1 49 [rule 13,19] ifecourt fled may 3 1 20111 · 2019. 6. 3. · bennett jones llp banisters and...

COURT FILE NUMBER

COURT

JUDICIAL CENTRE

DOCUMENT

ADDRESS FOR SERVICE ANDCONTACT INFORMATION OFPARTY FILING THISDOCUMENT

F0121\1 49[RULE 13,19]

1901 — 02578

COURT OF QUEEN'S BENCH OF ALBERTA

CALGARY

CIE OP LED IfeCOURT

F

MAY 3 1 20111

JUDICIAL CENTREOF CALGARY

IN THE MATTER OF THE COMPANIES'CREDITORS ARRANGEMENT ACT, R.S.C.1985, c. C-36, as amended

AND IN THE MATTER OF THE BUSINESSCORPORATIONS ACT, R.S.A. 2000, c. B-9, asam ended

AND IN THE MATTER OF THE PLAN OFCOMPROMISE OR ARRANGEMENT OFELCANO EXPLORATION INC., ELCANOEXPLORATION LTD. and ELCANO ENERGYPARTNERSHIP

AFFIDAVIT

BENNETT JONES LLPBanisters and Solicitors4500, 855 — 2nd Street S.W.Calgary, Alberta T2P 4K7

Attention: Chris Simard and Kelsey MeyerTel No.: 403-298-4485/3323Fax No.: 403-265-7219Client File No. 86037.1

AFFIDAVIT NO. 2 OF RICHARD FULTON

Sworn on May 31, 2019

I, Richard Fulton, of Calgary, Alberta, SWEAR AND SAY THAT:

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1. I am the President and Chief Executive Officer of Elcano Exploration Inc. ("EEI") and as

such 1 have personal knowledge of the matters hereinafter deposed to, save where stated to

be based on information and belief, in which case 1 verily believe the same to be true. The

other Applicant, Elcano Exploration Ltd. ("EEL"), is a direct wholly-owned subsidiary of

EEL Elcano Energy Partnership ("EEP") is a partnership, with respect to which EEI and

EEL are partners. EEI, EEL and EEP are collectively referred to herein as the "Plan

Applicants".

Any capitalized term used but not defined in this Affidavit are intended to bear their

meanings as defined in the Plan or the Meeting Order, as applicable.

Relief Requested

3. The Application by the Plan Applicants is for the following Orders:

(a) if necessary, an Order abridging the time for service of notice of this Application

and supporting materials, abridging the time for service to the time provided,

deeming service good and sufficient and declaring that no other person is required

to have been served with notice;

(b) an Order authorizing the Plan Applicants to file their Plan of Compromise and

Arrangement (the "Plan"), a true copy of which is attached to this Affidavit as

Exhibit "1", and to call, hold and conduct the Meeting of their Affected Creditors

to vote on the Plan (the "Meeting"), and granting other relief related to the Plan and

the Meeting (the "Meeting Order");

(c) An Order:

(i) extending the Stay Period, as ordered and defined in paragraph 13 of the

Initial Order granted herein on February 26, 2019 ("Initial Order"), and as

extended in the Order granted by this Court on March 28, 2019, to and

including July 11, 2019; and

(ii) amending paragraph 9(a) of the Initial Order to state:

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(d)

(e)

"to make no payments of principal, interest thereon or otherwise on

account of amounts owing by the Applicants to any of their creditors

as of the date of this Order, other than principal repayments,interest

payments and professional fees to NBC;"

[underlining indicates the amended wording];

(iii) amending paragraph 30 of the Initial Order to state:

"The Monitor, counsel to the Monitor, and counsel to the

Applicants, as security for the professional fees and disbursements

incurred both before and after the granting of this Order, shall be

entitled to the benefits of and are hereby granted a charge (the

"Administration Charge") on the Property, which charge shall not

exceed an aggregate amount of $400,000.00 as security for their

professional fees and disbursements incurred at the normal rates and

charges of the Monitor and such counsel, both before and after the

making of this Order in respect of these proceedings. The

Administration Charge shall have the priority set out in paragraphs

31 and 33 hereof."

[underlining indicates the amended number]

(iv) amending paragraph 31 of the Initial Order to state:

"The priorities of the Charges (as defined below), as between

them, shall be as follows:

First — Administration Charge (to the maximum amount of

$400,000.00);

Second - Directors' Charge (to the maximum amount of

$50,000.00);

(collectively, the "Charges")."

[underlining indicates the amended number]

An Order sealing the Confidential Affidavit No. 3 of Richard Fulton, sworn May

31, 2019 and the Confidential Supplement to the Second Report (the "Confidential

Monitor's Report") of Hardie & Kelly Inc., the Court-appointed Monitor of the

Plan Applicants (the "Monitor"); and

such 'further and other relief as counsel may request and this Honourable Court may

deem just and appropriate in the circumstances.

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The Plan

4. A summary of the key aspects of the Plan are set out below.

Overview of the Plan

5. The Plan provides for the following:

(a) payment in full of the secured claims of National Bank of Canada and Canada

Revenue Agency, who are the only secured creditors of the Plan Applicants;

(b) continued payment of all Post-Filing Trade Payables by the Plan Applicants in the

ordinary course of business;

(c) Affected Creditors will receive an Initial Distribution in cash on the Plan

Implementation Date, in the aggregate total amount of $1,696,000. In this Initial

Distribution, all Affected Creditors will receive the first $5,000 of the amount of

their Proven Claim;

(d) those Affected Creditors whose Proven Claims total $5,000 or less are defined in

the Plan as "Convenience Class Creditors" and their Proven Claims will be repaid

in full in the Initial Distribution. Convenience Class Creditors will be deemed to

be present at the Meeting, in person or by proxy, and will be deemed to have voted

in favour of the Plan;

(e)

(1)

Releases

each Affected Creditor who is not a Convenience Class Creditor shall receive its

Pro Rata Share of the balance of the Initial Distribution and will also receive a

Promissory Note for the unpaid balance of its Proven Claim. The Promissory Notes

will be non-interest bearing and will be repaid by EEI no later than 18 months after

the Plan Implementation Date; and

Equity Claimants shall receive no distribution under the Plan, but their existing

shareholdings in the Plan Applicants will remain unchanged, so that they may

potentially benefit from future recoveries.

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6. The Plan includes releases of a number of parties, including each of the Plan Applicants,

and their current and former respective Directors, Officers, current and former employees,

advisors, legal counsel and agents (collectively the "Plan Applicant Released Parties"),

and the Monitor and its current and former directors, officers, employees, legal counsel,

and agents (collectively, the "Monitor Released Parties").

7 However, the Plan explicitly provides that nothing therein shall release or discharge:

(a) fraudulent or criminal acts committed any Plan Applicant Released Party, or

criminal, fraudulent or wilful misconduct committed by any Monitor Released

Party, all as determined by way of a final judgment on the merits; or

(b) the Plan Applicants' Directors with respect to matters set out in section 5.1(2) of

the CCAA, which include claims based on allegations of misrepresentations made

by directors to creditors or of wrongful oppressive conduct by directors.

8. The Plan and the proposed Sanction Order provide that parties are enjoined from

prosecuting Claims that are released, discharged, compromised or terminated pursuant to

the Plan,

Conditions Precedent

The Plan includes a number of conditions precedent:

(a) the Meeting Order being granted by the Court on or before June 7, 2019 (or such

later date as agreed to by the Plan Applicants and Monitor) and being a Final Order;

(b) the Meeting being convened by the date set by the Meeting Order, namely July 2,

2019, or a later date that is acceptable to the Plan Applicants in consultation with

the Monitor;

(c) the Plan Applicants paying their Administrative Costs or providing for the payment

thereof, to the Monitor's satisfaction;

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(d) all material consents, declarations, rulings, certificates or approvals of or by any

Governmental Authority as may be considered necessary by the Plan Applicants

and the Monitor in respect of the Plan Transaction Steps being obtained;

(e) the Plan shall have been approved by the Required Majority of Affected Creditors;

(1)

(g)

the Sanction Order being granted by the Court by July 4, 2019, or such later date

as is acceptable to the Plan Applicants and Tallinn Capital Energy Corp., as General

Partner of Tallinn Capital Energy Limited Partnership ("Tallinn", the proposed

new lender to the Plan Applicants whose proposed debt financing is making it

possible for the Plan Applicants to bring forward their Plan), in consultation with

the Monitor, in form and substance satisfactory to the Plan Applicants, Tallinn and

the Monitor, and the Sanction Order being a Final Order; and

the Plan Implementation Date occurring by July 11, 2019, or such later date as shall

be acceptable to the Plan Applicants and Talliim, in consultation with the Monitor.

Authorization to call the Meeting

10. The Plan Applicants arc seeking authorization to call and hold the Meeting on July 2, 2019,

to allow the Affected Creditors to vote on the Plan.

The Meeting Order

1 1. The Meeting Order provides for the following:

(a) the Affected Creditor Meeting Materials will be posted no later than 5:00 p.m. on

the 'first Business Day following the date this Court grants the Meeting Order;

(b) on the second Business Day following the granting of the Meeting Order (the

"Mailing Date"), the Affected Creditor Meeting Materials will be sent to each

Affected Creditor by courier, personal delivery, regular mail or email;

(c) the Meeting shall be conducted at the offices of Bennett Jones LLP in Calgary,

Alberta on July 2, 2019, at 10:00 a.m.;

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(d) Marc Kelly, or another representative of the Monitor, shall preside as Chairperson

of the Meeting;

(e) the quorum required at each meeting shall be one Affected Creditor with a Voting

Claim against a Plan Applicant present at the Meeting (in person or by proxy) and

the Convenience Class Creditors shall be deemed to be present;

(f) if the Meeting is postponed by the vote of a majority in value of Voting Claims of

the Affected Creditors present at. the Meeting (in person or by proxy), then the

Meeting shall be adjourned by the Chairperson to a later date, time and place as

designated by the Chairperson;

(g) the only Persons entitled to attend and speak at the Meeting are:

(i) the Affected Creditors entitled to vote at the Meeting, or their proxies, and

their legal and financial advisors;

the Chairperson, the Scrutineer and the Secretary;

(iii) one or more representatives of the Monitor and the Monitor's legal counsel;

(iv) one or more representatives of the current board of Directors and/or senior

management of the Plan Applicants, as selected by the Plan Applicants, and

the Plan Applicants' legal counsel and financial advisors;

(v) counsel to the Directors and Officers of any of the Plan Applicants; and

(vi) any person invited to the Meeting in consultation with the Monitor.

(h) the key aspects of the voting procedure are as follows:

(i) the vote at each Meeting will be conducted by written ballot;

(ii) subject to certain exceptions, the only Persons entitled to vote at a Meeting

(whether in person or by proxy) are Affected Creditors with Voting Claims

against the applicable Plan Applicant as at the Voting Record Date;

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(i)

each Affected Creditor that has a Voting Claim against the applicable Plan

Applicant shall be entitled to vote as a member of the Affected Creditor

Class in relation to that Plan Applicant, which vote shall have a value equal

to the dollar value of such Affected Creditor's Voting Claim;

(iv) as noted above, the Convenience Class Creditors will be deemed to be

present at the Meeting, in person or by proxy, and will be deemed to have

voted in favour of the Plan; and

(v) each Affected Creditor with an Unresolved Claim against one or more Plan

Applicants as at the Voting Record Date will be entitled to attend, and be

entitled to one vote at, the applicable Meeting, but the Monitor will keep a

separate record of votes cast by Affected Creditors with Unresolved Claims

and will report to the Court regarding those claims at the Sanction Hearing;

and

the Plan must receive an affirmative vote of the Required Majority of Affected

Creditors in order to be approved, and the result shall be binding on all Affected

Creditors of the Plan Applicants.

Update on the SISP

12. On February 26, 2019, the Court approved a sale and investment solicitation process (the

"SISP"), to solicit interest in and opportunities for an investment in or sale of all or part of

the assets, property and undertakings of the Plan Applicants.

13 . The SISP had deadlines for submission of non-binding letters of intent (defined in the SISP

as "Phase 1 Qualified Bids") by April 26, 2019 and submission of binding offers (defined

in the SISP as a "Phase 2 Qualified Bids") by May 17, 2019.

14. CiMP FirstEnergy ("GMP") was the SISP Advisor who assisted the Plan Applicants with

the SISP. Phases 1 and 2 of the SISP have now been completed, and the Plan Applicants,

in consultation with GIVIP and with the approval of the Monitor, have selected as the

"Successful Bid" in the SISP, the debt refinancing transaction offered by Tallinn (the

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9

"Tallinn Transaction"). The Plan Applicants and Tallinn have executed a Commitment

Letter with Tallinn with respect thereto, a true copy of which is attached as Exhibit "2" to

this Affidavit.

15. GMP has prepared a summary of the steps undertaken in the conduct of the SISP, a true

copy of which is attached as Exhibit "3" to this Affidavit.

The Tallinn Transaction

16. One of the conditions precedent to the Tallinn Transaction (condition no. 14 on page 6 of

Exhibit "2") is the provision of not less than 5275,000 in new equity or subordinated debt

financing. Three of the members of Elcano's Board of Directors (me, Harry Wheeler and

Darren Rennie) are among those who are providing such funds. Therefore, those three

directors abstained from the vote in which the Board of Directors chose the Successful Bid

under the SISP. The two Directors who are taking no part in the new equity or subordinated

debt financing, the independent directors Gary Goetsch and Frank Wormsbecker, voted to

approve the Tallinn Transaction as the Successful Bid.

17. I confirm that the $275,000 required to fund the new equity or subordinated debt financing

has been delivered to Bennett Jones LLP, counsel to the Plan Applicants, to be held in trust.

18. Another condition precedent of the Tallinn Transaction (condition no. 12 on page 6 of

Exhibit "2") is that the Plan Applicants enter into certain hedging arrangements. On May

28 and 29, Elcano entered into contracts to:

(a) physically deliver 200 bbl/day of its production at Cromer, Manitoba terminal,

receiving an adjusted West Texas Intermediate ("WTI") price of US$58,08 per

barrel, from July 1, 2019 to June 30, 2020; and

(b) purchased a put option, entitling Elcano to a WTI floor price of US$45.00 for up to

100bb1/day from July 1, 2019 to June 30, 2020, at a cost of US$67,580

(collectively, the "Hedges").

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The Plan Applicants received the approval of the Monitor and Tallinn prior to entering into

the Hedges. The Board of Directors of the Plan Applicants approved the Hedges. In my

view, the Hedges are commercially reasonable and reasonably mitigate the risk to the Plan

Applicants to perform under the Tallinn Transaction, in the event that there are future

negative commodity price movements. Tallinn has confirmed that Elcano entering into the

Hedges has satisfied condition no. 12 under the Tallinn Transaction,

19. Another requirement of the Tallinn Transaction is that Tallinn receive an assignment of the

security held by National Bank of Canada ("NBC") as against the Plan Applicants (NBC's

secured debt will be repaid in full on the Plan Implementation Date). Accordingly, the

Plan Applicants requested NBC to agree to such assignment. NBC has agreed to provide

such an assignment, and has offered to support the Tallinn Transaction, on a number of

conditions. The conditions are all acceptable to the Plan Applicants. One of NBC's

conditions is that the Plan Applicants make voluntary principal repayments of the secured

debt of NBC out of surplus cashflow, during the Stay Period ($250,000 in early June and

$500,000 in late June). The Plan Applicants have sufficient surplus cashflow that will not

be required for expenses, to be able to make these payments. However, the Initial Order

currently prohibits all payment of pre-filing debt, and only allows for payment of interest

to NBC and professional fees to its advisors. For this reason, the Plan Applicants are asking

that the Initial Order be amended to allow for principal repayments to NBC.

20. I am advised by the Monitor that it has reviewed the security of NBC and opined that it is

valid and enforceable, subject to customary assumptions and qualifications.

21. NBC's secured debt will be repaid in full under the Plan. The use of surplus cash that is

not required for operations, to pay down NBC's secured debt in advance of the Plan

Implementation Date, is in the best interests of the Plan Applicants and their stakeholders.

Such payments will allow the Tallinn Transaction and the Plan to move forward.

22. If the Initial Order is amended as requested, the Plan Applicants will pay NBC $250,000

as soon as practicable after the granting of the Order sought (on June 7 or June 10) and will

pay NBC $500,000 on or around June 26.

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Conclusion on the SISP

23. I believe that the Plan Applicants, with the assistance of GMP and the Monitor, have in the

SISP conducted a thorough and comprehensive canvassing of the relevant market for the

Plan Applicants and their assets and business, and I am satisfied that all alternatives and

expressions of interest were properly and thoroughly pursued.

24. In my view, the Tallinn Transaction:

(a) offers fair and reasonable consideration to the stakeholders of the Plan Applicants;

(b) is in the best interests of all the stakeholders of the Plan Applicants; and

(c) is more beneficial to the stakeholders of the Plan Applicants than would be a sale

or disposition in receivership or bankruptcy proceedings.

Update on the Status of the Plan Applicants and the Request to Extend the Stay Period

25. On February 26, 2019, the Honourable Madam Justice K.M. Homer of this Court granted

the Initial Order in this Action granting, among other things, the Stay Period, to and

including March 28, 2019. On March 28, 2019, the Honourable Mr. Justice B. Nixon

granted an order extending the Stay Period to and including June 14, 2019.

26. Since March 28, 2019, the Elcano Group has taken significant steps to advance the

restructuring, including but not limited to:

(a) continuing to cooperate with the Monitor to facilitate its monitoring of the Elcano

Group's business and operations;

(b) continuing to communicate with various stakeholder groups and/or their advisors,

including counsel for NBC, trade creditors, employees, contractors and others;

(c) as detailed above, working with the Monitor and GMP to implement and complete

the SISP, subject to the Court's approval of the Meeting Order, the Affected

Creditors' approval of the Plan and the Court's sanction of the Plan;

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(d) working with the Monitor to substantially complete the Claims Procedure that was

ordered by this Honourable Court on March 28, 2019;

(e) successfully completing the Optimization Program described at paragraphs 18 — 20

of my Affidavit No. 1 sworn on March 18, 2019. The Optimization Program

succeeded in increasing the Plan Applicants' daily oil production to570.7 bbls/day;

and

(f) continuing to operate and manage the business and operations of the Plan

Applicants in the ordinary course, subject to the terms of the Initial Order.

27. Attached hereto as Exhibit "4" is a true copy of a cash flow forecast through to August 4,

2019. As shown in Exhibit "4", the Plan Applicants are projected to have sufficient cash

to fund their operations, its restructuring costs and the proposed voluntary repayments to

NBC during the proposed extended Stay Period, without requiring interim financing from

a third party.

28. The Plan Applicants are working in good faith and with due diligence in these proceedings,

it is in the best interests of the Plan Applicants and all of their stakeholders that the Stay

Period be extended, and it is appropriate in the circumstances to so order. The extension

of the Stay Period as requested will allow sufficient time to hold a meeting of the Plan

Applicants' unsecured creditors to vote on the Plan and for the Plan Applicants to apply for

a sanction order, should their Affected Creditors vote to approve the Plan.

Update on the Claims Procedure

29. The Claims Bar Date under the Claims Procedure was May 13, 2019. 171 unsecured claims

with an aggregate value of $2,998,504.64 have been accepted as Proven Claims. Attached

as Exhibit "5" to this Affidavit is a true copy of a list of those creditors and the accepted

amounts of their claims.

30. Nine unsecured claims with an aggregate value (based on the amount set out in the

claimant's Proof of Claim) of $1,150,341.27 have been revised or disallowed by the Plan

Applicants and the Monitor, and are not yet resolved. Attached as Exhibit "6" to this

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Affidavit is a true copy of a list of those creditors and the value of their disputed claims as

set out in their Proofs of Claim, along with the Plan Applicants' current position in respect

of each of the claims.

31. One of the claims that has been accepted as a Proven Claim, if the Tallinn Transaction

proceeds and the Plan is approved, is the claim of Meta Capital Corporation ("Meta" and

the "Meta Claim"). As described in the Affidavit of Scott Pincock sworn herein on

February 20, 2019 (the "Pincock Affidavit"), Meta is an investment banking firm that

assisted the Plan Applicants with a marketing process in late 2018 (the "Meta Marketing

Process"). Meta's claim arises from the fact that Meta's engagement letter (which was

attached as Exhibit "14" to the Pincock Affidavit and is reattached as Exhibit "7" to this

Affidavit, hereinafter the "Meta Engagement Letter") entitles Meta to a Success Fee if

EEI enters into a transaction with a party who signed a non-disclosure agreement and

entered into the virtual data room during the Meta Marketing Process.

32. Tallinn did sign a non-disclosure agreement and did enter into the virtual data room during

the Meta Marketing Process.

33. EEI terminated the Meta Engagement Letter on February 22, 2019, prior to the granting of

the Initial Order. Attached as Exhibit "8" to this Affidavit is a true copy of EEI's

termination notice. However, the Meta Engagement Letter entitles Meta to a Success Fee

with respect to any transaction completed within 12 months of the termination of the Meta

Engagement Letter, and a Consulting Fee with respect to any financing from parties who

were on a list attached to the Meta Engagement Letter (which includes the group of

shareholders who are funding the $275,000 equity or subordinated debt financing).

34. Attached as Exhibit "9" to this Affidavit is a true copy of Meta's Proof of Claim.

35. If the Plan is approved and the Tallinn Transaction closes, the Plan Applicants are of the

view that Meta's claim will become a valid unsecured Affected Claim, and Meta will be

entitled to receive the consideration offered to Affected Creditors in the Plan. The Plan

Applicants calculate the value of Meta's claim as $240,581.25 (being 3% of the value of

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the new debt facilities being provided by Tallinn, and 1.5% of the equity or subordinated

debt financing, plus UST).

36. No relief with respect to the Meta claim is being sought at the hearing on June 7, 2019.

Rather, if the Plan is approved by the Affected Creditors and this Honourable Court grants

the Sanction Order, so that it is then known that the Tallinn Transaction will close, the Plan

Applicants will seek in the Sanction Order approval of Meta's claim.

Sealing of Confidential Evidence

37. The Confidential Fulton Affidavit No. 3 and the Confidential Monitor's Report contain

details of the bids received in Phase 1 and Phase 2 of the SISP, including the identity of

bidders, the consideration and terms offered by bidders, and other details regarding the

bids. If such evidence was disclosed publicly, it could prejudice the Plan Applicants' ability

to maximize the value of their assets and business for the benefit of their creditors, in the

event that the Tallinn Transaction does not close, and/or the Plan is not approved. As such,

the Confidential Fulton Affidavit No. 3 and the Confidential Monitor's Report contain

commercially sensitive information and the Plan Applicants seek an Order sealing those

documents on the Court file until the conclusion of these proceedings.

Conclusion

38. I swear this my Affidavit in support of the Plan Applicants' Application for the Meeting

Order and for no other or improper purpose.

SWORN BEFORE ME. at Calgary, Albertathis 31st day of May, 2019.

A Commissioner for Oathsin and for the Province of Alberta

CHRIS SIMARD

Banister and Solicitor

RI !HARD FULTON

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EXHIBIT 1

THIS IS EXHIBIT "1" REFERREDTO IN THE AFFIDAVIT NO. 2 OFRICHARD FULTON SWORNBEFORE ME THIS 31st DAY OFMAY, p19

CHRIS SIMARDBarrister and solicitor

CLERK'S STAMP

COURT FILE NUMBER

COURT

JUDICIAL CENTRE

DOCUMENT


1901-02578


CALGARY

IN THE MATTER OF THE COMPANIES'CREDITORS ARRANGEMENT ACT, R.S.C. 1985,c. C-36, as amended

AND IN THE MATTER OF THE BUSINESSCORPORATIONS ACT, R.S.A. 2000, c. B-9, asamended

AND IN THE MATTER OF TILE PLAN OFCOMPROMISE OR ARRANGEMENT OF ELCANOEXPLORATION INC., ELCANO EXPLORATIONLTD. and ELCANO EXPLORATIONPARTNERSHIP

PLAN OF COMPROMISE AND ARRANGEMENTOF ELCANO EXPLORATION INC., ELCANOEXPLORATION LTD. and ELCANO ENERGYPARTNERSHIP

BENNETT JONES LLPBanisters and Solicitors4500, 855 — 2nd Street S.W.Calgary, Alberta T2P 4K7

Attention: Chris Simard and Kelsey MeyerTel No.: 403-298-4485 / 3323Fax No.: 403-265-7219Client File No. 86037.1

WS LEGAL 4.186037.00001 ̀22339470v5

TABLE OF CONTENTS

Page

ARTICLE 1 INTRODUCTION 1

1 1 The CCAA Proceedings 1.2 The Plan Applicants' CCAA Plan 11.3 Overall Summary of this Plan 11.4 Voting by Affected Creditors of the Plan Applicants 1.5 Consequences of Voting Against the Plan 21.6 Monitor's Report on this Plan

ARTICLE 2 INTERPRETATION 2

2.1 Definitions 2.2 Certain Rules of Interpretation 10

Time2.3 112.4 Date and Time for any Action 112.5 Successors and Assigns 112.6 Governing Law 122.7 Currency 122.8 Schedules 12

ARTICLE 3 PURPOSE AND EFFECT OF THIS PLAN 12

3.1 Purpose of Plan 123.2 Consideration to be Provided to Secured Creditors under the Plan 133.3 Consideration to be Provided to Affected Creditors under the Plan 133.4 Persons Affected 143.5 Persons Not Affected 143.6 Equity Claims 143.7 Post-Filing Trade Payables 14

ARTICLE 4 CLASSIFICATION OF CREDITORS, VOTING CLAIMS AND RELATEDMATTERS 14

4.1 Classification of Creditors 144.2 Claims of Affected Creditors 144.3 Unaffected Claims 154.4 Priority Claims 154.5 Creditors' Meeting 154.6 Voting 154.7 Procedure for Valuing Voting Claims 154.8 Approval by Creditors 154.9 Guarantees and Similar Covenants 16

ARTICLE 5 PROVISIONS REGARDING DISTRIBUTIONS, TRANSFERS ANDVOTING 16

5.1 Treatment of Undeliverable Distributions 16

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-2

5.2 Assignment of Claims for Voting and Distribution Purposes Prior to the Creditors'Meeting 17

5.3 Assignment of Claims for Distribution Purposes After the Creditors' Meeting 175.4 Tax Matters 17

ARTICLE 6 PLAN IMPLEMENTATION 18

6.1 Corporate Authorizations 186.2 Overview 186.3 Plan Implementation Date Transactions 186.4 Disputed Claims 20

ARTICLE 7 RELEASES 20

7.1 Plan Releases 20

ARTICLE 8 COURT SANCTION, CONDITIONS PRECEDENT ANDIMPLEMENTATION 21

8.1 Application for Sanction Order 218.2 Sanction Order 228.3 Conditions Precedent to Implementation of the Plan 238.4 Monitor's Plan Implementation Certificate 24

ARTICLE 9 GENERAL 24

9.1 Binding Effect 249.2 Claims Bar Dates 259.3 Deeming Provisions 259.4 Interest and Fees 259.5 Non-Consummation 259.6 Modification of the Plan 269.7 Paramountcy 269.8 Severability of Plan Provisions 269.9 Responsibilities of the Monitor 279.10 Different Capacities 279.11 Notices 279.12 Further Assurances 28

WSLEGAL 086037\00001 \22339470v5

IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C.1985, C. C-36, as amended

AND IN THE MATTER OF THE BUSINESS CORPORATIONS ACT, R.S.A. 2000, c. B-9, as amended

AND IN THE MATTER OF THE PLAN OF COMPROMISE OR ARRANGEMENT OFELCANO EXPLORATION INC., ELCANO EXPLORATION LTD. AND ELCANOEXPLORATION PARTNERSHIP

PLAN OF COMPROMISE AND ARRANGEMENT OF ELCANO EXPLORATION INC.AND ELCANO ENERGY PARTNERSHIP

DATED MAY 31, 2019

NOTE: THIS PLAN OF COMPROMISE AND ARRANGEMENT SHOULD BE READTOGETHER WITH THE SECOND REPORT OF THE MONITOR.

ARTICLE 1INTRODUCTION

1.1 The CCAA Proceedings

On February 26, 2019, Elcano Exploration Inc. ("EEI") and Elcano Exploration Ltd. ("EEL")successfully applied for protection under the Companies' Creditors Arrangement Act, R.S.C.1985, c. C-36, as amended ("CCAA"). EEI and EEL are partners in Elcano Energy Partnership("EEP"). EEP was not an Applicant in the CCAA Proceedings, but it received the benefit of thestay granted therein.

1.2 The Plan Applicants' CCAA Plan

This Plan is filed by EEI, EEL and EEP (together the "Plan Applicants"), to compromise theClaims of the creditors of the Plan Applicants (the "Plan").

1.3 Overall Summary of this Plan

This Plan proposes a single compromise and arrangement for all of the Plan Applicants, whichshall be voted on and shall deliver consideration to the unsecured creditors of the PlanApplicants who shall together form a single class of Affected Creditors. An "InitialDistribution" (as more completely defined later in this Plan) totaling $1,696,000 in cash shall bemade to the Affected Creditors as soon as reasonably practicable after approval of the Plan.Those Affected Creditors whose Proven Claims are not paid in full in the Initial Distribution

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shall receive a non-interest bearing "Promissory Note" issued by EEI (as more completelydefined later in this Plan) pursuant to which the Plan Applicants shall pay the remainder of theAffected Creditors' respective Proven Claims in a "Final Distribution" (as more completelydefined later in this Plan) on or before the date that is 18 months after the Plan is approved(except that the Final Distribution shall not exceed the aggregate amount of $1,754,000).

1.4 Voting by Affected Creditors of the Plan Applicants

Each Affected Creditor will vote on a resolution to accept the consideration offered by the PlanApplicants under this Plan. All Affected Creditors whose Proven Claims are less than or equalto $5,000 will be repaid in full from the proceeds of the Initial Distribution, and will not berequired or permitted to vote in favour of the Plan but instead will be deemed to have voted infavour of the Plan. All votes in connection with the Plan shall be determined by way of the"double majority" test set out in the CCAA: to receive approval, two-thirds in value and amajority in number of those proven creditors present and voting (in person or by Proxy) withinthe single class of Affected Creditors (the "Required Majority", as more completely definedlater in this Plan) must vote in favour, for the Affected Creditors to receive the considerationoffered in the Plan.

1.5 Consequences of Voting Against the Plan

If the Affected Creditors vote against the Plan, they shall not receive the consideration beingoffered to them in the Plan. It is anticipated that the assets of the Plan Applicants would have tobe liquidated immediately and the consideration that would become available to AffectedCreditors is unknown.

1.6 Monitor's Report on this Plan

The Monitor will report to Creditors and the Court regarding various aspects of this Plan,including the estimated recoveries to Affected Creditors, prior to the date Creditors are to vote onthis Plan. Creditors wishing to review copies of Court orders and other materials filed in theseproceedings, and copies of the Monitor's reports, are directed to the Website. All Creditorsshould review this Plan and the Second Monitor's Report before voting to accept or rejectthis Plan.

