intermediate sized, commodity balanced resource company with...

March 2013

Intermediate Sized, Commodity Balanced Resource Company with a Sustainable Dividend Model

Corporate Presentation Special Meeting of Pace, AvenEx and Charger Shareholders

Spyglass Resources Corp.

Advisory Statements

This presentation contains forward-looking information within the meaning of applicable securities laws and is based on the expectations, estimates and projections of management of Spyglass as of the date of this presentation, unless otherwise stated. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information. More particularly and without limitation, this presentation contains forward-looking information concerning: anticipated future production, operating netbacks, cash flow, capital expenditures, dividends, payout ratios, decline rates, development capital efficiencies, net debt to cash flow, reserve life index, credit facility availability and years of sustaining development available; anticipated future dividend payments of Spyglass.. Such forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Investors are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions.

In respect of the forward-looking information and statements, Spyglass has provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to commodity prices and interest and foreign exchange rates; planned synergies, capital efficiencies and cost-savings; applicable tax laws; future production rates; the sufficiency of budgeted capital expenditures in carrying out planned activities; and the availability and cost of labour and services.

Accordingly, readers should not place undue reliance on the forward-looking information contained in this presentation. In respect of the forward-looking information, including the anticipated dividend payments following closing, Spyglass has provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions in respect of: prevailing commodity prices, margins and exchange rates; that Spyglass’ future results of operations will be consistent with past performance and management expectations in relation thereto; the continued availability of capital at attractive prices to fund future capital requirements relating to existing assets and projects, including but not limited to future capital expenditures relating to expansion, upgrades and maintenance shutdowns; the success of growth projects; future operating costs; that counterparties to material agreements will continue to perform in a timely manner; that there are no unforeseen events preventing the performance of contracts; and that there are no unforeseen material construction or other costs related to current growth projects or current operations.

Since forward-looking information addresses future events and conditions, such information by its very nature involves inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to the risks associated with the industries in which Spyglass operates in general such as: operational risks; delays or changes in plans with respect to growth projects or capital expenditures; costs and expenses; health, safety and environmental risks; commodity price, interest rate and exchange rate fluctuations; environmental risks; competition; failure to successfully integrate each of Charger, Pace and AvenEx into Spyglass; ability to access sufficient capital from internal and external sources; and changes in legislation, including but not limited to tax laws and environmental regulations. The proposed dividend of Spyglass may change as a result of fluctuations in commodity prices, production levels, capital expenditure requirements, debt service requirements, operating costs, royalty burdens, and the satisfaction of the liquidity and solvency tests imposed by the Business Corporations Act (Alberta) for the declaration and payment of dividends. Depending on these and other factors, many of which will be beyond the control of Spyglass, the dividend policy of Spyglass may change from time to time and, as a result, future cash dividends could be reduced or suspended entirely.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on other factors that could affect the operations or financial results of each of Charger, Pace and AvenEx, and the combined company, are included in reports on file with applicable securities regulatory authorities, including but not limited to; the Annual Information Form for the year ended December 31, 2011 for each of Charger, Pace and AvenEx which may be accessed on their respective SEDAR profiles at www.sedar.com.

Any financial outlook or future oriented financial information in this presentation, as defined by applicable securities legislation, has been approved by management Spyglass. Such financial outlook or future oriented financial information is provided for the purpose of providing information about management's reasonable expectations as to the anticipated results of Spyglass and its anticipated business activities for the twelve months following the closing of the Merger.

The forward-looking information contained in this presentation is made as of the date hereof and Spyglass undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

The production type curves used in this presentation are constructed from well data representing only those wells deemed to be most indicative of the go-forward wells which Spyglass intends to develop. These type curves are for illustrative purposes of potential future performance only and do not constitute a guarantee of future well performance in the areas which they describe.

Boes are presented on the basis of one Boe for six Mcf of natural gas. Disclosure provided herein in respect of Boes may be misleading, particularly if used in isolation. A Boe conversion ratio of 6 Mcf:1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

2


Why Spyglass?

