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FACILITY INTEREST SALE AGREEMENT

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BETWEEN

TOURMALINE OIL CORP.

AND

TOPAZ ENERGY CORP.

May 18, 2021

Article	1	INTERPRETATION............................................................................................................................................................. 1
1.1		Definitions............................................................................................................................................................................. 1
1.2		Interpretation ........................................................................................................................................................................ 6
1.3		Accounting Matters ............................................................................................................................................................. 7
1.4		Knowledge ............................................................................................................................................................................ 7
1.5		Schedules ............................................................................................................................................................................... 7
Article	2	PURCHASE AND SALE ..................................................................................................................................................... 8
2.1		Purchase and Sale ................................................................................................................................................................. 8
2.2		Purchase Price ...................................................................................................................................................................... 8
2.3		GST ........................................................................................................................................................................................ 8
2.4		Adjustments .......................................................................................................................................................................... 8
2.5		Form of Payment ................................................................................................................................................................. 8
Article	3	CONDITIONS TO CLOSING .......................................................................................................................................... 8
3.1		Mutual Conditions Precedent ............................................................................................................................................ 8
3.2		Purchaser's Conditions........................................................................................................................................................ 9
3.3		Vendor's Conditions ............................................................................................................................................................ 9
3.4		Efforts to Fulfil Conditions Precedent ............................................................................................................................ 9
Article	4	CLOSING DELIVERIES .................................................................................................................................................. 10
4.1		Closing Deliveries of Vendor .......................................................................................................................................... 10
4.2		Closing Deliveries of Purchaser ...................................................................................................................................... 10
4.3		Copies of Title Documents .............................................................................................................................................. 10
Article	5	REPRESENTATIONS AND WARRANTIES ............................................................................................................. 10
5.1		Vendor's Representations and Warranties ..................................................................................................................... 10
5.2		Purchaser's Representations and Warranties ................................................................................................................ 12
5.3		No Additional Representations or Warranties by Vendor ......................................................................................... 13
5.4		Survival of Representations and Warranties ................................................................................................................. 14
Article	6	INDEMNITIES AND LIMITATIONS ON LIABILITY .......................................................................................... 14
6.1		Vendor's Indemnities for Representations and Warranties ........................................................................................ 14
6.2		Purchaser's Indemnities for Representations and Warranties.................................................................................... 14
6.3		Future Obligations ............................................................................................................................................................. 15
6.4		Purchaser's Environmental Indemnity ........................................................................................................................... 15
6.5		Limit on Responsibility ..................................................................................................................................................... 15
6.6		Procedures – General Indemnities ................................................................................................................................. 15
Article	7	TERMINATION .................................................................................................................................................................. 17
7.1		Termination ........................................................................................................................................................................ 17
7.2		Effect of Termination ....................................................................................................................................................... 17
Article	8	NOTICE ................................................................................................................................................................................. 18
8.1		Addresses for Service ........................................................................................................................................................ 18

Article	9	MISCELLANEOUS ............................................................................................................................................................. 18
9.1		Costs and Expenses ........................................................................................................................................................... 18
9.2		Further Assurances ............................................................................................................................................................ 18
9.3		No Third Party Beneficiary Rights ................................................................................................................................. 19
9.4		Entire Agreement............................................................................................................................................................... 19
9.5		Survival ................................................................................................................................................................................ 19
9.6		Severability .......................................................................................................................................................................... 19
9.7		Waiver .................................................................................................................................................................................. 19
9.8		Confidentiality and Public Announcements ................................................................................................................. 19
9.9		Amendment ........................................................................................................................................................................ 20
9.10		Time ..................................................................................................................................................................................... 20
9.11		Governing Law ................................................................................................................................................................... 20
9.12		Enurement .......................................................................................................................................................................... 20
9.13		Counterpart and Facsimile Execution ............................................................................................................................ 21

Schedules:

Schedule "A" – Facility
Schedule "B" – Disclosure
Schedule "C" – [ deleted ]
Schedule "D" – Form of COO Agreement
Schedule "E" – Form of Volume Commitment Agreement Schedule "F" – Form of Certificate for Vendor
Schedule "G" – Form of Certificate for Purchaser
Schedule "H" – Form of General Conveyance

FACILITY INTEREST SALE AGREEMENT

THIS AGREEMENT is dated the 18[th] day of May, 2021.

BETWEEN:

TOURMALINE OIL CORP. , a corporation amalgamated under the laws of the Province of Alberta (hereinafter referred to as " Vendor ")

and -

TOPAZ ENERGY CORP. , a corporation incorporated under the laws of the Province of Alberta (hereinafter referred to as " Purchaser ")

AND WHEREAS Vendor and Purchaser have agreed that Vendor will sell, assign, convey and transfer the Facility Interest to Purchaser and Purchaser will acquire and receive the Facility Interest from Vendor;

AND WHEREAS Vendor and Purchaser wish to enter into this Agreement to provide for the sale of the Facility Interest to Purchaser by Vendor on the terms and subject to the conditions set forth in this Agreement;

NOW THEREFORE in consideration of the mutual covenants and conditions herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties covenant and agree as follows:

ARTICLE 1 INTERPRETATION

1.1 Definitions

In this Agreement, unless the context otherwise requires:

(a) " Affiliate " of any Person means any other Person who directly or indirectly Controls, or is Controlled by, or is under common Control with, such Person.
(b) " Agreement " means this Facility Interest Sale Agreement and the Schedules attached hereto.
(c) " Ancillary Agreements " means the Volume Commitment Agreement and the COO Agreement.
(d) " Applicable Laws " means, in relation to any Person, property, activity, transaction or event, all laws, statutes, rules, regulations, official directives, published guidelines, standards, codes of practice and orders of, and the terms of all judgments, orders, awards and decrees issued by, any Governmental Authority by which such Person is bound or having application to the Person, property, activity, transaction or event in question.
(e) " Business Day " means a day on which banks are generally open for the transaction of commercial business in Calgary, Alberta, but does not in any event include a Saturday or a Sunday or statutory holiday in Alberta.
(f) " Claim " means any cause of action, action, account, lien of any kind whatsoever, claim, demand, lawsuit, audit, proceeding, or arbitration, including any proceeding or investigation by a Governmental Authority.
(g) " Claiming Party " has the meaning set out in Section 6.6.
(h) " Closing " means the sale and conveyance of the Facility Interest by Vendor to Purchaser by executing the General Conveyance, the payment and delivery of the Purchase Price by Purchaser to Vendor, subject to the

provisions of Section 1.2(r), and the delivery of other documents required to be delivered on the Closing Date under the terms of this Agreement.

(i) " Closing Date " means July 1, 2021 or any other Business Day as Vendor and Purchaser may agree.
(j)
" Confidential Information " has the meaning set out in Section 9.8.
(k) " Consequential Losses " means any consequential, incidental, punitive, special, exemplary or indirect damages, and whether or not in the nature of the foregoing, deferred profits or revenues, loss of business opportunity, losses based on loss of use, cost of use, including standby charges, loss of drilling rights and/or deferment of drilling or other business interruption losses and damages.
(l) " Control " means one or more of the following:
(i) a body corporate is controlled by a Person if: (A) securities of the body corporate to which are attached more than 50% of the votes that may be cast to elect directors of the body corporate are beneficially owned, directly or indirectly, by such Person; and (B) the votes attached to those securities are sufficient to elect a majority of the directors of the body corporate;
(ii) an association, partnership, limited liability company, trust or other organization is controlled by a Person if: (A) more than 50% of the ownership interests, however designated, into which the association, partnership, limited liability company, trust or other organization is divided are beneficially owned, directly or indirectly, by such Person; and (B) the Person is able to direct the business and affairs of the association, partnership, limited liability company, trust or other organization;
(iii) a body corporate, association, partnership, limited liability company, trust or other organization is controlled by a Person if such Person has, directly or indirectly, control in fact of the body corporate, association, partnership, limited liability company, trust or other organization; or
(iv) a body corporate, association, partnership, limited liability company, trust or other organization that controls (within the meaning of this definition) another body corporate, association, partnership, limited liability company, trust or other organization is deemed to control (within the meaning of this definition) any body corporate, association, partnership, limited liability company, trust or other organization that is controlled or deemed to be controlled (within the meaning of this definition) by the other body corporate, association, partnership, limited liability company, trust or other organization.
(m) " COO Agreement " means the Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex entered into by the Parties at Closing in the form attached hereto as Schedule "D".
(n) " Disclosing Party " has the meaning set out in Section 9.8.
(o) " Dollar " or " $ " means a Canadian dollar.
(p)
" Effective Date " means July 1, 2021.
(q) " Environmental Liabilities " means all losses and liabilities that relate to the Facility or the Lands, or that arise in connection with the ownership thereof or operations pertaining thereto, whether it has arisen in the past, hereof, or hereafter, including liabilities related to or arising from:
(i) past, present or future transportation, storage, use, holding or disposal of toxic or hazardous substances or waste;
(ii) leaching, migration, release, spill, escape or emission of toxic or hazardous substances or waste;
(iii) obligations to test, monitor, remediate, protect or clean-up the environment;

(iv) the costs of complying with any order or direction of any Governmental Authority having jurisdiction over the Lands or the Facility; or
(v) damage, pollution, contamination or other adverse situations pertaining to the environment howsoever of or to the environment,

and including liabilities to compensate Third Parties for damages and losses resulting from the items described in items (i), (ii), (iii), (iv) and (v) above (including damage to property, personal injury and death) and obligations to take action to prevent or rectify damage to or otherwise protect the environment and, for purposes of this Agreement, "the environment" includes the air, the surface and subsurface of the earth, bodies of water (including rivers, streams, lakes and aquifers) and plant, human and animal life.

(r) " Facility " means the Gundy gas processing plant owned and operated by Vendor, as further described in Schedule "A", and includes all tangible depreciable property, apparatus, plant, equipment, tools, separators, machinery, field inventory, buildings, meters, generators, motors, compressors, treaters, dehydrators, separators, pumps, tanks, boilers and communication equipment located within, upon or in the vicinity of such facility.
(s) " Facility Interest " mean an undivided twenty (20%) percent interest in the Facility and all Miscellaneous Interests pertaining thereto.
(t) " GAAP " means generally accepted accounting principles accepted in Canada which are in effect from time to time.
(u) " Governmental Authority " means, in relation to any Person, property, activity, transaction or event, any: (i) federal, state, provincial, municipal or local governmental body (whether administrative, legislative, executive or otherwise); (ii) agency, authority, commission, bureau, 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, tribunal, arbitrator, commission or body exercising judicial, quasi-judicial, administrative or similar functions; and (iv) any other body or entity created under the authority of or otherwise subject to the jurisdiction of any of the foregoing, including securities exchanges, in each case having jurisdiction over such Person, property, activity, transaction or event.
(v) " GST " means the goods and services tax provided for in the Excise Tax Act (Canada) and any other tax imposed or levied by the Government of Canada on or in respect of the sale or supply of goods or services in addition to or replacement for such goods and services tax.
(w) " Indemnified Matter " has the meaning set out in Section 6.6(a).
(x) " Indemnifying Party " has the meaning set out in Section 6.6.
(y) " ITA " means the Income Tax Act (Canada).
(z) " Lands " means any lands held pursuant to the Surface Rights, including the lands upon which the Facility is situate.
(aa) " Liabilities " means any and all liabilities and obligations whether under common law, in equity, under Applicable Laws or otherwise, whether tortious, contractual, vicarious, statutory or otherwise, whether absolute or contingent, and whether based on fault, strict liability or otherwise.
(bb) " Losses " means, in respect of a Person and in relation to a matter, any and all losses, damages, costs, expenses, charges (including all penalties, assessments and fines) which such Person suffers, sustains, pays or incurs in connection with such matter and includes taxes, reasonable costs of legal counsel (on a solicitor and client basis) and other professional advisors and consultants and reasonable costs of investigating and defending any Claims arising from the matter, regardless of whether such Claims are sustained.

(cc) " Miscellaneous Interests " means, subject to the limitations and exclusions below in this definition, Vendor's right, title and interest in and to all property and rights that pertain directly to the Facility, other than the Facility, including:
(i) the Title Documents and all other contracts and agreements and all rights in relation thereto;
(ii) the Surface Rights;
(iii) records, files, reports, data, correspondence and other information, including lease, contract and facilities files and records and emergency response plans;
(iv) all extensions, renewals, replacements, substitutions or amendments of or to any of the agreements and instruments described in paragraphs (i) and (ii) above; and
(v) any office equipment including computers, furniture, fixtures, general office equipment and site specific software licenses situate at, and used exclusively in connection with, the Facility or the operation and maintenance thereof, but excluding any such equipment located at any other offices of Vendor, including its head office in Calgary, and excluding any software licenses that relate to any such other offices or are licensed to Vendor on a corporate basis;

however, the Miscellaneous Interests do not include:

  - (A) any of the foregoing property or rights to the extent that they:

     - (I) include or pertain to Vendor's proprietary technology, evaluations, forecasts or interpretations (whether geological, engineering, economic or otherwise); or

     - (II) are owned or licensed by Third Parties with restrictions that prohibit the sale, transfer or disclosure thereof to Purchaser.

(dd) " Party " means a Person who is a party to, and is bound by, this Agreement.
(ee) " Permitted Encumbrances " means any of the following:
(i) liens for taxes, assessments and governmental charges which are not due or the validity of which is being diligently contested in good faith by or on behalf of Vendor;
(ii) easements, rights of way, servitudes or other similar rights in land, including rights of way and servitudes for highways, roads, railways, sewers, drains, gas or oil pipelines or gas or water mains or for electric light, power, telephone, telegraph or cable television conduits, poles, wires or cables;
(iii) the right reserved to or vested in any Governmental Authority by the terms of any lease, licence, franchise, grant or permit or by any Applicable Laws, to terminate such lease, licence, franchise, grant or permit or to require annual or other periodic payments or the posting of deposits as a condition of the granting or continuance thereof;
(iv) the right reserved to or vested in any Governmental Authority to levy taxes on Petroleum Substances produced from the Lands or the income or revenue attributable thereto or in respect of operations;
(v) governmental requirements as to operations, including limitations or restrictions on production rates;
(vi) rights reserved to or vested in any Governmental Authority to control or regulate the Facility Interest in any manner;
(vii) the terms and conditions of the Title Documents;

(viii) undetermined or inchoate liens incurred or created in the ordinary course of business or a lien created as security in favour of the Person conducting operations related to the Facility for the costs and expenses of such operations which are not due and delinquent;
(ix) the reservations, limitations, provisos and conditions in any original grants from the Crown of any of the Lands or interest therein and statutory exceptions to title;
(x) liens granted in the ordinary course of business to a public utility or Governmental Authority in connection with operations;
(xi) mechanics', builders' and materialmen's liens in respect of services rendered or goods supplied in the course of operations, but only insofar as such liens relate to goods or services for which payment is not due, or the validity of which is being diligently contested by or on behalf of Vendor;
(xii) encumbrances related to indebtedness incurred under hedging arrangements; and
(xiii) any security held by any Third Party encumbering the Facility Interest, or any part or portion thereof, in respect of which Vendor has delivered a discharge in registrable form, a no interest letter with an undertaking to discharge the security interest or like document to Purchaser at or prior to Closing.
(ff) " Person " means and includes an individual, limited or general partnership, limited liability company, limited liability partnership, trust, joint venture, association, body corporate, unlimited liability corporation, trustee, executor, administrator, legal representative, government (including any Governmental Authority) or any other entity, whether or not having legal status.
(gg) " Purchase Price " has the meaning set out in Section 2.2.
(hh) " Receiving Party " has the meaning set out in Section 9.8.
(ii) " Related Parties " means, in reference to a Party, its Affiliates, successors and assigns and its and its Affiliates' directors, officers and employees; provided that for purposes of this definition, Vendor and Purchaser shall not be considered Related Parties.
(jj) " Right of First Refusal " means a right of first refusal, right of first offer or other pre-emptive or preferential right of purchase or similar right to acquire the Facility Interest that may become operative by virtue of this Agreement or completion of the Transaction.
(kk) " Schedules " has the meaning set out in Section 1.5.
(ll) " Surface Rights " means all rights to occupy, cross or otherwise use or enjoy the surface of the lands upon which the Facility is situate; (ii) used in connection with the ownership or operation of the Facility; or (iii) used to gain access to the Facility.
(mm) " Survival Period " means, in the case of Vendor's or Purchaser's representations and warranties in Sections 5.1 and 5.2, respectively, a period of twelve (12) months from the date hereof.
(nn) " Third Party " means a Person who is not a Party or an Affiliate of a Party.
(oo) " Title Documents " means, collectively, the various leases, reservations, permits, licences, agreements and other documents of title relating to: (i) the acquisition, ownership or operation by Vendor of the Facility; and (iii) all similar documents of title issued pursuant thereto, in renewal or replacement thereof or substitution therefor and all other documents relating to Vendor's right, estate and interest in the Facility.
(pp) " Transaction " means the entering into of this Agreement and the Ancillary Agreements.

(qq) " Volume Commitment Agreement " means the Volume Commitment Agreement (Gundy Facility) to be entered into between the Parties at Closing in the form attached as Schedule "E".
(rr) " Volume Commitment Interest " means the interest in and to the commitment and delivery of certain volumes by Vendor to Purchaser under and pursuant to the Volume Commitment Agreement.

1.2 Interpretation

In this Agreement, unless the context requires otherwise:

(a) words importing the singular number include the plural and vice versa ;
(b) words importing the masculine gender include the feminine and neuter genders;
(c) if a word is defined in this Agreement, a derivative of that word shall have a corresponding meaning;
(d) words and phrases which are not defined herein but have a generally accepted meaning in the custom and usage of the upstream oil and gas industry in the Province of Alberta as at the date hereof shall be given such generally accepted meaning;
(e) the terms "herein", "hereby", "hereof", "hereunder", "hereto" and similar expressions mean or refer to this Agreement and not to any particular provision of this Agreement;
(f) the use of the word "include" or "including" shall be deemed to mean "include, without limitation", or "including, without limitation", as applicable;
(g) references to any Person (including any Governmental Authority) include such Person's permitted successors and assigns;
(h) any reference to a Person in a particular capacity is and is deemed to be a reference to that Person in that capacity and not in any other capacity;
(i) reference to any agreement, document or instrument means such agreement, document or instrument as amended, replaced, restated or modified and in effect from time to time in accordance with the terms thereof;
(j) references to any Applicable Law (including any statute referenced in this Agreement) means such Applicable Law as amended, modified, codified, replaced or re-enacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder, and references to any section or other provision of any Applicable Law means that provision of such Applicable Law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or re-enactment of such section or other provision;
(k) references to Articles, Sections, Subsections or Schedules refer to articles, sections, subsections or schedules of this Agreement;
(l) headings and the table of contents are not to be considered part of this Agreement and are included solely for convenience of reference and are not intended to be full or accurate descriptions of the contents hereof;
(m) the rule of contractual interpretation known as " contra proferentem " shall not apply to the interpretation or construction of this Agreement, such that in interpreting this Agreement, it shall be irrelevant which Party drafted any particular provision hereof;
(n) all dollar amounts referred to in this Agreement are in Canadian dollars, unless otherwise indicated herein;
(o) payments are to be made in immediately available Canadian dollars;

(p) unless otherwise indicated, references to the time of day or date mean the local time or date in Calgary, Alberta;
(q) unless otherwise specified herein, or as the context may require, computation of any period of time referred to in this Agreement shall exclude the first day and include the last day of such period; and
(r) where any payment or calculation is to be made, or any other action is to be taken, on or as of a day that is not a Business Day, then unless otherwise provided herein, such payment or calculation is to be made, or the other action is to be taken, as applicable, on or as of the next following Business Day, unless such next following Business Day falls in the next calendar month, in which event the payment or calculation is to be made, or the other action is to be taken, as applicable, on or as of the immediately preceding Business Day.

1.3 Accounting Matters

Where the character or amount of any asset or liability or item of revenue or expense is required to be determined, or any consolidation or other accounting computation is required to be made, for the purposes of this Agreement, such determination, consolidation or computation shall, unless the Parties otherwise agree or the context otherwise requires, be made in accordance with GAAP, as adopted by Vendor and applied on a consistent basis.

1.4 Knowledge

Where in this Agreement a representation or warranty is limited to the knowledge or awareness of a Party, such knowledge or awareness shall be deemed to consist of the actual knowledge or awareness of the senior management personnel and officers of that Party, without any obligation of inquiry, and shall not include the knowledge or awareness of any other Person.

1.5 Schedules

The following schedules (the " Schedules ") are attached to, form part of and are incorporated in this

Agreement:

Schedule "A" – Facility Schedule "B" – Disclosure Schedule "C" – [ deleted ] Schedule "D" – Form of COO Agreement Schedule "E" – Form of Volume Commitment Agreement Schedule "F" – Form of Certificate for Vendor Schedule "G" – Form of Certificate for Purchaser Schedule "H"– Form of General Conveyance

If there is any conflict or inconsistency between the provisions of the main body of this Agreement and those of a Schedule, the provisions of the main body of this Agreement shall prevail to the extent of the conflict.

ARTICLE 2 PURCHASE AND SALE

2.1 Purchase and Sale

(a) Vendor hereby agrees to sell, transfer, convey and assign the Facility Interest to Purchaser and Purchaser hereby agrees to acquire and accept the Facility Interest from Vendor for the consideration set forth in Section 2.2, on the Closing Date, subject to and in accordance with the terms of this Agreement.
(b) Subject to all other provisions of this Agreement, upon Closing, title to, and beneficial ownership, risk and possession of, the Facility Interest shall pass from Vendor to Purchaser.

2.2 Purchase Price

[Amount redacted]

The consideration to be paid by Purchaser to Vendor shall be

(the " Purchase Price ") and shall, subject to the terms of this Agreement, be payable by Purchaser to Vendor by wire transfer in immediately available funds on the Closing Date, subject to the provisions of Section 1.2(r).

2.3 GST

The Purchase Price does not include an amount on account of GST payable in respect of the transaction contemplated herein. Each of Purchaser and Vendor hereby confirms to the other that it is registered under Subdivision D of Division V of the Excise Tax Act (Canada). The Purchaser shall be responsible for the applicable GST in respect of the amount attributable to the Facility Interest. Vendor and Purchaser agree that the Facility Interest is "real property" for the purpose of the Excise Tax Act (Canada) and as a result, Purchaser shall self-assess all applicable GST in respect of the sale of the Facility Interest and remit directly to the appropriate taxing authority pursuant to subsection 221(2) and 228(4) of the Excise Tax Act (Canada).

2.4 Adjustments

There shall be no adjustments to the Purchase Price. All benefits and obligations of every kind and nature accruing, paid or payable and received or receivable in respect of the Facility Interest have been taken into account in the calculation of the Purchase Price.

2.5 Form of Payment

All payments to be made pursuant to this Agreement shall be in Canadian funds.

ARTICLE 3 CONDITIONS TO CLOSING

3.1 Mutual Conditions Precedent

(a) The respective obligation of each of the Parties to complete the Transaction is subject to the condition that, on the Closing Date, no injunction, order or award restraining, enjoining or otherwise prohibiting the consummation of the transaction contemplated herein or granting a material amount of damages in connection therewith shall have been issued and remain in force, and no action seeking to restrain, enjoin or otherwise prohibit the consummation of such transaction or seeking material damages in connection therewith shall be pending before any Government Authority or arbitrator.
(b) The foregoing conditions are for the mutual benefit of both Parties and may not be waived, in whole or in part, by either Party. If the foregoing mutual conditions have not been satisfied or complied with at or before the Outside Date, then, provided that neither Section 7.1(c) nor Section 7.1(d) applies, this Agreement shall automatically terminate and the provisions of Section 7.2(a) shall apply.

3.2 Purchaser's Conditions

(a) The obligation of Purchaser to complete the Transaction and purchase the Facility Interest from Vendor hereunder is subject to the following conditions precedent, which are for the exclusive benefit of Purchaser and may be waived, in whole or in part, by Purchaser:
(i) the representations and warranties of Vendor set forth in Section 5.1 shall be true and correct in all material respects (other than those representations and warranties which are subject to a qualification as to materiality, which representations and warranties shall be true and correct in all respects) as of the date specified therein, or if no date is specified, as of the date of this Agreement and as of the Closing Date;
(ii) all obligations of Vendor contained in this Agreement to be performed prior to or at the Closing Date shall have been timely performed in all material respects prior to or on the Closing Date;
(iii) Vendor shall have duly delivered all agreements, certificates and other instruments and documents and taken all actions required pursuant to Section 4.1; and
(iv) Vendor shall have delivered to Purchaser at or prior to the Closing Date, if required, discharges of, or no interest letters in respect of, any security held by any Third Party encumbering Vendor's interest in and to the Facility Interest or any part or portion thereof.
(b) If any condition precedent set out in Section 3.2(a) has not been satisfied or complied with at or before the Closing Date and such condition precedent has not been waived by Purchaser before the Closing Date, then Purchaser may terminate this Agreement by written notice to Vendor immediately prior to the Closing Date and the provisions of Section 7.2(b) shall apply.

3.3 Vendor's Conditions

(a) The obligation of Vendor to complete the Transaction and sell the Facility Interest to Purchaser hereunder is subject to the following conditions precedent, which are for the exclusive benefit of Vendor and may be waived, in whole or in part, by Vendor:
(i) the representations and warranties of Purchaser set forth in Section 5.2 shall be true and correct in all material respects as of the date specified therein, but if no date is specified, as of the date of this Agreement and as of the Closing Date .
(ii) all obligations of Purchaser contained in this Agreement to be performed prior to or at the Closing Date shall have been timely performed in all material respects prior to or on the Closing Date; and
(iii) prior to or on the Closing Date, Purchaser shall have duly made and delivered all payments, agreements, certificates and other instruments and documents and taken all actions required pursuant to Section 4.2.
(b) If any condition precedent set out in Section 3.3(a) has not been satisfied or complied with at or before the Closing Date and such condition precedent has not been waived by Vendor before the Closing Date, then Vendor may terminate this Agreement by written notice to Purchaser immediately prior to the Closing Date and the provisions of Section 7.2(c) shall apply.

3.4 Efforts to Fulfil Conditions Precedent

(a) Each of Purchaser and Vendor shall proceed diligently and in good faith and use its commercially reasonable efforts to satisfy and comply with the conditions precedent in Sections 3.2(a) and 3.3(a) as applicable, including obtaining all required approvals, if any, on or prior to the Closing Date, and shall provide the other Party with any reasonable assistance in the satisfaction of and compliance with the conditions precedent in Sections 3.2(a) and 3.3(a) that the other Party may reasonably request.

ARTICLE 4 CLOSING DELIVERIES

4.1 Closing Deliveries of Vendor

On the Closing Date, Vendor shall deliver to Purchaser:

(a) a duly executed copy of the Volume Commitment Agreement;
(b) a duly executed copy of the COO Agreement;
(c) a duly executed copy of the General Conveyance;
(d) an Officer’s Certificate, duly executed by Vendor;
(e) if required, discharges of, or no interest letters in respect of, any security held by any Third Party encumbering Vendor's interest in and to the Facility Interest or any part or portion thereof;
(f) receipt for the Purchase Price; and
(g) such other items as may reasonably be requested by Purchaser or that are specifically required under this Agreement.

4.2 Closing Deliveries of Purchaser

On the Closing Date, Purchaser shall deliver to Vendor:

(a) the Purchase Price, in immediately available funds;
(b) an executed counterpart of the Volume Commitment Agreement delivered by Vendor pursuant to Section 4.1(a);
(c) an executed counterpart of the COO Agreement delivered by Vendor pursuant to Section 4.1(b);
(d) an executed counterpart of the General Conveyance delivered by Vendor pursuant to Section 4.1(c);
(e) an Officer’s Certificate signed by an officer of Purchaser; and
(f) such other items as may reasonably be requested by Vendor or that are specifically required under this Agreement.