ARTICLE 2INTERPRETATION

2.1 Definitions

In this Plan, unless otherwise stated or unless the subject matter or context otherwise requires:

"Administration Charge" means the CCAA Charge created by paragraph 30 of the InitialOrder;

"Administrative Costs" means costs incurred by and payments to be made on or after the PlanImplementation Date (including costs incurred prior to the Plan Implementation Date whichremain outstanding as of the Plan Implementation Date) in respect of: (a) the Monitor's fees and

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disbursements (including fees and disbursements of its legal counsel and other consultants andadvisors) in connection with the performance of its duties under the Plan and in the CCAAProceedings, including without limitation all fees and disbursements associated with resolvingDisputed Claims, fully implementing this Plan and winding-up the administration of theseCCAA proceedings; (b) any third-party fees, if any, incurred by the Plan Applicants and/or theMonitor in connection with the administration of the Plan; (c) Post-Filing Trade Payables; (d) thelawyer, consultant and advisor fees and disbursements of the Plan Applicants, including withoutlimitation all fees and disbursements associated with resolving Disputed Claims, fullyimplementing this Plan and winding-up the administration of these CCAA proceedings; (e)Excluded Claims, Government Priority Claims, Employee Priority Claims; and (f) any otherreasonable amounts in respect of any contingency as such Plan Applicant and the Monitor maydetermine in their discretion;

"Affected Claim" means all Claims other than Unaffected Claims;

"Affected Creditor" means a Creditor who has an Affected Claim;

"Affected Creditor Class" has the meaning ascribed thereto in Section 4.1;

"Applicable Law" means any law (including any principle of civil law, common law or equity),statute, Order, decree, judgment, rule, regulation, ordinance, or other pronouncement having theeffect of law, whether in Canada or any other country or any domestic or foreign province, state,city, county or other political subdivision;

"Applicants" means EEI and EEL, being the Applicants in the CCAA Proceedings;

"Assessments" means Claims of Her Majesty the Queen in Right of Canada or of Her Majestythe Queen in Right of any province or territory or of any municipality or of any other TaxingAuthority in any Canadian or other jurisdictions, including without limitation amounts whichmay arise or have arisen under any notice of assessment, notice of objection, notice ofreassessment, notice of appeal, audit, investigation, demand or similar request from any TaxingAuthority;

"BIA" means the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended;

"Business" means, for each of the Plan Applicants, the direct and indirect operations andactivities carried on by such Plan Applicant;

"Business Day" means a day on which banks are open for business in the City of Calgary,Alberta, Canada, but does not include a Saturday, Sunday or a statutory holiday in the Provinceof Alberta;

"Cash" means cash, certificates of deposit, bank deposits, commercial paper, treasury bills andother cash equivalents;

"CCAA" means the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended;

"CCAA Charges" means the Administration Charge and the Directors' Charge;

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"CCAA Proceedings" means the CCAA proceedings in respect of the Applicants commencedpursuant to the Initial Order in Action No. 1901-02578 in the Court;

"Claim" has the meaning given to such term in the Claims Procedure Order;

"Claims Bar Date" means 5:00 p.m. on May 13, 2019;

"Claims Bar Dates" means, collectively, the Claims Bar Date, the D&O Claims Bar Date andthe Restructuring Period Claims Bar Date;

"Claims Procedure Order" means the Order of the Court granted on March 28, 2019 andamended thereafter, approving and implementing the claims procedure in respect of the PlanApplicants and the Directors and Officers, as may be amended, restated or varied from time totime;

"Conditions Precedent" means the conditions precedent to Plan implementation set out inSection 8.3;

"Convenience Class Creditor" means an Affected Creditor whose Proven Claim is less than orequal to $5,000;

"Court" means the Court of Queen's Bench of Alberta or any appellate court seized withjurisdiction in the CCAA Proceedings, as the case may be;

"CRA" means Canada Revenue Agency;

"CRA Secured Claim" means the secured claim of CRA in the amount of $33.76;

"Creditor" means any Person asserting an Affected Claim or an Unaffected Claim and may,where the context requires, include the assignee of such Claim or a personal representative,agent, litigation guardian, mandatary, trustee, interim receiver, receiver, receiver and manager,liquidator or other Person acting on behalf of such Person;

"Creditors' Meeting" means the meeting of the Affected Creditor Class to be called and heldpursuant to the Meeting Order for the purpose of considering and voting upon the Plan, andincludes any adjournment, postponement or rescheduling of such meeting;

"D&O Claims Bar Date" means 5:00 p.m. on May 13, 2019;

"Director" has the meaning given to such term in the Claims Procedure Order, with respect tothe Plan Applicants;

"Directors' Charge" means the CCAA Charge created by paragraph 12 of the Initial Order;

"Disputed Claim" means that portion of an Affected Claim in respect of which a Proof of Claimhas been filed in accordance with the Claims Procedure Order that has not been finallydetermined to be a Proven Claim in whole or in part in accordance with the Claims ProcedureOrder, the Meeting Order, or any other Order made in the CCAA Proceedings;

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"Effective Time" means 12:01 a.m. on the Plan Implementation Date or such other time on suchdate as the Applicants and the Monitor shall determine or as otherwise ordered by the Court;

"Employee Priority Claims" means the following claims of Employees:

(a) claims equal to the amounts that such Employees would have been qualified toreceive under paragraph 136(1)(d) of the BIA if the Applicants had becomebankrupt on the Filing Date; and

(b) claims for wages, salaries, commissions or compensation for services rendered bythem after the Filing Date and on or before the Plan Implementation Date;

"Employees" means all current and former employees of the Plan Applicants other than directorsand officers, in such capacities;

"Encumbrance" means any charge, mortgage, lien, pledge, claim, restriction, security interest,security agreement, hypothecation, assignment, deposit arrangement, hypothec, lease, rights ofothers including without limitation Transfer Restrictions, deed of trust, trust or deemed trust,lien, financing statement, preferential arrangement of any kind or nature whatsoever, includingany title retention agreement, or any other arrangement or condition which in substance securespayment or performance of any obligations, action, claim, demand or equity of any naturewhatsoever, execution, levy, charge or other financial or monetary claim, whether or not theyhave attached or been perfected, registered or filed and whether secured, unsecured or otherwise,or other encumbrance, whether created or arising by agreement, statute or otherwise at law,attaching to property, interests or rights and shall be construed in the widest possible terms andprinciples known under law applicable to such property, interests or rights and whether or notthey constitute specific or floating charges as those terms are understood under Applicable Law,including without limiting the generality of the foregoing, the CCAA Charges;

"Equity Claim" means a Claim that is an "equity claim" within the meaning of section 2(1) ofthe CCAA, and, for certainty, includes (i) any claims resulting from the ownership, purchase orsale of an Equity Interest, and (ii) any indemnification claims against the Applicants related to orarising from (i) above;

"Equity Claimant" means any Person with an Equity Claim or holding an Equity Interest, butonly in such capacity, and for certainty includes an Existing Shareholder in its capacity as such;

"Equity Interests", with respect to the Plan Applicants, has the meaning ascribed thereto insection 2(1) of the CCAA and, for certainty, includes any interest in or entitlement to shares of aPlan Applicant;

"Excluded Claim" means any:

(a) Claim secured by any of the CCAA Charges; and

(b) Claim enumerated in section 5.1(2) of the CCAA;

"Filing Date" means February 26, 2019;

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"Final Distribution" means the distribution by the Plan Applicants of the aggregate amountequal to or less than $1,754,000, 18 months after the Plan Implementation Date, in accordancewith Section 3.3 of this Plan;

"Final Order" means a final Order of the Court, the implementation, operation or effect ofwhich shall not have been stayed, varied, vacated or subject to pending appeal and as to whichOrder any appeal periods relating thereto shall have expired;

"Government Priority Claims" means all Claims of Governmental Authorities that areenumerated in section 38(3) of the CCAA in respect of amounts that are outstanding and that areof a kind that could be subject to a demand on or before the Plan Implementation Date;

"Governmental Authority" means any government, including any federal, provincial, territorialor municipal government, and any government department, body, ministry, agency, tribunal,commission, board, court, bureau or other authority exercising or purporting to exerciseexecutive, legislative, judicial, regulatory or administrative functions of, or pertaining to,government including without limitation any Taxing Authority;

"Guarantee" means any guarantee, indemnity, surety or similar agreement by a Person toguarantee, indemnify or otherwise hold harmless any Person from or against any Indebtedness,losses, Liabilities or damages of that Person;

"Indebtedness" means, without duplication:

(a) all debts and liabilities of a Person for borrowed money;

(b) all debts and liabilities of a Person representing the deferred acquisition cost ofproperty and services; and

(c) all Guarantees given by a Person;

"Initial Distribution" means the distribution by the Plan Applicants of the aggregate amount of$1,696,000 as soon as reasonably practicable on or after the Plan Implementation Date, inaccordance with Section 3.3 of this Plan;

"Initial Order" means the Order of the Court granted in the CCAA Proceedings on February 26,2019, as may be amended, restated or varied from time to time;

"ITA" means the Income Tax Act (Canada), R.S.C. 1985, c. 1 (5th Supp.), and any regulationsthereunder, as amended from time to time;

"Liabilities" means all Indebtedness, obligations and other liabilities of a Person whetherabsolute, accrued, contingent, fixed or otherwise, or whether due or to become due;

"Meeting Order" means the Order, substantially in the form set out in Schedule "A", to bemade by the Court under the CCAA that, among other things, sets the date for the Creditors'Meeting;

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"Monitor" means Hardie & Kelly Inc., solely in its capacity as Court-appointed monitor of thePlan Applicants and not in its personal or corporate capacity;

"Monitor Released Party" has the meaning ascribed thereto in Section 7.1(b);

"Monitor's Plan Completion Certificate" means the certificate substantially in the form to beattached to the Sanction Order to be filed by the Monitor with the Court upon completion of itsduties under the Plan;

"Monitor's Plan Implementation Certificate" means the certificate substantially in the form tobe attached to the Sanction Order to be filed by the Monitor with the Court, certifying theimplementation of this Plan, in accordance with Section 8.4 of this Plan;

"NBC" means National Bank of Canada;

"NBC Secured Claim" means the secured claim of NBC against the Plan Applicants, includingall principal, interest, fees and costs;

"Officer" has the meaning given to such term in the Claims Procedure Order;

"Order" means any order of the Court, or any order, directive, judgment, decree, injunction,decision, ruling, award or writ of any Governmental Authority;

"Person" means any individual, firm, corporation, limited or unlimited liability company,general or limited partnership, association, trust, unincorporated organization, joint venture,government or any agency or instrumentality thereof or any other entity;

"Plan" means this Plan of Compromise and Arrangement under the CCAA, including theSchedules hereto, as amended, supplemented or replaced from time to time;

"Plan Applicants" means EEI, EEL and EEP;

"Plan Applicant Released Party" has the meaning ascribed thereto in Section 7.1(a);

"Plan Implementation Date" means the Business Day on which all of the Conditions Precedentto the implementation of the Plan have been fulfilled or, to the extent permitted pursuant to theterms and conditions of the Plan, waived;

"Plan Sanction Date" means the date that the Sanction Order issued by the Court becomes aFinal Order;

"Plan Transaction Steps" means the steps or transactions considered necessary or desirable togive effect to the transactions contemplated in the Plan, including those set out in Section 6.3;

"Plan Transactions" has the meaning ascribed thereto in Section 6.3;

"Post-Filing Trade Payables" means, for each Plan Applicant, post-Filing Date trade payables(excluding for greater certainty any Tax Claims and Administrative Costs) that were incurred bysuch Plan Applicant (a) after the Filing Date and before the Plan Implementation Date; (b) in the

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ordinary course of business; and (c) in compliance with the Initial Order and other Orders issuedin the CCAA Proceedings;

"Principal Claim" has the meaning ascribed thereto in Section 4.9;

"Pro Rata Share" means the fraction that is equal to (i) the amount of the Proven Claim of anAffected Creditor, divided by (ii) the aggregate amount of all Proven Claims held by AffectedCreditors in the Affected Creditor Class (excluding those Affected Creditors whose ProvenClaims have been repaid in full at the time of the determination of a Pro Rata Share);

"Promissory Notes" means the promissory notes to be issued by EEI in accordance with Section3.3 of this Plan to all Affected Creditors whose Proven Claims are not paid in full in the InitialDistribution, and which shall: (a) have a principal amount of the respective unpaid balance ofsuch Affected Creditor's Proven Claim; (b) be non-interest bearing; and (c) shall mature 18months after the Plan Implementation Date; to be issued substantially in the form attached to thisPlan as Schedule "B";

"Proof of Claim" has the meaning given to such term in the Claims Procedure Order;

"Property" means all current and future assets, undertakings and properties of the PlanApplicants, of every nature and kind whatsoever, and wherever situate;

"Proven Claim" means a Claim of an Affected Creditor finally determined for distributionpurposes in accordance with the Claims Procedure Order and the Plan;

"Proxy" means the proxy form to be delivered to or otherwise made available to the AffectedCreditors in accordance with the Meeting Order;

"Released Parties" means those Persons who are released pursuant to Section 7.1;

"Required Majority" means a majority in number of Affected Creditors in the Affected CreditorClass who represent at least two-thirds in value of the Voting Claims of such Affected CreditorClass who actually vote on the Resolution (in person or by Proxy) at the Creditors' Meeting orwho were deemed to vote on the Resolution in accordance with the Plan and the Meeting Order;

"Resolution" means the resolution approving the Plan herein, presented to the Affected CreditorClass for consideration at the Creditors' Meeting;

"Restructuring Period Claimant's Claim" has the meaning as described in paragraph 19 of theClaims Procedure Order;

"Restructuring Period Claims Bar Date" has the meaning given to such term in the ClaimsProcedure Order;

"Sanction Order" means the Order to be sought by the Applicants from the Court ascontemplated under the Plan which, inter alia, approves and sanctions the Plan and thetransactions contemplated thereunder, substantially in the form attached to this Plan as Schedule

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"SISP" means the Sale and Investment Solicitation Process with respect to the Plan Applicants,approved by the Court in the Initial Order;

"Stay of Proceedings" means the stay of proceedings created by the Initial Order as amendedand extended by further Orders of the Court from time to time;

"Subordinated Debt Financing" means that $275,000 subordinated debt financingcontemplated in the Tallinn Commitment Letter;

"Tallinn" means Tallinn Capital Energy Limited Partnership, by its General Partner, TallinnCapital Energy Corp.;

"Tallinn Commitment Fee" means that $75,000 commitment fee contemplated in the TallinnCommitment Letter;

"Tallinn Commitment Letter" means that commitment letter dated May 17, 2019 entered intobetween Tallinn and the Plan Applicants, which is attached as Schedule "C";

"Tallinn Facility" means that $7,500,000 credit facility contemplated in the TallinnCommitment Letter;

"Tax" means any and all taxes, including all income, sales, use, goods and services, harmonizedsales, value added, capital gains, alternative, net worth, transfer, profits, withholding, payroll,employer health, excise, franchise, real property, and personal property taxes and other taxes,customs, duties, fees, levies, imposts and other Assessments or similar charges in the nature of atax, including Canada Pension Plan and provincial pension plan contributions, employmentinsurance and unemployment insurance premiums and workers' compensation premiums,together with any instalments with respect thereto, and any interest, penalties, fines, fees, othercharges and additions with respect thereto;

"Tax Claims" means any claims of any Taxing Authorities against the Applicants arising on orafter the Plan Implementation Date;

"Tax Obligation" means any amount of Tax owing by a Person to a Taxing Authority;

"Taxing Authorities" means Her Majesty the Queen in right of Canada, Her Majesty the Queenin right of any province or territory of Canada, any municipality of Canada, the Canada RevenueAgency, any similar revenue or taxing authority of Canada and each and every province orterritory of Canada and any political subdivision thereof and any Canadian or foreigngovernment, regulatory authority, government department, agency, commission, bureau,minister, court, tribunal or body or regulation making entity exercising taxing authority orpower;

"Transfer Restrictions" means any and all restrictions on the transfer of shares, limitedpartnership or other units or interests in real property including rights of first refusal, rights offirst offer, shotgun rights, purchase options, change of control consent rights, puts or forced salesprovisions or similar rights of shareholders or lenders in respect of such interests;

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"Unaffected Claim" means: (a) an Excluded Claim; (b) a claim in respect of the AdministrativeCosts; and (c) Post-Filing Trade Payables;

"Unaffected Creditor" means a Creditor who has an Unaffected Claim, but only in respect ofand to the extent of such Unaffected Claim;

"Voting Claim" means the amount of the Affected Claim of an Affected Creditor as finallydetermined for voting purposes in accordance with the Claims Procedure Order and the MeetingOrder entitling such Affected Creditor to vote at the Creditors' Meeting in accordance with theprovisions of the Meeting Order, the Plan and the CCAA, and includes, for greater certainty, aProven Claim;

"Website" means the website maintained by the Monitor with respect to the CCAA Proceedings,at https://relieffromdebt.ca/elcano-group; and

"Withholding Obligation" has the meaning ascribed thereto in Section 6.4(b).

2.2 Certain Rules of Interpretation

For the purposes of the Plan:

(a) any reference in the Plan to a contract, instrument, release, indenture, or otheragreement or document being in a particular form or on particular terms andconditions means that such document shall be substantially in such form orsubstantially on such terms and conditions;

(b) any reference in the Plan to an Order or an existing document or exhibit filed or tobe filed means such Order, document or exhibit as it may have been or may beamended, restated or varied from time to time;

(c) unless otherwise specified, all references to currency and to "$" or "CDN$" are toCanadian dollars, provided, however that references to "USD$" are to U.S.dollars;

(d) the division of the Plan into "Articles" and "Sections" and the insertion of a Tableof Contents are for convenience of reference only and do not affect theconstruction or interpretation of the Plan, nor are the descriptive headings of"Articles" and "Sections" otherwise intended as complete or accurate descriptionsof the content thereof;

(e) references in the Plan to "Articles", "Sections", "Subsections" and "Schedules" arereferences to Articles, Sections, Subsections and Schedules of or to the Plan;

(f) the use of words in the singular or plural, or with a particular gender, including adefinition, shall not limit the scope or exclude the application of any provision ofthe Plan or a Schedule hereto to such Person (or Persons) or circumstances as thecontext otherwise permits;

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(g) the words "includes" and "including" and similar terms of inclusion shall not,unless expressly modified by the words "only" or "solely", be construed as termsof limitation, but rather shall mean "includes but is not limited to" and "includingbut not limited to", so that references to included matters shall be regarded asillustrative without being either characterizing or exhaustive;

(h) unless otherwise provided, any reference to a statute or other enactment ofparliament or a legislature includes all regulations made thereunder, allamendments to or re-enactments of such statute or regulations in force from timeto time, and, if applicable, any statute or regulation that supplements orsupersedes such statute or regulation;

(i)

(i)

2.3 Time

the terms "the Plan", "hereof', "herein", "hereto", "hereunder" and similarexpressions shall be deemed to refer generally to the Plan and not to anyparticular "Article", "Section" or other portion of the Plan and include anydocuments supplemental hereto; and

the word "or" is not exclusive.

For purposes of the Plan, unless otherwise specified, all references to time herein and in anydocument issued pursuant hereto mean prevailing local time in Calgary, Alberta, Canada, unlessotherwise stipulated.

2.4 Date and Time for any Action

For purposes of the Plan:

(a) in the event that any date on which any action is required to be taken under thePlan by any Person is not a Business Day, that action shall be required to be takenon the next succeeding day which is a Business Day, and any reference to anevent occurring on a Business Day shall mean prior to 5:00 p.m. on such BusinessDay; and

(b) unless otherwise specified, time periods within or following which any payment isto be made or act is to be done shall be calculated by excluding the day on whichthe period commences and including the day on which the period ends and byextending the period to the next succeeding Business Day if the last day of theperiod is not a Business Day.

2.5 Successors and Assigns

The Plan shall be binding upon and shall enure to the benefit of the heirs, administrators,executors, legal personal representatives, liquidators, receivers, trustees in bankruptcy, andsuccessors and assigns of any Person or party named or referred to in the Plan.

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2.6 Governing Law

The Plan shall be governed by and construed in accordance with the laws of the Province ofAlberta and the federal laws of Canada applicable therein, without reference to conflict of lawsprinciples which would result in the application of the laws of a different jurisdiction. Allquestions as to the interpretation of or application of the Plan and all proceedings taken inconnection with the Plan and its provisions shall be subject to the exclusive jurisdiction of theCourt.

2.7 Currency

For the purposes of voting or distribution under the Plan, a Claim shall be denominated inCanadian dollars and all payments and distributions to Affected Creditors on account of theirProven Claims shall be made in Canadian dollars. In accordance with paragraph 6 of the ClaimsProcedure Order, any Claim in a currency other than Canadian dollars must be converted toCanadian dollars, and any such amount shall be regarded as having been converted at the dailyrate of exchange quoted by the Bank of Canada for exchanging such currency to Canadiandollars as at the Filing Date.

2.8 Schedules

The following are the Schedules to the Plan, which are incorporated by reference into the Planand form a part of it:

Schedule "A" Meeting OrderSchedule "B" Promissory NoteSchedule "C" Tallinn Commitment LetterSchedule "D" Sanction Order

ARTICLE 3PURPOSE AND EFFECT OF THIS PLAN

3.1 Purpose of Plan

The purpose of this Plan is to:

(a) repay the Excluded Claims in full;

(b) repay the NBC Secured Claim and the CRA Secured Claim in full;

(c) restructure the Affected Claims against the Plan Applicants with a view tomaximizing Affected Creditors' recovery;

(d) avoid liquidation of the Plan Applicants' Property, which would result insuboptimal recoveries; and

(e) release each of the Plan Applicants and the Monitor, along with their respectivedirectors, officers, employees, advisors, legal counsel and agents, as applicable;

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The Plan Applicants expect, and the Monitor agrees, that approving and implementing this Planis likely to produce a better result for all Affected Creditors, while also providing the possibilityof future recovery to those Persons with Equity Interest in the Plan Applicants, than any otheravailable alternative, including an immediate liquidation of the Property of the Plan Applicants.The Plan contemplates the repayment in full of the NBC Secured Claim and the CRA SecuredClaim, the compromise and arrangement of the Affected Claims pursuant to the provisions of theCCAA in a manner that provides consistent and equitable treatment among the AffectedCreditors, and that is consistent with what would reasonably occur in an open market in whichparties deal with one another at s length.

3.2 Consideration to be Provided to Secured Creditors under the Plan

As soon as reasonably practicable on or after the Plan Implementation Date, the Plan Applicantsshall repay the NBC Secured Claim and the CRA Secured Claim in full.

3.3 Consideration to be Provided to Affected Creditors under the Plan

As soon as reasonably practicable on or after the Plan Implementation Date, the Plan Applicantsshall make the Initial Distribution, in the aggregate amount of $1,696,000. In the InitialDistribution:

(a) each Convenience Class Creditor shall receive the full amount of its respectiveProven Claim; and

(b) each Affected Creditor who is not a Convenience Class Creditor shall receive thefirst $5,000 of its respective Proven Claim; and

(c) each Affected Creditor who is not a Convenience Class Creditor shall also receiveits Pro Rata Share of the balance of the Initial Distribution, remaining after thepayments described in subparagraphs (a) and (b) immediately above.

Each Affected Creditor who is not a Convenience Class Creditor shall receive a Promissory Noteissued by EEI in the amount of the balance of its Proven Claim that remains unpaid after theInitial Distribution.

On a date which is on or before 18 months after the Plan Implementation Date, EEI shall makethe Final Distribution pursuant to the Promissory Notes. The Final Distribution shall not exceedthe aggregate amount of $1,754,000. If the aggregate amount outstanding under the PromissoryNotes is less than or equal to $1,754,000, EEI shall repay in full the Promissory Notes and uponsuch repayments, the Promissory Notes shall be cancelled. If the aggregate amount outstandingunder the Promissory Notes is greater than $1,754,000, EEI shall pay to each Affected Creditorholding a Promissory Note its Pro Rata Share of the aggregate amount of $1,754,000, and aftersuch payment, any remaining amounts owing under the Promissory Notes shall be deemed to beforgiven by the Affected Creditors holding the Promissory Notes and the Promissory Notes shallbe settled and shall terminate.

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3.4 Persons Affected

The Plan provides for a compromise of the Affected Claims. The Plan will become effectivecommencing at the Effective Time on the Plan Implementation Date. On the PlanImplementation Date, the Affected Claims of the Affected Creditor Class will be fully andfinally compromised, released, settled and discharged to the extent provided for under the Plan.With respect to such approving class of Affected Creditors, the Plan shall be binding on and shallenure to the benefit of the Plan Applicants, the Affected Creditors (including Equity Claimants),the Released Parties and all other Persons named or referred to in, receiving the benefit of orsubject to, the Plan.

3.5 Persons Not Affected

For greater certainty, the Plan does not affect the Unaffected Creditors with respect to and to theextent of their Unaffected Claims. Nothing in the Plan shall affect any of the Plan Applicants'rights and defences, both legal and equitable, with respect to any Unaffected Claims including,but not limited to, all rights with respect to legal and equitable defences or entitlements to set-offs or recoupments against such Unaffected Claims.

3.6 Equity Claims

All Persons holding Equity Claims shall receive no consideration under the Plan and shall not beentitled to vote at or attend the Creditors' Meeting. For clarity, all Persons holding shares in thePlan Applicants shall continue to hold such shares after the Plan Implementation Date.Therefore, the Plan allows for possible future recoveries by existing shareholders.

3.7 Post-Filing Trade Payables

The Plan Applicants shall continue to pay their Post-Filing Trade Payables in the ordinarycourse.

ARTICLE 4CLASSIFICATION OF CREDITORS, VOTING CLAIMS AND RELATED MATTERS

4.1 Classification of Creditors

For the purposes of considering, voting on and receiving distributions under the Plan included inthis Plan, the Affected Creditors, being all the unsecured creditors of the Plan Applicants, shallconstitute a single class, the Affected Creditor Class.

4.2 Claims of Affected Creditors

Affected Creditors shall be entitled to vote their Voting Claims at the Creditors' Meeting andshall be entitled to receive distributions on their Proven Claims pursuant to this Plan.

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4.3 Unaffected Claims

Unaffected Claims shall not be compromised under the Plan. No holder of an Unaffected Claimshall:

(a) be entitled to vote on the Plan or attend at any Creditors' Meeting in respect ofsuch Unaffected Claim; or

(b) be entitled to or receive any distributions pursuant to the Plan in respect of suchUnaffected Claim, unless specifically provided for under and pursuant to the Plan.

4.4 Priority Claims

The Employee Priority Claims and the Government Priority Claims, if any, shall be paid on orafter the Plan Implementation Date pursuant to and in accordance with Section 6.3 of the Plan,the Sanction Order and the CCAA.

4.5 Creditors' Meeting

The Creditors' Meeting shall be held in accordance with the Plan, the Claims Procedure Order,the Meeting Order and any further Order of the Court. The only Persons entitled to attend theCreditors' Meeting shall be representatives of the Plan Applicants and their respective legalcounsel and advisors, the Monitor and its legal counsel and advisors and all other Persons,including the holders of Proxies, entitled to vote at the Creditors' Meeting and their respectivelegal counsel and advisors.

4.6 Voting

Each Affected Creditor in the Affected Creditor Class who is entitled to vote at the Creditors'Meeting for, pursuant to and in accordance with the Claims Procedure Order, the Meeting Order,the Plan and the CCAA, shall be entitled to one vote equal to the dollar value of its AffectedClaim determined as a Voting Claim. Convenience Class Creditors shall not be required orpermitted to vote at the Creditors' Meeting, but instead shall be deemed to vote in favour of thePlan in the amount of their respective Proven Claim. NBC and CRA (with respect to the CRASecured Claim only) shall not be required or permitted to vote at the Creditors' Meeting.

4.7 Procedure for Valuing Voting Claims

The procedure for valuing Voting Claims and resolving disputes and entitlements to voting shallbe as set forth in the Claims Procedure Order, the Meeting Order, the Plan and the CCAA. TheMonitor, in consultation with the Plan Applicants, shall have the right to seek the assistance ofthe Court in valuing any Voting Claim in accordance with the Meeting Order and the Plan, ifrequired, and to ascertain the result of any vote on the Plan.

4.8 Approval by Creditors

In order to be approved, the Plan must receive the affirmative vote of the Required Majority ofthe Affected Creditors.

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If the Affected Creditor Class votes in favour of the Plan, all of the Affected Creditors thereofshall receive all the consideration offered to them in this Plan (as described in Article 3 of thePlan) and NBC, CRA and the Unaffected Creditors shall receive the consideration offered tothem in this Plan.

4.9 Guarantees and Similar Covenants

No Person who has a Claim under a Guarantee in respect of any Claim which is compromisedunder the Plan (such compromised Claim being the "Principal Claim"), or who has any right toor claim over in respect of or to be subrogated to the rights of any Person in respect of thePrincipal Claim, shall:

(a) be entitled to any greater rights as against the Plan Applicants than the Personholding the Principal Claim;

(b) be entitled to vote on their respective Plan to the extent that the Person holdingthe Principal Claim is voting on such Plan; or

(c) be entitled to receive any distribution under the Plan to the extent that the Personholding the Principal Claim is receiving a distribution.

For greater certainty, no Person who has a Claim under a Guarantee in respect of a PrincipalClaim shall be entitled to recover, in aggregate under the Guarantee and the Principal Claim,more than the amount of the Principal Claim.

ARTICLE 5PROVISIONS REGARDING DISTRIBUTIONS, TRANSFERS AND VOTING

All distributions to be effected pursuant to the Plan shall be made pursuant to this Article 5 andshall occur in the manner set out below.

Notwithstanding any other provisions of the Plan, no distributions or transfers of Cash shall bemade by the Applicants with respect to all or any portion of a Disputed Claim unless and only tothe extent that such Disputed Claim has become a Proven Claim, in whole or in part.

5.1 Treatment of Undeliverable Distributions

If any Affected Creditor's distributions are returned as undeliverable, no further distributions tosuch Affected Creditor shall be made unless and until the Plan Applicants and the Monitor arenotified by such Affected Creditor of such Affected Creditor's current address. All claims forundeliverable distributions must be made on or before the expiration of one (1) year followingthe later of the Plan Implementation Date or the date upon which such Affected Creditor's claimbecame a Proven Claim. After such date the Proven Claims of any Affected Creditor orsuccessor of such Affected Creditor with respect to such unclaimed distributions shall, unlessotherwise consented to by the Plan Applicants, be forever discharged and forever barred,notwithstanding any federal or provincial laws to the contrary. Nothing contained in the Planshall require the Plan Applicants or the Monitor to attempt to locate any holder of a ProvenClaim.

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5.2 Assignment of Claims for Voting and Distribution Purposes Prior to the Creditors'Meeting

An Affected Creditor may transfer or assign the whole of its Claim prior to the Creditors'Meeting, provided that neither the Plan Applicants nor the Monitor shall be obligated to givenotice to or otherwise deal with the transferee or assignee of such Claim as an Affected Creditorin respect thereof, including allowing such transferee or assignee of an Affected Claim to vote atthe Creditors' Meeting, unless and until actual notice of the transfer or assignment, together withsatisfactory evidence of such transfer or assignment, has been received and acknowledged by theMonitor in writing no later than 3:00 p.m. on the date that is one (1) Business Day prior to theCreditors' Meeting. Thereafter such transferee or assignee shall, for all purposes in accordancewith the Claims Procedure Order and the Meeting Order, constitute an Affected Creditor andshall be bound by any and all notices previously given to the transferor or assignor and any andall steps taken in respect of such Claim.

Where a Claim has been transferred or assigned in part, the transferor or assignor shall retain theright to vote at the Creditors' Meeting in respect of the full amount of the Claim, and thetransferee or assignee shall have no voting rights at the Creditors Meeting in respect of suchClaim.

5.3 Assignment of Claims for Distribution Purposes After the Creditors' Meeting

An Affected Creditor may transfer or assign the whole of its Claim for distribution purposes afterthe Creditors' Meeting provided that the Plan Applicants shall not be obliged to makedistributions to any such transferee or assignee or otherwise deal with such transferee or assigneeas an Affected Creditor in respect thereof unless and until actual notice of the transfer orassignment, together with satisfactory evidence of such transfer or assignment, has been receivedand acknowledged by the Monitor in writing; thereafter, such transferee or assignee shall, for allpurposes in accordance with the Claims Procedure Order, the Meeting Order and the Plan,constitute an Affected Creditor and shall be bound by any and all notices previously given to thetransferor or assignor and any and all steps taken in respect of such Claim.

5.4 Tax Matters

(a) Notwithstanding any provisions of the Plan, each Person that receives adistribution, disbursement or other payment pursuant to the Plan shall have soleand exclusive responsibility for the satisfaction and payment of any TaxObligations imposed on such Person by any Taxing Authority on account of suchdistribution, disbursement or payment.

(b) Any payor shall be entitled to deduct and withhold and remit from anydistribution, payment or consideration otherwise payable to any Person pursuantto the Plan such amounts as are required (a "Withholding Obligation") to bededucted and withheld with respect to such payment under the ITA, or anyprovision of federal, provincial, territorial, state, local or foreign tax law, in eachcase, as amended or succeeded. For greater certainty, no distribution, payment orother consideration shall be made to or on behalf of a Person until such Person

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has delivered to the Monitor and the Plan Applicants such documentationprescribed by Applicable Law or otherwise reasonably required by the PlanApplicants as will enable the Plan Applicants to determine whether or not, and towhat extent, such distribution, payment or consideration to such Person is subjectto any Withholding Obligation imposed by any Taxing Authority.

(c) All distributions made by the Plan Applicants on behalf of the Applicantspursuant to the Plan shall be first in satisfaction of the portion of Affected Claimsthat are not subject to any Withholding Obligation.

(d) To the extent that amounts are withheld or deducted and paid over to theapplicable Taxing Authority, such withheld or deducted amounts shall be treatedfor all purposes of the Plan as having been paid to such Person as the remainder ofthe payment in respect of which such withholding and deduction were made.

(e) For the avoidance of doubt, it is expressly acknowledged and agreed that theMonitor and any Director or Officer will not hold any assets hereunder, includingCash, or make distributions, payments or disbursements, and no provision hereofshall be construed to have such effect.

ARTICLE 6PLAN IMPLEMENTATION

6.1 Corporate Authorizations

The adoption, execution, delivery, implementation and consummation of all matterscontemplated under the Plan involving any corporate action of any of the Plan Applicants willoccur and be effective as of the Plan Implementation Date as set out in Section 6.3, and will beauthorized and approved under the Plan and by the Court, where appropriate, as part of theSanction Order, in all respects and for all purposes without any requirement of further action byshareholders, Directors or Officers of such Applicants. All necessary approvals to take actionsshall be deemed to have been obtained from the Directors or shareholders of the Applicants, asapplicable.

6.2 Overview

Following the Plan Implementation Date, the Affected Claims of all Creditors will becompromised and released but the Affected Creditors shall receive the consideration as describedin Article 3 of the Plan.

