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, 2008 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. Commencing with the 2003 year end report, Zargon’s reserve estimates have been calculated in accordance with NI 51-101. 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.

In a report dated February 24, 2009, McDaniel assigned the following reserve estimates based on forecast prices and costs as of December 31, 2008:

Trust Reserves ⁽¹⁾

Notes:

1. Trust working interest reserves before royalties, boe (6:1).
2. 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.

In the McDaniel report, proved producing reserves represent 93 percent of Zargon's total proved reserves while total proved reserves account for 71 percent of proved and probable reserves. These percentages compare to the respective 92 and 70 percentages reported in the 2007 year end report. Zargon's proved non-producing reserves are comprised primarily of natural gas reserves from recently drilled wells at the Alberta Plains Jarrow property and selected West Central Alberta properties and of oil reserves at the Alberta Plains Bellshill Lake property. McDaniel forecasts $10.03 million of net future (forecast prices) capital costs 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 $27.52 million of net future (forecast prices) capital costs to deliver the total proved and probable reserve estimate.

Based on 2008 year end reserves and Zargon's 2008 fourth quarter production rates of 4,434 barrels of oil and liquids per day and 29.86 million cubic feet of natural gas per day, Zargon's proved reserve life index is 8.0 years for oil and liquids, 4.4 years for natural gas and 6.1 years on a barrel of oil equivalent basis. The corresponding proved and probable oil and liquids, natural gas and oil equivalent reserve life indices are 11.0, 6.5 and 8.6 years, respectively. The relatively high oil and liquids reserve life reflects Zargon's portfolio of long-life shallow-decline Williston Basin waterflood projects.

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