4.3 Copies of Title Documents

Following the Closing Date and in cooperation with Vendor, and during normal business hours without undue interference to Vendor's business, Purchaser may attend at Vendor's office to make photocopies of those of the Title Documents relating to the Facility. Purchaser shall provide the personnel and paper at its own cost, and Vendor shall provide the photocopier at its own cost for Purchaser's use to make such copies.

ARTICLE 5 REPRESENTATIONS AND WARRANTIES

5.1 Vendor's Representations and Warranties

Purchaser acknowledges that it is purchasing the Facility Interest on an "as is, where is" basis, without representation and warranty and without reliance on any information provided to or on behalf of Purchaser by Vendor or any Third Party, except that and subject in all instances to the Permitted Encumbrances, or any matter disclosed in any of the Schedules, Vendor makes the following representations and warranties to Purchaser:

(a) Standing: Vendor is a corporation duly formed and validly existing under the laws of the Province of Alberta and is authorized to carry on business in the jurisdiction in which the Lands are located;
(b) Requisite Authority: Vendor has good right, full power and absolute authority to sell, transfer, convey and assign the Facility Interest and sell, commit and dedicate the Volume Commitment Interest to Purchaser in accordance with the true intent and meaning of this Agreement and the Volume Commitment Agreement;
(c) Execution: the execution, delivery and performance of this Agreement and each of the Ancillary Agreements has been duly and validly authorized by any and all requisite corporate, partner, shareholders' and directors' actions and will not result in any violation of, be in conflict with or constitute a default under any articles, charter, bylaw or other governing document to which Vendor is bound;
(d) No Conflicts: the execution, delivery and performance of this Agreement each of the Ancillary Agreements will not result in any violation of, be in conflict with or constitute a default under any term or provision of any agreement or document to which Vendor is party or by which Vendor is bound, nor under any Applicable Law applicable to Vendor;
(e) Enforceability: this Agreement, the Ancillary Agreements and any other agreements delivered in connection herewith constitute valid and binding obligations of Vendor enforceable against Vendor in accordance with their terms, subject to the qualification that such enforceability may be subject to:
(i) bankruptcy, insolvency, fraudulent preference, reorganization or other laws affecting creditors' rights generally; and
(ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at equity or law);
(f) Regulatory Approval: except as otherwise provided in this Agreement, no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required for the due execution, delivery and performance by Vendor of this Agreement and each of the Ancillary Agreements, other than authorizations, approvals or exemptions from requirement therefor, previously obtained and currently in force;
(g) Finders' Fees: Vendor has not incurred any obligation or liability, contingent or otherwise, for brokers' or finders' fees in respect of this Agreement or the transaction to be effected by it for which Purchaser shall have any obligation or liability;
(h) Title to the Facility Interest: Vendor does not warrant title to the Facility Interest, except that it warrants that:
(i) the Facility Interest is free and clear of all liens, adverse claims, royalties, mortgages, charges, conversion rights, and encumbrances created by, through or under it or of which it is aware;
(ii) no Person, other than Vendor and Purchaser, pursuant to this Agreement, has a legal or beneficial undivided interest in the Facility;
(iii) the Facility Interest is not subject to reduction or alteration by virtue of:
- (A) the conversion or other alteration of the interest of any interest of a Third Party granted by, through or under Vendor; and
- (B) any sale agreement, farmout agreement, option agreement, asset exchange or swap agreement or other obligation of Vendor, whether contingent or vested, to assign or transfer of the Facility Interest;
(i) No Default Notices: except for matters that are the subject matter of a Claim listed in Schedule "B", as at the date hereof it has neither received nor delivered any written notices of violation or alleged violation of any material provisions of any of the Title Documents or Applicable Laws in respect of the Facility Interest or

operations in respect thereof which would reasonably be expected to have a material adverse effect on the Facility Interest, taken as a whole;

(j) Compliance with Title Documents: except for matters that are the subject matter of a Claim listed in Schedule "B", it has performed, observed and satisfied all of its material duties, liabilities, obligations and covenants required as at the date hereof to be satisfied, performed and observed by it under, and is not in default under or in breach, in respect of the Facility Interest, of any material provision of the Title Documents;
(k) No Claims: except the Claims listed in Schedule "B", as at the date hereof there are no material Claims which have been served upon it or its Affiliates with respect to the commencement of legal proceedings, or to Vendor's knowledge, threatened, in respect of, or relating to the Facility Interest or the Title Documents or operations pertaining thereto;
(l) AMIs etc: there are no active areas of mutual interest, areas of exclusion or areas of dedication provisions in any of the Title Documents or other contracts, agreements and documents to which the Facility Interest is subject;
(m) Indigenous Matters:
(i) as at the date hereof there are no material Claims which have been served upon it or its Affiliates with respect to the commencement of legal proceedings, or to Vendor's knowledge, threatened, by Indigenous groups or any Person controlled or owned in whole or in part by any Indigenous groups in respect of, or relating to the Facility Interest or the Title Documents or operations pertaining thereto; and
(ii) none of Vendor or any of its Affiliates is a party to or otherwise bound by any material agreements with any Indigenous groups or any Person controlled or owned in whole or in part by any Indigenous groups, in respect of, or relating to the Facility Interest or the Title Documents or operations pertaining thereto;
(n) No ROFRS: there are no Rights of First Refusal applicable to the Transaction contemplated herein;
(o) Operations: any and all of Vendor's operations on or in respect of the Facility have been conducted in accordance with good oil and gas industry practices and in compliance with all Applicable Laws and Vendor is the operator of the Facility and has not entered in to a contract operating agreement (or similar arrangement) with a Third Party in respect of the contract operation of the Facility;
(p) Environmental Matters: it has not received notice of:
(i) any material non-compliance in relation to the Facility Interest pursuant to any law intended to protect the environment which has not been remedied in all material respects; or
(ii) to Vendor's knowledge, any Claim in relation to the Facility Interest by any Third Party of material Environmental Liabilities (including pollution);
(q) Canadian Resident: it is not a non-resident of Canada within the meaning of the Income Tax Act (Canada) R.S.C. 1985, c.1 (5th Supplement); and
(r) Information. to Vendor’s knowledge it has not withheld any material information concerning the Facility Interest from Purchaser which information a reasonably prudent purchaser of the Facility Interest would need to know to conduct its assessment of the the Facility Interests and the Transaction contemplated by this Agreement.

5.2 Purchaser's Representations and Warranties

Purchaser represents and warrants to Vendor as follows:

(a) Standing: Purchaser is a corporation formed under the laws of the Province of Alberta and is authorized to carry on business in the jurisdictions in which the Lands are located;

(b) Requisite Authority: Purchaser has good right, full power and absolute authority to purchase, acquire and receive the Facility Interest from Vendor according to the true intent and meaning of this Agreement;
(c) Execution: the execution, delivery and performance of this Agreement and each of the Ancillary Agreements has been duly and validly authorized by any and all requisite corporate, shareholders' and directors' actions and will not result in any violation of, be in conflict with or constitute a default under any articles, charter, bylaw or other governing document to which Purchaser is bound;
(d) No Conflicts: the execution, delivery and performance of this Agreement and each of the Ancillary Agreements will not result in any violation of, be in conflict with or constitute a default under any term or provision of any agreement or document to which Purchaser is party or by which Purchaser is bound, nor under any Regulation applicable to Purchaser;
(e) Enforceability: this Agreement, each of the Ancillary Agreements and any other agreements delivered in connection herewith constitute valid and binding obligations of Purchaser enforceable against Purchaser in accordance with their terms, subject to the qualification that such enforceability may be subject to:
(i) bankruptcy, insolvency, fraudulent preference, reorganization or other laws affecting creditors' rights generally; and
(ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at equity or law);
(f) Regulatory Approval: except as otherwise provided in this Agreement, no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required for the due execution, delivery and performance by Purchaser of this Agreement and each of the Ancillary Agreements, other than authorizations, approvals or exemptions from requirements therefor, previously obtained and currently in force;
(g) Finders' Fees: Purchaser has not incurred any obligation or liability, contingent or otherwise, for brokers' or finders' fees in respect of this Agreement or the transaction to be effected by it for which Vendor shall have any obligation or liability; and
(h) Investment Canada Act: Purchaser is not a non-Canadian person for the purposes of the Investment Canada Act (Canada).
5.3 No Additional Representations or Warranties by Vendor
(a) Vendor makes no representation or warranty, express or implied, in fact or by law, with respect to:
(i) its title to the Facility Interest except as set forth in Subsection 5.1(h);
(ii) the quality, condition, merchantability, serviceability or suitability or fitness for any particular purpose of any property; or
(iii) the value of the Facility Interest except as may be set out in the COO Agreement.
(b) Purchaser acknowledges that, with the exception of the representations and warranties made by Vendor in Section 5.1 and the performance by Vendor of its obligations under this Agreement, Purchaser is not relying on any representation, warranty or covenant by Vendor or its Related Parties or any of their representatives or agents not contained in this Agreement or on any statement or discussions with Vendor, its Related Parties or any of their representatives or agents and that with the exception of the representations and warranties made by Vendor in Section 5.1 Purchaser forever releases and discharges Vendor and its Representatives from any Losses and Liabilities of Purchaser and its assigns and successors, as a result of the use or reliance upon advice, information and materials pertaining to the Facility Interest delivered or made available to Purchaser by Vendor or any of its Representatives prior to or under the Agreement, including, any evaluations, projections, reports and interpretive or non-factual materials prepared by or for Purchaser, or otherwise in its possession.

(c) Except for the representations and warranties of Vendor in Section 5.1:
(i) Vendor expressly negates and disclaims; and
(ii) Vendor shall not be liable (whether under contract or tort law, at common law, in equity, under statute or otherwise howsoever) for,

any representation, warranty, statement, information, data or covenant in any other document or for any statement made or information provided by Vendor or its Related Parties or their agents, solicitors, accountants, consultants or representatives to Purchaser in connection with this Agreement in any manner, whether on or before the execution hereof.

5.4 Survival of Representations and Warranties

The representations and warranties in Sections 5.1 and 5.2 shall survive the Closing for the Survival Period and not be merged in the Ancillary Agreements or any of them, or any other documents executed and delivered or otherwise provided pursuant to this Agreement. No Party shall have any liability in respect of a breach of a representation and warranty in Sections 5.1 and 5.2 unless notice of such breach with reasonable particulars shall have been provided by such Party to the other Party prior to the expiry of the Survival Period.

ARTICLE 6 INDEMNITIES AND LIMITATIONS ON LIABILITY

6.1 Vendor's Indemnities for Representations and Warranties

Subject to Section 6.5, Vendor shall:

(a) be liable to Purchaser for; and
(b) in addition, indemnify Purchaser from and against,

all Claims that may be brought against Purchaser or Losses and Liabilities that Purchaser suffers, sustains, pays or incurs as a result of a breach of a representation or warranty made by Vendor in Section 5.1 or a breach by Vendor of a covenant or agreement contained in this Agreement.

6.2 Purchaser's Indemnities for Representations and Warranties

Subject to Section 6.5, Purchaser shall:

(a) be liable to Vendor for; and
(b) in addition, indemnify Vendor from and against,

all Claims that may be brought against Vendor or Losses and Liabilities that Vendor suffers, sustains, pays or incurs as a result of a breach of a representation or warranty made by Purchaser in Section 5.2 or a breach by Purchaser of a covenant or agreement contained in this Agreement; provided however that Purchaser shall not be liable to nor be required to indemnify Vendor in respect of any Claims brought against Vendor or Losses and Liabilities that Vendor suffers, sustains, pays or incurs which are caused by the gross negligence or willful misconduct of Vendor or its Representatives or are matters or things for which Purchaser is entitled to indemnification under Section 6.1.

6.3 Future Obligations

From and after Closing, Purchaser shall be liable for all Claims that may be brought against Vendor or Losses and Liabilities that Vendor suffers, sustains, pays or incurs and, in addition as an independent covenant, shall defend, indemnify and save harmless Vendor from and against all Claims that may be brought against it or Losses and Liabilities that Vendor suffers, sustains, pays or incurs; which, in either case, arise out of any matter or thing occurring, accruing or arising on and after the Closing Date and which relates to the Facility Interest (excluding any Losses and Liabilities or Claims that pertain to any Environmental Liabilities, which shall be dealt with under Section 6.4). Notwithstanding the foregoing in this Section 6.3, nothing in this Section 6.3 shall be construed so as to require Purchaser to be liable for or to indemnify Vendor in connection with any such Losses and Liabilities or any such Claims to the extent arising from:

(a) the representations and warranties of Vendor contained in Section 5.1 being untrue or incorrect, but only to the extent that Vendor is liable to indemnify Purchaser pursuant to Section 6.1 in respect of such representations and warranties; or
(b) the gross negligence or wilful misconduct of Vendor.

6.4 Purchaser's Environmental Indemnity

From and after Closing, Purchaser shall be liable for Claims that may be brought against Vendor or Losses and Liabilities that Vendor suffers, sustains, pays or incurs and, in addition as an independent covenant, shall defend, indemnify and save harmless Vendor from and against all Claims that may be brought against it or Losses and Liabilities that Vendor suffers, sustains, pays or incurs, in either case, in respect of all past, present and future Environmental Liabilities. This assumption of liability and indemnity shall apply without limit and without regard to the negligence of Vendor. The Parties acknowledge that the Purchase Price has taken into account all of the Environmental Liabilities identified by the Parties prior to the date of this Agreement and, accordingly, this assumption of liability and indemnity shall apply in respect of all of the Environmental Liabilities. Purchaser hereby waives, and acknowledges and agrees that it shall not exercise, any right or remedy against Vendor in respect to any such Environmental Liabilities that Purchaser may otherwise have under Applicable Law, including any right to name as a party to any Claim commenced by Purchaser or by any Third Party in which Purchaser is a party. Notwithstanding the foregoing in this Section 6.4, nothing in this Section 6.4 shall be construed so as to require Purchaser to be liable for or to indemnify Vendor in connection with any such Losses and Liabilities or any such Claims to the extent arising from the representations and warranties of Vendor contained in Section 5.1(p) being untrue or incorrect, but only to the extent that Vendor is liable to indemnify Purchaser pursuant to Section 6.1 in respect of such representations and warranties.

6.5 Limit on Responsibility

(a) In no event shall a Party have any liability for a breach of a representation and warranty in Section 5.1 or Section 5.2:
(i) unless notice of such breach with reasonable particulars shall have been provided by such Party to the other Party prior to the expiry of the Survival Period; or
(ii) to extent the Loss is reimbursed by insurance carried by such Party.
(b) In no event shall Vendor have any liability to Purchaser in respect of any Claims, Losses or Liabilities that are inconsistent with Section 5.3.
(c) Other than as a result of a breach of Section 9.8, in no event shall either Party be liable for any Consequential Losses.

6.6 Procedures – General Indemnities

If a Party (the " Claiming Party ") wishes to claim indemnification from the other Party (the " Indemnifying Party ") pursuant to Sections 6.1(b), 6.2(b), 6.3 or 6.4 , the following shall apply:

(a) Promptly after acquiring knowledge of the subject matter of the Claim or the Losses and Liabilities in respect of which the claim for indemnification is to be made (an " Indemnified Matter "), the Claiming Party shall provide notice thereof to the Indemnifying Party, provided that, failure to give such notice will not limit or lessen the right of the Claiming Party to indemnity under this Agreement except to the extent that the Indemnifying Party is prejudiced in its contest or defence of the Indemnified Matter as a result of such failure. Such notice shall describe the nature of the Indemnified Matter in reasonable detail and indicate, if reasonably ascertainable, the Claiming Party's good faith estimate of the amount for which the Indemnifying Party may be liable under this Agreement in respect of such Indemnified Matter.
(b) If the Indemnified Matter relates to a Claim made or brought by a Third Party:
(i) the Indemnifying Party shall have the right to participate in or to elect to assume control of the defence or dispute of any such Claim. Any such participation in or assumption of control of the defence or dispute of the Claim shall be at the Indemnifying Party's own expense and use counsel chosen by the Indemnifying Party. The Claiming Party shall provide all reasonable assistance that the Indemnifying Party may reasonably request in connection with such defence or dispute;
(ii) the Claiming Party shall have the right to participate in the defence or dispute of any such Indemnified Matter using counsel of its own choice if representation of both the Claiming Party and the Indemnifying Party by the same counsel would be inappropriate due to conflicting interests of the two Parties, including Claims that would be partially excluded from indemnification by the Indemnifying Party by virtue of another provision of this Agreement. The Indemnifying Party shall be liable for the costs of such additional counsel retained by the Claiming Party, but only to the extent that such costs pertain to the defence or dispute of the Indemnified Matter; and
(iii) the Claiming Party shall not settle or compromise, or propose to settle or compromise, any such Indemnified Matter without first obtaining the consent of the Indemnifying Party, provided that, such consent shall not be required if: the Indemnifying Party denies or disputes that the particular Claim constitutes an Indemnified Matter and refuses to take responsibility for the defence or dispute thereof as provided above; the Indemnifying Party fails to respond to any notice of the Indemnified Matter given by the Claiming Party in accordance with Section 6.6(a) within 15 days of receipt thereof by the Indemnifying Party; or the Indemnifying Party either refuses or fails to defend or dispute such Indemnified Matter after assuming responsibility for the defence or dispute thereof as provided above. In each such a case, the Claiming Party shall be entitled to defend, dispute, settle or compromise such a Claim by a Third Party in any manner it determines to be appropriate, acting reasonably and in good faith, subject to any limitations set forth in this Agreement.
(c) If the Indemnified Matter relates to Losses and Liabilities directly suffered, sustained, paid or incurred by the Claiming Party or any of the Claiming Party's Related Persons, the Indemnifying Party shall respond to the Claiming Party as to whether the Indemnifying Party accepts liability for such Indemnified Matter within 30 days of receipt of the Claiming Party's notice given in accordance with Section 6.6(a) and:
(i) if the Indemnifying Party does not respond within such 30-day period, the Indemnifying Party shall be deemed to have accepted its liability for such Indemnified Matter;
(ii) if the Indemnifying Party accepts its liability for such Indemnified Matter, the Indemnifying Party shall discharge its liability to indemnify the Claiming Party within 10 days after the end of the initial 30-day notice period; and
(iii) if the Indemnifying Party disputes whether the particular Losses and Liabilities constitute an Indemnified Matter or the amount of such Losses or Liabilities for which the Indemnifying Party is liable within such 30-day period, or if the Indemnifying Party accepts or is deemed to have accepted liability for such Indemnified Matter, but fails to discharge such liability within the specified period, the Claiming Party shall be free to seek to enforce its right to indemnification in respect of such Indemnified Matter under this Agreement in any manner that it deems appropriate.

(d) If the Indemnifying Party has paid an amount in respect of an Indemnified Matter pursuant to this Agreement, then: (i) the Indemnifying Party will be subrogated to all and any Claims that the Claiming Party may have relating thereto without any further action; (ii) the Claiming Party, without limiting its rights to the indemnity under this Agreement, shall provide any reasonable assistance that the Indemnifying Party may reasonably request in order to permit the Indemnifying Party to pursue such Claims; and (iii) if the Claiming Party is subsequently reimbursed by any Person or from any source other than the Indemnifying Party in respect of the Indemnified Matter, the Claiming Party shall promptly pay to the Indemnifying Party any such amounts so received by it, up to the amount received from the Indemnifying Party in respect of such Indemnified Matter.

ARTICLE 7 TERMINATION

7.1 Termination

This Agreement may be terminated and the Transaction may be terminated prior to Closing only as

follows:

(a) by mutual written agreement of the Parties;
(b) automatically pursuant to Section 3.1;
(c) by Purchaser pursuant to Section 3.2(b); or
(d) by Vendor pursuant to Section 3.3(b).

7.2 Effect of Termination

(a) If this Agreement is terminated pursuant to Section 7.1(a) or Section 7.1(b), then, except as set out in any such mutual agreement of the Parties:
(i) Purchaser and Vendor shall be released and discharged from the further performance of any duties or obligations under this Agreement, except as provided in Section 9.8; and
(ii) neither Party shall have any Claim against the other Party under or in connection with this Agreement or in connection with the Facility Interest or otherwise in connection with the Transaction or the termination of this Agreement, other than pursuant to such mutual agreement and Section 9.8.
(b) If this Agreement is terminated by Purchaser pursuant to Section 7.1(c), then:
(i) subject to the limitations of liability set forth in Section 6.5, Purchaser shall be entitled to pursue a Claim against Vendor for all Losses and Liabilities and all damages that Purchaser suffers as a direct consequence of the termination of this Agreement in such circumstances, and waives all other remedies Purchaser may have, whether at law or in equity, relating to or in respect of such a termination of this Agreement; and
(ii) Purchaser and Vendor shall be released and discharged from the further performance of any duties or obligations under this Agreement, other than pursuant to Section 7.2(b)(i) and Section 9.8.
(c) If this Agreement is terminated by Vendor pursuant to Section 7.1(d), then:
(i) subject to the limitations of liability set forth in Section 6.5, Vendor shall be entitled to pursue a Claim against Purchaser for all Losses and Liabilities and all damages that Purchaser suffers as a direct consequence of the termination of this Agreement in such circumstances, and waives all other remedies Purchaser may have, whether at law or in equity, relating to or in respect of such a termination of this Agreement; and

(ii) Purchaser and Vendor shall be released and discharged from the further performance of any duties or obligations under this Agreement, other than pursuant to Section 7.2(c)(i) and Section 9.8.

ARTICLE 8 NOTICE

8.1 Addresses for Service

(a) Any notice, consent, approval, determination or other communication to be given or sent to a Party pursuant to this Agreement shall be in writing and shall be conclusively deemed to have been validly given or received for the purposes of this Agreement if delivered personally or by facsimile or electronically as follows:

(i) to Vendor:

2900, 250 6[th] Avenue S.W. Calgary, Alberta T2P 3H7

Attention: Drew Tumbach Vice President, Land and Contracts

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[Personal contact information redacted]

(ii) to Purchaser:

2900, 250 6th Avenue S.W. Calgary, Alberta T2P 3H7 Attention: Marty Staples President and Chief Executive Officer

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[Personal contact information redacted]

(b) A Party may, at any time, change such Party's address for the purpose of service by written notice to the other Party.
(c) Notices given by way of facsimile or other electronic means of communication shall be conclusively deemed to have been received on the date of their transmittal (if on a Business Day during normal business hours of the recipient and, if not, on the next Business Day). Notices delivered by hand or courier shall be conclusively deemed to have been received on the date of delivery.

ARTICLE 9 MISCELLANEOUS

9.1 Costs and Expenses

Except as specifically provided herein, all legal and other costs and expenses incurred by a Party in connection with this Agreement and the transactions contemplated hereby will be paid by the Party that incurred the same.

9.2 Further Assurances

The Parties will execute and deliver such further instruments, papers and documents, and shall do such further acts and things as may reasonably be necessary or as may reasonably be requested for the purpose of carrying out the provisions of this Agreement.

9.3 No Third Party Beneficiary Rights

This Agreement shall be construed to benefit the Parties and their respective successors and permitted assigns only and shall not be construed to create Third Party beneficiary rights in any other Person.

9.4 Entire Agreement

This Agreement, together with the Ancillary Agreements, constitutes the entire agreement of the Parties relating to, and there are no collateral or other statements, understandings, covenants, agreements, representations or warranties, written or oral, relating to, the subject matter of this Agreement. This Agreement, together with the Ancillary Agreements, supersedes all prior agreements, understandings, negotiations and discussions, whether written or oral, between the Parties relating to the subject matter hereof or thereof.

9.5 Survival

The expiry or termination of this Agreement will not discharge or release any Party from any of its Liabilities or obligations (including payment obligations) accrued at the time of such expiry or termination (including a breach of a representation, warranty or covenant) or from any of its Liabilities or obligations that expressly continue beyond or arise out of such expiry or termination of this Agreement.

9.6 Severability

If any provision of this Agreement is determined to be invalid or unenforceable under the laws of the Province of Alberta or the laws of Canada applicable therein or under any Applicable Laws or the terms and provisions of any authorizations, the remainder of this Agreement, or the application of the provisions of this Agreement to Persons or circumstances other than those to which it is held invalid or unenforceable, will not be affected thereby.

9.7 Waiver

(a) No waiver by any Party of any default by the other Party in the performance of any provision, condition or requirement herein shall be deemed to be a waiver of, or in any manner release the other Party from performance of, any other provision, condition or requirement herein, nor shall such waiver be deemed to be a waiver of, or in any manner a release of, the other Party from future performance of the same provision, condition or requirement.
(b) Any delay in exercising or failure to exercise any right, remedy, power or privilege hereunder on the part of any Party shall not operate as a waiver thereof nor impair the exercise of any such right, remedy, power or privilege or any other right, remedy, power or privilege accruing to such Party thereafter.
(c) The failure of a Party to perform its obligations hereunder shall not release the other Party from the performance of its obligations.

9.8 Confidentiality and Public Announcements

(a) Each Party (in this Section, the " Receiving Party ") shall keep confidential all information obtained from the other Party (in this Section, the " Disclosing Party ") in connection with the Lands, this Agreement, and the transactions contemplated hereby that is not within the public domain through no act or fault of the Receiving Party (and for such purposes, specific items of information shall not be considered to be in the public domain merely because more general information is in the public domain) (the " Confidential Information ") and shall not release any such Confidential Information, without the prior written consent of the Disclosing Party, which consent shall not be unreasonably withheld or delayed. Nothing contained herein shall prevent a Party at any time from furnishing information:
(i) to any Governmental Authority or to the public if required by Applicable Laws, including securities laws or the rules of any stock exchange on which any securities of the Party are listed, provided that the Parties shall use reasonable commercial efforts to consult with each other prior to disclosing any

Confidential Information to such Governmental Authority or making any public statement or otherwise disclosing any Confidential Information to the public including filing a redacted form of this Agreement in which case the Disclosing Party shall redact all of the provisions reasonably requested by the other Party.

(b) Following Closing, the obligations of confidentiality set forth in Subsection 9.8(a):
(i) shall, as applicable be superseded by the confidentiality obligations set forth in the Volume Commitment Agreement with respect to the Volume Commitment Interest, and the COO Agreement with respect to the Facility; and
(ii) shall otherwise continue to apply to Purchaser with respect to other information provided by Vendor to Purchaser, if any.

9.9 Amendment

This Agreement may not be varied or amended in its terms otherwise than by an instrument in writing dated subsequent to the date hereof, executed by duly authorized representatives of the Parties.

9.10 Time

Time shall be of the essence hereof.

9.11 Governing Law

This Agreement will be construed in accordance with and governed by the laws in force in the Province of Alberta and the laws of Canada applicable in the Province of Alberta.

9.12 Enurement

This Agreement shall enure to the benefit of and be binding upon the Parties and, to the extent permitted hereunder, their successors and assigns.

9.14 Counterpart and Facsimile Execution

This Agreement may be executed in as many counterparts as are deemed necessary, and may be delivered by facsimile or in electronic pdf form, and when so executed and delivered, each such counterpart is as valid and binding on all Parties as every other such counterpart.

IN WITNESS WHEREOF the Parties have duly executed this Agreement on the date first above written.

TOURMALINE OIL CORP.

TOPAZ ENERGY CORP.

Per: (signed) " Drew Tumbach " Per: (signed) " Marty Staples " Drew Tumbach Marty Staples Vice President, Land and Contracts President and Chief Executive Officer

This is the Execution Page for the Facility Interest Sale Agreement between Tourmaline Oil Corp. and Topaz Energy Corp. dated May 18, 2021

SCHEDULE A FACILITY

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Facility

The Facility means the raw inlet gas capacity Gundy Gas Processing Facility currently 200 mmcf/day (Phase 1) located at C-060-A/094-B-16 and all related infrastructure and equipment, including all permanently installed equipment between the inlet riser and outlet flange of such plant, and including all liquids handling infrastructure associated with the plant which is required for the extraction and storage of hydrocarbon liquids.