6.3 Plan Implementation Date Transactions

Commencing at the Effective Time, the following transactions, steps, offsets, distributions,payments, disbursements, compromises, releases and discharges shall occur, or be deemed tohave occurred and be taken (the "Plan Transactions"), in the following order in five minuteincrements and at the times set out in this Section 6.3 (or in such other manner or order or at suchother time or times as the Plan Applicants and the Monitor may agree, acting reasonably),

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without any further act or formality required on the part of any Person, except as may beexpressly provided herein:

(a) The Subordinated Debt Financing: the transactions contemplated in theSubordinated Debt Financing shall close, the definitive documents contemplatedtherein shall become effective and the loan proceeds therefrom shall be advancedto the Plan Applicants;

(b) The Tallinn Facility: the transactions contemplated in the Tallinn Facility shallclose, the definitive documents contemplated therein shall become effective andthe loan proceeds therefrom shall be advanced to the Plan Applicants;

(c) The Tallinn Commitment Fee: the Plan Applicants shall pay the TallinnCommitment Fee to Tallinn;

(d) The Plan Applicants shall each pay the following Administrative Costs:

(i) all fees and disbursements owing as at the Plan Implementation Date tothe legal counsel, and other consultants and advisors of the PlanApplicants and the Monitor;

(ii) all amounts on account of Government Priority Claims; and

(iii) all amounts on account of Employee Priority Claims;

(e) Payment of the NBC Secured Claim: the NBC Secured Claim shall be repaid infull;

Payment of the CRA Secured Claim: the CRA Secured Claim shall be repaid infull;

Release of CCAA Charges: the CCAA Charges shall be discharged as againstthe Property of the Plan Applicants;

(f)

(g)

(h) Payment of Initial Distribution: the Plan Applicants shall distribute to eachAffected Creditor the amount to which it is entitled as part of the InitialDistribution, for an aggregate total of $1,696,000;

(i) Issuance of Promissory Notes: EEI shall issue the Promissory Notes to allAffected Creditors whose Proven Claims are not paid in full in the InitialDistribution;

Appointment of Tallinn's Nominee Director: the nominee Tallinn director ofEEI, as contemplated in the Tallinn Commitment Letter, shall be appointed to theboard of directors of EEI; and

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(k) Compromise, Satisfaction and Release: the compromises with the AffectedCreditors and the release of the Released Parties referred to herein shall becomeeffective, in accordance with Article 7 of the Plan.

6.4 Disputed Claims

Holders of Disputed Claims shall not receive their entitlements to the Initial Distribution, thePromissory Notes or the Final Distribution and shall not enjoy any rights attendant thereon, butsuch entitlements and distributions shall be held by the Plan Applicants in trust, subject todelivery if the Disputed Claim is determined to be a Proven Claim. If the Disputed Claim isdetermined not to be a Proven Claim, any such cash distribution shall be distributed by the PlanApplicants to the Affected Creditors, as to their Pro Rata Shares thereof, and any suchPromissory Note shall be cancelled and deemed to be of no force and effect.

ARTICLE 7RELEASES

7.1 Plan Releases

(a) On the Plan Implementation Date, each of the Plan Applicants, and their currentand former respective Directors, Officers, current and former employees,advisors, legal counsel and agents (being referred to individually as a "PlanApplicant Released Party") shall be released and discharged from any and alldemands, claims, actions, applications, causes of action, counterclaims, suits,debts, sums of money, accounts, covenants, damages, judgments, orders,including for injunctive relief or specific performance and compliance orders,expenses, executions, Encumbrances and other recoveries on account of anyliability, obligation, demand or cause of action of whatever nature which anyCreditor, Affected Creditor, or other Person may be entitled to assert, includingany and all Claims in respect of the payment and receipt of proceeds, statutoryliabilities of the Directors, Officers and employees of the Plan Applicant ReleasedParties and any alleged fiduciary or other duty (whether such employees areacting as a Director, Officer or employee), whether known or unknown, maturedor unmatured, foreseen or unforeseen, existing or hereafter arising, based in wholeor in part on any omission, transaction, duty, responsibility, indebtedness,liability, obligation, dealing or other occurrence existing or taking place on orprior to the later of the Plan Implementation Date and the date on which actionsare taken to implement the Plan that are in any way relating to, arising out of or inconnection with the Claims, the Business whenever or however conducted, thePlan, the CCAA Proceedings, or any Claim that has been barred or extinguishedby the Claims Procedure Order and all claims arising out of such actions oromissions shall be forever waived and released (other than the right to enforce theApplicants' obligations under the Plan Documents), all to the full extent permittedby Applicable Law, provided that nothing herein shall release or discharge (i) anyApplicant Released Party if such Applicant Released Party is judged by theexpressed temis of a judgment rendered on a final determination (a "FinalDetermination") on the merits to have committed criminal or fraudulent acts, or

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(ii) the Directors with respect to matters set out in section 5.1(2) of the CCAA,which for certainty includes claims based on allegations of misrepresentationsmade by directors to creditors or of wrongful oppressive conduct by directors;

(b) on the Plan Implementation Date, the Monitor and its current and formerdirectors, officers and employees, legal counsel and agents (being referred toindividually as a "Monitor Released Party") shall be released and dischargedfrom any and all demands, claims, actions, applications, causes of action,counterclaims, suits, debts, sums of money, accounts, covenants, damages,judgments, orders, including for injunctive relief or specific performance andcompliance orders, expenses, executions, Encumbrances and other recoveries onaccount of any liability, obligation, demand or cause of action of whatever naturewhich any Creditor, Affected Creditor, or other Person may be entitled to assert,whether known or unknown, matured or unmatured, foreseen or unforeseen,existing or hereafter arising, based in whole or in part on any omission,transaction, duty, responsibility, indebtedness, liability, obligation, dealing orother occurrence existing or taking place on or prior to the later of the PlanImplementation Date and the date on which actions are taken to implement thePlan that are in any way relating to, arising out of or in connection with theClaims, the Business whenever or however conducted, the Plan, the CCAAProceedings, or any Claim that has been barred or extinguished by the ClaimsProcedure Order and all claims arising out of such actions or omissions shall beforever waived and released (other than the right to enforce the Monitor'sobligations under the Plan Documents), all to the full extent permitted byApplicable Law, provided that nothing herein shall release or discharge anyMonitor Released Party if such Monitor Released Party is judged by the expressedterms of a judgment rendered on a final determination on the merits to havecommitted criminal, fraudulent or other willful misconduct;

(c) this Plan and the Sanction Order will enjoin the prosecution, whether directly,derivatively or otherwise, of any Claim, obligation, suit, judgment, damage,demand, debt, right, cause of action, liability or interest released, discharged,compromised or terminated pursuant to the Plan; and

(d) nothing in the Plan shall be interpreted as restricting the application of Section 21of the CCAA.

ARTICLE 8COURT SANCTION, CONDITIONS PRECEDENT AND IMPLEMENTATION

8.1 Application for Sanction Order

If the Required Majority of the Affected Creditors approve the Plan, the Plan Applicants, shallapply for the Sanction Order on or before the date set in the Meeting Order for the hearing of theSanction Order or such later date as the Court may set.

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8.2 Sanction Order

The Sanction Order will have effect from and after the Effective Time on the PlanImplementation Date, and shall, among other things:

(a) declare that the SISP has been completed and is terminated;

(b) declare that (i) the Plan has been approved by the Required Majority of AffectedCreditors with Proven Claims, in conformity with the CCAA; (ii) the PlanApplicants have complied with the provisions of the CCAA and the Orders of theCourt made in these CCAA Proceedings in all respects; (iii) the Court is satisfiedthat the Plan Applicants have not done or purported to do anything that is notauthorized by the CCAA; and (iv) the Plan contemplated thereby is fair andreasonable;

(c) declare that the Plan and all associated steps, compromises, transactions,arrangements, releases and reorganizations effected thereby are approved, bindingand effective on the Plan Applicants, all Affected Creditors, the Released Partiesand all other Persons and parties affected by the Plan as of the Effective Time,with respect to the Plan Applicants;

(d) grant to the Monitor, in addition to its rights and obligations under the. CCAA, thepowers, duties and protections contemplated by and required under the Plan andauthorize and direct the Monitor to perform its duties and fulfil its obligationsunder the Plan to facilitate the implementation thereof;

(e) confirm the releases and injunctions of the Released Parties, as set out in Section7.1

(f)

(g)

declare that any Affected Claim for which a Proof of Claim has not been filed bythe Claims Bar Dates in accordance with the Claims Procedure Order or any otherOrder, as applicable, shall be forever barred and extinguished;

declare that in no circumstance will the Monitor have any liability for any of thePlan Applicants' tax liabilities regardless of how or when such liability may havearisen;

(h) declare that the Plan Applicants and the Monitor shall be authorized, inconnection with the taking of any step or transaction or performance of anyfunction under or in connection with the Plan, to apply to any GovernmentalAuthority for any consent, authorization, certificate or approval in connectiontherewith;

(i) declare that, in carrying out the terms of the Sanction Order and the Plan, (i) theMonitor shall benefit from all the protections given to it by the CCAA, the InitialOrder and any other Order in the CCAA Proceedings, and as an officer of theCourt, including the Stay of Proceedings in its favour; (ii) the Monitor shall incurno liability or obligation as a result of carrying out the provisions of the Sanction

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Order and/or the Plan; and (iii) the Monitor shall be entitled to rely on the booksand records of the Plan Applicants and any information provided by any of thePlan Applicants without independent investigation and shall not be liable for anyclaims or damages resulting from any errors or omissions in such books, recordsor information;

provide for discharge of the CCAA Charges as against the Property of the PlanApplicants;

authorize the Plan Applicants (at their sole election) to seek an order of any courtof competent jurisdiction to recognize the Plan and the Sanction Order and toconfirm the Plan and the Sanction Order as binding and effective in anyappropriate foreign jurisdiction;

declare that the Plan Applicants and the Monitor may apply to the Court fromtime to time for advice and direction in respect of any matters arising from orunder the Plan;

approve the form of the Monitor's Plan Completion Certificate, and declare thatthe Monitor, in its capacity as Monitor, following written notice from the PlanApplicants pursuant to Section 8.4 that the Plan Applicants have completed theirduties to effect the Initial Distribution and the issuance of the Promissory Notes,and that all Disputed Claims have been resolved, shall file with the Court theMonitor's Plan Completion Certificate; and

(n) declare that the Monitor shall be discharged and the CCAA Proceedings shall beterminated, upon the filing of the Monitor's Plan Completion Certificate.

8.3 Conditions Precedent to Implementation of the Plan

The implementation of the Plan shall be conditional upon the fulfilment or waiver, whereapplicable, of the following conditions precedent by the date specified therefor, providedhowever that any waiver of any such conditions precedent shall require the consent of theMonitor:

(a) the Meeting Order shall have been granted by the Court on or before June 7,2019, or such later date as shall be acceptable to the Plan Applicants inconsultation with the Monitor, and shall be a Final Order;

(b) the Creditors' Meeting to consider and vote on the Plan shall have been convenedby the date set by the Meeting Order or such later date and shall be acceptable tothe Plan Applicants in consultation with the Monitor;

(c) the Plan Applicants shall have paid their respective Administrative Costs orprovision shall have been made in respect thereof to the satisfaction of theMonitor;

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(d) all material consents, declarations, rulings, certificates or approvals of or by anyGovernmental Authority as may be considered necessary by the Plan Applicantsand the Monitor in respect of the Plan Transaction Steps shall have been obtained;

(e) the Plan shall have been approved by the Required Majority of the AffectedCreditors;

(f)

(g)

the Sanction Order shall have been granted by the Court by July 4, 2019, or suchlater date as shall be acceptable to the Plan Applicants and Tallinn, in consultationwith the Monitor, in form and substance satisfactory to the Plan Applicants,Tallinn and the Monitor, and shall be a Final Order; and

the Plan Implementation Date shall have occurred by July 11, 2019, or such laterdate as shall be acceptable to the Plan Applicants and Tallinn, in consultation withthe Monitor.

8.4 Monitor's Plan Implementation Certificate

Upon delivery of written notice from the Plan Applicants of the fulfilment or waiver of theconditions precedent to implementation of the Plan as set out in Section 8.3 of the Plan, theMonitor shall deliver to the Plan Applicants and file with the Court a Certificate that the Plan hasbeen implemented. Upon filing, the Plan Implementation Date shall be deemed to occur.

ARTICLE 9GENERAL

9.1 Binding Effect

On the Plan Implementation Date, or as otherwise provided in the Plan:

(a) the Plan will become effective commencing at the Effective Time and the PlanTransaction Steps will be implemented;

(b) the treatment of Affected Claims shall be final and binding for all purposes andenure to the benefit of such Plan Applicants, all Affected Creditors, the ReleasedParties and all other Persons and parties named or referred to in, or subject to, thePlan and their respective heirs, executors, administrators and other legalrepresentatives, successors and assigns;

(c) all Affected Claims shall be and shall be deemed to be forever discharged andreleased, and shall be and shall be deemed to be fully satisfied, discharged andreleased, excepting only the obligations to make distributions in respect of suchAffected Claims in the manner and to the extent provided for in the Plan;

(d) any terms and conditions of any Affected Claims which purport to deal with theordering of or grant of priority of payment of principal, interest, penalties or otheramounts shall be deemed to be void and ineffective;

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(e) each Person named or referred to in, or subject to, the Plan shall be deemed tohave consented and agreed to all of the provisions of the Plan, in its entirety;

each Person named or referred to in, or subject to, the Plan shall be deemed tohave executed and delivered to the Plan Applicants all consents, releases,directions, assignments and waivers, statutory or otherwise, required to implementand carry out the Plan in its entirety; and

(f)

(g) each Person named or referred to in, or subject to, the Plan shall be deemed tohave received from the Plan Applicants all statements, notices, declarations andnotifications, statutory or otherwise, required to implement and carry out the Planin its entirety.

9.2 Claims Bar Dates

Nothing in this Plan extends or shall be interpreted as extending or amending the Claims BarDates, or gives or shall be interpreted as giving any rights to any Person in respect of Claims thathave been barred or extinguished pursuant to the Claims Procedure Order or any other Order.

9.3 Deeming Provisions

In the Plan, the deeming provisions are not rebuttable and are conclusive and irrevocable.

9.4 Interest and Fees

Except as provided in this Plan interest shall not accrue or be paid on Affected Claims after theFiling Date, and no holder of an Affected Claim shall be entitled to interest accruing nor to feesand expenses incurred in respect of an Affected Claim on or after the Filing Date and any Claimsin respect of interest accruing or fees and expenses incurred on or after the Filing Date shall bedeemed to be forever extinguished and released.

9.5 Non-Consummation

The Plan Applicants reserve the right to revoke or withdraw the Plan at any time prior to the PlanSanction Date. If the Plan Applicants revoke or withdraw the Plan, or if the Sanction Order is notissued or if the Plan Implementation Date does not occur, (a) the Plan (including all PlanTransaction Steps) shall be null and void in all respects, (b) any settlement or compromiseembodied in the Plan, or any document or agreement executed pursuant to or in connection withthe Plan shall be deemed to be null and void, and (c) nothing contained in the Plan, and no actstaken in preparation for consummation of the Plan, shall (i) constitute or be deemed to constitutea waiver or release of any Claims by or against any of the Plan Applicants or any other Person,(ii) prejudice in any manner the rights of the Plan Applicants or any other Person in any furtherproceedings involving any of the Plan Applicants, or (iii) constitute an admission of any sort byany of the Plan Applicants or any other Person.

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9.6 Modification of the Plan

(a) The Plan Applicants reserve the right, at any time and from time to time, with theconsent of the Monitor, both prior to and during the Creditors' Meeting or afterthe Creditors' Meeting, to amend, restate, modify and/or supplement the Plan;provided (i) if made prior to or at the Creditors' Meeting, such amendment,restatement, modification or supplement shall be communicated to AffectedCreditors in the manner required by the Meeting Order and (ii) if made followingthe Creditors' Meeting, such amendment, restatement, modification or supplementshall be approved by the Court following notice to the Affected Creditors byposting the application materials on the Website.

(b) Notwithstanding Section 9.6(a), any amendment, restatement, modification orsupplement to the Plan may be made by the Plan Applicants, with the consent ofthe Monitor or pursuant to an Order of the Court, at any time and from time totime, provided that it concerns a matter which (i) is of an administrative naturerequired to better give effect to the implementation of the Plan and the SanctionOrder or (ii) to cure any errors, omissions or ambiguities, and in either case is notmaterially adverse to the financial or economic interests of the Affected Creditors.

(c) Any amended, restated, modified or supplementary Plan or Plans filed with theCourt and, if required by this Section, approved by the Court shall, for allpurposes, be and be deemed to be a part of, and incorporated in, the Plan.

9.7 Paramountcy

Except with respect to the Unaffected Claims, from and after the Effective Time on the PlanImplementation Date, any conflict between:

(a) the Plan or the Sanction Order; and

(b) the covenants, warranties, representations, terms, conditions, provisions orobligations, expressed or implied, of any contract, mortgage, security agreement,indenture, trust indenture, loan agreement, commitment letter, agreement for sale,bylaws of the Applicants, lease or other agreement, written or oral and any and allamendments or supplements thereto existing between any Person and the PlanApplicants as at the Plan Implementation Date;

will be deemed to be governed by the terms, conditions and provisions of the Plan and theSanction Order, which shall take precedence and priority.

9.8 Severability of Plan Provisions

If, prior to the Plan Sanction Date, any term or provision of the Plan is held by the Court to beinvalid, void or unenforceable, the Court, at the request of the Plan Applicants and with theconsent of the Monitor, shall have the power to either (a) sever such term or provision from thebalance of the Plan and provide the Plan Applicants with the option to proceed with theimplementation of the balance of the Plan as of and with effect from the Plan Implementation

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Date, or (b) alter and interpret such term or provision to make it valid or enforceable to themaximum extent practicable, consistent with the original purpose of the ten-n or provision held tobe invalid, void or unenforceable, and such term or provision shall then be applied as altered orinterpreted. Notwithstanding any such holding, alteration or interpretation, and provided that theApplicants proceed with the implementation of the Plan, the remainder of the tams andprovisions of the Plan shall remain in full force and effect and shall in no way be affected,impaired or invalidated by such holding, alteration or interpretation.

9.9 Responsibilities of the Monitor

The Monitor is acting and will continue to act in all respects in its capacity as Monitor in theCCAA Proceedings with respect to the Plan Applicants and not in its personal or corporatecapacity. The Monitor will not be responsible or liable whatsoever for any obligations of the PlanApplicants. The Monitor will have the powers and protections granted to it by the Plan, theCCAA, the Initial Order, the Sanction Order and any other Order made in the CCAAProceedings.

9.10 Different Capacities

Persons who are affected by the Plan may be affected in more than one capacity. Unlessexpressly provided herein to the contrary, a Person will be entitled to participate hereunder ineach such capacity. Any action taken by a Person in one capacity will not affect such Person inany other capacity, unless expressly agreed by a Person in writing or unless its Claims overlap orare otherwise duplicative.

9.11 Notices

Any notice or other communication to be delivered hereunder must be in writing and referencethe Plan and may, subject as hereinafter provided, be made or given by personal delivery,ordinary mail or by email addressed to the respective Parties as follows:

(a) If to the Plan Applicants:

Elcano Exploration Inc.Suite 1600, 521 - 3 Avenue SWCalgary AB T2P 3T3

Attention: Richard FultonEmail: rfulton(&,elcano.ca

with a copy to:

Bennett Jones LLP4500, 855 — 2nd Street S.W.Calgary, AB T2P 41(7

Attention: Chris SimardEmail: [email protected]

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(b) If to the Monitor:

Hardie & Kelly Inc.Suite 110, 5800 — 2nd Street SWCalgary AB T2H OH2

Attention: Marc KellyEmail: mkelly !iinsolvency.net

with a copy to:

Borden Ladner Gervais LLP1900, 520 — 3rd Avenue S.W.Calgary, AB T2P OR3

Attention: Josef Kruger, Q.C.Email: [email protected]

or to such other address as any party may from time to time notify the others in accordance withthis Section. Any such communication so given or made shall be deemed to have been given ormade and to have been received on the day of delivery if delivered, or on the day of sending bymeans of recorded electronic communication, provided that such day in either event is aBusiness Day and the communication is so delivered or sent before 5:00 p.m. on such day.Otherwise, such communication shall be deemed to have been given and made and to have beenreceived on the next following Business Day.

9.12 Further Assurances

Each of the Persons named or referred to in, or subject to, the Plan will execute and deliver allsuch documents and instruments and do all such acts and things as may be necessary or desirableto carry out the full intent and meaning of the Plan and to give effect to the transactionscontemplated herein.

DATED as of the 31' day of May, 2019.

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SCHEDULE "A"

MEETING ORDER

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CLEWS STAMP

COURT FILE NUMBER

COURT

JUDICIAL CENTRE

PLAN APPLICANTS

DOCUMENT


1901-02578


CALGARY

IN THE MATTER OF THE COMPANIES'CREDITORS ARRANGEMENT ACT, R.S.C. 1985,c. C-36, as amended


IN THE MATTER OF THE BUSINESSCORPORATIONS ACT, R.S.A. 2000, c. B-9, asamended

MEETING ORDER

BENNETT JONES LLPBarristers and Solicitors4500, 855- 2nd Street SWCalgary, Alberta T2P 4K7

Attention: Chris Simard and Kelsey MeyerTelephone No.: 403-298-4485/3323Fax No.: 403-265-7219Client File No. 86037.1

DATE ON WHICH ORDER WAS PRONOUNCED: June 7, 2019

LOCATION OF HEARING OR TRIAL: Edmonton

NAME OF JUDGE WHO MADE THIS ORDER: The Honourable Mr. Justice J. S. Little

UPON the Application of Elcano Exploration Inc. ("EEI"), Elcano Exploration Ltd.

("EEL") and Elcano Exploration Partnership ("EEP") (collectively, the "Plan Applicants", and

each, a "Plan Applicant") for a Meeting Order, among other things, (i) accepting the filing of

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the CCAA Plan of the Plan Applicants dated May 31, 2019 (the "Plan"); (ii) authorizing the

classification of creditors for purposes of voting on the Plan; (iii) authorizing and directing the

Plan Applicants to call, hold and conduct meeting of Affected Creditors of the Plan Applicants to

vote on a resolution to approve the Plan; (iv) authorizing and directing the mailing and

distribution of the Affected Creditors Meeting Materials; (v) approving the procedures to be

followed with respect to the Meeting of Affected Creditors; and (vi) setting a date of the hearing

of the Plan Applicants' application for Court approval of the Plan contained in the Plan;

AND UPON reading the pleadings and proceedings herein, the notice of this Application,

the Affidavit No. 2 of Richard Fulton sworn May 31, 2019, the Confidential Affidavit No. 3 of

Richard Fulton sworn May 31, 2019, the Second Report of Hardie & Kelly Inc. (the "Monitor")

dated • 2019 and the Confidential Supplement thereto; AND UPON hearing the submissions of

counsel for the Plan Applicants, counsel for the Monitor and counsel for other interested parties

and stakeholders;

IT IS HEREBY ORDERED AND DECLARED THAT:

SERVICE

1. Service of notice of the Application for this Meeting Order and supporting documents is

hereby deemed to be good and sufficient, the time for notice is hereby abridged to the time

provided, and no other person is required to have been served with notice of the Application.

MONITOR'S ROLE

2. The Monitor, in addition to its prescribed rights and obligations under (i) the CCAA,

(ii) the Initial Order, (iii) the Claims Procedure Order granted on March 28, 2019 (the "Claims

Procedure Order"), and (iv) any other Order, is hereby directed and empowered to take such

other actions and fulfill such other roles as are authorized by this Meeting Order.

3. In carrying out the terms of this Meeting Order, the Monitor shall: (i) have all the

protections given to it by the CCAA, the Initial Order, or as an officer of the Court, including the

stay of proceedings in its favour; (ii) incur no liability or obligation as a result of carrying out the

provisions of this Meeting Order, save and except for any gross negligence or willful misconduct

on its part; (iii) be entitled to rely on the books and records of the Plan Applicants and any

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information provided by the Plan Applicants and the Affected Creditors without independent

investigation; and (iv) not be liable for any claims or damages resulting from any errors or

omissions in such books, records or information.

4. The Monitor and the Plan Applicants are hereby authorized to retain such agents as they

deem to be advisable to assist them in connection with calling and conducting the Meeting,

including with respect to the distribution of the Affected Creditor Meeting Materials, the

identification of the applicable Affected Creditors, and the solicitation of proxies from Persons

entitled to vote at the Meeting.

DEFINITIONS

5. Any capitalized terms used herein but not otherwise defined herein have the meanings

ascribed thereto in the Plan or in the Claims Procedure Order, as applicable.

6. For the purposes of this Meeting Order, in addition to the terms defined elsewhere in this

Meeting Order, the Plan, or the Claims Procedure Order, as applicable, the following terms shall

have the following meanings:

(a) "Affected Creditor Meeting Materials" means, in respect of each Affected

Creditor, copies of:

(i) the Notice to Affected Creditors;

(ii) the Meeting Order;

(iii) the blank form of the Affected Creditors' Proxy;

(iv) a Written Notice of Electronic Records; and

(v) any other materials the Plan Applicants wish to include;

(b) "Affected Creditors' Proxy" means a proxy substantially in the form attached as

Schedule "B" hereto, to be submitted to the Monitor by any Affected Creditor

who wishes to vote by proxy at the Meeting;

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(c) "Mailing Date" means the second Business Day following the date of this

Meeting Order;

(d) "Meeting Date" means July 2, 2019, provided that the Plan Applicants may, with

the consent of the Monitor, extend the date on which the Meeting will be held;

(e) "Meeting Order" means this Order, as it may be amended by any further Order

of the Court;

(f) "Notice to Affected Creditors" means the notice to Affected Creditors

substantially in the form attached as Schedule "A" hereto;

(g) "Resolution" means the Resolution, as defined in the Plan;

(h) "Sanction Hearing Date" means July 4, 2019;

"Service List" means the list of counsel and other interested parties who have

requested service of materials filed with the Court in this proceeding, as

maintained by the Plan Applicants and the Monitor;

(j) "Unresolved Claim" means an Affected Claim in respect of which a Proof of

Claim has been filed in accordance with the Claims Procedure Order but that, as

at any applicable time, has not been (i) determined to be a Voting Claim, or (ii)

finally disallowed;

(k) "Voting Claim" means a Voting Claim as defined in the Plan;

(1) "Voting Record Date" means the Business Day prior to the Meeting, being June

28, 2019;

(m) "Website" means the Monitor's website located at the URL

https://relieffromdebt.ca/elcano-group; and

(n) "Written Notice of Electronic Records" means a written notice to be sent to

each Affected Creditor, which shall direct Affected Creditors to the Website, on

which materials relevant to the Plan and the Meeting will be available for

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viewing, downloading and printing based on instructions contained in the Written

Notice of Electronic Records.

7. All references to time herein shall mean local time in Calgary, Alberta, Canada, and any

reference to an event occurring on a Business Day shall mean prior to 3:00 p.m. on such

Business Day unless otherwise indicated herein.

8. All references to the word "including" shall mean "including without limitation".

9. All references to the singular herein shall include the plural, the plural shall include the

singular and any reference to one gender includes the other gender.

THE PLAN

10. The Plan is hereby accepted for filing and the Plan Applicants are hereby authorized and

directed to call the Meeting for the purposes of having the Affected Creditors vote on the Plan, in

the manner set out herein.

11. The Plan Applicants may, at any time and from time to time prior to or at the Meeting, or

after the Meeting and in advance of the Sanction Hearing, as the case may be, amend, restate,

modify and/or supplement the Plan, subject to the terms of the Plan, provided that: (i) the

Monitor, the Plan Applicants or the Chairperson (as defined in paragraph 20 below) shall

communicate the details of any such amendments, restatements, modifications and/or

supplements made prior to or at the Meeting to Affected Creditors present at the Meeting prior to

any vote being taken at the Meeting; (ii) the Plan Applicants shall forthwith provide notice to the

Service List of any such amendments, restatements, modifications and/or supplements and shall

file a copy thereof with this Court forthwith and in any event prior to the Meeting or the Sanction

Hearing, as the case may be; and (iii) the Monitor shall post an electronic copy of any such

amendments, restatements, modifications and/or supplements on the Website forthwith and in

any event prior to the Meeting or the Sanction Hearing, as the case may be.

12. The Plan Applicants may, at any time after the date of the Sanction Hearing and only

with the Monitor's consent, amend, restate, modify and/or supplement the Plan provided such

amendment, restatement, modification or supplement concerns a matter which, in the opinion of

the Plan Applicants and the Monitor, is of an administrative nature required to better give effect

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to the implementation of the Plan and the Sanction Order, or to cure any errors, omissions or

ambiguities and is not materially adverse to the financial or economic interests of the Affected

Creditors.

13. Any amended, restated, modified or supplementary plan filed with this Court and, if

required, approved by this Court, shall for all purposes, be and be deemed to be a part of, and

incorporated into the Plan.

FORMS OF DOCUMENTS

14. The forms of Notice to Affected Creditors and Affected Creditors' Proxy are hereby

approved. The Plan Applicants may:

(a) make any changes to such materials as are necessary or desirable to conform the

content thereof to the terms of the Plan or this Meeting Order; and

(b) at any time and from time to time prior to or at the Meeting, amend, restate,

modify and/or supplement any of such materials, subject to the terms of the Plan,

provided that:

(i) the Monitor, the Plan Applicants or the Chairperson shall communicate

the details of any such amendments, restatements, modifications and/or

supplements to Affected Creditors present at the Meeting prior to any vote

being taken at the Meeting;

(ii) the Plan Applicants shall forthwith provide notice to the Service List of

any such amendments, restatements, modifications and/or supplements

and shall file a copy thereof with this Court forthwith and in any event

prior to any vote being taken at the Meeting; and

(iii) the Monitor shall post an electronic copy of any such amendments,

restatements, modifications and/or supplements on the Website forthwith

and in any event prior to any vote being taken at the Meeting.

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VOTING BY CREDITORS

15. For the purposes of considering and voting on the Plan, there will be one (1) meeting (the

"Meeting") of all of the Affected Creditors of the Plan Applicants, where all such Affected

Creditors shall constitute a single class.

NOTICE TO AFFECTED CREDITORS

16. The Monitor shall, no later than 5:00 p.m. on the first Business Day following the date of

this Meeting Order, post an electronic copy of the Notice to Affected Creditors, the Plan and the

Affected Creditors' Proxy, (substantially in the foiiiis provided by the Plan Applicants as at the

date of this Meeting Order), and a copy of the Second Report of the Monitor, on the Website.

17. The Monitor shall, on the Mailing Date, deliver the Affected Creditor Meeting Materials

by courier, personal delivery, regular mail or email to each Affected Creditor at the address set

out in such Affected Creditor's Proof of Claim (or in any other written notice that has been

received by the Monitor in advance of such date regarding a change of address for an Affected

Creditor), or in the case of Known Claimants (as defined in the Claims Procedure Order) the

address reflected in the Plan Applicants' books and records for such Known Claimants.

NOTICE, SERVICE AND DELIVERY

18. The Monitor's fulfillment of the notice, delivery and Website posting requirements set out

in this Meeting Order shall constitute good and sufficient notice, service and delivery thereof on

all Persons who may be entitled to receive notice, service or delivery thereof or who may wish to

be present or vote (in person or by proxy) at the Meeting, and that no other form of notice,

service or delivery need be given or made on such Persons and no other document or material

need be served on such Persons.

CONDUCT OF MEETING AND DELIVERY OF PROXIES

19. The Plan Applicants are hereby authorized and directed to call the Meeting and to hold

and conduct the Meeting on the Meeting Date at Bennett Jones LLP, 4500 Bankers Hall East,

855 - 2nd Street SW, Calgary, Alberta, for the purpose of seeking approval of the Plan by the

Affected Creditors with Voting Claims at the Meeting in the manner set forth herein. In the

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event that the Meeting Date is extended after the Mailing Date, the Monitor shall post notice of

the extension of the Meeting Date on the Website and provide notice of the extension of the

Meeting Date to the Service List.

20. Marc Kelly or another representative of the Monitor, designated by the Monitor, shall

preside as the chair of the Meeting (the "Chairperson") and, subject to this Meeting Order or

any further Order of the Court, shall decide all matters relating to the conduct of the Meeting.

21. The Monitor may appoint one or more scrutineers for the supervision and tabulation of

the attendance at, quorum at and votes cast at each of the Meeting (the "Scrutineer"). One or

more people designated by the Monitor shall act as secretary at each of the Meeting (the

"Secretary").

22. The quorum required at the Meeting shall be one Affected Creditor with a Voting Claim

a Plan Applicant present at the Meeting (in person or by proxy). Each member of the

Convenience Class shall be deemed to be present, in person or by proxy.

23. If the requisite quorum is not present at the Meeting, or the Meeting is postponed by the

vote of a majority in value of Voting Claims of the Affected Creditors present at the Meeting (in

person or by proxy), then the Meeting shall be adjourned by the Chairperson to a later date, time

and place as designated by the Chairperson. The Chairperson shall be entitled to adjourn and

further adjourn the Meeting at the Meeting or at any adjourned Meeting. Any adjournment or

adjournments described in this paragraph 23 shall be for a period of not more than seven (7) days

in total unless otherwise agreed to by the Plan Applicants and the Monitor. In the event of any

adjournment described in this paragraph 23, no Person shall be required to deliver any notice of

the adjournment of the Meeting or adjourned Meeting, provided that the Monitor shall: (i)

announce the adjournment at the Meeting or adjourned Meeting, as applicable; (ii) post notice of

the adjournment at the originally designated time and location of the Meeting or adjourned

Meeting, as applicable; (iii) forthwith post notice of the adjournment on the Website; and (iv)

provide notice of the adjournment to the Service List forthwith. Any Affected Creditor Proxies

validly delivered in connection with the Meeting shall be accepted as proxies in respect of any

adjourned Meeting.

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24. The only Persons entitled to attend and speak at the Meeting are: (i) the Affected

Creditors entitled to vote at that Meeting (or, if applicable, any Person holding a valid Affected

Creditor's Proxy on behalf of one or more such Affected Creditors) and any such Affected

Creditor's or valid proxyholder's legal counsel and financial advisors; (ii) the Chairperson, the

Scrutineer and the Secretary; (iii) one or more representatives of the Monitor and the Monitor's

legal counsel; (iv) one or more representatives of the current board of Directors and/or senior

management of the Plan Applicants, as selected by the Plan Applicants, and the Plan Applicants'

legal counsel and financial advisors; and (v) counsel to the Directors and Officers of any of the

Plan Applicant. Any other person may be admitted to a Meeting on invitation of the Plan

Applicants, in consultation with the Monitor.