• Sustainable dividend paying corporation with an attractive total return proposition

• Low decline base production, balanced commodity profile

• Large inventory of capital efficient light oil development opportunities

• Proven management team

• Liquidity, with approximately $107 million of unused bank lines

• Diverse, low risk, efficient asset base

• Active hedging program

• Potential for asset rationalization

• Plan to implement DRIP program

3


Commodity Balanced Dividend-Paying Producer

Spyglass (TSX:SGL) is a cash distributing producer with a balanced commodity

portfolio with a $0.0225 monthly cash dividend

• Strong value potential with yield compression

Balanced commodity portfolio, a strong management team and a sustainable yield

model

• 12-month production averaging ~18,000 boe/d (50% - 52% oil and liquids) (1)

• Management team with a track record of creating shareholder value in a dividend

model – familiarity with majority of the asset base

• Mature, low decline (~20%) producing assets coupled with capital efficient light oil

development (~$25,000 / boe/d) provide the scale, stability and low-risk running room

to support a sustainable yield model

Spyglass is well positioned with strong financial flexibility

• ~$107 million of available credit capacity (~30% availability)

• Potential to monetize non-core assets with minimal impact on cash flow

• Active hedging program used to manage volatility (target 50%-60% production)

(1) Based on management estimates for the first 12-months commencing on the closing date of the Merger.

Spyglass has an extensive inventory of low-risk, high-return drilling opportunities

4


Experienced Management Team

Spyglass Management Team

Tom Buchanan, FCA CEO & Director 30+ years of experience in the oil and natural gas sector

Recently as President & CEO and Director of Provident Energy Trust

Co-founder, President & CEO of Founders Energy Ltd., which was converted to Provident Energy Trust

in 2001

Currently a Director of Pembina Pipeline Corporation, Athabasca Oil Corp., and Hawk Exploration Ltd

Dan O’Byrne, P.Eng, MBA President & COO 30+ years of diverse experience in the oil and natural gas sector

Recently as Executive VP & COO of Provident Energy Trust

Served as Division VP for Nexen Inc. and numerous executive positions with Canadian Occidental

Mark Walker, CMA Senior VP Finance & CFO 23+ years of experience in oil and gas finance and accounting

Recently as Senior VP Finance & CFO of Provident Energy Trust

Kelly Cowan Senior VP Corporate

Development & Land

30+ years of experience in the oil and gas sector

Recently as CEO of Churchill Energy Inc.

Co-founder, SVP & COO of Founders Energy Ltd., which was converted to Provident Energy Trust in

2001

John Milford, M.Sc. VP Exploration &

Development

30+ years of experience as a petroleum geologist

Founded and served in a Director / Executive role for a number of private oil and gas companies

including Predator Corporation, Primal Energy, and Mojo Energy

Dan Fournier, Q.C. General Counsel &

Corporate Secretary

30+ years as a Partner with Blakes Calgary office, and is currently a member of Blakes energy financial

services group

Advised on the structuring of numerous private and public energy financings

Floyd Siegle, P.Eng, MBA VP Engineering 36+ years of broad engineering experience in the oil and natural gas sector

Recently as Senior Manager Reserves and Evaluations at Provident Energy Trust

Previously Vice President Engineering at AJM Petroleum Consultants and various engineering positions

with progressively increasing responsibilities with major E&P companies

Currently serving on the board of directors of the Society of Petroleum Evaluation Engineers

John Lamacchia VP Production 30+ years of diversified experience in the oil and natural gas sector

Recently as VP Engineering & Operations and COO of Amarone Oil & Gas

Previously VP Engineering & Operations of Capitol Energy Resources Ltd.

Bob Guy, P.Eng VP Operations 30+ years of experience in the oil and gas sector

Recently as Vice President, Production Operations with AvenEx Energy Corp.

5


Board of Directors

Spyglass Board of Directors

Randy Findlay, P.Eng Independent

Chairman

Director of Charger Energy Corp., Canadian Helicopters Group Inc., Pembina

Pipeline Corporation, Superior Plus Corp., Whitemud Resources Inc., EllisDon

Inc., Summerland Energy Inc. and SeaNG Ltd.

Dennis Balderston, CA Director Director of AvenEx Energy Corp, Condor Petroleum Inc. and Suroco Energy Inc.

Tom Buchanan, FCA Director Chairman & CEO of Charger Energy Corp. and Former President & CEO of

Provident Energy Trust

Director of Pembina Pipeline Corporation, Athabasca Oil Corp., and Hawk

Exploration Ltd.

Gary Dundas, CMA, MBA Director Director and VP, Finance & CFO of AvenEx Energy Corp.

Director of Direct Cash Payments Inc., Athabasca Oil Corporation, Canadian

International Oil Corp. Fraction Energy Services

Peter Harrison, CFA, MBA Director Chairman, Pace Oil and Gas Ltd., Director, Freehold Royalties Ltd.

Manager, Oil and Gas Investments for CN Investment Division

Former Senior Vice President, Montrusco Bolton Investments Inc.