SCHEDULE B DISCLOSURE

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NIL

SCHEDULE "C" [deleted]

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SCHEDULE "D" FORM OF COO AGREEMENT

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Attached.

AGREEMENT FOR THE CONSTRUCTION, OWNERSHIP AND OPERATION OF THE GUNDY GAS PLANT COMPLEX

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

______

HEAD DOCUMENT

ARTICLE I - INTERPRETATION ............................................................................................................................... 2	ARTICLE I - INTERPRETATION ............................................................................................................................... 2
*101.*	*Definitions ................................................................................................................................................................... 2*
*102.*	*Headings ...................................................................................................................................................................... 2*
*103.*	*References .................................................................................................................................................................... 2*
*104.*	*Conflicts ....................................................................................................................................................................... 2*
ARTICLE II - EXHIBIT "A"......................................................................................................................................... 3
*201.*	*Exhibit"A" ................................................................................................................................................................... 3*
*202.*	*Amendment of Operating Procedure and Appendices ................................................................................................. 4*
ARTICLE III - PURPOSE OF THIS AGREEMENT AND THE FACILITY.................................................................. 5
*301.*	*Agreement Purpose ...................................................................................................................................................... 5*
*302.*	*Facility Purpose........................................................................................................................................................... 5*
ARTICLE IV - BASIS OF PARTICIPATION .............................................................................................................. 5
*401.*	*Initial Participation..................................................................................................................................................... 5*
*402.*	*Investment Values ........................................................................................................................................................ 5*
*403.*	*Future Participation .................................................................................................................................................... 5*
ARTICLE V - COMMITMENT TO DELIVER TO THE FACILITY .............................................................................. 5
*501.*	*Commitment to Deliver to the Facility ......................................................................................................................... 5*
ARTICLE VI - OPERATIONS AND OPERATORSHIP .............................................................................................. 6
*601.*	*Initial Operator ............................................................................................................................................................ 6*
*602.*	*Operation of the Facility ............................................................................................................................................. 6*
*603.*	*Ownership .................................................................................................................................................................... 6*
*604.*	*Capacity ....................................................................................................................................................................... 6*
ARTICLE VII - EFFECTIVE DATE ............................................................................................................................. 6
*701.*	*Effective Date............................................................................................................................................................... 6*

ARTICLE VIII - PRIOR COMMITMENTS .................................................................................................................. 7	ARTICLE VIII - PRIOR COMMITMENTS .................................................................................................................. 7
*801.*	*Prior Commitments ...................................................................................................................................................... 7*
*802.*	*Existing Conditions ...................................................................................................................................................... 7*
ARTICLE IX - OPERATING AND ACCOUNTING PROCEDURES .......................................................................... 7
*901.*	*Operating Procedure ................................................................................................................................................... 7*
*902.*	*Accounting Procedure ................................................................................................................................................. 7*
*903.*	*Prevailing Provisions .................................................................................................................................................. 7*
ARTICLE X - NO AMENDMENT EXCEPT IN WRITING........................................................................................... 8
*1001.*	*No Amendment Except in Writing ............................................................................................................................ 8*
ARTICLE XI - AGREEMENT EXECUTION ............................................................................................................... 8
*1101.*	*Execution in Counterpart ........................................................................................................................................ 8*

EXHIBIT "A OPERATING PROCEDURE

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

HEAD DOCUMENT

This Agreement is dated as of the 1[st] day of July, 2021 between:

TOURMALINE OIL CORP.

AND

TOPAZ ENERGY CORP.

WHEREAS Tourmaline was the original owner of the Facility;

AND WHEREAS Tourmaline sold, assigned, conveyed and transferred an interest in the Facility to Topaz pursuant to the Facility Interest Sale Agreement;

AND WHEREAS the Owners desire to enter into an agreement to provide for the ownership and operation of the Facility upon such terms and conditions set forth herein;

The Owners hereby agree as follows:

ARTICLE I - INTERPRETATION

101. Definitions

All capitalized terms used herein shall have the meaning assigned in the Operating Procedure and, in addition, the following words and phrases shall have the following respective meanings, namely:

(a) "Volume Commitment Agreement (Gundy Facility)" means the Volume Commitment Agreement (Gundy Facility) dated July 1, 2021 between Tourmaline and Topaz, pursuant to which Tourmaline made a volume commitment to Topaz for the delivery of Owner's Substances to the Gundy Facility.
(b) "Effective Date" means July 1, 2021;
(c) "Facility Interest Sale Agreement" means the Facility Interest Sale Agreement dated May [ ], 2021 between Tourmaline and Topaz, pursuant to whichTourmaline agreed to assign an interest in the Facility to Topaz; and
(d) "Owner’s Substances" means an Owner’s or an Affiliates working interest or royalty share of production from any well that is delivered to the Facility and which meets the specifications set out in the Appendix titled “SPECIFICATIONS OF INLET SUBSTANCES AND FACILITY PRODUCTS”.

102. Headings

The headings of the Articles and Clauses of this Agreement have been inserted for convenience of reference only and shall not affect the interpretation hereof.

103. References

Unless otherwise expressly stated the words "hereinbefore", "hereinafter", "hereunder", "herein", and "hereof" in the Head Document refer to the provisions of this Head Document and references to Articles, Clauses, Subclauses or Paragraphs in the Head Document refer to Articles, Clauses, Subclauses or Paragraphs of this Head Document.

104. Conflicts

If any provision contained in this Head Document conflicts with a provision contained in Exhibit "A", the provision in the Head Document shall prevail. If any provision contained in an Appendix conflicts with a provision contained in the Operating Procedure, the provision in the Operating Procedure shall prevail, except when using a defined term in the Appendix titled “ACCOUNTING PROCEDURE”, in which case the meaning assigned to that term in the Appendix titled “ACCOUNTING PROCEDURE” shall prevail for the purposes of the Appendix titled “ACCOUNTING PROCEDURE”. If there is a conflict between any provision in this Agreement and the Regulations, the Regulations shall govern, except that the allocation of responsibility for losses as provided herein

(including, without restricting the generality of the foregoing, Article V of the Operating Procedure) shall govern the relationship of the Owners. If there is a conflict as provided above, the Head Document, the Operating Procedure or the Appendix, as the case may be, shall be modified accordingly to the extent necessary to resolve such conflict and, as so modified, shall continue in full force and effect.

ARTICLE II - EXHIBIT "A"

201. Exhibit "A"

Exhibit "A", being the Operating Procedure and a series of Appendices, which sets forth certain business and technical matters relating to Joint Operations, is attached hereto and forms part of this Agreement. Only the following Appendices, as indicated below, are part of this Agreement:

FORMS PART OF THIS AGREEMENT AS APPENDIX NO.:

(a) "FACILITY PARTICIPATION"

which describes the Facilities which are subject to this Agreement and the ownership each Owner has in such Facility;

(b) "DESCRIPTION OF FACILITY AND FUNCTIONAL UNITS, MAP AND SCHEMATIC"

which provides the descriptions which are necessary to identify II the location of the Facility, the Functional Units and may also include schematic diagrams and maps related to the Facilities;

(c ) "ACCOUNTING PROCEDURE" which describes the costs and related credits the Operator is allowed to bill the Owners, which, in respect to Joint Operations conducted hereunder, the Operator has incurred on behalf of the Owners and certain other rights, obligations and limitations related to the Joint Account;

III

(d) "DEEMED ORDER OF CAPACITY UTILIZATION" which describes the manner in which Inlet Substances will be deemed to utilize each Owner’s Capacity Ownership;

(e) "STRUCTURE AND SHARING OF THE JOINT ACCOUNT " which describes the structure of the Joint Account and sets forth V the basis of sharing costs among the Owners and distributing fees among the Owners;

(f) "CAPACITY USAGE" which describes, pursuant to Clause 604, nominal capacities, the VI priority to use capacity and the fees related to excess capacity usage by Owners and non-Owners; (g) "INSURANCE" which describes the types, limits, responsibilities for carrying and VII similar insurance management matters pertaining to the Facilities and Joint Operations;

(h) "SPECIFICATIONS OF INLET SUBSTANCES AND FACILITY PRODUCTS"

VIII

which describes the specifications of Inlet Substances and Facility Products ;

(i) "FACILITY PRODUCT ALLOCATION PROCEDURE" which, subject to Articles VII and VIII of the Operating Procedure, describes the procedure for allocating Facility Products;

(j) "MEASUREMENT"

IX X

which, subject to Article VII of the Operating Procedure, describes the procedures and responsibilities for measurement where such procedures and responsibilities are specific to measuring Inlet Substances, components of Inlet Substances and Facility Products within the Faciity, at the Facility Inlet and at the Facility Outlet;

(k) "INVESTMENT VALUES" which is a record of Facility Capital Costs borne by the Owners;

XI

(l) "ENLARGEMENT"

which describes the terms and conditions by which the Owners XII agree to have Operator proceed with an Enlargement, including the terms and conditions of Owner's participation;

(m) "DISPUTE RESOLUTION"

which describes the dispute resolution and arbitration processes XIII to be followed by the Owners;

(n) "ENVIRONMENTAL MATTERS" which sets out the rights of the Owners and the responsibility of XIV Operator to identify, report and react to environmental matters;

(o) "REQUIRED CAPACITY EXPENDITURE" which describes the terms and conditions by which the Owners XV agree to handle Required Capacity Expenditures, including the terms and conditions of Owners participation and resulting Facility Participation adjustments.

202. Amendment of Operating Procedure and Appendices

(a) Subject to Subclause 202(c) hereto, and Subclause 204(h) of the Operating Procedure, the Operating Procedure and the Appendices may only be revised, amended or replaced by the unanimous agreement of the Owners.
(b) An affirmative vote of Owners having a combined Facility Participation of one hundred percent (100%) and conducted in accordance with Clause 204 of the Operating Procedure, excepting thereout Subclause 204(b) therein, shall be deemed to constitute unanimous agreement between all of the Owners and each Owner, whether such Owner voted or was deemed to have voted, shall be bound thereby.
(c) The operation of this Clause shall not restrict the Operator from revising Appendices as provided for under this Agreement, and when required, to accurately reflect routine consequential changes, such as Facility Participations and amalgamations.

(d) Operator shall provide each Owner with one copy of any revision, amendment or replacement in a timely manner.

ARTICLE III - PURPOSE OF THIS AGREEMENT AND THE FACILITY

301. Agreement Purpose

The purpose of this Agreement is to document the terms of ownership of the Facility and the allocation of Facility costs, provide terms for the operation of the Facility and set out the basis upon which a share of the Facility Products shall be allocated and distributed to each Person delivering Inlet Substances to the Facility Inlet.

302. Facility Purpose

The purpose of the Facility is to process Inlet Substances to obtain Facility Products to be delivered to the Facility Outlet for commercial sales.

ARTICLE IV - BASIS OF PARTICIPATION

401. Initial Participation

The Owners of the Facility agree that Facility Participation as of the Effective Date are as set out in the Appendix titled “FACILITY PARTICIPATION”.

402. Investment Values

Investment value as of the Effective Date shall be expressed in dollars and calculated by Operator. The investment value for the Facility is as indicated in the Appendix titled “INVESTMENT VALUES”.

403. Future Participation

The basis of participation in an Enlargement of the Facility shall be determined pursuant to Exhibit "A", under the Appendix titled "ENLARGEMENT".

ARTICLE V - COMMITMENT TO DELIVER TO THE FACILITY

501. Commitment to Deliver to the Facility

(a)

Alternate Eimmediately below shall apply:
ALTERNATE A.
Owner's Substances are hereby dedicated to the Facility.
ALTERNATE B.
Owner's Substances produced from the wells listed under the Appendix
titled "WELLS" are hereby dedicated to the Facility.
ALTERNATE C.
Owner's Substances produced from the ______ zone in the wells
listed under the Appendix titled "WELLS" are hereby dedicated to the
Facility.
ALTERNATE D.
The Owners agree that there is no commitment to deliver Owner's
Substances to the Facility.

ALTERNATE E. The Owners agree that there is no commitment to deliver Owner’s Substances to the Facility, other than in connection with the Volume Commitment Agreement (Gundy Facility).
(b) Subject to the provisions of this Agreement, and unless excused by the Operating Committee or otherwise precluded from delivery under the Regulations, each Owner shall only be committed to deliver or cause to be delivered in accordance with alternate A, B, C or E of Clause 501(a) all of its Owner's Substances, up to Alternate B immediately below:

ALTERNATE A. such Owner's share of Capacity,

ALTERNATE B .

the overall available surplus Capacity in the Facility, and the Operator shall accept all Owner's Substances if delivered within the specifications as set out in the Appendix titled "SPECIFICATIONS OF INLET SUBSTANCES AND FACILITY PRODUCTS".

ARTICLE VI - OPERATIONS AND OPERATORSHIP

601. Initial Operator

The Owners hereby designate Tourmaline as the initial Operator and Tourmaline accepts such designation.

602. Operation of the Facility

The Facility shall be operated according to the terms of this Agreement.

603. Ownership

Each Owner shall own an undivided percentage interest in the Facility equal to its Facility Participation. Operator shall hold such interests in trust for the Owners subject to the provisions of this Agreement.

604. Capacity

(a) Each Owner shall have the right to use its Capacity Ownership. The Capacity and terms and conditions related to the use of Capacity shall be as set forth in the Appendix titled "CAPACITY USAGE".
(b) The Facility is designed for, and is deemed to have, an initial Capacity as shown in the Appendix titled “CAPACITY USAGE” to process Inlet Substances meeting the specifications initially set forth in the Appendix titled "SPECIFICATIONS OF INLET SUBSTANCES AND FACILITY PRODUCTS". The foregoing capacity may be redetermined under this Agreement and set forth in the Appendix titled "CAPACITY USAGE".

ARTICLE VII - EFFECTIVE DATE

701. Effective Date

Alternate A immediately below shall apply:

ALTERNATE A . This Agreement shall be effective on the Effective Date.

ALTERNATE B. This Agreement shall be effective on the Effective Date if on or before ____, 200_ Owners having Facility Participations totalling one hundred

percent (100%), as set forth in Exhibit "A", under the Appendix titled “FACILITY AND FUNCTIONAL UNIT PARTICIPATION", have executed and delivered to the Operator one (1) counterpart of this Agreement. The Operator shall promptly notify all Owners of the Effective Date. If an Effective Date is not established by the first day of _, 200, this Agreement shall become null and void and cease to bind any person having executed same, unless the representatives of those proposed Owners who have then executed and delivered counterparts unanimously agree to extend the time.

ARTICLE VIII - PRIOR COMMITMENTS

801. Prior Commitments

The Owners hereby acknowledge that prior to the execution of this Agreement, Operator may have contracted with various parties for the design, construction and operation of the Facility. Subject to Clause 802, the Owners hereby acknowledge that any commitments, expenditures, covenants, obligations, duties, responsibilities, rights and agreements of Operator made, arising or incurred as a result thereof have been made, incurred or performed by the Operator on behalf of the Owners and the Owners hereby ratify and confirm the same and agree to be responsible for them in accordance with each Owner's Facility Participation, except to the extent that they arise from the Gross Negligence of the Operator.

802. Existing Conditions

Alternate C immediately below shall apply:

ALTERNATE A. Conditions existing prior to and excluded from the operation of Clause 801 which are not the responsibility of the Owners are specifically described herein as follows:

ALTERNATE B. Specific conditions existing prior to and included in the operation of Clause 801 which shall be the responsibility of the Owners are specifically described herein as follows:

ALTERNATE C . None

ARTICLE IX - OPERATING AND ACCOUNTING PROCEDURES

901. Operating Procedure

The Operating Procedure is the Operating Procedure contained in the 1999 PJVA Model Construction, Ownership and Operating Agreement and has been modified to meet the purposes of this Agreement.

902. Accounting Procedure

The Accounting Procedure is the 1996 PASC Accounting Procedure and has not been modified except as specifically noted in the Appendix titled "Accounting Procedure".

903. Prevailing Provisions

In the event that modifications are made to the Accounting Procedure and such modifications are not appropriately noted pursuant to Clauses 901 and 902 then the applicable provisions in the standard Accounting Procedure named in Clauses 901 and 902 are deemed to prevail.

ARTICLE X - NO AMENDMENT EXCEPT IN WRITING

1001. No Amendment Except in Writing

No amendment or variation of the provisions of this Head Document shall be binding upon any Owner unless and until it is evidenced in writing and executed by each of the Owners.

ARTICLE XI - AGREEMENT EXECUTION

1101. Execution in Counterpart

This Agreement may be executed in as many counterparts as are necessary and all executed counterparts shall constitute one Agreement.

The Operator shall promptly supply each Owner with copies of a full set of counterpart execution pages.

IN WITNESS WHEREOF the Owners have executed this Agreement each on the date shown above its execution hereof.

DATE: July 1, 2021 DATE: July 1, 2021 TOURMALINE OIL CORP. TOPAZ ENERGY CORP. Per: Per: Drew Tumbach Marty Staples Vice President, Land and Contracts President and Chief Executive Officer Address for Service: Address for Service: 2900, 250-6[th] Ave. S.W. 2900, 250-6[th] Ave. S.W. Calgary, Alberta T2P 3H7 Calgary, Alberta T2P 3H7 Attn: Vice President, Land and Contracts Attn: President and Chief Executive Officer

==> picture [175 x 40] intentionally omitted <==

[Personal contact information redacted]

This is the Execution Page of the Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

EXHIBIT "A" to

AGREEMENT FOR THE CONSTRUCTION, OWNERSHIP AND OPERATION OF THE GUNDY GAS PLANT COMPLEX

1999 OPERATING PROCEDURE

Petroleum Joint Venture Association

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____. 10968079.1

EXHIBIT "A" to

AGREEMENT FOR THE CONSTRUCTION, OWNERSHIP AND OPERATION OF THE GUNDY GAS PLANT COMPLEX

Elections and Modifications to the 1999 Operating Procedure

(a) The following clauses of the Operating Procedure include the following elections, alternates, options or values:

101(j) Enlargement: one hundred thousand dollars ($100,000)
204 Voting Procedures:
(b) Negative Vote: fifty percent (50%); fifty percent (50%)
(e)(i) General Vote: two (2) or more Owners; sixty-five percent (65%)
(f) Removal of Operator: two (2) or more Owners; ninety percent (90%)
(f)(i) Removal of Operator: fifty percent (50%)
(g) Replacement of Operator: two (2) or more Owners; sixty-five percent (65%)
(h) Amendment of Appendices

The Appendices may be revised, amended or replaced from time to time in the following manner:

(i) Appendices I, II and XI as provided in Clause 202 (c) of the Head Document, Clauses 104 and 105 of Exhibit "A" and Article IX of Exhibit "A" hereof.
(ii) Appendices VII, VIII, IX, X, XII, XIII and XIV at the direction of the Operating Committee by an affirmative vote of two or more Owners having a combined Facility Participation of seventy percent (70%) or more.
(iii) Appendices III, IV, V, VI and XV at the direction of the Operating Committee by unanimous approval of all Owners.

602(b)(iii) Set-off: Alternate B

805 Distribution of Proceeds: Alternate A
(Complete one only of the following for the Alternate chosen for 805 above).
A: Two percent (2.0 %)
B: __ ($/m[3] ); __ ($/10[3] m[3] ); __ ($_/t)
C: __ ($_)

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

901 Disposal of Interest: Alternate C

902 Unrestricted Disposal:

(d) shall X / shall not ___apply
(e) shall ___/ shall not X apply

1109 Statute of Limitations

(a) For claims disclosed by an audit: two (2) Years
(b) For all other claimes: four (4) Years

(b) If any provision contained in the Operating Procedure conflicts with a provision contained in this Elections and Modifications Form, the provision in the Elections and Modifications Form shall prevail.

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

iii

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

EXHIBIT "A" 1999 OPERATING PROCEDURE

ARTICLE I	INTERPRETATION PAGE
101.	Definitions ................................................................................................................ 1
102.	References .............................................................................................................. 4
103.	Derivatives ............................................................................................................... 4
104.	Correction of Appendices ........................................................................................ 4
105.	Revision of Exhibit "A" ............................................................................................. 4
106.	Effective Time of Exhibit "A" .................................................................................... 4
107.	Revised Appendices Deemed Correct .................................................................... 5
108.	Identification of Revised Appendices ...................................................................... 5
109.	Preparation and Distribution of Revised Appendices .............................................. 5

ARTICLE II	SUPERVISION AND CONTROL OF JOINT OPERATIONS
201.	Operating Committee .............................................................................................. 5
202.	Chairman ................................................................................................................. 5
203.	Powers..................................................................................................................... 5
204.	Voting Procedure ..................................................................................................... 6
205.	Meetings .................................................................................................................. 8
206.	Minutes .................................................................................................................... 9
207.	Reduction in Owners ............................................................................................... 9
208.	Unanimous Approval ............................................................................................... 9
209.	Subcommittees........................................................................................................ 9
210.	Enlargement ............................................................................................................ 9
211.	Environmental Matters ............................................................................................ 9
212.	Required Capacity Expenditure ............................................................................... 9
ARTICLE III	APPOINTMENT AND REPLACEMENT OF OPERATOR
301.	Assumption of Duties of Operator ......................................................................... 10
302.	Resignation of Operator ........................................................................................ 10
303.	Replacement of Operator ...................................................................................... 10
304.	Appointment of Successor Operator ..................................................................... 10
305.	Transfer of Property on Change of Operator ........................................................ 11
306.	Inventory and Audit of Accounts on Change of Operator ...................................... 11
307.	Assignment of Operatorship .................................................................................. 12
ARTICLE IV	FUNCTIONS AND DUTIES OF OPERATOR
401.	Control and Management of Joint Operations....................................................... 12
402.	Subcontracting ...................................................................................................... 13
403.	Operator as an Owner ........................................................................................... 13
404.	Independent Status of Operator ............................................................................ 13
405.	Title ........................................................................................................................ 15

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

ARTICLE V

INDEMNITY AND LIABILITY PAGE
Limit of Liability ..................................................................................................... 14
Indemnification of Operator ................................................................................... 14
Burden of Responsibility ........................................................................................ 14
Continuation of Legal Responsibilities................................................................... 14
Environmental Responsibilities ............................................................................. 15

ARTICLE VI

ACCOUNTING MEASURES

601.	Joint Account ......................................................................................................... 15
602.	Operator's Lien and Remedies .............................................................................. 15
603.	Reimbursement of Operator .................................................................................. 16
604.	Commingling of Funds .......................................................................................... 16
605.	Forecasts ............................................................................................................... 16

ARTICLE VII MEASUREMENT 701. Accuracy ................................................................................................................ 17 702. Unit of Volume and Weight ................................................................................... 18 703. Determination of Volumes ..................................................................................... 18 704. Change of Measurement Methodology ................................................................. 18

ARTICLE VIII	PRODUCTION AND FACILITY PRODUCTS
801.	Owner's Share of Facility Products ....................................................................... 18
802.	Losses in Handling, Flaring and Operation of the Facility ..................................... 19
803.	Fuel Gas Usage .................................................................................................... 19
804.	Disposition of Facility Products.............................................................................. 19
805.	Distribution of Proceeds ........................................................................................ 20
806.	Audit by Non-Taking Owner .................................................................................. 20
807.	Operator to be Indemnified .................................................................................... 20
808.	Indemnification for Royalties and Other Payments ............................................... 20
809.	Warranty by Owners .............................................................................................. 20

ARTICLE IX DISPOSAL OF FACILITY INTEREST

901.	Disposal of an Interest in the Facility ..................................................................... 21
902.	Unrestricted Disposals .......................................................................................... 22
903.	Financing ............................................................................................................... 23
904.	Admission of New Owners Through Enlargement ................................................ 23
905.	Disposal of Interest Documentation ...................................................................... 23
906.	Change of Name ................................................................................................... 24

ARTICLE X TERM AND TERMINATION

1001.	Term ...................................................................................................................... 24
1002.	Termination ........................................................................................................... 24
1003.	Salvage or Disposition ........................................................................................... 24
1004.	Proceeds and Costs .............................................................................................. 24

ARTICLE XI GENERAL PROVISIONS

1101.	Enurement ............................................................................................................. 25
1102.	No Partnership ...................................................................................................... 25
1103.	Force Majeure ....................................................................................................... 25

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

PAGE

1104.	Notices .................................................................................................................. 25
1105.	Suits....................................................................................................................... 26
1106.	Compliance with Laws and Regulations ................................................................ 26
1107.	Governing Law ...................................................................................................... 29
1108.	Waiver ................................................................................................................... 26
1109.	Statute of Limitations ............................................................................................. 26
1110.	Further Assurances ............................................................................................... 27
1111.	Partitioning ............................................................................................................. 27
1112.	United States Taxes .............................................................................................. 27
1113.	Confidentiality ........................................................................................................ 27
1114.	General Business Conduct .................................................................................... 28
1115.	Supersedes Previous Agreements ........................................................................ 28
1116.	Time of the Essence ............................................................................................. 28
1117.	No Implied Covenants ........................................................................................... 28
1118.	Waiver of Relief ..................................................................................................... 28

APPENDICES TO EXHIBIT "A"

APPENDIX I - FACILITY PARTICIPATION APPENDIX II - DESCRIPTION OF FACILITY, MAP AND SCHEMATIC APPENDIX III - ACCOUNTING PROCEDURE APPENDIX IV - ORDER OF CAPACITY UTILIZATION APPENDIX V - STRUCTURE AND SHARING OF THE JOINT ACCOUNT APPENDIX VI - CAPACITY USAGE APPENDIX VII - INSURANCE APPENDIX VIII - SPECIFICATIONS OF INLET SUBSTANCES AND FACILITY PRODUCTS APPENDIX IX - FACILITY PRODUCT ALLOCATION PROCEDURE APPENDIX X - MEASUREMENT APPENDIX XI - INVESTMENT VALUES APPENDIX XII - ENLARGEMENT APPENDIX XIII - DISPUTE RESOLUTION APPENDIX XIV - ENVIRONMENTAL MATTERS APPENDIX XV - REQUIRED CAPACITY EXPENDITURE

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

EXHIBIT "A" to

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

1999 OPERATING PROCEDURE

ARTICLE I INTERPRETATION

101. Definitions

All capitalized terms used herein shall have the meaning assigned in the Head Document and the Accounting Procedure, and, in addition, the following words and phrases shall have the following respective meanings, namely:

(a) "Accounting Procedure" means the Appendix titled "ACCOUNTING PROCEDURE";
(b) "Affiliate" means, with respect to any Owner, any other Person which is affiliated with such Owner, and for the purposes hereof:
(i) two Persons will be considered to be affiliated with one another if one (1) of them controls the other, or if both of them are controlled by a common third Person, and
(ii) one (1) Person will be considered to control another Person if it has the power to direct or cause the direction of the management and policies of the other Person, whether directly or indirectly, through one (1) or more intermediaries or otherwise, and whether by virtue of the ownership of shares or other equity interests, the holding of voting rights or contractual rights, or otherwise,

provided that, for certainty, Tourmaline and Topaz are deemed not to be Affiliates of each other;