25. The Monitor may, with the consent of the Plan Applicants, waive in writing the time

limits imposed on Affected Creditors as set out in this Meeting Order (including the schedules

hereto), generally or in individual circumstances, if the Monitor deems it advisable to do so.

ASSIGNMENT OF AFFECTED CLAIMS PRIOR TO THE MEETING

26. Subject to any restrictions contained in Applicable Laws, an Affected Creditor may

transfer or assign the whole of its Affected Claim prior to the Meeting (or any adjournment

thereof), provided that none of the Plan Applicants or the Monitor shall be obliged to deal with

any transferee or assignee thereof as an Affected Creditor in respect of such Affected Claim,

including allowing such transferee or assignee to attend or vote at the Meeting, unless and until

actual notice of the transfer or assignment, together with satisfactory evidence of such transfer or

assignment, has been received and acknowledged by the Plan Applicants and the Monitor, which

receipt and acknowledgment must have occurred on or before the last Business Day prior to the

date of the Meeting (or any adjournment thereof), failing which the original transferor shall have

all applicable rights as the "Affected Creditor" with respect to such Affected Claim as if no

transfer of the Affected Claim had occurred. If such receipt and acknowledgment by the Plan

Applicants and the Monitor has occurred on or before the last Business Day prior to the date of

the Meeting (or any adjournment thereof): (i) the transferor of the applicable Affected Claim

shall no longer constitute an Affected Creditor in respect of such Affected Claim; and (ii) the

transferee or assignee of the applicable Affected Claim shall, for all purposes in accordance with

this Meeting Order, constitute an Affected Creditor in respect of such Affected Claim and shall

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be bound by any and all notices previously given to the transferor or assignor in respect thereof

and shall be bound by any Affected Creditors' Proxy duly submitted to the Monitor in

accordance with this Meeting Order. For greater certainty, the Plan Applicants and the Monitor

shall not recognize partial transfers or assignments of Affected Claims.

VOTING PROCEDURE

27. At the Meeting, the Chairperson shall direct a vote, by written ballot, on the Resolution in

relation to the Plans and any amendments thereto.

28. Subject to paragraph 35, the only Persons entitled to vote at the Meeting (whether in

person or by proxy) are Affected Creditors with Voting Claims against the Plan Applicants as at

the Voting Record Date (which, for greater certainty, includes any transferee of an Affected

Claim that is a Voting Claim, provided that such transferee has been recognized as an Affected

Creditor in respect of such transferred Affected Claim in accordance with paragraph 26) or any

such Affected Creditor's validly appointed holder of its Affected Creditors' Proxy.

29. Each Affected Creditor of a Plan Applicant that has a Voting Claim against the applicable

Plan Applicant shall be entitled to a single vote as a member of the Affected Creditor Class,

which vote shall have a value equal to the dollar value of such Affected Creditor's Voting Claim

or the aggregate dollar value of all of such Affected Creditor's Voting Claims, if the Affected

Creditor holds more than one Voting Claim.

30. For the purpose of calculating the two-thirds majority in value of Voting Claims at the

Meeting, the aggregate amount of Voting Claims held by all Affected Creditors of the Plan

Applicants that vote (in person or by proxy) at the Meeting shall be divided by the aggregate

amount of all Voting Claims held by all Affected Creditors that vote (in person or by proxy) at

the Meeting. For the purpose of calculating a majority in number of Affected Creditors voting at

the Meeting, (i) each Affected Creditor that votes (in person or by proxy) at the Meeting shall

only be counted once, without duplication.

31. For purposes of tabulating the votes cast on any matter that may come before the

Meeting, the Chairperson shall be entitled to rely on any vote cast by a holder of an Affected

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Creditors' Proxy that has been duly submitted to the Monitor in the manner set forth in this

Meeting Order.

32. Any Affected Creditor that is entitled to vote at the Meeting and that wishes to vote at the

Meeting in person must: (i) duly complete and sign an Affected Creditors' Proxy; (ii) identify

itself in the Affected Creditors' Proxy as the Person with the power to attend and vote at the

Meeting on behalf of such Affected Creditor; and (iii) deliver such Affected Creditors' Proxy, to

the Monitor so that it is received on or before the last Business Day before the date of the

Meeting (or any adjournment thereof), and such delivery must be made in accordance with the

instructions accompanying such Affected Creditors' Proxy.

33. Any Affected Creditor that is entitled to vote at the Meeting and that wishes to appoint a

nominee to vote on its behalf at the Meeting must: (i) duly complete and sign an Affected

Creditors' Proxy; (ii) identify its desired nominee in the Affected Creditors' Proxy, as the Person

with the power to attend and vote at the Meeting on behalf of such Affected Creditor; and (iii)

deliver such Affected Creditors' Proxy to the Monitor so that it is received on or before the last

Business Day before the date of the Meeting (or any adjournment thereof), and such delivery

must be made in accordance with the instructions accompanying such Affected Creditors' Proxy.

34. Notwithstanding anything in paragraphs 32 or 33, or any minor error or omission in any

Affected Creditors' Proxy that is submitted to the Monitor, the Chairperson shall have the

discretion to accept for voting purposes any Affected Creditors' Proxy submitted to the Monitor

in accordance with the Meeting Order.

VOTING OF UNRESOLVED CLAIMS

35. Notwithstanding anything to the contrary herein or in the Plan, each Affected Creditor

with an Unresolved Claim against one or more Plan Applicants as at the Voting Record Date

shall be entitled to attend the Meeting and shall be entitled to one vote at the Meeting in respect

of such Unresolved Claim in accordance with the Claims Procedure Order. Any vote cast in

respect of an Unresolved Claim shall be dealt with in accordance with paragraph 36, unless and

until (and then only to the extent that) such Unresolved Claim is ultimately determined to be: (i)

a Voting Claim, in which case such vote shall have the dollar value attributable to such Voting

Claim; or (ii) disallowed, in which case such vote shall not be counted for any purpose.

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36. The Monitor shall keep a separate record of votes cast by Affected Creditors with

Unresolved Claims and shall report to the Court with respect thereto at the Sanction Hearing. If

approval or non-approval of a Plan by Affected Creditors of the applicable Plan Applicant would

be altered by the votes cast in respect of Unresolved Claims: (i) such result shall be reported to

the Court as soon as reasonably practicable after the Meeting; (ii) if a deferral of the Sanction

Hearing is deemed to be necessary or advisable by the Monitor (in consultation with the Plan

Applicants), the Monitor shall request an appropriate deferral of the Sanction Hearing; and (iii)

the Monitor may make a request to the Court for directions.

37. The Plan Applicants and the Monitor shall have the right to seek the assistance of the

Court at any time in valuing any Unresolved Claim if required to ascertain the result of any vote

on the Plan.

PERSONS NOT ENTITLED TO VOTE

38. For greater certainty, and notwithstanding anything else contained herein, the following

Persons, in such capacity, shall have no right to, and shall not, vote at the Meeting: (i)

Unaffected Creditors, (ii) Equity Claimants, and (iii) any other Person asserting Claims against

the Plan Applicants whose Claims do not constitute Affected Claims on the Voting Record Date.

APPROVAL OF THE PLAN

39. The Plan must receive an affirmative vote of the Required Majority of Affected Creditors

in order to be approved by the Affected Creditors.

40. The result of any vote at the Meeting shall be binding on all Affected Creditors of the

Plan Applicants, regardless of whether such Affected Creditor was present at or voted at the

Meeting, or was entitled to be present or vote at the Meeting.

PLAN SANCTION

41. The Monitor shall report to the Court the results of any votes taken at the Meeting as

soon as reasonably practicable after the Meeting (or any adjournment thereof).

42. The Plan Applicants may apply to the Court at a time to be determined on the Sanction

Hearing Date for the Sanction Order (the "Sanction Hearing").

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43. Service of this Meeting Order by the Monitor or the Plan Applicants to the parties on the

Service List shall constitute good and sufficient service of notice of the Sanction Hearing on all

Persons entitled to receive such service and no other form of notice or service need be made and

no other materials need be served in respect of the Sanction Hearing, except that, subject to

paragraph 41 any party shall also serve the Service List with any additional materials that it

intends to use in support of the Sanction Hearing by no later than 4:00 p.m. (Calgary time) on

July 3, 2019.

44. Any Person who wishes to oppose the Sanction Hearing shall serve on the Plan

Applicants, the Monitor and the Service List a notice setting out the basis for such opposition

and a copy of the materials to be used to oppose the Sanction Hearing by no later than 4:00 p.m.

(Calgary time) on June 27, 2019.

MISCELLANEOUS

45. Notwithstanding anything contained in this Meeting Order, the Plan Applicants may

decide not to call, hold and conduct the Meeting, provided that:

(i) the Monitor, the Plan Applicants or the Chairperson shall communicate

such decision to Affected Creditors present at the Meeting prior to any

vote being taken at the Meeting;

(ii) the Plan Applicants shall forthwith provide notice to the Service List of

any such decision and shall file a copy thereof with this Court forthwith

and in any event prior to the Sanction Hearing; and

(iii) the Monitor shall post an electronic copy of any such decision on the

Website forthwith and in any event prior to the Sanction Hearing.

46. Nothing in this Meeting Order (including the acceptance or determination of any Claim,

or any part thereof, as a Voting Claim in accordance with this Meeting Order) has the effect of

determining the status of any Claim as a Proven Claim for the purposes of the Plan.

47. This Court hereby requests the aid and recognition of any court, tribunal, regulatory or

administrative body have jurisdiction in Canada or the United States, or in any other foreign

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jurisdiction, to give effect to this Meeting Order and to assist the Plan Applicants, the Monitor

and their respective agents in carrying out the terms of this Meeting Order. All courts, tribunals,

regulatory and administrative bodies are hereby respectfully requested to make such orders and

to provide such assistance to the Plan Applicants, or any of them, and to the Monitor, as an office

of the Court, as may be necessary or desirable to give effect to this Meeting Order, to grant

representative status to the Plan Applicants in any foreign proceeding, or to assist the Plan

Applicants, or any of them, and the Monitor and their respective agents in carrying out the terms

of this Meeting Order.

48. The Plan Applicants or the Monitor may from time to time apply to this Court to amend,

vary, supplement or replace this Meeting Order or for advice and direction concerning the

discharge of their respective powers and duties under this Meeting Order or the interpretation or

application of this Meeting Order.

J.C.Q.B.A. or Clerk of the Court

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Schedule "A"

NOTICE TO AFFECTED CREDITORS

IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT,R.S.C. 1985, c. C-36, AS AMENDED

IN THE MATTER OF THE BUSINESS CORPORATIONS ACT,R.S.A. 2000, c. B-9, AS AMENDED

AND IN THE MATTER OF THE PLAN OF COMPROMISE OR ARRANGEMENT OFELCANO EXPLORATION INC., ELCANO EXPLORATION LTD. and ELCANO

ENERGY PARTNERSHIP

THIS NOTICE concerns a plan of compromise and arrangement (the "Plan") proposed by ElcanoExploration Inc. ("EEI"), Elcano Exploration Ltd. ("EEL") and Elcano Exploration Partnership("EEP") (collectively, the "Plan Applicants", and each, a "Plan Applicant") under the CompaniesCreditors' Arrangement Act (the "CCAA").

All capitalized terms not otherwise defined in this Notice to Affected Creditors have the meaning given tothem in the order of the Court of Queen's Bench of Alberta (the "Court") dated June 7, 2019 (the"Meeting Order").

NOTICE IS HEREBY GIVEN THAT a meeting (the "Meeting") of the Affected Creditors of the PlanApplicants will be held for the following purposes:

(1) to consider and, if deemed advisable, to pass, with or without variation, a resolution to approvethe Plan proposed by the Plan Applicants; and

(2) to transact such other business as may properly come before the Meeting or any adjournmentthereof.

The Meeting is being held pursuant to the Meeting Order.

NOTICE IS ALSO HEREBY GIVEN that the Meeting Order established the procedures for the PlanApplicants to call, hold and conduct the Meeting to consider and pass the resolution described above, ifthought advisable, and to transact such other business as may be properly brought before the Meeting.For the purposes of considering and voting on the Plan, there will be one (1) Meeting as follows:

(1) a meeting of all of the Affected Creditors of the Plan Applicants, where all such AffectedCreditors shall constitute a single class.

NOTICE IS ALSO HEREBY GIVEN that the Meeting will be held at the following date, time andlocation:

Date: July 2, 2019

Time: 10:00 a.m. (Calgary time)

Location: Bennett Jones LLP, 4500 Bankers Hall East, 855 - 2nd Street S.W., Calgary, Alberta

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Subject to paragraph 28 of the Meeting Order, only Affected Creditors with Voting Claims against thePlan Applicants as at the Voting Record Date will be eligible to attend the Meeting and vote on theResolution to approve the Plan. The votes of Affected Creditors holding Unresolved Claims will beseparately tabulated and Unresolved Claims will not be counted unless, until and only to the extent thatsuch Unresolved Claims are finally determined to be Voting Claims. A holder of an Unaffected Claimshall not be entitled to attend or vote at the Meeting in respect of such Unaffected Claim.

Any Affected Creditors who are unable to attend the Meeting may vote by proxy, subject to the terms ofthe Meeting Order. Further, any Affected Creditors who are not individuals may only attend and vote atthe Meeting if they have appointed a proxy holder to act on their behalf at such Meeting.

NOTICE IS ALSO HEREBY GIVEN that if the Plan is approved at the Meeting in accordance with theMeeting Order and the Plan and all other necessary conditions are met, the Applicants intend to make anapplication to the Court on July 4, 2019 seeking an order sanctioning the Plan pursuant to the CCAA (the"Sanction Order"). Any person wishing to oppose the application for the Sanction Order must serve acopy of the materials to be used to oppose the application and setting out the basis for such oppositionupon the lawyers for the Applicants, the Monitor as well as those parties listed on the Service List postedon the Monitor's website. Such materials must be served by 4:00 p.m. (Calgary time) on July 3, 2019.

NOTICE IS ALSO HEREBY GIVEN that in order for the Plan to become effective:

i. the Plan must be approved by the Required Majority of Affected Creditors entitled tovote and voting on the Plan as required under the CCAA and in accordance with theterms of the Meeting Order and the Plan;

ii. the Plan must be sanctioned by the Court; and

iii. the conditions to implementation and effectiveness of the Plan as set out in the Plan mustbe satisfied or waived.

Additional copies of the Affected Creditor Meeting Materials including the Plan, may be obtained fromthe Monitor's Website at https://relieffromdebt/elcano-group, or by contacting the Monitor by telephone at(403) 536-8510 or [email protected].

DATED at Calgary, Alberta, this 7th day of June, 2019.

WSLEGAL\086037\00001\22447421v3

Schedule "B"

AFFECTED CREDITOR'S PROXY

IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT,R.S.C. 1985, c. C-36, AS AMENDED

IN THE MATTER OF THE BUSINESS CORPORATIONS ACT,R.S.A. 2000, c. B-9, AS AMENDED

AND IN THE MATTER OF THE PLAN OF COMPROMISE OR ARRANGEMENT OFELCANO EXPLORATION INC., ELCANO EXPLORATION LTD. and ELCANO

ENERGY PARTNERSHIP

AFFECTED CREDITOR'S PROXYFOR AFFECTED CREDITORS OF ELCANO EXPLORATION INC., ELCANO

EXPLORATION LTD. and ELCANO ENERGY PARTNERSHIP

Capitalized terms used and not otherwise defined herein have the meanings given to them in the Plan ofCompromise and Arrangement of the Plan Applicants dated as of May 31, 2019 (as may be amended,restated or supplemented from time to time, the "Plan") filed pursuant to the Companies' CreditorsArrangement Act (the "CCAA") with the Court of Queen's Bench of Alberta (the "Court"), or theMeeting Order, as applicable.

In accordance with the Meeting Order and the Plan, this proxy may only be filed by an Affected Creditorhaving a Voting Claim or an Unresolved Claim (an "Eligible Voting Creditor").

THE UNDERSIGNED ELIGIBLE VOTING CREDITOR hereby revokes all proxies previously givenand nominates, constitutes, and appoints Marc Kelly of Hardie & Kelly Inc. in its capacity as Monitor ofthe Plan Applicants,

OR

instead of the foregoing, , or such other Person as he/she, in his/her solediscretion, may designate to attend on behalf of and act for the Eligible Voting Creditor at the Meeting tobe held in connection with the Plan and at any and all adjournments, postponements or other reschedulingof such Meeting, and to vote the amount of the Eligible Voting Creditor's claim(s) for voting purposes asdetermined by and accepted for voting purposes in accordance with the Meeting Order, Claims ProcedureOrder and set out in the Plan as follows:

1. (mark one only):

❑ Vote FOR approval of the Resolution set out below; or

❑ Vote AGAINST approval of the Resolution set out below.

If this proxy is submitted and a box is not marked as a vote for or against approval of theResolution set out below, this proxy shall be voted FOR approval of the Resolution set outbelow.

- and -

WSLEGAL\086037\00001\22447421v3

2

2. Vote at the nominee's discretion and otherwise act for and on behalf of the undersignedEligible Voting Creditor with respect to any amendments, modifications, variations orsupplements to the Plan and to any other matters that may come before the Meeting orany adjournment, postponement or other rescheduling of such Meeting.

RESOLUTION TO BE VOTED UPON:

BE IT RESOLVED THAT:

1. The Plan of the Plan Applicants is hereby approved, and the consideration being offeredto the Affected Creditors of the Plan Applicants under the Plan substantially as set out inthe Plan, is hereby accepted.

Dated this day of , 2019.

Print Name of Eligible Voting Creditor Title of the authorized signing officer of thecorporation, partnership or trust, if applicable

Signature of Eligible Voting Creditor or, if theEligible Voting Creditor is a corporation,partnership or trust, signature of an authorizedsigning officer of the corporation, partnershipor trust

Telephone number of Eligible Voting Creditor orauthorized signing officer

E-mail Address of Eligible Voting Creditor Mailing address of Eligible Voting Creditor

Print Name of Witness, if Eligible Voting Creditoris an individual

WSLEGAL\086037\00001\22447421v3

3

INSTRUCTIONS FOR COMPLETION OF PROXY

1. Each Affected Creditor has the right to appoint a person (who need not be an Affected Creditor) to

attend, act and vote for and on the Affected Creditor's behalf and such right may be exercised by

inserting in the space provided the name of the person to be appointed. An individual Affected

Creditor of the Plan Applicants wishing to attend and vote in person at the Meeting should insert

the Affected Creditor's own name in the space provided. If no name has been inserted in the

space provided, the Affected Creditor will be deemed to have appointed Marc Kelly of Hardie

& Kelly Inc. (or his/her designee) as the Affected Creditor's proxyholder.

2. If Marc Kelly (or his/her designee) is appointed or deemed to be appointed as proxyholder

and the Affected Creditor fails to indicate on this Proxy a vote for or against the approval of

the Resolution set out in this Proxy, this Proxy will be voted FOR approval of the Resolution.

3. If this Proxy is not dated in the space provided, it will be deemed to bear the date on which it is

received by the Monitor.

4. This Proxy must be signed by the Affected Creditor or by the Affected Creditor's attorney duly

authorized in writing or, if the Affected Creditor is a corporation, by a duly authorized officer or

attorney of the corporation specifying the title of such officer or attorney.

5. Valid proxies bearing or deemed to bear a later date will revoke this Proxy. If more than one valid

proxy for the same Affected Creditor and bearing or deemed to bear the same date are received with

conflicting instructions, such proxies will be treated as disputed proxies and will not be counted.

6. This Proxy must be received by the Monitor by no later than 3:00 p.m. (Calgary time) on the last

Business Day before the Meeting or any adjournment thereof, at the address set out below:

Mail:

Hardie & Kelly Inc.Court-appointed Monitor of Elcano Exploration Inc., Elcano Exploration Ltd. and Elcano EnergyPartnershipSuite 110, 5800 — 2'd Street SWCalgary, AB T2H OH2

Attention: Marc KellyFax: +1 403 640 0591Email: [email protected]

WSLEGAL\ 086037 \ 00001 \22447421v3

SCHEDULE "B"

PROMISSORY NOTE

WS LEGAL\086037 \00001 \22339470v5

TERM PROMISSORY NOTE

CDN$ • DATE: •

1. Promise to Pay

FOR VALUE RECEIVED the undersigned (the "Payor") unconditionally promises to pay to •(the "Holder"), its successors and assigns, or to its order, at [insert full address] (or at such otheraddress as the Holder shall notify the Payor in writing), in lawful money of Canada, the amount of[write out dollar amount] ($•) (the "Principal Amount"). The Principal Amount shall be dueand be paid on [insert date that is 18 months after the date of the Note].

2. Interest

No interest shall be payable on the Principal Amount outstanding at any time, and from time totime, under this Note.

3. Prepayment

The Payor shall be entitled to prepay all or any portion of the Principal Amount outstanding withoutnotice, bonus or penalty.

4. Waiver by the Payor

The Payor waives demand, presentment for payment, notice of non-payment, notice of dishonour,notice of acceleration, and notice of protest of this Note.

5. No Waiver by the Holder

Neither the extension of time for making any payment which is due and payable under this Note atany time or times, nor the failure, delay, or omission of the Holder to exercise or enforce any of itsrights or remedies under this Note, shall constitute a waiver by the Holder of its right to enforceany such rights and remedies subsequently. The single or partial exercise of any such right orremedy shall not preclude the Holder's further exercise of such right or remedy or any other rightor remedy.

6. Governing Law and Successors

This Note is made under and shall be governed by and construed in accordance with the laws ofthe Province Alberta and the federal laws of Canada applicable in the Province of Alberta, and shallenure to the benefit of the Holder and its successors and assigns, and shall be binding on the Payorand its successors and permitted assigns.

[Signature page follows]

WSLEGAL 086037 \ 00001 \22481531v3

ELCANO EXPLORATION INC.

By:

By:

Name:Title:

Name:Title:

WSLEGAL\086037\00001\22481531v3

SCHEDULE "C"

TALLINN COMMITMENT LETTER

WSLEGAL\ 086037 \00001 \22339470v5

Suite 418, 100 - 4th Ave SWCalgary, A13, T2P 3N2Tel: (403) 850-3483wvvw,tallinnenergv.00m

CONFIDENTIAL

May 17, 2019

Elcano Exploration Inc.1600, 521 — 3rd Avenue S.W.Calgary, Alberta T2P 3T3Attention: Gary Goetsch,Frank Wormsbecker,Darren Rennie

GMP FirstEnergySuite 1100, 311 — 6th Avenue S.W.Calgary, Alberta T2P 4M9Attention: R. Scott Robertson,Director, Investment Banking

Dear Sirs,

Re: Commitment Letter

Hardie & Kelly Inc.Suite 110, 5800 2nd Street S.W.Calgary, Alberta T2H OH2Attention: Marc Kelly

tallinncapital energy corp.

Re: Debt Financing Offer in respect of Elcano Exploration Inc., Elcano Exploration Ltd. and ElcanoExploration Partnership (collectively, the "Elcano Group") by Tallinn Capital Energy LP, by itsgeneral partner, Tallinn Capital Energy Corp.

Pursuant to an Initial Order (the "Order") of the Alberta Court of Queen's Bench (the "Court") under theCompanies' Creditors' Arrangement Act (the "CCAA") dated February 26, 2019, the Court has appointed Hardie& Kelly Inc, (the "Monitor") as monitor of the property, business and financial affairs of the Elcano Group.

The Lender confirms receipt of the Confidential Information Memorandum (the "CIM") describing the businessand assets of the Elcano Group, which has been prepared and distributed by GMP FirstEnergy in connectionwith the Sale and Investments Solicitation Process authorized by the Initial Order (the "SISP").

We are pleased to advise that Tallinn Capital Energy Corp. ("TCEC"), the general partner of Tallinn CapitalEnergy Limited Partnership ("Tallinn" or the "Lender"), has approved the following credit facility for ElcanoExploration Inc. subject to the terms and conditions set forth below and in the attached Terms & Conditions andSchedules (collectively, the "Commitment Letter"), We confirm that we have sufficient immediately availablefunds to provide the credit facility.

Elcano is indebted (the "Existing Indebtedness") to the National Bank of Canada ("Existing Lender") pursuantto a credit agreement made as of the 16th day of October 2017 as amended January 8, 2018 between the ExistingLender and Elcano (the "Original Credit Letter") and provided security (collectively, the "NBC Security") tothe Existing Lender in support of the Existing Indebtedness. The Existing Lender has agreed to sell and assign tothe Lender the Existing Indebtedness, the Existing Security and the agreements relating thereto.

CAN: 30195809,4

Elcano Exploration Inc,Commitment Letter, May 17, 2019 2

Borrower: Elcano Exploration Inc, ("Eleatic)" or the "Borrower"),

Guarantor(s): All current and future subsidiaries and affiliates of Elcano (collectively, the "Guarantors"and each individually, a "Guarantor").

Loan Parties: Collectively, the Borrower and the Guarantors and "Loan Party" means any one of them,

Lender: Tallinn Capital Energy Limited Partnership by its general partner, TCEC.

Credit Facility: $7,500,000 (the "Credit Facility"),

Purpose: The Credit Facility will be utilized to i) by the Lender to purchase the existing debt ofapproximately $6,965,000 plus accrued interest held by the Existing Lender under theOriginal Credit Agreement; ii) by the Borrower to pay the Commitment Fee (as definedbelow) of $75,000; and iii) by the Borrower finance capital expenditures of approximately$460,000, The Credit Facility will not be utilized for any purpose other than as describedherein without the prior written consent of the. Lender,

Availability: The Credit Facility will be available concurrently with the completion of the SISP and theCCAA proceedings on terms satisfactory to the Lender (including the discharge of theMonitor, the discharge of the Administration Charge (as defined in the Order) and thedischarge of the Directors' Charge (as defined in the Order), anticipated on or about July 4,2019 (the ("Funding Date") subject to the terms of this Commitment Letter including thesatisfaction or waiver of the conditions set out under "Conditions Precedent" below.

Maturity Date: June 30, 2021 ("Maturity Date").

Interest Rate: The Borrower shall pay interest on the outstanding principal amount of the Credit Facilityfrom time to time at a rate of 11.50% per annum; provided, however, that if an Event ofDefault (as defined below) shall have occurred, the Borrower shall pay interest on theoutstanding principal amount, if and to the fullest extent permitted by applicable law, at arate of 19% per annum calculated from and after the date of the Event of Default during thecontinuance of the Event of Default. Notwithstanding the foregoing, the interest ratepayable hereunder shall revert to 11.5% per annum upon the cure or rectification by theBorrower of such Event of Default to the satisfaction of the Lender, acting reasonably. Allinterest hereunder shall be calculated daily and compounded. and payable monthly on thelast day of each month,

Payments by All payments to the Lender shall be set up on electronic funds transfer ("EFT") to theEFT: Lender's account at the Bank of Montreal,

Work Fee: A work fee of $7,500 ("Work Fee") was paid to Tallinn Capital Energy Corp. on January4, 2019 which covered certain out of pocket expenses including all engineering, geologicaland consulting expenses associated with this transaction. The Work Fee did not cover alltravel, legal and security documentation costs,

Commitment A commitment fee of $75,000 (the "Commitment Fee") will be earned and payable to theFee: Lender on the Funding Date,

Strictly Confidential

Elcano Exploration Inc.• Commitment Letter, May 17, 2019 3

Participatory The Lender will earn a participatory interest which will be due and payable on April 30,Interest: 2020 (the "2019 Participation Interest") and a further participatory interest which will be

due and payable on April 30, 2021 (the "2020 Participatory Interest"), with each of the2019 Participatory Interest and the 2020 Participation Interest (collectively, the"Participatory Interest") calculated as follows:

2019 Participatory Interest

1,0% of 2019 Gross Revenues.

For the purposes of the above calculations,

"2019 Gross Revenue" is defined as the consolidated gross revenues of the Borrower, asper the Borrower's annual audited consolidated financial statements for the year endingDecember 31, 2019;



For the purposes of the above calculation,

"2020 Gross Revenue" is defined as the consolidated gross revenues of the Borrower, asper the Borrower's annual audited consolidated financial statements for the year endingDecember 31, 2020.

Repayment: Prior to an Event of Default occurring, the Borrower will pay to the Lender:

• Interest monthly in arrears;• Principal reductions of $250,000 per month commencing August 31, 2019;• Proceeds from asset sales completed by any Loan Party;• Proceeds from issuance of any debt completed by any Loan Party;• Proceeds from issuance of any equity completed by any Loan Party, excluding

equity raised to support the 2019 and 2020 capital development program; and• the outstanding principal balance on the Maturity Date,

unless otherwise agreed to by the Lender in writing.

All payments shall be applied as follows:

Firstly, to any outstanding costs and expenses of the Lender;Secondly, to all accrued and unpaid interest;Thirdly, to all fees due; and thenFourthly, to repay the principal amount outstanding on the Credit Facility.


Elcano Exploration Inc,

Commitment Letter, May 17, 2019 4

Prepayment:

Security:

Confirmation ofNBC Security:

The Credit Facility may be prepaid at any time subject to 60 days prior written notice and,will be subject to the payment to the Lender of an amount equal to the greater of 4% of themaximum amount drawn under the Credit Facility ("Prepayment Interest") or theapplicable Participatory Interest. For greater certainty, if notice of prepayment is providedprior to April 30, 2020, the 2019 Participatory Interest will apply, and if on or after May 1,2020, the 2020 Participatory Interest will apply.

The following security (the "Security") shall be completed, duly executed, delivered andregistered, where necessary, to the entire satisfaction of the Lender and its counsel. AllSecurity, including the NBC Security, shall be held by the Lender for and on behalf of itselfas continuing security for the indebtedness, liabilities and obligations (whether direct orindirect, absolute or contingent) of the Loan Parties to the Lender under this CommitmentLetter and the Security, as the same may be amended, replaced, restated or supplemented.

1. Promissory Note for $7,500,000 from the Borrower;

2. $10,000,000 demand debenture (the "Debenture") from the Borrower providing:(i) a security interest in all present and after-acquired personal property of theBorrower; (ii) a floating charge on all present and after-acquired oil and gas assetsof the Borrower and (iii) a floating charge over all other present and after-acquiredreal property; (iv) an unconditional undertaking from the Borrower to provide fixedcharges against the oil and gas interests of the Borrower at the request of theLender to be registered in such places and at such times in the sole discretion of theLender; and (v) a pledge/deposit of such Debenture. The charges referred to initems (i) - (iii) above may be registered in such places and at such times as may bedetermined by the Lender in its sole discretion.

Unlimited guarantees from the Guarantors, each supported by a $10,000,000demand debenture in the same form and substance as the Debenture;

4. Agreements providing for the assignment by the Existing Lender to the Lender ofthe Existing Indebtedness and the NBC Security (the "Assignment Agreements")in form and substance satisfactory to the Lender duly authorized and executed byNational Bank of Canada and the Loan Parties; and

5. Such other security, documents, and agreements the Lender or its legal counselmay reasonably request.

The Security shall be registered/perfected in such places and in such manner and at suchtimes, in the sole discretion of the Lender, but at a minimum shall be registered/perfected inthe Province of Manitoba, and the Security shall be in first place and in priority, to all othermortgages, liens, pledges, charges, security interests or other encumbrance of any kind,other than the Permitted Encumbrances (as defined below).

The Loan Parties hereby confirm and agree that the NBC Security is and shall remain infull force and effect in all respects notwithstanding the assignment provided for by theAssignment Agreements, and shall continue to exist and apply to all obligations, liabilitiesand indebtedness owing by the Loan Parties to the Lender under this Commitment Letter.


Eleano Exploration Inc,Commitment Letter, May 17, 2019 5

Release and The Loan Parties shall not be discharged from the Security or any part thereof, other than toDischarge of the extent that such Security applies to a disposition permitted hereunder (in which case theSecurity: Security shall thereupon cease to apply to the subject matter thereof for the benefit of the

Lender) except by a written release and discharge signed by the Lender with the priorwritten consent of the Lender,

If all of the obligations, liabilities and indebtedness under the Commitment Letter and theSecurity have been repaid, paid, satisfied and discharged, as the case may be, in full and theCredit Facility has been fully cancelled, then the Lender shall cause its interest in theSecurity to be released and discharged at the expense of the Borrower.

