3) or Section 5.4(5).
(b) subject to the terms of this Agreement, solicit proxies, in accordance with Law, in favour of the approval of the Arrangement Resolution and against any resolution submitted by any Company Shareholder that is inconsistent with the Arrangement Resolution;
(c) provide the Purchaser with copies of or access to information regarding the Company Meeting generated by any dealer or proxy solicitation services firm, as requested from time to time by the Purchaser;
(d) consult with the Purchaser in fixing the date of the Company Meeting, give notice to the Purchaser of the Company Meeting and allow the Purchaser's Representatives and legal counsel to attend the Company Meeting;
(e) promptly advise the Purchaser, at such times as the Purchaser may reasonably request and, if requested by the Purchaser, at least on a daily basis on each of the last ten (10) Business Days prior to the date of the Company Meeting, as to the aggregate tally of the proxies received by the Company in respect of the Arrangement Resolution;
(f) promptly advise the Purchaser of any communication (written or oral) from any Company Shareholder in opposition to the Arrangement, written notice of dissent, purported exercise or withdrawal of Dissent Rights, and written communications sent by or on behalf of the Company to any Company Shareholder exercising or purporting to exercise Dissent Rights;
(g) not make any payment or settlement offer, or agree to any payment or settlement prior to the Effective Time with respect to Dissent Rights without the prior written consent of the Purchaser;
(h) not change the record date for the Company Shareholders entitled to vote at the Company Meeting in connection with any adjournment or postponement of the Company Meeting unless required by Law;
(i) at the request of the Purchaser from time to time, provide the Purchaser with a list (in both written and electronic form) of (i) the Company Shareholders, together with their addresses and respective holdings of Company Shares, (ii) the names, addresses and holdings of all Persons having rights issued by the Company to acquire Company Shares (including holders of Company Options and the Company Debentures), and (iii) participants and book-based nominee registrants such as CDS & Co., CEDE & Co. and the Depository Trust Company, and non-

objecting beneficial owners of Company Shares, together with their addresses and respective holdings of Company Shares. The Company shall from time to time require that its registrar and transfer agent furnish the Purchaser with such additional information, including updated or additional lists of Company Shareholders, and lists of securities positions and other assistance as the Purchaser may reasonably request in order to be able to communicate with respect to the Arrangement with the Company Shareholders and with such other Persons as are entitled to vote on the Arrangement Resolution;

(j) at the request of the Purchaser, to the extent permitted by applicable Law, adjourn or postpone the Company Meeting to a date specified by the Purchaser that is not later than fifteen (15) Business Days after the date on which the Company Meeting was originally scheduled and in any event to a date that is not later than five (5) Business Days prior to the Outside Date; and
(k) not propose or submit for consideration at the Company Meeting any business other than the Arrangement without Purchaser's prior written consent.

2.4 The Company Circular.

(1) The Company shall as soon as reasonably practicable following the date of this Agreement (but taking into account the need for the Purchaser to provide the information set out in Section 2.4(4) prepare and complete, in consultation with the Purchaser, the Company Circular together with any other documents required by Law in connection with the Company Meeting and the Arrangement, and the Company shall, promptly after obtaining the Interim Order (and the Company will use its reasonable commercial efforts to do so on or before May 8, 2014), cause the Company Circular and such other documents to be filed and sent to each Company Shareholder and other Person as required by the Interim Order and Law, in each case so as to permit the Company Meeting to be held by the date specified in Section 2.3(1)(a).
(2) The Company shall ensure that the Company Circular complies in all material respects with Law, including applicable Securities Laws, does not contain any Misrepresentation and provides the Company Shareholders with sufficient information to permit them to form a reasoned judgement concerning the matters to be placed before the Company Meeting. Without limiting the generality of the foregoing, the Company Circular must include: (a) a copy of the Company Fairness Opinions; (b) a statement that the Company Board has received the Company Fairness Opinions, and has unanimously, after receiving legal and financial advice, determined that the Arrangement Resolution is in the best interests of the Company and unanimously recommends that the Company Shareholders vote in favour of the Arrangement Resolution (the "Company Board Recommendation"); and (c) a statement that each director and each of the Company Executives (and each other officer that has signed a Company Voting Agreement) intends, in accordance with the Company Voting Agreements, to vote all of such individual's Company Shares in favour of the Arrangement Resolution and against any resolution submitted by any Company Shareholder that is inconsistent with the Arrangement.
(3) The Company shall give the Purchaser and its legal counsel a reasonable opportunity to review and comment on drafts of the Company Circular and other related documents, and shall give reasonable consideration to any comments made by the Purchaser and its legal counsel, and agrees that all information relating solely to the Purchaser included in the Company Circular must be in a form and content satisfactory to the Purchaser, acting reasonably.
(4) The Purchaser and the Parent shall provide all necessary information concerning the Purchaser and the Parent, respectively, that is required by Law to be included by the Company in the Company Circular, any public announcement or regulatory filing or other related documents to the Company in writing, and shall use its reasonable commercial efforts to ensure that such information does not contain any Misrepresentation.
(5) The Purchaser hereby indemnifies and saves harmless the Company, its Subsidiaries and their respective Representatives from and against any and all liabilities, claims, demands, losses, costs, damages and expenses to which the Company, any Subsidiary or any of their respective Representatives may be subject or may suffer as a result of, or arising from, any Misrepresentation or alleged Misrepresentation contained in any information included in the Company Circular that was provided by the Purchaser or the Parent in writing for inclusion in the Company Circular pursuant to Section 2.4(4), including as a result of any order made, or any inquiry, investigation or proceeding instituted by any Securities Authority or other Governmental Entity based on such a Misrepresentation or alleged Misrepresentation.
(6) The Company hereby indemnifies and saves harmless the Purchaser, its Subsidiaries and their respective Representatives from and against any and all liabilities, claims, demands, losses, costs, damages and expenses to which the Purchaser, any Subsidiary or any of their respective Representatives may be subject or may suffer as a result of, or arising from:
(a) any Misrepresentation or alleged Misrepresentation contained in the Company Circular; and
(b) any order made, or any inquiry, investigation or proceeding by any Securities Authority or other Governmental Entity, to the extent based on any Misrepresentation or any alleged Misrepresentation in the Company Circular,

provided, however, that the above noted indemnification obligation of the Company shall not apply to any liabilities, claims, demands, losses, costs, damages and expenses arising as a result of any Misrepresentation or any alleged Misrepresentation in the Company Circular based solely on information supplied in writing by the Purchaser or the Parent to the Company for inclusion in the Company Circular in accordance with Section 2.4(4) and contained in the Company Circular

(7) Each Party shall promptly notify the other Party if it becomes aware that the Company Circular contains a Misrepresentation, or otherwise requires an amendment or supplement. The Parties shall co-operate in the preparation of any such amendment or supplement as required or appropriate, and the Company shall promptly mail, file or otherwise publicly disseminate any such amendment or supplement to the Company Shareholders and, if required by the Court or by Law, file the same with the Securities Authorities or any other Governmental Entity as required.

2.5 Final Order.

The Company shall take all steps necessary or desirable to submit the Arrangement to the Court and diligently pursue an application for the Final Order pursuant to Section 192 of the CBCA, as soon as reasonably practicable, but in any event not later than three (3) Business Days after the Arrangement Resolution is passed at the Company Meeting as provided for in the Interim Order and the conditions in Article 6 have been satisfied or waived by each of the Parties, as applicable.

2.6 Court Proceedings.

In connection with all Court proceedings relating to obtaining the Interim Order and the Final Order, the Company shall:

(1) diligently pursue, and cooperate with the Purchaser in diligently pursuing, the Interim Order and the Final Order;
(2) provide legal counsel to the Purchaser with a reasonable opportunity to review and comment upon drafts of all material to be filed with the Court in connection with the Arrangement, and give reasonable consideration to all such comments;
(3) provide copies of any notice of appearance, evidence or other documents served on the Company or its legal counsel in respect of the application for the Interim Order or the Final Order or any appeal from them, and any notice, written or oral, indicating the intention of any Person to appeal, or oppose the granting of, the Interim Order or the Final Order;
(4) ensure that all material filed with the Court in connection with the Arrangement is consistent with this Agreement and the Plan of Arrangement;
(5) not file any material with the Court in connection with the Arrangement or serve any such material, or agree to modify or amend any material so filed or served, except as contemplated by this Agreement or with the Purchaser's prior written consent, such consent not to be unreasonably withheld, conditioned or delayed, provided the Purchaser is not required to agree or consent to any increase in or variation in the form of the Consideration or other modification or amendment to such filed or served materials that expands or increases the Purchaser's obligations, or diminishes or limits the Purchaser's rights, set forth in any such filed or served materials or under this Agreement;
(6) oppose any proposal from any Person that the Final Order contain any provision inconsistent with this Agreement, and if required by the terms of the Final Order or by

Law to return to Court with respect to the Final Order do so only after notice to, and in consultation and cooperation with, the Purchaser; and

(7) not object to legal counsel to the Purchaser making such submissions on the hearing of the motion for the Interim Order and the application for the Final Order as such legal counsel considers appropriate, provided the Purchaser advises the Company of the nature of any such submissions prior to the hearing and such submissions are consistent with this Agreement and the Plan of Arrangement.

2.7 Treatment of Company Options, RSUs, PSUs, DSUs and Company Warrants.

(1) Subject to the terms and conditions of this Agreement, pursuant to the Arrangement, all Company Options and Company Warrants whether vested or unvested will be cancelled by the Company in exchange for a cash payment by the Company to each holder of a Company Option or Company Warrant in respect of each Company Option or Company Warrant held by such holder, of an amount, if any, equal to the Consideration less the applicable exercise price and net of all Taxes required to be withheld in respect of each Company Option or Company Warrant, as the case may be, and the Company shall take all such reasonable steps as may be necessary or desirable to give effect to the foregoing.
(2) The Company agrees to elect, and the Purchaser agrees to cause the Company to elect, in prescribed form in accordance with subsection 110(1.1) of the Tax Act, that neither the Company nor any person not dealing at arm's length with the Company will deduct in computing its income any amount (other than a designated amount described in subsection 110(1.2) of the Tax Act) in respect of any cash payment to be made by the Company to any Company Optionholder pursuant to this Agreement or the Plan of Arrangement. The Company agrees to file such election in a timely manner with the Minister of National Revenue (Canada) and the Company agrees to provide evidence in writing of such election to each Company Optionholder receiving such a cash payment. In furtherance of the foregoing, each of the Company and the Purchaser agree not to rescind, amend or otherwise modify or seek or nullify any such election.
(3) Subject to the terms and conditions of this Agreement and Section 2.7(4) of the Company Disclosure Letter, pursuant to the Arrangement, all RSUs, whether vested or unvested, will be redeemed by the Company in exchange for a cash payment by the Company to each holder of an RSU, in respect of each RSU held by such holder, of an amount equal to the Consideration net of all Taxes required to be withheld, and the Company shall take all such reasonable steps as may be necessary or desirable to give effect to the foregoing.
(4) Subject to the terms and conditions of this Agreement, pursuant to the Arrangement, all PSUs, whether vested or unvested, and assuming the performance conditions have been met at target, will be redeemed by the Company in exchange for a cash payment by the Company to each holder of a PSU, in respect of each PSU held by such holder, of an amount equal to the Consideration net of all Taxes required to be withheld, and the Company shall take all such reasonable steps as may be necessary or desirable to give effect to the foregoing.

(5) Subject to the terms and conditions of this Agreement and Section 2.7(6) of the Company Disclosure Letter, pursuant to the Arrangement, all DSUs will be redeemed by the Company in exchange for a cash payment by the Company to each holder of a DSU, in respect of each DSU held by such holder, of an amount equal to the Consideration net of all Taxes required to be withheld, and the Company shall take all such reasonable steps as may be necessary or desirable to give effect to the foregoing.

2.8 Employment Matters.

(1) From and after the Effective Time, unless otherwise agreed in writing between the Parties, the Parent and the Purchaser covenant and agree that the Company Employees, unless their employment is terminated, shall be provided with monetary compensation (other than equity compensation plans) not less than that provided to such Company Employees immediately prior to the Effective Time.
(2) From and after the Effective Time, the Parent and the Purchaser covenant and agree to honour and comply in all material respects with the terms of all existing change of control agreements and employment and severance obligations of the Company and its Subsidiaries and all obligations of the Company and its Subsidiaries under the Employee Plans.
(3) Each of the Parent and the Purchaser agrees and acknowledges that the Company shall institute special retention and minimum severance programs in connection with the Arrangement, the particulars of which have been set forth in Section 2.8(3) of the Company Disclosure Letter and, subject to completion of the Arrangement, each of the Parent and the Purchaser covenants and agrees to cause the Company to allocate and pay out to the Company Employees special retention and minimum severance amounts (the "Company Employee Amounts") pursuant to the terms of such bonus programs.

2.9 Articles of Arrangement and Effective Date.

(1) The Company shall amend the Plan of Arrangement from time to time at the reasonable request of the Purchaser, provided that no such amendment is inconsistent with the Interim Order or the Final Order or is prejudicial to the Company Shareholders or other Persons to be bound by the Plan of Arrangement.
(2) The Company shall file the Articles of Arrangement with the Director within two (2) Business Days of the satisfaction or, where not prohibited, the waiver by the applicable Party or Parties in whose favour the condition is, of the conditions set out in Article 6 (excluding conditions that, by their terms, cannot be satisfied until the Effective Date, but subject to the satisfaction or, where not prohibited, the waiver by the applicable Party or Parties in whose favour the condition is, of those conditions as of the Effective Date), unless another time or date is agreed to in writing by the Parties.
(3) The closing of the Arrangement will take place at the offices of legal counsel to the Company, or at such other location as may be agreed upon by the Parties.

2.10 Tax Considerations.

The Purchaser, the Company and the Depositary shall be entitled to deduct or withhold from any dividend or consideration payable to any Company Shareholder or Company Optionholder, such amounts as the Purchaser, the Company or the Depositary is required to deduct or withhold with respect to such payment under the Tax Act or any provision of federal, provincial, territorial, state, local or foreign tax Law, in each case, as amended. To the extent that amounts are so deducted or withheld, such deducted or withheld amounts shall be treated, for all purposes hereof, as having been paid to the Company Shareholders or Company Optionholders in respect of whom such deduction or withholding was made, provided that such deducted or withheld amounts are actually remitted to the appropriate Governmental Entity.

2.11 List of Securityholders

At the reasonable request of Purchaser from time to time, and in compliance with applicable Laws, the Company shall, or shall direct its registrar and transfer agent to, provide Purchaser with a list of the registered Company Shareholders and all other securityholders of the Company, together with their addresses and respective holdings of Company Shares and all other securities of the Company, and with a list of the names and addresses and holdings of all persons having rights issued by the Company to acquire Company Shares and other securities of the Company (including holders of Company Options, RSUs, PSUs, DSUs and Company Warrants), and a list of non-objecting beneficial owners of Company Shares and all other securityholders of the Company, together with their addresses and respective holdings of Company Shares and all other securities of the Company. The Company shall from time to time require that its registrar and transfer agent furnish Purchaser with such additional information, including updated or additional lists of Company Shareholders and lists of holdings and other assistance as Purchaser may reasonably request.

ARTICLE 3 REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company.

(1) Except as set forth in the correspondingly numbered paragraph of the Company Disclosure Letter (it being expressly understood and agreed that the disclosure of any fact or item in any Section of the Company Disclosure Letter shall only be deemed to be an exception to (or, as applicable, disclosure for the purposes of) the representations and warranties of the Company that are contained in the corresponding Section of Schedule C of this Agreement), the Company represents and warrants to the Purchaser and the Parent as set forth in Schedule C and acknowledges and agrees that the Purchaser and the Parent are relying upon such representations and warranties in connection with the entering into of this Agreement.
(2) The representations and warranties of the Company contained in this Agreement shall not survive the completion of the Arrangement and shall expire and be terminated on the earlier of the Effective Time and the date on which this Agreement is terminated in accordance with its terms.

3.2 Representations and Warranties of the Parent and the Purchaser.

(1) Each of the Parent and the Purchaser jointly and severally represents and warrants to the Company as set forth in Schedule D and acknowledges and agrees that the Company is relying upon such representations and warranties in connection with the entering into of this Agreement.
(2) The representations and warranties of the Parent and the Purchaser contained in this Agreement shall not survive the completion of the Arrangement and shall expire and be terminated on the earlier of the Effective Time and the date on which this Agreement is terminated in accordance with its terms.

ARTICLE 4 COVENANTS

4.1 Covenants of the Parent and the Purchaser.

(1) Each of the Parent and the Purchaser shall use its reasonable commercial efforts to take or cause to be taken all actions and to do or cause to be done all things necessary, proper or advisable under Law to consummate the Arrangement as soon as practicable, including:
(a) preparing and filing, as promptly as practicable, all necessary documents, registrations, statements, petitions, filings and applications for the Regulatory Approvals and using its reasonable commercial efforts to obtain and maintain all Regulatory Approvals, and providing or submitting all documentation and information that is required, or in the opinion of the Purchaser, advisable in connection with obtaining the Regulatory Approvals;
(b) using its reasonable commercial efforts to oppose, lift or rescind any injunction, restraining or other order, decree or ruling seeking to restrain, enjoin or otherwise prohibit or adversely affect the consummation of the Arrangement and defend, or cause to be defended, any proceedings to which it is a party or brought against it or its directors or officers challenging the Arrangement or this Agreement; and
(c) carrying out the terms of the Interim Order and the Final Order applicable to it and complying promptly with all requirements imposed by Law on it or its Subsidiaries with respect to this Agreement or the Arrangement.
(2) Each of the Parent and the Purchaser will make all necessary filings and applications under Law, including Securities Laws, required to be made on the part of the Parent and the Purchaser, respectively, in connection with the transactions contemplated herein and shall take all reasonable action necessary to be in compliance with such Law.
(3) Each of the Parent and the Purchaser shall promptly notify the Company of:
(a) any notice or other communication from any Person alleging that the consent (or waiver, permit, exemption, order, approval, agreement, amendment or

confirmation) of such Person is required in connection with this Agreement or the Arrangement;

(b) any notice or other communication from any Governmental Entity in connection with this Agreement (and, subject to Section 4.3(6), the Purchaser shall contemporaneously provide a copy of any such written notice or communication to the Company); or
(c) any filing, actions, suits, claims, investigations or proceedings commenced or, to its knowledge, threatened in respect of this Agreement or otherwise affecting the transactions contemplated hereby.
(4) The Purchaser shall or shall cause the Company to satisfy all of the Company's obligations under the Company Debenture Indenture arising in connection with or at any time following the implementation of the Arrangement.
(5) The Parent or the Purchaser shall pay, or cause to be paid, to TransGlobe within ten (10) days of having received an invoice from TransGlobe in respect of certain out-of-pocket expenses incurred by TransGlobe and its affiliates in connection with the "Arrangement" (as defined in the TransGlobe Agreement), the amount reflected on such invoice, provided that in no event shall such amount exceed CDN\$1.2 million.

4.2 Covenants of the Company.

(1) Until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms, the Company shall conduct business in the Ordinary Course.
(2) Without limiting the generality of Section 4.2(1), and without derogating from the obligations of the Company in Section 6.2, but subject to Law, the Company shall use its reasonable best efforts to preserve intact the current business organization of the Company, keep available the services of the present employees and agents of the Company and maintain good relations with, and the goodwill of, suppliers, customers, landlords, creditors, distributors and all other Persons having business relationships with the Company and, except with the prior written consent of the Purchaser or as required by this Agreement, the Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly:
(a) amend its Constating Documents or, in the case of any Subsidiary which is not a corporation, its similar organizational documents;
(b) split, combine or reclassify any shares of its capital stock or declare, set aside or, subject to Section 4.9, pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) or amend any term of any outstanding debt security;
(c) redeem, repurchase, or otherwise acquire or offer to redeem, repurchase or otherwise acquire any shares of its capital stock, except as required by the terms of its shares and in accordance with such terms;
(d) except as set out in Section 4.2(2)(d) of the Company Disclosure Letter, issue, deliver, sell, pledge or otherwise encumber, or authorize the issuance, delivery, sale, pledge or other encumbrance of any shares of its capital stock or other equity or voting interests, or any options, warrants or similar rights exercisable or exchangeable for or convertible into such capital stock or other equity or voting interests, or any stock appreciation rights, phantom stock awards or other rights that are linked to the price or the value of Company Shares, except for the issuance of Company Shares issuable upon the exercise of the currently outstanding Company Options or Company Warrants or the issuance of Company Shares issuable upon the exercise of the currently outstanding Company Debentures as specified in Section 4.2(2)(d) of the Company Disclosure Letter in accordance with the terms of the Company Options, the Company Warrants and the Company Debentures;
(e) adopt a plan of liquidation or resolutions providing for the liquidation, dissolution, merger, consolidation or reorganization of the Company or any of its Subsidiaries;
(f) acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, in one transaction or in a series of related transactions, assets, securities, properties, interests or businesses having a cost, on a per transaction or series of related transactions basis, in excess of \$1,000,000 and subject to a maximum of \$5,000,000 for all such transactions unless otherwise contemplated by the Company Budget;
(g) sell, lease, transfer or otherwise dispose of any of its assets except for (i) assets which are obsolete and which individually or in the aggregate do not exceed \$5,000,000, (ii) transactions of this nature contemplated by the Company Budget or (iii) assets disposed of in the Ordinary Course; provided that the foregoing shall not restrict the Company's ability to sell, lease, transfer or otherwise dispose of any of its assets as permitted by certain agreements with the Purchaser in relation to existing production sharing contracts to which the Company is party;
(h) make any capital expenditure or commitment to do so which individually exceeds \$1,000,000 or in the aggregate exceeds \$5,000,000 unless otherwise contemplated by the Company Budget; provided that the foregoing shall not restrict the Company's ability to make any capital expenditure or commitment as permitted by certain agreements with the Purchaser in relation to existing production sharing contracts to which the Company is party;
(i) except as set out in Section 4.2(2)(i) of the Company Disclosure Letter, prepay any long-term indebtedness before its scheduled maturity or increase, create, incur, assume or otherwise become liable for any indebtedness for borrowed money or guarantees thereof in an amount, on a per transaction basis or in aggregate, in excess of \$5,000,000, which for greater certainty shall exclude any intercompany indebtedness between the Company and any of its Subsidiaries;
(j) make any loan or advance to, or any capital contribution or investment in, or assume, guarantee or otherwise become liable with respect to the liabilities or obligations of, any Person;
(k) enter into any interest rate, currency, equity or commodity swaps, hedges, derivatives, forward sales contracts or similar financial instruments;
(l) make any bonus or profit sharing distribution or similar payment of any kind (including any Company Options, DSUs, PSUs, RSUs and Company Warrants) except as may be required by the terms of an employment Contract or Employee Plan or as set out in Section 4.2(2)(1) of the Company Disclosure Letter;
(m) make any change in the Company's methods of accounting, except as required by concurrent changes in GAAP;
(n) grant any general increase in the rate of wages, salaries, bonuses or other remuneration of any Company Employees except as may be required by the terms of any employment Contract or as set out in Section 4.2(2)(n) of the Company Disclosure Letter;
(o) except as required by Law or by the terms of the Employee Plans or Contracts in effect on the date of this Agreement: (i) adopt, enter into or amend any Employee Plan (other than entering into an employment agreement in the Ordinary Course with a new employee who was not employed by the Company or a Subsidiary on the date of this Agreement); (ii) pay any benefit to any director or officer of the Company or any of its Subsidiaries or to any Company Employee other than in the Ordinary Course, that is not required under the terms of any Employee Plan in effect on the date of this Agreement or, in each case, as set out in Section 4.2(2)(o) of the Company Disclosure Letter; (iii) grant, accelerate, increase or otherwise amend any payment, award or other benefit payable to, or for the benefit of, any director or officer of the Company or any of its Subsidiaries or to any Company Employee other than in the Ordinary Course; (iv) make any material determination under any Employee Plan that is not in the Ordinary Course; or (v) take or propose any action to effect any of the foregoing;
(p) cancel, waive, release, assign, settle or compromise any material claims or rights;
(q) compromise or settle any litigation, proceeding or governmental investigation relating to the assets or the business of the Company in excess of an aggregate amount of \$200,000;
(r) except as set out in Section 4.2(2)(r) of the Company Disclosure Letter, amend or modify, or terminate or waive any right under, any Company Material Contract or enter into any contract or agreement that would be a Company Material Contract if in effect on the date of this Agreement;
(s) enter into, amend or modify any agreement, other than agreements entered into pursuant to and in accordance with the joint venture agreements entered into

among the Company and affiliates of the Parent, to which the term is for a duration of longer than one (1) year unless the agreement is capable of being terminated at any time within thirty (30) days and without penalty to the Company;