(c) "Agreement" means the Head Document together with the Operating Procedure and the Appendices;
(d) "Appendix" means any of the appendices (as amended) attached to the Operating Procedure, as indicated in Article II of the Head Document;
(e) "Capacity" means the daily volumetric handling capability of the Facility, as set forth initially in the Appendix titled “CAPACITY USAGE” and as may be redetermined under this Agreement;
(f) "Capacity Ownership" means an Owner's share of Capacity equal to its Facility Participation;
(g) "Capital Costs" means all expenditures incurred in connection with the Facility, any Modification or Enlargement and any other expenditures so designated by the Operating Committee;
(h) "Day" means a period commencing at 0800 hours on any calendar day and ending at 0800 hours on the immediately next succeeding calendar day, or at such other time as may hereinafter be set by the Operating Committee;
(i) "Effective Date" has the meaning ascribed to it in the Head Document;
(j) "Enlargement" means an expansion, addition or enhancement to the Facility that increases the Capacity of the Facility and has a total installed cost of one hundred thousand dollars ($100,000) or more, and is

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

required to process, treat or handle, as the case may be, additional volumes of Inlet Substances or the components thereof, in excess of an Owner’s Capacity Ownership in the Facility;

(k) "Exhibit "A" means this Operating Procedure and the Appendices;
(l) "Facility" means all real and personal property of every nature and kind attached to, forming part of or used in connection with Joint Operations, maintained and held by Operator in accordance with this Agreement and as described under the Appendix titled "DESCRIPTION OF FACILITY, MAP AND SCHEMATIC";
(m) "Facility Inlet" means the point at which Inlet Substances first enter the Facility;
(n) "Facility Outlet" means the point at which Facility Products leave the Facility;
(o) "Facility Participation" means the percentage voting interest of each Owner as set forth opposite such Owner's name under the Appendix titled "FACILITY PARTICIPATION" and as may be redetermined under this Agreement;
(p) "Facility Products" means all substances recovered from the processing or handling of Inlet Substances in the Facility, which are available for delivery from the Facility, excluding such substances as are unavoidably lost, consumed as fuel or flared in Joint Operations;
(q) "Fixed Operating Costs" means those Operating Costs that do not vary with production or throughput volume, such as, but not limited to, property taxes, insurance and surface lease rentals;
(r) "Forecast" means a written statement, initiated by Operator, of the Joint Operations which are anticipated to be conducted during the Forecast Period, together with a written statement of the estimated expenditures to be made in connection with such Joint Operations;
(s) "Forecast Period" means a period of one (1) Year, provided that if this Agreement does not come into effect as of the beginning of a Year, the first such period for the Year in which this Agreement comes into effect shall comprise the portion of such Year remaining after this Agreement comes into effect;
(t) "Gross Negligence" means:
(i) a marked and flagrant departure from the standard of conduct of a reasonable person acting in the circumstances at the time of the alleged misconduct, or
(ii) such wanton and reckless conduct or omissions as constitutes in effect an utter disregard for harmful, foreseeable and avoidable consequences,

provided that Gross Negligence shall not include any act or omission, insofar as it was done or omitted to be done in accordance with the instructions or express concurrence of the Operating Committee;

(u) "Head Document" means the agreement to which this Exhibit "A" is attached;
(v)
"Inlet Substances" means Owner's Substances and Outside Substances;
(w) "Joint Account" means the account set up pursuant to Clause 601 showing the charges paid and credits received as a result of Joint Operations and which are to be shared by the Owners in accordance with the terms of this Agreement;
(x) "Joint Operations" means all activities resulting in Capital Costs, Operating Costs and all other activities undertaken in connection with the Facility, where such activities are conducted for the Joint Account under the terms of this Agreement;

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

(y) "Market Price" means the price at which Facility Products are to be sold pursuant to Article VIII if an Owner does not take its share of Facility Products in kind and separately dispose of the same, which price is not unreasonable having regard to market conditions applicable to similar production in arm's length transactions at the time of such disposition, including, without restricting the generality of the foregoing, such factors as the volumes available, the kind and quality of Facility Products to be sold, the effective date of the sale, the term of the sale agreement, the point of sale of the Facility Products and the type of transportation service available for the delivery of the Facility Products to be sold;
(z) "Modification" means an expansion, addition or enhancement to the Facility that is not an Enlargement;
(aa) "Month" means a calendar month, commencing at the beginning of the first Day thereof and ending at the last Day thereof, or at such other times as may hereafter be set by the Operating Committee;
(bb) "Non-Operator" means an Owner other than Operator; (cc) "Operating Committee" means the committee composed of the duly authorized representatives of each of the Owners, established pursuant to Article II of the Operating Procedure;
(dd) "Operating Costs" means all costs and expenses, except Capital Costs, incurred in connection with the testing, operation, repair and maintenance of the Facility;
(ee) "Operating Procedure" means Exhibit "A", excluding the Appendices; (ff) "Operator" means the Owner so designated under the Head Document or such other Owner as subsequently may be designated by the Operating Committee;
(gg) "Outside Substances" means those Inlet Substances which are not Owner's Substances; (hh) "Owner" means a party to this Agreement; (ii) "Owner's Substances" has the meaning ascribed to it in the Head Document; (jj) "Person" means an individual, firm, body corporate, partnership or other legal entity, as the case may be; (kk) "Regulations" means all statutes, laws, rules, orders and regulations in effect from time to time (including any amendments thereto or replacements thereof) and made by governments or governmental boards or agencies having jurisdiction over the Facility or Joint Operations;
(ll) "Required Capacity Expenditure" means an expenditure that is required by the Operator to maintain the Inlet Substances capacity of the Facility as provided in Table I of the Appendix "CAPACITY USAGE"
(mm) "Surplus Capacity" means that portion of the Capacity which is available from time to time, but which is not being utilized in accordance with the provisions of Appendix IV;
(nn) "Topaz" means Topaz Energy Corp.; (oo) "Tourmaline" means Tourmaline Oil Corp.;
(pp) "Variable Operating Costs" means those Operating Costs that remain after excluding Fixed Operating Costs and that vary with throughput volume of Inlet Substances; and
(qq) "Year" means a calendar year, commencing at the beginning of the first Day of January and ending at the last Day of December, or at such other times as may hereafter be set by the Operating Committee.

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

References

Unless otherwise expressly stated:

(a) the words "hereinbefore", "hereinafter", "hereunder", "herein", and "hereof" in the Operating Procedure refer to the provisions of this Operating Procedure, and references to Articles, Clauses, Subclauses or Paragraphs in the Operating Procedure refer to Articles, Clauses, Subclauses or Paragraphs of this Operating Procedure;
(b) whenever the singular, masculine or neuter is used in this Agreement, the same shall be construed as meaning plural or feminine or body politic or corporate or vice versa, as the context so requires;
(c) all times referred to in this Agreement are in respect of time for the applicable time zone or legislated method of determining time for the area in which the Facility is located;
(d) all references to "dollars" or "$" in this Agreement shall mean the lawful currency of Canada, and all payments and receipts shall be made and recorded in lawful currency of Canada;
(e) wherever the phrase "within" or "at least" is used with reference to a specific number of Days herein, the Day of receipt of the relevant notice or the Day of the relevant event shall be excluded in determining the applicable time period. However, if the time for doing any act expires on a Saturday, Sunday or statutory holiday in either the Province of Alberta or Canada, the time for doing that act shall be extended to the next normal business Day, except as prescribed in the Accounting Procedure with respect to the payment of billings; and
(f) all conversions between Imperial units and Systems International (metric) units required to be made pursuant to this Agreement shall be conducted utilizing the conversion factors prescribed in the publication entitled "Metric Practice Guide for the Petroleum and Natural Gas Industry and Services, Fifth Edition, 1989", as may be amended or supplemented from time to time.

103. Derivatives

If a term is defined, a derivative of that term shall have a corresponding meaning unless the context otherwise requires.

104. Correction of Appendices

If Operator becomes aware of a mistake or mechanical error in the Operating Procedure or an Appendix, Operator shall prepare a corrected Operating Procedure or Appendix and supply each Owner with a copy thereof.

105. Revision of Exhibit "A"

(a) This Operating Procedure may be revised, amended or replaced by a vote of the Operating Committee in accordance with Clause 202 of the Head Document.
(b) Appendices shall be revised by Operator as provided for under this Agreement, and when required, to accurately reflect routine consequential changes, such as Facility Participations and amalgamations.

106. Effective Time of Exhibit "A"

Except as otherwise expressly provided in this Agreement:

(a) subject to Subclause 106 (b), any revised Operating Procedure or Appendix shall be effective in its revised or amended form as of the time specified by the provision of this Agreement allowing such revision or amendment, or if no such time is specified, such revised or amended Operating Procedure or Appendix shall be effective as of the first Day of the Month next following the date that all required

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

documentation was received by Operator or on such other date or time as directed by the Operating Committee; and

(b) any Appendix which is corrected pursuant to Clause 104, to rectify an error therein, shall, unless otherwise directed by the Operating Committee, be effective in its corrected form as of the date on which the incorrect version of the Appendix would have been effective, and the incorrect version of the Appendix shall be deemed conclusively never to have been effective.

107. Revised Appendices Deemed Correct

Subject to the provision set forth in Subclause 106 (b), each Appendix, and each revised or corrected version thereof, shall for purposes of this Agreement be deemed conclusively to be correct and binding on the Owners from the time at which it becomes effective until the time at which a revised or corrected version thereof becomes effective.

108. Identification of Revised Appendices

Revised and corrected versions of Appendices shall be numbered consecutively, shall indicate the date on which they become effective, shall reference the ballot issued to the Operating Committee for approval, if applicable, and shall indicate whether they are revised or corrected versions of an Appendix, or both.

109. Preparation and Distribution of Revised Appendices

Each time that an Appendix is to be revised or corrected pursuant to this Agreement, Operator shall effect the required revisions or corrections in a timely and diligent manner and shall provide each Owner with one (1) copy of the revised or corrected version of the Appendix.

ARTICLE II

SUPERVISION AND CONTROL OF JOINT OPERATIONS

201. Operating Committee

The Owners shall form an Operating Committee composed of their duly appointed representatives to supervise and control all Joint Operations. As soon as possible after the Effective Date, each Owner shall notify Operator in writing of the names and addresses of its primary representative and one (1) or more alternate representatives. The representative of an Owner shall be deemed to have full power and authority to represent and bind such Owner with respect to all matters within the power of the Operating Committee, and all acts done by such representative in such capacity shall be deemed to be the acts of the Owner appointing such representative. An alternate representative shall have full power to act for an Owner in the absence of the primary representative. An Owner may change any of its representatives from time to time by written notice to Operator. Two (2) or more Owners may appoint the same Person as their representative, who shall in such cases, cast a separate vote for each Owner being represented.

202. Chairman

The representative of the Operator shall be the chairman of the Operating Committee.

203. Powers

The Operating Committee shall, in accordance with the terms of this Agreement, exercise overall supervision and control of and shall determine all matters of importance relating to Joint Operations, except for those matters:

(a) specifically designated in this Agreement to be within the exclusive jurisdiction and control of Operator; or
(b) specifically excluded in this Agreement from the jurisdiction and control of the Operating Committee.

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

204. Voting Procedure

Subject to Clause 208, the Operating Committee shall determine all matters properly coming before it by vote, in accordance with the following voting procedure:

(a) Voting Interest

For the purpose of determining the number of Owners having voted or deemed to have voted on any matter pursuant to this Article II, Owners who are Affiliates of each other and who vote the same in respect of a matter hereunder shall be deemed to be one (1) Owner only.

Except as may otherwise be provided in this Agreement, each Owner shall have a voting interest equal to its Facility Participation.

Notwithstanding Subclause 204 (c), if an Owner is precluded from voting pursuant to Paragraph 602 (b) (ii), the voting interest of each non-defaulting Owner shall be revised so as to bear the same ratio to the other as do their Facility Participations, so that the voting interests of all non-defaulting Owners equals one hundred percent (100%).

(b) Negative Vote

Notwithstanding Subclause 204 (e) and (h), but subject to Subclauses 204 (f), (g) and (i), no single Owner shall be able to defeat a vote on a matter, unless such Owner's voting interest with respect to such matter is greater than fifty percent (50%), and if a single Owner with a voting interest of fifty percent (50%) or less is the only Owner voting negatively on a matter, such Owner shall be shown to have voted negatively in recording the results of the vote, but such matter shall be conclusively deemed carried in the affirmative.

(c) Deemed Vote

Subject to Subclauses 204 (f), (g) and (i), an Owner who does not vote or abstains from voting on any matter shall be conclusively deemed to have voted in the affirmative on the matter. In recording the result of a vote, such Owner shall be shown as having abstained from voting, been absent from the meeting in which such vote was taken, if applicable, or otherwise having failed to vote on such matter, as the case may be.

(d) Effect of Vote

A determination of a matter by the vote of the Owners in accordance with the provisions of this Agreement shall be binding upon all of the Owners, except as otherwise provided in this Agreement.

(e) General Vote

Except as otherwise provided herein, a matter being voted on by the Operating Committee shall be decided by the affirmative vote of:

(i) Two (2) or more Owners having a combined Facility Participation of sixty-five percent (65%) or more, if such matter materially affects or involves the entire Facility.

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

(f) Vote for Removal of Operator

Operator may be removed by the affirmative vote of two (2) or more Owners having a combined Facility Participation of ninety percent ((90%) or more of the remaining Facility Participation, after excluding the Facility Participations of Operator and its Affiliates, provided that:

(i) subject to Clause 303 and Subclause 602 (e), Operator may not be removed by a vote of the Operating Committee if Operator and its Affiliates collectively hold Facility Participations totalling fifty percent (50%) or more, and
(ii) the provisions of Subclauses 204 (b) and (c) shall not apply to a vote taken under this Subclause 204 (f).
(g) Vote for Replacement Operator

A successor Operator that consents to assume all the duties and obligations of Operator shall be appointed by an affirmative vote of two (2) or more Owners having a combined Facility Participation of sixty-five percent (65%) or more. In voting on the appointment of a successor Operator, the departing Operator and its Affiliates shall not be entitled to vote to have the departing Operator or any of its Affiliates succeed the departing Operator. In addition:

(i) should more than one (1) potential successor Operator be voted on, the potential successor Operator that receives the greatest combined Facility Participation vote shall be the successor Operator, and the requirement for the specified number of Owners voting in the affirmative and the provisions of Subclauses 204 (b) and (c) shall not apply; and
(ii) should two (2) or more potential successor Operators receive an equal Facility Participation voting percentage, the potential successor Operator holding the largest Facility Participation shall be the successor Operator.
(h) Amendment of Appendices

The Appendices may be revised, amended or replaced from time to time in the following manner:

(i) Appendices I, II and XI as provided in Clause 202 (c) of the Head Document, Clauses 104 and 105 of Exhibit "A" and Article IX of Exhibit "A" hereof.
(ii) Appendices VII, VIII, IX, X, XII, XIII and XIV at the direction of the Operating Committee by an affirmative vote of two or more Owners having a combined Facility Participation of seventy percent (70%) or more.
(iii) Appendices III, IV, V, VI, and XV at the direction of the Operating Committee by unanimous approval of all Owners.
(i)
Vote for Termination of Agreement

Subject to the provisions of Article X, this Agreement may be terminated by the affirmative vote of two (2) or more Owners having a combined Facility Participation of ninety percent (90%) or more; provided that the provisions of Subclauses 204 (b) and (c) shall not apply to a vote taken under this Subclause.

(j) Vote by Proxy

An Owner may appoint a proxy to attend any meeting on its behalf. Such proxy appointment shall be by written instrument signed by the Owner, setting forth the extent of the authority granted to the proxy

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

holder. A proxy appointment shall not be effective unless such instrument is deposited with the chairman of the Operating Committee prior to or during the first meeting in respect of which such proxy has been appointed to attend. An Owner who has submitted an instrument appointing a proxy may revoke such instrument at any time prior to the commencement of or during any meeting to which the proxy appointed thereby is to attend, provided that the revocation of an appointment of proxy during a meeting shall not apply to any vote conducted during that meeting prior to the revocation of that appointment. In addition to revocation in any other manner permitted by law, an instrument appointing a proxy shall be deemed to be automatically revoked for a meeting to which the proxy appointment relates, insofar as the Operating Committee representative of the Owner who appointed the proxy attends that meeting.

(k) Vote by Notice
(i) An Owner not represented at a meeting may vote on any matter on the agenda by prior written notice to Operator, indicating the position of such Owner regarding such matter.
(ii) Operator may, without calling a meeting, call for a vote on any matter by submitting such matter, together with reasonable details regarding the same, to each Owner by mail ballot notice. Each Owner shall, by notice to Operator, cast its vote within fifteen (15) Days from the date of deemed receipt of such mail ballot notice by the Owners. Such vote shall be binding, unless, within seven (7) Days after sending such mail ballot notice, Operator calls a meeting or is requested to call a meeting to consider the matter in accordance with Clause 205. Operator shall promptly notify the Owners of the result of such vote after the expiry of such fifteen (15) Day period.
(iii) All mail ballots shall be numbered consecutively. Such numbering shall include the Year in which the mail ballot is issued.

205. Meetings

The following procedures shall apply to meetings of the Operating Committee:

(a) The Operating Committee shall hold meetings whenever called by Operator. Operator may call a meeting at any time and from time to time on its own motion. One (1) or more Owners having Facility Participations totalling five percent (5%) or more shall have the right to request the Operator to call a meeting to deal with specific stated items. Operator shall issue the notice of such meeting within ten (10) Days of receipt of a written request by an Owner, and the meeting shall be held within thirty (30) Days of receipt by Operator of such request.
(b) At least ten (10) Days' notice of each meeting shall be given to each Owner, unless all of the Owners agree in writing or by vote at a meeting, to waive or shorten such notice period. Notice of any meeting shall be accompanied by an agenda together with reasonable details of the matters on the agenda and any motions to be voted on at the meeting. Any Owner shall have the right to require Operator to place an item on the agenda for such meeting, provided such item and reasonable details sufficient to enable the Owners to consider beforehand the nature of such item shall be furnished to the other Owners by such Owner within five (5) Days of the date of deemed receipt of the notice of such meeting. A motion not contained in the agenda or an amendment to be made to a motion which is contained in the agenda shall not be voted on at a meeting unless all of the Owners, whether or not present at such meeting, agree to add or amend such motion.
(c) Motions voted on at a meeting shall be numbered in accordance with Paragraph 204 (k) (iii).
(d) A representative of any Owner attending a meeting of the Operating Committee may be accompanied by a reasonable number of advisors, and the chairman may be accompanied by such additional attendees as are required to record the minutes of the meeting or otherwise assist in the conduct thereof.
(e) All meetings of the Operating Committee shall be held at the office of the Operator or at such other place as the Operating Committee may decide.

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

206. Minutes

Operator shall keep minutes of the proceedings of each meeting of the Operating Committee and a copy thereof shall be forwarded to each Owner within thirty (30) Days of the date of such meeting. The minutes shall contain the names of all Owners' representatives present at the meeting, indicating their capacity and the Owners that they represent, a description of the matters reviewed, the result of any vote and any dissenting Owner opinion. The minutes for any Operating Committee meeting shall be deemed to be correct as written and distributed, unless an Owner receiving the minutes gives Operator notice of an error or omission regarding such minutes within thirty (30) Days of the date upon which such minutes were sent to the Owners. Upon receiving such a notice:

(a) Operator shall promptly correct and re-issue the minutes if Operator agrees with the claim of an error or omission; or
(b) Operator shall promptly submit the matter to the Operating Committee for resolution by a vote in accordance with Subclause 204 (e) if Operator does not agree with the claim of an error or omission.

Any revised version of the minutes shall be deemed to replace all prior versions of the same and shall be deemed correct as written and distributed, subject to the terms of this Clause, which shall apply to such revised version of the minutes as if they were the original version of the same.

207. Reduction in Owners

Subject to Clause 208, if the number of Owners having a Facility Participation decreases after the Effective Date to a level equal to or less than the minimum number of Owners required to determine a matter under Subclause 204 (e), (f), (g), (h) or (i), the minimum number of Owners required to determine a matter shall always be one less than the number of Owners entitled to vote.

208. Unanimous Approval

If and for so long as there are only two (2) Owners for voting purposes, Subclauses 204(b), (e), (f), (g), (h) and (i) shall not have any effect, and all matters coming before the Operating Committee shall be determined by the unanimous approval of the representatives of the Owners. At any time where unanimous approval cannot be reached in respect of any matter, either Owner may invoke the provisions of the Appendix titled "DISPUTE RESOLUTION", to resolve such matter.

209. Subcommittees

The Operating Committee may from time to time establish subcommittees to deal with defined mandates as provided by the Operating Committee. Any such subcommittee shall not have any powers of supervision or control, but shall only be entitled to report and make recommendations to the Operating Committee.

210. Enlargement

Any Enlargement shall be approved and conducted in accordance with the Appendix titled "ENLARGEMENT".

211. Environmental Matters

The Appendix titled “ENVIRONMENTAL MATTERS” shall only be effective from the first Day of the Month next following execution of this Agreement by one hundred percent (100%) of the Owners, and shall not apply prior to such date.

212. Required Capacity Expenditure

Any Required Capacity Expenditure will be conducted in accordance with the Appendix titled "REQUIRED CAPACITY EXPENDITURE"

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

ARTICLE III APPOINTMENT AND REPLACEMENT OF OPERATOR

301. Assumption of Duties of Operator

Operator named in the Head Document, and any succeeding Operator appointed hereunder, shall assume the duties and obligations of Operator hereunder and shall have all the rights of Operator hereunder.

302. Resignation of Operator

Operator may resign as Operator on giving each of the Owners a minimum of ninety (90) Days' notice of its intention to do so, provided that such resignation shall be effective at the end of a Month.

303. Replacement of Operator

Operator shall immediately cease to be Operator in the circumstances described in Subclauses (a) and (b) below and in all circumstances described in this Clause a replacement Operator appointed pursuant to Clause 304, if:

(a) Operator becomes bankrupt or insolvent, commits or suffers any act of bankruptcy or insolvency, is placed in receivership or a receiver/manager or Person filling that role is appointed with respect to its property, seeks debtor relief protection under applicable legislation (including, without restricting the generality of the foregoing, the Bankruptcy and Insolvency Act of Canada and the Companies' Creditors Arrangement Act of Canada) or permits any judgement to be registered against its interest in the Facility or any portion thereof, and without restricting the generality of the foregoing, an Operator shall be deemed insolvent for the purposes of this Clause if it is unable to pay its debts as they fall due in the usual course of business;
(b) subject to Clauses 307 and 402, Operator assigns or attempts to assign its general powers and responsibilities of supervision and management as Operator hereunder, unless such assignment is to an Affiliate of Operator who is also an Owner;
(c) the Operating Committee votes pursuant to Subclause 204 (f) to remove Operator and such motion is carried;
(d) Operator ceases to be an Owner; or
(e) Operator resigns pursuant to this Article.

304. Appointment of Successor Operator

(a) Interim Operator

Upon Operator resigning or otherwise ceasing to be Operator and until a replacement Operator is appointed, the Owner with the largest Facility Participation, excluding the Facility Participation of the departing Operator and any Affiliate of the departing Operator, shall automatically become the interim Operator. The interim Operator shall immediately cease to be interim Operator upon the appointment of a replacement Operator.

(b) Appointment

If an Operator resigns or otherwise ceases to be Operator, a successor Operator shall be appointed by the Operating Committee. An interim Operator is not disqualified from being elected as the successor Operator.

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

(c) Two Party Agreement

Notwithstanding Subclauses 204 (g), 304 (a) and (b), if there are only two (2) Owners and Operator resigns or otherwise ceases to be Operator, the Owner who was not Operator previously shall automatically become Operator effective the date that the previous Operator ceases to be Operator, unless, in the case of an assignment by Operator of its Facility Participation pursuant to Article IX, that Owner agrees in writing to allow Operator's assignee to become Operator.

(d) Consent

Subject to Subclauses 304 (a) and (c), no Owner shall be appointed as Operator unless it has given its written consent to the appointment.

(e) Re-appointment

No provision of this Article shall be construed to re-appoint as next-succeeding Operator an Operator who has ceased to be Operator or any Affiliate of that former Operator, except with the unanimous consent of the Owners.

(f) Effective Time

Except as otherwise determined by the Operating Committee, the appointment of a successor Operator (including an automatic appointment as Operator pursuant to the terms of this Article), shall be effective immediately upon the previous Operator ceasing to be Operator.

305. Transfer of Property on Change of Operator

At the effective date of the resignation or replacement of an Operator as provided in this Article, Operator being replaced shall immediately deliver to the successor Operator possession and control of:

(a) the Facility;
(b) any and all funds held for the Joint Account;
(c) any and all Inlet Substances and Facility Products, if any, which have not been delivered in kind;
(d) all Material held for the Joint Account;
(e) copies of books of account and records kept for the Joint Account; and
(f) all documents, agreements and other papers relating to property transferred hereunder.

Upon compliance with such obligation, the departing Operator shall be released and discharged from, and the successor Operator shall assume, all duties and obligations of Operator, except those unsatisfied duties and obligations of the departing Operator which had accrued prior to the effective date of the change of Operator, for which the departing Operator shall continue to remain liable. If the departing Operator holds any real or personal property on behalf of the Owners, such property shall continue to be held by the departing Operator in trust for the Owners until title and possession of such property has been transferred to the successor Operator in trust for the Owners.

306. Inventory and Audit of Accounts on Change of Operator

Subject to Clause 307, within ninety (90) Days after the successor Operator commences to act as Operator, the Operating Committee may cause an audit to be made of the books of account and records kept for the Joint Account and may cause an inventory of Controllable Material to be taken. The cost of the audit and inventory shall be for the Joint Account.

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

307. Assignment of Operatorship

If Operator wishes its assignee to replace it as Operator after having disposed of all or a portion of its Facility Participation to such assignee pursuant to Article IX, such assignee shall have the right to become Operator if it is an Affiliate of Operator or, if it is not an Affiliate of Operator, if the Operating Committee approves that it shall become Operator.

ARTICLE IV

FUNCTIONS AND DUTIES OF OPERATOR

401. Control and Management of Joint Operations

Operator shall consult with the Operating Committee from time to time with respect to decisions to be made for the conduct of Joint Operations, and Operator shall keep the Owners informed in a timely manner with respect to important or significant Joint Operations. Operator is hereby delegated the management of the Facility on behalf of the Owners and shall, subject to the direction of the Operating Committee, conduct or cause to be conducted all Joint Operations diligently, in a good and workmanlike manner, in accordance with good oil field and environmental practice, the Regulations and the terms of this Agreement. In the absence of specific instructions from the Operating Committee, Operator shall conduct or cause to be conducted, all Joint Operations, as would a prudent operator under the same or similar circumstances. Without limiting the generality of any of the foregoing provisions of this Clause, Operator shall conduct and oversee all Joint Operations, and in particular shall:

(a) make and file all reports as required by governmental authorities relating to Joint Operations;
(b) maintain in the Province of Alberta complete and accurate accounts, books, records and documents in relation to the Facility and Joint Operations and provide each Owner with reasonable access thereto;
(c) provide Owners with reports as required and on a frequency and containing the information about Joint Operations as directed by the Operating Committee;
(d) on behalf of the Owners, complete all applications and obtain all licenses and approvals required by Regulations to conduct Joint Operations;
(e) promptly pay and discharge all expenses and taxes (other than income taxes) incurred in connection with Joint Operations and keep the Facility free and clear from all adverse claims and liens occasioned by Joint Operations, except claims or liens created under or pursuant to this Agreement or being contested in good faith;
(f) acquire and maintain all necessary surface rights, Material and services required to conduct Joint Operations and where Operator deems appropriate, use its own equipment and facilities to serve such operations, subject to the Accounting Procedure;
(g) procure and maintain for the Joint Account the insurance set forth in the Appendix titled "INSURANCE" and use reasonable efforts to require contractors and subcontractors to procure and maintain such insurance as Operator deems necessary;
(h) comply with and, where applicable, require its agents, contractors and their subcontractors to comply with Regulations governing Joint Operations;
(i) subject to Clause 402, subcontract such portion of Joint Operations as Operator deems appropriate;
(j) furnish each Owner as soon as practicable with written notice of:
(i) physical damage to the Facility in excess of Operator's expenditure limit as provided in the Accounting Procedure; and

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

(ii) any environmental, health, safety or other occurrence which is required to be reported under any Regulation and which either requires remediation costs exceeding the single expenditure limit set forth in the Accounting Procedure or could result in a punishable offence under the Regulations;
(k) extend to each Owner, at that Owner's sole risk and expense, the right to examine and inspect the Facility at all reasonable times in the presence of a representative of Operator and after giving Operator reasonable notice, except for portions of the Facility which are proprietary to a licensor to the extent that such licensor expressly prohibits examinations and inspection by such Owner; and
(l) prepare and submit to the Operating Committee for approval the Forecasts provided for in Clause 605;

provided further that, during Initial Construction of the Facility or any Enlargement or Modification, Operator shall also:

(m) carry out or cause the construction of the Facility and any Enlargement or Modification;
(n) contract with such Persons as Operator may deem appropriate for the performance of such work or undertaking, or any portion thereof;
(o) supervise all work related to such construction;
(p) acquire all Material required for such construction and the commencement and continuation of Joint Operations;
(q) supervise and have direct charge of all matters regarding design, construction and installation of the Facility and any Enlargement or Modification; and
(r) provide Owners with reports as required and on a frequency, and containing the information about construction, a Modification or an Enlargement as directed by the Operating Committee;

402. Subcontracting

Provided that Operator is not in default or in the process of being replaced pursuant to Clause 303, Operator may subcontract all or substantially all of its duties and responsibilities to a reliable and competent third party subcontractor or an Affiliate of Operator, with the approval of and on terms approved by the Operating Committee, provided that Operator retains full control and supervision of such subcontractor or Affiliate and that any third party subcontractor is retained on a genuine arm's length basis. It shall be a condition of such subcontracting that the Owners have the right to audit the books and records of the third party subcontractor or Affiliate with respect to its subcontracting activities hereunder on the same terms and conditions as provided under the Accounting Procedure to audit Operator.