Amendment and From and after the effective time of the Assignment Agreements (as defined below):Restatement:

UnsecuredCreditors:

1. the Original Credit Agreement shall be and is hereby amended and restated in theform of this Commitment Letter; and

2. all advances and other amounts outstanding under the Original Credit Agreementprior to the advance of any portion of the Credit Facility to the Existing Lender orto the Borrower shall continue to be outstanding under this Commitment Letter andshall be deemed to be advances and obligations, liabilities, and indebtedness owingby the Borrower to the Lender under this Commitment Letter,

Notwithstanding the foregoing or any other term hereof, all of the covenants,representations and warranties on the part of the Borrower under the Original CreditAgreement and all of the claims and causes of action arising against the Borrower inconnection therewith, in respect of all matters, events, circumstances and obligationsarising or existing prior to the advance of any portion of the Credit Facility shall continue,survive and shall not be merged in the execution of this Commitment Letter or any otherinstruments or agreements entered into by the parties relating to the Credit Facility,including the Security, or any advance or provision of any advance hereunder,

The Loan Parties shall make application to the Court on or about June 7, 2019 for an order(the "June Order") which provides for, among other things, the calling and holding of ameeting (the "Meeting") of the unsecured creditors of the Loan Parties (collectively, the"Unsecured Creditors") on or before July 4, 2019 to approve a plan (the "Plan") tocompromise and settle the liabilities (the "Unsecured Debt") claimed by the UnsecuredCreditors in full on the basis of (i) 50% of the Unsecured Debt being paid in cash and (ii)50% of the Unsecured Debt being paid by way of the issue by Loan Parties of unsecured,non-interest bearing promissory notes (the "Notes") with an 18 month maturity date, Thevoting threshold for approval of the Plan by the Unsecured Creditors shall be a majority innumber of the Unsecured Creditors representing two thirds in value of the Unsecured Debtwho are present and voting either in person or by proxy at the Meeting, or such otherthreshold as agreed to by the Lender,

Conditions The Lender's obligations under this Commitment Letter are subject the followingPrecedent: conditions precedent occurring or being fulfilled on or before July 4, 2019 (or such earlier

date as set out below), to the full satisfaction of the Lender in its sole discretion and all suchconditions precedent are for the sole benefit of the Lender and may be waived by theLender in writing:




1. The grant of the June Order not later than June 10, 2019 on terms satisfactory to theLender;

2. The Meeting is held on or before July 4, 2019 and the Plan is approved by theUnsecured Creditors at the Meeting;

3. The grant of the final order of the Court in respect of the CCAA proceedingsproviding for, among other customary matters, the completion of the SISP and theCCAA proceedings, the discharge of the Monitor, the discharge of theAdministration Charge, the discharge of the Directors' Charge (as each term isdefined in the Order), the approval of the Plan and the approval of the compromiseof the Unsecured Debt in accordance with the Plan, in each instance on termssatisfactory to the Lender;

4. The compromise and settlement of the Unsecured Debt in accordance with the Plan;

5. Delivery of duly executed and authorized copies of this Commitment Letter;

6. Evidence of Insurance coverage in accordance with industry standards;

7. All Security, including the Assignment Agreements, shall have been duly completed,authorized, executed and delivered by the parties thereto and all such Security shallbe on terms and conditions satisfactory to the Lender;

8. All Security that is required to be registered in order to protect or perfect the securityinterest granted thereby or which is required to be registered in order to obtain apriority over all other creditors shall have been duly registered to the satisfaction ofcounsel to the Lender free and clear of all liens, mortgages, pledges, securityinterests, assignments, encumbrances, charges, and other interests in property of anynature whatsoever, howsoever created or arising, and other adverse claims(collectively, "Encumbrances") with the exception of the permitted encumbrancesset forth in Appendix "B" attached hereto ("Permitted Encumbrances");

9. Legal opinion from legal counsel to the Borrower, in form and content reasonablyrequired by the Lender, stating that: (i) each Loan Party has beenformed/incorporated and is existing as a limited partnership/corporation, and has thepower and capacity to enter into the Commitment Letter and the Security and toperform its obligations thereunder; (ii) the Commitment Letter and the Security havebeen duly authorized, executed and delivered by it; (iii) execution, delivery andperformance of the Commitment Letter and the Security does not conflict with orcontravene any laws, constating documents, unanimous shareholders agreements orresolutions; (iv) no filing, registration, consent or action is required in connectionwith the execution and delivery of the Commitment Letter and the Security otherthan registrations made in connection with the Debenture and the AssignmentAgreements; and (v) such other opinions as may be requested by the Lender;

10, Legal Opinion of the Lender's counsel, including an opinion that the obligations ofthe Loan Parties under the Commitment Letter and Security are enforceable inaccordance with their terms;



11. Satisfactory evidence by way of officer's certificate (including a schedule of thepetroleum and natural gas reserves described by lease (type, date, term, parties),legal description (wells and spacing units), interest (W.I. or other APO/BPOinterests), overrides (APO/BPO), gross overrides, and other liens, encumbrances,and overrides) addressed to the Lender and its counsel that each Loan Party has goodand valid title to its petroleum and natural gas interests and that no Encumbrancesexist against such interests other than the Security and Permitted Encumbrances;

12, Completion of hedging arrangements, which may include 6,000 bbl/month ofphysical hedges at a minimum of $60/bbl in addition to put options of 3,000bbl/month at a minimum of $45/bbl until June 30, 2020, or similar arrangementssatisfactory to the Lender;

13. The appointment of the Lender's nominee as a director of the Borrower to haveeffect immediately following the completion of the transactions contemplate by thisCommitment Letter;

14, Evidence of proceeds of not less than $275,000 from additional equity orsubordinated debt financings completed by the Borrower held in trust by counsel toBorrower and, if applicable, delivery of loan postponement agreement(s) executedby the lender(s) under such subordinated debt financings;

15. All regulatory approvals shall have been obtained in connection with the transactionscontemplated herein;

16. Director's Resolution from each Loan Party authorizing the Credit Facility, theCommitment Letter and the Security;

17. There shall not exist any event, action, or condition of any nature whatsoever which,in the sole opinion of the Lender, could materially adversely affect the business,operations, assets, or affairs of the Loan Parties, taken as a whole;

18. Confirmation from the Borrower's CFO that salaries for Dale Barnard, DarrenRennie and Greg Jones will be reduced by $25,000 each per annum until June 30,2020;

19. The representations and warranties of the Loan Parties contained herein (and, asapplicable, the Security) are true and correct;

20. The Loan Parties shall have fulfilled or complied with in all material respects witheach of their covenants set out in this Commitment Letter and shall have providedthe Lender a certificate confirming same;

21. Confirmation from the Monitor that its accounts and the accounts of personsengaged by it in connection with the Order, including but not limited to its legalcounsel, have been paid in full;

22. Confirmation from GMP FirstEnergy that its accounts and the accounts of personsengaged by it in connection with the Order, including but not limited to its legalcounsel, have been paid in full;


Elcano Exploration Inc.


23, Confirmation from the directors and officers that all amounts owing or accruing dueto each from the Loan Parties have been paid in full other than the payment ofsalaries in the normal course of business and on a basis consistent with past practiceand that they are not aware of any basis for any claim against the Loan Parties forindemnification under the Order or otherwise; and

24. A payout statement from National Bank of Canada in respect of all amounts owingby the Loan Parties with a payout not to exceed $7,100,000.

If any of the above conditions precedent do not occur or are not fulfilled on or before July4, 2019, to the full satisfaction of the Lender in its sole discretion or are not waived by theLender in writing, this Commitment Letter shall be of no force and effect.

Representations Each Loan Party represents and warrant to the Lender (all of which representations andand Warranties: warranties each Loan Party hereby acknowledges are being relied upon by the Lender in

assuming its obligations under this Commitment Letter) that:

1, It has been duly incorporated or formed, as applicable, and is in good standingunder the legislation governing it, and it has the powers, permits, and licensesrequired to operate its business or enterprise and to own, manage, and administerits property;

2. This Commitment Letter constitutes, and the Security and other agreementscontemplated hereby, including the Assignment Agreements, will constitute, legal,valid, and binding obligations of itself, enforceable in accordance with their terms,subject to applicable bankruptcy, insolvency, or similar laws affecting creditors'rights generally and to the availability of equitable remedies;

3. It has the right to pledge, charge, mortgage, or lien its assets in accordance with theSecurity contemplated by this Commitment Letter;

4, It is presently in good standing under, and shall duly perform and observe, allmaterial terms of all material documents, agreements, and instruments affecting orrelating to its petroleum and natural gas assets (collectively, the "PNGAgreements");

5. The total Unsecured Debt does not exceed $3,450,000;

6. The process to determine potential claims against the directors and officers of theLoan Parties is complete and there are no such claims;

7. It presently does not have any assets or liabilities which it has not already disclosedto the Lender in writing and it does not foresee incurring any material liabilitywhich it has not already disclosed to the Lender in writing;

8. There has been no adverse material change in the financial position of theBorrower or any Guarantor since the effective date of its most recent annualcomparative consolidated financial statements, being December 31, 2018 which ithas not already disclosed to the Lender in writing; such financial statements fairly


Eloano Exploration Inc.Commitment Letter, May 17, 2019 9

present the consolidated financial position of the Borrower at that date, and theBorrower does not foresee incurring any major liability which it has not alreadydisclosed to the Lender;

9. It is not involved in any dispute or legal proceedings likely to materially affect itsfinancial position or its capacity to operate its business;

10, The sole subsidiaries and affiliates of Elcano are the corporation and partnershipset forth in Appendix "C" attached hereto;

11. Without limiting the generality of clause 4 above with respect to PNG Agreements,it is not in default under any other contracts to which it is a party or under theapplicable legislation and regulations governing the operation of its business or itsproperty, including all Environmental Requirements (as defined below) except: (i)the arrears in payment of amounts outstanding to suppliers and service providers,which have been disclosed to the Lender; and (ii) where such default or non-compliance could not reasonably be expected to have a material adverse effect onthe Borrower or its property;

12. It does not carry on business under any trade or other business name, and does notown any property or carry on any material business in any jurisdictions other thanthe Provinces of Manitoba, Alberta and Saskatchewan;

13, It is in compliance in all material respects with applicable law relating to anyabandonment and reclamation obligations, liabilities or activities including, withoutlimitation, any outstanding abandonment/reclamation orders;

14. It has provided to the Lender all material information in the possession of oravailable to it and relevant to the Lender's review and assessment of the CreditFacility, Security and the structure of the Loan Parties and, all such information istrue, complete and accurate;

15. National Bank of Canada is the only secured creditor of the Loan Parties;

16. It has all the requisite power, authority and capacity to execute and deliver thisCommitment Letter and the Security and to perform its obligations hereunder andthereunder;

17. The execution and delivery of this Commitment Letter and the Security and theperformance of the terms of this Commitment Letter and the Security do not violatethe provisions of its constating documents or its by-laws, as applicable, or any law,order, rule or regulation applicable to it and have been validly authorized by it;

18, All property owned or operated by the Loan Parties has been and will continue tobe operated and maintained, as the case may be, in a good and workmanlikemanner in accordance with sound industry practice and in accordance with allapplicable Laws, except to the extent that the failure to do so would not reasonablybe expected to have a material adverse effect on the Loan Parties;

19, Each Loan Party has in full force and effect such policies of insurance in such




amounts issued by such insurers of recognized standing covering the property ofthe Loan Parties as required by this Commitment Letter;

20. Each Loan Party: (i) has obtained all permits, licenses and other authorizationswhich are required under environmental law; and (ii) is in compliance withEnvironmental Law and with the terms and conditions of all such permits, licensesand authorizations, except in each case to the extent that the failure to so obtain orcomply would not reasonably be expected to have a material adverse effect on aLoan Party;

21. It has good and valid title to its assets and property, free and clear of allEncumbrances except for Permitted Encumbrances and each Loan Party is entitledto charge or pledge its interests in its property in favour of the Lender as providedin this Commitment Letter without the need to obtain any consent of or releasefrom any other person or entity which has not been obtained and such property isnot held in trust by any Loan Party for any Person other than a Loan Party; and

22, The execution, delivery and performance of the terms of this Commitment Letterand the Security will not constitute a breach of any agreement to which it or itsproperty, assets or undertaking are bound or affected,

Unless expressly stated to be made as of a specific date, the representations and warrantiesmade in this Commitment Letter shall survive the execution of this Commitment Letterand all Security, and shall be deemed to be repeated as of the date of each drawdownunder the Credit Facility and as of the date of delivery of each compliance certificateattached hereto as Appendix "A" (the "Compliance Certificate"), subject tomodifications made by the Borrower to the Lender in writing and accepted by the Lender.The Lender shall be deemed to have relied upon such representations and warranties ateach such time as a condition of making each drawdown under the Credit Facility orcontinuing to extend the Credit Facility,

Reporting Each Loan Party shall submit to the Lender, in form and substance satisfactory to theRequirements: Lender:

1. Daily production data for all wells operated by the Borrower;

2, Lease operating statements for operated properties within 30 days at the end ofeach month;

3. Aged consolidated AP and AR summaries within 60 days of each quarter-end;

4. Internally prepared financial statements within 60 days of each quarter-end;

5. Annual independent engineering report in form and substance satisfactory to theLender on the petroleum and natural gas reserves of the Borrower (on aconsolidated basis) within 120 calendar days of each fiscal year end, prepared by afirm acceptable to the Lender;

6. Annual audited consolidated financial statements of the Borrower, within 120calendar days of each fiscal year end;


Elmo Exploration Inc.Commitment Letter, May 17, 2019 11

AffirmativeCovenants:

7. Annual compiled unaudited financial statements of the Guarantors, within 120calendar days of each fiscal year end;

8. Compliance Certificate delivered concurrently with the quarterly and annualfinancial statements, at the times set forth above;

9. Decommissioning schedule and budget (well and facilities list used to derivebalance sheet liability) delivered at a minimum annually with currently requiredannual repOrting;

10. Annual report satisfactory to the Lender in respect of the ARO and governmentregulatory obligations in Manitoba, Alberta, and Saskatchewan related to itspetroleum and natural gas reserves within 120 days of the Borrower's year-end;

11. Board approved annual operating and capital budgets for the upcoming fiscal year,in form satisfactory to the Lender, prior to each fiscal year-end;

12. Within (i) 60 days after the end of the first three fiscal quarters of each fiscal year,and (ii) 120 days after the end of each fiscal year, the Borrower will furnish to theLender a detailed variance report of actual capital expenditures for such fiscalperiod month in comparison to the applicable approved budget;

13. Details of any proposed sales of reserves or working interests in assets (includingfarmouts, participations, pooling, unitization or similar agreements) prior to its saleor disposition including its impact on future production and revenues;

14. Detailed information with respect to all hedging contracts within three businessdays following the execution thereof;

15, Details of the commencement of any legal or administrative proceedings or anyinsurance claims against any Loan Party and the related particulars as reasonablypossible upon the Borrower becoming aware thereof;

16. Details of the occurrence of any default hereunder or under Security or any otherevent which would reasonably be expected to result in a material adverse effect ona Loan Party, in each case as soon as reasonably possible upon the Borrowerbecoming aware thereof and specify in such notice the nature of the event and thesteps taken or proposed to be taken to remedy or eliminate the same; and

17. Any additional information as reasonably requested by the Lender.

Each of the Loan Parties covenants and agrees with the Lender that it shall:

1. Pay all sums of money when due and payable by it to the Lender under thisCommitment Letter and the Security;

2. Deliver to the Lender the Security, in all cases and in form and substancesatisfactory to the Lender and the Lender's solicitor;



Comtnitniont Letter, May 17, 2019 12

3, Borrower will use the proceeds of the Credit Facility only for the purposesapproved by the Lender;

4. Carry on business and operate its petroleum and natural gas reserves in accordancewith good practices consistent with accepted industry standards and pursuant toapplicable agreements, regulations, and laws;

5, Maintain its existence and comply with all applicable laws and maintain alllicenses and authorization required from regulatory or governmental authorities oragencies to permit it to early on its business, including, without limitation, anylicenses, certificates, permits and consents from the protection of the environment;

6. Pay, when due, all taxes, assessments, deductions at source, crown royalties,income tax or levies for which the payment is guaranteed by legal privilege, priorclaim, or legal hypothec, without subrogation or consolidations other than any suchtax assessment, deduction at source, royalty or levy being contested in good faithand where the liens for which would be Permitted Encumbrances;

7. Comply with all regulatory bodies and provisions regarding environmentalprocedures and controls;

8. Duly perform and observe all material terms of all PNG Agreements and promptlynotify the Lender of any material default or event of material default under anyPNG Agreement;

9. Comply in all material respects with applicable law relating to abandonment andreclamation obligations, liabilities or activities including, without limitation, anyoutstanding abandonment/reclamation orders;

10, Upon reasonable notice and during normal business hours, allow the Lender accessto its books and records and to visit and inspect its assets and place of business;

11. Maintain adequate and appropriate insurance on its assets including protectionagainst public liability, blow-outs, and "all-risk" perils;

12, Inform the Lender in writing, giving reasonable details of, any event or actionwhich would have a material adverse impact on its operational or financial affairs,including the sale of assets, guarantees, or alterations of type of business;

13, Inform the Lender in writing, giving reasonable details of any Alberta EnergyRegulator Directives (or equivalent Regulator and Policy Document for otherrelevant jurisdictions, including Manitoba, where the Loan Parties have producingproperties) that has application to 'Loan Parties and the impact of which could beadverse to Loan Parties;

14, Keep and maintain books of account and other accounting records in accordancewith generally accepted accounting principles;



Commitment Letter, May 17, 2019

FinancialCovenants;

13

15. The Borrower will, and will cause each other Loan Party to, maintain good andvalid title to its property, subject only to Permitted Encumbrances and to minordefects of title which in the aggregate do not affect their rights of ownershiptherein or the value thereof in any material way,

16. The Borrower will, and will cause each other Loan Party that provides Security tothe extent required hereunder to, do all things reasonably requested by the Lenderto protect and maintain the Security and the priority thereof in relation to otherPersons;

17. At any time between meetings of the Borrower's shareholders at which shareholderapproval is sought for the election of directors, the Lender has the right to nominateand have elected/appointed one representative to stand for appointment to theBoard of Directors of the Borrower by the existing directors of the Borrower to fillany vacancy among the directors or as an additional director in accordancewith, and subject to, the provisions of the Act and the Corporation's Articles andBy-laws (and the Borrower agrees to call a meeting of its Board of Directors toconsider such appointment and to use its reasonable efforts to hold such meetingwithin five days of a notice to the Borrower from the Lender with respect to suchnominee(s)). The Lender . shall have the right in accordance with theforegoing, upon notice to the Borrower, to have such nominee nominated forelection as a director of the Borrower at any meeting of shareholders of theBorrower at which directors are elected, and the Borrower hereby agrees to causesuch nominee to be elected as a director;

18. When a representative of the Lender does not serve as a director of the Lender, theLender has the right to appoint an employee of the Lender as a non-voting, non-participating observer (an "Observer") to the Board of Directors of the Lender(entitling observation rights at the Board and committee levels, subject to anyconflict of interest restrictions) and upon notice to the Borrower as to the identityof the Observer, and the Lender and its Observer agreeing in writing to covenantsregarding confidentiality, misappropriation of corporate opportunities and othersimilar requirements that the Board may reasonably require, the Observer shallhave the right to receive notice of, and attend at, meetings of the Board (andcommittees thereof) and to receive copies of any and all materials sent to Directorsor committee members; and

19. Maintain the senior management group of borrower consisting of Richard Fulton,Scott Pincocic, Darren Rennie, Greg Jones and Dale Bernard or replacementssatisfactory to the Lender in its sole discretion.

The Borrower covenants and agrees with the Lender that it shall:

1. Maintain a Current Ratio (as defined below) of not less than 1,25:1,0 at all timescommencing September 30, 2019, and thereafter;

Maintain Secured Debt (as defined below) to Trailing Cash Flow (as defined below) ator below 1,5:1.0 for the quarter ending June 30, 2019, and thereafter; and




NegativeCovenants:

14

3. Maintain monthly oil and liquids sales production of at least 500 bbl/d commencingJune 30, 2019 until March 31, 2020, apart from a force majeure event. A revisedproduction limit will be proposed by the Lender and agreed to by the Loan Parties byApril 30, 2020, subject to the covenant remaining at 500 bbl/d if no agreement can bereached.

"Current Ratio" is defined as Current Assets (as defined by IFRS, being as definedbelow), (excluding unrealized hedging gains and/or losses) divided by CurrentLiabilities (as defined by IFRS), but excluding any current portion of the CreditFacility (to the extent that it is not past due), indebtedness under the Notes andunrealized hedging gains and/or losses, all determined on a consolidated basis,

"Secured Debt" means in respect of the Loan Parties, as of the end of a fiscal quarterand as determined in accordance with IFRS on a consolidated basis and withoutduplication, an amount equal to all liabilities outstanding which are secured against theassets of the Borrower and the Guarantors, excluding subordinated shareholder loans.

"Trailing Cash Flow" means, in respect of the Loan Parties, for the most recentlycompleted fiscal quarter, the net income of the Borrower determined on a consolidatedbasis in accordance with 'FRS; provided that (but without duplication) there shall be;(i) added thereto deferred taxes, interest expense, amortization and other non-cashcharges; and (ii) subtracted therefrom dividends declared during the period, calculatedon an annualized basis.

Each Loan Party covenants and agrees that it shall not, without the Lender's prior writtenapproval:

1. Merge, amalgamate, dissolve or liquidate or wind up its assets, except in the case of asubsidiary of the Borrower, if any, where the successor thereto or transferee thereof isa Loan Party that is a Guarantor, as applicable, and has provided Security;

2, Allow a transaction or series of related transactions (whether sales, transfers orissuance of shares of the Loan Party or other corporations or mergers, amalgamations,arrangements or other transactions) after which the Loan Party is controlled by aperson ("person" as used herein means an individual, corporation, partnership, trustor other entity) or group of persons that did not control the Loan Party prior to suchtransaction or series of transactions and, for the purposes hereof, persons associatedor affiliated within the meaning of the Business Corporation Act (Alberta) shallconclusively be deemed to be acting in concert (a "Change of Control"), In thissection "control" means, in reference to a person, the power to direct or cause thedirection of the business and affairs of such person, provided that, without limitingthe manner in which control of a corporation can be held, the ownership of shares ofa corporation that carry the right to vote more than fifty percent (50%) of the votesthat can ordinarily be cast on a resolution to elect the directors of a corporation shallbe deemed to constitute control of such corporation;

3. (i) Reduce or distribute its capital; (ii) declare or pay dividends or other distributions;(iii) redeem or repurchase shares, partnership units or partnership interests, trust unitsor trust interests or other securities of a Loan Party; or (iv) make any payment on orin respect of any shareholder advances or other loans owing by a Loan Party to a


Mane Exploration Inc,


holder (or to an affiliate of such holder) of shares, partnership units/interests or trustunits/interests of a Loan Party;

4. Incur further indebtedness (other than indebtedness secured by PermittedEncumbrances);

5, Create, incur, assume or permit to exist any Encumbrance on or against any of theassets of any Loan Party, other than Permitted Encumbrances, or guarantee theobligations of others, other than any guarantee or indemnity granted in favour of theLender;

6. Make loans or investments (by way of loan, financial assistance or otherwise) otherthan to or in another Loan Party or those investments outlined in the Borrower'sbudgets provided to the Lender;

7, Incur capital expenditures other than those expenditures contemplated in theBorrower's budgets provided to the Lender;

8. Sell or dispose of any assets (including but not limited to: (i) any farmouts,participations, pooling, unitization or similar agreements (collectively called"farmouts") involving non-arm's length parties; and (ii) any sale/leasebacktransactions on facilities) except for those assets that are subject to the floating chargewhich may be sold or disposed of, other than by way of farmouts involving non-arm'slength parties, in accordance with the floating charge provisions of the applicableDebenture provided that: (a) such sales or dispositions are at fair market value; (b) theaggregate value of such sales or dispositions do not exceed $25,000 in any calendaryear; and (c) all of the sale proceeds are used to repay the Credit Facility);

9. Hedge or contract crude oil, natural gas liquids, or natural gas, on a fixed price basis,exceeding amounts agreed to in writing with the Lender;

10, Monetize or settle any fixed price financial hedge or contract;

11. Enter into any contract with a non-arm's length service provider without Tallinn'sprior consent;

12. Increase the compensation payable to its employees and consultants;

13, Contract with any service provider who is related to any director or officer of theBorrower;

14. Create or otherwise acquire a new subsidiary; or

15, Amend the terms of its constating documents or its by-laws, any applicablepartnership agreement or any similar document or instrument if, in each case, to do sowould reasonably be expected to materially and adversely affect the rights of theLenders under this Commitment Letter and the Security.

Environmental 1. Each Loan Party shall comply with the requirements of all legislative and regulatoryObligations: environmental provisions (including abandonment and reclamation laws and


Eleano Exploration Inn,


regulations) ("Environmental Requirements") and shall at all times maintain theauthorizations, permits, and certificates required under these provisions.

2, Each Loan Party shall promptly notify the Lender in the event a contaminant spill oremission occurs or is discovered with respect to its property, operations, or those ofany neighboring property. In addition, it shall report to the Lender forthwith anynotice, order, decree, or fine that it may receive or be ordered to pay with respect to theEnvironmental Requirements relating to its business or property.

3. At the request of and in accordance with the conditions set forth by the Lender, eachLoan Party shall, at its own cost, provide any information or document, which theLender may require, with respect to its environmental situation, including any study orreport prepared by a firm acceptable to the Lender. In the event that such studies orreports reveal that any Environmental Requirements are not being respected, the LoanParties shall effect the necessary work to ensure that its business and property complywith the Environmental Requirements within a period acceptable to the Lender.

4. Each Loan Party agrees to indemnify and hold harmless each of the Lender andLender's partners, officers, directors, employees, and assignees for any damage whicheach may suffer or any liability which each may incur as a result of any non-compliance with Environmental Requirements.

Events of Each of the following shall be considered an "Event of Default" hereunder. Upon theDefault: occurrence of any Event of Default, the Lender may choose, in its sole discretion, to cancel

all credit availability and to demand repayment of the Credit Facility in full, together withoutstanding accrued interest, costs and fees, demand under any guarantees and, withoutprejudice to the Lender's and Lender's other rights and remedies, the Security shall becomeenforceable:

1, Default in payment of any principal payment when due to the Lender by a Loan Party;

2. Default in payment of any interest, fee or any other monies (other than as set forth inno. 1 above), when due to the Lender by a Loan Party; in each case if such default isnot remedied within two (2) business days of the due date;

3 Any Representation or Warranty of a Loan Party to the Lender proves to be untrue ina material respect and such representation or warranty in question remains untrue in amaterial respect within the period of five (5) days following receipt of notice of suchuntrue representation or warranty from the Lender;

4, Default by a Loan Party under any material provision of any material agreement,statute or regulation in respect of its oil and gas assets;

5. The failure of any Loan Party to observe or comply with any of the negativecovenants set out in nos. 2, 3, 4, 5, 8, 9, 10 and 15 under "Negative Covenants";

6. Except for (i) the failure to pay any monies due to the Lender hereunder, under the

Security or under any other agreement between the Lender and a Loan Party relating

to the Commitment Letter when due, and (ii) the other failures or Events of Defaultotherwise dealt with in Clauses 1 to 5 and 7 to 15 under this "Events of Default", the




failure by a Loan Party to observe or comply with any other provision (including theAffirmative and Negative Covenants herein other than the negative covenants set outin nos. 2, 3, 4, 5, 8, 9, 10 and 15 under "Negative Covenants") of this CommitmentLetter, the Security or any other agreement made between the Lender and a LoanParty relating to the Commitment Letter, and such failure or noncompliance (ifcapable of being remedied or rectified) is not remedied or rectified to the satisfactionof the Lender within the period of thirty (30) days following receipt of notice of suchfailure or compliance from the Lender;

7. In the opinion of the Lender, acting reasonably, a material adverse change in thebusiness, financial condition, operations, assets, or affairs of a Loan Party, hasoccurred;

8. A petition is filed, an order is made or a resolution passed, or any other proceeding istaken for the winding up, dissolution, or liquidation of a Loan Party;

9, Proceedings are taken to enforce any encumbrance on the assets of a Loan Party, or ifthere is any judgment or judgments against a Loan Party or Loan Parties, having avalue in the aggregate greater than $25,000, unless evidence is provided by the LoanParty that such proceedings are being contested in good faith and security, satisfactoryto the Lender, has been provided to the Lender;

10. A Loan Party is in default of the payment of indebtedness or other obligations to thirdparties in an amount which in the aggregate exceeds $100,000, excluding amountscurrently due to TORC Oil and Gas Ltd.;

11. A Loan Party ceases or threatens to cease to carry on its business, or if proceedingsare commenced for the suspension of the business of a Loan Party, or if anyproceedings are commenced under the Companies Creditors Arrangements Act orunder the Bankruptcy and Insolvency Act (including filing a proposal or notice ofintention) in respect of a Loan Party or if a Loan Party commits or threatens to commitan act of bankruptcy, or if a Loan Party becomes insolvent or bankrupt or makes anauthorized assignment pursuant to the Bankruptcy and Insolvency Act, or a bankruptcypetition is filed by or presented against a Loan Party;

12. Proceedings are commenced to appoint a receiver, receiver/manager, or trustee inrespect of the assets of a Loan Party by a court or pursuant to any other agreement;

13. Any change in the senior management of a Loan Party without the prior writtenconsent of the Lender;

14. If a Change of Control occurs; and

15. Sale by a Loan Party of all or substantially all of its assets.

Any waiver of, exception to or relief from any of the Events of Default outlined aboverequire the Lender's prior written consent

Indemnity': The Loan Parties jointly and severally indemnify and hold the Lender harmless against anyloss, costs, claims, actions, suits, damages, expenses or liabilities of any and every kind




Costs:

18

which the Lender may sustain or incur, directly or indirectly, as a consequence of the entryinto or performance of this Commitment Letter or any of the Security, the use of fundsadvanced under this Commitment Letter, the consummation of any transactioncontemplated by this Commitment Letter, any litigation or claim commenced arising out ofthe execution, delivery or performance of, or the enforcement of any right under thisCommitment Letter or any of the Security, a default by any Loan Party in the payment orperformance of any obligations (including any representation or warranty made herein by aLoan Party being incorrect at the time it was made or deemed. to have been made), thefailure by a Loan Party to comply with any of its covenants in this Commitment Letter orin any of the Security, or the occurrence of any other default or Event of Default, exceptwhere such loss, costs, claims, actions, suits, damages, expenses or liabilities arise byreason of the gross negligence or willful misconduct of the Lender,

The Borrower shall reimburse the nominee of the Lender who serves as a director of theBorrower (and each Observer) for his or her reasonable expenses incurred in connectionwith their duties as directors of the Borrower. The Borrower will indemnify any suchdirector to the fullest extent permitted by the Business Corporations Act (Alberta), Nothingin this Commitment Letter limits the right of any such director to claim indemnity apartfrom the provisions of this Commitment Letter, if such director is entitled to suchindemnity. Indemnification agreements shall also be entered into for the benefit of eachnominee of the Lender who serves as a director of the Borrower and each Observer.

The indemnities in this Commitment Letter (including this section) shall extend to thepartners, officers, directors, employees, and assignees of the Lender and, for certainty,those for whom the Lender acts as Lender hereunder, and the Loan Parties will hold thebenefit of such indemnities in trust for such indemnified parties to the extent necessary togive effect hereto,

The provisions, undertakings, and indemnifications set out in this Commitment Letter,(including those in this section and those in the section entitled "EnvironmentalObligations") shall survive the satisfaction and release of the Security and payment andsatisfaction of the indebtedness and liability of the Loan Parties to the Lender.

All reasonable costs, including legal fees on a solicitor and his own client basis, incurredby the Lender in connection with the Credit Facility being made available hereunder are forthe account of, and shall be paid by, the Borrower, including all costs and expensesincurred by the Lender in connection with: (i) the negotiation and settling of the terms ofthis Commitment Letter and any of the Security and other agreements contemplatedhereby; (ii) the enforcement of any of the Security; and (iii) obtaining repayment of anymonies outstanding hereunder.

The parties agree that the Lender's counsel may directly enforce the obligation of theBorrower to pay its fees as if such counsel were a direct party to this Commitment Letter

without any requirement for such counsel to proceed against the Lender and the Lender

will hold the benefit of the covenant of the Borrower in trust for such counsel.

General: Time is of the essence.

The insertion of headings in this Commitment Letter is for convenience of reference only

and shall not affect the construction or interpretation of this Commitment Letter. The



terms "this Commitment Letter", "hereof', "hereunder", "herein" and similar expressionsrefer to this Commitment Letter and not to any particular Section or other portion hereofand include any agreement supplemental hereto.

Words importing the singular number only shall include the plural and vice versa, wordsimporting the masculine gender shall include the feminine and neuter genders and viceversa, words importing persons shall include individuals, partnerships, associations, trusts,unincorporated organizations and corporations and vice versa and words and termsdenoting inclusiveness (such as "include" or "includes" or "including"), whether or not sostated, are not limited by their context or by the words or phrases which precede or succeedthem.

Reference herein to any agreement, instrument, licence or other document shall be deemedto include reference to such agreement, instrument, licence or other document as the samemay from time to time be amended, modified, supplemented or restated in accordancewith the provisions of this Commitment Letter if and to the extent such provisions areapplicable; and reference herein to any enactment shall be deemed to include reference tosuch enactment as re-enacted, amended or extended from time to time and to anysuccessor enactment,

The Loan Parties agree that all information provided by it to the Lender may be disclosedto the Lender's partners, directors, officers employees, authorized representatives(including lawyers, engineers, accountants, consultants, bankers and financial advisors).

The Borrower shall distribute and report to its directors that information which isreasonably requested by a director or is reasonably required by laws or by therecommended good corporate governance practices of Canadian regulatory authorities

The Loan Parties shall do all things and execute all documents reasonably deemednecessary or appropriate by the Lender, for the purposes of giving full force and effect tothe terms, conditions, undertakings, and security granted or to be granted hereunder.

It is understood and agreed that the execution, delivery and registration of the Securityshall in no way merge or extinguish this Commitment Letter or the terms and conditionshereof, which shall survive and continue in full force and effect. When a contradiction orconflict exists between an express term of any of the Security and an express term of thisCommitment Letter, the term of this Commitment Letter shall govern and prevail. Forgreater certainty a term contained in the Security and not contained in the CommitmentLetter and vice versa is not a contradiction or conflict with the other. Notwithstanding theforegoing, if there is any right or remedy of the Lender set out in any of the Security or anypart of which is not set out or provided for in this Commitment Letter, such additional rightshall not constitute a conflict or inconsistency.