(t) enter into, amend or modify any union recognition agreement, Collective Agreement or similar agreement with any trade union or representative body other than in the Ordinary Course and upon reasonable consultation with the Purchaser;
(u) except as contemplated in Section 4.8 amend, modify or terminate any material insurance policy of the Company or any Subsidiary in effect on the date of this Agreement;
(v) enter into, renew or extend any agreement to retain the services of business development consultants or agents;
(w) authorize, agree, resolve or otherwise commit, whether or not in writing, to do any of the foregoing;
(x) abandon or fail to diligently pursue any application for any material licences, permits, authorizations or registrations;
(y) make, rescind or change any material election with respect to Taxes or file any material amended Tax Returns, settle any material Tax claim or dispute or waive or extend the statute of limitations relating to any Taxes of the Company or any of its Subsidiaries, or enter into any closing agreement regarding Taxes, surrender any right to claim a material refund of Taxes or amend any of its transfer pricing policies; or
(z) the Company shall not take any action or fail to take any action which action or failure to act would result in the material loss, expiration or surrender of, or the loss of any material benefit under, or reasonably be expected to cause any Governmental Entities to institute proceedings for the suspension, revocation or limitation of rights under, any Permits necessary to conduct its business as now conducted; or fail to prosecute with commercially reasonable due diligence any pending applications to any Governmental Entities.
(3) The Company shall use its reasonable commercial efforts to take or cause to be taken all actions and to do or cause to be done all things necessary, proper or advisable under Law to consummate the Arrangement as soon as practicable, including:
(a) using its reasonable commercial efforts to obtain and maintain all third party or other consents, waivers, permits, exemptions, orders, approvals, agreements, amendments or confirmations that are (i) required to be obtained under the Company Material Contracts in connection with the Arrangement or (ii) required in order to maintain the Company Material Contracts in full force and effect following completion of the Arrangement, in each case, on terms that are reasonably satisfactory to the Purchaser, and without paying, and without

committing itself or the Purchaser to pay, any consideration or incur any liability or obligation without the prior written consent of the Purchaser;

(b) preparing and filing, as promptly as practicable, all necessary documents, registrations, statements, petitions, filings and applications for the Regulatory Approvals and using its reasonable commercial efforts to obtain and maintain all Regulatory Approvals, and providing or submitting all documentation and information that is required, or in the reasonable opinion of the Purchaser, advisable in connection with obtaining the Regulatory Approvals.
(c) using its reasonable commercial efforts to oppose, lift or rescind any injunction, restraining or other order, decree or ruling seeking to restrain, enjoin or otherwise prohibit or adversely affect the consummation of the Arrangement and defend, or cause to be defended, any proceedings to which it is a party or brought against it or its directors or officers challenging the Arrangement or this Agreement; and
(d) carrying out the terms of the Interim Order and the Final Order applicable to it and complying promptly with all requirements imposed by Law on it or its Subsidiaries with respect to this Agreement or the Arrangement.
(4) The Company shall use its reasonable commercial efforts to maintain the listing of the Company Shares on the LSE until the Effective Date.
(5) The Company will make all necessary filings and applications under Law, including Securities Laws, required to be made on the part of the Company in connection with the transactions contemplated herein and shall take all reasonable action necessary to be in compliance with such Law.
(6) The Company shall promptly notify the Purchaser of:
(a) any Material Adverse Effect or any change, effect, event, development, occurrence, circumstance or state of facts which would reasonably be expected to have a Material Adverse Effect in respect of the Company;
(b) any notice or other communication from any Person alleging that the consent (or waiver, permit, exemption, order, approval, agreement, amendment or confirmation) of such Person is required in connection with this Agreement or the Arrangement;
(c) any notice or other communication from any Governmental Entity in connection with this Agreement (and, subject to Section 4.3(6), the Company shall contemporaneously provide a copy of any such written notice or communication to the Purchaser); or
(d) any filing, actions, suits, claims, investigations or proceedings commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting the Company.
(7) The Company shall use reasonable commercial efforts to cause to be delivered to the Purchaser on or before the Effective Date:
(a) resignations and mutual releases, effective as of the Effective Date, of each director of the Company and its Subsidiaries in a form acceptable to the Purchaser, acting reasonably; and
(b) the Regulatory Approvals and Consents.
(8) The Company shall promptly notify the Purchaser in writing of any material change (actual, anticipated, contemplated or, to the knowledge of the Company, threatened, financial or otherwise) in its business, operations, affairs, assets, capitalization, financial condition, licenses, permits, rights, privileges or liabilities, whether contractual or otherwise, or of any Governmental Entity or third party complaints, investigations or hearings (or communications indicating that the same may be contemplated), or of any change in any representation or warranty provided by the Company in this Agreement which change is or may be of such a nature to render any representation or warranty misleading or untrue in any material respect, and it shall in good faith discuss with the Purchaser any change in circumstances (actual, anticipated, contemplated, or to the knowledge of the Company, threatened) which is of such a nature that there may be a reasonable question as to whether notice need to be given to the Purchaser pursuant to this provision.

4.3 Mutual Covenants.

(1) Each Party shall use all reasonable commercial efforts to, and shall cause its Subsidiaries to use all reasonable commercial efforts to, satisfy (or cause the satisfaction of) the conditions precedent to its obligations hereunder as set forth in Article 6 to the extent the same is within its control and to take, or cause to be taken, all other action and to do, or cause to be done, all other things necessary, proper or advisable under any Law to complete the Arrangement, including using its reasonable commercial efforts to promptly:
(a) obtain all necessary waivers, consents and approvals required to be obtained by it from parties to credit and loan agreements, leases and other contracts;
(b) obtain all necessary exemptions, consents, approvals and authorizations as are required to be obtained by it under any Law;
(c) effect all necessary registrations and filings and submissions of information requested by Governmental Entities required to be effected by it in connection with the Arrangement and participate and appear in any proceedings of either Party before Governmental Entities;
(d) defend all lawsuits or other legal, regulatory or other proceedings against it challenging or affecting the Arrangement or this Agreement, and oppose, lift or rescind any injunction or restraining order or other order or action seeking to stop,

or otherwise adversely affecting the ability of the Parties to consummate, the Arrangement;

(e) fulfill all conditions and satisfy all provisions of this Agreement and the Arrangement, including delivery of the certificates of their respective officers contemplated by Section 6.2 and Section 6.3; and
(f) co-operate with the other Party in connection with the performance by it and its Subsidiaries of their obligations under this Agreement.
(2) Each Party shall cooperate fully with the other Party and such other Party's legal counsel, recognizing that certain competitively sensitive information shall be exchanged only on a legal counsel only basis and in accordance with the Confidentiality Agreement and any other subsequent written agreement that addresses confidentiality between the Parties, in the preparation of all filings, responses and submissions in relation to any Law, and the Parties shall supply as promptly as practicable any additional information or documentary materials that may be required in that regard.
(3) The Parties shall not engage in any meetings or material communications with any Governmental Entity in relation to the Arrangement without legal counsel for the other Party being advised of same, having been given the opportunity to participate in such meetings or communications, and in any event shall immediately notify and provide copies to the other Party's legal counsel of any communications to or from a Governmental Entity in relation to the Arrangement.
(4) The Parties shall not enter into any agreement or arrangement with a Governmental Entity in relation to the Arrangement without the consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed.
(5) The Parties shall cooperate with one another in connection with obtaining the Regulatory Approvals including by providing or submitting on a timely basis, and in any event within ten (10) days of a request for same by the other Party or by any Governmental Entity, all documentation and information that is required, or in the reasonable opinion of the Purchaser, advisable, in connection with obtaining the Regulatory Approvals and using their best efforts to ensure that such information does not contain a Misrepresentation.
(6) The Parties shall cooperate with and keep one another fully informed as to the status of and the processes and proceedings relating to obtaining the Regulatory Approvals, and shall promptly notify each other of any communication from any Governmental Entity in respect of the Arrangement or this Agreement, and shall not make any submissions or filings, participate in any meetings or any material conversations with any Governmental Entity in respect of any filings, investigations or other inquiries related to the Arrangement or this Agreement unless it consults with the other Party in advance and, to the extent not precluded by such Governmental Entity, gives the other Party the opportunity to review drafts of any submissions or filings, or attend and participate in any communications or meetings. Despite the foregoing, submissions, filings or other written

communications with any Governmental Entity may be redacted as necessary before sharing with the other Party to address reasonable attorney-client or other privilege or confidentiality concerns, provided that a Party must provide external legal counsel to the other Party non-redacted versions of drafts or final submissions, filings or other written communications with any Governmental Entity on the basis that the redacted information will not be shared with its clients.

(7) Each Party shall promptly notify the other Party if it becomes aware that any (a) application, filing, document or other submission for a Regulatory Approval contains a Misrepresentation, or (b) any Regulatory Approval or other order, clearance, consent, ruling, exemption, no-action letter or other approval applied for as contemplated by this Agreement contains, reflects or was obtained following the submission of any application, filing, document or other submission containing a Misrepresentation, such that an amendment or supplement may be necessary or advisable. In such case, each Party shall, in consultation with and subject to the prior approval of the other Party, cooperate in the preparation, filing and dissemination, as applicable, of any such amendment or supplement.
(8) The Parties shall request that the Regulatory Approvals be processed by the applicable Governmental Entity on an expedited basis and, to the extent that a public hearing is held, the Parties shall request the earliest possible hearing date for the consideration of the Regulatory Approvals.
(9) If any objections are asserted with respect to the transactions contemplated by this Agreement under any Law, or if any proceeding is instituted or threatened by any Governmental Entity challenging or which could lead to a challenge of any of the transactions contemplated by this Agreement as not in compliance with any Law, the Parties shall use their reasonable commercial efforts consistent with the terms of this Agreement to resolve such proceeding so as to allow the Effective Time to occur on or prior to the Outside Date.
(10) Despite anything to the contrary contained in this Section 4.3, the Purchaser is under no obligation to take any steps or actions that would, in its sole discretion, affect the Purchaser's right to own, use or exploit its business, operations or assets or those of its affiliates, the Company or the Company's Subsidiaries or to negotiate or agree to the sale, divestiture or disposition by the Purchaser of its business, operations or assets or those of its affiliates, the Company or the Company's Subsidiaries, or to any form of behavioral remedy including an interim or permanent hold separate order.
(11) In connection with the Investment Canada Act Approval, Purchaser shall prepare and file an application for review under Part IV of the Investment Canada Act as promptly as practicable and, in any event within fifteen (15) Business Days after the date of this Agreement (provided that such period will be extended as necessary to the extent of any delay caused by the failure of the Company to provide any information necessary for such filing) and shall use commercially reasonable efforts to obtain Investment Canada Act Approval as soon as practicable, including, if requested to do so by the Investment

Review Division of Industry Canada, offering and agreeing to undertakings typically required in connection with a transaction of this nature.

(12) The Purchaser shall pay all applicable filing fees incurred in connection with the Regulatory Approvals.
(13) Except for non-substantive communications with its shareholders, and subject to its obligations under Section 4.5, the Parties shall, subject to Section 4.3(6), furnish promptly to the other Party or its legal counsel, a copy of each notice, report, schedule or other document delivered, filed or received by it in connection with: (a) the Arrangement; (b) any filings under any Law in connection with the transactions contemplated in this Agreement; and (c) any dealings with Governmental Entities in connection with the transactions contemplated in this Agreement.
(14) Each Party shall use its reasonable commercial efforts to conduct its affairs so that all representations and warranties of such Party shall be true and correct on and as of the Effective Time as if made at that time, provided that any representation and warranty not qualified by materiality shall be true and correct in all material respects.
(15) The Purchaser and the Company shall use their reasonable commercial efforts to make the necessary arrangements for the Company Shares to be de-listed from the LSE promptly, with effect immediately following the acquisition by the Purchaser of the Company Shares, as contemplated by the Arrangement.

4.4 Access to Information; Confidentiality.

(1) Subject to Law, the Company shall give the Purchaser and its Representatives (a) upon reasonable notice, reasonable access during normal business hours to its and its Subsidiaries' (i) premises, (ii) property and assets (including all books and records, whether retained internally or otherwise), (iii) Contracts, leases and other similar arrangements, as applicable, and (iv) senior personnel, so long as the access does not unduly interfere with the Ordinary Course conduct of the business of the Company; and (b) such financial and operating data or other information with respect to the assets or business of the Company that the Purchaser from time to time reasonably requests.
(2) Investigations made by or on behalf of the Purchaser whether under this Section 4.4 or otherwise, will not waive, diminish the scope of, or otherwise affect any representation or warranty made by the Company in this Agreement.
(3) The Purchaser and the Company acknowledge that the Confidentiality Agreement continues to apply and that any information provided under Section 4.4(1) above that is non-public and/or proprietary in nature shall be subject to the terms of the Confidentiality Agreement. If this Agreement is terminated in accordance with its terms, the obligations under the Confidentiality Agreement shall survive the termination of this Agreement.

4.5 Public Communications.

The Parties shall co-operate in the preparation of presentations, if any, to Company Shareholders regarding the Arrangement. Except as required by Law, a Party must not issue any press release or make any other public statement or disclosure with respect to this Agreement or the Arrangement without the consent of the other Party (which consent shall not be unreasonably withheld or delayed), and a Party must not make any filing with any Governmental Entity with respect to this Agreement or the Arrangement without the consent of the other Party (which consent shall not be unreasonably withheld or delayed); provided that any Party that is required to make disclosure by Law shall use its best efforts to give the other Party prior oral or written notice and a reasonable opportunity to review or comment on the disclosure or filing (other than with respect to confidential information contained in such disclosure or filing). The Party making such disclosure shall give reasonable consideration to any comments made by the other Party or its legal counsel, and if such prior notice is not possible, shall give such notice immediately following the making of such disclosure or filing.

4.6 Notice and Cure Provisions.

(1) Each Party shall promptly notify the other Party of the occurrence, or failure to occur, of any event or state of facts which occurrence or failure would, or would be reasonably likely to:
(a) cause any of the representations or warranties of such Party contained in this Agreement to be untrue or inaccurate in any respect at any time from the date of this Agreement to the Effective Time; or
(b) result in the failure to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by such Party under this Agreement.
(2) Notification provided under this Section 4.6 will not affect the representations, warranties, covenants, agreements or obligations of the Parties (or remedies with respect thereto) or the conditions to the obligations of the Parties under this Agreement.
(3) The Purchaser may not elect to exercise its right to terminate this Agreement pursuant to Section 7.1(1)(c)(i) and the Company may not elect to exercise its right to terminate this Agreement pursuant to Section 7.1(1)(d)(i), unless the Party seeking to terminate the Agreement (the "Terminating Party") has delivered a written notice ("Termination Notice") to the other Party (the "Breaching Party") specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which the Terminating Party asserts as the basis for termination. After delivering a Termination Notice, provided the Breaching Party is proceeding diligently to cure such matter and such matter is capable of being cured prior to the Outside Date (with any intentional breach being deemed to be incurable), the Terminating Party may not exercise such termination right until the earlier of (a) the Outside Date, and (b) if such matter has not been cured by the date that is seven (7) Business Days following receipt of such Termination Notice by the Breaching Party, such date. If the Terminating Party delivers a Termination Notice prior to the date of the Company Meeting, unless the Parties agree

otherwise, the Company shall, to the extent permitted by Law, postpone or adjourn the Company Meeting to the earlier of (a) five (5) Business Days prior to the Outside Date and (b) the date that is seven (7) Business Days following receipt of such Termination Notice by the Breaching Party.

4.7 Personal Information.

(1) For the purposes of this Section 4.7, the following definitions shall apply:
(a) "applicable law" means, in relation to any Person, transaction or event, all applicable provisions of Laws, statutes, rules, regulations, official directives and orders of and the terms of all judgments, orders and decrees issued by any authorized authority by which such Person is bound or having application to the transaction or event in question, including applicable privacy laws;
(b) "applicable privacy laws" means any and all applicable Laws relating to privacy and the collection, use and disclosure of Personal Information in all applicable jurisdictions, including the Personal Information Protection and Electronic Documents Act (Canada) and/or any comparable provincial Law including the Personal Information Protection Act (Alberta);
(c) "authorized authority" means, in relation to any Person, transaction or event, any (i) federal, provincial, municipal or local governmental body (whether administrative, legislative, executive or otherwise), both domestic and foreign, (ii) agency, authority, commission, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, (iii) court, arbitrator, commission or body exercising judicial, quasi-judicial, administrative or similar functions, and (iv) other body or entity created under the authority of or otherwise subject to the jurisdiction of any of the foregoing, including any stock or other securities exchange, in each case having jurisdiction over such Person, transaction or event; and
(d) "Personal Information" means information about an identifiable individual.
(2) The Parties hereto acknowledge that they are responsible for compliance at all times with applicable privacy laws which govern the collection, use and disclosure of Personal Information acquired by or disclosed to either Party pursuant to or in connection with this Agreement (the "Disclosed Personal Information").
(3) Prior to the completion of the Arrangement, none of the Parties shall use the Disclosed Personal Information for any purposes other than those related to the performance of this Agreement and the completion of the Arrangement.
(4) Each Party acknowledges and confirms that the disclosure of Personal Information is necessary for the purposes of determining if the Parties shall proceed with the Arrangement, and that the disclosure of Personal Information relates solely to the carrying on of the business and the completion of the Arrangement.
(5) Each Party covenants and agrees to, upon request, use reasonable efforts to advise the other of all documented purposes for which the Disclosed Personal Information was initially collected from or in respect of the individual to which such Disclosed Personal Information relates and all additional documented purposes where the Party has notified the individual of such additional purpose, and where required by applicable law, obtained the consent of such individual to such use or disclosure.
(6) In addition to its other obligations hereunder, each Party receiving Disclosed Personal Information covenants and agrees to: (i) after the completion of the Arrangement, collect, use and disclose the Disclosed Personal Information only for those purposes for which the Disclosed Personal Information was initially collected from or in respect of the individual to which such Disclosed Personal Information relates or for the completion of the Arrangement, unless (A) either Party has first notified such individual of such additional purpose, and where required by applicable law, obtained consent of such individual to such additional purpose, or (B) such use or disclosure is permitted or authorized by applicable law, without notice to, or consent from such individual; (ii) where required by applicable law, promptly notify the individuals to whom the Disclosed Personal Information relates that the Arrangement has taken place and that the Disclosed Personal Information has been disclosed; and (iii) notwithstanding any other provision herein, where the disclosure or transfer of Disclosed Personal Information requires the consent of, or the provision of notice to the individual to which such Disclosed Personal Information relates, to not require or accept the disclosure or transfer of such Disclosed Personal Information until the disclosing Party has first notified such individual of such disclosure or transfer and the purpose for same, and where required by applicable law, obtained the individual's consent to same and to only collect, use and disclose such information to the extent necessary to complete the Arrangement and as authorized or permitted by applicable law.
(7) Each Party acknowledges and confirms that it has and shall continue to employ appropriate technology and take reasonable steps in accordance with applicable Law to prevent accidental loss or corruption of the Disclosed Personal Information, unauthorized input or access to the Disclosed Personal Information, or unauthorized or unlawful collection, storage, disclosure, recording, copying, alteration, removal, deletion, use or other processing of such Disclosed Personal Information.
(8) Subject to the following provisions, each Party shall at all times keep strictly confidential all Disclosed Personal Information provided to it, and shall instruct those employees or advisors responsible for processing such Disclosed Personal Information to protect the confidentiality of such information in a manner consistent with the Parties obligations hereunder. Each Party shall ensure that access to the Disclosed Personal Information shall be restricted to those employees or advisors of the respective party who have a bona fide need to access to such information in order to complete the Arrangement.
(9) Where not prohibited by applicable Law, each Party shall promptly notify the other Parties to this Agreement of all inquiries, complaints, requests for access, and claims of which the Party is made aware in connection with the Disclosed Personal Information. To the extent permitted by applicable Law, the Parties shall fully cooperate with one another,

with the Persons to whom the Personal Information relates, and any authorized authority charged with enforcement of applicable privacy laws, in responding to such inquiries, complaints, requests for access, and claims.

(10) Upon the expiry or termination of this Agreement, or otherwise upon the reasonable request of either Party, the other Party shall forthwith cease all use of the Personal Information acquired by such Party in connection with this Agreement and will return to the party or, at the Party's request, destroy in a secure mariner, the Disclosed Personal Information (and any copies thereof).

4.8 Insurance and Indemnification.

(1) Prior to the Effective Date, the Company shall purchase customary "tail" policies of directors' and officers' liability insurance providing protection no less favourable in the aggregate to the protection provided by the policies maintained by the Company and its Subsidiaries which are in effect immediately prior to the Effective Date and providing protection in respect of claims arising from facts or events which occurred on or prior to the Effective Date and the Parent and the Purchaser shall or shall cause the Company and its Subsidiaries to maintain such tail policies in effect without any reduction in scope or coverage for six (6) years from the Effective Date; provided that neither the Parent nor the Purchaser shall be required to pay any amounts in respect of such coverage prior to the Effective Time and provided further that the cost of such policies shall not exceed 250% of the Company's current annual aggregate premium for policies currently maintained by the Company or its Subsidiaries.
(2) The Parent and the Purchaser shall honour all rights to indemnification or exculpation now existing in favour of present and former employees, officers and directors of the Company and its Subsidiaries to the extent that they are disclosed in Section 4.8(2) of the Company Disclosure Letter, and acknowledges that such rights, to the extent that they are disclosed in the Company Disclosure Letter, shall survive the completion of the Plan of Arrangement and shall continue in full force and effect in accordance with their terms for a period of not less than six (6) years from the Effective Date.
(3) If the Company or any of its Subsidiaries or any of their respective successors or assigns (a) consolidates with or merges into any other Person and is not a continuing or surviving corporation or entity of such consolidation or merger, or (b) transfers all or substantially all of its properties and assets to any Person, the Purchaser shall ensure that any such successor or assign (including, as applicable, any acquirer of substantially all of the properties and assets of the Company or its Subsidiaries) assumes all of the obligations set forth in this Section 4.8.

4.9 Dividends

(1) If, on or after the date hereof, the Company sets a record date for any dividend or other distribution on the Company Shares which is prior to the Effective Time or declares or pays any dividend or other distribution on the Company Shares prior to the Effective Time, (a) to the extent that the amount of such dividend or distribution per Company Share does not exceed the Consideration, the Consideration shall be reduced by the amount of such dividend or distribution, and (b) to the extent that the amount of such dividend or distribution per Company Share exceeds the Consideration, the Company will place such excess amount in escrow with an independent escrow agent acceptable to Purchaser, acting reasonably, for the account of the Purchaser or another person designated by the Purchaser.

4.10 Pre-Acquisition Reorganization

(1) Each of the Company and its subsidiaries, as the case may be, shall, prior to the Effective Date, use commercially reasonable efforts to co-operate with the Purchaser and the Parent in structuring, planning and implementing any reorganization of their respective business, operations, assets and structure as the Purchaser or the Parent may reasonably request (a "Pre-Acquisition Reorganization"), provided that (a) the Purchaser shall provide written notice to the Company of any proposed reorganization at least ten (10) days prior to the Effective Date; (b) any such requested co-operation does not unreasonably interfere with the ongoing operations of the Company and its subsidiaries or delay, impair or prevent the completion of the Arrangement; (c) the Company and its subsidiaries shall not be obligated to take any action that could result in any Taxes being imposed on, or any adverse Tax or other material economic consequences to, any securityholder of the Company incrementally greater than the Taxes or other material economic consequences to such party in connection with the consummation of the Arrangement in the absence of any such action (however, in the circumstance of any such action having any such greater adverse impact, the Company agrees to notify the Purchaser of the same within 24 hours of becoming aware of the same and will use commercially reasonable efforts to cooperate with the Purchaser and the Parent to modify such action in a manner that would not cause such greater adverse impact); (d) the Purchaser shall pay and be responsible for the implementation costs and any direct or indirect costs and liabilities thereof, including Taxes that may be incurred to unwind any such reorganization if the Arrangement is not completed, including reasonable out-ofpocket costs and expenses for filing fees and external counsel and auditors, which may be incurred; (e) such co-operation does not require the directors, officers, employees or agents of the Company and its subsidiaries to take any action in any capacity other than as a director, officer or employee, as the case may be; and (f) in no circumstances shall the Company or its subsidiaries be required to take any action if the Company Board, based on the advice of outside legal counsel, determines that taking such action would be in breach of applicable Laws; and provided further that it is agreed and understood that no such actions shall be considered to constitute a breach of the representations or warranties or covenants of the Company under this Agreement.
(2) The Company shall cooperate with the Purchaser and the Parent to determine the nature of any Pre-Acquisition Reorganization that might be undertaken and the manner in which they may most effectively be undertaken.
(3) Without limiting the generality of the foregoing, the Company acknowledges that the Purchaser may wish to enter into transactions, as part of any Pre-Acquisition Reorganization, designed to facilitate the step-up of the tax basis in certain capital

property of the Company or any of its Subsidiaries for purposes of the Tax Act (the "bump transactions") and agrees subject to Section 4.10(1) and 4.10(2) to (i) co-operate with the Purchaser in order to facilitate the bump transactions and other related reorganizations or transactions which the Purchaser determines would be advisable as part of any Pre-Acquisition Reorganization and (ii) use commercially reasonable efforts to provide any requested information and assistance on a timely basis and to assist in the obtaining of any such information, including without limitation the identity of beneficial owners of Company Shares, as is reasonably requested by the Purchaser.