403. Operator as an Owner

Operator shall have all of the rights and obligations of an Owner with respect to its Facility Participation.

404. Independent Status of Operator

Operator is an independent contractor in conducting Joint Operations. Operator shall determine the number of employees and contractors respecting its operations, their selection, their hours of labour and their compensation hereunder. All employees and contractors used in its operations hereunder shall be the employees and contractors of Operator.

405. Title

Operator shall hold and maintain title to the Facility and all associated licences and approvals required under the Regulations on behalf of the Owners. Operator shall perform all duties to maintain such licences and approvals in good standing. However, nothing in this Clause shall be construed to require or permit Operator to conduct any Joint

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

Operations without the approval of the Operating Committee, if such approval is required pursuant to the terms of this Agreement.

ARTICLE V INDEMNITY AND LIABILITY

501. Limit of Liability

(a) Notwithstanding Clause 404 and the obligation in Clause 401 to conduct Joint Operations diligently, in a good and workmanlike manner in accordance with good oilfield and environmental practice, Operator, its Affiliates, directors, officers, consultants, agents and employees shall not be liable to the other Owners, or any of them, for any loss, expense, injury, death or damage to Owners, whether contractual or tortious, suffered or incurred by the Owners resulting from or in any way attributable to or arising out of any act or omission, whether negligent or otherwise, of Operator or its Affiliates, directors, officers, consultants, agents, contractors or employees in conducting or carrying out Joint Operations, except when and to the extent that such loss, expense, injury, death or damage is a direct result of, or is directly attributable to the Gross Negligence of Operator or its Affiliates, directors, officers, consultants, agents, contractors or employees.
(b) To the extent that the Gross Negligence condition in Subclause (a) of this Clause applies, Operator shall be solely liable for such loss, expense, injury, death or damage and, in addition, shall indemnify and save harmless each other Owner, its Affiliates, directors, officers, consultants, agents and employees from and against the same and also from and against all actions, causes of action, suits, claims and demands by any Person in respect of such loss, expense, injury, death or damage, and any costs and expenses relating thereto. However, in no event shall the responsibility of Operator prescribed by this Clause 501 extend to losses suffered by the Owners respecting the loss of profits or other consequential or indirect losses, including, without restricting the generality of the foregoing, loss or delay of production.

502. Indemnification of Operator

Except as otherwise provided in Clause 501, the Owners indemnify and save harmless Operator, its Affiliates, directors, officers, consultants, agents and employees from and against any and all actions, causes of action, suits, claims, demands, costs, losses and expenses resulting from loss, expense, injury, death or damage respecting any Person (including the Owners), which may be brought against or incurred or suffered by Operator, its Affiliates, directors, officers, consultants, agents or employees or which Operator, its Affiliates, directors, officers, consultants, agents or employees may sustain, pay or incur by reason of, or which may be attributable to or arise out of, any act or omission of Operator or its Affiliates, directors, officers, consultants, agents, contractors or employees in conducting Joint Operations.

503. Burden of Responsibility

Except where Operator is to be held solely liable pursuant to the terms of Clause 501, all liabilities and indemnities arising from Joint Operations shall be for the Joint Account and shall be borne by the Owners in the proportions of their respective Facility Participations.

504. Continuation of Legal Responsibilities

Notwithstanding the assignment by an Owner of all or a portion of its Facility Participation, such Owner shall, as regards the other Owners and notwithstanding the terms of such assignment, remain liable for its proportionate share of any liabilities and indemnities which arose in respect of the Facility or under this Agreement, prior to the date that such Owner's assignee becomes an Owner with respect to the assigned interest pursuant to Article IX.

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

505. Environmental Responsibilities

Any Person who becomes an Owner shall be responsible for its proportionate share of environmental liabilities arising in relation to Joint Operations (and the associated indemnities, if any) whether they accrued before or after such Person became an Owner, provided that the Operating Committee may, in its discretion, apply Clause 504 to the accrued environmental liabilities applicable to the Facility Participation assigned by an Owner.

ARTICLE VI

ACCOUNTING MEASURES

601. Joint Account

Operator shall set up a Joint Account and administer it as set forth in the Accounting Procedure. All proper costs and expenses incurred by Operator in connection with Joint Operations shall be in accordance with the Accounting Procedure, or as otherwise permitted hereunder. Such costs and expenses shall be allocated to the Owners in accordance with the Appendix titled "STRUCTURE AND SHARING OF THE JOINT ACCOUNT."

602. Operator's Lien and Remedies

(a) Effective from the Effective Date, Operator shall have a lien and charge, which is first and prior to any other lien, charge, mortgage or other security interest, with respect to the Facility Participations of each Owner and such Owner's share of Facility Products, to secure payment of such Owner's proportionate share of the costs and expenses incurred by Operator for the Joint Account.
(b) If an Owner fails to pay or advance any of the costs or expenses incurred for the Joint Account which are to be paid or advanced by it within the time period prescribed by the Accounting Procedure, Operator may, without limiting Operator's other rights as contained in this Agreement or otherwise held at law or in equity:
(i) charge such Owner compound interest, as computed Monthly, with respect to such unpaid amount from the Day such payment is due until the Day it is paid, at the rate of two percent (2%) per annum higher than the rate designated as the prevailing prime rate for Canadian commercial loans by the principal Canadian chartered bank used by Operator, regardless of whether Operator has notified such Owner in advance of its intention to charge interest with respect to such unpaid amount;
(ii) withhold from such Owner any further information and privileges with respect to Joint Operations, including the right to vote pursuant to provisions of Article II, which information and privileges shall be conveyed or restored, as the case may be, to such Owner upon such default being fully rectified;
(iii) set-off against the amount unpaid by such defaulting Owner, any sums due or accruing to such Owner from Operator in accordance with ALTERNATE B , immediately below:
- ALTERNATE A. pursuant to this Agreement;
- ALTERNATE B . pursuant to this Agreement and from any other agreement between Operator and such Owner, whether executed before or after the Effective Date;
(iv) maintain an action or actions for such unpaid amounts and interest thereon on a continuing basis as such amounts are payable, but not paid by such defaulting Owner, as if the obligation to pay such amounts and the interest thereon were liquidated demands due and payable on the relevant date such amounts were due to be paid, without any right or resort of such Owner to set-off or counter-claim; and

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

(v) treat the default as an immediate and automatic assignment to Operator of the proceeds of the sale of such Owner's share of Facility Products. Service of a copy of this Agreement upon a purchaser of such Owner's share of Facility Products, together with written notice from Operator, shall constitute a written irrevocable direction by such defaulting Owner to any such purchaser to pay to Operator the proceeds from any such sale up to the amount owed to Operator by such defaulting Owner hereunder (including any accrued interest with respect thereto), and such purchaser is authorized by such defaulting Owner to rely upon the statement of Operator as to the amount so owed to it by such Owner.

However, Operator may not exercise the rights granted in Paragraphs (iii) - (v) of this Subclause with respect to such default until at least thirty (30) Days following the issuance of a notice to such Owner specifying such default and requiring the same to be remedied.

(c) The obligation to pay interest at the rate specified in Subclause (b) of this Clause with respect to a default is to apply until such default is rectified and shall not merge into a judgement for principal and interest, or either of them. The Owners waive the application of any Regulations to the contrary, insofar as such waiver is permitted or not prohibited by the Regulations.
(d) Books and records kept by the Operator for the Joint Account shall constitute proof of the existence of any financial default hereunder, subject, however, to the rights of inspection and audit provided for elsewhere in this Agreement.
(e) If Operator is the Owner which defaults in paying its share of any cost or expense incurred for the Joint Account, the other Owners may, subject to Subclause 304 (c), appoint an Owner pending the appointment of a successor Operator pursuant to Subclause 204 (g), to exercise any of the rights and remedies otherwise available to Operator pursuant to this Agreement in order to rectify such default.

603. Reimbursement of Operator

If Operator has not received full payment of an Owner's share of the costs and expenses of Joint Operations within three (3) Months following the date the payment was due, each other Owner, upon being billed therefor by Operator, shall contribute a fraction of the unpaid amount, excluding interest thereon, which fraction shall have:

(a) as its numerator, the applicable Facility Participation of such Owner; and
(b) as its denominator, the aggregate applicable Facility Participations of all Owners except the defaulting Owner.

Thereupon, each such contributor shall be proportionately subrogated to Operator's rights pursuant to Clause 602 and to the interest thereafter payable thereunder on the unrecovered portion of its contribution.

604. Commingling of Funds

Operator may commingle with its own funds the moneys which it receives from or for the Joint Account pursuant to this Agreement. Notwithstanding that moneys of a Non-Operator have been commingled with Operator's funds, the moneys of a Non-Operator advanced or paid to Operator, whether for the conduct of Joint Operations or as proceeds from the sale of Facility Products, shall be deemed to be trust moneys and, subject to Clause 602, shall be applied only to their intended use and shall in no way be deemed to be funds belonging to Operator, other than in its capacity as the NonOperator's trustee.

605. Forecasts

(a) As soon as practicable after the execution hereof, Operator shall submit to the Operating Committee for approval a Forecast for the Forecast Period. In each subsequent Year, Operator shall submit a Forecast for the Forecast Period to the Operating Committee for approval, on or before the end of the current Year. If the Operating Committee does not approve a Forecast, or any portion thereof, such Forecast or the

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

portion thereof not approved, shall be revised by Operator in accordance with the instructions of the Operating Committee. A copy of each revised Forecast shall be promptly furnished to each Owner.

(b) Each Forecast shall include a detailed and specific description of expenditures therein, identifying Operating Costs and Capital Costs separately, and providing an estimate of Owner's Substances and Outside Substances to be handled by the Facility. Any single Operating Cost in excess of the single expenditure limit set forth in the Accounting Procedure for which the Operator requests approval through approval of the Forecast should be clearly and separately identified. Each Forecast shall also provide for comparison, a summary of the Forecast and a projection of expected final expenditures for the current Year.
(c) Approval of a Forecast shall constitute approval of all expenditures in accordance with this Agreement, except single Capital Cost expenditures in excess of the single expenditure limit set forth in the Accounting Procedure. If directed by the Operating Committee, separate approval for projects, categorized as Operating Costs, that have an estimated cost in excess of Operator's single expenditure limit set forth in the Accounting Procedure, shall be required.

ARTICLE VII MEASUREMENT

701. Accuracy

(a) The metering facilities described under the Appendix titled "MEASUREMENT", shall be tested at reasonable intervals by Operator. If any question arises as to the accuracy of measurement, any meter shall be tested by Operator upon demand of an Owner and if found to be correct, or to be in error by not more than two percent (2%) with respect to gas measurement, or one and one-half percent (1.5%) with respect to equilibrium liquid product measurement or one-half of one percent (0.5%) with respect to liquid measurement (hereinafter called the "relevant percentage"), the expense of such testing shall be borne by the Owner demanding the test. The expense shall be for the Joint Account if a meter is found to be in error by more than the relevant percentage. An Owner, at its sole cost and risk, may witness any test.
(b) If, upon any test, the measuring equipment is found to be in error by not more than the relevant percentage, the previous readings of such equipment shall be considered correct in computing the volumes being metered, but such equipment shall be adjusted properly as soon as practicable to record accurately.
(c) If, upon any test, the measuring equipment is found to be inaccurate by more than the relevant percentage, any previous reading of such equipment shall, subject to applicable legal limitation periods, be corrected to zero (0) error for any period which is known definitely or agreed upon by the Operating Committee; however, if the period is not known definitely or agreed upon by the Operating Committee, such correction shall be for a period covering the last half of the time elapsed since the date of the last test.
(d) If the measuring equipment is out of service or requires repair, so that the volume being measured is not correctly indicated by the reading thereof, the volume attributable to the period shall be estimated and agreed upon on the basis of the best data available, using the most appropriate of the following methods:
(i) by using the readings from any other measuring equipment, if installed and accurately registering; or
(ii) by correcting the error if the percentage of error is ascertainable by calibrations, test or mathematical calculation; or
(iii) by estimating on the basis of actual volumes measured during the preceding periods under similar conditions when the meter was registering accurately.

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

(e) Operator shall preserve and make available for inspection by the Owners all original test and sample data, charts and other similar records for a period of at least seven (7) Years after the end of the Year to which they relate, or such further period required by the Operating Committee or the Regulations, as well as any records to which an audit query relates until all such queries are resolved.

702. Unit of Volume and Weight

The standards of measurements shall be governed by the following:

(a) the unit volume of gas for purposes of measurement shall be one thousand cubic metres (10[3] m[3] ) of gas at a temperature of fifteen degrees Celsius (15°C) and an absolute pressure of one hundred one point three two five kilopascals (101.325 kPa);
(b) the unit of volume of liquids for purposes of measurement shall be one cubic metre (1 m[3] ) as defined in the Weights and Measures Act (Canada), as amended; and
(c) the unit of weight of solids for purposes of measurement shall be one tonne (1 t) being one thousand kilograms (1000 kg).

703. Determination of Volumes

(a) For purposes of measurement and meter calibration the atmospheric pressure at the point of measurement hereunder shall be assumed to be constant at the pressure stated in the Appendix titled "MEASUREMENT" irrespective of the actual elevation or location of any of the meters above sea level or variations in the atmospheric pressure from time to time.
(b) Volumes of gas measured by orifice meters shall be computed in accordance with the methods prescribed in the publication entitled "Orifice Metering of Natural Gas, Standard 2530, American National Standards Institute/American Petroleum Institute", including the Appendix thereto as updated in 1985, and as amended. Volumes of gas shall be suitably corrected for deviation from Boyle's Law in accordance with the Regulations.
(c) Volumes of liquids shall be computed taking into consideration the compressibility and specific gravity, if applicable, and volumes so measured shall be corrected to fifteen degrees Celsius (15°C).

704. Change of Measurement Methodology

Notwithstanding any provisions of this Agreement to the contrary, if in order to comply with, or by reason of, the Regulations, the basis or method of measurement hereunder must change, all charges incurred by Operator relating to changing the basis or method of measurement shall be charged to the Joint Account. Operator may change the basis or method of measurement in any manner approved by the Regulations, but if not required to do so, the charges incurred by Operator may be charged to the Joint Account only with the approval of the Operating Committee.

ARTICLE VIII PRODUCTION AND FACILITY PRODUCTS

801. Owner's Share of Facility Products

Each Owner shall own the Facility Products that are attributable to Inlet Substances delivered to the Facility by or on behalf of such Owner. Allocation of Facility Products will be in accordance with the Appendix titled "FACILITY PRODUCT ALLOCATION PROCEDURE".

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

802. Losses in Handling, Flaring and Operation of the Facility

Each Owner owning Inlet Substances shall bear a share of any volumes of those Inlet Substances and Facility Products that are lost as a result of rupture, release, flaring or handling in the Facility during each Month in accordance with the Appendix titled "FACILITY PRODUCT ALLOCATION PROCEDURE". Notwithstanding that Appendix, if Operator is able to identify the ownership of those lost volumes, those losses shall be borne by the Owners in proportion to their ownership of those volumes.

803. Fuel Gas Usage

Operator shall be entitled to use a portion of the Inlet Substances for fuel in Joint Operations. Fuel gas usage shall be allocated to each Owner in accordance with the Appendix titled "FACILITY PRODUCT ALLOCATION PROCEDURE".

804. Disposition of Facility Products

(a) Each Owner shall separately take in kind or dispose of its share of Facility Products at its own cost. To the extent that an Owner (hereinafter in this Article called "non-taking Owner") fails to take or otherwise adequately dispose of its share of Facility Products, then so long as such failure continues, Operator in its sole discretion, as agent and for the account and at the expense and risk of the non-taking Owner, may sell or purchase at Market Price or store all or any portion of the non-taking Owner's share of Facility Products in any reasonable manner Operator sees fit, subject to the provisions of this Clause.

Each Owner shall provide Operator with such information respecting such Owner's arrangements for the disposition of its share of Facility Products as Operator may reasonably require to fulfil its obligations hereunder. If an Owner fails to provide such information, or if any of the disposition arrangements specified are inadequately provided for or are otherwise unworkable or impracticable, Operator shall forthwith so notify such Owner, who shall be deemed to be a non-taking Owner.

(b) The authority of Operator to enter into contracts for the sale of the non-taking Owner's share of Facility Products shall be restricted to contracts that are only for such reasonable periods of time as are consistent with the minimum needs of the industry under the circumstances, provided that in no event shall the term thereof exceed one (1) Month, unless such term may be terminated without penalty on no more than one (1) Month's notice, or unless the non-taking Owner has otherwise agreed in writing. Such authority shall be revocable, subject to the terms of any existing contracts for the sale of the non-taking Owner's share of Facility Products and the terms hereof, at the will of the non-taking Owner.

When Operator has so contracted, the non-taking Owner may take its share of Facility Products in kind upon the expiration of the current sales contract, if the non-taking Owner provides written notice to Operator of its intention to resume taking in kind at least thirty (30) Days in advance of the expiration of that arrangement. However, any such revocation shall only be effective so long as such Owner continues to take in kind and separately dispose of its share of Facility Products.

Notwithstanding the foregoing, if due to Regulations or shipping restrictions, arrangements to sell, store or otherwise dispose of Facility Products must be made prior to the date that the same are actually produced, then at the request of the Operator each Owner shall make such arrangements at its own cost prior to the date of production and shall give Operator notice of the same prior to the commencement of the actual Month of production. If any Owner fails to make such arrangements and give such notice, such Owner shall be deemed to have failed to take in kind or dispose of its share of Facility Products to be allocated to it at the actual time and place of production, and Operator shall be entitled to exercise its rights as aforesaid with respect to the non-taking Owner's share of Facility Products as of the date that the non-taking Owner was required to give notice as outlined above.

Insofar as Operator disposes of all or a portion of a non-taking Owner's share of Facility Products pursuant to this Subclause, Operator shall advise the non-taking Owner of the manner pursuant to which it has disposed of such Facility Products and other relevant information pertaining to the disposition within one (1) Month of the commencement of that disposition.

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

805. Distribution of Proceeds

Subject to the provisions of Clause 804, and unless otherwise agreed to by Operator, if Operator disposes of another Owner's share of Facility Products pursuant to Clause 804, Operator shall forthwith pay to that Owner the proceeds of such sale, less any costs associated with such sale and any other moneys payable with respect to the Facility to Operator by that Owner. Such costs shall, unless otherwise agreed to by Operator, include an administration fee to cover Operator's cost of arranging for and carrying out the sale of a non-taking Owner's share of Facility Products not taken in kind and disposed of by that Owner, as described by ALTERNATE A , immediately below:

ALTERNATE A . Two percent (2.0%) of the gross proceeds of the sale of Facility Products; ALTERNATE B. _ dollars per cubic metre ($/m[3] ) in the case of petroleum; _$ dollars per one thousand cubic metres ($/10[3] m[3] ) in the case of natural gas; ___ dollars per cubic metre ($/m[[3]] ) in the case of natural gas liquids and substances other than petroleum and natural gas (but not including sulphur); ___ dollars per tonne ($/t) in the case of sulphur; ALTERNATE C. A flat fee of ____ dollars ($) per Month.

___ dollars per cubic metre ($/m[[3]] ) in the case of natural gas liquids and substances other than petroleum and natural gas (but not including sulphur);

Operator shall include with such payment a statement showing the manner in which the amount was calculated. If Operator does not pay such amount on or before the 25[th] day of the calendar month next following the calendar month in which those funds were received, the interest provisions of Subclause 602 (b) shall apply with respect to such outstanding amounts.

806. Audit by Non-Taking Owner

To the extent only that Operator sells all or a portion of the share of Facility Products of a non-taking Owner, the audit provisions of the Accounting Procedure shall, with the necessary changes, apply with respect to such sale between Operator and the non-taking Owner on whose behalf such Facility Products were sold, provided that Operator shall not be required to provide the auditors with access to any of Operator's proprietary marketing information and that the non-taking Owner shall bear all costs of such audit.

807. Operator to be Indemnified

If an Owner does not take in kind and separately dispose of its share of Facility Products and Operator disposes of such Facility Products on behalf of the non-taking Owner pursuant to this Article, the non-taking Owner shall indemnify Operator with respect to any injury, loss or damage which Operator may suffer with respect to such sale by virtue of defects in the non-taking Owner's title to such Facility Products.

808. Indemnification for Royalties and Other Payments

Each Owner shall pay or be responsible for the payment of and shall indemnify the other Owners against liability for any and all royalties, overriding royalties, production payments, taxes and any and all other payments chargeable against its share of Facility Products.

809. Warranty by Owners

Each Owner warrants that it has the right to produce its portion of the Inlet Substances and dispose of its portion of the Facility Products and agrees to indemnify and save harmless the other Owners from all actions, causes of actions, claims and demands that may be made by any Person who has or claims to have an interest in such Inlet Substances or Facility Products.

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

ARTICLE IX DISPOSAL OF FACILITY INTEREST

901. Disposal of an Interest in the Facility

Except as provided in this Article IX, no Owner shall sell, transfer, assign, mortgage or otherwise dispose of all or part of its interest in the Facility. An Owner who intends to dispose of all or a part of its interest in the Facility (in this Article called "the Disposing Owner") shall comply with the provisions of ALTERNATE C immediately below:

ALTERNATE A.

The Disposing Owner shall be under no obligation to obtain the consent of the other Owners or to provide the other Owners with a right to acquire that Disposing Owner's interest in the Facility.

ALTERNATE B.

The Disposing Owner shall obtain the consent of the other Owners, and shall provide them with information regarding the disposition, including the description of the Facility Participation proposed to be disposed and the identity of the proposed assignee. Such consent shall not be unreasonably withheld, and it shall be reasonable for an Owner to withhold its consent to the disposition if it reasonably believes that the disposition would be likely to have a material adverse effect on its Facility Participation or Joint Operations, including, without limiting the generality of all or any part of the foregoing, a reasonable belief that the proposed assignee does not have the financial capability to meet prospective obligations arising out of this Agreement, provided that an Owner which withholds its consent shall include in its notice its reasons for withholding consent. However, an Owner shall be deemed to have consented to the disposition to the proposed assignee, unless, within twenty (20) Days, the Owner advises the other Owners, by notice, that it is not prepared to consent to such disposition.

ALTERNATE C .

(a) The Disposing Owner shall, by notice, advise each other Owner (in this Article called an "Offeree") of its intention to make the disposition, including in such notice a description of the Facility Participation proposed to be disposed, the identity of the proposed assignee, the price or other consideration for which the Disposing Owner is prepared to make such disposition, the proposed effective date and closing date of the transaction and any other information respecting the transaction which the Disposing Owner reasonably believes would be material to the exercise of the Offerees' rights hereunder (such notice in this Article called "the Disposition Notice").
(b) If the consideration described in the Disposition Notice cannot be matched in kind and the Disposition Notice does not include the Disposing Owner's bona fide estimate of the value, in cash, of such consideration, an Offeree may, within seven (7) Days of the receipt by the Offerees of the Disposition Notice, request the Disposing Owner to provide such estimate to the Offerees, whereupon the Disposing Owner shall provide such estimate in a timely manner and the election period provided herein to the Offerees shall be suspended until such estimate is received by the Offerees.
(c) If there is a dispute as to the reasonableness of an estimate of the cash value of the consideration described in the Disposition Notice or provided pursuant to Subclause (b), as the case may be, the matter shall be referred directly to arbitration under the Appendix titled "DISPUTE RESOLUTION" within seven (7) Days of the receipt of such estimate. The Disposing Owner and the applicable Offeree shall thereupon diligently attempt to complete such arbitration in a timely manner. The equivalent cash consideration determined in such arbitration shall thereupon be deemed to be the sale price for the Facility Participation described in the Disposition Notice.

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

(d) Within the later of i) thirty (30) Days from the receipt of the Disposition Notice, as modified by any suspension pursuant to Subclause (b) of this Alternate C; or ii), if Subclause (c) of this Alternate C is applicable, fifteen (15) Days from receipt of notice of the arbitrated value determined pursuant to the preceding Subclause, an Offeree may give notice to the Disposing Owner that it elects to purchase the Facility Participation described in the Disposition Notice for the applicable price (in this Article called a "Notice of Acceptance"). A Notice of Acceptance shall create a binding contractual obligation upon the Disposing Owner to sell, and upon an Offeree giving a Notice of Acceptance to purchase, for the applicable price, all of the Facility Participation included in such Disposition Notice on the terms and conditions set forth in the Disposition Notice. However, if more than one Offeree gives a Notice of Acceptance, each such Offeree shall purchase the Facility Participation to which such Notice of Acceptance pertains in the proportion its Facility Participation bears to the total Facility Participation of all such Offerees.
(e) If the Facility Participation described in the Disposition Notice is not disposed of to one or more of the Offerees pursuant to the preceding Subclause, the disposition to the proposed assignee shall be subject to the consent of the Offerees. Such consent shall not be unreasonably withheld, and it shall be reasonable for an Offeree to withhold its consent to the disposition if it reasonably believes that the disposition would be likely to have a material adverse effect on its Facility Participation or Joint Operations, including, without limiting the generality of all or any part of the foregoing, a reasonable belief that the proposed assignee does not have the financial capability to meet prospective obligations arising out of this Agreement, provided that an Owner which withholds its consent shall include its reasons for withholding consent in its notice. However, an Offeree shall be deemed to have consented to the disposition to the proposed assignee, unless, within the time period prescribed in Subclause (d), the Offeree advises the other Owners, by notice, that it is not prepared to consent to such disposition.
(f) If the Facility Participation described in the Disposition Notice is not disposed of to one or more of the Offerees pursuant to Subclause (d) of this Alternate C, the Disposing Owner may, subject to obtaining the consents prescribed by the preceding Subclause, dispose of such Facility Participation at any time within one hundred and fifty (150) Days from the issuance of such Disposition Notice, provided that such disposition is not on terms that are more favourable to such proposed assignee than those offered in the Disposition Notice.
(g) Following a disposition herein or one hundred and fifty (150) Days following the issuance of a Disposition Notice from which a disposition did not result, as the case may be, the provisions of this Clause 901 shall once again apply to the Facility Participation described in the Disposition Notice.