If any amount due to the Lender is not paid when due, the Borrower shall pay interest onsuch unpaid amount (including interest on interest) if and to the fullest extent permitted byapplicable law, at a rate of 19% per annum.




Adoption ofLiabilityManagementRating System;

All interest rates specified are nominal annual rates, The effective annual rate in any casewill vary with payment frequency, All interest payable hereunder bears interest as wellafter as before maturity, default and judgment with interest on overdue interest at theapplicable rate payable herein,

Notwithstanding any provision herein to the contrary, in no event shall the aggregate"interest" (as defined in section 347 of the Criminal Code (Canada)) payable under thisCommitment Letter exceed the maximum effective annual rate of interest on the "creditadvanced" (as defined in that section) permitted under that section and, if any payment,collection or demand pursuant to this Commitment Letter in respect of "interest" (asdefined in that section) is determined to be contrary to the provisions of that section, suchpayment, collection or demand shall be deemed to have been made by mutual mistake andthe amount of such payment or collection shall be refunded to the Borrower. For purposesof this Commitment Letter, the effective annual rate of interest shall be determined inaccordance with generally accepted actuarial practices and principles over the term of theCredit Facility on the basis of annual compounding of the lawfully permitted rate ofinterest and, in the event of dispute, a certificate of a Fellow of the Canadian Institute ofActuaries appointed by the Lender shall be prima facie evidence, for the purposes of suchdetermination.

In accordance with prudent lending practices of knowing your client, each Loan Partyacknowledges that the policies and procedures of the Lender require investigation,verification and recording of information regarding the Borrower, the Guarantors, theirdirectors, officers and shareholders and other persons in control of any Loan Party. Subjectto any applicable privacy laws, the Loan Parties agree to promptly provide all informationas may be reasonably requested by the Lender, including supporting documentation andother evidence, in order to comply with the Lender's internal policies and anti-moneylaundering and anti-terrorist legislation. Subject to compliance with any applicable privacylaws, the Loan Parties hereby authorize any personal information lender, financialinstitution, creditor, tax authority, employer, or any other person including any publicentity, having information concerning the Loan Parties or their respective property, moreparticularly any financial information or information with respect to any undertaking,guarantee, or suretyship given by the Loan Parties, to supply such information to theLender in order to verify the accuracy of all information furnished or to be furnished fromtime to time to the Lender and to ensure the solvency of any Loan Party at all times.

If the regulatory body with responsibility for the oversight of environmental matters in theoil and gas industry in Manitoba begins to use a liability management (or equivalent) ratingas a means of determining whether a person is in compliance with its abandonment andreclamation policies, regulations and directives of the Province of Manitoba, then, in anysuch case, the Borrower and the Lender shall enter into good faith discussions with a viewto determining amendments to this Commitment Letter and to the Security to provide forrepresentations, warranties and covenants of the Loan Parties related to their maintenanceof an acceptable rating that are consistent with the prevailing market practice. Upon theBorrower and the Lender agreeing on such matters, the Loan Parties and the Lenders partyhereto shall enter into documentation to amend the provisions hereof and the Security torefer to such rate and make all other adjustments incidental thereto.

Personal Each Loan Party hereby waives the requirement for the Lender to provide copies ofProperty Security registrations, verification statements or financing statements undertaken by the Lender,


Elcano Exploration Inc.Commitment Letter, May 17, 2019 21

Act: including those registrations, verification statements and financing statements under thePersonal Property Security Act (Alberta) and equivalent legislation in other jurisdictions.

Requirements: Each Loan Party hereby agrees to provide to the Lender written notice of a change in nameor address promptly.

Assignment: No rights or obligations of any Loan Party herein and no amount of the Credit Facility maybe transferred or assigned by any Loan Party, with any such transfer or assignment beingnull and void insofar as the Lender is concerned and rendering the Credit Facility and otherindebtedness immediately due and payable at the option of the Lender and releasing theLender from any and all obligations of making any advances hereunder. The Lender mayassign (by way of participation or otherwise) all or any part of the Credit Facility, thisCommitment Letter and the Security without the consent of the Loan Parties, but willnotify the Loan Parties within a reasonable time frame of such assignment occurring,

Access to Each Loan Party hereby authorizes any personal information provider, credit bureau,Information: financial institution, creditor, tax authority, employer, or any other person including any

public entity, having information concerning it or its property, more particularly anyfinancial information or information with respect to any undertaking, guarantee, or suretyship given by it, to supply such information to the Lender in order to verify the accuracy ofall information furnished or to be furnished from time to time to the Lender and to ensurethe solvency of it at all times.

BindingAgreement:

Solicitors:

The terms and conditions of this Commitment Letter are binding and legal obligations andshall constitute a commitment on the part of each Loan Party and the Lender.

All legal work and documentation is to be performed at the Borrower's expense, All legalwork and documentation completed on behalf of the Lender will be performed by a legalfirm approved by the Lender.

Confidentiality: This Commitment Letter is delivered to you on the understanding that neither it nor itscontents shall be disclosed to any other party except to counsel, accountants, employeesand lenders of the Borrower who are specifically involved in the transaction,

The Borrower acknowledges and agrees that the nominees of the Lender who are eitherobservers on or members of its Board of Directors may disclose information obtained bythem in their observer or director capacities with the Lender's partners, directors,officers employees, authorized representatives (including lawyers, engineers, accountants,consultants, bankers and financial advisors), but only to the extent such persons need toknow such information,

Subsidiaries: Upon a Loan Party, directly or indirectly, acquiring a subsidiary corporation, partnership orother entity, the Loan Party shall promptly notify the Lender of such acquisition and, uponrequest by the Lender, shall cause the subsidiary to execute a joinder to this CommitmentLetter or other agreement agreeing to be bound by all of the terms hereof as a Guarantorand to provide an unlimited guarantee with supporting debenture, certificates and opinions,in form and substance satisfactory to the Lender and its counsel,

Lender's Role: Nothing contained in this Commitment Letter, the Security or any related documentationshall in any way be deemed to be or be construed as creating the relationship of joint


Eloano Exploration Inc.Commitment Letter, May 17, 2019 22

Non-Exclusivity

Promotion:

Counterparts:

Set-Off:

venturer or partner or co-venturer with the Loan Parties, The parties each acknowledge andagree that the relationship between them is solely and exclusively one of borrower andlender.

Tallinn is working with the Borrower on a non-exclusive basis and may, following theexpiry of the acceptance date may, in its sole discretion, provide financing term sheets orother indications of financing interest to other parties who may be interested in the sametransaction as that contemplated herein,

By acceptance of this Commitment Letter, each Loan Party grants the Lender permission toidentify the Borrower as being financed by the Lender, and to use images of the LoanParties for promotional purposes, in the Lender's website, brochures, or pamphlets.

This Commitment Letter may be executed by the parties hereto in any number ofcounterparts and by different parties in separate counterparts, each of which when soexecuted shall be deemed to be an original and all of which taken together shall constituteone and the same document. Executed copies may be delivered by facsimile transmissionor electronic mail transmission and it will not be necessary to confirm execution bydelivery of originally executed documents. Without limiting the foregoing, the words"execution", "signed", "signature" and words of like import in this Commitment Letter, anySecurity or any other document delivered in connection with this Commitment Letter shallbe deemed to include electronic signatures or the keeping of records in electronic form,each of which shall be of the same legal effect, validity or enforceability as a manuallyexecuted signature or the use of a paper-based recordkeeping system, as the case may be, tothe extent and as provided for in any Law, including Parts 2 and 3 of thepersonal Information Protection and Electronic Documents Act (Canada) and other similarfederal or provincial laws based on the Uniform Electronic Commerce Act of the UniformLaw Conference of Canada or its Uniform Electronic Evidence Act, as the case may be,

The Lender shall have the right to set-off and apply any indebtedness owing to any LoanParty by the Lender against any of the amounts outstanding to the Lender under thisCommitment Letter or Security from time to time.

Judgment If for the purpose of obtaining judgment in any court in any jurisdiction with respect to thisCurrency: Commitment Letter it is necessary to convert into the currency of such jurisdiction (the

"Judgment Currency") any amount due hereunder in any currency other than theJudgment Currency, then such conversion shall be made at the rate of exchange prevailingon the business day before the day on which judgment is given. For this purpose, rate ofexchange means the rate at which the Lender would, on the relevant day, be prepared tosell a similar amount of such currency against the Judgment Currency,

Rights and The rights, remedies and powers of the Lender under this Commitment Letter and theRemedies Security, at law and in equity are cumulative and not alternative and are not in substitutionCumulative: for any other remedies, rights or powers of the Lender, and no delay or omission in

exercise of any such right, remedy or power shall exhaust such rights, remedies and powersto be construed as a waiver of any of them.

Waivers and No term, provision or condition of this Commitment Letter or any of the Security, may beAmendments: waived, varied or amended unless in writing and signed by a duly authorized officer of the


Rican° Exploration Inc,


Lender,

Interest Act Any interest rate set forth in this Commitment Letter based on a period less than a year(Canada): expressed as an annual rate for the purposes of the Interest Act (Canada) is equivalent to

such interest rate multiplied by the actual number of days in the calendar year in which thesame is to be ascertained and divided by the number of days in the period upon which itwas based, Each Loan Party hereby waives, to the fullest extent it may do so under law,any provisions of law, including specifically the Interest Act (Canada) or the JudgmentInterest Act (Alberta), which may be inconsistent with this Commitment Letter.

IFRS:

Governing Law:

All financial statements required to be furnished to the Lender hereunder shall be preparedin accordance with International Financial Reporting Standards ("IFRS") consistentlyapplied which are in effect from time to time, as issued by the Accounting StandardsBoard. Each accounting term used in this Commitment Letter, unless otherwise definedherein, has the meaning assigned to it under IFRS and, except as otherwise providedherein, reference to any balance sheet item, statement of income item or statement of cashflows item means such item as computed from the applicable financial statement preparedin accordance with IFRS, If there occurs a change in IFRS (an "Accounting Change"), andsuch change would result in a change (other than an immaterial change) in the calculationof any financial covenant, standard or term used hereunder, then at the request of theBorrower or the Lender, the Borrower and the Lender shall enter into negotiations toamend such provisions so as to reflect such Accounting Change with the result that thecriteria for evaluating the financial condition of the Borrower or any other party, asapplicable, shall be the same after such Accounting Change, as if such Accounting Changehad not occurred. If, however, within 30 days of the foregoing request by the Borrower orthe Lender, the Borrower and the Lender have not reached agreement on such amendment,the method of calculation shall not be revised and all amounts to be determined thereundershall be determined without giving effect to the Accounting Change,

This Commitment Letter shall be construed, governed and enforced in accordance with,and the rights of the parties shall be governed by, the law of the Province of Alberta andthe law of Canada applicable therein. The Lender may commence and prosecute legalproceedings against any Loan Party pursuant to or in relation to this Commitment Letter orthe Security in the courts of Alberta or such other jurisdiction or jurisdictions as the Lendermay, in its sole and absolute discretion, deem advisable, and each Loan Party attorns to thenon-exclusive jurisdiction of the court or courts so selected by the Lender.




Notice: All notices which may or are required to be given pursuant to this Commitment Letter shallbe in writing and shall be addressed as follows:

If to any Loan Party:

Elcano Exploration Inc.Suite 1600, 521-3rd Avenue SWCalgary, Alberta T2P 3T3Email: [email protected]: Richard Fulton, CEO

If to the Lender:

Tallinn Capital Energy Limited PartnershipSuite 418, 100 — 4th Ave SWCalgary, AB, T2P 3N2Tel: (403) 850 3483Email: [email protected]: President

or such other addresses or facsimile numbers as the parties may advise by notice in writing.All communications provided for or permitted hereunder shall be in writing, personallydelivered to an officer or other responsible employee of the addressee or sent by confirmedfacsimile to the address or facsimile number set forth above or to such other address orfacsimile number as the recipient may from time to time designate to the other in suchmanner. Any communication so personally delivered or sent by confirmed facsimile shallbe deemed to have been validly and effectively given on the date of such delivery orfacsimile, as the case may be.

Officers' Upon full repayment of the Credit Facility including all interest, fees and any other costs,Certificate prior and prior to the release and discharge of the Security, the President of each Loan Party, orto Discharging its general partner, shall sign an Officer's Certificate, in their capacity as an officer of thethe Security applicable Loan Party, and not in any personal capacity and without any personal liability,

confirming that as of the date of the full payout of the Credit Facility:

1. he has made such investigations of corporate records and inquiries of other officersand senior management of the Loan Party as he has deemed reasonably necessary tosign the Officer's Certificate; and

2. the Loan Party is up to date in paying all its potential prior-ranking claims including:

a, all obligations to its employees and all obligations to others which relate to itsemployees, including all wages, payroll source deduction remittances (CPPcontributions, EI premiums, employee income taxes), WCB assessments, pensionremittances, remittances owed to third party benefit holders and other duties, levies,government fees, claims and dues related to its employees;

b, all GST and HST remittances; and

c. all taxes (including income, capital, business and property taxes), assessments,


11,1onno Exploration Inc,


Joint and SeveralLiability:

rates, duties, levies, government fees, claims and dues lawfully levied, assessed orimposed upon it or its property; and

3. to the best of his knowledge, there does not at that date exist any litigation, event oraction, which could adversely affect the payout of the Credit Facility by a Loan Party.

If more than one person is designated as Guarantors, then each such person shall be jointlyand severally liable for all of the indebtedness, liabilities, covenants, representations,warranties and other obligations of the Guarantors set out in this Commitment Letter, Ifmore than one person is designated as Loan Parties, then each such person shall be jointlyand severally liable for all of the indebtedness, liabilities, covenants, representations,warranties and other obligations of the Loan Parties set out in this Commitment Letter,

Brokers' Fees: Fees for any Lender's or broker's services are the Loan Parties sole responsibility.

Waiver of JuryTrial:

Each Loan Party hereby irrevocably waives, to the fullest extent permitted by applicablelaw, any right it may have to a trial by jury in any legal proceeding directly or indirectlyarising out of or relating to this Commitment Lotter, the Security or any other document orthe transactions contemplated hereby or thereby (whether based on contract, tort or any ofother theory).

Permitted Any reference to Permitted Encumbrances contained in this Commitment Letter shall notEncumbrances: expressly or by implication result in any Permitted Encumbrance ranking in priority to the

Security.

Lapsing Date: Unless funds are drawn by July 31, 2019, the Lender's commitment to fund shall, at theLender's option, expire.

Expiry Date: This Commitment Letter is open for acceptance until 5:00 pm MDT (Calgary time) on June3, 2019 at which time, at the option of the Lender, it will expire unless extended by theLender,

Signature page follolvs.



Commitment Latter, May 17, 2019 26

If the foregoing terms and conditions arc acceptable then in order to accept, you must sign four copies of thisCommitment Letter,

Yours very truly,

Tallinn Capital Energy Limited Partnershipby its general partner Tallinn Capital Energy Corp.

Per: Per; Henry A. DetinnersCEO

AGREED AND ACCEPTED as of the

Borrower:


Per:N aine,/./ FL) -/-z-)iJ

?)( CPer

ae: 5-11 of,g

day of

Shari K. SentnerPresident & COO

, 2019.

ACKNOWLEDGED AND AGREED to as as of the day of , 2019.

Guarantors:

Elcano Exploration Ltd.

Per:Name:Title:

Per:N-trntitle:

t'\/Z Fb tzt-e--kJa

rs..4.,9 5

Elcano Exploration Partnership by its partners:


Per:

Name/Title/ i-rey„t eElcano Ltd.

Per:


To is. e,

Ey(firc:Vis\-,

ElcEmo Exploration Inc,


APPENDIX "A'

COMPLIANCE CERTIFICATE

TO; Tallinn Capital Energy Limited Partnership

I , of the City of , in the Province of , hereby certify as at the date of this Certificate as follows:

1, I am the ofthis certificate to you for and on behalf of the Borrower;

This certificate applies to the fiscal quarter ended

("Borrower") and I am authorized to provide

3, I am familiar with and have examined the provisions of the Commitment Letter dated April_, 2019between the Loan Parties and Tallinn Capital Energy Limited Partnership and Tallinn Capital Energy Corp.("Commitment Letter") and I have made such investigations of corporate and partnership records, asapplicable, and inquiries of other officers and senior personnel of the Loan Parties as I have deemed reasonablynecessary for purposes of the Certificate;

4. As of the date hereof, the Borrower confirms that all of its subsidiaries (if any) are Loan Parties;

The representations and warranties set forth in the Commitment Letter are in all material respects trueand correct on the date hereof;

6. The Borrower and each of the Guarantors arc up to date in paying all its priority payables andremittances including, without limitation;

a. all obligations to its employees and all obligations to others which relate to its employees, includingwithout limitation all Wages, Payroll source deduction remittances (CPP contributions, El premiums, Employeeincome taxes), WC13 Assessments, Pension remittances, Remittances owed to third party benefit holders andother Duties, Levies, Government fees, Claims and Dues related to its employees;

b, all GOT and IIST remittances; and

e. all Taxes (including without limitation Income, Capital, Business and Property taxes), Assessments,Rates, Duties, Levies, Government fees, Claims and Dues lawfully levied, assessed or imposed upon it or itsproperty.

7, No Default or Event of Default has occurred and is continuing of which we are aware and the financialratios and production requirements described under 'Financial Covenants" have been calculated as indicated andarc within the covenants required under the Commitment. Letter;

8. As required, I have calculated the Current Ratio for the above-noted fiscal quarter as follows: 1.0, being not less than the required ratio of 1,25:1.0 during the fiscal quarter ending September 30,2019 and thereafter;

9, As required, I have calculated the Secured Debt to Trailing Cash Flow for the above-noted fiscal quarteras follows: 1,0, being not greater than the required ratio of 1.5:1,0 during the fiscal quarter ending.Tune 30, 2019 and thereafter;




10. Monthly net oil and liquids sales production for each month of the quarter endedbbl/d respectively, meeting the net sales production minimum of 500 bbl/d.

aS

11, Except where the context otherwise requires, all capitalized terms used herein have the same meaning asthe Commitment Letter; and

12, This Certificate is given by the undersigned officer in his/her capacity as an officer of ofthe Borrower without any personal liability on the part of such officer.

''please attach a calculations worksheet for items 8, 9, and 10,Executed at the City of , in the Province of , this clay of20

Name of Officer:Title of Officer:


Elcario Exploration Inc,


APPENDIX "B"

PERMITTED ENCUMBRANCES

"Permitted Encumbrances" means as at any particular time any of the following encumbrances on the propertyor any part of the property of the Loan Parties:

(a) all agreements pursuant to which a Loan Party has agreed to (or is committed to) sell, for fairmarket value, petroleum, natural gas and/or related hydrocarbons from any petroleum, naturalgas or related hydrocarbon property to an arm's length purchaser and in the ordinary course of itsbusiness;

(h) all reservations in the original grant or patent from the Crown of any lands or interests thereinand all statutory exceptions, qualifications and reservations in respect of title;

(C) (i) undetermined or inchoate liens or charges incidental to current operations which have not atthe time been duly registered in accordance with applicable law against a Loan Party or itsproperty and of which no notice has been served upon such Loan Party and which are not due ordelinquent or, if due or delinquent, the validity of which is being contested in good faith,provided such lien or charge does not relate to an amount which exceeds $25,000;

(ii) liens for taxes, assessments or governmental charges not at the time due or delinquent or, ifdue or delinquent, the validity of which is being contested in good faith, provided such lien doesnot relate to an amount which exceeds $25,000;

(iii) liens incurred or created in the ordinary course of business and in accordance with soundindustry practice in respect of the exploration, development or operation of petroleum andnatural gas rights, related production or processing facilities in which such Person has an interestor the transmission of hydrocarbons as security in favour of any other Person conducting theexploration, development, operation or transmission of the property to which such liens relate,for a Loan Party's portion of the costs and expenses of such exploration, development, operationor transmission, provided that such costs or expenses are not due or delinquent or, if due ordelinquent, the validity of which is being contested in good faith, provided such lien does notrelate to an amount which exceeds $25,000;

(iv) deemed liens and trusts arising by operation of law in connection with workers'compensation, employment insurance and other social security legislation, in each case, whichsecure obligations not at the time due or delinquent or, if due or delinquent, the validity of whichis being contested in good faith, provided such lien or trust does not relate to an amount whichexceeds $25,000;

(v) liens under or pursuant to any judgment rendered, or claim filed, against a Loan Party, whichsuch Loan Party shall be contesting at the time in good faith provided such lien or claim doesnot relate to an amount which exceeds $25,000;

provided that the aggregate amount of all of the aforementioned liens, charges, trusts and claimsand the amounts secured thereby does not exceed $100,000;


Eleano Explorntion

Commitment Lefler, May 17, 2019

(d)

(e)

30

any right of first refusal or preferential right of purchase contained in any instrument affectingthe Mortgaged Property (as defined in the Cdn, $10,000,000 debenture granted by a Loan Partyin favour of the Lender on or about the date hereof (as amended or restated from time to time,the "Debenture") that is customary in the oil and gas industry in Canada;

the Security and any security interests now or at any time hereafter made or granted by a LoanParty to the 'Lender to secure any of the present or future debts, liabilities or obligations of aLoan Party to the Lender under the Commitment Letter to which this Appendix "B" is attached;

(f) those encumbrances listed in Schedule "A" of the Debenture;

(g) easements, rights of way, servitudes or other similar rights in land (including, without in anyway limiting the generality of the foregoing, rights of way and servitudes for railways, sewers,drains, gas and oil and other pipelines, gas and water mains, electric light and power andtelecommunication, telephone or telegraph or cable television conduits, poles, wires and cables)granted to or reserved or taken by other Persons which individually or in the aggregate do notmaterially detract from the value of any of the Mortgaged Property or materially impair its usein the operation of the business of the Loan Parties, taken as a whole;

(h) security given by a Loan Party to a public utility or any municipality or governmental or otherpublic authority when required by such utility or municipality or other authority in connectionwith the operations of the Loan Party, all in the ordinary course of its business whichindividually or in the aggregate do not materially detract from the value of any of the MortgagedProperty or materially impair its use in the operation of the business of the Loan Parties, taken asa whole;

(i) lions for penalties arising under non participation or independent operations provisions ofoperating or similar agreements in respect of a Loan Party's petroleum and natural gas rights,provided that such liens do not materially detract :from the value of any of the MortgagedProperty of the Loan Parties, taken as a whole;

any encumbrance or agreement entered into in the ordinary course of business relating tofarmout, joint ownership, pooling or a plan of unitization affecting the property of a Loan Party,or any part thereof;

(k) the right reserved or vested in any municipality or governmental or other public authority by theterms of any petroleum and natural gas leases in which a Loan Party has any interest or by anystatutory provision to terminate any petroleum and natural gas leases in which a Loan Party hasany interest, or to require annual or other periodic payments as a condition of the continuancethereof;

(1) security interests relating to operating leases;

(in) security interests relating to capital lease transactions (according to IFRS) or sale-leasebacktransactions where the indebtedness represented by all such transactions does not at any timeexceed $50,000 in aggregate;

(n) security interests granted or assumed to finance the purchase of any property or asset (a"Purchase Money Security Interest") where:

the security interest is granted at the time of or within 60 clays after the purchase,


Dean() Exploration Inc,

Commitment Lc0cr, May 17, 2019 31

the security interest is limited to the property and assets acquired, and

iii) the indebtedness represented by all Purchase Money Security Interests does not at anytime exceed $25,000 in aggregate;

security interests or liens (other than those hereinbefore listed) of a specific nature (andexcluding for greater certainty floating charges) on properties and assets having a fair marketvalue not in excess of $25,000 in aggregate;

the right reserved to or vested in any governmental authority by the terms of any lease, license,franchise, grant or permit or by any applicable laws, to terminate any such lease, license,franchise, grant or permit or to require payment of rent or other periodic payments as a conditionof the continuance thereof;

(q) rights of general application reserved to or vested in any governmental authority to levy taxes onany of the assets or the income therefrom, or to limit, control or regulate any of the assets, oroperations pertaining thereto, in any manner;

(r)

(s)

(1)

royalties, net profits and other interests and obligations arising in accordance with standardindustry practice and in the ordinary course of business, under petroleum and natural gasesleases in which a Loan Party thereof has any interest;

landlords' liens or any other rights of distress reserved in or exercisable under any lease of realproperty for rent and for compliance with the terms of such lease; provided that such lien doesnot attach generally to all or substantially all of the undertaking, assets and property of a LoanParty;

(i) deposits to secure performance of (i) bids, tenders, contracts (other than contracts for thepayment of money) or (ii) leases of real property (other than petroleum and natural gas leases)entered into in the ordinary course of business, in each case, to which a Loan Party is a party;and

(ii) security interests resulting from the deposit of cash or securities as security when a LoanParty is required to do so by a governmental authority or by normal business practice inconnection with contracts, licenses or tenders or similar matters in the ordinary course ofbusiness and for the purpose of carrying on the same, or to secure workers' compensation, suretyor appeal bonds or to secure costs of litigation when required by applicable law;

provided the aggregate amount of such deposits of cash and securities does not exceed $100,000and the security interests only attach to such deposits;

(u) minor defects of title which, individually and in the aggregate, do not materially affect the titleof a Loan Party to its assets; and

(v) all such other claims and encumbrances that the Lender agrees in writing to accept as PermittedEncumbrances,


Eleatic) Exploration Inc.

Commitment Letter, Inlay 17, 2019 32


Lleano Exploration Partnership

Cook Exploration Ltd.

APPENDIX "C"

ELCANO SUBSIDIARIES


SCHEDULE "D"

SANCTION ORDER

WSLEGAL.086037,00001 V22339470v5

COURT FILE NUMBER

COURT

JUDICIAL CENTRE

CLERK'S STAMP

1901-02578


CALGARY

APPLICANTS IN THE MATTER OF THE COMPANIES'CREDITORS ARRANGEMENTACT,R.S.C. 1985,c. C-36, as amended

AND IN THE MATTER OF THE BUSINESSCORPORATIONS ACT, R.S.A. 2000, c. B-9, asamended


DOCUMENT SANCTION ORDER

ADDRESS FOR SERVICE ANDCONTACT INFORMATION OFPARTY FILING THIS DOCUMENT

BENNETT JONES LLPBarristers and Solicitors4500, 855 — 2nd Street S.W.Calgary, Alberta T2P 4K7

Attention: Chris Simard and Kelsey MeyerTel No.: 403-298-4485/3323Fax No.: 403-265-7219Client File No. 86037.1

DATE ON WHICH ORDER WAS July 4, 2019PRONOUNCED:

LOCATION WHERE ORDER WAS Calgary, AlbertaPRONOUNCED:

NAME OF JUSTICE WHO MADE The Honourable Madam Justice C. A. KentTHIS ORDER:

WSLEGAL\086037 00001\22447637v3

- 2 -

UPON the Application of Elcano Exploration Inc. ("EEI"), Elcano Exploration Ltd.

("EEL") and Elcano Exploration Partnership ("EEP") (collectively, the "Plan Applicants", and

each, a "Plan Applicant"), for an Order pursuant to the Companies' Creditors Arrangement Act,

RSC 1985, c C-36, as amended (the "CCAA"), sanctioning and approving the individual Plans

of Compromise and Arrangement included in the Plan of Compromise and Arrangement of the

Plan Applicants dated May 31, 2019, as may be further amended, varied or supplemented from

time to time in accordance with the terms thereof (the "Plan"); AND UPON having read the

pleadings and proceedings filed in this action, including the Affidavit No. 2 of Richard Fulton,

sworn May 31, 2019, the Affidavit No. 3 of Richard Fulton, sworn June 24, 2019, the Second

and Third Reports of Hardie & Kelly Inc., in its capacity as Court-appointed Monitor of the

Applicants (the "Monitor"); AND UPON hearing from counsel for the Plan Applicants, counsel

for the Monitor, and from any other affected parties that may be present;

IT IS HEREBY ORDERED AND DECLARED THAT:

DEFINED TERMS

Capitalized terms not defined herein shall have the meanings ascribed to them in the

Plan, the Initial Order granted in the within proceedings on February 26, 2019 (the

"Initial Order"), and the Meeting Order granted on June 7, 2019 (the "Meeting Order").

SERVICE, NOTICE AND Al EETING

Service of this Application and supporting documents is hereby deemed to be good and

sufficient, the time for notice is hereby abridged to the time provided, and no other

person is required to have been served with notice of this Application.

3. There has been good and sufficient notice, service and delivery of the Affected Creditor

Meeting Materials to all Persons upon whom notice, service and delivery was required.

4. The Meeting was duly convened and held, all in conformity with the CCAA and the

Orders of this Court, including, without limitation, the Meeting Order.

WS LEGALOS 6037 \ 00001'22447637 \

-3-

5. The hearing in respect of the Sanction Order was open to all of the Affected Creditors

and all other Persons with an interest in the Plan Applicants and that such Affected

Creditors and other Persons were permitted to be heard at the hearing in respect of the

Sanction Order; and prior to the hearing, all of the Affected Creditors and all other

Persons on the Service List were given adequate notice thereof

SANCTION OF THE PLAN

6. For the purposes of voting to approve the Plan, the Affected Creditor Class was a single

class comprised of the Plan Applicants, as defined in Article 4.1 of the Plan.

7. The Plan has been approved by the Required Majority of the class of Affected Creditors

in conformity with the CCAA and the Meeting Order.

8. The Plan Applicants have complied with the provisions of the CCAA and the Orders of

the Court made in these proceedings in all material respects.

9. The Plan Applicants have acted and are acting in good faith and with due diligence, and

have not done or purported to do (nor does the Plan do or purport to do) anything that is

not authorized by the CCAA.

10. The Plan, and all the terms and conditions thereof, and matters and transactions

contemplated thereby, are fair and reasonable.

1 1. The Plan is hereby sanctioned and approved pursuant to Section 6 of the CCAA.

PLAN IMPLEMENTATION

12. The Plan and all associated steps, compromises, transactions, arrangements, releases and

reorganizations effected thereby are hereby:

(a) approved;

(b) deemed to have been implemented; and

WSLEGAL\086037 \MOO' \22-147637v3

4

(c) binding upon and effective with respect to the Plan Applicants and all of the

Affected Creditors, the Directors and Officers, the Released Parties and all other

Persons named or referred to in, or subject to, the Plan;

all in accordance with the provisions of the Plan, as of the Plan Implementation Date

commencing at the Effective Time, with respect to the Plan Applicants.

1 3 . The Plan shall be binding upon and enure to the benefit of the Plan Applicants, the

Released Parties, all Affected Creditors, and all other Persons named or referred to in,

affected by, or subject to the Plan, including, without limitation, their respective heirs,

executors, administrators, and other legal representatives, successors, and assigns.

14. The Plan Applicants and the Monitor are authorized and directed to take all steps and

actions, and to do all things, necessary or appropriate to implement the Plan in

accordance with its terms and to enter into, execute, deliver, complete, implement and

consummate all of the steps, transactions, distributions, deliveries, allocations,

instruments and agreements contemplated in and pursuant to the Plan, and such steps and

actions are hereby authorized, ratified and approved. Furthermore, none of the Plan

Applicants, the Directors or Officers, or the Monitor shall incur any liability as a result of

acting in accordance with terms of the Plan or this Sanction Order. In addition, to the

extent not previously given, all necessary approvals of and from the shareholders,

members, directors, managers or officers of the Plan Applicants, as applicable (including

all necessary resolutions, whether ordinary, special or otherwise, of the shareholders,

members, directors, managers or officers of the Plan Applicants, as applicable) to take all

actions under the Plan or contemplated thereby (including but not limited to the adoption,

execution, delivery, implementation and consummation of all matters contemplated under

the Plan) shall be deemed to have been made, given, passed or obtained, and no

agreement between or among the shareholders or members of any Plan Applicants, or any

of them, or between a shareholder or member and another Person, that limits or purports

to limit in any way the right to vote shares or membership interests held by such

shareholder(s) or member(s) with respect to any of the steps or transactions contemplated

W5LE0AL036037\00001\224476370

-5

by the Plan, shall be effective, and all such agreements shall be deemed to be of no force

or effect.

15. Each of the Plan Applicants and the Monitor, and any other Person required to make any

distributions, deliveries or allocations or take any steps or actions related thereto pursuant

to the Plan are hereby directed to complete such distributions, deliveries or allocations

and to take any such related steps and/or actions in accordance with the terms of the Plan,

and such distributions, deliveries and allocations, and steps and actions related thereto,

are hereby approved.

16. All distributions or payments by the Plan Applicants to the Affected Creditors with

Proven Claims under the Plan are for the account of the Plan Applicants and the

fulfillment of their respective obligations under the Plan.

1 7. The Plan Applicants shall be authorized, in connection with the making of any payment

or distribution, and the Plan Applicants and the Monitor shall be authorized, in

connection with the taking of any step or transaction or performance of any function

under or in connection with the Plan, to apply to any Governmental Authority for any

consent, authorization, certificate or approval in connection therewith.

18. Any securities or other consideration issued, transferred or distributed pursuant to the

Plan shall be issued, transferred or distributed free and clear of any Encumbrances,

other than the Encumbrances created in the Plan.