Mike Shaikh, FCA Director Director of Pace Oil and Gas Ltd., Hawk Exploration Ltd.

Former member of the board of the ASC (2003-2006)

Jeff Smith, P.Geol Director Director of Pembina Pipeline Corporation

John Wright, P.Eng, CFA Director President, CEO and Director of Petrobank Energy and Resources Ltd.,

Chairman and CEO of PetroBakken Energy Ltd. and Chairman of

Petrominerales Ltd., Director of Hawk Exploration Ltd., and Director of Charger

Energy Corp.

6


Key Attributes & Outlook

(1) Reserves from reserve reports for each company as of December 31, 2011 and the updated GLJ report on certain properties

for Charger as of May 31, 2012 adjusted for AvenEx and Charger minor dispositions in 2012 and adjusted for 2012

production to October 31, 2012 as forecast in the December 2011 reserve reports.

(2) Pro forma net debt and working capital incorporates cash proceeds from the disposition of Elbow River Marketing and

estimated transaction costs and excludes risk management assets and liabilities as of the closing date of the transaction.

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Presentation Tables.xlsx

Sheet: PR Table

Range: $C$3:$E$14

(1) Assumes transaction closes March 31, 2013 with Pace as continuing issuer. 2013 outlook reflects one quarter of Pace projections

and three quarters of pro forma Spyglass projections.

(2) Commodity price assumptions: 2013 - Edm Light C$88.89, corporate realized crude oil and liquids price C$74.23 at the wellhead,

AECO $3.39 / Mcf. 2014 - Edm Light C$88.54, corporate realized crude oil and liquids price C$79.42 at the wellhead, AECO $3.79

/ Mcf.

(3) Commodity price sensitivities: 2013 - a $1.00/bbl change in realized crude oil prices, results in a $0.9 million change in annualized

cash flow; a $0.50/Mcf change in natural gas prices, results in a $6.0 million change in annualized cash flow. 2014 - a $1.00/bbl

change in realized crude oil prices, results in a $2.5 million change in cash flow; a $0.50/Mcf change in natural gas prices, results

in a $8.0 million change in cash flow.

(4) All-in Payout Ratio is defined as Capital Expenditures plus Dividends divided by Cash Flow.

Pro Forma Operational

Current Production [boe/d] 17,500

% Oil & Liquids [%] 49%

Total Proved Reserves (1) [MMboe] 57.5

Total Proved plus Probable Reserves (1) [MMboe] 93.9

Undeveloped Land (Net) [Acres] 645,000

Light Oil Drilling Inventory [Locations] >1,000

Years of Sustaining Development Available [Years] >20

Pro Forma Financial

Shares Outstanding [MM] 129

Net Debt and Working Capital (2) [$MM] $293

Credit Facility Capacity [$MM] $400

Estimated Tax Pools [$MM] $900

Hedging Program

Hedging Target [% Production] 50%-60%

Time Horizon [months] 12-18

Crude Oil Hedged for 2013 [% Production] 32%

Natural Gas Hedged 2013 [% Production] 41%

2013 Outlook (1)

Exit Production Forecast [boe/d] 18,000


Average Production Forecast [boe/d] 16,000


Cash Flow Forecast (2)(3) [$MM] 104

Capital Expenditures [$MM] $70 - $80

Dividends [$MM] $26

Net Debt to Annualized Exit Cash Flow [x] 2.1x

Basic Payout Ratio [%] 25%

All-in Payout Ratio(4) [%] 95% - 100%

Preliminary 2014 Outlook(2)(3)

Average Production Forecast [boe/d] ~18,000

% Oil & Liquids [%] 53% - 55%

Capital Expenditures [$MM] $90 - $100

Dividends [$MM] $35

Net Debt to Cash Flow [x] 1.7x

Basic Payout Ratio [%] < 25%

All-in Payout Ratio(4) [%] 80% - 85%

7

Spyglass Resources Corp. File: SPYGLASS_v2.0.MAP Datum: NAD27 Projection: Stereographic Center: N54.61689 W113.26251 Created in AccuMap™, a product of IHS

Light Oil Focus Areas

Randell

Slave Point & Gilwood

Pembina

Cardium

Halkirk-Provost

Viking

Southern Alberta

Multi-zone

Legend

Pace

AvenEx

Charger Dixonville

Montney

$80 - $90 Million Capital Program

Area

Proposed Capex

Allocation

Halkirk-Provost Viking 30%

Southern Alberta Multiple Zones (Pekisko, Glauc, etc.) 20%

Randell Slave Point and Gilwood 20%

Pembina Cardium 10%

Other 20%

Total 100%

8


Underpinning the Model – Low Decline, Balanced Production Base

Company Core Area

Q3-2012 Production (boe/d)(1)