4.11 Treatment of Convertible Bonds

The Company Debenture Indenture and the rights of Company Debentureholders under each Company Debenture and the Company Debenture Indenture, shall be treated as contemplated by, and in the manner set forth in, the Plan of Arrangement. The Company agrees to deliver the notice attached as Schedule F hereto to (i) each Company Debentureholder and (ii) the Company Debenture Trustee, immediately after the execution of this Agreement.

4.12 Performance of Purchaser

The Parent hereby unconditionally and irrevocably guarantees in favour of the Company, and covenants and agrees to be jointly and severally liable with the Purchaser, for the due and punctual performance of each and every covenant and obligation of the Purchaser under this Agreement.

ARTICLE 5 ADDITIONAL COVENANTS REGARDING NON-SOLICITATION

5.1 Non-Solicitation.

(1) Except as expressly provided in this Article 5, the Company shall not, directly or indirectly, through any Representative, or otherwise, and shall not permit any such Person to:
(a) solicit, initiate, encourage or otherwise facilitate, (including by way of furnishing or providing copies of, access to, or disclosure of, any confidential information, properties, facilities, books or records of the Company or any of its Subsidiaries or entering into any form of agreement, arrangement or understanding) any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to, an Acquisition Proposal;
(b) enter into or otherwise engage or participate in any discussions or negotiations with any Person (other than the other Party) regarding any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to, an Acquisition Proposal;
(c) withdraw, amend, modify or qualify, or publicly propose or state an intention to withdraw, amend, modify or qualify, the Company Board Recommendation;
(d) accept, approve, endorse or recommend, or publicly propose to accept, approve, endorse or recommend, or take no position or remain neutral with respect to, any Acquisition Proposal (it being understood that publicly taking no position or a neutral position with respect to any Acquisition Proposal for a period of no more than three (3) Business Days following the formal announcement of such Acquisition Proposal will not be considered to be in violation of this Section 5.1 provided the Company Board has rejected such Acquisition Proposal and affirmed the Company Board Recommendation before the end of such three (3) Business Day period); or
(e) enter into or publicly propose to enter into any agreement in respect of an Acquisition Proposal.
(2) The Company shall, and shall cause its Subsidiaries and Representatives to, immediately cease and terminate, and cause to be terminated, any solicitation, encouragement, discussion, negotiations, or other activities commenced prior to the date of this Agreement with any Person (other than the Purchaser), including TransGlobe (except as may be required to discharge the Company's obligations to TransGlobe pursuant to the TransGlobe Agreement in connection with the termination thereof), with respect to any inquiry, proposal or offer that constitutes, or may reasonably be expected to constitute or lead to, an Acquisition Proposal, and in connection with such termination shall:
(a) immediately discontinue access to and disclosure of all information, including any confidential information, properties, facilities, books and records of the Company or any of its Subsidiaries; and
(b) within five (5) Business Days request, and exercise all rights it has to require (i) the return or destruction of all copies of any confidential information regarding the Company or any of its Subsidiaries provided to any Person, including TransGlobe, other than the Purchaser, and (ii) the destruction of all material including or incorporating or otherwise reflecting such confidential information regarding the Company or any of its Subsidiaries (except as may have already been publically disclosed in, or as a result of, the TransGlobe Agreement prior to the date hereof) using its reasonable commercial efforts to ensure that such requests are fully complied with in accordance with the terms of such rights or entitlements.
(3) The Company represents and warrants that it has not waived any confidentiality, standstill, non-disclosure or similar agreement or restriction to which the Company or any of its Subsidiaries is a Party, except to permit submissions of expressions of interest prior the date of this Agreement, and covenants and agrees that (a) the Company shall take all necessary action to enforce each confidentiality, standstill, nondisclosure or similar agreement or restriction to which the Company or any of its Subsidiaries is a party, and (b) neither the Company, nor any of its Subsidiaries nor any of their respective Representatives have released or will, without the prior written consent of the Purchaser (which may be withheld or delayed in the Purchaser's sole and absolute discretion), release any Person from, or waive, amend, suspend or otherwise modify such Person's

obligations respecting the Company, or any of its Subsidiaries, under any confidentiality, standstill, non-disclosure or similar agreement or restriction to which the Company or any of its Subsidiaries is a party.

(4) The Company hereby acknowledges and agrees that the Purchaser and its affiliates shall be entitled to acquire additional Company Shares through purchases over a stock exchange provided (i) that the Purchaser does not acquire more than an additional 8.6% of the outstanding Company Shares on a non-diluted basis as at April 14, 2014, (ii) such purchases do not commence before April 16, 2014 and (iii) the purchase price paid for any such additional Company Share shall not exceed the Consideration. The Company hereby waives the standstill provisions of the Confidentiality Agreement to the extent necessary for the Purchaser and its affiliates to enter into this Agreement and make such purchases.

5.2 Notification of Acquisition Proposals.

(1) If the Company or any of its Subsidiaries or any of their respective Representatives, receives or otherwise becomes aware of any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to an Acquisition Proposal, or any request for copies of, access to, or disclosure of, confidential information relating to the Company or any of its Subsidiaries, including but not limited to information, access, or disclosure relating to the properties, facilities, books or records of the Company or any of its Subsidiaries, the Company shall immediately notify the Purchaser, at first orally, and then promptly and in any event within 24 hours in writing, of:
(a) such Acquisition Proposal, inquiry, proposal, offer or request, including a description of its material terms and conditions, the identity of all Persons making the Acquisition Proposal, inquiry, proposal, offer or request; and
(b) at the Purchaser's reasonable request, the status of developments and negotiations with respect to such Acquisition Proposal, inquiry, proposal, offer or request, including any changes, modifications or other amendments to any such Acquisition Proposal, inquiry, proposal, offer or request.

5.3 Responding to an Acquisition Proposal.

(1) Notwithstanding Section 5.1, or any other agreement between the Parties or between the Company and any other Person, including without limitation the Confidentiality Agreement, if at any time, prior to obtaining the approval by the Company Shareholders of the Arrangement Resolution, the Company receives a written Acquisition Proposal the Company may:
(a) contact the Person making such Acquisition Proposal and its Representatives solely for the purposes of clarifying the terms and conditions of such Acquisition Proposal and the likelihood of its consummation so as to determine whether such Acquisition Proposal is, or could reasonably be expected to lead to a Superior Proposal;
(b) engage in or participate in discussions or negotiations with such Person regarding such Acquisition Proposal, and may provide copies of, access to or disclosure of confidential information, properties, facilities, books or records of the Company or its Subsidiaries, if and only if:
(i) the Company Board first determines in good faith, after consultation with its financial advisors and its outside legal counsel, that such Acquisition Proposal constitutes or is reasonably likely to lead to a Superior Proposal;
(ii) such Person was not restricted from making such Acquisition Proposal pursuant to an existing confidentiality, standstill, nondisclosure, use, business purpose or similar restriction with the Company or any of its Subsidiaries;
(iii) the Company has been, and continues to be, in compliance with its obligations under this Article 5;
(iv) prior to providing any such copies, access, or disclosure, the Company enters into a confidentiality and standstill agreement with such Person on terms no more favourable to such Person than the Confidentiality Agreement and any copies, access or disclosure provided to such Person shall have already been (or simultaneously be) provided to the Purchaser; and
(v) the Company promptly provides the Purchaser with:
- (A) two (2) Business Days prior written notice stating the Company's intention to participate in such discussions or negotiations and to provide such copies, access or disclosure; and
- (B) prior to providing any such copies, access or disclosure, a true, complete and final executed copy of the confidentiality and standstill agreement referred to in Section 5.4(1)(a).
(2) Nothing contained in this Agreement shall prevent the Company Board from complying with Section 2.17 of Multilateral Instrument 62-104 - Takeover Bids and Issuer Bids and similar provisions under Securities Laws relating to the provision of a directors' circular in respect of an Acquisition Proposal.

5.4 Superior Proposal Notice and Purchaser's Right to Match.

(1) If the Company receives an Acquisition Proposal that constitutes a Superior Proposal prior to the approval of the Arrangement Resolution by the Company Shareholders, the Company Board may, subject to compliance with Section 7.2, enter into a definitive agreement with respect to such Acquisition Proposal, if and only if:

(a) the Person making the Superior Proposal was not restricted from making such Superior Proposal pursuant to an existing confidentiality, standstill, nondisclosure or similar restriction;
(b) the Company has been, and continues to be, in compliance with its obligations under this Article 5;
(c) the Company has delivered to the Purchaser a written notice of the determination of the Company Board that such Acquisition Proposal constitutes a Superior Proposal and of the intention of the Company Board to enter into such definitive agreement with respect to such Superior Proposal, together with a written notice regarding the value and financial terms that the Company Board in consultation with its financial advisors, has determined should be ascribed to any non-cash consideration offered under the Acquisition Proposal (the "Superior Proposal Notice");
(d) the Company has provided the Purchaser with a copy of the definitive agreement for the Superior Proposal and all supporting agreements, if any;
(e) at least five (5) Business Days (the "Matching Period") have elapsed from the date that is the later of the date on which the Purchaser received the Superior Proposal Notice and the date on which it received all of the materials set forth in Section 5.4(1)(c);
(f) during any Matching Period, the Purchaser has had the opportunity (but not the obligation), in accordance with Section 5.4(2), to offer to amend this Agreement and the Arrangement in order for such Acquisition Proposal to cease to be a Superior Proposal;
(g) if the Purchaser has offered to amend this Agreement and the Arrangement under Section 5.4(2), the Company Board has determined in good faith, after consultation with their outside legal counsel and financial advisers, that such Acquisition Proposal continues to constitute a Superior Proposal compared to the terms of the Arrangement as proposed to be amended by the Purchaser under Section 5.4(2);
(h) after the Matching Period, the Company Board has determined in good faith, after consultation with outside legal counsel that it is necessary for the Company Board to enter into a definitive agreement with respect to such Superior Proposal in order to properly discharge its fiduciary duties; and
(i) prior to or concurrently with entering into such definitive agreement the Company terminates this Agreement pursuant to Section 7.1(1)(d)(ii) and pays the Termination Fee pursuant to Section 7.2.
(2) During the Matching Period, or such longer period as the Company may approve in writing for such purpose: (a) the Company Board shall review any offer under Section 5.4(1)(f) to amend the terms of this Agreement and the Arrangement in good

faith in order to determine whether such proposal would, upon acceptance, result in the Acquisition Proposal previously constituting a Superior Proposal ceasing to be a Superior Proposal; and (b) the Company shall negotiate in good faith with the Purchaser to make such amendments to the terms of this Agreement and the Arrangement as would enable the Purchaser to proceed with the transactions contemplated by this Agreement on such amended terms. If the Company Board determines that such Acquisition Proposal would cease to be a Superior Proposal, it shall promptly so advise the Purchaser and the parties shall amend this Agreement to reflect such offer, and shall take and cause to be taken all such actions as are necessary to give effect to the foregoing.

(3) Each successive amendment to any Acquisition Proposal shall constitute a new Acquisition Proposal for the purposes of this Section 5.4, and, if applicable, the Purchaser shall be afforded a new five (5) Business Day Matching Period from the later of the date on which the Purchaser received the Superior Proposal Notice and a copy of the proposed definitive agreement for the new Superior Proposal from the Company.
(4) The Company Board shall promptly reaffirm the Company Board Recommendation by press release after any Acquisition Proposal which is not determined to be a Superior Proposal is publicly announced or it determines that a proposed amendment to the terms of this Agreement as contemplated under Section 5.4(2) would result in an Acquisition Proposal no longer being a Superior Proposal. The Purchaser and its outside legal shall be provided with a reasonable opportunity to review the form and content of any such press release and all reasonable amendments to such press release as requested by the Purchaser and its legal counsel shall be made to such press release.
(5) If the Company provides a Superior Proposal Notice to the Purchaser after a date that is less than five (5) Business Days before the Company Meeting, the Company shall either proceed with or shall postpone the Company Meeting, as directed by the Purchaser, acting reasonably, to a date that is not more than five (5) Business Days after the scheduled date of the Company Meeting but before the Outside Date, to the extent permitted by Law.

5.5 Breach by Subsidiaries and Representatives.

Without limiting the generality of the foregoing, the Company shall advise the Company's Subsidiaries and Representatives of the prohibitions set out in this Article 5 and any violation of the restrictions set forth in this Article 5 by a Subsidiary or Representative of the Company shall be deemed to be a breach of this Article 5 by the Company.

ARTICLE 6 CONDITIONS

6.1 Mutual Conditions Precedent.

The Parties are not required to complete the Arrangement unless each of the following conditions is satisfied on or prior to the Effective Time, which conditions may only be waived, in whole or in part, by the mutual consent of each of the Parties:

(1) Arrangement Resolution. The Arrangement Resolution has been approved and adopted by the Company Shareholders at the Company Meeting in accordance with the Interim Order.
(2) Interim and Final Order. The Interim Order and the Final Order have each been obtained on terms consistent with this Agreement, and have not been set aside or modified in a manner unacceptable to either the Company or the Purchaser, each acting reasonably, on appeal or otherwise.
(3) Regulatory Approvals. The Regulatory Approvals shall have been obtained.
(4) Illegality. No Law is in effect that makes the consummation of the Arrangement illegal or otherwise prohibits or enjoins the Company or the Purchaser from consummating the Arrangement.

6.2 Additional Conditions Precedent to the Obligations of the Purchaser.

The Purchaser is not required to complete the Arrangement unless each of the following conditions is satisfied on or before the Effective Time, which conditions are for the exclusive benefit of the Purchaser and may only be waived, in whole or in part, by the Purchaser in its sole discretion:

(1) Representations and Warranties. (i) The representations and warranties of the Company set forth in this Agreement were true and correct as of the date of this Agreement and are true and correct as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of such specified date), except to the extent that the failure or failures of such representations and warranties to be so true and correct, individually or in the aggregate, would not have a Material Adverse Effect (and, for this purpose, any reference to "material", "Material Adverse Effect" or other concepts of materiality in such representations and warranties shall be ignored) and (ii) the representations and warranties of the Company set forth in Sections (1), (2), (3), (5), (6) and (8) of Schedule C were true and correct as of the date of this Agreement and are true and correct as of the Effective Time: (A) to the extent qualified by "Material Adverse Effect", in all respects; and (B) in all other cases, in all material respects (and, for this purpose, any reference to "material" or other concepts of materiality in such representations and warranties shall be ignored) in each case, except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of such specified date; and the Company has delivered a certificate confirming same to the Purchaser, executed by two (2) senior officers of the Company (in each case without personal liability) addressed to the Purchaser and dated the Effective Date.
(2) Performance of Covenants. The Company has fulfilled or complied in all material respects with each of the covenants of the Company contained in this Agreement to be fulfilled or complied with by it on or prior to the Effective Time, and has delivered a certificate confirming same to the Purchaser, executed by two (2) senior officers of the

Company (in each case without personal liability) addressed to the Purchaser and dated the Effective Date.

(3) No Legal Action. There is no action or proceeding pending or threatened by any Person (other than the Purchaser) in any jurisdiction that is reasonably likely to:
(a) cease trade, enjoin, prohibit, or impose any limitations, damages or conditions on, the Purchaser's ability to acquire, hold, or exercise full rights of ownership over, any Company Shares, including the right to vote the Company Shares;
(b) prohibit or restrict the Arrangement, or the ownership or operation by the Purchaser of a material portion of the business or assets of the Purchaser or any of its affiliates or the Company or any of its Subsidiaries, or compel the Purchaser to dispose of or hold separate any material portion of the business or assets of the Purchaser or any of its affiliates or the Company or any of its Subsidiaries as a result of the Arrangement; or
(c) prevent or materially delay the consummation of the Arrangement, or if the Arrangement is consummated, have a Material Adverse Effect.
(4) Dissent Rights. Dissent Rights have not been exercised with respect to more than 5% of the issued and outstanding Company Shares.
(5) Other Conditions:
(a) Company Options. The Company Stock Option Plan shall have terminated.
(b) Company Transaction Costs. The Company Transaction Costs do not exceed \$27,600,000.

6.3 Additional Conditions Precedent to the Obligations of the Company.

The Company is not required to complete the Arrangement unless each of the following conditions is satisfied on or before the Effective Time, which conditions are for the exclusive benefit of the Company and may only be waived, in whole or in part, by the Company in its sole discretion:

(1) Representations and Warranties. The representations and warranties of the Purchaser set forth in this Agreement were true and correct as of the date of this Agreement and are true and correct as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of such specified date), except to the extent that the failure or failures of such representations and warranties to be so true and correct, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the ability of the Purchaser to consummate the Arrangement and perform its obligations hereunder (and, for this purpose, any reference to "material", "material adverse effect" or other concepts of materiality in such representations and warranties shall be ignored); and the Purchaser has delivered a certificate confirming same to the Company, executed by two (2) senior

officers of the Purchaser (in each case without personal liability) addressed to the Company and dated the Effective Date.

(2) Performance of Covenants. The Purchaser has fulfilled or complied in all material respects with each of the covenants of the Purchaser contained in this Agreement to be fulfilled or complied with by it on or prior to the Effective Time, and has delivered a certificate confirming same to the Company, executed by two (2) senior officers of the Purchaser (in each case without personal liability) addressed to the Company and dated the Effective Date.
(3) No Legal Action. There is no action or proceeding pending or threatened by any Person (other than the Company) in any jurisdiction that is reasonably likely to prohibit or restrict the Arrangement, or prevent or materially delay the consummation of the Arrangement.

6.4 Satisfaction of Conditions.

The conditions precedent set out in Section 6.1, Section 6.2 and Section 6.3 will be conclusively deemed to have been satisfied, waived or released when the Certificate of Arrangement is issued by the Director.

ARTICLE 7 TERM AND TERMINATION

7.1 Termination.

(1) This Agreement may be terminated prior to the Effective Time by:
(a) the mutual written agreement of the Parties; or
(b) either the Company or the Purchaser if:
- (i) the Required Approval is not obtained at the Company Meeting in accordance with the Interim Order provided that a Party may not terminate this Agreement pursuant to this Section 7.1(1)(b)(i) if the failure to obtain the Required Approval has been caused by, or is a result of, a breach by such Party of any of its representations or warranties or the failure of such Party to perform any of its covenants or agreements under this Agreement;
- (ii) after the date of this Agreement, any Law is enacted, made, enforced or amended, as applicable, that makes the consummation of the Arrangement illegal or otherwise permanently prohibits or enjoins the Company or the Purchaser from consummating the Arrangement, and such Law has, if applicable, become final and non-appealable; or
- (iii) the Effective Time does not occur on or prior to the Outside Date, provided that a Party may not terminate this Agreement pursuant to this Section 7.1(1)(b)(iii) if the failure of the Effective Time to so occur has

been caused by, or is a result of, a breach by such Party of any of its representations or warranties or the failure of such Party to perform any of its covenants or agreements under this Agreement.

(c) the Purchaser if:
(i) a breach of any representation or warranty or failure to perform any covenant or agreement on the part of the Company under this Agreement occurs that would cause any condition in Section 6.1 or Section 6.2 not to be satisfied, and such breach or failure is incapable of being cured on or prior to the Outside Date or is not cured in accordance with the terms of Section 4.6(3); provided that the Purchaser is not then in breach of this Agreement so as to cause any condition in Section 6.3(1) or Section 6.3(2) not to be satisfied;
(ii) the Company is in material breach of any representation or warranty in Section (18) or Section (19) of Schedule C;
(iii) the Company Board or any committee of the Company Board fails to unanimously recommend or withdraws, amends, modifies or qualifies, publicly proposes or states its intention to do so, or fails to publicly reaffirm (without qualification) within two (2) Business Days after having been requested in writing by the Purchaser to do so, the Company Board Recommendation, or takes no position or a neutral position with respect to an Acquisition Proposal in respect of the Company for more than two (2) Business Days after first learning of an Acquisition Proposal, or takes any other action that is or becomes disclosed publicly and which can reasonably be interpreted to indicate that the Company Board or a committee of the Company Board does not support the Arrangement and this Agreement or does not believe that the Arrangement and this Agreement are in the best interests of the Company Shareholders, or the Company willfully or intentionally breaches Section 5.1(1) in any respect or, the Company Board or any committee of the Company Board resolves or proposes to take any of the foregoing actions;
(iv) any event occurs as a result of which the conditions set forth in Section 6.2(4) or Section 6.2(5) are not capable of being satisfied by the Outside Date; or
(v) there has occurred a Material Adverse Effect in respect of the Company.
(d) the Company if:
(i) a breach of any representation or warranty or failure to perform any covenant or agreement on the part of the Parent or the Purchaser under this Agreement occurs that would cause any condition in Section 6.1 or Section 6.3 not to be satisfied, and such breach or failure is incapable of being cured or is not cured on or prior to the Outside Date in accordance

with the terms of Section 4.6(3); provided that the Company is not then in breach of this Agreement so as to cause any condition in Section 6.2(1) or Section 6.2(2) not to be satisfied; or

(ii) prior to the approval by the Company Shareholders of the Arrangement Resolution, the Company Board authorizes the Company to enter into a written agreement (other than a confidentiality agreement permitted by and in accordance with Section 5.3) with respect to a Superior Proposal, provided the Company is then in compliance with Article 5 and that prior to or concurrent with such termination the Company pays the Termination Fee in accordance with Section 7.2.

7.2 Termination Fees.

(1) Despite any other provision in this Agreement relating to the payment of fees and expenses, including the payment of brokerage fees, if a Termination Fee Event occurs, the Company shall pay the Parent the Termination Fee in accordance with Section 7.2(3), and if a Reverse Termination Fee Event occurs, the Purchaser shall pay the Company the Reverse Termination Fee in accordance with Section 7.2(5).
(2) For the purposes of this Agreement, "Termination Fee" means \$15,000,000, less the amount of any non-resident withholding required by Law relating to Taxes which is concurrently remitted by the Company to the relevant Governmental Entity, and "Termination Fee Event" means the termination of this Agreement:
(a) by the Purchaser, pursuant to Section 7.1(1)(c)(ii) or Section 7.1(1)(c)(iii);
(b) by the Company, pursuant to Section 7.1(1)(d)(ii);
(c) by the Company or the Purchaser pursuant to Section 7.1(1)(b)(i) if, prior to such termination, an Acquisition Proposal in respect of the Company is publicly announced by any Person other than the Purchaser or any of its affiliates and within 365 days following the date of such termination, (i) an Acquisition Proposal (whether or not such Acquisition Proposal is the same Acquisition Proposal referred to in this clause above) is consummated, in respect of the Company, or (ii) the Company or one or more of its Subsidiaries, directly or indirectly, in one or more transactions, enters into a Contract in respect of an Acquisition Proposal;
(d) by the Purchaser pursuant to Section 7.1(1)(c)(i) in the case of a breach of any representation or warranty under this Agreement; or
(e) by the Purchaser pursuant to Section 7.1(1)(c)(i) due to failure to perform any covenant by the Company under this Agreement that (i) individually or in the aggregate, causes or would reasonably be expected to cause a Material Adverse Effect in respect of the Company or (ii) was wilful and intentional.
(3) The Termination Fee shall be paid by the Company to the Parent as follows, by wire transfer of immediately available funds, if a Termination Fee Event occurs due to:
(a) a termination of this Agreement described in Section 7.2(2)(a), Section 7.2(2)(d) or Section 7.2(2)(e), within two (2) Business Days of the occurrence of such Termination Fee Event;
(b) a termination of this Agreement described in Section 7.2(2)(b), prior to or simultaneously with the occurrence of such Termination Fee Event; and
(c) a termination of this Agreement described in Section 7.2(2)(c) on or prior to the earlier of the consummation of the Acquisition Proposal or the entering into of the Contract referred to in Section 7.2(2)(c).
(4) For the purposes of this Agreement, "Reverse Termination Fee" means \$15,000,000, and "Reverse Termination Fee Event" means the termination of this Agreement:
(a) by the Company pursuant to Section 7.1(1)(d)(i) in the case of a breach of any representation or warranty under this Agreement; or
(b) by the Company pursuant to Section 7.1(1)(d)(i) due to the failure to perform any covenant by the Purchaser under this Agreement that (i) individually or in the aggregate, has or would reasonably be expected to have a material adverse effect on the ability of the Purchaser to consummate the Arrangement and perform its obligations hereunder or (ii) was willful and intentional; or
(c) by the Company pursuant to Section 7.1(1)(b)(iii) as a result of the failure of the Purchaser to obtain Investment Canada Act Approval.
(5) The Reverse Termination Fee shall be paid by the Purchaser to the Company by wire transfer of immediately available funds within two (2) Business Days of the occurrence of such Reverse Termination Fee Event.
(6) Each Party acknowledges that the agreements contained in this Section 7.2 are an integral part of the transactions contemplated by this Agreement, and that without these agreements the Parties would not enter into this Agreement, and that the amounts set out in this Section 7.2 represent liquidated damages which are a genuine pre-estimate of the damages, including opportunity costs, which the Parent will suffer or incur as a result of the event giving rise to such damages and resultant termination of this Agreement, and is not a penalty. Each Party irrevocably waives any right it may have to raise as a defence that any such liquidated damages are excessive or punitive.