19. Upon receiving from the Plan Applicants pursuant to Article 8.4 of the Plan written

notice of the fulfilment or waiver of the conditions precedent to implementation of the

Plan, the Monitor is authorized and directed to deliver to the Plan Applicants a certificate

substantially in the form attached hereto as Schedule "A" (the "Monitor's Plan

Implementation Certificate", the form of which is hereby approved) signed by the

Monitor, certifying that the Plan Implementation Date has occurred and that the Plan is

effective in accordance with its terms and the terms of the Sanction Order. As soon as

possible following the Plan Implementation Date, the Monitor shall file the Monitor's

Plan implementation Certificate with this Court and post it on the Website.

WSLEGAL\086037\00001\22447637v3

- 6 -

COMPROMISE OF CLAIMS AND EFFECT OF PLAN

20. Pursuant to and in accordance with the terms of the Plan, on the Plan Implementation

Date, (i) all Affected Claims against the Plan Applicants of any nature shall be fully,

finally, irrevocably and forever compromised, discharged and released, (ii) the ability of

any Person to proceed against the Plan Applicants or any of the Released Parties in

respect of or relating to any Affected Claims shall be forever discharged and restrained,

and (iii) all proceedings with respect to, in connection with or relating to such Affected

Claims be permanently stayed, subject only to the right of Affected Creditors to receive

distributions pursuant to the Plan in respect of their Affected Claims, if any.

21. Pursuant to and in accordance with the terms of Article 9.4 of the Plan, on the Plan

Implementation Date, all Claims in respect of interest accruing on Affected Claims or

fees and expenses incurred in respect of Affected Claims on or after the Filing Date, shall

be fully, finally, irrevocably and forever compromised, settled, released, discharged,

extinguished, cancelled and barred for no consideration and no Person shall have any

entitlement to any such accrued and unpaid interest or fees and expenses.

?). On the Plan Implementation Date, the releases set out in Article 7 of the Plan shall

become effective and the ability of any Person to proceed against any Released Party in

respect of any Claim released therein shall be forever discharged, barred and restrained,

and all proceedings with respect to, in connection with, or relating to any such matter is

enjoined and permanently stayed; provided that nothing herein shall release or discharge

(a) the right to enforce the obligations of any Person under the Plan, (b) any Released

Party if the Released Party is determined by a Final Order of a Court of competent

jurisdiction to have committed criminal acts, fraud or wilful misconduct, (c) the Plan

Applicants, their Directors or their Officers from or in respect of any Unaffected Claim or

any Claim that is not permitted to be released pursuant to Section 19(2) of the CCAA, or

(d) any Director or Officer of a Plan Applicant from any Claim that is not permitted to be

released pursuant to Section 5.1(2) of the CCAA, as determined by a Final Order of the

Court. However, notwithstanding anything to the contrary herein, from and after the Plan

Implementation Date, a Person may only commence an action against a Released Party in

WS LEGAL,086037T0001224476370

-7

connection with (b), (c) or (d) above if such Person has first obtained leave of this Court

on notice to the applicable Released Party, the Plan Applicants, the Monitor (unless

previously discharged), and any applicable insurers; provided that no Person shall be

prevented from commencing such an action against a Released Party where such an

action must be taken in order to comply with statutory time limitations in order to

preserve such Person's rights at law, provided farther that no further steps shall be taken

by such Person except in accordance with the other provisions of the Plan (including the

requirement herein to obtain the leave of the Court at the first available opportunity), and

notice in writing of such action be given to the applicable Released Party, the Plan

Applicants, the Monitor (unless previously discharged), and any applicable insurers at the

first available opportunity.

23. Each Affected Creditor and each Person holding a released Claim is hereby deemed to

have (i) consented to all of the provisions of the Plan, in its entirety, and (ii) executed and

delivered to the Plan Applicants and any other Released Party all consents, releases,

assignments and waivers, statutory or otherwise, required to implement and carry out the

Plan in its entirety.

24. Without limiting the provisions of the Claims Procedure Order, any Person that did not

file a Proof of Claim, a Notice of Dispute or a Notice of Dispute of Revision or

Disallowance (each as defined in the Claims Procedure Order), as applicable, by the

Claims Bar Dates (as defined in the Plan, the Claims Procedure Order, or as amended in a

subsequent Order) or such other date provided for in the Claims Procedure Order, as

applicable, whether or not such Affected Creditor received direct notice of the claims

process established by the Claims Procedure Order, shall be and is hereby forever barred

from making any Claim and shall not be entitled to any distribution under the Plan, and

such Person's Claim shall be and is hereby forever barred and extinguished. Nothing in

the Plan extends or shall be interpreted as extending or amending the Claims Bar Date or

any other bar date deadline provided for in the Claims Procedure Order or subsequent

Order or the Plan, or gives or shall be interpreted as giving any rights to any Person in

respect of Claims that have been barred or extinguished pursuant to the Claims Procedure

Order, the Plan, or the Sanction Order.

WSLEGALTS6037 \ 0000 r22447637v3

-8-

25. From and after the Plan Implementation Date, any and all Persons shall be and are hereby

barred, stopped, stayed and enjoined from commencing, taking, applying for or issuing or

continuing any and all steps or proceedings, including without limitation, administrative

hearings and orders, declarations or assessments, commenced, taken or proceeded with or

that may be commenced, taken or proceeded with against any Released Party in respect

of all Claims and any matter which is released pursuant to Article 7 of the Plan.

26. As of the Plan Implementation Date, all debentures, notes, certificates, agreements,

invoices and other instruments evidencing Affected Claims shall not entitle any holder

thereof to any compensation or participation and shall be and are hereby deemed to be

cancelled and shall be and are hereby deemed to be null and void.

THE MONITOR

27. The Monitor, in addition to its prescribed rights and obligations under the CCAA, and the

Initial Order, shall have the powers, duties and protections contemplated by and required

under the Plan, and in this Order, and shall be and is hereby authorized, directed and

empowered to perform its functions and fulfill its obligations under the Plan to facilitate

the implementation of the Plan.

28. In no circumstance will the Monitor have any liability for any Claims against the Plan

Applicants, including but not limited to any Claims with respect to tax liabilities,

regardless of how or when such Claims may have arisen.

29. In carrying out the terms of this Sanction Order and the Plan: (i) the Monitor shall have

all the protections given to it by the CCAA, the Initial Order, and any other Order in the

CCAA Proceedings, and as an officer of the Court, including the Stay of Proceedings in

its favour; (ii) the Monitor shall incur no liability or obligation as a result of carrying out

the provisions of this Sanction Order and/or the Plan; (iii) the Monitor shall be entitled to

rely on the books and records of the Plan Applicants and any information provided by the

Plan Applicants without independent investigation and shall not be liable for any claims

or damages resulting from any errors or omissions in such books, records or information.

WS LEGAL \086037,00001,22447637v3

9

CLAIM OF META CAPITAL CORPORATION

30. The unsecured claim of Meta Capital Corporation filed in the Claims Procedure by way

of a Proof of Claim dated May 9, 2019, is hereby declared to be an unsecured Proven

Claim and an Affected Claim for all purposes, in the amount of $..

AlISCELL,A,NEOUS

31. As of the Plan Implementation Date, the CCAA Charges as against the Property of the

Plan Applicants shall be discharged.

32. Upon receiving from the Plan Applicants pursuant to Article 8.4 of the Plan written

notice of the fulfilment or waiver of the conditions precedent to implementation of the

Plan, and after all Disputed Claims have been resolved, the Monitor is authorized and

directed to deliver to the Plan Applicants a certificate substantially in the form attached

hereto as Schedule "B" (the "Monitor's Plan Completion Certificate", the form of

which is hereby approved) signed by the Monitor. As soon as possible thereafter, the

Monitor shall file the Monitor's Plan Completion Certificate with this Court and post it on

the Website.

33. As of the date on which the Monitor's Plan Completion Certificate is filed, the CCAA

Proceedings with respect to the Plan Applicants shall be terminated without any other act

or formality and the Monitor shall be discharged without any other act or formality.

34. Notwithstanding the termination of the CCAA Proceedings, the Monitor shall continue to

have the benefit of all of the protections and priorities as set out in the Initial Order, the

Plan and this Sanction Order, and the CCAA, and any such protections and priorities

shall apply to the Monitor in fulfilling its duties under this Order or in carrying out the

provisions of this Order.

35. Notwithstanding the termination of the CCAA Proceedings, the Court shall remain seized

of any matter arising from the CCAA Proceedings, and the Plan Applicants and the

Monitor shall have the authority from and after the date of this Order to apply to this

Court to address matters ancillary or incidental to the CCAA Proceedings

WSLEGAL \086037,00001 '224476370

- 10 -

notwithstanding the termination thereof. In completing or addressing any such ancillary

or incidental matters, the Monitor shall continue to have the benefit of the provisions of

the CCAA and provisions of all Orders made in the CCAA Proceedings in relation to its

capacity as Monitor, including all approvals, protections and stays of proceedings in

favour of Hardie & Kelly Inc. in its capacity as Monitor.

36. The Plan Applicants and the Monitor may apply to the Court from time to time for advice

and direction in respect of any matters arising from or under the Plan and to the extent

that any Person (including any of the Plan Applicants or the Monitor) seeks any advice or

direction with respect to any matter arising from or under the Plan or this Sanction Order,

such motion shall be brought in the Court of Queen's Bench of Alberta.

37. This Sanction Order shall have full force and effect in all provinces and territories of

Canada, outside Canada and against all Persons against whom it may be enforceable.

The Plan Applicants and the Monitor may apply to a Court of competent jurisdiction to

recognize the Plan or this Sanction Order and to confirm the Plan and the Sanction Order

as binding and effective in any foreign jurisdiction.

3 8 . This Court hereby requests the aid and recognition of any Court, tribunal, regulatory or

administrative body having jurisdiction in Canada or the United States, or in any other

foreign jurisdiction, to give effect to this Sanction Order and to assist the Plan

Applicants, the Monitor and their respective agents in carrying out the terms of this

Sanction Order. All Courts, tribunals, regulatory and administrative bodies are hereby

respectfully requested to make such orders and to provide such assistance to the Plan

Applicants, and to the Monitor, as an officer of this Court, as may be necessary or

desirable to give effect to this Sanction Order, or to assist the Plan Applicants, and the

Monitor and their respective agents in carrying out the terms of this Sanction Order.

39. This Sanction Order shall be posted on the Website at https://relieffromdebt.ca/eicano-

group and only be required to be served upon the parties on the Service List and those

parties who appeared at the hearing of the motion for this Sanction Order.

WSLIEGAL036037\00001 \22447637v3

-WS LECiAL'086037,00001.'22447637v3

SCHEDULE "A"

FORM OF MONITOR'S PLAN IMPLEMENTATION CERTIFICATE

COURT FILE NUMBER 1901-02578

COURT COURT OF QUEEN'S BENCH OF ALBERTA

JUDICIAL CENTRE CALGARY

APPLICANTS IN THE MATTER OF THE COMPANIES'CREDITORS ARRANGEMENT ACT, R.S.C.1985, c. C-36, as amended

AND IN THE MATTER OF THE PLAN OFCOMPROMISE OR ARRANGEMENT OFELCANO EXPLORATION INC., ELCANOEXPLORATION LTD. and ELCANOENERGY PARTNERSHIP

IN THE MATTER OF THE BUSINESSCORPORATIONS ACT, R.S.A. 2000, c. 13-9, asamended

DOCUMENT MONITOR'S PLAN IMPLEMENTATION CERTIFICATE

ADDRESS FOR SERVICE AND BORDEN LADNER GERVAIS LLPCONTACT INFORMATION OF Barristers and SolicitorsPARTY FILING THIS Centennial Place, 520 — .3H Avenue SW, #1900DOCUMENT Calgary, Alberta T2P 0R3

Attention: Josef Kruger, Q.C.Tel No.: 403-232-9563Fax No.: 403-266-1395Client File No. 436743/000022

MONITOR'S CERTIFICATE

(Plan Implementation)

All capitalized terms not otherwise defined herein shall have the meanings ascribed

thereto in the Plan of Compromise and Arrangement dated May 31, 2019, as may be further

amended, varied or supplemented from time to time in accordance with the terms thereof (the

"Plan").

WSLEGAL\086037\00001A22447637v3

Pursuant to paragraph 19 of the Order of the Honourable Madam Justice C. A. Kent made

in these proceedings on July 4, 2019 (the "Sanction Order") and Article 8.4 of the Plan, Hardie

and Kelly Inc. in its capacity as Court-appointed Monitor of the Plan Applicants (the "Monitor")

delivers to the Plan Applicants this certificate and hereby certifies that:

1. the Monitor has received written notice from the Plan Applicants that the conditions

precedent set out in Article 8.3 of the Plan have been satisfied or waived in accordance

with the terms of the Plan; and

the Plan Implementation Date has occurred and the Plan is effective in accordance with

its terms and the terms of the Sanction Order.

DATED at the City of Calgary, in the Province of Alberta, this day of , 2019.

HARDIE & KELLY INC., solely in its capacityas Court-appointed Monitor of Elcano ExplorationInc., Elcano Exploration Ltd. and Elcano EnergyPartnership, and not in its personal or corporatecapacity.

1.3y:Name:Title:

WSLEGAL\086037 W0001'224476370

SCHEDULE "B"

FORM OF MONITOR'S PLAN COMPLETION CERTIFICATE

COURT FILE NUMBER 1901-02578

COURT COURT OF QUEEN'S BENCH OF ALBERTA

JUDICIAL CENTRE CALGARY

APPLICANTS IN THE MATTER OF THE COMPANIES'CREDITORS ARRANGEMENT ACT, R.S.C.1985, c. C-36, as amended

AND IN THE MATTER OF THE PLAN OFCOMPROMISE OR ARRANGEMENT OFELCANO EXPLORATION INC., ELCANOEXPLORATION LTD. and ELCANOENERGY PARTNERSHIP

1N THE MATTER OF THE BUSINESSCORPORATIONS ACT, R.S.A. 2000, c. B-9, asamended

DOCUMENT MONITOR'S PLAN COMPLETIONCERTIFICATE


BORDEN LADNER GERVAIS LLPBarristers and SolicitorsCentennial Place, 520 — 3° Avenue SW, #1900Calgary, Alberta T2P OR3

Attention: Josef Kruger, Q.C.Tel No.: 403-232-9563Fax No.: 403-266-1395Client File No. 436743/000022

MONITOR'S CERTIFICATE

(Plan Completion)

All capitalized terms not otherwise defined herein shall have the meanings ascribed

thereto in the Plan of Compromise and Arrangement dated May 31, 2019, as may be further

amended, varied or supplemented from time to time in accordance with the terms thereof (the

"Plan").

WS LEGALA86037 \ 00001 \224476370

Pursuant to paragraph 31 of the Order of the Honourable Madam Justice C. A. Kent made

in these proceedings on July 4, 2019 (the "Sanction Order") and Article 8.2(m) of the Plan,

Hardie and Kelly Inc. in its capacity as Court-appointed Monitor of the Plan Applicants (the

"Monitor") delivers to the Plan Applicants this certificate and hereby certifies that:

the Monitor has received written notice from the Plan Applicants that the conditions

precedent set out in Article 8.3 of the Plan have been satisfied or waived in accordance

with the terms of the Plan; and

2. all Disputed Claims have been resolved.

HARDIE & KELLY INC., solely in its capacityas Court-appointed Monitor of Elcano ExplorationInc., Elcano Exploration Ltd. and Elcano EnergyPartnership, and not in its personal or corporatecapacity.

By:Name:Title:

wsLEGAL\086037\00001\224,176370

EXHIBIT 2

THIS IS EXHIBIT "2" REFERREDTO IN THE AFFIDAVIT NO. 2 OFRICHARD FULTON SWORNBEFORE ME THIS 31st DAY OF

CHRIS SIMARD13a ulster and Solicitor

Suite 418, 100 - 4th Ave SWCalgary, All, T2P 3N2Tel: (403) 850-3483www,tallinnenargy.corn

CONFIDENTIAL

May 17, 2019

Elcano Exploration Inc,1600, 521 — 3rd Avenue S.W.Calgary, Alberta T2P 3T3Attention; Gary Goetsch,Frank Wormsbecker,Darren Rennie

GMP FirstEnergySuite 1100, 311 -- 6th Avenue S.W.Calgary, Alberta T2P 4M9Attention: R. Scott Robertson,Director, Investment Banking

Dear Sirs,

Re: Commitment Letter

Hardie & Kelly Inc,Suite 110, 5800 2nd Street S,W,Calgary, Alberta T214 0E12Attention; Marc Kelly

to1H capital energy corp.

Re: Debt Financing Offer in respect of Elcano Exploration Inc., Elcano Exploration Ltd. and ElcanoExploration Partnership (collectively, the "Elcano Group") by Tallinn Capital Energy LP, by itsgeneral partner, Tallinn Capital Energy Corp.

Pursuant to an Initial Order (the "Order") of the Alberta Court of Queen's Bench (the "Court") under theCompanies' Crecliors' Arrangemen! Act (the "CCAA") dated February 26, 2019, the Court has appointed Hardie& Kelly Inc. (the "Monitor") as monitor of the property, business and financial affairs of the Elcano Group,

The Lender confirms receipt of the Confidential Information Memorandum (the "CIM") describing the businessand assets of the Elcano Group, which has been prepared and distributed by GMP FirstEnergy in connectionwith the Sale and Investments Solicitation Process authorized by the Initial Order (the "SISP").

We are pleased to advise that Tallinn Capital Energy Corp. ("TCEC"), the general partner of Tallinn CapitalEnergy Limited Partnership ("Tallinn" or the "Lender"), has approved the following credit facility for ElcanoExploration Inc, subject to the terms and conditions set forth below and in the attached Terms & Conditions andSchedules (collectively, the "Commitment Letter"), We confirm that we have sufficient immediately availablefunds to provide the credit facility.

Elcano is indebted (the "Existing Indebtedness") to the National Bank of Canada ("Existing Lender") pursuantto a credit agreement made as of the 16th day of October 2017 as amended January 8, 2018 between the ExistingLender and Elcano (the "Original Credit Letter") and provided security (collectively, the "NBC Security") tothe Existing Lender in support of the Existing indebtedness. The Existing Lender has agreed to sell and assign tothe Lender the Existing Indebtedness, the Existing Security and the agreements relating thereto,

CAN: 30195809.4



Borrower: Elcano Exploration Inc, ("Eleano" or the "Borrower").

Guarantor(s); All current and future subsidiaries and affiliates of Elcano (collectively, the "Guarantors"and each individually, a "Guarantor").

Lo an Parties:

Lender:

Credit Facility:

Purpose:

Availability:

Collectively, the Borrower and the Guarantors and "Loan Party" means any one of them.

Tallinn Capital Energy Limited Partnership by its general partner, TCEC,

$7,500,000 (the "Credit Facility"),

The Credit Facility will be utilized to i) by the Lender to purchase the existing debt ofapproximately $6,965,000 plus accrued interest held by the Existing Lender under theOriginal Credit Agreement; ii) by the Borrower to pay the Commitment Fee (as definedbelow) of $75,000; and iii) by the Borrower finance capital expenditures of approximately$460,000. The Credit Facility will not be utilized for any purpose other than as describedherein without the prior written consent of the Lender,

The Credit Facility will be available concurrently with the completion of the SISP and theCCAA proceedings on terms satisfactory to the Lender (including the discharge of theMonitor, the discharge of the Administration Charge (as defined in the Order) and thedischarge of the Directors' Charge (as defined in the Order), anticipated on or about July 4,2019 (the ("Funding Date") subject to the terms of this Commitment Letter including thesatisfaction or waiver of the conditions set out under "Conditions Precedent" below,

Maturity Date: June 30, 2021 ("Maturity Date").

Interest Rate:

Payments byEFT:

Work. Fee:

The Borrower shall pay interest on the outstanding principal amount of the Credit Facilityfrom time to time at a rate of 11.50% per annum; provided, however, that if an Event ofDefault (as defined below) shall have occurred, the Borrower shall pay interest on theoutstanding principal amount, if' and to the fullest extent permitted by applicable law, at arate of 19% per annum calculated from and after the date of the Event of Default during thecontinuance of the Event of Default. Notwithstanding the foregoing, the interest ratepayable hereunder shall revert to 11.5% per annum upon the cure or rectification by theBorrower of such Event of Default to the satisfaction of the Lender, acting reasonably, Allinterest hereunder shall be calculated daily and compounded and payable monthly on thelast day of each month,

All payments to the Lender shall be set up on electronic funds transfer ("EFT") to theLender's account at the Bank of Montreal,

A work fee of $7,500 ("Work Fee") was paid to Tallinn Capital Energy Corp, on January4, 2019 which covered certain out of pocket expenses including all engineering, geologicaland consulting expenses associated with this transaction, The Work Fee did not cover alltravel, legal and security documentation costs,

Commitment A commitment fee of $75,000 (the "Commitment Fee") will be earned and payable to theFee: Lender on the Funding Date,


Elczno Exploration Inc,


ParticipatoryInterest:

The Lender will earn a participatory interest which will be due and payable on April 30,2020 (the "2019 Participation interest") and a further participatory interest which will beclue and payable on April 30, 2021 (the "2020 Participatory Interest"), with each of the2019 Participatory Interest and the 2020 Participation Interest (collectively, the"Participatory Interest") calculated as follows:



For the purposes of the above calculations,

"2019 Gross Revenue" is defined as the consolidated gross revenues of the Borrower, asper the Borrower's annual audited consolidated financial statements for the year endingDecember 31, 2019;



For the purposes of the above calculation,

"2020 Gross Revenue" is defined as the consolidated gross revenues of the Borrower, asper the Borrower's annual audited consolidated financial statements for the year endingDecember 31, 2020,

Repayment: Prior to an Event of Default occurring, the Borrower will pay to the Lender:

Interest monthly in arrears;Principal reductions of $250,000 per month commencing August 31, 2019;Proceeds from asset sales completed by any Loan Party;Proceeds from issuance of any debt completed by any Loan Party;Proceeds from issuance of any equity completed by any Loan Party, excludingequity raised to support the 2019 and 2020 capital development program; andthe outstanding principal balance on the Maturity Date,

unless otherwise agreed to by the Lender in writing.

All payments shall be applied as follows:

Firstly, to any outstanding costs and expenses of the Lender;Secondly, to all accrued and unpaid interest;Thirdly, to all fees due; and thenFourthly, to repay the principal amount outstanding on the Credit Facility.



Commitrnont Lotter, May 17, 2019 4

Prepayment:

Security:

Confirmation ofNBC Security:

The Credit Facility may be prepaid at any time subject to 60 days prior written notice and,will be subject to the payment to the Lender of an amount equal to the greater of 4% of themaximum amount drawn under the Credit Facility ("Prepayment Interest") or theapplicable Participatory Interest. For greater certainty, if notice of prepayment is providedprior to April 30, 2020, the 2019 Participatory Interest will apply, and if on or after May 1,2020, the 2020 Participatory Interest will apply.

The following security (the "Security") shall be completed, duly executed, delivered andregistered, where necessary, to the entire satisfaction of the Lender and its counsel. AllSecurity, including the NBC Security, shall be held by the Lender for and on behalf of itselfas continuing security for the indebtedness, liabilities and obligations (whether direct orindirect, absolute or contingent) of the Loan Parties to the Lender under this CommitmentLetter and the Security, as the same may be amended, replaced, restated or supplemented,

Promissory Note for $7,500,000 from the Borrower;

2. $10,000,000 demand debenture (the "Debenture") from the Borrower providing:(i) a security interest in all present and after-acquired personal property of theBorrower; (ii) a floating charge on all present and after-acquired oil and gas assetsof the Borrower and (iii) a floating charge over all other present and after-acquiredreal property; (iv) an unconditional undertaking from the Borrower to provide fixedcharges against the oil and gas interests of the Borrower at the request of theLender to be registered in such places and at such times in the sole discretion of theLender; and (v) a pledge/deposit of such Debenture, The charges referred to initems (i) - (iii) above may be registered in such places and at such times as may bedetermined by the Lender in its sole discretion.

3. Unlimited guarantees from the Guarantors, each supported by a $10,000,000demand debenture in the same form and substance as the Debenture;

4, Agreements providing for the assignment by the Existing Lender to the Lender ofthe Existing Indebtedness and the NBC Security (the "Assignment Agreements")in form and substance satisfactory to the Lender duly authorized and executed byNational Bank of Canada and the Loan Parties; and

Such other security, documents, and agreements the Lender or its legal counselmay reasonably request.

The Security shall be registered/perfected in such places and in such manner and at suchtimes, in the sole discretion of the Lender, but at a minimum shall be registered/perfected inthe Province of Manitoba, and the Security shall be in first place and in priority, to all othermortgages, liens, pledges, charges, security interests or other encumbrance of any kind,other than the Permitted Encumbrances (as defined below),

The Loan Parties hereby confirm and agree that the NBC Security is and shall remain infull force and effect in all respects notwithstanding the assignment provided for by theAssignment Agreements, and shall continue to exist and apply to all obligations, liabilitiesand indebtedness owing by the Loan Parties to the Lender under this Commitment Letter,


Eleatic Exploration Inc.Commitment Letter, May 17, 2019 5

Release and The Loan Parties shall not be discharged from the Security or any part thereof, other than toDischarge of the extent that such Security applies to a disposition permitted hereunder (in which case theSecurity: Security shall thereupon cease to apply to the subject matter thereof for the benefit of the

Lender) except by a written release and discharge signed by the Lender with the priorwritten consent of the Lender,

If all of the obligations, liabilities and indebtedness under the Commitment Letter and theSecurity have been repaid, paid, satisfied and discharged, as the case may be, in full and theCredit Facility has been fully cancelled, then the Lender shall cause its interest in theSecurity to be released and discharged at the expense of the Borrower,

Amendment and From and after the effective time of the Assignment Agreements (as defined below);Restatement:

UnsecuredCreditors:

1. the Original Credit Agreement shall be and is hereby amended and restated in theibrm of this Commitment Letter; and

2, all advances and other amounts outstanding under the Original Credit Agreementprior to the advance of any portion of the Credit Facility to the Existing Lender orto the Borrower shall continue to be outstanding under this Commitment Letter andshall be deemed to be advances and obligations, liabilities, and indebtedness owingby the Borrower to the Lender under this Commitment Letter,

Notwithstanding the foregoing or any other term hereof, all of the covenants,representations and warranties on the part of the Borrower under the Original CreditAgreement and all of the claims and causes of action arising against the Borrower inconnection therewith, in respect of all matters, events, circumstances and obligationsarising or existing prior to the advance of any portion of the Credit Facility shall continue,survive and shall not be merged in the execution of this Commitment Letter or any otherinstruments or agreements entered into by the parties relating to the Credit Facility,including the Security, or any advance or provision of any advance hereunder.

The Loan Parties shall make application to the Court on or about June 7, 2019 for an order(the "June Order") which provides for, among other things, the calling and holding of ameeting (the "Meeting") of the unsecured creditors of the Loan Parties (collectively, the"Unsecured Creditors") on or before July 4, 2019 to approve a plan (the "Plan") tocompromise and settle the liabilities (the "Unsecured Debt") claimed by the UnsecuredCreditors in full on the basis of (i) 50% of the Unsecured Debt being paid in cash and (ii)50% of the Unsecured Debt being paid by way of the issue by Loan Parties of unsecured,non-interest bearing promissory notes (the "Notes") with an 18 month maturity date, Thevoting threshold for approval of the Plan by the Unsecured Creditors shall be a majority innumber of the Unsecured Creditors representing two thirds in value of the Unsecured Debtwho are present and voting either in person or by proxy at the Meeting, or such otherthreshold as agreed to by the Lender,

Conditions The Lender's obligations under this Commitment Letter are subject the followingPrecedent: conditions precedent occurring or being fulfilled on or before July 4, 2019 (or such earlier

date as set out below), to the full satisfaction of the Lender in its sole discretion and all suchconditions precedent are for the sole benefit of the Lender and may be waived by theLender in writing;


Elcano Explorntion Inc,


1. The grant of the June Order not later than June 10, 2019 on terms satisfactory to theLender;

2. The Meeting is held on or before July 4, 2019 and the Plan is approved by theUnsecured Creditors at the Meeting;

The grant of the final order of the Court in respect of the CCAA proceedingsproviding for, among other customary matters, the completion of the SISP and theCCAA proceedings, the discharge of the Monitor, the discharge of theAdministration Charge, the discharge of the Directors' Charge (as each term isdefined in the Order), the approval of the Plan and the approval of the compromiseof the Unsecured Debt in accordance with the Plan, in each instance on termssatisfactory to the Lender;

4. The compromise and settlement of the Unsecured Debt in accordance with the Plan;

5. Delivery of duly executed and authorized copies of this Commitment Letter;

6. Evidence of Insurance coverage in accordance with industry standards;

7. All Security, including the Assignment Agreements, shall have been duly completed,authorized, executed and delivered by the parties thereto and all such Security shallbe on terms and conditions satisfactory to the Lender;

All Security that is required to be registered in order to protect or perfect the securityinterest granted thereby or which is required to be registered in order to obtain apriority over all other creditors shall have been duly registered to the satisfaction ofcounsel to the Lender free and clear of all liens, mortgages, pledges, securityinterests, assignments, encumbrances, charges, and other interests in property of anynature whatsoever, howsoever created or arising, and other adverse claims(collectively, "Encumbrances") with the exception of the permitted encumbrancesset forth in Appendix "B" attached hereto ("Permitted Encumbrances");

9. Legal opinion from legal counsel to the Borrower, in form and content reasonablyrequired by the Lender, stating that: (i) each Loan Party has beenformed/incorporated and is existing as a limited partnership/corporation, and has thepower and capacity to enter into the Commitment Letter and the Security and toperform its obligations thereunder; (ii) the Commitment Letter and the Security havebeen duly authorized, executed and delivered by it; (iii) execution, delivery andperformance of the Commitment Letter and the Security does not conflict with orcontravene any laws, constating documents, unanimous shareholders agreements orresolutions; (iv) no filing, registration, consent or action is required in connectionwith the execution and delivery of the Commitment Letter and the Security otherthan registrations made in connection with the Debenture and the AssignmentAgreements; and (v) such other opinions as may be requested by the Lender;

10. Legal Opinion of the Lender's counsel, including an opinion that the obligations ofthe Loan Parties under the Commitment Letter and Security are enforceable inaccordance with their terms;


Elonno Exploration Inc,Commitment Latter, May 17, 2012 7

11, Satisfactory evidence by way of officer's certificate (including a schedule of thepetroleum and natural gas reserves described by lease (type, date, term, parties),legal description (wells and spacing units), interest (W,I. or other ATO/BPOinterests), overrides (APO/BPO), gross overrides, and other liens, encumbrances,and overrides) addressed to the Lender and its counsel that each Loan Party has goodand valid title to its petroleum and natural gas interests and that no Encumbrancesexist against such interests other than the Security and Permitted Encumbrances;

12, Completion of hedging arrangements, which may include 6,000 bbl/month ofphysical hedges at a minimum of 560/bbl in addition to put options of 3,000bbl/month at a minimum of $45/bbl until June 30, 2020, or similar arrangementssatisfactory to the Lender;

13. The appointment of the Lender's nominee as a director of the Borrower to haveeffect immediately following the completion of the transactions contemplate by thisCommitment Letter;

14. Evidence of proceeds of not less than $275,000 from additional equity orsubordinated debt financings completed by the Borrower held in trust by counsel toBorrower and, if applicable, delivery of loan postponement agreement(s) executedby the lender(s) under such subordinated debt financings;

15. All regulatory approvals shall have been obtained in connection with the transactionscontemplated herein;

1 6. Director's Resolution from each Loan Party authorizing the Credit Facility, theCommitment Letter and the Security;

17. There shall not exist any event, action, or condition of any nature whatsoever which,in the sole opinion of the Lender, could materially adversely affect the business,operations, assets, or affairs of the Loan Parties, taken as a whole;

8. Confirmation from the Borrower's CFO that salaries for Dale Barnard, DarrenRennie and Greg Jones will be reduced by $25,000 each per annum until June 30,2020;

19. The representations and warranties of the Loan Parties contained herein (and, asapplicable, the Security) arc true and correct;

7.0. The Loan Parties shall have fulfilled or complied with in all material respects witheach of their covenants set out in this Commitment Letter and shall have providedthe Lender a certificate confirming same;

21, Confirmation from the Monitor that its accounts and the accounts of personsengaged by it in connection with the Order, including but not limited to its legalcounsel, have been paid in full;

22. Confirmation from GMP FirstEnergy that its accounts and the accounts of personsengaged by it in connection with the Order, including but not limited to its legalcounsel, have been paid in fall;


Elea110 EXplOPEIC1011


Representationsand .\Varrantics:

23. Confirmation from the directors and officers that all amounts owing or accruing dueto each from the Loan Parties have been paid in full other than the payment ofsalaries in the normal course of business and on a basis consistent with past practiceand that they are not aware of any basis for any claim against the Loan Parties forindemnification under the Order or otherwise; and

24, A payout statement from National Bank of Canada in respect of all amounts owingby the Loan Parties with a payout not to exceed $7,100,000,

If any of the above conditions precedent do not occur or are not fulfilled on or before July4, 2019, to the full satisfaction of the Lender in its sole discretion or are not waived by theLender in writing, this Commitment Letter shall be of no force and effect.

