Corporate Governance

General

In general, The Board of Directors of Zargon Oil & Gas Ltd. (the "Corporation") is responsible for the stewardship of the Corporation, the other subsidiaries and a partnership (collectively, "Zargon").

Decision Making

The Board of Directors has a mandate to supervise the management of our business and affairs and our other direct or indirect subsidiaries and partnership and to act with a view to our best interest. The Board of Directors' mandate includes: (i) an offering of securities by us; (ii) ensuring compliance with all applicable laws, including in relation to an offering of our securities; (iii) all matters relating to the content of any documents relating to an offering of our securities; the accuracy of the disclosure contained therein, and the certification thereof; (iv) all matters concerning the terms of, and amendment from time to time of, our material contracts; (v) all matters concerning any subscription agreement or underwriting or agency agreement providing for the sale or issue of common shares or rights to acquire common shares; (vi) all matters relating to the redemption of common shares; (vii) all matters relating to the voting rights on any of our investments; and (viii) the adoption of a shareholder rights plan and other miscellaneous matters relating to the maximization of Shareholder value. The Board of Directors holds regularly scheduled meetings at least quarterly to review the business and affairs of our subsidiaries and partnerships and make any necessary decisions relating thereto.

Additional information in respect of corporate governance matters is contained in the Information Circular which has been filed on SEDAR at www.sedar.com.

Dividends and Dividend Policy

Cash dividends are made on the 15th day (or if such date is not a business day, on the next business day) following the end of each calendar month to Shareholders of record on the last business day of each such calendar month or such other date as determined from time to time by the Corporation.

The Board of Directors reviews the dividend policy on a regular basis. Dividends are normally announced on a monthly basis in the context of prevailing and anticipated commodity prices. During periods of volatile commodity prices, we may vary the dividend rate monthly.

Directors and Officers

The name, municipality of residence, principal occupation for the prior five years and position, of each of the directors and officers of Zargon Oil & Gas Ltd. are as follows:

Directors

Name and Municipality of Residence	Director Since	Principal Occupation
Craig H. Hansen Calgary, Alberta	1992	President & Chief Executive Officer – Zargon Oil & Gas Ltd.
K. James Harrison(3) (4) Oakville, Ontario	1995	President – K. J. Harrison & Partners Inc.(Investment Management)
Kyle D. Kitagawa(1) (2) Calgary, Alberta	2001	Managing Director, North River Capital Corp.
Margaret A. McKenzie(1) (3) Calgary, Alberta	2007	Chief Financial Officer, Range Royalty Management Ltd.
Geoffrey C. Merritt(2) Calgary, Alberta	2009	Independent Businessman
Jim Peplinski(2) (4) Calgary, Alberta	1997	Managing Partner, Humberview Group; VP Business Development, Calgary Flames Hockey Club
J. Graham Weir(1) (2) Calgary, Alberta	2003	Independent Businessman
Grant A. Zawalsky(3) (4) Calgary, Alberta	2000	Partner, Burnet, Duckworth & Palmer LLP (Barristers and Solicitors)

Notes:

1. Member of the audit committee, which is required under the Business Corporations Act (Alberta).
2. Member of the reserves committee.
3. Member of the governance and nominating committee.
4. Member of the compensation committee.
5. Zargon does not have an executive committee.

Officers

Name and Municipality of Residence	Office
Craig H. Hansen Calgary, Alberta	President & Chief Executive Officer
C.L. (Chuck) Buckley Calgary, Alberta	Vice President, Geosciences
R.J. (Randy) Doetzel Calgary, Alberta	Vice President, Operations
Jason B. Dranchuk Calgary, Alberta	Vice President, Finance and Chief Financial Officer
Tracy L. Howard Calgary, Alberta	Corporate Secretary
Brian G. Kergan Calgary, Alberta	Vice President, Corporate Development
Kevin C.Y. Lee Calgary, Alberta	Vice President, Alberta Plains North
Robert T. Moriyama Calgary, Alberta	Vice President, Enhanced Recovery

Corporate Cease Trade Orders or Bankruptcies

Except as otherwise disclosed herein, in the ten years preceding the 2010 Annual Information Form, none of the directors, officers or insiders of Zargon Oil & Gas Ltd. are or have been a director, officer or promoter of any other issuer that, while acting in such capacity:

1. was the subject of a cease trade or similar order or an order that denied the issuer access to any statutory exemptions for a period of more than 30 consecutive days; or
2. was declared bankrupt or made a voluntary assignment in bankruptcy, made a proposal under any legislation relating to bankruptcy and insolvency or been subject to or instituted any proceedings, arrangement, or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that person, other than Mr. Zawalsky who was a director of Efficient Energy Resources Ltd. (a private electrical generation company) which agreed to the voluntary appointment of a receiver in 2005.

Penalties or Sanctions

None of the directors, officers or insiders of Zargon Oil & Gas Ltd. have been subject to any penalties or sanctions under securities legislations except as disclosed herein.

Personal Bankruptcies

None of the directors, officers or insiders of Zargon Oil & Gas Ltd. have in the ten years preceding the date of the 2010 Annual Information Form become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or been subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold their assets except as disclosed herein.

Conflicts of Interest

Circumstances may arise where members of the Board of Directors serve as directors or officers of corporations which are in competition to our interests and the interests of Zargon Oil & Gas Ltd. No assurances can be given that opportunities identified by such board members will be provided to us or Zargon Oil & Gas Ltd.

The Business Corporations Act (Alberta) provides that in the event that a director has an interest in a contract or proposed contract or agreement, the director shall disclose his interest in such contract or agreement and shall refrain from voting on any matter in respect of such contract or agreement unless otherwise provided under such Act. To the extent that conflicts of interest arise, such conflicts will be resolved in accordance with the provisions of such Act.

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