7.3 Effect of Termination/Survival.

If this Agreement is terminated pursuant to Section 7.1, this Agreement shall become void and of no further force or effect without liability of any Party (or any shareholder, director, officer, employee, agent, consultant or representative of such Party) to any other Party to this Agreement, except that: (a) Section 4.7 shall survive for a period of six (6) years following such

termination; and (b) this Section 7.3, Section 7.2 and Section 8.2 through to and including Section 8.14, shall survive, and provided further that no Party shall be relieved of any liability for any wilful and material breach by it of this Agreement.

ARTICLE 8 GENERAL PROVISIONS

8.1 Amendments.

This Agreement and the Plan of Arrangement may, at any time and from time to time before or after the holding of the Company Meeting but not later than the Effective Time, be amended by mutual written agreement of the Parties, and any such amendment may, without limitation:

(a) change the time for performance of any of the obligations or acts of the Parties;
(b) modify any representation or warranty contained in this Agreement or in any document delivered pursuant to this Agreement;
(c) modify any of the covenants contained in this Agreement and waive or modify performance of any of the obligations of the Parties; and/or
(d) modify any mutual conditions contained in this Agreement.

8.2 Expenses and Expense Reimbursement.

All out-of-pocket third party transaction expenses incurred in connection with this Agreement and the Plan of Arrangement, including all costs, expenses and fees of the Company incurred prior to or after the Effective Date (but expressly excluding those amounts contemplated by Section 4.1(5)) in connection with, or incidental to, the Plan of Arrangement, including the reverse termination fee payable by the Company pursuant to the TransGlobe Agreement, shall be paid by the Party incurring such expenses, whether or not the Arrangement is consummated.

8.3 Notices.

Any notice, or other communication given regarding the matters contemplated by this Agreement must be in writing, sent by personal delivery, courier or facsimile (but not by electronic mail and addressed:

(a) to the Parent or Purchaser at:

8682321 Canada Inc. Baarermattstrasse 3 CH-6340 Baar Switzerland

Attention: Ken Klassen Telephone: +41 41 709 2000 Facsimile: +41 41 709 2621 Email: [email protected]

Glencore UK Ltd 50 Berkeley St London W1J 8HD United Kingdom

Attention: Gary Middleton and Guy Casteels Telephone: +44 0207 935 4455 Facsimile: +44 0207 412 3310 Email: [email protected]/[email protected]

with a copy to (which shall not constitute notice):

Torys LLP Suite 3000, 79 Wellington Street West Toronto, Ontario M5K 1N2

Attention:	James Scarlett and John Emanoilidis
Telephone:	(416) 865-0040
Facsimile:	(416) 865-7380
Email:	[email protected] / [email protected]

(b) to the Company at:

Caracal Energy Inc. Suite 2100, 555 - 4th Avenue SW Calgary, AB T2P 3E7

Attention: Chief Financial Officer Telephone: (403) 724-7228 Facsimile: (403) 262-7534

with a copy (which shall not constitute notice) to:

Stikeman Elliott LLP 4300 Bankers Hall West 888 - 3rd Street S.W. Calgary, Alberta T2P 5C5

Attention: Christopher Nixon/Keith R. Chatwin Telephone: (403) 266-9017 Facsimile: (403) 266-9034 Email: [email protected] / [email protected]

Any notice or other communication is deemed to be given and received (i) if sent by personal delivery or same day courier, on the date of delivery if it is a Business Day and the delivery was made prior to 4:00 p.m. (local time in place of receipt) and otherwise on the next Business Day, (ii) if sent by overnight courier, on the next Business Day, or (iii) if sent by facsimile, on the Business Day following the date of confirmation of transmission by the originating facsimile. A Party may change its address for service from time to time by providing a notice in accordance with the foregoing. Any subsequent notice or other communication must be sent to the Party at its changed address. Any element of a Party's address that is not specifically changed in a notice will be assumed not to be changed. Sending a copy of a notice or other communication to a Party's legal counsel as contemplated above is for information purposes only and does not constitute delivery of the notice or other communication to that Party. The failure to send a copy of a notice or other communication to legal counsel does not invalidate delivery of that notice or other communication to a Party.

8.4 Time is of the Essence.

Time is of the essence in this Agreement.

8.5 Injunctive Relief.

The Parties agree that irreparable harm would occur for which money damages would not be an adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that, before the termination of this Agreement pursuant to Section 7.1, the Parties shall be entitled to injunctive and other equitable relief to prevent breaches of this Agreement, and to enforce compliance with the terms of this Agreement, this being in addition to any other remedy to which the Parties may be entitled at law or in equity.

8.6 Third Party Beneficiaries.

(1) Except as provided in, Section 2.4(6), Section 2.7(2) and Section 4.8 which, without limiting their terms, are intended as stipulations for the benefit of the third Persons mentioned in such provisions (such third Persons referred to in this Section 8.6 as the "Indemnified Persons"), the Company and the Purchaser intend that this Agreement will not benefit or create any right or cause of action in favour of any Person, other than the Parties and that no Person, other than the Parties, shall be entitled to rely on the provisions of this Agreement in any action, suit, proceeding, hearing or other forum.
(2) Despite the foregoing, the Purchaser acknowledges to each of the Indemnified Persons their direct rights against it under Section 4.8, of this Agreement, which are intended for the benefit of, and shall be enforceable by, each Indemnified Person, his or her heirs and his or her legal representatives, and for such purpose, the Company confirms that it is acting as trustee on their behalf, and agrees to enforce such provisions on their behalf. The Parties reserve their right to vary or rescind the rights at any time and in any way whatsoever, if any, granted by or under this Agreement to any Person who is not a Party, without notice to or consent of that Person, including any Indemnified Person.
(3) Despite the foregoing, the Company acknowledges to each of the Indemnified Persons their direct rights against it under Section 2.4(6), Section 2.7(2) and Section 4.8 of this Agreement, which are intended for the benefit of, and shall be enforceable by, each Indemnified Person, his or her heirs and his or her legal representatives, and for such

purpose, the Purchaser confirms that it is acting as trustee on their behalf, and agrees to enforce such provisions on their behalf. The Parties reserve their right to vary or rescind the rights at any time and in any way whatsoever, if any, granted by or under this Agreement to any Person who is not a Party, without notice to or consent of that Person, including any Indemnified Person.

8.7 Waiver.

No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision (whether or not similar). No waiver will be binding unless executed in writing by the Party to be bound by the waiver. A Party's failure or delay in exercising any right under this Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not preclude a Party from any other or further exercise of that right or the exercise of any other right.

8.8 Entire Agreement.

This Agreement, together with the Confidentiality Agreement, constitutes the entire agreement between the Parties with respect to the transactions contemplated by this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties. There are no representations, warranties, covenants, conditions or other agreements, express or implied, collateral, statutory or otherwise, between the Parties in connection with the subject matter of this Agreement, except as specifically set forth in this Agreement. The Parties have not relied and are not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Agreement.

8.9 Successors and Assigns.

(1) This Agreement becomes effective only when executed by the Company and the Purchaser. After that time, it will be binding upon and enure to the benefit of the Company, the Purchaser and their respective successors and permitted assigns.
(2) No party to this Agreement shall assign any of its rights or obligations under this Agreement without the prior written consent of the other parties, provided that the Purchaser may, without the consent of the Company assign its rights, interests and obligations under this Agreement to any of its affiliates, if such affiliate delivers to the Company an instrument in writing that it is bound by and shall perform the obligations of the Purchaser under this Agreement as if it were an original signatory hereto. In the event of an assignment contemplated by this Section 8.9(2) any reference in this Agreement to the "Purchaser" shall be deemed to include its affiliate transferee.

8.10 Severability.

If any provision of this Agreement is determined to be illegal, invalid or unenforceable by an arbitrator or any court of competent jurisdiction, that provision will be severed from this Agreement and the remaining provisions shall remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.

8.11 Governing Law.

(1) This Agreement will be governed by and interpreted and enforced in accordance with the laws of the Province of Alberta and the federal laws of Canada applicable therein.
(2) Each Party irrevocably attorns and submits to the exclusive jurisdiction of the Alberta courts situated in the City of Calgary and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum.

8.12 Rules of Construction.

The Parties to this Agreement waive the application of any Law or rule of construction providing that ambiguities in any agreement or other document shall be construed against the party drafting such agreement or other document.

8.13 No Liability.

No director or officer of the Purchaser shall have any personal liability whatsoever to the Company under this Agreement or any other document delivered in connection with the transactions contemplated hereby on behalf of the Purchaser. No director or officer of the Company or any of its Subsidiaries shall have any personal liability whatsoever to the Purchaser under this Agreement or any other document delivered in connection with the transactions contemplated hereby on behalf of the Company or any of its Subsidiaries.

8.14 Language.

The Parties expressly acknowledge that they have requested that this Agreement and all ancillary and related documents thereto be drafted in the English language only.

8.15 Counterparts.

This Agreement may be executed in any number of counterparts (including counterparts by facsimile) and all such counterparts taken together shall be deemed to constitute one and the same instrument. The Parties shall be entitled to rely upon delivery of an executed facsimile or similar executed electronic copy of this Agreement, and such facsimile or similar executed electronic copy shall be legally effective to create a valid and binding agreement between the Parties.

[Remainder of page intentionally left blank. Signature pages follow.]

IN WITNESS WHEREOF the Parties have executed this Agreement.

GLENCORE INTERNATIONAL AG

By: "Helen Klassen"

Name: Helen Klassen Title:

By: "Alicia Wright" Name: Alicia Wright Title:

8682321 CANADA INC.

By: "Stephen Young" Name: Stephen Young Title: President

By:

Name:

Title:

CARACAL ENERGY INC.

By: "Gary S. Guidry"

Name: Gary S. Guidry Title: President and Chief Executive Officer

By: "Robert B. Hodgins"

Name: Robert B. Hodgins Title: Chairman of the Board

Signature Page to Arrangement Agreement

B-60

SCHEDULE A

PLAN OF ARRANGEMENT UNDER SECTION 192 OF THE

CANADA BUSINESS CORPORATIONS ACT

ARTICLE1 DEFINITIONS AND INTERPRETATION

1.1 In this Plan of Arrangement, unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the respective meanings set out below and grammatical variations of those terms shall have corresponding meanings:
(a) "affiliate" has the meaning specified in National Instrument 45-106 Prospectus and Registration Exemptions;
(b) "Amalco" means Caracal Energy Inc., the corporation resulting from the Amalgamation;
(c) "Amalco Redeemable Preferred Shares" has the meaning ascribed thereto in subsection 3.4(a)(iv);
(d) "Amalgamation" has the meaning ascribed thereto in subsection 3.1(d);
(e) "Arrangement" means an arrangement under Section 192 of the CBCA on the terms and subject to the conditions set out in this Plan of Arrangement, subject to any amendments or variations to this Plan of Arrangement made in accordance with the terms of the Arrangement Agreement or made at the direction of the Court in the Final Order with the prior written consent of the Company and the Purchaser, each acting reasonably;
(f) "Arrangement Agreement" means the arrangement agreement made as of April 14, 2014 among the Purchaser, Parent and the Company, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms;
(g) "Articles of Arrangement" means the articles of arrangement of the Company in respect of the Arrangement required by subsection 192(6) of the CBCA to be sent to the Director after the Final Order is made, which shall include this Plan of Arrangement and otherwise be in a form and content satisfactory to the Company and the Purchaser, each acting reasonably;
(h) "Business Day" means any day of the year, other than a Saturday, Sunday or any day on which major banks are closed for business in Toronto, Ontario, Calgary, Alberta, London, United Kingdom, Zurich, Switzerland or New York, New York;
(i) "CanCo" means [] Canada Inc., a corporation incorporated under the laws of Canada as a wholly-owned subsidiary of the Company;
(j) "CanCo Shares" means the common shares in the capital of CanCo;
(k) "CBCA" means the Canada Business Corporations Act;
(l) "Certificate of Arrangement" means the certificate of arrangement to be issued by the Director pursuant to subsection 192(7) of the CBCA in respect of the Articles of Arrangement giving effect to the Arrangement;
(m) "Company" means Caracal Energy Inc. prior to the Amalgamation;
(n) "Company Awards" means DSUs, PSUs and RSUs;
(o) "Company Circular" means the notice of the Company Meeting and accompanying management information circular, including all schedules, appendices and exhibits to, and information incorporated by reference in, such management information circular, to be sent to the Company Shareholders in connection with the Company Meeting, as amended, supplemented or otherwise modified from time to time in accordance with the terms of the Arrangement Agreement;
(p) "Company Debentures" means the \$173.6 million aggregate principal amount of pre-IPO convertible bonds of the Company with a maturity date of September 30, 2017;
(q) "Company Long Term Incentive Plan" means the "Griffiths Energy Incentive Compensation Plan" dated January 1, 2013, including any amendments approved by Company Shareholders at the annual and special meeting of Company Shareholders to be held on May 15, 2014;
(r) "Company Meeting" means the special meeting of Company Shareholders, including any adjournment or postponement of such special meeting in accordance with the terms of the Arrangement Agreement, to be called and held in accordance with the Interim Order to consider the Arrangement and for any other purpose as may be set out in the Company Circular and agreed to in writing by the Purchaser;
(s) "Company Optionholders" means the holders of Company Options;
(t) "Company Options" means the outstanding options to purchase Company Shares issued pursuant to the Company Stock Option Plan;
(u) "Company Shareholders" means the registered or beneficial holders of the Company Shares or, following the Amalgamation, Amalco Redeemable Preferred Shares, as the context requires;
(v) "Company Shares" means the common shares in the capital of the Company;
(w) "Company Stock Option Plan" means the Company's stock option plan effective as of June 30, 2011;
(x) "Company Warrants" means the outstanding management performance warrants and the employee performance warrants exercisable for Company Shares;
(y) "Consideration" means 5.50 GBP in cash;
(z) "Court" means the Court of Queen's Bench of Alberta in Calgary, Alberta, or other court as applicable;
(aa) "Depositary" means such Person as the Purchaser may appoint to act as depositary for the Arrangement, with the approval of the Company, acting reasonably;
(bb) "Director" means the Director appointed pursuant to Section 260 of the CBCA;
(cc) "Dissent Rights" means the rights of dissent in respect of the Arrangement described in this Plan of Arrangement;
(dd) "Dissenting Shareholder" means any registered Company Shareholder who has duly and validly exercised its Dissent Rights pursuant to Article 5 of this Plan of Arrangement and the Interim Order and has not withdrawn or been deemed to have withdrawn such exercise of Dissent Rights;
(ee) "Dissenting Shares" means the Company Shares held by Dissenting Shareholders;
(ff) "DSUs" means the deferred share units granted under the Company Long Term Incentive Plan;
(gg) "Effective Date" means the date shown on the Certificate of Arrangement giving effect to the Arrangement;
(hh) "Effective Time" means 12:01 a.m. on the Effective Date, or such other time as the Parties agree to in writing before the Effective Date;
(ii) "Encumbrance" includes any mortgage, pledge, assignment, charge, lien, security interest, adverse interest in property, other third party interest or encumbrance of any kind whether contingent or absolute, and any agreement, option, right or privilege (whether by Law, contract or otherwise) capable of becoming any of the foregoing;
(jj) "Final Order" means the final order of the Court in a form acceptable to the Company and the Purchaser, each acting reasonably, approving the Arrangement,

as such order may be amended by the Court (with the consent of both the Company and the Purchaser, each acting reasonably) at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended (provided that any such amendment is acceptable to both the Company and the Purchaser, each acting reasonably) on appeal;

(kk) "GBP" means the pound sterling, the lawful currency of the United Kingdom;
(ll) "Governmental Entity" means: (i) any international, multinational, national, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau, ministry, agency or instrumentality, domestic or foreign; (ii) any subdivision or authority of any of the above; (iii) any quasigovernmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing; (iv) any governmentcontrolled corporation or similar entity; or (v) any stock exchange;
(mm) "Interim Order" means the interim order of the Court in a form acceptable to the Company and the Purchaser, each acting reasonably, providing for, among other things, the calling and holding of the Company Meeting, as such order may be amended by the Court with the consent of the Company and the Purchaser, each acting reasonably;
(nn) "Law" means, with respect to any Person, any and all applicable law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement, whether domestic or foreign, enacted, adopted, promulgated or applied by a Governmental Entity that is binding upon or applicable to such Person or its business, undertaking, property or securities, and to the extent that they have the force of law, policies, guidelines, notices and protocols of any Governmental Entity, as amended;
(oo) "Letter of Transmittal" means the letter of transmittal to be sent to Company Shareholders pursuant to which Company Shareholders are required to deliver certificates representing Company Shares in connection with the Arrangement;
(pp) "Parent" means Glencore International AG;
(qq) "Person" includes any individual, partnership, association, body corporate, organization, trust, estate, trustee, executor, administrator, legal representative, government (including Governmental Entity), syndicate or other entity, whether or not having legal status;
(rr) "Plan of Arrangement", "hereof", "herein", "hereunder" and similar expressions means this Plan of Arrangement, including any appendices hereto, and any amendments, variations or supplements hereto made from time to time in accordance with the terms hereof, the Arrangement Agreement or made at the direction of the Court in the Final Order;
(ss) "PSUs" means the performance share units granted under the Company Long Term Incentive Plan;
(tt) "Purchaser" means 8682321 Canada Inc.;
(uu) "Redemption Call Right" has the meaning ascribed thereto in Section 4.1 of Schedule I hereto;
(vv) "Redemption Call Time" has the meaning ascribed thereto in Section 1.1 of Schedule I hereto;
(ww) "RSUs" means the restricted share units granted under the Company Long Term Incentive Plan; and
(xx) "Tax Act" means the Income Tax Act (Canada).

1.2 Interpretation Not Affected by Headings, etc.

The division of this Plan of Arrangement into Articles, Sections, subsections, paragraphs and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof.

1.3 Article References

Unless the contrary intention appears, references in this Plan of Arrangement to an Article, Section, subsection, paragraph or Schedule by number or letter or both refer to the Article, Section, subsection, paragraph or Schedule, respectively, bearing that designation in this Plan of Arrangement.

1.4 Number and Gender

In this Plan of Arrangement, unless the context otherwise requires, words used herein importing the singular include the plural and vice versa; and words importing gender include all genders. The words "include", "includes" and "including" shall be deemed to be followed by the words "without limitation" whether or not they are in fact followed by those words or words of like import.

1.5 Date for Any Action

If the date on which any action is required to be taken hereunder by any of the parties hereto is not a Business Day in the place where the action is required to be taken, such action shall be required to be taken on the next succeeding day which is a Business Day in such place.

1.6 Time

Time shall be of the essence in every matter or action contemplated hereunder. All times expressed herein or in the Letters of Transmittal are local time in Calgary, Alberta unless otherwise stipulated herein or therein.

1.7 Currency

Unless otherwise stated, all references in this Plan of Arrangement to sums of money are expressed in lawful money of the United States.

1.8 Statutory References

References in this Plan of Arrangement to a particular statute or Law shall be to such statute or Law and the rules, regulations and published policies made thereunder, as now in effect and as they may be promulgated thereunder or amended from time to time.

ARTICLE 2 EFFECT OF THE ARRANGEMENT

2.1 This Plan of Arrangement is made pursuant to, is subject to the provisions of and forms part of, the Arrangement Agreement.
2.2 This Plan of Arrangement, upon the filing of the Articles of Arrangement and the issuance of the Certificate of Arrangement, will become effective at, and be binding upon the Company, the Company Shareholders (including Dissenting Shareholders), all registered holders and all beneficial owners of any Company Award, all holders and all beneficial owners of Company Warrants, the Company Optionholders, CanCo, the Depositary, the Purchaser and all other Persons as and from the Effective Time, without any further act or formality required on the part of any Person except as expressly provided herein.
2.3 The Articles of Arrangement and the Certificate of Arrangement shall be filed and issued, respectively, with respect to the Arrangement in its entirety. The Certificate of Arrangement shall be conclusive evidence that the Arrangement has become effective and that each of the provisions of Article 3 has become effective in the sequence and at the times set out therein.
2.4 Other than as expressly provided for herein, no portion of this Plan of Arrangement shall take effect with respect to any party or Person until the Effective Time.

ARTICLE3 ARRANGEMENT

3.1 Commencing at the Effective Time, each of the events set out below shall occur and be deemed to occur in the following sequence, without any further act or formality, unless specifically noted:

(a) the Purchaser shall make a loan to the Company in an amount equal to the aggregate amount of the payments that are to be made, pursuant to subsection 3.1(b) below, to the holders of Company Options, Company Warrants and Company Awards (the "Loan Amount") and such amount shall be deposited by the Purchaser with the Depositary in accordance with Section 4.1(a);
(b) notwithstanding any vesting or exercise provisions to which a Company Option, Company Warrant or Company Award might otherwise be subject (whether by contract, conditions of a grant, Law or terms of the Company Stock Option Plan or Company Long Term Incentive Plan, as the case may be), all of the outstanding Company Options, Company Warrants and Company Awards, without any further action on behalf of the holder thereof and without any payment except as provided in this Plan of Arrangement and notwithstanding the terms of the applicable Company Stock Option Plan, Company Warrant or Company Long Term Incentive Plan, shall be disposed of and surrendered by the holders thereof to the Company without any act or formality on its or their part in exchange for a cash payment equal to:
(i) with respect to each outstanding Company Option and Company Warrant, the amount (if any) by which (A) the product of the number of Company Shares underlying such Company Option or Company Warrant, multiplied by the Consideration exceeds (B) the aggregate exercise price payable under such Company Option or Company Warrant, if such exercise price is in GBP, or the GBP equivalent calculated using the Canadian dollar/GBP exchange rate as of 12:00 p.m. Eastern Time on the Business Day prior to the Effective Date published by the Bank of Canada on its website, if such exercise price is in Canadian dollars, by the holder to acquire the Company Shares underlying such Company Option or Company Warrant;
(ii) with respect to each outstanding Company Award, the number of Company Shares the holder of such Company Award is entitled to pursuant to such Company Award, multiplied by the Consideration;
(c) all of the outstanding Company Options, Company Warrants and Company Awards shall be cancelled and each of the Company Stock Option Plan and Company Long Term Incentive Plan shall be terminated;
(d) CanCo and the Company shall amalgamate to form Amalco, as more fully described in Section 3.4 (the "Amalgamation");
(e) one common share of Amalco shall be issued to the Purchaser for a subscription price of GBP 5.50;
(f) at the Redemption Call Time:
(i) each Amalco Redeemable Preferred Share issued in exchange for Company Shares in respect of which Dissent Rights have been validly

exercised shall be transferred and deemed to be transferred by the holder thereof, without any further act or formality on its part, free and clear of all Encumbrances, to the Purchaser in consideration for a debt claim against Purchaser in an amount determined and payable in accordance with Section 5.1, and the name of such holder will be removed from the register of holders of Amalco Redeemable Preferred Shares (in respect of the Amalco Redeemable Preferred Shares issued in exchange for Company Shares for which Dissent Rights have been validly exercised), and the Purchaser shall be recorded as the registered holder of Amalco Redeemable Preferred Shares so transferred and shall be deemed to be the legal and beneficial owner of such Amalco Redeemable Preferred Shares free and clear of any Encumbrances;

(ii) the Purchaser will be deemed to exercise the Redemption Call Right such that each Amalco Redeemable Preferred Share (other than those held by the Purchaser or any of its affiliates), shall be transferred and deemed to be transferred by the holder thereof, without any further act or formality on its part, free and clear of all Encumbrances, to the Purchaser in exchange for a payment in cash equal to the Consideration, and the name of such holder will be removed from the register of holders of Amalco Redeemable Preferred Shares and the Purchaser shall be recorded as the registered holder of Amalco Redeemable Preferred Shares so transferred and shall be deemed to be the legal and beneficial owner thereof, free and clear of any Encumbrances; and
(g) Amalco shall repay the Loan Amount by issuing to the Purchaser such number of Amalco common shares as is equal to the quotient obtained when the Loan Amount is divided by the Consideration.
3.2 The Purchaser and the Company shall make the appropriate entries in their respective securities registers to reflect the matters referred to in Section 3.1.
3.3 With respect to each holder of Amalco Redeemable Preferred Shares referred to in subsection 3.1(f), upon the transfer of each such Amalco Redeemable Preferred Share pursuant to subsection 3.1(f) each holder of an Amalco Redeemable Preferred Share shall cease to be a holder of the Amalco Redeemable Preferred Share so transferred.