902. Unrestricted Disposals

Notwithstanding anything contained in this Article IX, an Owner may transfer all or a portion of its interest in the Facility without providing prior notice or the option to acquire such interest to the other Owners in the following instances, namely:

(a) a disposition to an Affiliate of the Owner, or in consequence of a merger or amalgamation of the Owner with another corporation or pursuant to an assignment, sale or disposition made by an Owner of its entire Facility Participation to a corporation in return for shares in that corporation or to a registered partnership in return for an interest in that partnership;
(b) if a portion of an Owner's interest in the Facility is disposed of as a result of the conversion of a gross overriding royalty interest or other interest to a working interest in a well pursuant to an agreement in

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

existence as of the Effective Date, and the production from such well is required to be delivered to the Facility;

(c) a disposition made by an Owner of all, or substantially all, or of an undivided interest in all or substantially all, of its petroleum and natural gas rights in the province or territory where the Facility is situated, and for the purposes of this Subclause, "substantially all" means a percentage of ninety percent (90%) or more of the net hectares held by such Owner in that province or territory;
(d) Subclause (d) shall apply:

a disposition made by an Owner of all, or substantially all, or of an undivided interest in all or substantially all, of its petroleum and natural gas rights in wells producing to the Facility, and for the purposes of this Subclause, "substantially all" means a percentage of ninety percent (90%) or more of the working interest held by such Owner in such wells; and

(e) Subclause (e) shall not apply:

a disposition made by an Owner of a portion of its petroleum and natural gas rights in wells producing to the Facility, where such disposition is accompanied by the disposition of a proportionate part or share of the Facility.

However, an Owner making such a disposition pursuant to Subclause (a), (b), (c), (d) or (e) of this Clause shall advise the Operator of such disposition in a timely manner, and shall comply with the provisions of Clause 905.

If the transfer is to an Affiliate, the Owner shall execute and deliver to Operator a continuing guarantee of all obligations to be assumed by the Affiliate under this Agreement. Such guarantee shall also provide that the guarantor waives notice of any extensions, modifications or amendments to this Agreement and agrees to be bound thereby; that no such extensions, modifications or amendments will release the guarantor; and that the guarantor will not be released by any waiver of any obligation of the Affiliate by the indulgence or concession granted to it.

903. Financing

Notwithstanding anything contained in this Article IX, an Owner may mortgage its interest in the Facility; provided that any such mortgage shall expressly provide that the mortgagee shall hold the interest subject to all the terms and provisions of this Agreement, and shall also provide that upon any realization of the security, the party acquiring the interest in the Facility shall be required to assume all obligations of the mortgagor under this Agreement, including the obligations imposed under Clause 905; and

904. Admission of New Owners Through Enlargement

No Person shall become an Owner through an Enlargement except with the approval of the Operating Committee and upon such terms and conditions as may be imposed by the Operating Committee, which shall include the condition that any Person becoming an Owner shall execute and deliver to Operator one (1) counterpart of this Agreement.

905. Disposal of Interest Documentation

(a) Every disposition of an interest in the Facility shall be made subject to this Agreement and shall not be binding on the other Owners until the first Day of the Month next following the date:
(i) the Person acquiring the interest, if not already an Owner, has executed and delivered to Operator one (1) counterpart of this Agreement; and
(ii) a copy of the instrument, executed by both the disposing Owner and its assignee, evidencing such change in ownership has been delivered to Operator.

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

Once such disposition becomes effective, the assignor shall thereupon be relieved from all obligations that thereafter accrue hereunder with respect to the assigned interest, subject to Clauses 504, 505, 902 and 1001.

(b) Subject to Clause 307, the assignment of any interest in the Facility by an Owner while acting in the capacity of Operator shall not confer upon the Person acquiring such interest the position of Operator.

906. Change of Name

An Owner whose name is changed by due legal process shall notify and supply evidence of the change to Operator as soon as possible.

ARTICLE X TERM AND TERMINATION

1001. Term

This Agreement shall remain in full force and effect from the Effective Date so long as all or any portion of the Facility is held pursuant to this Agreement and so long thereafter as may be necessary to decommission, abandon, dispose of and reclaim the Facility, in accordance with the Regulations, and final settlement of accounts has been made among the Owners, provided that those provisions related to audit, liability, indemnity, disposal and salvage of Material and enforcement of default shall survive for six (6) Years thereafter or such later time as may be prescribed by the Regulations.

1002. Termination

Subject to the provisions of Clause 1001, this Agreement shall terminate upon a vote of the Operating Committee in accordance with Subclause 204 (i).

1003. Salvage or Disposition

If required by the Regulations or directed by the Operating Committee to salvage the Facility or portion thereof as the case may be, Operator shall, for the Joint Account:

(a) salvage as much of the Facility or portion thereof, as the case may be, as can economically and reasonably be salvaged or otherwise dispose of the same in the manner determined by the Operating Committee; and
(b) clean up and restore the site of the Facility or portion thereof, as the case may be, in accordance with the Regulations and to the satisfaction of any governmental body having jurisdiction with regard thereto and to the reasonable satisfaction of the owner or occupier of the land upon which the Facility is located.

1004. Proceeds and Costs

The proceeds and costs of salvaging, decommissioning, abandonment, reclamation or disposing of any portion of the Facility, incurred pursuant to Clause 1003, shall be shared and borne by the Owners of the Facility, based on each Owner's respective Facility Participation.

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

ARTICLE XI GENERAL PROVISIONS

1101. Enurement

Subject to the provisions of Clause 905, this Agreement shall enure to the benefit of, and be binding upon, the respective heirs, executors, administrators, successors and permitted assigns of the Owners.

1102. No Partnership

Nothing herein contained shall be read or construed as creating a partnership, or as imposing upon any Owner any partnership duty, obligation or liability of any kind, it being the express intention of the Owners that the respective rights, obligations and liabilities of each of the Owners under this Agreement and in respect of the subject matter hereof generally, shall be several, and not joint or joint and several.

1103. Force Majeure

(a) For the purposes of this Clause, "force majeure" means an occurrence beyond the reasonable control of the Owner claiming suspension of an obligation hereunder, which has not been caused by such Owner's negligence and which such Owner was unable to prevent or provide against by the exercise of reasonable diligence at a reasonable cost and includes, without limiting the generality of the foregoing, an act of God, war, revolution, insurrection, blockage, riot, strike, a lockout or other industrial disturbance, fire, lightning, unusually severe weather, storms, floods, explosion, accident, shortage of labour or materials, or government restraint, action, delay or inaction.
(b) If any Owner is prevented by force majeure from fulfilling any obligations hereunder, the obligations of that Owner, insofar as its obligations are affected by the force majeure, shall be suspended while the force majeure continues to prevent the performance of such obligation and for that time thereafter as that Owner may reasonably require to commence to fulfil such obligation. An Owner prevented from fulfilling any obligation by the force majeure shall promptly give the other Owners notice of the force majeure and the affected obligations, including reasonably full particulars in respect thereof.
(c) The Owner claiming suspension of an obligation as aforesaid shall promptly remedy the cause and effect of the applicable force majeure, insofar as it is reasonably able so to do, and such Owner shall promptly give the other Owners notice when the force majeure ceases to prevent the performance of the applicable obligation. However, the terms of settlement of any strike, lockout or other industrial disturbance shall be wholly in the discretion of such Owner, notwithstanding Subclause (a), and that Owner shall not be required to accede to the demands of its opponents in any strike, lockout or industrial disturbance solely to remedy promptly the force majeure thereby constituted.
(c) Notwithstanding anything contained in this Clause, lack of finances shall not be considered a force majeure, nor shall any force majeure suspend any obligation for the payment of money hereunder.

1104. Notices

All notices and other communications to be given in connection with this Agreement shall be in writing and shall be sufficiently given:

(a) if delivered by hand or by courier to an Owner at its address for service, such delivery shall be deemed received by the Owner when actually delivered, if such delivery is during Owner's normal business hours, on any Day other than a Saturday, a Sunday or statutory holiday. If such notice or other communication is not delivered during the Owner's normal business hours, such notice or other communication shall be deemed to have been received by Owner on the Day next following the date of delivery, other than a Saturday, Sunday or statutory holiday;

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

(b) except during any period of actual or impending postal disruption, if sent by first class mail, or by airmail if sent from outside Canada or the United States, postage prepaid, to an Owner at its address for service, such mailing shall be deemed received by the Owner on the fourth Day following the date of mailing (Saturdays, Sundays and statutory holidays excepted). However, if postal service is interrupted or operating with unusual or imminent delay, such notice or other communication shall not be sent by such means during such interruption or period of delay; and
(c) to an Owner which has provided a direct e-mail adress as part of its address for service, if sent by e-mail to the Owner's designated e-mail address, such transmission shall be deemed received by the Owner when actually received, if such transmission is during Owner's normal business hours on any Day other than a Saturday, Sunday or a statutory holiday. If such notice or other communication is not received during the Owner's normal business hours, such notice or other communication shall be deemed to have been received by Owner on the Day next following the date of transmission, other than a Saturday, Sunday or a statutory holiday.

For the purposes of this Clause 1104, the address for service for each Owner initially shall be the address set forth below its signature on the execution page of the Head Document. Operator may change its address for service by giving written notice thereof to each of the other Owners, and any other Owner may change its address for service by giving written notice thereof to Operator.

1105. Suits

An Owner who is sued on an alleged cause of action arising out of Joint Operations shall forthwith notify every other Owner.

1106. Compliance with Laws and Regulations

In exercising their respective rights and discharging their respective obligations under this Agreement, the Owners shall comply in all material respects with all Regulations.

1107. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein, and each of the Owners submits to the jurisdiction of the courts of the Province of Alberta for the interpretation and enforcement hereof.

1108. Waiver

No waiver by any Owner of any breach (whether actual or anticipated) of any of the covenants, provisions or conditions herein contained shall take effect or be binding upon that Owner unless the same is expressed in writing under the authority of that Owner. Any waiver so given shall extend only to the particular breach so waived and shall not limit or affect any rights with respect to any other or future breach.

1109. Statute of Limitations

The two-year time period for seeking a remedial order under section (3)(1)(a) of the Limitations Act, R.S.A. 2000 c. L-12, including any amendments thereto or replacements thereof, for any claim (as defined in the Act) arising in connection with this Agreement is extended to:

(a) for claims disclosed by an audit, two (2) years after the time this agreement permitted that audit to be performed; or
(b) for all other claims, four (4) years

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

1110. Further Assurances

Each Owner shall from time to time and at all times do all such further acts and execute and deliver all further documents as may be reasonably required in order to perform and carry out the terms of this Agreement.

1111. Partitioning

No Owner shall resort to any action for partition, or sale in lieu of partition, of any real property comprised in the Facility, or any portion thereof.

1112. United States Taxes

If for the purposes of the United States Internal Revenue Code of 1986, as amended ("the Code"), this Agreement or the relationship established thereby constitutes a partnership as defined in Section 761 (a) of the Code, each Owner who is entitled under such Section to elect, hereby elects to have such partnership excluded from the application of Subchapter K of Chapter 1 of Subtitle A of the Code, or such portion thereof as the Secretary of the Treasury of the United States, or his delegate, permits to be so excluded. Operator is authorized to execute such election on behalf of the applicable Owners and to file the election with the proper United States government office or agency. Operator is further authorized and directed to execute and file such additional and further evidence of such election as may be required, all at the expense solely of those Owners subject to the Code. However, if Operator is not subject to the Code with respect to the Facility, the obligations of Operator under this Clause shall be fulfilled by the Owner who is subject to the Code with respect to the Facility and who, among those Owners subject to the Code, holds the greatest Facility Participation.

1113. Confidentiality

Each Owner entitled to information obtained hereunder or pursuant to this Agreement may use such information for its sole benefit. However, the Owners shall take such measures with respect to Joint Operations and internal security as are appropriate in the circumstances to keep confidential from third Persons all such information, except information which the Owners have expressly agreed among themselves to release and information disclosed by an Owner:

(a) when and to the extent required by the Regulations and securities laws applicable to such Owner, provided that such Owner shall invoke any confidentiality protection permitted by such Regulations and securities laws;
(b) to an Affiliate, provided that such Owner shall be deemed to have required such Affiliate to maintain the confidential status of the disclosed information in accordance with this Clause 1113, that such Affiliate shall be deemed to have accepted such obligation and that such Owner shall be liable for any loss suffered by the other Owners, or any of them, because of the failure of such Affiliate to maintain such information confidential;
(c) to a third Person to which such Owner is seeking to assign all or a portion of its interest hereunder, provided that a binding covenant is obtained from such third Person prior to disclosure which provides, inter alia, that none of such information shall be disclosed by it to any other third Person; and
(d) to the technical, financial or other professional consultants of such Owner which require such information to provide their services to such Owner or to a bank or other financial institution from which such Owner is attempting to obtain financing, provided that a binding covenant is obtained from such consultant or financier, as the case may be, prior to such disclosure, which provides, inter alia, that none of such information shall be disclosed by it to any other third Person or used for any purposes other than advising such Owner or providing financing to such Owner, as the case may be.

However, the confidentiality obligation in this Clause shall not extend to information to the extent it is in the public domain, provided that specific items of information shall not be considered to be in the public domain merely because more general information is in the public domain.

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

Notwithstanding the foregoing provisions of this Clause, any Owner which otherwise ceases to be bound by the provisions of the Agreement shall nevertheless remain bound by the provisions of this Clause with respect to information obtained hereunder or pursuant to this Agreement until and to the extent that such information is in the public domain.

1114. General Business Conduct

Except as otherwise provided herein, none of the Owners nor any of their Affiliates, directors, officers, consultants, agents or employees shall give or receive any commission, fee, rebate, gift or entertainment of significant cost or value in connection with this Agreement.

1115. Supersedes Previous Agreements

Unless otherwise provided in the Head Document, this Agreement supersedes all other previous agreements, documents, writings and verbal understandings among the Owners relating to the Facility, and expresses all of the terms and conditions agreed upon by the Owners with respect to the Facility.

1116. Time of the Essence

Time is of the essence in this Agreement.

1117. No Implied Covenants

The Owners have expressed herein their entire understanding and agreement concerning the subject matter of this Agreement. No implied covenant, condition or term shall be read into this Agreement, nor shall any prior oral or written understanding entered into modify or compromise any of the terms and conditions herein.

1118. Waiver of Relief

The Owners acknowledge that any default, forfeiture or assignment provisions contained in this Operating Procedure are reasonable and equitable. Each Owner waives any and all rights which it may have at law, in equity or by the Regulations, against default, forfeiture or penalty if such provisions are invoked.

Exhibit "A", Operating Procedure, No. _, Revision _, Correction _, Mail Ballot No. , Effective _,____.

APPENDIX I of EXHIBIT "A" to

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

FACILITY PARTICIPATION

101. Facility Participation

(a) Facility – Phase 1

As of the Effective Date, the Owners and their respective Facility Participations are as follows:

Owners Tourmaline Topaz Total	Facility Participation
	80.00% 20.00%
	100.00%

(b) Facility – Phase 2

The Owners acknowledge and agree that Tourmaline intends to undertake an Enlargement of the Facility to, inter alia, increase the capacity of the Facility to 400 mmcf/d (nameplate capacity) (the “ Phase 2 Expansion ”). As described in Appendix XII – Enlargement, the Owners acknowledge and agree that Topaz has elected not to participate in the Phase 2 Expansion. As such, following the in-service date of the Phase 2 Expansion, the total investment value of the Facility and each Owner's Facility Participation shall be redetermined, pursuant to Appendix XI and Appendix XII, and the Facility Participation shall be as follows:

Owners Tourmaline Topaz Total	Facility Participation
	90.00% 10.00%
	100.00%

102. Basis for Determination

(a) The Facility Participation of each Owner has been determined pursuant to this Appendix titled "FACILITY PARTICIPATION".

EXHIBIT "A", APPENDIX I, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE 1 ,

APPENDIX II of EXHIBIT "A" to

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

DESCRIPTION OF FACILITY AND FUNCTIONAL UNITS, MAP AND SCHEMATIC

101. Facility Description

(a) Function

The Facility shall provide for the processing of Inlet Substances and the delivery of Facility Products to a Facility Outlet.

(b) Facility Location

The Facility is located at C-060-A/094-B-16 in the province of British Columbia.

102. Facility Description

200 mmcf per day of deep cut processing capacity (Phase 1), increasing to 400 mmcf per day of deep cut processing capacity (Phase 2), located at C-060-A/094-B-16 and all related infrastructure and other equipment and tangible depreciable property located within the area lease limits as shown on the attached Facility Map or as listed below, including all permanently installed equipment between the inlet riser and outlet flange of such plant, and including all liquids handling infrastructure associated with the plant which is required for the extraction and storage of hydrocarbon liquids. The plot plan for the C-060A/094-B-16 site includes a detailed listing of the equipment for the Facility.

EXHIBIT "A", APPENDIX III, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

FACILITY PLOT PLAN

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EXHIBIT "A", APPENDIX III, NO.

, REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

FACILITY MAP

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EXHIBIT "A", APPENDIX III, NO.

, REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

APPENDIX III of EXHIBIT "A" to

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

ACCOUNTING PROCEDURE

101. Accounting Procedure Chosen

(a) Alternate immediately below shall apply as a schedule to this Appendix:

ALTERNATE A . The Accounting Procedure is the 1996 Petroleum Accountants Society of Canada's Accounting Procedure and has been modified only as shown in Clause 102 (b) hereof. The elections chosen and values inserted are described in Clause 102 (a) hereof.

ALTERNATE B. The Accounting Procedure is unique to this Agreement and is attached hereto as Schedule A.

102. Rates, Elections and Modifications to the 1996 PASC Accounting Procedure

The following clauses of the Accounting Procedure are modified to include the indicated election, alternate, option or value:

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105. Operating Fund: [Amount redacted]
110. Approvals: [Elections redacted]
112. Expenditure Limitations:
[Amounts redacted]
202. Employee Benefits:
[Amount redacted]
213. Camp and Housing:
[Election redacted]
216. Warehouse Handling: [Amount redacted]
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EXHIBIT "A", APPENDIX III, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

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221. Allocation Options:
[Allocations redacted]
302. Overhead Rates:
(a) __ percent (%)
OR
(1) percent (%) ; __ dollars ($__)
(2) _ percent (%) ; __ dollars ($__)
(3) _ percent (%)
(b) __ percent (%)
OR
(1) percent (%) ; __ dollars ($__)
(2) _ percent (%) ; __ dollars ($__)
(3) _ percent (%)
(c) __ percent (%)
OR
(1)
(2)
[Amounts redacted]
(3)
(d) percent (__%)
OR
(1)
(2)
(3)
(e) (1) [Amount redacted]
(2) __ dollars ($_)
(3)_dollars($ )
shall ___ shall not
406. Dispositions: [Amount redacted]
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The Accounting Procedure is modified as follows:

The following clause contained in the Accounting Procedure is deleted and replaced as follows:

Clause 201(a)(6) - Salaries and wages of the Operator's employees engaged in Production Engineering who are either temporarily or permanently assigned to and directly employed off-site in direct support of Joint Operations.

The following clauses are amended as follows:

Clause 207(d) - replace "warehouse" with "Warehouse".

EXHIBIT "A", APPENDIX III, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE ,

Clause 406 - replace "affiliates" with "Affiliates".

Clause 501(b) - replace "warehouse" with "Warehouse".

The clauses contained in the Accounting Procedure are amended as follows:

EXHIBIT "A", APPENDIX III, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

APPENDIX IV of EXHIBIT "A" to

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

DEEMED ORDER OF CAPACITY UTILIZATION

101. Order of Capacity Utilization

Owner's Substances and Outside Substances shall be deemed to utilize each Owner’s Capacity Ownership in the following manner:

During the term of the Volume Commitment Agreement (Gundy Facility):

i. First, 100% of Owner’s Substances delivered by Tourmaline shall first utilize Topaz’s Capacity Ownership to a maximum of 40 mmcf/day (or 1,127 E3m3/day), and shall be deemed to be utilizing Topaz's Surplus Capacity for the purposes of Clause 102 of the Appendix to Exhibit “A” titled “STRUCTURE AND SHARING OF THE JOINT ACCOUNT” and Clause 102 of the Appendix to Exhibit "A" titled "CAPACITY USAGE".
ii. Second: Owner's Substances delivered by Tourmaline exceeding 40 mmcf/day (or 1,127 E3m3/day) shall utilize Tourmaline's Ownership Capacity.
iii. Third, Outside Substances shall utilize Tourmaline’s Capacity Ownership and shall be deemed to be utilizing Tourmaline’s Surplus Capacity for the purposes of Clause 102 of the Appendix to Exhibit "A" titled "STRUCTURE AND SHARING OF THE JOINT ACCOUNT" and Clause 103 of the Appendix to Exhibit "A" titled "CAPACITY USAGE".

Following the expiry of the Volume Commitment Agreement (Gundy Facility):

i. First, Outside Substances shall utilize each Owner's Capacity Ownership in proportion to their Facility Participation, subject to Clause 102 and which shall be deemed to be utilitizing Owner's Surplus Capacity for the purposes of Clause 102 of the Appendix to Exhibit “A” titled “STRUCTURE AND SHARING OF THE JOINT ACCOUNT” and Clause 103 of the Appendix to Exhibit "A" titled "CAPACITY USAGE".
iv. Second, 10% of Owner’s Substances delivered by Tourmaline shall utilize Topaz's Ownership Capacity in an amount up to, but not to exceed, Topaz's available Capacity Ownership and shall be deemed to be utilizing Topaz's Surplus Capacity for the purposes of Clause 102 of the Appendix to Exhibit “A” titled “STRUCTURE AND SHARING OF THE JOINT ACCOUNT” and Clause 102 of the Appendix to Exhibit "A" titled "CAPACITY USAGE".
ii. Third, 90% of Owner’s Substances delivered by Tourmaline, plus all Owner’s Substances delivered by Tourmaline in excess of Topaz's Capacity Ownership, shall utilize Tourmaline's Capacity Ownership, up to, but not to exceed Tourmaline’s Capacity Ownership.

EXHIBIT "A", APPENDIX IV, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

APPENDIX V of EXHIBIT "A" to

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

STRUCTURE AND SHARING OF THE JOINT ACCOUNT

101. Structure of the Joint Account

The Joint Account for the Facility and all statements furnished to the Owners shall be divided into Capital Costs and Operating Costs.

102. Sharing of the Joint Account Between Owners

(a) The Owners shall reimburse Operator each Month for Capital Costs and Operating Costs as follows:
1. Capital Costs: in proportion to each Owner's Facility Participation.
2. Operating Costs (Fixed and Variable):
  - a. During the term of the Volume Commitment Agreement (Gundy Facility): Tourmaline will be responsible for 100% of Fixed Operating Costs and 100% of Variable Operating Costs.
  - b. Following the expiry of the Volume Commitment Agreement (Gundy Facility): in proportion to each Owner's Facility Participation.
(b) Operator shall distribute fee income from Outside Substances, as may be charged from time to time pursuant to Clause 103 of the Appendix to Exhibit “A” titled “CAPACITY USAGE” to Owners Monthly on an interim basis in proportion to their Facility Participation and such distribution shall be subject to an annual adjustment pursuant to subclause (d) hereof.
(c) Operator shall distribute the Surplus Capacity usage charges, as may be charged from time to time pursuant to Clause 102 of the Appendix to Exhibit “A” titled “CAPACITY USAGE”, to the Owners Monthly on an interim basis in proportion to their Facility Participation and such distribution shall be subject to an annual adjustment pursuant to subclause (d) hereof, provided that:
1. during the term of the Volume Commitment Agreement (Gundy Facility), 100% of the Surplus Capacity usage charges applicable to Tourmaline’s delivery of 40 mmcf/d (or 1,127E3m3/day) pursuant to the Volume Commitment Agreement (Gundy Facility) shall be distributed to Topaz by Operator; and
2. following the term of the Volume Commitment Agreement (Gundy Facility), 100% of the Surplus Capacity usage charges applicable to Tourmaline's delivery of 10% of Owner's Substances delivered by Tourmaline shall be distributed to Topaz by Operator.
(d) Operator shall, within one-hundred and eighty (180) Days of the end of the preceding Year adjust the distribution of the costs, Outside Substances fee income and Surplus Capacity usage

EXHIBIT "A", APPENDIX V, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

charges made pursuant to Subclauses (a), (b) and (c) hereof to reflect actual costs and actual fee income.

EXHIBIT "A", APPENDIX V, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE ,

APPENDIX VI of EXHIBIT "A" to

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

CAPACITY USAGE

101. Determination of Capacity

Appendix V, Table I Capacity sets out the Capacity of the Facility as of the Effective Date (Phase 1) and the Capacity of the Facility upon completion of the Phase 2 Expansion. The Capacity shall be redetermined by Operator, for the approval of the Operating Committee pursuant to Subclause 204 (e) of the Operating Procedure, at reasonable intervals to take into consideration prevailing operating conditions. If the sum of all Owners' and non-Owners' average daily throughput for any given Month exceeds the Capacity of the Facility, then Operator shall refer the matter to the Operating Committee for a decision as to whether or not Appendix V, Table I Capacity should be revised. During the term of the Volume Commitment Agreement (Gundy Facility), Topaz’s Capacity Ownership shall, in all cases, be equal to 40 mmcf/d.

102. Owner Surplus Capacity Usage

(a) Determination of utilized Surplus Capacity:
(i) Operator shall determine each Owner's throughput through the Facility on a Monthly basis;

(ii) Operator shall determine each Owner's Surplus Capacity or utilized Surplus Capacity in the Facility for the period specified in Paragraph (i) of this Subclause 102 (a) by taking the difference between each Owner's average daily throughput and that Owner's Capacity Ownership in the Facility;

(iii) Operator shall prorate the total utilized Surplus Capacity in the Facility to those Owners with Surplus Capacity in the proportion that their respective Surplus Capacities bear to the total Surplus Capacity in the Facility;

(iv) If more than one Owner desires to utilize Surplus Capacity, such Surplus Capacity shall be prorated among the Owners desiring to utilize it for the processing of Owner’s Substances, in the proportion that each Owner’s Facility Participation bears to the total Facility Participation of all Owners desiring to utilize such Surplus Capacity in the Facility. If under the foregoing prorationing, an Owner is eligible to utilize more of the Surplus Capacity than such Owner desires to utilize, that Owner shall be allocated only its desired share of Surplus Capacity, which share of Surplus Capacity shall be subtracted from the total Surplus Capacity available. The remaining Surplus Capacity shall be prorated in the above manner to the other Owners until all of the Surplus Capacity is fully utilized.

(b) Calculation of utilized Surplus Capacity charge:

During the term of the Volume Commitment Agreement (Gundy Facility), Owner’s Substances delivered by an Owner that is deemed to utilize another Owner’s Surplus Capacity shall pay a utilized Surplus Capacity charge equal to the Committed Volume Fee (as such term is defined in the Volume Commitment Agreement (Gundy Facility)), which as of the Effective Date is equal to [Amount redacted]

EXHIBIT "A", APPENDIX VI, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

Following the expiration of the Volume Commitment Agreement (Gundy Facility), the Surplus Capacity charge shall be equal

[Amount redacted]

103. Outside Substances Capacity Usage

Capacity may be allocated by the Operator to non-Owners. All requests received from non-Owners who wish to utilize Capacity for handling or processing of Outside Substances shall be referred to the Operator. Operator shall seek approval of the Operating Committee prior to committing the Facility Capacity to be used by a non-Owner. During the term of the Volume Commitment Agreement (Gundy Facility), Tourmaline may allocate Tourmaline Ownership Capacity to non-Owners in its sole discretion, provided that in no event shall such allocation of Capacity infringe upon or derogate from the rights of Topaz pursuant to the Volume Commitment Agreement (Gundy Facility).