Q3-2012 Oil & Liquids

Q3-2012 Op Costs ($/boe)

Q3-2012 Netback ($/boe)(2)

Est. Base Decline Rate

PCE Southern AB 4,591 48% 19.76 16.76 25%

PCE Dixonville 3,185 89% 12.53 29.71 11%

PCE Northwest AB 3,065 19% 13.39 5.91 18%

PCE Deep Basin 1,206 5% 6.95 6.29 22%

PCE Peace River Arch 634 55% 21.83 15.94 30%

AVF BC 930 1% 9.39 2.13 13%

AVF Northern AB 1,131 67% 16.22 25.77 20%

AVF Southern AB(3) 667 83% 33.84 21.18 12%

AVF Saskatchewan 404 99% 26.78 33.03 10%

AVF Royalty Volumes 36 86% - - -

CHX Halkirk-Provost 1,106 65% 21.95 26.86 34%

CHX Peace River Arch 1,481 17% 10.62 12.40 23%

CHX Drumheller 441 8% 6.40 8.65 16%

CHX Royalty Volumes 111 95% - - -

Pro Forma Total / Weighted Avg 18,988 47% 15.65 16.74 20%

(1) Pro forma current production estimated at approximately 17,500 boe/d, 49% oil and liquids.

(2) Excludes hedging gains and losses.

(3) AVF production excludes central AB disposition in Q4 2012. Southern AB production includes remaining 99 boe/d (31% liquids) of remaining central AB production.

9


Sustaining the Model – Low Risk, High Return Development Portfolio

Development Plays

Unrisked Single Well Economic

Indicators(1)

Prospective

Locations(2)

EUR

(Mboe)

Capex

($MM) % Oil

30 day

IP

(boe/d)

1st yr Op

Costs

($/boe)

1st yr

Netback

($/boe)

NPV at

10%

($MM)

Capital

Efficiency

($/boed)(5)

IRR

(btax)

F&D

Costs

($/boe)

Provost Viking Long Reach(3) 425 143 1.8 70% 128 7.95 38.99 2.2 22,397 53% 12.24

Provost Viking Short Reach(3) 106 107 1.4 70% 85 8.38 40.80 1.6 27,389 46% 13.32

Twining Pekisko 7 191 3.0 65% 168 8.33 34.14 1.6 28,511 27% 15.74

Pembina Cardium 11 60 2.3 100% 169 12.17 75.67 1.2 30,417 69% 38.33

Randell Slave Point 22 90 2.6 100% 138 13.03 72.43 1.4 31,988 54% 28.89

Randell Gilwood 16 70 1.7 100% 135 13.37 72.09 1.5 22,500 146% 23.57

Noel Cadomin 93 448 5.0 0% 982 4.16 15.96 1.1 8,995 27% 11.17

Matziwin Pekisko 78 134 2.3 93% 103 7.23 64.80 2.0 31,186 56% 17.18

Matziwin Glauc 3 61 1.6 82% 119 6.61 51.09 0.9 18,182 103% 26.13

Southern AB Glauc 4 94 1.6 78% 90 6.90 45.96 0.8 31,185 30% 16.95

Elmworth Commingled 5 467 5.0 0% 641 2.56 14.87 0.6 14,205 14% 10.70

Other 274

Total 1,044

(1) Economic indicators based on evaluations at consultant's average October 2012 price forecasts with an effective date, investment date and s tart of

production date of January 1, 2013.

(2) Includes a l l primary, secondary and prospective (gross ) dri l l ing locations .

(3) Provost Viking economics weighted 75% freehold and 25% crown.

(4) Includes Bel lshi l l El lers l ie, Red Earth, Cranberry, Ki tty and Lubicon Slave Point, Wapiti Cardium, Sutton Montney, Southern AB Mannvi l le and others .

(5) Based on 1st year average production.

10


Proved Developed

Producing, 42%

Proved Undeveloped &

PDNP, 19%

Probable, 39%

Pro Forma Reserves

Total Proved plus Probable Reserves by Category

Oil (Mbbl)

Nat. Gas

(MMcf)

NGL

(Mbbl)

Total

(Mboe)(2)

Proved Developed Producing 20,921 105,746 798 39,345

% by Product 53% 45% 2%

Total Proved 28,459 166,800 1,240 57,499

% by Product 49% 48% 2%

Total Proved plus Probable 43,059 290,923 2,312 93,858

% by Product 46% 52% 2%

Pro Forma Selected Reserves

Information(1)

as at October 31, 2012(1)

(1) Working interest reserves from reserve reports for Pace, AvenEx and Charger as of

December 31, 2011 and the updated GLJ report on certain properties for Charger as of

May 31, 2012 adjusted for AvenEx and Charger minor dispositions in 2012 and adjusted

for 2012 production to October 31, 2012 as forecast in the December 2011 reserve

reports.