3.4 Amalgamation of CanCo and the Company

(a) Pursuant to Section 3.1(d), CanCo and the Company shall amalgamate to form Amalco under the CBCA, with the effect described below, and, unless and until otherwise determined in the manner required by Law, the following shall apply:
(i) Name. The name of Amalco shall be Caracal Energy Inc.
(ii) Registered Office. The registered office of Amalco shall be located in Canada in the Province of Alberta. The address of the registered office shall be Suite 2100, 555 – 4th Avenue S.W., Calgary, Alberta, T2P 3E7.
(iii) Business and Powers. There shall be no restrictions on the business that Amalco may carry on or on the powers it may exercise.
(iv) Authorized Share Capital. Amalco shall be authorized to issue an unlimited number of common shares and an unlimited number of shares designated as "Class A Preferred Shares" ("Amalco Redeemable Preferred Shares").
(v) Share Provisions. The Amalco Redeemable Preferred Shares shall have the terms set forth in Schedule I attached hereto. Certificates representing Company Shares will represent the Amalco Redeemable Preferred Shares received on the Amalgamation.
(vi) Shares. Each CanCo Share shall be cancelled without any repayment of capital in respect thereof. Each Company Share (including any Company Share issued prior to the Effective Time pursuant to (i) Company Options, Company Warrants, Company Awards or (ii) the conversion of any Company Debentures), including Company Shares in respect of which Dissent Rights have been exercised, shall be converted into one fully paid and non-assessable Amalco Redeemable Preferred Share and the shares so converted shall be added to the register of shareholders of Amalco.
(vii) Restrictions on Transfer. The transfer of Amalco Redeemable Preferred Shares shall be restricted, other than pursuant to the Arrangement or the Redemption Call Right, and no holder of Amalco Redeemable Preferred Shares shall transfer any such share without either: (i) the approval of the directors of Amalco passed at a meeting of the board of directors or by an instrument or instruments in writing signed by a majority of the directors; or (ii) the approval of the holders of at least a majority of the shares of Amalco entitling the holders thereof to vote in all circumstances (other than holders of shares who are entitled to vote separately as a class) for the time being outstanding, expressed by a resolution passed at a meeting of the holders of such shares or by an instrument or instruments in writing signed by the holders of a majority of such shares.
(viii) Number of Directors. The number of directors of Amalco shall not be less than 1 and not more than 10, and otherwise as the shareholders of Amalco may from time to time determine by special resolution.
(ix) Initial Directors. The initial directors of Amalco shall be the directors of the Company immediately prior to the Amalgamation.
(x) By-laws. The by-laws of Amalco shall be the same as the by-laws of the Company.
(xi) Articles. The Articles of Arrangement filed shall be deemed to be the articles of amalgamation of Amalco and any certificate issued in respect of such Articles of Arrangement by the Director under the CBCA giving

effect to the Arrangement shall be deemed to be the Certificate of Amalgamation of Amalco.

(xii) Stated Capital. The aggregate of the stated capital of the issued and outstanding Class A Preferred Share shall be equal to the aggregate of the stated capital of the issued and outstanding Company Shares immediately prior to the Amalgamation.
(xiii) Effect of Amalgamation. Upon the amalgamation of CanCo and the Company to form Amalco becoming effective pursuant to Section 3.1(d):
A. the property of each of CanCo and the Company shall continue to be the property of Amalco;
B. Amalco shall continue to be liable for the obligations of CanCo and the Company;
C. all existing causes of action, claims or liabilities to prosecution with respect to CanCo and the Company shall be unaffected;
D. all civil, criminal or administrative actions or proceedings pending by or against CanCo and the Company may be continued to be prosecuted by or against Amalco; and
E. all convictions against, or rulings, orders or judgments in favour of or against CanCo and the Company may be enforced by or against Amalco.

ARTICLE 4 CERTIFICATES AND PAYMENTS

4.1 Payment of Consideration

(a) Prior to the Effective Date (i) the Purchaser shall deposit, or arrange to be deposited, the money required to be deposited with the Depositary for the payment of the aggregate Consideration (the "Purchase Price") for the Amalco Redeemable Preferred Shares acquired on the Effective Date pursuant to subsection 3.1(f) (with the amount per Amalco Redeemable Preferred Share issued in exchange for Company Shares in respect of which Dissent Rights have been exercised being deemed to be the Consideration per applicable Amalco Redeemable Preferred Share for this purpose) for the benefit of and in trust for the Company Shareholders entitled to receive the Consideration for each Amalco Redeemable Preferred Share held by them in a special account with the Depositary to be paid to or to the order of the respective former Company Shareholders without interest and (ii) the Purchaser shall deposit the Loan Amount for payment of the obligations to holders of Company Options, Company Warrants and Company Awards pursuant to subsection 3.1(b) for the benefit of and in trust for such holders in a special account with the Depositary to be paid to or to the order of the respective former holders without interest. Thereafter, the Purchaser shall be fully and completely discharged from its obligation to pay the Purchase Price to the former Company Shareholders, and the Company shall be fully and completely discharged from its payment obligations to former holders of Company Options, Company Warrants and Company Awards, referred to in Section 3.1, respectively, and the rights of such holders shall be limited to receiving, without interest, from the Depositary their proportionate portion of the money so deposited, less any amounts withheld pursuant to Section 4.3, on, in the case of Company Shareholders, presentation and surrender of the documentation specified below. Any interest on such deposit shall belong to the Purchaser. All such deposited money shall be cash, denominated in GBP in same day funds, provided that, if the Purchaser elects to offer the choice of payment of the Consideration in one or more additional currencies other than GBP, payment to or to the order of the aforesaid former Company Shareholders may be effected in such other currency as elected by a Company Shareholder, or deemed to be elected, as set forth in the Letter of Transmittal delivered to the Depositary pursuant to clause (i) immediately below. Such payment to or to the order of the aforesaid former holders shall be made: (i) in the case of the Amalco Redeemable Preferred Shares received pursuant to the Amalgamation, on presentation and surrender to the Depositary the certificate(s) which immediately prior to the Effective Time represented the Company Shares which were exchanged for the Amalco Redeemable Preferred Shares in the Amalgamation, which were subsequently acquired by the Purchaser pursuant to subsection 3.1(f)(ii) and a duly completed Letter of Transmittal and such other documents and instruments, if any, as the Depositary may reasonably require and (ii) in the case of Company Options, Company Warrants and Company Awards, upon provision to the Depositary of a written direction by the Company and the Purchaser in respect of the Company Options, Company Warrants and Company Awards cancelled pursuant to subsection 3.1(c), together with such other documents and instruments, if any, as the Depositary may reasonably require.

(b) From and after the Effective Time, each certificate that immediately prior to the Effective Time represented Company Shares, which were exchanged for the Amalco Redeemable Preferred Shares in the Amalgamation, shall be deemed to represent only the right to receive the consideration in respect of the Amalco Redeemable Preferred Shares acquired under this Plan of Arrangement, less any amounts withheld pursuant to Section 4.3. Any such certificate formerly representing Company Shares not duly surrendered on or before the day that is two years less one day from the Effective Date shall cease to represent a claim by or interest of any kind or nature against or in any of the Company or the Purchaser. On such date, any and all consideration to which such former holder was entitled shall be deemed to have been surrendered to the Purchaser or the Company, as applicable.
(c) Any payment made by way of cheque by the Company, the Depositary or the Purchaser pursuant to this Plan of Arrangement that has not been deposited or has

been returned to the Company, the Depositary or the Purchaser or that otherwise remains unclaimed, in each case, on or before the second anniversary of the Effective Time shall be returned by the Depositary to the Purchaser, and any right or claim to payment hereunder that remains outstanding on the day that is two years less one day from the Effective Date shall cease to represent a right or claim by or interest of any kind or nature and the right of a former holder of Company Shares to receive the consideration for the Amalco Redeemable Preferred Shares for which such Company Shares were exchanged pursuant to this Plan of Arrangement shall terminate and be deemed to be surrendered and forfeited to the Purchaser or the Company, as applicable, for no consideration.

(d) No former holder of Company Shares shall be entitled to receive any consideration with respect to the Amalco Redeemable Preferred Shares for which such Company Shares were exchanged other than the consideration to which such former holder is entitled to receive in accordance with this Section 4.1 or Section 5.1 and, for greater certainty, no such holder with be entitled to receive any interest, dividends, premium or other payment in connection therewith.

4.2 Lost Certificates

In the event any certificate which immediately prior to the Effective Time represented one or more outstanding Company Shares that were exchanged for Amalco Redeemable Preferred Shares and subsequently transferred pursuant to Section 3.1 shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate to be lost, stolen or destroyed, the Purchaser or the Depositary, as applicable, will issue and deliver in exchange for such lost, stolen or destroyed certificate, the consideration to which the holder is entitled pursuant to this Plan of Arrangement. When authorizing such issuance and delivery in exchange for any lost, stolen or destroyed certificate, the Person to whom such consideration is to be issued and delivered shall, as a condition precedent to the delivery of such consideration, give a bond satisfactory to the Purchaser (acting reasonably) in such sum as the Purchaser may direct, or otherwise indemnify the Purchaser in a manner satisfactory to the Purchaser, acting reasonably, against any claim that may be made against the Purchaser with respect to the certificate alleged to have been lost, stolen or destroyed.

4.3 Withholding Rights

The Company, the Purchaser and the Depositary shall be entitled to deduct and withhold from any consideration otherwise payable to any Company Shareholder, Company Optionholder or holder of a Company Warrant or Company Award under this Plan of Arrangement (including, without limitation, any amounts payable pursuant to Section 5.1 hereof), such amounts as the Company, the Purchaser or the Depositary determines, acting reasonably, are required or reasonably believes to be required to be deducted and withheld from such consideration in accordance with the Tax Act or any provision of any other Law. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes hereof as having been paid to the Person in respect of which such withholding was made, provided that such deducted and withheld amounts are remitted to the appropriate taxing authority.

ARTICLE 5 DISSENT RIGHTS

5.1 Dissent Rights

Registered Company Shareholders may exercise Dissent Rights with respect to Company Shares held by such holders in connection with the Arrangement pursuant to the procedure set forth in Section 190 of the CBCA, as modified by the Interim Order, provided that Company Shareholders who exercise such Dissent Rights and who:

(a) are ultimately entitled to be paid fair value for their Company Shares shall be deemed not to have participated in the transactions in Article 3 (other than subsection 3.1(d) (insofar as the Company Shareholders participate in the Amalgamation), subsection 3.1(f)(i) and subsection 3.4(a)(vi)) and shall be paid an amount equal to such fair value by the Purchaser and will not be entitled to any other payment or consideration, including any payment that would be payable under the Arrangement had such Company Shareholders not exercised their Dissent Rights in respect of such Company Shares and such Company Shareholders shall be deemed to have transferred their Dissenting Shares to the Purchaser for cancellation in accordance with subsection 3.1(f)(i); or
(b) are ultimately not entitled, for any reason, to be paid fair value for their Company Shares, shall be deemed to have participated in the Arrangement, as of the Effective Time, on the same basis as a non-dissenting holder of Company Shares as set out in subsection 3.1(f)(ii), but provided that in no case shall the Company or the Purchaser or any other Person be required to recognize Company Shareholders who exercise Dissent Rights as Company Shareholders after the Effective Time, and the names of such Company Shareholders who exercise Dissent Rights shall be removed from the registers of Company Shares at the Effective Time.

ARTICLE6 AMENDMENT

6.1 Amendment of this Plan of Arrangement

(a) The Company and the Purchaser reserve the right to amend, modify and/or supplement this Plan of Arrangement at any time and from time to time prior to the Effective Date, provided that any amendment, modification or supplement must be contained in a written document which is: (i) filed with the Court and, if made following the Company Meeting, approved by the Court; and (ii) communicated to Company Shareholders in the manner required by the Court (if so required).
(b) Any amendment, modification or supplement to this Plan of Arrangement may be proposed by the Company and the Purchaser at any time prior to or at the Company Meeting with or without any other prior notice or communication and, if so proposed and accepted, in the manner contemplated and to the extent required by the Arrangement Agreement, by Company Shareholders, shall become part of this Plan of Arrangement for all purposes.
(c) Any amendment, modification or supplement to this Plan of Arrangement which is approved or directed by the Court following the Company Meeting shall be effective only: (i) if it is consented to by the Company and the Purchaser (each acting reasonably); and (ii) if required by the Court or Law, it is consented to by the Company Shareholders.
(d) This Plan of Arrangement may be amended, modified or supplemented following the Effective Time unilaterally by the Purchaser, provided that it concerns a matter that, in the reasonable opinion of the Purchaser, is of an administrative nature required to better give effect to the implementation of this Plan of Arrangement and is not adverse to the economic interest of any Company Shareholders.

ARTICLE 7 MISCELLANEOUS

7.1 Further Assurances

Notwithstanding that the transactions and events set out herein shall occur and shall be deemed to occur in the order set out in this Plan of Arrangement without any further act or formality, each of the Purchaser and the Company shall make, do and execute, or cause to be made, done and executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably be required in order to further document or evidence any of the transactions or events set out herein.

7.2 Paramountcy

From and after the Effective Time, (a) this Plan of Arrangement shall take precedence and priority over any and all rights related to the Company Shares, Amalco Redeemable Preferred Shares, Company Options, Company Warrants and Company Awards issued prior to the Effective Time, (b) the rights and obligations of the Company Shareholders, Company Optionholders, holders of Company Awards, holders of Company Warrants and any trustee and transfer agent therefor, shall be solely as provided for in this Plan of Arrangement, and (c) all actions, causes of actions, claims or proceedings (actual or contingent, and whether or not previously asserted) based on or in any way relating to the Company Shares, Amalco Redeemable Preferred Shares, Company Options, Company Warrants and Company Awards, shall be deemed to have been settled, compromised, released and determined without liability except as set forth herein.

Schedule I - Terms for Amalco Redeemable Preferred Shares

ARTICLE 1 INTERPRETATION

1.1 For the purposes of these share provisions:

"Act" means the Canada Business Corporations Act, as amended.

"affiliate" has the meaning specified in National Instrument 45-106 – Prospectus and Registration Exemptions.

"Amalgamation" has the meaning given to that term in the Plan of Arrangement.

"Arrangement" means the arrangement under Section 192 of the Act contemplated by, and on the terms and subject to the conditions set out in, the Plan of Arrangement.

"Articles of Arrangement" means the articles of arrangement of the Company in respect of the Arrangement sent to the Director after the Final Order was made.

"Board" means the board of directors of the Company.

"Certificate of Arrangement" means the certificate of arrangement of the Company dated , 2014 issued by the Director pursuant to subsection 192(7) of the Act in respect of the Articles of Arrangement giving effect to the Arrangement.

"Company" means Caracal Energy Inc., a corporation amalgamated under the laws of Canada.

"Consideration" means 5.50 GBP in cash per Class A Preferred Share.

"Court" means the Court of Queen's Bench of Alberta in Calgary, Alberta.

"Class A Preferred Shares" means the Class A Preferred Shares in the capital of the Company having the rights, privileges, restrictions and conditions set forth in these share provisions.

"Depositary" means such Person as the Purchaser may appoint to act as depositary for the Arrangement, with the approval of the Company, acting reasonably.

"Effective Date" means the date shown on the Certificate of Arrangement giving effect to the Arrangement.

"Final Order" means the final order of the Court dated , 2014 and any amendments made thereto prior to the Effective Date, approving the Arrangement.

"GBP" means the pound sterling, the lawful currency of the United Kingdom.

"Old Caracal Shares" means the common shares in the capital of Caracal Energy Inc. that were in existence immediately prior to the Amalgamation.

"Plan of Arrangement" means the plan of arrangement involving Caracal Energy Inc., [insert full name of CanCo] and the Purchaser approved by the Court pursuant to the Final Order.

"Purchaser" means 8682321 Canada Inc.

"Redemption Amount" has the meaning given to that term in section 5.1.

"Redemption Call Purchase Price" has the meaning given to that term in section 4.1.

"Redemption Call Right" has the meaning given to that term in section 4.1.

"Redemption Call Time" with respect to any Class A Preferred Share, means the first moment in time immediately following the issuance of the Class A Preferred Share.

1.2 Unless otherwise indicated, references to "Article", "Articles", "section" and "sections" are to articles and sections in these share provisions.

ARTICLE 2 DIVIDENDS

2.1 The holders of Class A Preferred Shares shall not be entitled to receive any dividends thereon.

ARTICLE 3 LIQUIDATION, DISSOLUTION OR WINDING-UP

3.1 In the event of the liquidation, dissolution or winding-up of the Company or other distribution of property of the Company among shareholders for the purpose of windingup its affairs, the holders of Class A Preferred Shares shall be entitled to receive from the property of the Company a sum equivalent to the aggregate Redemption Call Purchase Price (as hereinafter defined) of all the Class A Preferred Shares held by them respectively before any amount shall be paid or any property of the Company distributed to the holders of common shares. After payment to the holders of Class A Preferred Shares of the amount so payable to them as above provided they shall not be entitled to share in any further distribution of the property of the Company.

ARTICLE 4 REDEMPTION CALL RIGHT

4.1 The Purchaser will have the overriding right (the "Redemption Call Right"), to and shall purchase from the holders of Class A Preferred Shares (other than the Purchaser and its affiliates) at the Redemption Call Time all of the Class A Preferred Shares then outstanding (other than those held by the Purchaser and any of its affiliates) for the Consideration (the "Redemption Call Purchase Price"). Upon the exercise of the

Redemption Call Right by the Purchaser, each holder will be obligated to sell all of the Class A Preferred Shares held by the holder to the Purchaser at the Redemption Call Time and delivery by the Purchaser to the holder of the Redemption Call Purchase Price for each share will be made on or as soon as practicable after the Redemption Call Time upon presentation and surrender to the Depositary of the certificates representing the Old Caracal Shares which were exchanged for Class A Preferred Shares pursuant to the Amalgamation. From and after the Redemption Call Time, the holders of the Class A Preferred Shares called for purchase shall not be entitled to exercise any of the rights of shareholders in respect thereof unless payment of the Redemption Call Purchase Price shall not be made upon presentation of certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected.

4.2 The Redemption Call Right shall be deemed to be exercised at each applicable Redemption Call Time. Upon the exercise of the Redemption Call Right, the Purchaser will purchase and the holders will sell all of the Class A Preferred Shares then outstanding (other than those held by the Purchaser and any of its affiliates) for a price per share equal to the Redemption Call Purchase Price.
4.3 The Plan of Arrangement, including Articles 3 through to 7, shall govern for the purposes of completing the purchase of the Class A Preferred Shares pursuant to the Redemption Call Right.

ARTICLE 5 REDEMPTION AT THE OPTION OF THE COMPANY

5.1 Subject to applicable law, and subject to, and without limiting the generality of, the Redemption Call Right, the Company may, subject to the requirements of the Act, upon the giving of such notice, if any, and following such procedures as the Board may determine, from time to time redeem at any time the whole or from time to time any part of the then outstanding Class A Preferred Shares, either on a pro rata basis or otherwise, on payment of an amount for each share to be redeemed equal to the Consideration "Redemption Amount".
5.2 On or after the date specified for redemption pursuant to this Article 5, the Company shall pay or cause to be paid to or to the order of the registered holders of the Class A Preferred Shares to be redeemed the Redemption Amount thereof on presentation and surrender at the registered office of the Company or any other place designated by the Company in the notice of redemption of the certificates representing the Old Caracal Shares which were exchanged for Class A Preferred Shares, pursuant to the Amalgamation, called for redemption. If less than all the Class A Preferred Shares represented by any certificate are redeemed, the holder shall be entitled to receive a new certificate for that number of Class A Preferred Shares represented by the original certificate which are not redeemed. From and after the date specified for redemption, the holders of the Class A Preferred Shares called for redemption shall cease to be entitled to exercise any of the rights of shareholders in respect thereof unless payment of the Redemption Amount shall not be made upon presentation of certificates in accordance

with the foregoing provisions, in which case the rights of the holders shall remain unaffected.

ARTICLE 6 VOTING RIGHTS

6.1 The holders of the Class A Preferred Shares shall be entitled to receive notice of, to attend and to vote at any meeting of the shareholders of the Company and the Class A Preferred Shares and the common shares shall each be entitled to one vote per share thereat.

ARTICLE 7 CALL RIGHTS

7.1 Each holder of a Class A Preferred Share prior to the Redemption Call Time, whether of record or beneficial, by virtue of becoming and being a holder, will be deemed to acknowledge the Redemption Call Right in favour of the Purchaser, and the overriding nature of this right in connection with the purchase of Class A Preferred Shares and to be bound by such right in favour of the Purchaser.

SCHEDULE B

ARRANGEMENT RESOLUTION

BE IT RESOLVED THAT:

1. The arrangement (the "Arrangement") under Section 192 of the Canada Business Corporations Act (the "CBCA") of Caracal Energy Inc. (the "Company"), as more particularly described and set forth in the management information circular (the "Circular") dated , 2014 of the Company accompanying the notice of this meeting (as the Arrangement may be amended, modified or supplemented in accordance with the definitive agreement (the "Arrangement Agreement") made as of April 14 , 2014 between the Company, 8682321 Canada Inc. and Glencore International AG), is hereby authorized, approved and adopted.
1. The plan of arrangement of the Company (as it has been or may be amended, modified or supplemented in accordance with the Arrangement Agreement (the "Plan of Arrangement")), the full text of which is set out in Appendix "" to the Circular, is hereby authorized, approved and adopted.
1. The (a) Arrangement Agreement and related transactions, (b) actions of the directors of the Company in approving the Arrangement Agreement, and (c) actions of the directors and officers of the Company in executing and delivering the Arrangement Agreement, and any amendments, modifications or supplements thereto, are hereby ratified and approved.
1. The Company be and is hereby authorized to apply for a final order from the Alberta Court of Queen's Bench to approve the Arrangement on the terms set forth in the Arrangement Agreement and the Plan of Arrangement (as they may be amended, modified or supplemented and as described in the Circular).
1. Notwithstanding that this resolution has been passed (and the Arrangement adopted) by the shareholders of the Company or that the Arrangement has been approved by the Alberta Court of Queen's Bench, the directors of the Company are hereby authorized and empowered to, without notice to or approval of the shareholders of the Company, (a) amend, modify or supplement the Arrangement Agreement or the Plan Arrangement to the extent permitted by the Arrangement Agreement and (b) subject to the terms of the Arrangement Agreement, not to proceed with the Arrangement and related transactions.
1. Any officer or director of the Company is hereby authorized and directed for and on behalf of the Company to execute and deliver for filing with the Director under the CBCA articles of arrangement and such other documents as are necessary or desirable to give effect to the Arrangement and the Plan of Arrangement and transactions contemplated thereby in accordance with the Arrangement Agreement, such determination to be conclusively evidenced by the execution and delivery of such articles of arrangement and any such other documents.
Any officer or director of the Company is hereby authorized and directed for and on behalf of the Company to execute or cause to be executed and to deliver or cause to be delivered all such other documents and instruments and to perform or cause to be performed all such other acts and things as such person determines may be necessary or desirable to give full effect to the foregoing resolution and the matters authorized thereby, such determination to be conclusively evidenced by the execution and delivery of such document or instrument or the doing of any such act or thing.