Operator shall charge each non-Owner utilizing Capacity a Capacity usage fee as approved by the Operating Committee, provided that during the term of the Volume Commitment Agreement (Gundy Facility), Tourmaline may determine such usage fees in its sole discretion.

104. Distribution of Surplus Capacity and Non-Owner Capacity Usage Charges

Distributions of charges made pursuant to Clauses 102 and 103 hereof shall be performed by Operator as provided in the Appendix titled "STRUCTURE AND SHARING OF THE JOINT ACCOUNT".

105. Order of Cutbacks

(a) If the Facility cannot handle all Inlet Substances that Owners and non-Owners wish to deliver to the Facility on any Day, the Inlet Substances shall be cut back in the following order:

During the term of the Volume Commitment Agreement (Gundy Facility):

(i) Outside Substances being handled on an interruptible basis; followed by
(ii) Owner’s Substances delivered by Tourmaline in excess of 40 mmcf/day (or 1,127 E3m3/day); followed by
(iii) Outside Substances being handled on a firm service basis, in the proportion that the sum of all Outside Substances behing handled on a firm service basis bears to the total available Capacity of the Facility; followed by
(iv) Owner’s Substances delivered by Tourmaline up to 40 mmcf/day (or 1,127E3m3/day) delivered pursuant to the Volume Commitment Agreement (Gundy Facility), which shall be deemed to be handled on a firm service basis for the account of Topaz, together with other Owner's Substances being handled on a firm service basis, in the proportion that the sum of Owner’s Substances being handled on a firm service basis bears to the total available Capacity of the Facility.

Following the term of the Volume Commitment Agreement (Gundy Facility):

(i) Outside Substances being handled on an interruptible basis; followed by
(ii) Owner’s Substances being handled on an interruptible basis; followed by

EXHIBIT "A", APPENDIX VI, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

(iii) Outside Substances being handled on a firm service basis, in the proportion that the sum of all Outside Substances being handled on a firm service basis bears to the total available Capacity of the Facility; followed by
(iv) Owner’s Substances being handled on a firm service basis, in the proportion that the sum of Owner’s Substances behing handled on a firm service basis bears to the total available Capacity of the Facility.
(b) For the purposes of cutbacks, Outside Substances produced from a well jointly owned by an Owner and a non-Owner in an unavoidably commingled stream and delivered to the Facility shall be deemed to be Owner’s volumes, provided that such Outside Substances are within that Owner’s Capacity Ownership. Outside Substances exceeding an Owner’s Capacity Ownership shall not be deemed to be Owner’s Substances. All Outside Substances shall be subject to Outside Substances Capacity usage fees as described herein.
(c) Intermittent cutbacks during a Day that may be necessary pursuant to this Clause shall be made at the Operator's discretion exercised reasonably, and applying the principles described in Subclause (a) hereof to the extent possible.
(d) Any Owner wishing to enter into a firm service agreement with a third party in respect of Outside Substances to be delivered to the Facility shall, prior to entering into such firm service agreement, obtain the consent of the other Owner, such consent not to be unreasonably withheld.

TABLE I CAPACITY

Design Capacity as of the Effective Date (Phase 1)

Sweet Gas Processing Facility Inlet Pressure: 1,417 kPa Sales Pressure: 9,940 kPa maximum discharge Inlet Substances: 5,634.8 E3m3/d Condensate Handling: 368 m3/d Water Handling: 222.5 m3/d Fractionation Capacity: 1,590 m3/day

Design Capacity as of In Service date of Phase 2

Sweet Gas Processing Facility Inlet Pressure: 1,417 kPa Sales Pressure: 9,940 kPa maximum discharge Inlet Substances: 11,269.6 E3m3/d Condensate Handling: 736 m3/d Water Handling: 445 m3/d Fractionation Capacity: 3,180 m3/day

EXHIBIT "A", APPENDIX VI, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

APPENDIX VII of EXHIBIT "A" to

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

INSURANCE

101. Insurance

(a) Without in any way limiting the obligations or liabilities of Operator, Operator shall also comply with the provisions of ALTERNATE A immediately below:

ALTERNATE A .

(b) Operator shall, prior to the commencement of Joint Operations, hold or cause to be held with a reputable insurance company or companies, and thereafter maintain or cause to be maintained for the Joint Account and benefit of the Owners and their respective Affiliates, directors, officers, consultants, agents and employees, the insurance hereinafter set forth and any other insurance which is specifically required to comply with the Regulations. The insurance required pursuant to this Subclause shall, subject to Subclause 101 (d), be as follows:
(i) Automobile Liability Insurance covering all motor vehicles or snowcraft and all terrain vehicles, owned and/or leased, operated or licensed by Operator and used in Joint Operations, with an inclusive bodily injury, death and property damage limit of two million dollars ($2,000,000) per accident;
(ii) Commercial General Liability Insurance with an inclusive bodily injury, death, and property damage limit of two million dollars ($2,000,000) per occurrence, and, without restricting the generality of the provisions of this Paragraph, such coverage shall include, but not be limited to, Employer's Liability, Employer's Contingent Liability, Contractual Liability, Contractor's Protective Liability, Products and Completed Operations Liability, and, such policy shall _____ /shall not X include Pollution Liability;
(iii) If aircraft are used, Aircraft Liability Insurance covering all aircraft, owned, leased, operated or licensed by Operator and used in Joint Operations, with an inclusive bodily injury, death and property damage limit of five million dollars ($5,000,000) per occurrence;
(iv) If required, Builder's Risk Course of Construction Insurance in an amount not less than the full value of any work being performed in respect of the Initial Construction or any Enlargement, which shall cover all risks of physical loss or damage to the Facility or the work being performed in respect thereto, including all machinery, materials and supplies at the site of such work, in transit thereto and intended to become a part of the finished work, or on site awaiting erection or installation, testing or final acceptance by Operator; and

EXHIBIT "A", APPENDIX VII, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

(v) If required, Wrap-up General Liability Insurance for a combined single limit of __ dollars ($_) for each occurrence or accident, including property damage, bodily injury (including death at any time resulting therefrom) and personal injuries sustained by any Person because of bodily injury or destruction of property (including loss of use or occupancy); and contractual liability and employer's liability. Such coverage shall extend to include contractors and subcontractors as additional insureds, in connection with the work. The policy should provide for coverage during the term of Initial Construction or any Enlargement, including twelve (12) Months completed operations liability.

ALTERNATE B.

(b) Operator shall, prior to the commencement of Joint Operations, hold or cause to be held with a reputable insurance company or companies, and thereafter maintain or cause to be maintained for the Joint Account and benefit of the Owners and their respective Affiliates, directors, officers, consultants, agents and employees:
(i) Insurance that is specifically required to comply with the Regulations.
(ii) Shall _/shall not _ provide Builder's Risk Course of Construction Insurance in an amount not less than the full value of any work being performed in respect of the Initial Construction or any Enlargement, which shall cover all risks of physical loss or damage to the Facility or the work being performed in respect thereto, including all machinery, materials and supplies at the site of such work, in transit thereto and intended to become a part of the finished work, or on site awaiting erection or installation, testing or final acceptance by Operator; and
(iii) Shall _/shall not _ provide Wrap-up General Liability Insurance for a combined single limit of __ dollars ($_) for each occurrence or accident, including property damage, bodily injury (including death at any time resulting therefrom) and personal injuries sustained by any Person because of bodily injury or destruction of property (including loss of use or occupancy); and contractual liability and employer's liability. Such coverage shall extend to include contractors and subcontractors, as additional insureds, in connection with the work. The policy should provide for coverage during the term of Initial Construction or any Enlargement, including twelve (12) Months' completed operations liability.

The following conditions shall be applicable to the ALTERNATE which is specified:

(c) It is the intention of the Owners that, except as provided in Subclause 101 (b) of this Appendix and in Article V of the Operating Procedure, the cost of any accident, loss or any claim of or liability to third parties or to each other for bodily injury, death or property damage arising out of any Joint Operation shall be borne individually by the Owners in proportion to their respective Facility Participation.
(d) Operator shall provide information regarding deductibles specified for each accident or occurrence in any insurance policy maintained for the Joint Account to any Owner who requests in writing such information. Operator shall maintain deductibles in accordance with its internal policy unless otherwise directed by the Operating Committee.
(e) (i) If the policies which Operator is required to obtain or maintain for the Joint Account are, in Operator's reasonable opinion, unavailable or available only at an unreasonable cost, then Operator shall promptly notify the Owners, in order that the Operating Committee may redetermine the policies which shall be held for the Joint Account. Subject to the

EXHIBIT "A", APPENDIX VII, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

provisions of this Clause, policies obtained for the Joint Account pursuant to this Clause may contain terms, conditions or exclusions affecting or limiting the risks covered thereby or the circumstances under which the insurer may be required to indemnify or compensate the Owners thereunder, provided that such terms, conditions or exclusions are, in Operator's reasonable opinion, the best available from the marketplace on reasonable terms and ordinary or appropriate. However, Operator shall obtain the prior approval of the Operating Committee with respect to any such change which is made after the relevant policy or policy renewal has been acquired for the Joint Account.

(ii) Except as provided in subparagraph (i), failure by the Operator to maintain the insurance required to be maintained for the Joint Account shall be deemed to be Gross Negligence.
(f) If Operator makes any payments with respect to any losses, damages, claims or liabilities arising out of Joint Operations which are covered by insurance policies maintained for the Joint Account hereunder with the approval of the insurers thereof or if Operator makes any payments authorized hereunder with respect to any other losses, damages, claims or liabilities arising out of such operations, such payments shall be a charge for the Joint Account. However, Operator shall diligently attempt to process its claims under such policies with respect to such losses, damages, claims or liabilities, and shall promptly credit the Joint Account the amount it ultimately recovers under such policies. Insofar as such charge is one which is not to be borne for the Joint Account pursuant to Article V of the Operating Procedure, Operator shall adjust the Joint Account accordingly at such time as it is determined that the charge is not to be borne for the Joint Account.
(g) Operator shall use reasonable efforts to ensure that each insurance policy maintained for the Joint Account pursuant to this Clause includes:
(i) a provision that coverage is primary to any other coverage carried by the Owners (other than coverage maintained by an Owner to reduce its exposure to a deductible);
(ii) a provision that such policy shall survive the default or bankruptcy of the insured for claims arising out of an event before such default or bankruptcy; and
(iii) a provision that the insurer shall provide Operator with sixty (60) Days' written notice of cancellation of such policy.
(h) Each Owner shall be responsible for insuring its own interest in the Facility with respect to physical damage to property, loss of income, Operator's Extra Expense, Seepage, Pollution, Contamination and Clean-up costs relating to the well(s) and any insurance other than that referred to in the ALTERNATE specified in Subclause 101 (a) of this Appendix. Each Owner shall ensure that each policy maintained by it for its own account hereunder shall contain a waiver of all rights, by subrogation or otherwise, against the other Owners and their respective Affiliates, directors, officers, consultants, agents, contractors and employees.
(i) Operator shall provide each Owner with notice of damages or losses incurred hereunder as soon as practicable after the damage or loss has been discovered. Operator shall provide the Owners with such assistance and materials as is required to substantiate such damages or losses for the purposes of the Owners' insurance coverage.
(j) Operator shall, with respect to Joint Operations, use every reasonable effort to have its contractors and sub-contractors:
(i) comply with all Regulations applicable to workers employed by them; and
(ii) carry such insurance in such amounts as Operator deems necessary, provided that such insurance policies shall either include waivers of all rights, by subrogation or otherwise,

EXHIBIT "A", APPENDIX VII, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

against the Owners and their respective Affiliates, directors, officers, consultants, agents, contractors and employees, or include the Owners as insureds under such policies.

EXHIBIT "A", APPENDIX VII, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE ,

APPENDIX VIII of EXHIBIT "A" to

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

SPECIFICATIONS OF INLET SUBSTANCES AND FACILITY PRODUCTS

All Producer Inlet Substances delivered to the Facility Inlet shall:

(a) be of a kind, quality and composition and at a temperature and pressure so as to be within the design and operating parameters of the Facility.
(b) be free from substances in such quantities that may obstruct, damage or be detrimental to the operation of the Facility. Producer Inlet Substances shall be also free of substances that may result in Outlet Substances having objectionable odors, solid matter, dust, gums and gum-forming constituents which might affect the marketability or cause injury to or interference with the proper operation on the lines, regulators, meters or other appliances through which such Outlet Substances flow.

EXHIBIT "A", APPENDIX IX, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

, . {PJVA-1999}

APPENDIX IX of EXHIBIT "A" to

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

FACILITY PRODUCT ALLOCATION PROCEDURE

The allocation is performed on a component volume basis. Components are HE, N2, H2, CO2, H2S, C1, C2, C3, IC4, NC4, IC5, NC5, C6, C7+
Well or battery gas deliveries to the Facility are derived by deducteing lease flare and fuel volumes.
Where a Facility inlet has distinct measurment (each an "Inlet"), each Inlet’s recombined gas and condensate gas equivalent volume is prorated to each Producer’s source Raw Gas deliveries on a component volume basis, to derive an "adjusted gathered gas volume" for each Producer source. Component volumes are derived using the recombination analysis for each Producer source.
Calculation of recombined component gas volumes to liquid equivalent volume will be completed using conversion factors from most recent GPA 2145 tables. The conversion factor for the grouped component C7+ will be determined using volumetric and physical properties (relative density and molecular weight) for the C7+ component in the Producer’s Raw Gas and liquid analysis.
Plant Products and dispositions (plant condensate, flare, acid gas, sulphur, NGL Mix, plant fuel, return fuel and sales gas) are converted to component volumes and then allocated to each Producer source on a component volume basis. The order of allocation for each product being in the same order that the products were created in the Facility process. Once a product is allocated, a delined balance is calculated which forms the basis for the subsequent product allocation.
During each accounting period Producer shall be allocated the following Plant Products: (a) as NGL Mix, Producer’s proportionate share of (i) the amount of C3 contained in the Producer gas delivered to the Facility, (ii) the amount of C4 contained in the Producer Gas delivered to the Facility, and (iii) the amount of C5+ unavoidably included in the NGL Mix as a result of processing at the facility, and (b) an amount of Condensate based on the C5+ included in the Producer Gas delivered to the Facility less any C5+ unavoidably included in the NGL mix.
Total Facility NGL volumes to be split to component volumes in m3 using composition of the NGL in liquid volume fraction. Each individual component in the NGL to be prorated to each producer’s theoretical liquid volume on a component by component basis. The theoretical liquid volume for each producer is derived from its declined gas component volumes which has been converted to liquid equivalent volumes using conversion factors from the most recent GPA 2145.
Return fuel volumes (E3m3) and GJ’s are added onto the actual (TCPL/Enbridge/Alliance) volumes (E3m3) and GJ’s to derive total available Specification Gas on a component basis.
Total available Specification Gas volume is then allocated on a component volume basis to each Producer sources’ declined gas ("theoretical residue gas in E3m3"), which has been previously declined for its share of plant fuel, dilution gas, segregated condensate, flare and NGL Mix.
Measured or prorated return fuel in E3m3 is reported at a producer level and subtracted from the allocated "Total Available Sales Gas" at a component level to derive the "Net Pipeline Sales Gas".
GJ Allocation:

EXHIBIT "A", APPENDIX IX, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

, . {PJVA-1999}

Producer level "theoretical residue gas in E3m3" is multiplied by the heating value for each component (from the most recent GPA 2145) to derive each entities’ "theoretical residue gas in GJs".

Total return fuel gas for the Facility in E3m3 is multiplied by the heating value for each component (from the most recent GPA 2145) to derive the return fuel GJs.

Total available Specification Gas (pipeline plus return fuel) in GJs in allocated to each Producer based upon its derived "theoretical residue gas in GJs".

Producer level measured or prorated return fuel in E3m3 is multiplied by the heating value for each component (from the most recent GPA 2145) and subtracted from the entity level "Total Available Specification Gas in GJs" to derive "Net Pipeline Sales Gas in GJs".

EXHIBIT "A", APPENDIX IX, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

, . {PJVA-1999}

APPENDIX X of EXHIBIT "A" to

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

MEASUREMENT

101. Measurement Equipment

(a) All Inlet Substances or, as the context so requires in this Article, Facility Products shall be measured at the Facility Inlet or the Facility Outlet, as the case may be, by suitable meters or gauges of standard make, furnished, installed, operated and maintained by Operator for the Joint Account.
(b) Effluent from each well producing Inlet Substances (hereinafter called “Well Effluent”) shall be metered. Well Effluent metering (hereinafter called “Well Effluent Meters”) and sampling equipment shall be installed by the applicable well owner at its sole cost, risk and expense. Well Effluent Meters and sampling equipment shall be of a standard make and shall be installed in a manner and at a location as approved by the Operator of the Facility.

The correct volume of Inlet Substances shall be prorated by Operator to each well or stream upstream of the discharge meter at the compressor in proportion that the volume of Well Effluent measured by each Well Effluent Meter bears to the total volume of Well Effluent measured by all Well Effluent Meters. Operator shall make arrangement with all Owners of Well Effluent Meters to provide accurate measurement data when required to settle measurement differences which may arise pursuant to this Subclause. Any dispute as to the proration by Operator of Inlet Substances shall be handled through the mechanisms in accordance with the Appendix titled “DISPUTE RESOLUTION”.

(c) Where during any Month the volume of Facility Products measured by the discharge meter at any compressor delivering to the Facility inlet is different from the volume measured at the respective Facility inlet meter, the volume as measured at the Facility inlet meter shall be assumed to be correct unless it is proven by test that the Facility inlet meters are incorrect.
Atmospheric Pressure

The atmospheric pressure at the point of measurement shall be assumed to be a constant one hundred one point three tow five (101.325) kilopascals irrespective of the actual elevation or location of the meters above sea level or variations in the atmospheric pressure from time to time.

EXHIBIT "A", APPENDIX X, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

APPENDIX XI of EXHIBIT "A" to

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

INVESTMENT VALUES

Initial Investments

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[Initial investment values redacted]

EXHIBIT "A", APPENDIX XII, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

APPENDIX XII of EXHIBIT "A" to

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

ENLARGEMENT

101. Notice and Elections

Any Owner wishing to enlarge the Facility shall give notice to the Operator stating the purpose of the proposed Enlargement and such other information as the Operator may reasonably require. Pursuant to Clause 102 of this Appendix, the Operator shall prepare and submit an Enlargement proposal to the Operating Committee for approval which, subject to each Owner's rights under Clause 103 of this Appendix, shall consider its compatibility with the existing Facility. The Operating Committee shall also approve a methodology to allocate the cost of previous capital investment in common facilities which the Enlargement significantly utilizes. Common facilities include, but are not limited to, steam facilities, power facilities, office facilities, warehouse facilities or roads.

Upon approval by the Operating Committee, the Operator shall issue a notice to each Owner and each Owner wishing to participate in the Enlargement (the " Participating Owner ") shall give the Operator written advice, within thirty (30) Days of receipt of notice, of its capacity nomination in the Enlargement. No Owner shall be obligated to participate in an Enlargement.

The Participating Owners and the Operator shall promptly consult to determine the design and construction of the Enlargement, which shall be approved by unanimous consent of the Participating Owners. If the original scope of the Enlargement, as defined in the Enlargement proposal, is revised, then a new Enlargement proposal shall be issued to the Operating Committee. When the final design of the Enlargement has been approved, the Operator, on behalf of the Participating Owners, shall proceed with the construction thereof at the sole cost, risk and expense of the Participating Owners in proportion to each Participating Owner's capacity nomination. The Operator shall carry out the construction with as little interference as possible in the operation of the Facilities. Should it be necessary to shutdown the Facilities in order to tie-in the Enlargement, the time of shut-down and subsequent start-up shall be determined by the Operator who shall give notice to all Owners. The cost shall be limited to the direct cost of shutdown and subsequent start-up and shall be borne by the Participating Owners.

The Owners acknowledge and agree that Topaz has elected not to participate in the proposed Enlargement of the Facility, being the Phase 2 Expansion (as defined in Appendix I). The Phase 2 Expansion shall be deemed to be an Enlargement of an existing Functional Unit and Topaz is a Non-Participating Owner in this Enlargement for the purposes of this Agreement.

102. Information in the Enlargement Proposal

The Enlargement proposal shall specifically identify the purpose of the Enlargement, the proposed process, capacity estimates, location of facilities, construction timing, description of how the Enlargement will be integrated with the existing Facilities and an estimate of capital and operating costs. The Enlargement proposal shall also include a methodology to allocate the cost of previous capital investment in common facilities which the Enlargement significantly utilizes.

103. Adjustment of Facility and Functional Unit Participation, Capacity and Capacity Ownership

(a) Notwithstanding other provisions in this Agreement, an Owner that does not participate in an Enlargement (a " Non-Participating Owner ") that will result in a new Functional Unit shall be entitled to the same Capacity in existing Functional Units that it would have otherwise been entitled to had the Enlargement not proceeded.

EXHIBIT "A", APPENDIX XII, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

(b) Notwithstanding other provisions in this Agreement, a Non-Participating Owner in an Enlargement that will become part of an existing Functional Unit shall be entitled to the Capacity in the enlarged Functional Unit it would have otherwise been entitled to had the Enlargement not proceeded.
(c) Upon completion of the Enlargement, in the case of an Enlargement to an existing Functional Unit, the Functional Unit Participation shall be redetermined based on the total of each Owner's Capacity in the Enlargement and such Owner's Capacity in the Functional Unit prior to the Enlargement; provided that, following the in-service date of the Phase 2 Expansion: (i) during the term of the Volume Commitment Agreement (Gundy Facility), Topaz's Capacity Ownership shall not be less than 40 mmcf/d; and (ii) prior to a redetermination following an Enlargement subsequent to the Phase 2 Expansion, Topaz's Facility Participation shall be10%.
(d) From and after in-service date of the Phase 2 Expansion, equalization of investments in the enlarged Functional Unit and in the common facilities as described in Clause 101 of this Appendix, shall be conducted by the Operator in the manner approved by the Operating Committee.

104. Capacity of Enlarged Facility

(a) Subject to Subclause 103(c)(i) and (ii) and Subclause 103(d), but otherwise, notwithstanding other provisions in this Agreement, the new Capacity for an enlarged Functional Unit shall reflect Capacity contributed through previous capital expenditures in the Functional Unit and Capacity contributed through capital expenditure in the Enlargement. Should there be any doubt as to the change in actual Capacity resulting from the Enlargement, a Capacity test shall be conducted if:
(i) approved by the Operating Committee, in which case the costs of the Capacity test shall be borne by all Owners in accordance with their Functional Unit Participation;
(ii) requested by the Non-Participating Owners, in which case, if not approved by the Operating Committee, the costs of the Capacity test shall be borne by the Non-Participating Owners; or
(iii) requested by the Participating Owners, in which case, if not approved by the Operating Committee, the costs of the Capacity test shall be borne by the Participating Owners.
(b) If a Capacity test is conducted, subject to Subclause 104 (a) of this Appendix, the actual Capacity of the Enlargement, as approved by the Operating Committee, shall be retroactive to the earlier of the first Day of the Month following;
(i) the date of approval by the Operating Committee to conduct the Capacity test; or
(ii) the date of request to conduct the Capacity test.
(c) Table I Capacity in Appendix IV shall be revised by the Operator to reflect the Capacities resulting from the Enlargement.

105. Participating Owners' Rights

The provisions of the Operating Procedure relating to the rights, duties, liabilities and obligations of the Operator and the Owners shall apply with such modifications as the context may require among the Participating Owners with respect to the construction and start-up of the Enlargement.

106. Non-Participating Owners' Rights

The Non-Participating Owners shall not bear any portion of the Capital Costs of an Enlargement. If a new Functional Unit is added as part of the Enlargement, the Operator shall review the Appendix which covers the

EXHIBIT "A", APPENDIX XII, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

structure and sharing of the Joint Account to determine if a revision is required. If a revision is required, the Operator shall propose a revision to the Operating Committee.

107. Liability during Construction of Enlargement

The Participating Owners in an Enlargement shall indemnify the Non-Participating Owners against all direct costs and liabilities associated with construction and start-up of the Enlargement and agree to be liable for any damage caused to the existing Facility as a result of construction and start-up of the Enlargement. The Participating Owners shall not be responsible for loss of profits or production of the Non-Participating Owners due to a shut-down of the Facilities to tie-in the Enlargement.

EXHIBIT "A", APPENDIX XII, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

APPENDIX XIII of EXHIBIT "A" to

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

DISPUTE RESOLUTION

101. Definitions

In this Appendix, in addition to all terms herein before defined, the following words and phrases shall have the following meaning namely:

"Dispute" means any dispute or controversy amongst any of the Owners and/or any of the Owner(s) and Operator concerning any matter arising out of this Agreement; except that any matter which is within the powers of the Operating Committee and which has been voted on by the Owners pursuant to Article II of the Operating Procedure shall be deemed to be a matter not in dispute.

102. Disputes Initially Referred To Senior Management then Mediation

The Owners will attempt to resolve any Dispute through consultation and negotiation in good faith. If those attempts fail, each of the Parties shall immediately thereafter refer the dispute to the senior executive of that Party responsible for the relationship with the other Parties, who shall enter into good faith discussions with the senior executive appointed by the other Parties to attempt to resolve the dispute. If the senior executives of the Parties are unable to resolve the dispute within thirty (30) days of the matter being referred to them, an Owner may, by notice to the other Owners at any time following the thirty (30) day period of those negotiations, request the other Owners to attempt to resolve that Dispute through mediation, including with that notice sufficient detail to enable the other Owners to understand the issues that remain in dispute. The Owners will attempt to agree on the selection of a mediator within ten (10) Days of receipt of that notice, unless an Owner gives notice to the other Owners within that period that it is not prepared to proceed with mediation respecting that Dispute. If the Owners are proceeding with a mediation and are unable to select a mediator within that period, any Owner may deliver a written request to the Canadian Foundation for Dispute Resolution to select, within two (2) business Days of the receipt of that request, a mediator qualified by education and experience to resolve that Dispute, and the Owners agree that the person so selected will be the mediator for the Dispute. Unless otherwise unanimously agreed, the Owners will commence a mediation within twenty (20) Days of the selection of the mediator. The mediation will continue until the Dispute is resolved, or an Owner serves notice to the other Owners that it wishes to terminate the mediation, or the mediator makes a written determination that the Dispute cannot be resolved through mediation, or sixty (60) Days pass after the receipt of the original notice, whichever occurs first. All Owners which participate in or are affected by the mediation will each bear their own costs associated with a mediation, but will share the common costs of a mediation based on their Facility Participation, including, without limitation, the cost of the mediator.

103. Arbitration Proceedings

Unless a Dispute has otherwise been resolved, any Dispute described in Alternate A below shall be submitted to binding X / non-binding____ arbitration in accordance with the provisions of this section:

ALTERNATE A .

Any Dispute which the Agreement specifically provides to be resolved by arbitration; or

ALTERNATE B. Any Dispute.

EXHIBIT "A", APPENDIX XIII, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

Any such arbitration and any other arbitration the Owners agree to conduct hereunder will be conducted under the Commercial Arbitration Rules of The Canadian Foundation for Dispute Resolution.

104. Location of and Representation at Mediation and Arbitration

The place for mediation and arbitration shall be Calgary, Alberta. Any Owner may have another Owner, provided that other Owner agrees to same in writing, represent its interests in the Dispute resolution.

