AN INTERVIEW WITH JOHN CLARKE

VP Business Development for CGX Energy

As of October 24, 2011

Canada’s top-ranked oil and gas analysts.

He took an interesting position

two years ago with

President, Business Development. We

have been following the CGX story for

13 years and it looks like in the next

couple of months, finally, we will know

whether it was worth the wait and the

excitement.

David Pescod: John, can you tell us

the background of the two plays that

you will be looking at shortly and how big they might be?

John Clarke: Certainly David. The first play that we will be

drilling is the Jaguar prospect, which is on our Georgetown

Block in which we hold 25%. This is operated by Repsol and

our other partners are Tullow and YPF. The target in this

case is the Turonian sea floor fan, which is analogous to the

Jubilee field offshore Ghana, and more recently has been

migrated to the other side of the Atlantic with Tullow’s successful

Zaedyus well in French Guiana. That is the number

one target and it is a billion barrel prospect. This is a 700

mmboe prospect according to Angus Mccoss from Tullow,

and since the discovery in French Guiana he likens Jaguar to

Zaedyus as a super-fan, very similar in size and potential. So,

you can look at 700 mmboe to a 1,000 mmboe as a P50 case.

The second well that we will be drilling now we have completed

our financing, will be a shallower well on our 100%-

owned Corentyne Block that we call Eagle Shallow. It has two

prospective targets, the primary Eocene, which is a tertiary

turbidite fan and a secondary Maastrichtian target. The Eocene

turbidite looks good on seismic but is higher up in the

section than the Turonian which is a Cretaceous play. Below

the Eocene, we have a Maastrichtian prospect that we plan to

drill also, and if you remember your history from CGX Energy,

this was shown to be a productive horizon in 1975 when

Shell drilled the Abary well and lost control of it in the Maastrichtian,

but recovered light oil (37 degree API).

David Pescod T: 780.408.1750 Debbie Lewis T: 780.408.1748 Toll Free: 1.877.409.1750

So, those are the two wells that we will be drilling and the

second one is 100% interest and the Eocene target is in the

hundreds of millions of barrels range. So not quite as big

as the Turonian, but still very important as we have 100% of

it.

DP: For those who have been following this play for 13

years, other developments in the next week or two might

make a difference. Right beside you Inpex, the Japanese

firm, is drilling in Suriname. What do we know and what is

their timetable?

JC: As you know, the rig they are using, the Atwood Beacon,

is to come to Georgetown as soon as it’s finished drilling

in Suriname. The interesting thing in the Inpex case is

that their target is neither the shallow Eocene nor the

deeper Turonian, but is in fact an Albian carbonate prospect

that has been very successful for OGX in the Campos

basin offshore Brazil. This is an 18,000 foot well, and it’s

behind schedule, but to the best of our knowledge it should

TD early in November. If it is successful, Inpex will have a

testing program that could go from two to four weeks and

then with that finished, the rig will move over to Guyana

from Suriname. So we expect we will be able to spud the

well before year-end.

DP: Now if Inpex is successful, does that mean the odds

are better for CGX Energy?

JC: Well, it opens up another play in the Albian, and we

have two prospects on our 100% Corentyne PPL and two

leads on our 25% Georgetown PPL. So we have the potential

for four such Albian accumulations if Inpex is successful.

This year we engaged DeGolyer and MacNaughton to

do a resource report and the P50 case that they put just on

our Corentyne prospects only was a 325 million barrels

best estimate.

DP: The one thing we are learning about drilling in these

waters is that these are not cheap wells and they don’t get

done quickly.

JC: That has been the experience thus far, although Murphy

did drill two wells on time but delays due to waiting on

weather delayed moving the rig. It was drilling in the early

part of the year and sea conditions were such that the rig

could not be moved to the next location. The 70 days of

extra time held the rig back before it could be moved to

Inpex. Subsequently, Inpex have had delays in drilling, not

weather related, but mechanical in nature and they have

been drilling rather slowly. We believe they are approaching

their primary Albian target having drilled through their

secondary Maastrichtian target and should TD soon.

David Pescod T: 780.408.1750 Debbie Lewis T: 780.408.1748 Toll Free: 1.877.409.1750

DP: How long do you think it’s going to take to drill these two wells for CGX Energy?

JC: The CGX well on Corentyne will is the Eagle Shallow well. It will not go down to the high temp, high pressure Turonian

zone that we are anticipating on the Jaguar well. Thus, we are planning a 40-day well to approximately 15,000 ft

and if we can get a rig into there and spud the well before the end of the year, the results from the Eagle Shallow

should come before Jaguar. The Jaguar well is anticipated to take 180 days for the deeper test to approximately

22,500 ft level.

DP: And the budget for that well?

JC: The budget for the Jaguar well is around $160 million for the deep, HTHP well and approximately $40 million for

the Eagle Shallow well.

DP: You know it’s amazing when you give numbers like this, that all this money can be spent and yet the oil and gas

guys can produce gas for only $1.20 a litre or thereabouts.

JC: That comparison gets a little muddy, because the crack spread between crude and the products that are made is

hard to predict but usually not terribly healthy - it’s a volume business. Especially in Canada and Europe, product

prices are not 100% related to the crack spread, it is more related to the government taxation in whatever zone you are

in. So if you go driving in the U.K. or Europe, you will be paying about twice as much for gasoline as you would in

Canada, which is a little more than you pay in America. You are not dealing with apples and apples here, so I don’t

want to comment on the downstream section of the business. However, with oil prices where they are now (especially

if you can get the Brent pricing as opposed to WTI) I think you will get very healthy returns almost everywhere if you

are drilling for light sweet crude.

DP: Now we are going to ask you to put that top-ranked analyst hat on again and look at your crystal ball and what

are your predictions for oil say, Christmas this year and next year. And if you had to pick one stock (other than your

own) what would it be?

JC: You regularly ask me this question…the last time was at the beginning of the year and I think I think I said $99.99,

but I didn’t specify whether it would be WTI or Brent. Then a month or two ago I said $89.99, but that was for WTI. I

should hedge my bet and take something in between, but as we are getting a close to the end of the year, I will stay

with $89.99 for WTI at YE 2011 and $93.99 for WTI at year end 2012.

DP: And your stock pick?

JC: How about

Stat Oil, in the past couple of decades and it looks like it could be two billion barrels in Norway. Lundin has a significant

interest and although it is probably not one of the ‘penny stocks’ that can drive a lot of enthusiasm, I think it is

going to be a company maker with strong value add. So this time I will go with one of the bigger companies rather

than one of the smaller ones.

DP: Thank you Mr. Clarke!