Reserves

Formal disclosure of oil, natural gas liquids and natural gas reserves as required by National Instrument 51-101 Standards of Disclosure (“NI 51-101”) will be included in the Trust’s Annual Information Form for the year ended December 31, 2009 that will be filed on SEDAR.

Since 1993, the independent engineering firm of McDaniel & Associates Consultants Ltd. (“McDaniel”)has evaluated 100 percent of Zargon’s reserves. Zargon’s reserve estimates have been calculated in accordance with National Instrument 51-101 Standards of Disclosure (“NI 51-101”) and formal disclosure of Zargon’s reserves, as required by NI 51-101, will be included in the Trust’s Annual Information Form for the year ended December 31, 2009, which will be filed on SEDAR. Under NI 51-101, proved reserve estimates are defined as having a 90 percent probability that actual reserves recovered over time will equal or exceed proved reserve estimates. Probable reserves are defined under NI 51-101 so that there are equal (50 percent) probabilities that the actual reserves to be recovered will be less than, or greater than, the proved and probable reserves estimate. Significant highlights from the 2009 reserves evaluation are as follows:

In McDaniel’s report, proved producing reserves represent 94 percent (2008 – 93 percent) of Zargon’s total proved reserves, while total proved reserves account for 71 percent (2008 – 71 percent) of proved and probable reserves. Zargon’s proved non-producing reserves are comprised primarily of natural gas reserves at the Alberta Plains property of Jarrow and selected West Central Alberta properties. McDaniel forecasts $7.80 million of net future (forecast prices) capital costs (excluding future Alberta drilling credits) to deliver the total proved reserve estimate. Zargon’s probable reserves generally reflect incremental waterflood recoveries on producing oil properties and improved gas recoveries for currently producing natural gas wells. McDaniel forecasts $24.34 million of net future (forecast prices) capital costs (excluding future Alberta drilling credits) to deliver the total proved and probable reserves estimate.

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