SCHEDULE C

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

(1) Organization and Qualification.

The Company is a corporation duly incorporated and validly existing under the laws of Canada and has the corporate power and authority to own and operate its assets and conduct its business as now owned and conducted. The Company is duly qualified, licensed or registered to carry on business and is in good standing in each jurisdiction in which the character of its assets and properties, owned, leased, licensed or otherwise held, or the nature of its activities makes such qualification necessary, and has all Authorizations required to own, lease and operate its properties and to carry on its business as now conducted, except where the failure to be so qualified will not, individually or in the aggregate, have a Material Adverse Effect.

(2) Corporate Authorization.

The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement. The execution and delivery and performance by the Company of this Agreement and the consummation of the Arrangement have been duly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or the consummation of the Arrangement other than approval by the Company Board of the Company Circular, and approval of the Arrangement Resolution by the Company Shareholders in the manner required by the Interim Order and Law and approval by the Court.

(3) Execution and Binding Obligation.

This Agreement has been duly executed and delivered by the Company, and constitutes a legal, valid and binding agreement of the Company enforceable against it in accordance with its terms subject only to any limitation under bankruptcy, insolvency or other Law affecting the enforcement of creditors' rights generally and the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction.

(4) Governmental Authorization.

The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Arrangement does not require any Authorization or other action by or in respect of, or filing, recording, registering or publication with, or notification to, any Governmental Entity other than (a) the Interim Order and any approvals required by the Interim Order; (b) the Final Order; (c) filings with the Director under the CBCA; (d) the Regulatory Approvals; (e) compliance with Securities Law; and (f) any actions or filings the absence of which would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

(5) No Conflict / Non- Contravention.

(a) The execution, delivery and performance by the Company of this Agreement and the consummation of the Arrangement do not and will not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition):
(i) contravene, conflict with, or result in any violation or breach of the Constating Documents of the Company;
(ii) assuming compliance with the matters referred to in Section (4) above, contravene, conflict with or result in a violation or breach of Law;
(iii) allow any Person to exercise any rights, require any consent or other action by any Person, or constitute a default under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which the Purchaser is entitled (including by triggering any rights of first refusal or first offer, change in control provision or other restriction or limitation) under any Contract, lease or other instrument, indenture, deed of trust, mortgage, bond or any Authorization to which the Company or any of its Subsidiaries is a party of by which the Company or any of its Subsidiaries is bound; or
(iv) result in the creation or imposition of any Lien upon any of the Company's assets or the assets of any of its Subsidiaries; with such exceptions, in the case of paragraphs (ii) through (iv), as would not be reasonably expected to individually or in the aggregate have a Material Adverse Effect or prevent, adversely impair or materially delay the consummation of the Arrangement.

(6) Capitalization.

(a) The authorized capital of the Company consists of an unlimited number of Company Shares. As of the close of business on the date of this Agreement, there were issued and outstanding 146,703,856 Company Shares. All outstanding Company Shares have been duly authorized and validly issued, are fully paid and non-assessable. All of the Company Shares issuable upon the exercise of the Company Options, the Company Shares issuable upon the exercise of the Company Awards, the Company Shares issuable upon the exercise of the Company Warrants and the Company Shares issuable upon exercise or conversion of the Company Debentures, have been duly authorized and, upon issuance in accordance with their respective terms, will be validly issued as fully paid and non-assessable and are not and will not be subject to or issued in violation of any pre-emptive rights. No Company Shares have been issued and no Company Options or Company Awards have been granted in violation of any Law or any pre-emptive or similar rights applicable to them.

(b) Section (6)(b) of the Company Disclosure Letter sets forth, in respect of each Company Option, Company Warrant and Company Award outstanding as of the date of this Agreement: (i) the number of Company Shares issuable upon exercise; (ii) the exercise price payable; (iii) the date of grant; (iv) the date of expiry; (v) the name of the registered holder, identifying whether such holder is not an employee of the Company; and (vi) the extent to which such Company Options, Company Warrants and Company Awards are vested and are exercisable, identifying whether such vesting or exercise may be accelerated as a result, either alone or together with another event or occurrence, of the Arrangement. The Company Stock Option Plan, the Company Warrant certificates and the Company Long Term Incentive Plan, and the issuance of Company Shares under such plans and instruments (including all outstanding Company Options, Company Warrant certificates and Company Awards), have been duly authorized by the Company Board in compliance with Law and the terms of the Company Stock Option Plan, the Company Warrant certificates and the Company Long Term Incentive Plan, as applicable, and have been recorded on the Company's financial statements in accordance with GAAP, and no such grants involved any "back dating", "forward dating", "spring loading" or similar practices.
(c) Except for rights under the Company Stock Option Plan and the Company Long Term Incentive Plan, including outstanding Company Options and Company Awards, and Company Warrants and the Company Debentures, there are no issued, outstanding or authorized options, warrants, conversion, pre-emptive, redemption, repurchase, stock appreciation or other rights, or any other agreements, arrangements, instruments or commitments of any kind that obligate the Company or any of its Subsidiaries to, directly or indirectly, issue or sell any securities of the Company or any of its Subsidiaries, or give any Person a right to subscribe for or acquire, any securities of the Company or any of its Subsidiaries, or the value of which is based on the value of the securities of the Company or any of its Subsidiaries.
(d) Except for the Company Options, the Company Awards, the Company Warrants and the Company Debentures, there are no issued, outstanding or authorized:
(i) obligations to repurchase, redeem or otherwise acquire any securities of the Company or any of its Subsidiaries, or qualify securities for public distribution in Canada or elsewhere, or with respect to the voting or disposition of any securities of the Company or any of its Subsidiaries; or
(ii) notes, bonds, debentures or other evidences of indebtedness or any other agreements, arrangements, instruments or commitments of any kind that give any Person, directly or indirectly, the right to vote with holders of Company Shares on any matter.
(e) All dividends or distributions on securities of the Company that have been declared or authorized have been paid in full.

(7) Shareholders' and Similar Agreements.

The Company is not party to any shareholder, pooling, voting, or other similar arrangement or agreement relating to the ownership or voting of any of the securities of the Company or any of its Subsidiaries or pursuant to which any Person may have any right or claim in connection with any existing or past equity interest in the Company or any of its Subsidiaries and the Company has not adopted a shareholder rights plan or any other similar plan or agreement.

(8) Subsidiaries.

(a) The following information with respect to each Subsidiary of the Company is accurately set out in Section (8) of the Company Disclosure Letter: (i) its name; (ii) the number, type and principal amount, as applicable, of its outstanding equity securities or other equity interests and a list of registered holders of capital stock or other equity interests; and (iii) its jurisdiction of incorporation, organization or formation.
(b) Each Subsidiary is a corporation, partnership, trust or limited partnership, as the case may be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, organization or formation, as the case may be, and has all requisite corporate, trust or partnership power and authority, as the case may be, to own, lease and operate its properties and assets and to carry on its business as now being conducted, except where the failure to be so organized, validly existing, qualified or in good standing, or to have such power or authority, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(c) The Company is, directly or indirectly, the registered and beneficial owner of all of the outstanding common shares or other equity interests of each of the Subsidiaries, free and clear of any Liens, all such shares or other equity interests so owned by the Company have been validly issued and are fully paid and nonassessable, as the case may be, and no such shares or interests have been issued in violation of any pre-emptive or similar rights. Except for the shares or interests owned by the Company in any Subsidiary, the Company does not own, beneficially or of record, any equity interests of any kind in any other Person.
(d) If duly authorized by its board of directors or similar governing authority and subject to applicable Law, no Subsidiary of the Company is prohibited, directly or indirectly, from paying any distributions, dividends or interest payments to the Company, from making any other distribution on such Subsidiary's share capital or other ownership interest, from repaying to the Company any notes, loans or advances to such subsidiary or from transferring any of such Subsidiary's property or assets to the Company in each case in any material respect.

(9) Securities Law Matters.

(a) The Company is a "reporting issuer" under Securities Laws in each of the provinces and territories of Canada. The Company Shares are listed on the Official List and trade on the LSE and the Company Debentures are listed and posted for trading on the Luxembourg Stock Exchange. The Company is not in material default of Securities Laws.
(b) The Company has not taken any action to cease to be a reporting issuer in any province or territory of Canada nor has the Company received notification from any Securities Authority seeking to revoke the reporting issuer status of the Company. To the knowledge of the Company, no delisting, suspension of trading or cease trade or other order or restriction with respect to any securities of the Company is pending, in effect, has been threatened, or is expected to be implemented or undertaken, and the Company is not subject to any formal or informal review, enquiry, investigation or other proceeding relating to any such order or restriction.
(c) The Company has timely filed or furnished all Company Filings required to be filed or furnished by the Company with any Governmental Entity (including "documents affecting the rights of securityholders" and "material contracts" required to be filed by Part 12 of National Instrument 51-102 - Continuous Disclosure Obligations). Each of the Company Filings complied as filed with Law and did not, as of the date filed (or, if amended or superseded by a subsequent filing prior to the date of this Agreement, on the date of such filing), contain any Misrepresentation.
(d) The Company has provided to the Purchaser true and complete copies of all documents filed with or furnished to a Securities Authority on a confidential basis (including complete copies of any documents redacted for confidentiality or other reasons). To the knowledge of the Company, there are no outstanding or unresolved comments in comment letters from any Securities Authority with respect to any of the Company Filings and neither the Company nor any of the Company Filings is the subject of an ongoing audit, review, comment or investigation by any Securities Authority.
(e) The Company is a "foreign private issuer" as defined in Rule 3b-4 under the U.S. Exchange Act.

(10) Financial Statements.

(a) The audited consolidated financial statements and the consolidated interim financial statements of the Company (including, in each case, any the notes or schedules to and the auditor's report on such financial statements) included in the Company Filings or otherwise publicly disseminated by the Company in respect of any subsequent period prior to the Effective Date (i) were prepared or shall be prepared, as applicable, in accordance with GAAP and Law, (ii) complied or shall

comply, as applicable, as to form in all material respects with applicable accounting requirements in Canada, and (iii) fairly present or shall fairly present, as applicable, in all material respects, the assets, liabilities (whether accrued, absolute, contentment or otherwise), consolidated financial position, results of operations or financial performance and cash flows of the Company and its Subsidiaries as of their respective dates and the consolidated financial position, results of operations or financial performance and cash flows of the Company and its Subsidiaries for the respective periods covered by such financial statements (except as may be expressly indicated in the notes to such financial statements).

(b) The Company does not intend to correct or restate, nor, to the knowledge of the Company is there any basis for any correction or restatement of, any aspect of any of the financial statements referred to in Section A(10)(a). The selected financial data and the summary financial information included in the Company Filings present fairly the information shown in the Company Filings and have been compiled on a basis consistent with that of the audited financial statements included in the Company Filings. The other financial and operational information included in the Company Filings presents fairly the information included in the Company Filings.
(c) Except as disclosed in the Company Filings, there are no material off-balance sheet transactions, arrangements, obligations (including contingent obligations) or other relationships of the Company or any of its Subsidiaries with unconsolidated entities or other Persons.
(d) The financial books, records and accounts of the Company and each of its Subsidiaries: (i) have been maintained, in all material respects, in accordance with GAAP, (ii) are stated in reasonable detail, (iii) accurately and fairly reflect all the material transactions, acquisitions and dispositions of the Company and its Subsidiaries, and (iv) accurately and fairly reflect the basis for the Company's financial statements.

(11) Disclosure Controls and Internal Control over Financial Reporting.

(a) The Company has established and maintains disclosure controls and procedures (as such term is defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings) to provide reasonable assurance that: (i) material information relating to the Company is made known to the Company's management, including its chief financial officer and chief executive officer, particularly during the periods in which the Company's interim filings and annual filings (as such terms are defined in National Instrument 52-109 - Certification of Disclosure in Issuers' Annual and Interim Filings) are being prepared; and (ii) information required to be disclosed by the Company in such annual or interim filings or other reports filed or submitted by it under Securities Laws, is recorded, processed, summarized and reported within the time periods specified in Securities Laws.

(b) As of the date of this Agreement, there is no material weakness (as such term is defined in National Instrument 52-109 - Certification of Disclosure in Issuers' Annual and Interim Filings) relating to the design, implementation or maintenance of its internal control over financial reporting, or fraud, whether or not material, that involves management or other employees who have a significant role in the internal control over financial reporting of the Company.
(c) Since December 31, 2011, none of the Company, any of its Subsidiaries or, to the Company's knowledge, any director, officer, employee, auditor, accountant or representative of the Company or any of its Subsidiaries has received or otherwise obtained knowledge of any material complaint, allegation, assertion, or claim, whether written or oral, regarding accounting, internal accounting controls or auditing matters, including any material complaint, allegation, assertion, or claim that the Company or any of its Subsidiaries has engaged in questionable accounting or auditing practices, or any expression of concern from its employees regarding questionable accounting or auditing matters, which has not been resolved to the satisfaction of the audit committee of the Company Board.

(12) No Undisclosed Liabilities.

(a) There are no material liabilities or obligations of the Company or any of its Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, other than liabilities or obligations: (i) disclosed, or otherwise, in the Company Filings; (ii) incurred in the Ordinary Course; or (iii) incurred in connection with this Agreement.
(b) The principal amount of all material indebtedness for borrowed money of the Company and its Subsidiaries, including capital leases, is disclosed in Section (12)(b) of the Company Disclosure Letter.

(13) Oil and Gas Matters.

(a) Section (13)(a) of the Company Disclosure Letter provides a complete list and description of all of the Petroleum and Natural Gas Interests of the Company and its Subsidiaries. The Company has previously provided to the Purchaser pursuant to certain agreements with the Purchaser in relation to existing production sharing contracts to which the Company is party, all material information regarding all Petroleum and Natural Gas Interests owned, leased, or otherwise in which an interest is held by the Company or its Subsidiaries that are material to the conduct of the business of the Company or its Subsidiaries, and all such information made available to the Purchaser is true and correct in all material respects and no material fact or facts have been omitted therefrom which would make such information misleading.
(b) The Petroleum and Natural Gas Interests of the Company and its Subsidiaries disclosed in the Company Filings were evaluated and reported in accordance with accepted engineering practices and applicable Securities Laws and were, at such

date, in compliance in all material respects with the requirements applicable to the presentation of such reserves and resources in documents, including without limitation the provisions of National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities. There has been no material reduction in the aggregate amount of reserves and resources of the Company and its Subsidiaries from the amounts publicly disclosed by the Company.

(c) The Company and each of its Subsidiaries has conducted and is conducting its respective business in accordance with good oilfield practices and in compliance with Law, and, in particular, all applicable licencing and Environmental Laws or other lawful requirements of any Governmental Entities applicable to it in each jurisdiction in which it carries on business and holds all Authorizations in all jurisdictions in which it carries on business or which are necessary to carry on the business of the Company and any of its Subsidiaries, as now conducted, and none of such Authorizations contains any burdensome term, provision, condition or limitation, which would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(d) All Taxes and assessments based on, or measured by, the ownership of the Petroleum and Natural Gas Interests of the Company or any of its Subsidiaries or the production of Petroleum Substances from such Petroleum and Natural Gas Interests, or the receipt of proceeds from them, and all royalties and rentals accruing prior to the Effective Date, that are payable by the Company or any of its Subsidiaries with respect to their Petroleum and Natural Gas Interests will at the Effective Date have been properly paid.
(e) In those cases where the Company or any of its Subsidiaries is the operator, the Petroleum and Natural Gas Interests of the Company or its Subsidiaries have been operated and maintained in a manner consistent with prudent practices in the petroleum and natural gas industry in the jurisdictions where they are located, in compliance with joint operating agreements and in compliance with Law and all orders of all Governmental Entities having jurisdiction over the same and, in cases where neither the Company nor any of its Subsidiaries is the operator thereof, the Company has no knowledge that such has not been, is not or will not be the case.
(f) Neither the Company nor any of its Subsidiaries has elected or refused to participate in any exploration, development or other operations on its Petroleum and Natural Gas Interests which has or may give rise to any penalties, forfeitures or reduction of its interest by virtue of any conversion or other alteration occurring under the title and operating documents which govern the Company's or any of its Subsidiaries' ownership and operation of their Petroleum and Natural Gas Interests.
(g) The Company does not have any currently outstanding interest rate, currency, equity or commodity swaps, hedges, derivatives, forward sales contracts or similar financial instruments.
(h) The Company has made available to McDaniel, prior to the issuance of the McDaniel Report, all information material to an adequate determination of oil and gas reserves and resources, none of which information contained a Misrepresentation and, except for any impact of changes in commodity prices, which may or may not be material, the Company has no knowledge of any change in the production, costs, price, reserves, estimates of future net production revenues or other relevant information from that disclosed in the McDaniel Report except as would not have a Material Adverse Effect in respect of the Company.
(i) The McDaniel Report complies with the requirements of National Instrument 51- 101 - Standards of Disclosure for Oil and Gas Activities and reasonably presents the quantity of estimated oil and gas reserves and resources attributable to the properties evaluated therein as at the date stated therein based upon information available at the time the McDaniel Report was prepared and the assumptions as to commodity prices and costs contained therein McDaniel has not provided any updates, amendments or revisions to the information contained in the McDaniel Report, nor has McDaniel reevaluated any of the reserves of the Company since the McDaniel Report.
(j) Other than as set forth in Section (13)(j) of the Company Disclosure Letter, the Company and its Subsidiaries are the legal and/or beneficial owners, in accordance with the Laws of Chad, as applicable, of all right, title and interest in the Petroleum and Natural Gas Interests set forth in Section (13)(j) of the Company Disclosure Letter and other oil and gas facilities of the Company and its Subsidiaries, free and clear of any defects, failures or impairments in the title of the Company or any of its Subsidiaries.
(k) The Company and its Subsidiaries hold their Petroleum and Natural Gas Interests under valid and subsisting leases, licenses, permits, concessions, concession agreements, contracts, subleases, reservations, or other agreements.
(l) The Company and each of its Subsidiaries has duly and timely satisfied all of the obligations required to be satisfied, performed and observed by it under, and there exists no default or event of default or event, occurrence, condition or act which, with the giving of notice, the lapse of time or the happening of any other event or condition, would become a default or event of default by the Company or any of its Subsidiaries under any leases, gas purchase contracts or any other agreement pertaining to their respective Petroleum and Natural Gas Interests or to their other respective assets or properties and each such lease, contract or other agreement is enforceable and in full force and effect.
(m) Subject to the rights, covenants, conditions and stipulations in the title documents and any agreement pertaining to its assets or properties (including the Petroleum and Natural Gas Interests of the Company and any of its Subsidiaries) and on the lessee's or holder's part thereunder to be paid or performed and observed, the Company and each of its Subsidiaries may enter into and upon, hold and enjoy its

respective property and assets (including its respective Petroleum and Natural Gas Interests) for the remainder of their respective terms and all renewals, variations or extensions thereof for its own use and benefit without any lawful interruption of or by any other person whomsoever claiming by, through or under the Company or any of its Subsidiaries.

(n) Neither the Company's, nor any of its Subsidiaries assets and properties (including their respective Petroleum and Natural Gas Interests) are subject to any Take or Pay Obligations.

(14) Non-Arm's Length Transactions.

Neither the Company nor any of its Subsidiaries is indebted to any director, officer, employee or agent of, or independent contractor to, the Company or any of its Subsidiaries or any of their respective affiliates or associates (except for amounts due in the Ordinary Course as salaries, bonuses and director's fees or the reimbursement of Ordinary Course expenses). Except as disclosed in the Company Filings, there are no material Contracts with, or advances, loans, guarantees, liabilities or other obligations to, on behalf or for the benefit of, any shareholder, officer or director of the Company or any of its Subsidiaries, or any of their respective affiliates or associates.

(15) No "Collateral Benefit".

To the knowledge of the Company, except as set out in Section (15) of the Company Disclosure Letter, no related party of the Company (within the meaning of MI 61-101) together with its associated entities, beneficially owns or exercises control or direction over 1% or more of the outstanding Company Shares, except for related parties who will not receive a "collateral benefit" (within the meaning of such instrument) as a consequence of the transactions contemplated by this Agreement.

(16) Absence of Certain Changes or Events.

Since December 31, 2012, except as disclosed in the Company Filings and other than the transactions contemplated in this Agreement, the business of the Company and its Subsidiaries has been conducted in the Ordinary Course and there has not been any event, circumstance or occurrence which has had, or is reasonably likely to give rise to, a Material Adverse Effect.

(17) Compliance with Laws.

Other than as set forth in Section (17) of the Company Disclosure Letter, the Company, each of its Subsidiaries and, to the knowledge of the Company, each of their respective directors and officers is, and since December 31, 2011 has been, in compliance with Law. Neither the Company nor any of its Subsidiaries or, to the knowledge of the Company, their respective officers or directors has been convicted of any crime, has engaged in any conduct that could result in criminal liability or disqualification by a Governmental Entity or is under any investigation with respect to, has been charged or threatened to be charged with, or has received notice of, any violation or potential violation of any Law or disqualification by a Governmental Entity.

(18) Money Laundering Laws and Foreign Corrupt Practices.

Other than as set forth in Section (18) of the Company Disclosure Letter:

(a) The operations of the Company and its Subsidiaries are, and have been conducted at all times in compliance with the record-keeping and reporting requirements of the anti-money laundering and anti-terrorism statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Entities to which the Company or its Subsidiaries is subject (collectively, the "Money Laundering Laws"), and no action, suit, proceeding or investigation by or before any Governmental Entity involving the Company or its Subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(b) Neither the Company nor any of its Subsidiaries, nor, to the knowledge of the Company, any of their respective directors, officers, agents, employees, consultants or other Persons acting on behalf of the Company or any of its Subsidiaries has offered or given, and the Company is not aware of and does not have any knowledge of any Person that has offered or given on its behalf, anything of value to any official of a Governmental Entity, any political party or official thereof or any candidate for political office, any customer or member of any Governmental Entity, or any other Person, in any such case while knowing or having reason to know that all or a portion of such money or thing of value may be offered, given or promised, directly or indirectly, for the purpose of any of the following:
(i) influencing any action or decision of such Person, in such Person's official capacity, including a decision to fail to perform such Person's official function;
(ii) inducing such Person to use such Person's influence with any Governmental Entity to affect or influence any act or decision of such Governmental Entity to assist the Company or any of its Subsidiaries in obtaining or retaining business for, with, or directing business to, any Person or otherwise to obtain or retain an advantage in the course of business; or
(iii) where such payment would constitute a bribe, rebate, payoff, influence payment, kickback or illegal or improper payment to assist the Company or any of its Subsidiaries in obtaining or retaining business for, with, or directing business to, any Person.
(c) There have been no actions taken by the Company or its Subsidiaries or, to the knowledge of the Company, by any Persons on behalf of the Company or its

Subsidiaries, that would cause the Company or its Subsidiaries or such Persons to be in violation of the Corruption of Foreign Public Officials Act (Canada), as amended, the Foreign Corrupt Practices Act of 1977 (United States), as amended, (collectively, the "Corruption Acts"), the UK Bribery Act of 2010 or any similar legislation in any jurisdiction in which the Company and its Subsidiaries conduct their business and to which the Company and its Subsidiaries may be subject.

(d) The financial records of the Company and its Subsidiaries have at all times been maintained in compliance with the Corruption Acts and the UK Bribery Act of 2010.
(e) There are no proceedings or investigations under the Corruption Acts, the UK Bribery Act of 2010 or any similar legislation in any jurisdiction in which the Company and its Subsidiaries conduct their business pending against the Company or its Subsidiaries, nor any of their respective directors, officers, agents, employees, consultants or other Persons acting on behalf of the Company or any of its Subsidiaries, or to the knowledge of the Company, threatened against or affecting, the Company or its Subsidiaries or any of their respective directors, officers, agents, employees, consultants or other Persons acting on behalf of the Company or any of its Subsidiaries.

(19) Sanctions Legislation.

