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Gear Energy Ltd.: 2017 Property Offering

October 24, 20177:30 AM CB Securities

Gear Energy Ltd. has retained CB Securities Inc. as its exclusive advisor for this sale.

Vermilion Property

  • Current production is 127 Bbls/day, of which 87% is from five (5) 100% working interest wells
  • Operating Results for 7 months in 2017
    • $44.25/Bbl average price received ($4.80 less than WCS average)
    • 144 Bbls/day average oil rate
    • 4.8% royalties
    • $29.50/Bbl operating costs
      • Wet spring resulted in higher May/June 2017 costs
      • $23.45/Bbl is expected going forward
      • Includes costs for all the non-producing wells
    • $12.65/Bbl netback (would have been $18.70/Bbl with go-forward operating costs)
    • $664 thousand of annualized net operating income
    • Only $3.15/Bbl of capital expenditures over past 3 years
  • Mostly 100% working interests in 4,120 acres of land
  • Upside includes:
    • 10 identified recompletions in the Sparky, Dina, and General Petroleums ($28 thousand of capital each)
    • 4 identified Sparky drilling locations ($440 thousand of capital each)
    • Waterflood implementation in west side of Sparky pool (57 MMBbls of OOIP)
    • Horizontal development of the Dina pool in Section 18-50-05 W4M (26 MMBbls of OOIP)
      • Initial well rates of 100 Bbls/day are typical using current technology

Islay Property

  • Current production is 69 Bbls/day from three (3) 100% working interest wells
  • Operating Results for 7 months in 2017
    • $44.25/Bbl average price received ($4.80 less than WCS average)
    • 64 Bbls/day average oil rate
    • 7.8% royalties
    • $14.35/Bbl operating costs
      • Includes costs for all the non-producing wells
      • Costs are in $11 to $12/Bbl range for the producing wells
    • $26.45/Bbl netback
    • No capital required to date in 2017
    • $622 thousand of annualized net operating income
  • Shallow ~8% declining production
  • Mostly 100% working interests in 3,040 acres of land
  • Upside includes:
    • Identified Sparky drilling location ($440 thousand of capital)
    • Waterflood implementation in the Sparky pool (13.6 MMBbls of OOIP)
    • Clean out of 1 identified interest well to resume Sparky production
    • Horizontal development of the Lloydminster pool (30 MMBbls of OOIP)
      • Initial well rates of 100 Bbls/day are typical using current technology

Lloydminster Property

  • Current production is 26 Bbls/day from four (4) 100% working interest wells
  • Operating Results for 7 months in 2017
    • $43.20/Bbl average price received ($5.85 less than WCS average)
    • 30 Bbls/day average oil rate
    • 0.5% royalties
    • $44.90/Bbl operating costs (includes significant fixed operating costs for all the non-producing wells)
      • Operating costs are in the $20 to $22/Bbl range for the producing wells
    • $-1.95/Bbl netback (producing wells ARE economic)
    • Only $3 thousand of capital required to date in 2017
  • Shallow ~8% declining production
  • Gear is willing to entertain small or large offers on assets in this property that has a scattered land and well base
  • Mostly scattered 100% working interests in 1,720 acres of land
  • Upside includes:
    • Six (6) identified vertical Sparky drilling locations ($300 thousand of capital each)
    • Two (2) identified horizontal Sparky drilling locations
    • Four (4) identified vertical General Petroleums drilling locations
    • Five (5) identified Sparky recompletions (and likely more)
    • One (1) identified Colony recompletion
    • One (1) Cummings recompletion

BC Minors Property
The British Columbia Minors is comprised of land in 2 areas, specifically Cache and Ekwan, offered as single package. The Cache area is developed with a single long producing life well producing ~300 Mcf/day of net sales gas at a 65% working interest, and 100% working interests in the Ekwan exploration area.

Gear land holdings include 65% to 100% working interests in 5 sections within Cache, 100% working interests in 2 sections within Buick, 50% working interests in 2 sections within Bubbles, 100% working interests in 1 section within Medana, and 100% working interests in 8 exploratory sections of land centered on B/94-I-15 with 5 wellbores that are prospective for Jean Marie gas production.

Additional non-confidential information on the Properties is provided in the Offering Circular that is available for viewing on CB Securities website at or by emailing CB Securities at info@cbsecurities.com.

Interested parties are asked to submit a Non-Binding Bid by noon on Thursday, November 16, 2017.

Gear Energy Property Listings

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