105. Interim Relief

All limitation periods respecting the commencement of an action will be stayed during the period that the Owners are attempting to resolve a Dispute under Clauses 102 and 103 of this Appendix. An Owner may, at any time it believes is necessary to protect its interest, seek interim or provisional relief, in the form of a temporary restraining order, preliminary injunction or other interim equitable relief concerning a Dispute under this Agreement, notwithstanding anything to the contrary in this Appendix.

EXHIBIT "A", APPENDIX XIII, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

APPENDIX XIV of EXHIBIT "A" to

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

ENVIRONMENTAL MATTERS

This Environmental Matters Appendix shall become effective pursuant to the provisions of Clause 211 of the Operating Procedure. Any decisions to be made by the Operating Committee pursuant to this Appendix XIV shall be made in accordance with Subclause 204 (e) of the Operating Procedure.

Audit Provisions

The initial environmental audit may be conducted at any time following the effective date of this Appendix, but no later than one year following the effective date of this Appendix, in accordance with Clause 103 hereof.
Subsequent environmental audits shall be conducted at a maximum five (5) year intervals in accordance with Clause 103 herein unless otherwise determined by the Operating Committee.
An environmental audit relating to the Joint Operations hereunder shall be conducted by:
(i) a competent internal or third party environmental auditor chosen by the Operator and approved by the Operating Committee. Prior to execution of the audit the Operating Committee shall approve the "Terms of Reference" that define the type of environmental audit to be done and the standards to be included in the assessment and that include, but are not necessarily limited to, the scope of work, the name(s) of the firm or representative who will conduct the work, the schedule and the estimated cost, including rates of remuneration and expenses. The costs of such audit shall be borne by all Owners at their Facility Participations. Deficiencies disclosed by such audit shall be dealt with by the Operator in accordance with Clause 104 hereof;
(ii) a competent internal or third party environmental auditor chosen by an Owner or Owners, who shall give reasonable written notice to Operator and the other Owners of the intention to conduct an environmental audit, which Owner or Owners shall bear the total cost and risk thereof. Deficiencies identified by such audit and disclosed to the Operator and other Owners shall be dealt with by the Operator in accordance with Clause 104 hereof; or
(iii) both.
The Operator shall expedite consideration of the findings of the environmental audit referred to in Clause 103 hereof and within eighteen(18) weeks of receipt of the environmental audit report, shall present for approval of the Operating Committee a plan for resolution or remediation of any identified deficiencies. A deficiency that is a violation of the Regulations shall be remedied as quickly as possible. Within six (6) Months of the completion date of deficiency remediation specified in the Operator's plan, Operator will provide the Owners with a detailed report on such remediation. If the deficiencies have not been corrected adequately or in a timely manner, the Operating Committee may authorize any other Owner or Owners to complete such deficiency remediation at the expense of the Joint Account and such Owner or Owners shall be subrogated to the Operator's rights pursuant to Article VI of the Operating Procedure.
Environmental audit reports and communications relative to environmental issues as referenced in Clause 103 shall not be disclosed to any party who is not an Owner without the express consent of all the Owners, unless required by the Regulations or court order.

EXHIBIT "A", APPENDIX XIV, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

Each environmental audit shall be conducted so as to cause a minimum of inconvenience to Operator. If two (2) or more Owners desire to conduct audits, such Owners shall make every reasonable effort to conduct joint or simultaneous audits.

EXHIBIT "A", APPENDIX XIV, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

APPENDIX XV of EXHIBIT "A" to

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

REQUIRED CAPACITY EXPENDITURE

101. Notice and Elections

If Operator determines that a Required Capacity Expenditure is required, Operator shall provide each Owner with notice of such Required Capacity Expenditure, together with reasonable supporting detail. The Voting Procedure set forth in 204 will apply to the Required Capacity Expenditure and the resulting Owner vote will operate as follows;

(i) Owner Affirmative Vote:
- a. Where all Owners Vote Affirmative, each Owner will contribute to the Required Capacity Expenditure in proportion to their Facility Participation;
- b. Where one or more Owners Vote Negative or Abstain, the Owners that voted Affirmative will contribute to the Required Capacity Expenditure in proportion to their Facility Participation, plus their proportionate share of the Negative or Abstain Owners proportion of Facility Participation as calculated pursuant to Clause 102, and in such case, the Facility Participation of such Owners voting Affirmative will increase as described in Clause 103;
(ii) Owner Negative or Abstain Vote:
- a. The Facility Participation of an Owner that votes Negative or Abstains will decrease as described in Clause 103;
Determination of Proportionate Share of Negative or Abstain Owners
(i) The Facility Participation of Owners voting Negative or Abstain with respect to the Required Capacity Expenditure shall be determined in accordance with the following formula:

PS = A x B x (C/D)

where:

PS= Proportionate share of Required Capacity Expenditure
A = Total Facility Participation of Owners Voting Negative or Abstain ( percentage)
B = Required Capacity Expenditure amount
C = Owner Facility Participation
D = Total Facility Participation of Owners Voting Affirmative

EXHIBIT "A", APPENDIX XV, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

103. Equalization of Facility Participation Due to Capacity Expenditure

(a) The new Facility Participation of an Owner voting Affirmative shall be determined in accordance with the following formula:

NFP = CFP + {([A x B x (CFP/D)]/IV) x 100}

where:

NFP = New Facility Participation (percentage)

CFP = Current Facility Participation (percentage)

A = Total Facility Participation of Owners Voting Negative or Abstain (percentage) B = Required Capacity Expenditure amount D = Total Facility Participation of Owners Voting Affirmative IV = Investment Value of the Facility as per the Appendix "INVESTMENT VALUES"

(b) The new Facility Participation of an Owner voting Negative or Abstain shall be determined in accordance with the following formula:

NFP = CFP - {([CFP x B]/IV) x 100}

where:

NFP = New Facility Participation (percentage) CFP = Current Facility Participation (percentage) B = Required Capacity Expenditure amount IV = Investment Value of the Facility as per the Appendix "INVESTMENT VALUES"

104. Investment Value of Facility after Required Capital Expenditure

The Investment Value of the Facility as per the Appendix "INVESTMENT VALUES" will remain unchanged following and as a result of a Required Capital Expenditure.

EXHIBIT "A", APPENDIX XV, NO. , REVISION , CORRECTION , MAIL BALLOT NO. , EFFECTIVE

SCHEDULE "E" FORM OF VOLUME COMMITMENT AGREEMENT

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Attached.

VOLUME COMMITMENT AGREEMENT (GUNDY FACILITY)

THIS AGREEMENT dated effective the 1[st] day of July, 2021.

BETWEEN:

TOURMALINE OIL CORP. , a corporation amalgamated under the laws of Alberta (" Tourmaline ")

AND

TOPAZ ENERGY CORP. , a corporation incorporated under the laws of Alberta (" Topaz ")

WHEREAS pursuant to the Facility Interest Sale Agreement, Tourmaline agreed to make the Volume Commitment to Topaz, upon and subject to the terms of this Agreement.

NOW THEREFORE in consideration of the mutual covenants, agreements and obligations set out below and to be performed, the Parties hereby agree as follows:

1. DEFINITIONS

In this Agreement, including the recitals, definitions and Schedules:

(a) " Actual Monthly Volumes " means, for any Month, the actual Monthly volumes of petroleum substances delivered by Tourmaline to the Gundy Facility for the handling of Tourmaline Volumes under the Gundy Gas Plant Complex CO&O Agreement for the account of Topaz.
(b) " Business Day " means a day on which banks are generally open for the transaction of commercial business in Calgary, Alberta, but does not in any event include a Saturday or a Sunday or statutory holiday in Alberta.
(c)
" Capacity Ownership " has the meaning ascribed to that term in the Gundy Gas Plant Complex CO&O.
(d) " Committed Volumes " means, for any Month, 100% of all Tourmaline Volumes delivered to the Gundy Facility for the account of Topaz up to the MVC for that Month.
(e) " Committed Volume Fee " means a fee equal to $0.70/mcf ($24.85 E[3] m[3] ) applicable to the handling of Committed Volumes, subject to adjustment in accordance with Section 4 hereof.
(f) " Consumer Price Index " means the Consumer Price Index, by Province (Monthly), all items, not seasonally adjusted, for British Columbia, for a specified Month, as published by Statistics Canada, currently in CANSIM, Table: 18-10-0004-01 and Catalogue No. 62-001-X, or if such index ceases to be published, then any successor index, which successor index shall be a published index which reasonably reflects changes to the cost of living, inflation and deflation in British Columbia.
(g) " Day " means a period commencing at 08:00 a.m. MST on any calendar day and ending immediately prior to 08:00 a.m. MST on the immediately next calendar day.
(h)
" Effective Date " means July 1, 2021.
(i) " FM Days " means each Day or portion thereof, as applicable, in a Month or a Year, that Tourmaline is unable to deliver Tourmaline Volumes to the Gundy Facility as a result of the occurrence of an event of Force Majeure at:
(i) the Gundy Facility; or

(ii) any facilities upstream or downstream of the Gundy Facility.

If an FM Day is less than 24 hours in a Day, the FM Day shall be calculated as a fraction, the numerator of which is the number of hours in the Day that the conditions in either paragraph (i) or (ii) exist, and the denominator of which is 24 hours.

(j) " Force Majeure " has the meaning ascribed to that term in the Gundy Gas Plant Complex CO&O Agreement.
(k) " Gundy Facility " has the meaning ascribed to that term in the Gundy Gas Plant Complex CO&O Agreement.
(l) " Gundy Gas Plant Complex CO&O Agreement " means the Construction, Ownership and Operating Agreement for the Gundy Gas Plant Complex dated July 1, 2021 between Tourmaline and Topaz.
(m)
" Month " means a calendar month.
(n) " Monthly Volume Commitment " or " MVC " means the Monthly volume of petroleum substances which Tourmaline has committed to deliver to the Gundy Facility for the handling of Tourmaline Volumes under the Gundy Gas Plant Complex CO&O Agreement for the account of Topaz pursuant to this Agreement, and calculated in accordance with, Section 3(a).
(o) " Monthly Deficit Payment " has the meaning set forth in Section 3(c).
(p)
" Monthly Deficit Volumes " has the meaning set forth in Section 3(c).
(q) " Non-Operating Days " means each Day or portion thereof, as applicable, in a Month or a Year, that Tourmaline is unable to deliver Tourmaline Volumes to the Gundy Facility as a result of any planned or unplanned outage (other than by reason of an event of Force Majeure) at:
(i) the Gundy Facility; or
(ii) any facilities upstream or downstream of the Gundy Facility.

If a Non-Operating Day is less than 24 hours in a Day, the Non-Operating Day shall be calculated as a fraction, the numerator of which is the number of hours in the Day that the conditions in either paragraph (i) or (ii) exist, and the denominator of which is 24 hours.

(r)
" Party " means a party to this Agreement.
(s) " Facility Interest Sale Agreement " means the Facility Interest Sale Agreement dated May [ ], 2021 between Tourmaline and Topaz, pursuant to which Tourmaline agreed to sell and assign an interest in the Gundy Facility to Topaz.
(t) " Term " has the meaning set forth in Section 6.
(u)
" Third Party " means a person that is not a Party.
(v) " Tourmaline Volumes " means all volumes of petroleum substances produced from a well in which Tourmaline has a beneficial ownership interest that are owned by Tourmaline at the wellhead.
(w) " Year " means a period commencing on January 1 of each year and ending on December 31 of the same year; provided that, for purposes of calculating the AVC:
(i) the first Year of the Term means the period that commences on the Effective Date and ends on December 31, 2021; and

(ii) the last Year of the Term means the period that commences on January 1, 2031 and ends on June 30, 2031.

2. INTERPRETATION

In this Agreement, unless the context requires otherwise:

(a)
words importing the singular number include the plural and vice versa;
(b)
words importing the masculine gender include the feminine and neuter genders;
(c) if a word is defined in this Agreement, a derivative of that word shall have a corresponding meaning;
(d) all dollar amounts referred to in this Agreement are in Canadian dollars, unless otherwise indicated herein;
(e) payments are to be made in immediately available Canadian dollars;
(f) unless otherwise indicated, references to the time of day or date mean the local time or date in Calgary, Alberta;
(g) unless otherwise specified herein, or as the context may require, computation of any period of time referred to in this Agreement shall exclude the first day and include the last day of such period; and
(h) where any payment or calculation is to be made, or any other action is to be taken, on or as of a day that is not a Business Day, then unless otherwise provided herein, such payment or calculation is to be made, or the other action is to be taken, as applicable, on or as of the next following Business Day, unless such next following Business Day falls in the next calendar month, in which event the payment or calculation is to be made, or the other action is to be taken, as applicable, on or as of the immediately preceding Business Day.

3. MONTHLY VOLUME COMMITMENT

(a) Tourmaline hereby agrees to deliver, during each Month of the Term, volumes of Tourmaline’s Owner's Substances to the Gundy Facility in a volume equal to the Monthly Volume Commitment for that Month (the " Monthly Volume Commitment " or " MVC ") in accordance with the following formula and subject to Section 3(b):

MVC = [E x (F-G-H)]

where:

  - E  = 40 mmcf/d (1,127 E[3] m[3] /d)

  - F  = # of Days in the Month

  - G  = # of Non-Operating Days in the Month H = # of FM Days in the Month

(b) For purposes of calculating the MVC, notwithstanding the actual number of Non-Operating Days in the Month, the number of Non-Operating Days in the Year in which such Month occurs shall not exceed 15 Days.
(c) If, for any Month, the MVC exceeds the Actual Monthly Volumes for that Month (the difference, the " Monthly Deficit Volumes ") Tourmaline shall pay to Topaz, an amount equal to:
(i) the Monthly Deficit Volumes; multiplied by
(ii) the Committed Volume Fee,

(the " Monthly Deficit Payment "), on or by the next Monthly payment required to be paid by Tourmaline to Topaz under the Gundy Gas Plant Complex CO&O Agreement.

4. COMMITTED VOLUME FEE ADJUSTMENT

[Adjustment mechanism redacted]

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5. AUDIT

Topaz may, upon reasonable notice to Tourmaline and at Topaz's own expense, audit the books, records and accounts of Tourmaline, with respect to payments made to Topaz and deductions taken from the Actual Monthly Volumes received by Topaz under this Agreement within twenty-four (24) months next following the end of the applicable Year. Any such audit shall be conducted in accordance with and pursuant to the audit provisions set out in the Gundy Gas Plant Complex CO&O Agreement.

6. TERM

This Agreement shall commence on the Effective Date and shall end on June 30, 2031 (the " Term ").

7. ASSIGNMENT

(a) If Topaz assigns an interest in the Gundy Facility under and in accordance with the Gundy Gas Plant Complex CO&O Agreement, Topaz shall assign a corresponding interest in this Agreement to the same assignee. Topaz may not otherwise assign this Agreement or any interest in this Agreement to any Third Party.
(b) If Tourmaline assigns an interest in the Gundy Facility under and in accordance with the Gundy Gas Plant Complex CO&O Agreement, Tourmaline may assign a corresponding interest in this Agreement to the same assignee. Tourmaline may not otherwise assign this Agreement or any interest in this Agreement to any Third Party.

8. NOTICE

(a) Any notice, consent, approval, determination or other communication to be given or sent to a Party pursuant to this Agreement shall be in writing and shall be conclusively deemed to have been validly given or received for the purposes of this Agreement if delivered personally or by facsimile or electronically as follows:
(i) to Tourmaline:

Tourmaline Oil Corp. 2900, 250 6 Ave SW, Calgary, AB T2P 3H7

Attention: Vice President, Land and Contracts

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[Personal contact information redacted]

(ii) to Topaz:

Topaz Energy Corp. 2900, 250 6 Ave SW,

Calgary, AB T2P 3H7

President and Chief Executive Officer

Attention:

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[Personal contact information redacted]

(b) A Party may, at any time, change such Party's address for the purpose of service by written notice to the other Party.
(c) Notices given by way of facsimile or other electronic means of communication shall be conclusively deemed to have been received on the date of their transmittal (if on a Business Day during normal business hours of the recipient and, if not, on the next Business Day). Notices delivered by hand or courier shall be conclusively deemed to have been received on the date of delivery.

9. GENERAL PROVISIONS

(a) Further Assurances: The Parties will execute and deliver such further instruments, papers and documents, and shall do such further acts and things as may reasonably be necessary or as may reasonably be requested for the purpose of carrying out the provisions of this Agreement.
(b) Confidentiality: The confidentiality provisions set forth in the Gundy Gas Plant Complex CO&O Agreement shall apply to information (including the contents of this Agreement) obtained by a Party under this Agreement and such provisions are incorporated mutatis mutandis into this Agreement by reference and form a part of this Agreement.
(c) Entire Agreement: This Agreement, together with the Gundy Gas Plant Complex CO&O Agreement, constitutes the entire agreement of the Parties relating to, and there are no collateral or other statements, understandings, covenants, agreements, representations or warranties, written or oral, relating to, the subject matter of this Agreement. This Agreement supersedes all prior agreements, understandings, negotiations and discussions, whether written or oral, between the Parties relating to the subject matter hereof or thereof.
(d) Survival: The expiry or termination of this Agreement will not discharge or release any Party from any of its Liabilities or obligations (including payment obligations) accrued at the time of such expiry or termination (including a breach of a representation, warranty or covenant) or from any of its Liabilities or obligations that expressly continue beyond or arise out of such expiry or termination of this Agreement.
(e) Waiver:
(i) No waiver by any Party of any default by the other Party in the performance of any provision, condition or requirement herein shall be deemed to be a waiver of, or in any manner release the other Party from performance of, any other provision, condition or requirement herein, nor shall such waiver be deemed to be a waiver of, or in any manner a release of, the other Party from future performance of the same provision, condition or requirement.
(ii) Any delay in exercising or failure to exercise any right, remedy, power or privilege hereunder on the part of any Party shall not operate as a waiver thereof nor impair the exercise of any such right, remedy, power or privilege or any other right, remedy, power or privilege accruing to such Party thereafter.
(iii) The failure of a Party to perform its obligations hereunder shall not release the other Party from the performance of its obligations.
(f) Amendment: This Agreement may not be varied or amended in its terms otherwise than by an instrument in writing dated subsequent to the date hereof, executed by duly authorized representatives of the Parties.
(g) Time: Time shall be of the essence hereof.

(h) Governing Law: This Agreement will be construed in accordance with and governed by the laws in force in the Province of Alberta and the laws of Canada applicable in the Province of Alberta.
(i) Enurement: This Agreement shall enure to the benefit of and be binding upon the Parties and, to the extent permitted hereunder, their successors and assigns.
(j) Counterpart Execution . This Agreement may be executed in as many counterparts as are deemed necessary, and may be delivered by facsimile or in electronic pdf form, and when so executed and delivered, each such counterpart is as valid and binding on all Parties as every other such counterpart

IN WITNESS WHEREOF the Parties have entered into this Agreement as of the date first set forth above.

TOURMALINE OIL CORP.

TOPAZ ENERGY CORP.

Per:

Drew Tumbach Vice President, Land and Contracts

Marty Staples President and Chief Executive Officer

SCHEDULE "F" FORM OF CERTIFICATE FOR VENDOR

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TO: Topaz Energy Corp.
RE: Facility Interest Sale Agreement dated _____, 2021 (" Sale Agreement ") between Tourmaline Oil Corp. (" Vendor ") and Topaz Energy Corp. (" Purchaser ")

The undersigned, [ INSERT NAME ], being the [ INSERT TITLE ] of Vendor, hereby certifies, for and on behalf of Vendor and not in his/her personal capacity, as follows:

The undersigned is personally familiar, in his/her capacity as an officer of Vendor, with the matters hereinafter certified.
This certificate is made and delivered pursuant to Section 4.1(d) of the Sale Agreement.
The definitions contained in the Sale Agreement are adopted in this Certificate and wherever used shall have the meanings ascribed to them in the Sale Agreement.
The representations and warranties of Vendor set forth in Section 5.1 are true and correct in all material respects (other than those representations and warranties which are subject to a qualification as to materiality, which representations and warranties shall be true and correct in all respects) as of the date specified therein, or if no date is specified, as of the date of this Agreement and as of the Closing Date.
All obligations and covenants of Vendor to be performed or complied with prior to or on the Closing Date, have been timely performed or complied with in all material respects as of the date of this Certificate.

DATED at Calgary, Alberta, as of this _ day of ______, 2021.

TOURMALINE OIL CORP.

Per:

Name: Title:

SCHEDULE "G" FORM OF CERTIFICATE FOR PURCHASER

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TO: Tourmaline Oil Corp. (" Vendor ")
RE: Facility Interest Sale Agreement dated _____, 2021 (" Sale Agreement ") between Tourmaline Oil Corp. (" Vendor ") and Topaz Energy Corp. (" Purchaser ")

The undersigned, [ INSERT NAME ], being the [ INSERT TITLE ] of Purchaser, hereby certifies, for and on behalf of Purchaser and not in his/her personal capacity, as follows:

The undersigned is personally familiar, in his/her capacity as an officer of Purchaser, with the matters hereinafter certified.
This certificate is made and delivered pursuant to Section 4.2(e) of the Sale Agreement.
The definitions contained in the Sale Agreement are adopted in this Certificate and wherever used shall have the meanings ascribed to them in the Sale Agreement.
The representations and warranties of Purchaser set forth in Section 5.2 are true and correct in all material respects (other than those representations and warranties which are subject to a qualification as to materiality, which representations and warranties shall be true and correct in all respects) as of the date specified therein, or if no date is specified, as of the date of this Agreement and as of the Closing Date.
All obligations and covenants of Purchaser to be performed or complied with prior to or on the Closing Date, have been timely performed or complied with in all material respects as of the date of this Certificate.

DATED at Calgary, Alberta, as of this _ day of ______, 2021.

TOPAZ ENERGY CORP.

Per:

Name: Title:

SCHEDULE "H" FORM OF GENERAL CONVEYANCE

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GENERAL CONVEYANCE

THIS GENERAL CONVEYANCE made this  day of  ·, 2021.

BETWEEN:

TOURMALINE OIL CORP. , a corporation amalgamated under the laws of the Province of Alberta (hereinafter referred to as " Vendor ")

and -

TOPAZ ENERGY CORP. , a corporation incorporated under the laws of the Province of Alberta (hereinafter referred to as " Purchaser ")

WHEREAS pursuant to the Facility Interest Sale Agreement dated May  , 2021 between Vendor and Purchaser (the " Sale Agreement "), Vendor has agreed to sell and convey the Facility Interests to Purchaser and Purchaser has agreed to purchase and receive the Facility Interests from Vendor;

NOW THEREFORE for the consideration provided in the Sale Agreement and in consideration of the premises hereto and the covenants and agreements hereinafter set forth and contained, the Parties hereto covenant and agree as follows:

1. DEFINITIONS

In this General Conveyance the definitions provided for in the Sale Agreement are incorporated herein by this reference.

2. CONVEYANCE

Vendor, pursuant to and for the consideration provided for in the Sale Agreement, the receipt and sufficiency of such consideration being hereby acknowledged by Vendor, hereby sells, assigns, transfers, conveys and sets over to Purchaser, the Facility Interests, to have and to hold the same absolutely, together with all benefit and advantage to be derived therefrom.

3. SUBORDINATE DOCUMENT

This General Conveyance is executed and delivered by the Parties hereto pursuant to and for the purposes of the provisions of the Sale Agreement and the provisions of the Sale Agreement shall prevail and govern in the event of a conflict between the provision of the Sale Agreement and this Conveyance.

4. ENUREMENT

This General Conveyance shall be binding upon and shall inure to the benefit of each of the Parties hereto and their respective trustees, receivers, receiver managers, successors and assigns.

5. FURTHER ASSURANCES

Each Party hereto will, from time to time and at all times hereafter, at the request of the other Party but without further consideration, do all such further acts and execute and deliver all such further documents as shall be reasonably required in order to fully perform and carry out the terms hereof.

6. GOVERNING LAW

This Conveyance shall be governed by and construed in accordance with the laws of the Province of Alberta and the federal laws of Canada applicable therein.

7. NON-MERGER

This General Conveyance is not intended to supersede the Sale Agreement or to vary or affect, or effect a merger of any of the terms, conditions, covenants, representations or warranties thereof or contained therein, but is entered into only for the purpose of effecting the sale and conveyance of the Facility Interests in the manner and on the terms set forth in the Sale Agreement.

8. COUNTERPART EXECUTION

This General Conveyance may be executed and delivered in counterparts and, if so executed and delivered, the execution and delivery of a counterpart by each of the Parties hereto shall constitute execution and delivery of this General Conveyance.

IN WITNESS WHEREOF the Parties hereto have executed this General Conveyance on the date first above written.

TOURMALINE OIL CORP.

TOPAZ ENERGY CORP.

Per: Drew Tumbach Vice President, Land and Contracts

Per:

Marty Staples President and Chief Executive Officer

AI assistant

Topaz Energy Corp. — M&A Activity 2021

47862_rns_2021-06-04_9ca94568-ad46-4299-b6fb-2815eb2f6ac4.pdf

TABLE OF CONTENTS

Schedules:

FACILITY INTEREST SALE AGREEMENT

BETWEEN:

ARTICLE 1 INTERPRETATION

1.1 Definitions

1.2 Interpretation

1.3 Accounting Matters

1.4 Knowledge

1.5 Schedules

ARTICLE 2 PURCHASE AND SALE

2.1 Purchase and Sale

2.2 Purchase Price

[Amount redacted]

2.3 GST

2.4 Adjustments

2.5 Form of Payment

ARTICLE 3 CONDITIONS TO CLOSING

3.1 Mutual Conditions Precedent

3.2 Purchaser's Conditions

3.3

Vendor's Conditions

3.4 Efforts to Fulfil Conditions Precedent

ARTICLE 4 CLOSING DELIVERIES

4.1 Closing Deliveries of Vendor

4.2 Closing Deliveries of Purchaser

4.3 Copies of Title Documents

ARTICLE 5 REPRESENTATIONS AND WARRANTIES

5.1 Vendor's Representations and Warranties

5.2 Purchaser's Representations and Warranties

5.4 Survival of Representations and Warranties

ARTICLE 6 INDEMNITIES AND LIMITATIONS ON LIABILITY

6.1 Vendor's Indemnities for Representations and Warranties

6.2 Purchaser's Indemnities for Representations and Warranties

6.3 Future Obligations

6.4 Purchaser's Environmental Indemnity

6.5 Limit on Responsibility

6.6 Procedures – General Indemnities

ARTICLE 7 TERMINATION

7.1 Termination

7.2 Effect of Termination

ARTICLE 8 NOTICE

8.1 Addresses for Service

(i) to Vendor:

ARTICLE 9 MISCELLANEOUS

9.1 Costs and Expenses

9.2 Further Assurances

9.3 No Third Party Beneficiary Rights

9.4 Entire Agreement

9.5 Survival

9.6 Severability

9.7 Waiver

9.8

Confidentiality and Public Announcements

9.9 Amendment

9.10 Time

9.11 Governing Law

9.12 Enurement

9.14 Counterpart and Facsimile Execution

TOURMALINE OIL CORP.

TOPAZ ENERGY CORP.

AGREEMENT FOR THE CONSTRUCTION, OWNERSHIP AND OPERATION OF THE GUNDY GAS PLANT COMPLEX

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

TABLE OF CONTENTS

HEAD DOCUMENT

EXHIBIT "A OPERATING PROCEDURE

Agreement for the Construction, Ownership and Operation of the Gundy Gas Plant Complex

HEAD DOCUMENT

TOURMALINE OIL CORP.

AND

ARTICLE I - INTERPRETATION

101. Definitions

102. Headings

103. References

104. Conflicts

ARTICLE II - EXHIBIT "A"

201. Exhibit "A"

Topaz Energy Corp. M&A Activity 2021