(a) Neither the Company nor any of its Subsidiaries, nor, to the knowledge of the Company, any of their respective directors, officers, agents, employees, consultants or other Persons acting on behalf of the Company or any of its Subsidiaries has been or is currently subject to and has not breached any economic or financial sanctions or trade embargoes imposed, authorized, administered or enforced by any Sanctions Authority (collectively, "Sanctions"), or has acted, whether directly or indirectly, in violation of any Sanctions and furthermore will not take any action, directly or indirectly, in violation of any Sanctions.
(b) Neither the Company nor any of its Subsidiaries, nor, to the knowledge of the Company, any of their respective directors, officers, agents, employees, consultants or other Persons acting on behalf of the Company or any of its Subsidiaries, is aware of or has taken any action, directly or indirectly, including, but not limited to sales, transactions, contracts, loans or investments, in any currency, in or with any Person listed in any Sanctions-related list of designated Persons maintained by any Sanctions Authority, any Person operating, organized or resident in a Sanctioned Country or any Person controlled by such Person (a "Sanctioned Person"). Neither the Company, its Subsidiaries nor any of their affiliates are owned or affiliated by or with any Sanctioned Person or a government of a country or territory which is the subject or target of any Sanctions (a "Sanctioned Country"), and no director, officer, agent, employee, consultant, representative or affiliate of the Company or any of its Subsidiaries is

a Sanctioned Person or is employed by or affiliated with the government, or is resident in, a Sanctioned Country.

(20) Authorizations and Licenses.

(a) Section (20)(a) of the Company Disclosure Letter lists and describes all material Authorizations that are required by Law in connection with the operation of the business of the Company or any of its Subsidiaries as presently or previously conducted, or in connection with the ownership, operation or use of the assets of the Company or any of its Subsidiaries.
(b) The Company or its Subsidiaries, as applicable, lawfully hold, own or use, and have complied with, all such Authorizations. Each Authorization is valid and in full force and effect in accordance with its terms.
(c) No action, investigation or proceeding is pending in respect of or regarding any such Authorization and none of the Company, its Subsidiaries or any of their respective officers or directors has received notice, whether written or oral, of revocation, non-renewal or material amendments of any such Authorization, or of the intention of any Person to revoke, refuse to renew or materially amend any such Authorization.

(21) Opinion of Financial Advisors.

The Company Board and the Company Special Committee have received the Company Fairness Opinions. True and complete copies of the engagement letters between the Company and each of Goldman, Sachs & Co. and RBC Capital Markets have been provided to the Purchaser and the Company has made true and complete disclosure to the Purchaser of all fees, commissions or other payments that may be incurred pursuant to such engagements or that may otherwise be payable to each of Goldman, Sachs & Co. and RBC Capital Markets.

(22) Finders' Fees.

Other than as set forth in Section (22) of the Company Disclosure Letter, except for the engagement letter between the Company and RBC Capital Markets and the engagement letter between the Company and Goldman, Sachs & Co., and the fees payable under or in connection with such engagements, no investment banker, broker, finder, financial adviser or other intermediary has been retained by or is authorized to act on behalf of the Company or any of its Subsidiaries, or any of their respective officers, directors or employees, or is entitled to any fee, commission or other payment from the Company or any of its Subsidiaries, or any of their respective officers, directors or employees, in connection with the Agreement or any other transaction contemplated by this Agreement.

(23) Company Board and Company Special Committee Approval.

(a) The Company Special Committee, after consultation with its financial and legal advisors has unanimously recommended that the Company Board approve the Arrangement and that the Company Shareholders vote in favour of the Arrangement Resolution.

(b) The Company Board acting on the unanimous recommendation in favour of the Arrangement by the Company Special Committee, has unanimously: (i) determined that the Arrangement is in the best interests of the Company and is fair to the Company Shareholders; (ii) resolved to unanimously recommend that the Company Shareholders vote in favour of the Arrangement Resolution; and (iii) authorized the entering into of this Agreement and the performance by the Company of its obligations under this Agreement, and no action has been taken to amend, or supersede such determinations, resolutions, or authorizations.
(c) Each of the directors and officers of the Company and each Principal Shareholder has advised the Company and the Company believes that they intend to vote or cause to be voted all Company Shares beneficially held by them in favour of the Arrangement Resolution in accordance with the terms of the Company Voting Agreements.

(24) TransGlobe Agreement

The members of the Company Board have determined that the Arrangement is a "Superior Proposal" within the meaning of the TransGlobe Agreement. The Company has complied with Article 5 of the TransGlobe Agreement with respect to entering into this Agreement. The TransGlobe Agreement has been validly terminated in accordance with Section 7.1(c)(ii) thereof and the Company has supplied Purchaser with a true copy of the notice of termination delivered in connection therewith. The Company has not breached in any material respect any terms of the TransGlobe Agreement and has paid the termination fee contemplated by section 7.2 thereof.

(25) Company Material Contracts.

(a) Section (24)(a) of the Company Disclosure Letter sets out a complete and accurate list of all Company Material Contracts.
(b) Each Company Material Contract is legal, valid, binding and in full force and effect and is enforceable by the Company or a Subsidiary, as applicable, in accordance with its terms (subject to bankruptcy, insolvency and other Laws affecting creditors' rights generally, and to general principles of equity) and is the product of fair and arms' length negotiations between each of the parties to such Company Material Contracts.
(c) The Company and each of its Subsidiaries have performed in all material respects all respective obligations required to be performed by them to date under the Company Material Contracts and neither the Company nor any of its Subsidiaries is in material breach or default under any Company Material Contracts, nor does the Company have knowledge of any condition that with the passage of time or the giving of notice or both would result in such a breach or default.
(d) To the Company's knowledge, none of the Company or any of its Subsidiaries knows of, or has received any notice (whether written or oral) of, any breach or default under nor does there exist any condition which with the passage of time or the giving of notice or both would result in such a breach or default under) any such Company Material Contract by any other party to a Company Material Contract to the extent that such breach or default would reasonably be expected to have a Material Adverse Effect.
(e) To the Company's knowledge, the Company has not received any notice (whether written or oral), that any party to a Company Material Contract intends to cancel, terminate or otherwise modify or not renew its relationship with the Company or any of its Subsidiaries, and no such action has been threatened, in each case to the extent that such cancellation, termination, modification or non-renewal could reasonably be expected to have a Material Adverse Effect.

(26) Litigation.

(a) There is no claim, action, inquiry, proceeding or investigation in effect or ongoing or, to the knowledge of the Company, pending or threatened against or relating to the Company or any of its Subsidiaries, the business of the Company or any of its Subsidiaries or affecting any of their respective current or former properties or assets, by or before any Governmental Entity. None of the proceedings disclosed in Section (26)(a) of the Company Disclosure Letter, if determined adverse to the interests of the Company or its Subsidiaries, would have, or reasonably could be expected to have a Material Adverse Effect nor are there any events or circumstances which could reasonably be expected to give rise to any such claim, action, proceeding or investigation.
(b) There is no bankruptcy, liquidation, winding-up or other similar proceeding pending or in progress, or, to the knowledge of the Company, threatened against or relating to the Company any of its Subsidiaries before any Governmental Entity.
(c) Neither the Company nor any of its Subsidiaries is subject to any outstanding order, writ, injunction or decree which has had or is reasonably likely to have, a Material Adverse Effect.

(27) Environmental Matters.

(a) No written notice, order, complaint or penalty has been received by the Company or any of its Subsidiaries alleging that the Company or any of its Subsidiaries is in material violation of, or has any material liability or potential liability under, any Environmental Law, and, to the Company's knowledge, there are no material judicial, administrative or other actions, suits or proceedings pending or threatened against the Company or any of its Subsidiaries which allege a material violation of, or any material liability or potential material liability under, any Environmental Laws; and the Company is not aware of any facts or circumstances that reasonably could be expected to give rise to any such notice, claim, order, complaint or penalty.

(b) The Company and each of its Subsidiaries has all material environmental Authorizations necessary for the operation of their respective businesses and to comply with all Environmental Laws; and the operations of the Company and each of its Subsidiaries are in compliance in all material respects with the terms of Environmental Laws.
(c) The operations of the Company and its Subsidiaries are and have been conducted in material compliance with all required or applicable Environmental Laws and environmental authorizations.
(d) Neither the Company nor its Subsidiaries have in a manner that is contrary to Environmental Laws, caused any releases of Hazardous Substances on, at, from or under any real or immovable property currently or formerly owned, operated, occupied or otherwise utilized by the Company or its Subsidiaries, to the extent that such release could reasonably be expected to have a Material Adverse Effect.
(e) Neither the Company nor its Subsidiaries have, either expressly or by operation of Law, assumed responsibility for or agreed to indemnify or hold harmless any Person for any liability or obligation arising under Environmental Law that is reasonably likely to form the basis of any material liabilities, claims, demands, losses, costs, damages or expenses against the Company or its Subsidiaries.
(f) To the knowledge of the Company, neither the execution of this Agreement, nor the consummation of the transactions contemplated by this Agreement, shall require any material notification to any Governmental Entity or the undertaking of any investigations or remedial actions pursuant to Environmental Law by the Company or its Subsidiaries.
(g) The Company has made available all material environmental reports, investigations, studies, audits and other environmental documents that are in the Company's possession or control and that have been completed within the past three (3) years that relate to the operations of the Company and its Subsidiaries or any real or immovable property currently or formerly owned, operated or occupied by the Company and its Subsidiaries.

(28) Shareholder Support.

The Company is not aware that any Company Shareholders are not supportive of the Arrangement and no Company Shareholders has indicated to the Company that it intends to vote against the Arrangement Resolution or to propose a competing resolution or take any other action which would be contrary to the Arrangement Resolution being passed.

(29) Employees.

(a) Section (29) of the Company Disclosure Letter sets out a true and complete list of all Company Employees (without showing names or employee numbers) with an annual aggregate compensation in excess of \$150,000, including their respective location, hire date and cumulative length of service, position, compensation (including but not limited to salary, wage rates, bonus and commissions), benefits, vacation entitlement in days, current status (full time or part-time, active or nonactive (and if non-active, the reason for leave)) and whether they are subject to a written employment Contract or a Company Change of Control Payment as well as a list of all former Company Employees to whom the Company or any of its Subsidiaries has any outstanding obligations exceeding \$100,000, indicating the nature and the value of such obligations.
(b) Each independent contractor of the Company has been properly classified as an independent contractor and neither the Company nor any Subsidiary has received any notice from any Governmental Entity disputing such classification.
(c) All written employment Contracts in relation to employees of the Company Employees have been disclosed to the Purchaser. No Company Employee has indicated to the Company or its Subsidiaries that he or she intends to resign, retire or terminate his or her engagement with the Company as a result of the transactions contemplated by this Agreement or otherwise.
(d) The Company and its Subsidiaries are materially in compliance with all terms and conditions of employment and all Law respecting employment, including pay equity, wages, hours of work, overtime, human rights and occupational health and safety, and there are no outstanding claims, complaints, investigations or orders under any such Law and there is no basis for such claim.
(e) The Company has not and is not engaged in any unfair labour practice and no unfair labour practice complaint, grievance or arbitration proceeding is pending or, threatened against the Company.
(f) All amounts due or accrued due for all salary, wages, bonuses, commissions, vacation with pay, sick days and benefits under Employee Plans and other similar accruals have either been paid or are accurately reflected in the books and records of the Company or of the applicable Subsidiary.
(g) Except as disclosed in Section (29) of the Company Disclosure Letter, no Company Employee has any Contract in relation to such employee's termination, length of notice, pay in lieu of notice, severance, job security or similar provisions other than such as results by law from the employment of an employee without an agreement as to notice or severance, nor are there any change of control payments, golden parachutes, severance payments, retention payments, Contracts or other agreements with current or former Company Employees providing for cash or other compensation or benefits upon the consummation of, or relating to,

the Arrangement or any other transaction contemplated by this Agreement, including a change of control of the Company or of any of its Subsidiaries.

(h) There are no outstanding assessments, penalties, fines, liens, charges, surcharges, or other amounts due or owing pursuant to any workplace safety and insurance legislation and neither the Company nor any Subsidiary has been reassessed in any respect under such legislation during the past three years and, no audit of the Company or any Subsidiary is currently being performed pursuant to any applicable workplace safety and insurance legislation. As of the date of this Agreement, there are no claims or potential claims which may adversely affect the Company or any Subsidiary's accident cost experience.
(i) There are no charges pending under applicable occupational health and safety legislation ("OHSA"). The Company has complied in all material respects with any orders issued under OHSA and there are no appeals of any orders under OHSA currently outstanding.
(j) There have been no fatal or critical accidents which have occurred in the course of the operation of the business since December 31, 2011 which could reasonably be expected to lead to charges under Law.

(30) Collective Agreements.

(a) There is no Collective Agreement in force with respect to the employees of the Company nor is there any Contract with any employee association in respect of the employees of the Company.
(b) Neither the Company nor any of its Subsidiaries is a party, either directly or indirectly, or by operation of law, to any other Collective Agreement and there are no outstanding labour tribunal proceedings of any kind, including any proceedings which could result in certification of a trade union as bargaining agent for any Company Employees not already covered by a Collective Agreement, and there are no written or oral agreements or course of conduct which modify the terms of the Collective Agreements. No trade union, council of trade unions, employee bargaining agency or affiliated bargaining agent holds bargaining rights with respect to any of the employees of the Company by way of certification, interim certification, voluntary recognition, or succession rights, or has applied or, threatened to apply to be certified as the bargaining agent of any employees of the Company.
(c) There are no threatened or pending union organizing activities involving any employees of the Company. There is no labour strike, dispute, work slowdown or stoppage pending or involving or, threatened against the Company and no such event has occurred within the last five (5) years.
(d) No trade union has applied to have the Company or any of its Subsidiaries declared a common or related employer pursuant to the Labour Relations Code

(Alberta) or any similar legislation in any jurisdiction in which the Company or any of its Subsidiaries carries on business.

(e) None of the Company or any of its Subsidiaries has engaged in any lay-off activities within the past three years that would violate or in any way subject the Company or any of its Subsidiaries to the group termination or lay-off requirements of the applicable provincial employment standards Law or other Law.
(f) There are no outstanding labour tribunal proceedings of any kind or other event of any nature whatsoever, including any proceedings which could result in certification, interim certification, voluntary recognition, or succession rights of a trade union, council of trade unions, employee bargaining agencies, affiliated bargaining agent or any other Person as bargaining agent for any Company Employees not already covered by a Collective Agreement.

(31) Employee Plans.

(a) Section (31)(a) of the Company Disclosure Letter lists and describes all health, welfare, supplemental unemployment benefit, bonus, profit sharing, option, insurance, incentive, incentive compensation, deferred compensation, share purchase, share compensation, disability, severance, termination, pension or supplemental retirement plans and other employee or director employment, compensation or benefit plans, policies, trusts, funds, arrangements, Contracts or other agreements for the benefit of directors or former directors of the Company or any of its Subsidiaries, Company Employees or former Company Employees, which are maintained by or binding upon the Company or any of its Subsidiaries or in respect of which the Company or any of its Subsidiaries has any actual or potential liability (collectively, the "Employee Plans").
(b) No changes have occurred or are expected to occur which would materially affect the information contained in the financial statements or asset statements required to be provided to the Purchaser.
(c) Each Employee Plan is and has been established, registered, qualified and, in all material respects, administered in accordance with Law, and in accordance with their terms, the terms of the material documents that support such Employee Plan and the terms of agreements between the Company and/or any of the Subsidiaries, as the case may be, and their respective employees and former employees who are members of, or beneficiaries under, the Employee Plan. No fact or circumstance exists which could adversely affect the registered status of any such Employee Plan.
(d) All current obligations of the Company or any of its Subsidiaries regarding the Employee Plans have been satisfied. All contributions, premiums or taxes required to be made or paid by the Company or any of its Subsidiaries, as the case may be, under the terms of each Employee Plan or by Law in respect of the

Employee Plans have been made in a timely fashion in accordance with Law in all respects and in accordance with the terms of the applicable Employee Plan. No current outstanding notice of underfunding, non-compliance, failure to be in good standing or otherwise has been received by the Company or any of its Subsidiaries from any applicable Governmental Entity in respect of any Employee Plan that is a pension or retirement plan.

(e) To the knowledge of the Company, no Employee Plan is subject to any pending investigation, examination or other proceeding, action or claim initiated by any Governmental Entity, or by any other party (other than routine claims for benefits) and there exists no state of facts which after notice or lapse of time or both would reasonably be expected to give rise to any such investigation, examination or other proceeding, action or claim or to affect the registration or qualification of any Employee Plan required to be registered or qualified.
(f) The Company has not received any payments of surplus out of any Employee Plan and there have been no improper withdrawals or transfers of assets from any Employee Plan.
(g) No insurance policy or any other agreement affecting any Employee Plan requires or permits a retroactive increase in contributions, premiums or other payments due under such insurance policy or agreement.
(h) None of the Employee Plans (other than pension plans) provide for retiree benefits or for benefits to retired employees or to the beneficiaries or dependents of retired employees.
(i) No provision of any Employee Plan or of any agreement, and no act or omission of the Company, in any way limits, impairs, modifies or otherwise affects the right of the Company to unilaterally amend or terminate any Employee Plan, and no commitments to improve or otherwise amend any Employee Plan have been made.
(j) None of the Employee Plans enjoy any special tax status under Law, nor have any advance tax rulings been sought or received in respect of any Employee Plan.
(k) All employee data necessary to administer each Employee Plan in accordance with its terms and conditions and Law is in possession of the Company and such data is complete, correct, and in a form which is sufficient for the proper administration of each Employee Plan.
(l) The Company does not and has never sponsored or participated in a defined benefit pension plan.

(32) Insurance.

(a) Each of the Company and its Subsidiaries is, and has been continuously since December 31, 2011, insured by reputable third party insurers with reasonable and prudent policies appropriate the size and nature of the business of the Company and its Subsidiaries and their respective assets, including a sufficient level of insurance necessary to comply with the terms and conditions of its Authorizations and the Company Material Contracts.

(b) The third party insurance policies of the Company and its Subsidiaries are in full force and effect in accordance with their terms, and the Company and its Subsidiaries are not in default under the terms of any such policy. There has not been any proposed, contemplated or threatened termination of, or premium increase with respect to, any of such policies.
(c) The limits contained within such policies have not been exhausted or significantly diminished and no further premiums or payments will be due following the Effective Time with respect to periods of time occurring prior to the Effective Time.
(d) There is no claim pending under any insurance policy that has been denied, rejected, questioned or disputed by any insurer or as to which any insurer has made any reservation of rights or refused to cover all or any portion of such claims. All proceedings covered by any of the insurance policies have been properly reported to and accepted by the applicable insurer.
(e) The Company is not in default with respect to any of the provisions contained in the insurance policies and has not failed to give any notice or to present any claim under any insurance policy in a due and timely fashion.
(f) There are no circumstances in respect of which any Person could make a material claim under any insurance policy. There has not been any adverse change in the relationship of the Company with its insurers, the availability of coverage, or in the premiums payable pursuant to the insurance policies.

(33) Taxes.

(a) All Tax Returns required by law to be filed with any Governmental Entity by, or on behalf of, the Company or any of its Subsidiaries have been filed when due in accordance with Law (taking into account any applicable extensions), and all such Tax Returns are, true and complete in all respects. The Company and each of its Subsidiaries has paid (or has had paid on its behalf) or has collected, withheld and remitted to the appropriate Governmental Entity all Taxes due and payable on a timely basis, has established (or has had established on its behalf and for its sole benefit and recourse) in accordance with GAAP, an adequate accrual for all Taxes through the end of the last period for which the Company and its Subsidiaries ordinarily record items on their respective books. There is no claim, audit, action, suit, proceeding or investigation now pending or, to the Company's knowledge, threatened against or with respect to the Company or its Subsidiaries in respect of any Tax or Tax asset, except as set out in this Section 33 of the Company Disclosure Letter. There are no currently effective elections, agreements or waivers extending the statutory period or providing for an extension of time with respect to the assessment or reassessment of any Taxes, or of the filing of any Tax Return or any payment of Taxes by the Company or any of its Subsidiaries. The Company is a taxable Canadian corporation as defined in the Tax Act.

(b) The Company and its Subsidiaries have not entered into any transactions or arrangements with persons with whom they do not deal at arm's length (for purposes of the Tax Act) otherwise than for consideration equal to fair market value, and have, where required, made and maintained documentation that complies with all of the requirements of subsection 247(4) of the Tax Act.

(34) Financial Information.

No forecast, budget or projection provided by or on behalf of the Company to the Purchaser contains any Misrepresentation and such forecasts, budgets and projections were prepared in good faith, disclosed all relevant assumptions and contain reasonable estimates of the prospects of the business of the Company.

(35) No Other Business

The Company does not and has not carried on any other business, other than as disclosed in the Company's most recent Annual Information Form filed on SEDAR.

SCHEDULE D

REPRESENTATIONS AND WARRANTIES OF THE PARENT AND PURCHASER

(1) Organization and Qualification

Each of the Parent and the Purchaser is a corporation duly incorporated or organized, as applicable, validly existing and in good standing under the laws of the country of its incorporation.

(2) Corporate Authorization

Each of the Parent and the Purchaser has the requisite corporate power and authority to enter into and perform its obligations under this Agreement. The execution and delivery by each of the Parent and the Purchaser of this Agreement, the performance by each of them of their obligations hereunder, and the Arrangement have been duly authorized by all necessary corporate action on the part of each of the Parent and the Purchaser.

(3) Execution and Binding Obligation

This Agreement has been duly executed and delivered by each of the Parent and the Purchaser and constitutes a legal, valid and binding obligation of each of the Parent and the Purchaser enforceable in accordance with its terms, subject only to any limitation under bankruptcy, insolvency or other Law affecting the enforcement of creditors' rights generally and the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction.

(4) Governmental Authorization

The execution, delivery and performance by each of the Parent and the Purchaser of this Agreement and the consummation by the Purchaser of the Arrangement does not require any Authorization or other action by or in respect of, or filing, recording, registering or publication with, or notification to, any Governmental Entity other than (a) the Interim Order and any approvals required by the Interim Order; (b) the Final Order; (c) filings with the Director under the CBCA; (d) the Regulatory Approvals; (e) compliance with Securities Law; and (f) any actions or filings the absence of which would not be reasonably expected to have, individually or in the aggregate, a material adverse effect on the ability of the Purchaser to consummate the Arrangement or perform its obligations hereunder.

(5) No Conflict / Non- Contravention

(a) The execution, delivery and performance by each of the Parent and the Purchaser of this Agreement and the consummation of the Arrangement do not and will not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition):

(i) contravene, conflict with, or result in any violation or breach of the Constating Documents of the Purchaser or the Parent;
(ii) assuming compliance with the matters referred to in Section A(4)(4) above, contravene, conflict with or result in a violation or breach of Law;
(iii) allow any Person to exercise any rights, require any consent or other action by any Person, or constitute a default under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which the Purchaser or the Parent is entitled (including by triggering any rights of first refusal or first offer, change in control provision or other restriction or limitation) under any Contract, lease or other instrument, indenture, deed of trust, mortgage, bond or any Authorization to which the Purchaser or the Parent or any of their respective Subsidiaries is a party of by which the Purchaser or the Parent or any of their respective Subsidiaries is bound; or
(iv) with such exceptions, in the case of paragraphs (ii) and (iii), as would not be reasonably expected to, individually or in the aggregate, have a material adverse effect on the ability of the Purchaser or the Parent to consummate the Arrangement and perform their respective obligations hereunder.

(6) Litigation

(a) There is no claim, action, inquiry, proceeding or investigation in effect or ongoing or, to the knowledge of the Purchaser or the Parent, pending or threatened against or relating to the Purchaser, the Parent or any of their respective Subsidiaries by or before any Governmental Entity that, if adversely determined, would, individually or in the aggregate, have or would reasonably be expected to have a material adverse effect on the ability of the Purchaser or the Parent to consummate the Arrangement and perform their respective obligations hereunder.
(b) There is no bankruptcy, liquidation, winding-up or other similar proceeding pending or in progress, or, to the knowledge of the Purchaser or the Parent, threatened against or relating to the Purchaser or the Parent before any Governmental Entity.
(c) None of the Purchaser, the Parent or any of their respective Subsidiaries is subject to any outstanding order, writ, injunction or decree which would, individually or in the aggregate, has or reasonably would be expected to have a material adverse effect on the ability of the Purchaser or the Parent to consummate the Arrangement and perform their respective obligations hereunder.

(7) Funds

The Parent and the Purchaser collectively have, and will have at the Effective Time, sufficient funds available to satisfy the aggregate Consideration payable by the Purchaser pursuant to the Arrangement in accordance with the terms of this Agreement and the Plan of Arrangement, and to satisfy all other obligations payable by the Parent or the Purchaser pursuant to this Agreement and the Arrangement.