(2) The Company has adopted the standard of 6 Mcf to 1 boe when converting natural gas to

barrels of oil equivalent. Boes may be misleading, particularly if used in isolation. A boe

conversion ratio of 6 Mcf :1 boe is based on an energy equivalency conversion method

primarily applicable at the burner tip and does not represent a value equivalency at the

wellhead.

2P RLI: ~14 years (based on 18,000 boe/d production)

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ebble Beach\3 Way -

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ebble Beach\3 Way -

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Sheet: Reserves

Range: $C$3:$H$12

11


0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

PGF ZAR ERF BNP LNV RPL TBE SPY WCP

201

3E

All-I

n P

ayo

ut

Ra

tio

(%

)

Dividends Capex Range

Average: 125%

Peer Benchmarking – Payout Ratio

2013E All-In Payout Ratio (1)(2)(3)(4)

(1) Capex consensus estimates per Capital IQ

(2) Dividend and cash flow estimates per First Call consensus, as available

(3) Assumes transaction closes March 31, 2013 with Pace as continuing issuer. 2013 outlook reflects one quarter of Pace projections and three quarters of pro forma Spyglass projections.

(4) Average excludes Spyglass

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Analysis - PEBBLE BEACH

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PRES.xlsx

Sheet: Payout (Excl. DRIP)

12


0%

5%

10%

15%

20%

25%

30%

35%

H F B G A E SPY D C

De

clin

e R

ate

(%

)

Average: 25%

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

D E G A H B SPY F C

Ca

pit

al

Eff

icie

nc

y (

$ / b

oe

/d) Average: $32,057

Peer Benchmarking – Decline & Capital Efficiency

Capital Efficiency (1)(2)(3) Decline Rate (1)(2)(3)

(1) Peer estimates per TD research

(2) Assumes Spyglass commences operations on January 1, 2013

(3) Average excludes Spyglass

Exploiting low-risk, light-oil development plays

key to long-term value

Stable, mature, low-decline base supports

dividend model

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Sheet: Capital Efficiency

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Sheet: Decline Rate

13


$2.58$2.25

$0.29

$2.21

$3.10

$4.03

$3.10

$0.56

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

SPG PCE AVF CHX

Sh

are

Pri

ce

Current Share Price

Highest Peer Yield

Avg Peer Yield

12.2%11.3%

10.0%

8.7% 8.3%

7.1%6.3%

5.7%

0%

2%

4%

6%

8%

10%

12%

14%

LNV RPL ZAR PGF TBE ERF WCP BNP

Yie

ld (

MR

A) Average: 8.7%

Peer Benchmarking – Current Yield & Implied Trading Levels

Current Yield

An analysis of dividend paying peer yields would suggest an implied Spyglass share price

in the range of $2.21 to $3.10 per share

Implied Share Price

14


Investment Highlights

Balanced, Dividend-Paying Producer

• Cdn$0.0225 Monthly Cash Dividend

Proven Management Team with Track Record of Creating Shareholder Value

Sustainable Dividend-Paying Model

• Target Dividend Payout of 25% to 30% of Cash Flow (90% to 100% All-In Payout)

• Mature, Low Decline Producing Assets Coupled With Capital Efficient Light Oil Development

Potential

• Extensive Inventory of Low-risk, High-Return Drilling Opportunities

Well Positioned With Strong Financial Flexibility

• ~$107 Million Undrawn Bank Line

• Proceeds From Planned DRIP Program Could Fund Modest Growth

15


Corporate Information


1700, 250 2nd Ave SW Calgary, AB T2P 0C1

Tel: (403) 303-8500 Fax: (403) 264-0085

www.spyglassresources.com [email protected]

Lead Bankers: National Bank of Canada,

Toronto Dominion Bank

Transfer Agent: Olympia Trust Company

Auditors: PricewaterhouseCoopers LLP

TSX Listed: SGL

Fiscal Year End: December 31

Legal Counsel: Norton Rose Canada LLP

Evaluation Engineers: McDaniel, GLJ,

Sproule, Insite

intermediate sized, commodity balanced resource company with...

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