SCHEDULE E

REGULATORY APPROVALS

Regulatory Approvals include the following:

Competition Act (Canada) Approval, which means that: (a) the Commissioner of Competition appointed under the Competition Act (Canada) (the "Commissioner") shall have issued an advance ruling certificate under section 102 of the Competition Act (Canada); or (b) both of (A) the waiting period under section 123 of the Competition Act (Canada) shall have expired or been terminated or the obligation to provide a pre-merger notification in accordance with Part IX of the Competition Act (Canada) shall have been waived in accordance with paragraph 113(c) of the Competition Act (Canada), and (B) the Purchaser shall have been advised in writing by the Commissioner that the Commissioner does not, at this time, intend to make an application under section 92 of the Competition Act (Canada) in respect of the transactions contemplated by this Agreement, and any terms and conditions attached to such advice shall be acceptable to the Purchaser, acting reasonably.

Investment Canada Act Approval, which means that the Purchaser shall have been advised in writing by the responsible Minister under the Investment Canada Act (the "Minister of Industry") that the Minister of Industry is satisfied that the transactions contemplated by this Agreement are likely to be of net benefit to Canada, or that the Minister of Industry is deemed to be satisfied that the transactions contemplated by this Agreement are likely to be of net benefit to Canada.

SCHEDULE F

COMPANY DEBENTURE NOTICE

[See attached]

[CARACAL ENERGY INC. HEADER]

7R >Ɣ@

'DWH >Ɣ@\$SULO

Dear Sirs

Acquisition of Caracal Energy Inc. (the "Company") by [Glencore Canada] (the "Purchaser") pursuant to a plan of arrangement (the "Plan")

We refer to the Company's U.S.\$173,600,000 Convertible Bonds due 31 September 2017 (the "Bonds"). Capitalised terms in this letter shall have the same meaning as set out in the Bonds unless otherwise stated.

The Plan will involve the acquisition by the Purchaser of the entire issued and to be issued share capital of the Company and will, if completed, result in a Change of Control.

Details concerning the Plan may be obtained from Details concerning the Plan may be obtained from [Caracal to confirm Paying, Transfer and Conversion Agent(s) and their specified offices].

This notice shall be governed by and construed in accordance with English law.

Yours faithfully

Caracal Energy Inc.

__________________

APPENDIX C

PLAN OF ARRANGEMENT

PLAN OF ARRANGEMENT UNDER SECTION 192 OF THE

CANADA BUSINESS CORPORATIONS ACT

ARTICLE 1 DEFINITIONS AND INTERPRETATION

1.1 In this Plan of Arrangement, unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the respective meanings set out below and grammatical variations of those terms shall have corresponding meanings:
(a) "affiliate" has the meaning specified in National Instrument 45-106 Prospectus and Registration Exemptions;
(b) "Amalco" means Caracal Energy Inc., the corporation resulting from the Amalgamation;
(c) "Amalco Redeemable Preferred Shares" has the meaning ascribed thereto in subsection 3.4(a)(iv);
(d) "Amalgamation" has the meaning ascribed thereto in subsection 3.1(d);
(e) "Arrangement" means an arrangement under Section 192 of the CBCA on the terms and subject to the conditions set out in this Plan of Arrangement, subject to any amendments or variations to this Plan of Arrangement made in accordance with the terms of the Arrangement Agreement or made at the direction of the Court in the Final Order with the prior written consent of the Company and the Purchaser, each acting reasonably;
(f) "Arrangement Agreement" means the arrangement agreement made as of April 14, 2014 among the Purchaser, Parent and the Company, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms;
(g) "Articles of Arrangement" means the articles of arrangement of the Company in respect of the Arrangement required by subsection 192(6) of the CBCA to be sent to the Director after the Final Order is made, which shall include this Plan of Arrangement and otherwise be in a form and content satisfactory to the Company and the Purchaser, each acting reasonably;
(h) "Business Day" means any day of the year, other than a Saturday, Sunday or any day on which major banks are closed for business in Toronto, Ontario, Calgary, Alberta, London, United Kingdom, Zurich, Switzerland or New York, New York;
(i) "CanCo" means [] Canada Inc., a corporation incorporated under the laws of Canada as a wholly-owned subsidiary of the Company;
(j) "CanCo Shares" means the common shares in the capital of CanCo;
(k) "CBCA" means the Canada Business Corporations Act;
(l) "Certificate of Arrangement" means the certificate of arrangement to be issued by the Director pursuant to subsection 192(7) of the CBCA in respect of the Articles of Arrangement giving effect to the Arrangement;
(m) "Company" means Caracal Energy Inc. prior to the Amalgamation;
(n) "Company Awards" means DSUs, PSUs and RSUs;
(o) "Company Circular" means the notice of the Company Meeting and accompanying management information circular, including all schedules, appendices and exhibits to, and information incorporated by reference in, such management information circular, to be sent to the Company Shareholders in connection with the Company Meeting, as amended, supplemented or otherwise modified from time to time in accordance with the terms of the Arrangement Agreement;
(p) "Company Debentures" means the \$173.6 million aggregate principal amount of pre-IPO convertible bonds of the Company with a maturity date of September 30, 2017;
(q) "Company Long Term Incentive Plan" means the "Griffiths Energy Incentive Compensation Plan" dated January 1, 2013, including any amendments approved by Company Shareholders at the annual and special meeting of Company Shareholders to be held on May 15, 2014;
(r) "Company Meeting" means the special meeting of Company Shareholders, including any adjournment or postponement of such special meeting in accordance with the terms of the Arrangement Agreement, to be called and held in accordance with the Interim Order to consider the Arrangement and for any other purpose as may be set out in the Company Circular and agreed to in writing by the Purchaser;
(s) "Company Optionholders" means the holders of Company Options;
(t) "Company Options" means the outstanding options to purchase Company Shares issued pursuant to the Company Stock Option Plan;
(u) "Company Shareholders" means the registered or beneficial holders of the Company Shares or, following the Amalgamation, Amalco Redeemable Preferred Shares, as the context requires;
(v) "Company Shares" means the common shares in the capital of the Company;
(w) "Company Stock Option Plan" means the Company's stock option plan effective as of June 30, 2011;
(x) "Company Warrants" means the outstanding management performance warrants and the employee performance warrants exercisable for Company Shares;
(y) "Consideration" means 5.50 GBP in cash;
(z) "Court" means the Court of Queen's Bench of Alberta in Calgary, Alberta, or other court as applicable;
(aa) "Depositary" means such Person as the Purchaser may appoint to act as depositary for the Arrangement, with the approval of the Company, acting reasonably;
(bb) "Director" means the Director appointed pursuant to Section 260 of the CBCA;
(cc) "Dissent Rights" means the rights of dissent in respect of the Arrangement described in this Plan of Arrangement;
(dd) "Dissenting Shareholder" means any registered Company Shareholder who has duly and validly exercised its Dissent Rights pursuant to Article 5 of this Plan of Arrangement and the Interim Order and has not withdrawn or been deemed to have withdrawn such exercise of Dissent Rights;
(ee) "Dissenting Shares" means the Company Shares held by Dissenting Shareholders;
(ff) "DSUs" means the deferred share units granted under the Company Long Term Incentive Plan;
(gg) "Effective Date" means the date shown on the Certificate of Arrangement giving effect to the Arrangement;
(hh) "Effective Time" means 12:01 a.m. on the Effective Date, or such other time as the Parties agree to in writing before the Effective Date;
(ii) "Encumbrance" includes any mortgage, pledge, assignment, charge, lien, security interest, adverse interest in property, other third party interest or encumbrance of any kind whether contingent or absolute, and any agreement, option, right or privilege (whether by Law, contract or otherwise) capable of becoming any of the foregoing;
(jj) "Final Order" means the final order of the Court in a form acceptable to the Company and the Purchaser, each acting reasonably, approving the Arrangement, as such order may be amended by the Court (with the consent of both the Company and the Purchaser, each acting reasonably) at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended (provided that any such amendment is acceptable to both the Company and the Purchaser, each acting reasonably) on appeal;
(kk) "GBP" means the pound sterling, the lawful currency of the United Kingdom;
(ll) "Governmental Entity" means: (i) any international, multinational, national, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau, ministry, agency or instrumentality, domestic or foreign; (ii) any subdivision or authority of any of the above; (iii) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing; (iv) any government-controlled corporation or similar entity; or (v) any stock exchange;
(mm) "Interim Order" means the interim order of the Court in a form acceptable to the Company and the Purchaser, each acting reasonably, providing for, among other things, the calling and holding of the Company Meeting, as such order may be amended by the Court with the consent of the Company and the Purchaser, each acting reasonably;
(nn) "Law" means, with respect to any Person, any and all applicable law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement, whether domestic or foreign, enacted, adopted, promulgated or applied by a Governmental Entity that is binding upon or applicable to such Person or its business, undertaking, property or securities, and to the extent that they have the force of law, policies, guidelines, notices and protocols of any Governmental Entity, as amended;
(oo) "Letter of Transmittal" means the letter of transmittal to be sent to Company Shareholders pursuant to which Company Shareholders are required to deliver certificates representing Company Shares in connection with the Arrangement;
(pp) "Parent" means Glencore International AG;
(qq) "Person" includes any individual, partnership, association, body corporate, organization, trust, estate, trustee, executor, administrator, legal

representative, government (including Governmental Entity), syndicate or other entity, whether or not having legal status;

(rr) "Plan of Arrangement", "hereof", "herein", "hereunder" and similar expressions means this Plan of Arrangement, including any appendices hereto, and any amendments, variations or supplements hereto made from time to time in accordance with the terms hereof, the Arrangement Agreement or made at the direction of the Court in the Final Order;
(ss) "PSUs" means the performance share units granted under the Company Long Term Incentive Plan;
(tt) "Purchaser" means 8682321 Canada Inc.;
(uu) "Redemption Call Right" has the meaning ascribed thereto in Section 4.1 of Schedule I hereto;
(vv) "Redemption Call Time" has the meaning ascribed thereto in Section 1.1 of Schedule I hereto;
(ww) "RSUs" means the restricted share units granted under the Company Long Term Incentive Plan; and
(xx) "Tax Act" means the Income Tax Act (Canada).

1.2 Interpretation Not Affected by Headings, etc.

1.3 Article References

1.4 Number and Gender

1.5 Date for Any Action

1.6 Time

1.7 Currency

Unless otherwise stated, all references in this Plan of Arrangement to sums of money are expressed in lawful money of the United States.

1.8 Statutory References

ARTICLE 2 EFFECT OF THE ARRANGEMENT

2.1 This Plan of Arrangement is made pursuant to, is subject to the provisions of and forms part of, the Arrangement Agreement.
2.2 This Plan of Arrangement, upon the filing of the Articles of Arrangement and the issuance of the Certificate of Arrangement, will become effective at, and be binding upon the Company, the Company Shareholders (including Dissenting Shareholders), all registered holders and all beneficial owners of any Company Award, all holders and all beneficial owners of Company Warrants, the Company Optionholders, CanCo, the Depositary, the Purchaser and all other Persons as and from the Effective Time, without any further act or formality required on the part of any Person except as expressly provided herein.
2.3 The Articles of Arrangement and the Certificate of Arrangement shall be filed and issued, respectively, with respect to the Arrangement in its entirety. The Certificate of Arrangement shall be conclusive evidence that the Arrangement has become effective and that each of the provisions of Article 3 has become effective in the sequence and at the times set out therein.
2.4 Other than as expressly provided for herein, no portion of this Plan of Arrangement shall take effect with respect to any party or Person until the Effective Time.

ARTICLE 3 ARRANGEMENT

3.1 Commencing at the Effective Time, each of the events set out below shall occur and be deemed to occur in the following sequence, without any further act or formality, unless specifically noted:
(a) the Purchaser shall make a loan to the Company in an amount equal to the aggregate amount of the payments that are to be made, pursuant to subsection 3.1(b) below, to the holders of Company Options, Company Warrants and Company Awards (the "Loan Amount") and such amount shall be deposited by the Purchaser with the Depositary in accordance with Section 4.1(a);
(b) notwithstanding any vesting or exercise provisions to which a Company Option, Company Warrant or Company Award might otherwise be subject (whether by contract, conditions of a grant, Law or terms of the Company Stock Option Plan or Company Long Term Incentive Plan, as the case may be), all of the outstanding Company Options, Company Warrants and Company Awards, without any further action on behalf of the holder thereof and without any payment except as provided in this Plan of Arrangement and notwithstanding the terms of the applicable Company Stock Option Plan, Company Warrant or Company Long Term Incentive Plan, shall be disposed of and surrendered by the holders thereof to the Company without any act or formality on its or their part in exchange for a cash payment equal to:
- (i) with respect to each outstanding Company Option and Company Warrant, the amount (if any) by which (A) the product of the number of Company Shares underlying such Company Option or Company Warrant, multiplied by the Consideration exceeds (B) the aggregate exercise price payable under such Company Option or Company Warrant, if such exercise price is in GBP, or the GBP equivalent calculated using the Canadian dollar/GBP exchange rate as of 12:00 p.m. Eastern Time on the Business Day prior to the Effective Date published by the Bank of Canada on its website, if such exercise price is in Canadian dollars, by the holder to acquire the Company Shares underlying such Company Option or Company Warrant;
- (ii) with respect to each outstanding Company Award, the number of Company Shares the holder of such Company Award is entitled to pursuant to such Company Award, multiplied by the Consideration;
(c) all of the outstanding Company Options, Company Warrants and Company Awards shall be cancelled and each of the Company Stock Option Plan and Company Long Term Incentive Plan shall be terminated;
(d) CanCo and the Company shall amalgamate to form Amalco, as more fully described in Section 3.4 (the "Amalgamation");
(e) one common share of Amalco shall be issued to the Purchaser for a subscription price of GBP 5.50;
(f) at the Redemption Call Time:
(i) each Amalco Redeemable Preferred Share issued in exchange for Company Shares in respect of which Dissent Rights have been validly exercised shall be transferred and deemed to be transferred by the holder thereof, without any further act or formality on its part, free and clear of all Encumbrances, to the Purchaser in consideration for a debt claim against Purchaser in an amount determined and payable in accordance with Section 5.1, and the name of such holder will be removed from the register of holders of Amalco Redeemable Preferred Shares (in respect of the Amalco Redeemable Preferred Shares issued in exchange for Company Shares for which Dissent Rights have been validly exercised), and the Purchaser shall be recorded as the registered holder of Amalco Redeemable Preferred Shares so transferred and shall be deemed to be the legal and beneficial owner of such Amalco Redeemable Preferred Shares free and clear of any Encumbrances;
(ii) the Purchaser will be deemed to exercise the Redemption Call Right such that each Amalco Redeemable Preferred Share (other than those held by the Purchaser or any of its affiliates), shall be transferred and deemed to be transferred by the holder thereof, without any further act or formality on its part, free and clear of all Encumbrances, to the Purchaser in exchange for a payment in cash equal to the Consideration, and the name of such holder will be removed from the register of holders of Amalco Redeemable Preferred Shares and the Purchaser shall be recorded as the registered holder of Amalco Redeemable Preferred Shares so transferred and shall be deemed to be the legal and beneficial owner thereof, free and clear of any Encumbrances; and
(g) Amalco shall repay the Loan Amount by issuing to the Purchaser such number of Amalco common shares as is equal to the quotient obtained when the Loan Amount is divided by the Consideration.
3.2 The Purchaser and the Company shall make the appropriate entries in their respective securities registers to reflect the matters referred to in Section 3.1.
3.3 With respect to each holder of Amalco Redeemable Preferred Shares referred to in subsection 3.1(f), upon the transfer of each such Amalco Redeemable Preferred Share pursuant to subsection 3.1(f) each holder of an Amalco Redeemable Preferred Share shall cease to be a holder of the Amalco Redeemable Preferred Share so transferred.

3.4 Amalgamation of CanCo and the Company

(a) Pursuant to Section 3.1(d), CanCo and the Company shall amalgamate to form Amalco under the CBCA, with the effect described below, and, unless and until otherwise determined in the manner required by Law, the following shall apply:
(i) Name. The name of Amalco shall be Caracal Energy Inc.
(ii) Registered Office. The registered office of Amalco shall be located in Canada in the Province of Alberta. The address of the registered office shall be Suite 2100, 555 – 4th Avenue S.W., Calgary, Alberta, T2P 3E7.
(iii) Business and Powers. There shall be no restrictions on the business that Amalco may carry on or on the powers it may exercise.
(iv) Authorized Share Capital. Amalco shall be authorized to issue an unlimited number of common shares and an unlimited number of shares designated as "Class A Preferred Shares" ("Amalco Redeemable Preferred Shares").
(v) Share Provisions. The Amalco Redeemable Preferred Shares shall have the terms set forth in Schedule I attached hereto. Certificates representing Company Shares will represent the Amalco Redeemable Preferred Shares received on the Amalgamation.
(vi) Shares. Each CanCo Share shall be cancelled without any repayment of capital in respect thereof. Each Company Share (including any Company Share issued prior to the Effective Time pursuant to (i) Company Options, Company Warrants, Company Awards or (ii) the conversion of any Company Debentures), including Company Shares in respect of which Dissent Rights have been exercised, shall be converted into one fully paid and non-assessable Amalco Redeemable Preferred Share and the shares so converted shall be added to the register of shareholders of Amalco.
(vii) Restrictions on Transfer. The transfer of Amalco Redeemable Preferred Shares shall be restricted, other than pursuant to the Arrangement or the Redemption Call Right, and no holder of Amalco Redeemable Preferred Shares shall transfer any such share without either: (i) the approval of the directors of Amalco passed at a meeting of the board of directors or by an instrument or instruments in writing signed by a majority of the directors; or (ii) the approval of the holders of at least a majority of the shares of Amalco entitling the holders thereof to vote in all circumstances (other than holders of shares who are entitled to vote separately as a class) for the time being outstanding, expressed by a resolution passed at a meeting of the

holders of such shares or by an instrument or instruments in writing signed by the holders of a majority of such shares.

(viii) Number of Directors. The number of directors of Amalco shall not be less than 1 and not more than 10, and otherwise as the shareholders of Amalco may from time to time determine by special resolution.
(ix) Initial Directors. The initial directors of Amalco shall be the directors of the Company immediately prior to the Amalgamation.
(x) By-laws. The by-laws of Amalco shall be the same as the by-laws of the Company.
(xi) Articles. The Articles of Arrangement filed shall be deemed to be the articles of amalgamation of Amalco and any certificate issued in respect of such Articles of Arrangement by the Director under the CBCA giving effect to the Arrangement shall be deemed to be the Certificate of Amalgamation of Amalco.
(xii) Stated Capital. The aggregate of the stated capital of the issued and outstanding Class A Preferred Share shall be equal to the aggregate of the stated capital of the issued and outstanding Company Shares immediately prior to the Amalgamation.
(xiii) Effect of Amalgamation. Upon the amalgamation of CanCo and the Company to form Amalco becoming effective pursuant to Section 3.1(d):
A. the property of each of CanCo and the Company shall continue to be the property of Amalco;
B. Amalco shall continue to be liable for the obligations of CanCo and the Company;
C. all existing causes of action, claims or liabilities to prosecution with respect to CanCo and the Company shall be unaffected;
D. all civil, criminal or administrative actions or proceedings pending by or against CanCo and the Company may be continued to be prosecuted by or against Amalco; and
E. all convictions against, or rulings, orders or judgments in favour of or against CanCo and the Company may be enforced by or against Amalco.

ARTICLE 4 CERTIFICATES AND PAYMENTS

4.1 Payment of Consideration

(b) From and after the Effective Time, each certificate that immediately prior to the Effective Time represented Company Shares, which were exchanged for the Amalco Redeemable Preferred Shares in the Amalgamation, shall be deemed to represent only the right to receive the consideration in respect of the Amalco Redeemable Preferred Shares acquired under this Plan of Arrangement, less any amounts withheld pursuant to Section 4.3. Any such certificate formerly representing Company Shares not duly surrendered on or before the day that is two years less one day from the Effective Date shall cease to represent a claim by or interest of any kind or nature against or in any of the Company or the Purchaser. On such date, any and all consideration to which such former holder was entitled shall be deemed to have been surrendered to the Purchaser or the Company, as applicable.
(c) Any payment made by way of cheque by the Company, the Depositary or the Purchaser pursuant to this Plan of Arrangement that has not been deposited or has been returned to the Company, the Depositary or the Purchaser or that otherwise remains unclaimed, in each case, on or before the second anniversary of the Effective Time shall be returned by the Depositary to the Purchaser, and any right or claim to payment hereunder that remains outstanding on the day that is two years less one day from the Effective Date shall cease to represent a right or claim by or interest of any kind or nature and the right of a former holder of Company Shares to receive the consideration for the Amalco Redeemable Preferred Shares for which such Company Shares were exchanged pursuant to this Plan of Arrangement shall terminate and be deemed to be surrendered and forfeited to the Purchaser or the Company, as applicable, for no consideration.
(d) No former holder of Company Shares shall be entitled to receive any consideration with respect to the Amalco Redeemable Preferred Shares for which such Company Shares were exchanged other than the consideration to which such former holder is entitled to receive in accordance with this Section 4.1 or Section 5.1 and, for greater certainty, no such holder with be entitled to receive any interest, dividends, premium or other payment in connection therewith.

4.2 Lost Certificates

by the Person claiming such certificate to be lost, stolen or destroyed, the Purchaser or the Depositary, as applicable, will issue and deliver in exchange for such lost, stolen or destroyed certificate, the consideration to which the holder is entitled pursuant to this Plan of Arrangement. When authorizing such issuance and delivery in exchange for any lost, stolen or destroyed certificate, the Person to whom such consideration is to be issued and delivered shall, as a condition precedent to the delivery of such consideration, give a bond satisfactory to the Purchaser (acting reasonably) in such sum as the Purchaser may direct, or otherwise indemnify the Purchaser in a manner satisfactory to the Purchaser, acting reasonably, against any claim that may be made against the Purchaser with respect to the certificate alleged to have been lost, stolen or destroyed.

4.3 Withholding Rights

ARTICLE 5 DISSENT RIGHTS

5.1 Dissent Rights

(a) are ultimately entitled to be paid fair value for their Company Shares shall be deemed not to have participated in the transactions in Article 3 (other than subsection 3.1(d) (insofar as the Company Shareholders participate in the Amalgamation), subsection 3.1(f)(i) and subsection 3.4(a)(vi)) and shall be paid an amount equal to such fair value by the Purchaser and will not be entitled to any other payment or consideration, including any payment that would be payable under the Arrangement had such Company Shareholders not exercised their Dissent Rights in respect of such Company Shares and such Company Shareholders shall be deemed to have transferred their Dissenting

Shares to the Purchaser for cancellation in accordance with subsection 3.1(f)(i); or

(b) are ultimately not entitled, for any reason, to be paid fair value for their Company Shares, shall be deemed to have participated in the Arrangement, as of the Effective Time, on the same basis as a non-dissenting holder of Company Shares as set out in subsection 3.1(f)(ii), but provided that in no case shall the Company or the Purchaser or any other Person be required to recognize Company Shareholders who exercise Dissent Rights as Company Shareholders after the Effective Time, and the names of such Company Shareholders who exercise Dissent Rights shall be removed from the registers of Company Shares at the Effective Time.

ARTICLE 6 AMENDMENT

6.1 Amendment of this Plan of Arrangement

(a) The Company and the Purchaser reserve the right to amend, modify and/or supplement this Plan of Arrangement at any time and from time to time prior to the Effective Date, provided that any amendment, modification or supplement must be contained in a written document which is: (i) filed with the Court and, if made following the Company Meeting, approved by the Court; and (ii) communicated to Company Shareholders in the manner required by the Court (if so required).
(b) Any amendment, modification or supplement to this Plan of Arrangement may be proposed by the Company and the Purchaser at any time prior to or at the Company Meeting with or without any other prior notice or communication and, if so proposed and accepted, in the manner contemplated and to the extent required by the Arrangement Agreement, by Company Shareholders, shall become part of this Plan of Arrangement for all purposes.
(c) Any amendment, modification or supplement to this Plan of Arrangement which is approved or directed by the Court following the Company Meeting shall be effective only: (i) if it is consented to by the Company and the Purchaser (each acting reasonably); and (ii) if required by the Court or Law, it is consented to by the Company Shareholders.
(d) This Plan of Arrangement may be amended, modified or supplemented following the Effective Time unilaterally by the Purchaser, provided that it concerns a matter that, in the reasonable opinion of the Purchaser, is of an administrative nature required to better give effect to the implementation of this Plan of Arrangement and is not adverse to the economic interest of any Company Shareholders.