Each Loan Party represents and warrant to the Lender (all of which representations andwarranties each Loan Party hereby acknowledges arc being relied upon by the Lender inassuming its obligations under this Commitment Letter) that;

It has been duly incorporated or formed, as applicable, and is in good standingunder the legislation governing it, and it has the powers, permits, and licensesrequired to operate its business or enterprise and to own, manage, and administerits property;

2. This Commitment Letter constitutes, and the Security and other agreementscontemplated hereby, including the Assignment Agreements, will constitute, legal,valid, and binding obligations of itself, enforceable in accordance with their terms,subject to applicable bahkruptcy, insolvency, or similar laws affecting creditors'rights generally and to the availability of equitable remedies;

3, It has the right to pledge, charge, mortgage, or lien its assets in accordance with theSecurity contemplated by this Commitment Letter;

4, It is presently in good standing under, and shall duly perform and observe, allmaterial terms of all material documents, agreements, and instruments affecting orrelating to its petroleum and natural gas assets (collectively, the "PNGAgreements");

5, The total Unsecured Debt does not exceed $3,450,000;

6. The process to determine potential claims against the directors and officers of theLoan Parties is complete and there are no such claims;

7. It presently does not have any assets or liabilities which it has not already disclosedto the Lender in writing and it does not foresee incurring any material liabilitywhich it has not already disclosed to the Lender in writing;

8. There has been no adverse material change in the financial position of theBorrower or any Guarantor since the effective date of its most recent annualcomparative consolidated financial statements, being December 31, 2018 which ithas not already disclosed to the Lender in writing; such financial statements fairly


Moan() Exploration Inc.

Commitment Letior, May 17, 2019 9

present the consolidated financial position of the Borrower at that date, and theBorrower does not foresee incurring any major liability which it has not alreadydisclosed to the Lender;

9. It is not involved in any dispute or legal proceedings likely to materially affect itsfinancial position or its capacity to operate its business;

10, The sole subsidiaries and affiliates of Elcano are the corporation and partnershipset forth in Appendix "C" attached hereto;

11. Without limiting the generality of clause 4 above with respect to 'MG Agreements,it is not in default under any other contracts to which it is a party or under theapplicable legislation and regulations governing the operation of its business or itsproperty, including all Environmental Requirements (as defined below) except; (i)the arrears in payment of amounts outstanding to suppliers and service providers,which have been disclosed to the Lender; and (ii) where such default or non-compliance could not reasonably be expected to have a material adverse effect onthe Borrower or its property;

12. It does not carry on business under any trade or other business name, and does notown any property or carry on any material business in any jurisdictions other thanthe Provinces of Manitoba, Alberta and Saskatchewan;

13, It is in compliance in all material respects with applicable law relating to anyabandonment and reclamation obligations, liabilities or activities including, withoutlimitation, any outstanding abandonment/reclamation orders;

14, It has provided to the Lender all material information in the possession of oravailable to it and relevant to' the Lender's review and assessment of the CreditFacility, Security and the structure of the Loan Parties and, all such information istrue, complete and accurate;

15, National Bank of Canada is the only secured creditor of the Loan Parties;

16, It has all the requisite power, authority and capacity to execute and deliver thisCommitment Letter and the Security and to perform its obligations hereunder andthereunder;

17. The execution and delivery of this Commitment Letter and the Security and theperformance of the terms of this Commitment Letter and the Security do not violatethe provisions of its constating documents or its by-laws, as applicable, or any law,order, rule or regulation applicable to it and have been validly authorized by it;

18, All property owned or operated by the Loan Parties has been and will continue tobe operated and maintained, as the case may be, in a good and workmanlikemanner in accordance with sound industry practice and in accordance with allapplicable Laws, except to the extent that the failure to do so would not reasonablybe expected to have a material adverse effect on the Loan Parties;

19. Each Loan Party has in full force and effect such policies of insurance in such


Elcano Exploration Inc.,


ReportingRequirements;

10

amounts issued by such insurers of recognized standing covering the property ofthe Loan Parties as required by this Commitment Letter;

20, Each Loan Party: (i) has obtained all permits, licenses and other authorizationswhich are required under environmental law; and (ii) is in. compliance withEnvironmental Law and with the terms and conditions of all such permits, licensesand authorizations, except in each case to the extent that the failure to so obtain orcomply would not reasonably be expected to have a material adverse effect on aLoanParty;

21, It has good and valid title to its assets and property, free and clear of allEncumbrances except for Permitted Encumbrances and each Loan Party is entitledto charge or pledge its interests in its property in favour of the Lender as providedin this Commitment Letter without the need to obtain any consent of or releasefrom any other person or entity which has not been obtained and such property isnot held in trust by any Loan Party for any Person other than a Loan Party; and

22. The execution, delivery and performance of the terms of this Commitment Letterand the Security will not constitute a breach of any agreement to which it or itsproperty, assets or undertaking are bound or affected,

Unless expressly stated to be made as of a specific date, the representations and warrantiesmade in this Commitment Letter shall survive the execution of this Commitment Letterand all Security, and shall be deemed to be repeated as of the date of each drawdownunder the Credit Facility and as of the date of delivery of each compliance certificateattached hereto as Appendix "A" (the "Compliance Certificate"), subject tomodifications made by the Borrower to the Lender in writing and accepted by the Lender.The Lender shall be deemed to have relied upon such representations and warranties ateach such time as a condition of making each drawdown under the Credit Facility orcontinuing to extend the Credit Facility,

Each Loan Party shall submit to the Lender, in form and substance satisfactory to theLender:

Daily production data for all wells operated by the Borrower;

2, Lease operating statements for operated properties within 30 days at the end ofeach month;

3. Aged consolidated AP and AR summaries within 60 days of each quarter-end;

4. Internally prepared financial statements within 60 days of each quarter-end;

5. Annual independent engineering report in form and substance satisfactory to theLender on the petroleum and natural gas reserves of the Borrower (on aconsolidated basis) within 120 calendar days of each fiscal year end, prepared by afirm acceptable to the Lender;

6. Annual audited consolidated financial statements of the Borrower, within 120calendar clays of each fiscal year end;


Eleano Exploration Inc.

Commitmenl Letter, May 17, 2019

AffirmativeCovenants;

7. Annual compiled unaudited financial statements of the Guarantors, within 120calendar days of each fiscal year end;

8, Compliance Certificate delivered concurrently with the quarterly and annualfinancial statements, at the times set forth above;

9, Decommissioning schedule and budget (well and facilities list used to derivebalance sheet liability) delivered at a minimum annually with currently requiredannual reporting;

10. Annual report satisfactory to the Lender in respect of the ARO and governmentregulatory obligations in Manitoba, Alberta, and Saskatchewan related to itspetroleum and natural gas reserves within 120 days of the Borrower's year-end;

11. Board approved annual operating and capital budgets for the upcoming fiscal year,in form satisfactory to the Lender, prior to each fiscal year-end;

12, Within (i) 60 days after the end of the first three fiscal quarters of each fiscal year,and (ii) 120 clays after the end of each fiscal year, the Borrower will furnish to theLender a detailed variance report of actual capital expenditures for such fiscalperiod month in comparison to the applicable approved budget;

13. Details of any proposed sales of reserves or working interests in assets (includingfarmouts, participations, pooling, unitization or similar agreements) prior to its saleor disposition including its impact on future production and revenues;

14. Detailed information with respect to all hedging contracts within three businessdays following the execution thereof;

15. Details of the commencement of any legal or administrative proceedings or anyinsurance claims against any Loan Party and the related particulars as reasonablypossible upon the Borrower becoming aware thereof;

16, Details of the occurrence of any default hereunder or under Security or any other.event which would reasonably be expected to result in a material adverse effect ona Loan Party, in each case as soon as reasonably possible upon the Borrowerbecoming aware thereof and specify in such notice the nature of the event and thesteps taken or proposed to be taken to remedy or eliminate the same; and

17. Any additional information as reasonably requested by the Lender.

Each of the Loan Parties covenants and agrees with the Lender that it shall:

Pay all sums of money when due and payable by it to the Lender under thisCommitment Letter and the Security;

2, Deliver to the Lender the Security, in all cases and in form and substancesatisfactory to the Lender and the Lender's solicitor;



Commilmont Letter, May 17, 2019 12

3. B orrower will use the proceeds of the Credit Facility only for the purposesapproved by the Lender;

4. Carty on business and operate its petroleum and natural gas reserves in accordancewith good practices consistent with accepted industry standards and pursuant toapplicable agreements, regulations, and laws;

5. Maintain its existence and comply with all applicable laws and maintain alllicenses and authorization required from regulatory or governmental authorities oragencies to permit it to carry on its business, including, without limitation, anylicenses, certificates, permits and consents from the protection of the environment;

6. Pay, when due, all taxes, assessments, deductions at source, crown royalties,income tax or levies for which the payment is guaranteed by legal privilege, priorclaim, or legal hypothec, without subrogation or consolidations other than any suchtax assessment, deduction at source, royalty or levy being contested in good faithand where the liens for which would be Permitted Encumbrances;

7. Comply with all regulatory bodies and provisions regarding environmentalprocedures and controls;

8. Duly perform and observe all material terms of all PNG Agreements and promptlynotify the Lender of any material default or event of material default under anyPNG Agreement;

9. Comply in all material respects with applicable law relating to abandonment andreclamation obligations, liabilities or activities including, without limitation, anyoutstanding abandonment/reclamation orders;

10. Upon reasonable notice and during normal business hours, allow the Lender accessto its books and records and to visit and inspect its assets and place of business;

1 1, Maintain adequate and appropriate insurance on its assets including protectionagainst public liability, blow-outs, and "all-risk" perils;

12. Inform the Lender in writing, giving reasonable details of, any event or actionwhich would have a material adverse impact on its operational or financial affairs,including the sale of assets, guarantees, or alterations of type of business;

13, Inform the Lender in writing, giving reasonable details of any Alberta EnergyRegulator Directives (or equivalent Regulator and Policy Document for otherrelevant jurisdictions, including Manitoba, where the Loan Parties have producingproperties) that has application to 'Loan Parties and the impact of which could beadverse to Loan Parties;

14, Keep and maintain books of account and other accounting records in accordancewith generally accepted accounting principles;



FinancialCovenants:

15. The Borrower will, and will cause each other Loan Party to, maintain good andvalid title to its property, subject only to Permitted Encumbrances and to minordefects of title which in the aggregate do not affect their rights of ownershiptherein or the value thereof in any material way.

16. The Borrower will, and will cause each other Loan Party that provides Security tothe extent required hereunder to, do all things reasonably requested by the Lenderto protect and maintain the Security and the priority thereof in relation to otherPersons;

17. At any time between meetings of the Borrower's shareholders at which shareholderapproval is sought for the election of directors, the Lender has the right to nominateand have elected/appointed one representative to stand for appointment to theBoard of Directors of the Borrower by the existing directors of the Borrower to fillany vacancy among the directors or as an additional director in accordancewith, and subject to, the provisions of the Act and the Corporation's Articles andBy-laws (and the Borrower agrees to call a meeting of its Board of Directors toconsider such appointment and to use its reasonable efforts to hold such meetingwithin five days of a notice to the Borrower from the Lender with respect to suchnominee(s)). The Lender . shall have the right in accordance with theforegoing, upon notice to the Borrower, to have such nominee nominated forelection as a director of the Borrower at any meeting of shareholders of theBorrower at which directors are elected, and the Borrower hereby agrees to causesuch nominee to be elected as a director;

18. When a representative of the Lender does not serve as a director of the Lender, theLender has the right to appoint an employee of the Lender as a non-voting, non-participating observer (an "Observer") to the Board of Directors of the Lender(entitling observation rights at the Board and committee levels, subject to anyconflict of interest restrictions) and upon notice to the Borrower as to the identityof the Observer, and the Lender and its Observer agreeing in writing to covenantsregarding confidentiality, misappropriation of corporate opportunities and othersimilar requirements that the Board may reasonably require, the Observer shallhave the right to receive notice of, and attend at, meetings of the Board (andcommittees thereof) and to receive copies of any and all materials sent to Directorsor committee members; and

19, Maintain the senior management group of borrower consisting of Richard Fulton,Scott Pincock, Darren Rennie, Greg Jones and Dale Bernard or replacementssatisfactory to the Lender in its sole discretion.

The Borrower covenants and agrees with the Lender that it shall:

1, Maintain a Current Ratio (as defined below) of not less than 1.25:1.0 at all timescommencing September 30, 2019, and thereafter;

Maintain Secured Debt (as defined below) to Trailing Cash Flow (as defiled below) ator below 1.5:1.0 for the quarter ending June 30, 2019, and thereafter; and


Eleano Exploration Inc,Commitment Letter, May 17, 2019

NegativeCovenants:

14

3. Maintain monthly oil and liquids sales production of at least 500 bbl/d commencingJune 30, 2019 until March 31, 2020, apart from a force majeure event. A revisedproduction limit will be proposed by the Lender and agreed to by the Loan Parties byApril 30, 2020, subject to the covenant remaining at 500 bbl/d if no agreement can bereached.

"Current Ratio" is defined as Current Assets (as defined by IFRS, being as definedbelow), (excluding unrealized hedging gains and/or losses) divided by CurrentLiabilities (as defined by IFRS), but excluding any current portion of the CreditFacility (to the extent that it is not past due), indebtedness under the Notes andunrealized hedging gains and/or losses, all determined on a consolidated basis.

"Secured Debt" means in respect of the Loan Parties, as of the end of a fiscal quarterand as determined in accordance with IFRS on a consolidated basis and withoutduplication, an amount equal to all liabilities outstanding which are secured against theassets of the Borrower and the Guarantors, excluding subordinated shareholder loans,

"Trailing Cash Flow" means, in respect of the Loan Parties, for the most recentlycompleted fiscal quarter, the net income of the Borrower determined on a consolidatedbasis in accordance with IFRS; provided that (but without duplication) there shall be:(i) added thereto deferred taxes, interest expense, amortization and other non-cashcharges; and (ii) subtracted therefrom dividends declared during the period, calculatedon an annualized basis,

Each Loan Party covenants and agrees that it shall not, without the Lender's prior writtenapproval:

1, Merge, amalgamate, dissolve or liquidate or wind up its assets, except in the case of asubsidiary of the Borrower, if any, where the successor thereto or transferee thereof isa Loan Party that is a Guarantor, as applicable, and has provided Security;

2, Allow a transaction or series of related transactions (whether sales, transfers orissuance of shares of the Loan Party or other corporations or mergers, amalgamations,arrangements or other transactions) after which the Loan Party is controlled by aperson ("person" as used herein means an individual, corporation, partnership, trustor other entity) or group of persons that did not control the Loan Party prior to suchtransaction or series of transactions and, for the purposes hereof, persons associatedor affiliated within the meaning of the Business Corporation Act (Alberta) shallconclusively be deemed to be acting in concert (a "Change of Control"). In thissection "control" means, in reference to a person, the power to direct or cause thedirection of the business and affairs of such person, provided that, without limitingthe manner in which control of a corporation can be held, the ownership of shares ofa corporation that carry the right to vote more than fifty percent (50%) of the votesthat can ordinarily be cast on a resolution to elect the directors of a corporation shallbe deemed to constitute control of such corporation;

3. (i) Reduce or distribute its capital; (ii) declare or pay dividends or other distributions;(iii) redeem or repurchase shares, partnership units or partnership interests, trust unitsor trust interests or other securities of a Loan Party; or (iv) make any payment on orin respect of any shareholder advances or other loans owing by a Loan Party to a



holder (or to an affiliate of such holder) of shares, partnership units/interests or trustunits/interests of a Loan Party;

4, Incur further indebtedness (other than indebtedness secured by PermittedEncumbrances);

5, Create, incur, assume or permit to exist any Encumbrance on or against any of theassets of any Loan Party, other than Permitted Encumbrances, or guarantee theobligations of others, other than any guarantee or indemnity granted in favour of theLender;

6, Make loans or investments (by way of loan, financial assistance or otherwise) otherthan to or in another Loan Party or those investments outlined in the Borrower'sbudgets provided to the Lender;

7, Incur capital expenditures other than those expenditures contemplated in theBorrower's budgets provided to the Lender;

8, Sell or dispose of any assets (including but not limited to: (i) any farmouts,participations, pooling, unitization or similar agreements (collectively called"farmouts") involving non-arm's length parties; and (ii) any sale/leasebacktransactions on facilities) except for those assets that are subject to the floating chargewhich may be sold or disposed of, other than by way of farmouts involving non-arm'slength parties, in accordance with the floating charge provisions of the applicableDebenture provided that: (a) such sales or dispositions are at fair market value; (b) theaggregate value of such sales or dispositions do not exceed $25,000 in any calendaryear; and (c) all of the sale proceeds are used to repay the Credit Facility);

9, Hedge or contract crude oil, natural gas liquids, or natural gas, on a fixed price basis,exceeding amounts agreed to in writing with the Lender;

10, Monetize or settle any fixed price financial hedge or contract;

11, Enter into any contract with a non-arm's length service provider without Tallinn'sprior consent;

12. Increase the compensation payable to its employees and consultants;

13. Contract with any service provider who is related to any director or officer of theB orrower;

14, Create or otherwise acquire a new subsidiary; or

15. Amend the terms of its constating documents or its by-laws, any applicablepartnership agreement or any similar document or instrument if, in each case, to do sowould reasonably be expected to materially and adversely affect the rights of theLenders under this Commitment Letter and the Security,

Environmental 1, Each Loan Party shall comply with the requirements of all legislative and regulatoryObligations: environmental provisions (including abandonment and reclamation laws and




regulations) ("Environmental Requirements") and shall at all times maintain theauthorizations, permits, and certificates required under these provisions.

2 Each Loan Party shall promptly notify the Lender in the event a contaminant spill oremission occurs or is discovered with respect to its property, operations, or those ofany neighboring property. In addition, it shall report to the Lender forthwith anynotice, order, decree, or fine that it may receive or be ordered to pay with respect to theEnvironmental Requirements relating to its business or property,

3. At the request of and in accordance with the conditions set forth by the Lender, eachLoan Party shall, at its own cost, provide any information or document, which theLender may require, with respect to its environmental situation, including any study orreport prepared by a firm acceptable to the Lender. In the event that such studies orreports reveal that any Environmental Requirements are not being respected, the LoanParties shall effect the necessary work to ensure that its business and property complywith the Environmental Requirements within a period acceptable to the Lender.

4. Each Loan Party agrees to indemnify and hold harmless each of the Lender andLender's partners, officers, directors, employees, and assignees for any damage whicheach may suffer or any liability which each may incur as a result of any non-compliance with Environmental Requirements.

Events of Each of the following shall be considered an "Event of Default" hereunder. Upon theDefault: occurrence of any Event of Default, the Lender may choose, in its sole discretion, to cancel

all credit availability and to demand repayment of the Credit Facility in full, together withoutstanding accrued interest, costs and fees, demand under any guarantees and, withoutprejudice to the Lender's and Lender's other rights and remedies, the Security shall becomeenforceable:

1, Default in payment of any principal payment when due to the Lender by a Loan Party;

2. Default in payment of any interest, fee or any other monies (other than as set forth inno, 1 above), when due to the Lender by a Loan Party; in each case if such default isnot remedied within two (2) business days of the due date;

3. Any Representation or Warranty of a Loan Party to the Lender proves to be untrue ina material respect and such representation or warranty in question remains untrue in amaterial respect within the period of five (5) days following receipt of notice of suchuntrue representation or warranty from the Lender;

4. Default by a Loan Party under any material provision of any material agreement,statute or regulation in respect of its oil and gas assets;

5. The failure of any Loan Party to observe or comply with any of the negativecovenants set out in nos, 2, 3, 4, 5, 8, 9, 10 and 15 under "Negative Covenants";

6. Except for (i) the failure to pay any monies due to the Lender hereunder, under theSecurity or under any other agreement between the Lender and a Loan Party relatingto the Commitment Letter when due, and (ii) the other failures or Events of Defaultotherwise dealt with in Clauses 1 to 5 and 7 to 15 under this "Events of Default", the




failure by a Loan Party to observe or comply with any other provision (including theAffirmative and Negative Covenants herein other than the negative covenants set outin nos. 2, 3, 4, 5, 8, 9, 10 and 15 under "Negative Covenants") of this CommitmentLetter, the Security or any other agreement made between the Lender and a LoanParty relating to the Commitment Letter, and such failure or noncompliance (ifcapable of being remedied or rectified) is not remedied or rectified to the satisfactionof the Lender within the period of thirty (30) days following receipt of notice of suchfailure or compliance from the Lender;

7. In the opinion of the Lender, acting reasonably, a material adverse change in thebusiness, financial condition, operations, assets, or affairs of a Loan Party, hasoccurred;

8, A petition is filed, an order is made or a resolution passed, or any other proceeding istaken for the winding up, dissolution, or liquidation of a Loan Party;

9, Proceedings are taken to enforce any encumbrance on the assets of a Loan Party, or ifthere is any judgment or judgments against a Loan Party or Loan Parties, having avalue in the aggregate greater than $25,000, unless evidence is provided by the LoanParty that such proceedings are being contested in good faith and security, satisfactoryto the Lender, has been provided to the Lender;

10, A Loan Party is in default of the payment of indebtedness or other obligations to thirdparties in an amount which in the aggregate exceeds $100,000, excluding amountscurrently due to TORC Oil and Gas Ltd.;

11. A Loan Party ceases or threatens to cease to early on its business, or if proceedingsare commenced for the suspension of the business of a Loan Party, or if anyproceedings are commenced under the Companies Creditors Arrangements Act orunder the Bankruptcy and Insolvency Act (including filing a proposal or notice ofintention) in respect of a Loan Party or if a Loan Party commits or threatens to commitan act of bankruptcy, or if a Loan Party becomes insolvent or bankrupt or makes anauthorized assignment pursuant to the Bankruptcy and Insolvency Act, or a bankruptcypetition is filed by or presented against a Loan Party;

12, Proceedings are commenced to appoint a receiver, receiver/manager, or trustee inrespect of the assets of a Loan Party by a court or pursuant to any other agreement;

13. Any change in the senior management of a Loan Party without the prior writtenconsent of the Lender;

14. If a Change of Control occurs; and

15. Sale by a Loan Party of all or substantially all of its assets,

Any waiver of, exception to or relief from any of the Events of Default outlined aboverequire the Lender's prior written consent

Indemnity: The Loan Parties jointly and severally indemnify and hold the Lender harmless against anyloss, costs, claims, actions, suits, damages, expenses or liabilities of any and every kind


Elcano Exploration Inc,Commitnlent Letter, May 17, 2019

Costs:

18

which the Lender may sustain or incur, directly or indirectly, as a consequence of the entryinto or performance of this Commitment Letter or any of the Security, the use of fundsadvanced under this Commitment Letter, the consummation of any transactioncontemplated by this Commitment Letter, any litigation or claim commenced arising out ofthe execution, delivery or performance of, or the enforcement of any right under thisCommitment Letter or any of the Security, a default by any Loan Party in the payment orperformance of any obligations (including any representation or warranty made herein by aLoan Party being incorrect at the time it was made or deemed. to have been made), thefailure by a Loan Party to comply with any of its covenants in this Commitment Letter orin any of the Security, or the occurrence of any other default or Event of Default, exceptwhere such loss, costs, claims, actions, suits, damages, expenses or liabilities arise byreason of the gross negligence or willful misconduct of the Lender.

The Borrower shall reimburse the nominee of the Lender who serves as a director of theBorrower (and each Observer) for his or her reasonable expenses incurred in connectionwith their duties as directors of the Borrower. The Borrower will indemnify any suchdirector to the fullest extent permitted by the Business Corporations Act (Alberta). Nothingin this Commitment Letter limits the right of any such director to claim indemnity apartfrom the provisions of this Commitrhent Letter, if such director is entitled to suchindemnity. Indemnification agreements shall also be entered into for the benefit of eachnominee of the Lender who serves as a director of the Borrower and each Observer.

The indemnities in this Commitment Letter (including this section) shall extend to thepartners, officers, directors, employees, and assignees of the Lender and, for certainty,those for whom the Lender acts as Lender hereunder, and the Loan Parties will hold thebenefit of such indemnities in trust for such indemnified parties to the extent necessary togive effect hereto,

The provisions, undertakings, and indemnifications set out in this Commitment Letter,(including those in this section and those in the section entitled "EnvironmentalObligations") shall survive the satisfaction and release of the Security and payment andsatisfaction of the indebtedness and liability of the Loan Parties to the Lender.

All reasonable costs, including legal fees on a solicitor and his own client basis, incurredby the Lender in connection with the Credit Facility being made available hereunder are forthe account of, and shall be paid by, the Borrower, including all costs and expensesincurred by the Lender in connection with: (i) the negotiation and settling of the terms ofthis Commitment Letter and any of the Security and other agreements contemplatedhereby; (ii) the enforcement of any of the Security; and (iii) obtaining repayment of anymonies outstanding hereunder.

The parties agree that the Lender's counsel may directly enforce the obligation of theBorrower to pay its fees as if such counsel were a direct party to this Commitment Letterwithout any requirement for such counsel to proceed against the Lender and the Lenderwill hold the benefit of the covenant of the Borrower in trust for such counsel,

General: Time is of the essence,

The insertion of headings in this Commitment Letter is for convenience of reference onlyand shall not affect the construction or interpretation of this Commitment Letter, The



terms "this Commitment Letter", "hereof', "hereunder", "herein" and similar expressionsrefer to this Commitment Letter and not to any particular Section or other portion hereofand include any agreement supplemental hereto.

Words importing the singular number only shall include the plural and vice versa, wordsimporting the masculine gender shall include the feminine and neuter genders and viceversa, words importing persons shall include individuals, partnerships, associations, trusts,unincorporated organizations and corporations and vice versa and words and termsdenoting inclusiveness (such as "include" or "includes" or "including"), whether or not sostated, are not limited by their context or by the words or phrases which precede or succeedthem,

Reference herein to any agreement, instrument, licence or other document shall be deemedto include reference to such agreement, instrument, licence or other document as the samemay from time to time be amended, modified, supplemented or restated in accordancewith the provisions of this Commitment Letter if and to the extent such provisions areapplicable; and reference herein to any enactment shall be deemed to include reference tosuch enactment as re-enacted, amended or extended from time to time and to anysuccessor enactment.

The Loan Parties agree that all information provided by it to the Lender may be disclosedto the Lender's partners, directors, officers employees, authorized representatives(including lawyers, engineers, accountants, consultants, bankers and financial advisors).

The Borrower shall distribute and report to its directors that information which isreasonably requested by a director or is reasonably required by laws or by therecommended good corporate governance practices of Canadian regulatory authorities

The Loan Parties shall do all things and execute all documents reasonably deemednecessary or appropriate by the Lender, for the purposes of giving full force and effect tothe terms, conditions, undertakings, and security granted or to be granted hereunder,

It is understood and agreed that the execution, delivery and registration of the Securityshall in no way merge or extinguish this Commitment Letter or the terms and conditionshereof, which shall survive and continue in full force and effect, When a contradiction orconflict exists between an express term of any of the Security and an express term of thisCommitment Letter, the term of this Commitment Letter shall govern and prevail. Forgreater certainty a term contained in the Security and not contained in the CommitmentLetter and vice versa is not a contradiction or conflict with the other. Notwithstanding theforegoing, if there is any right or remedy of the Lender set out in any of the Security or anypart of which is not set out or provided for in this Commitment Letter, such additional rightshall not constitute a conflict or inconsistency.

If any amount due to the Lender is not paid when due, the Borrower shall pay interest onsuch unpaid amount (including interest on interest) if and to the fullest extent permitted byapplicable law, at a rate of 19% per annum.




Adoption ofLiabilityManagementRating System:

PersonalProperty Security

All interest rates specified are nominal annual rates. The effective annual rate in any casewill vary with payment frequency. All interest payable hereunder bears interest as wellafter as before maturity, default and judgment with interest on overdue interest at theapplicable rate payable herein.

Notwithstanding any provision herein to the contrary, in no event shall the aggregate"interest" (as defined in section 347 of the Criminal Code (Canada)) payable under thisCommitment Letter exceed the maximum effective annual rate of interest on the "creditadvanced" (as defined in that section) permitted under that section and, if any payment,collection or demand pursuant to this Commitment Letter in respect of "interest" (asdefined in that section) is determined to be contrary to the provisions of that section, suchpayment, collection or demand shall be deemed to have been made by mutual mistake andthe amount of such payment or collection shall be refunded to the Borrower. For purposesof this Commitment Letter, the effective annual rate of interest shall be determined inaccordance with generally accepted actuarial practices and principles over the term of theCredit Facility on the basis of annual compounding of the lawfully permitted rate ofinterest and, in the event of dispute, a certificate of a Fellow of the Canadian Institute ofActuaries appointed by the Lender shall be prima facie evidence, for the purposes of suchdetermination.

In accordance with prudent lending practices of knowing your client, each Loan Partyacknowledges that the policies and procedures of the Lender require investigation,verification and recording of information regarding the Borrower, the Guarantors, theirdirectors, officers and shareholders and other persons in control of any Loan Party. Subjectto any applicable privacy laws, the Loan Parties agree to promptly provide all informationas may be reasonably requested by the Lender, including supporting documentation andother evidence, in order to comply with the Lender's internal policies and anti-moneylaundering and anti-terrorist legislation. Subject to compliance with any applicable privacylaws, the Loan Parties hereby authorize any personal information lender, financialinstitution, creditor, tax authority, employer, or any other person including any publicentity, having information concerning the Loan Parties or their respective property, moreparticularly any financial information or information with respect to any undertaking,guarantee, or suretyship given by the Loan Parties, to supply such information to theLender in order to verify the accuracy of all information furnished or to be furnished fromtime to time to the Lender and to ensure the solvency of any Loan Party at all times.

If the regulatory body with responsibility for the oversight of environmental matters in theoil and gas industry in Manitoba begins to use a liability management (or equivalent) ratingas a means of determining whether a person is in compliance with its abandonment andreclamation policies, regulations and directives of the Province of Manitoba, then, in anysuch case, the Borrower and the Lender shall enter into good faith discussions with a viewto determining amendments to this Commitment Letter and to the Security to provide forrepresentations, warranties and covenants of the Loan Parties related to their maintenanceof an acceptable rating that are consistent with the prevailing market practice. Upon theBorrower and the Lender agreeing on such matters, the Loan Parties and the Lenders partyhereto shall enter into documentation to amend the provisions hereof and the Security torefer to such rate and make all other adjustments incidental thereto.

Each Loan Party hereby waives the requirement for the Lender to provide copies ofregistrations, verification statements or financing statements undertaken by the Lender,



Act:

Requirements:

Assignment:

including those registrations, verification statements and financing statements under thePersonal Property Security Act (Alberta) and equivalent legislation in other jurisdictions,

Each Loan Party hereby agrees to provide to the Lender written notice of a change in nameor address promptly.

No rights or obligations of any Loan Party herein and no amount of the Credit Facility maybe transferred or assigned by any Loan Party, with any such transfer or assigmnent beingnull and void insofar as the Lender is concerned and rendering the Credit Facility and otherindebtedness immediately due and payable at the option of the Lender and releasing theLender from any and all obligations of making any advances hereunder. The Lender mayassign (by way of participation or otherwise) all or any part of the Credit Facility, thisCommitment Letter and the Security without the consent of the Loan Parties, but willnotify the Loan Parties within a reasonable time frame of such assignment occurring.

Access to Each Loan Party hereby authorizes any personal information provider, credit bureau,Information: financial institution, creditor, tax authority, employer, or any other person including any

public entity, having information concerning it or its property, more particularly anyfinancial information or information with respect to any undertaking, guarantee, or suretyship given by it, to supply such information to the Lender in order to verify the accuracy ofall information furnished or to be furnished from time to time to the Lender and to ensurethe solvency of it at all times.

BindingAgreement:

Solicitors:

The terms and conditions of this Commitment Letter are binding and legal obligations andshall constitute a commitment on the part of each Loan Party and the Lender.

All legal work and documentation is to be performed at the Borrower's expense. All legalwork and documentation completed on behalf of the Lender will be performed by a legalfirm approved by the Lender.

Confidentiality: This Commitment Letter is delivered to you on the understanding that neither it nor itscontents shall be disclosed to any other party except to counsel, accountants, employeesand lenders of the Borrower who are specifically involved in the transaction,

The Borrower acknowledges and agrees that the nominees of the Lender who are eitherobservers on or members of its Board of Directors may disclose information obtained bythem in their observer or director capacities with the Lender's partners, directors,officers employees, authorized representatives (including lawyers, engineers, accountants,consultants, bankers and financial advisors), but only to the. extent such persons need toknow such information,

Subsidiaries: Upon a Loan Party, directly or indirectly, acquiring a subsidiary corporation, partnership orother entity, the Loan Party shall promptly notify the Lender of such acquisition and, uponrequest by the Lender, shall cause the subsidiary to execute a joinder to this CommitmentLetter or other agreement agreeing to be bound by all of the terms hereof as a Guarantorand to provide an unlimited guarantee with supporting debenture, certificates and opinions,in form and substance satisfactory to the Lender and its counsel.

Lender's Role: Nothing contained in this Commitment Letter, the Security or any related documentationshall in any way be deemed to be or be construed as creating the relationship of joint



venturer or partner or co-venturer with the Loan Parties, The parties each acknowledge andagree that the relationship between them is solely and exclusively one of borrower andlender,

Non-Exclusivity Tallinn is working with the Borrower on a non-exclusive basis and may, following theexpiry of the acceptance date may, in its sole discretion, provide financing term sheets orother indications of financing interest to other parties who may be interested in the sametransaction as that contemplated herein.

Promotion: By acceptance of this Commitment Letter, each Loan Party grants the Lender permission toidentify the Borrower as being financed by the Lender, and to use images of the LoanParties for promotional purposes, in the Lender's website, brochures, or pamphlets,

Counterparts: This Commitment Letter may be executed by the parties hereto in any number ofcounterparts and by different parties in separate counterparts, each of which when soexecuted shall be deemed to be an original and all of which taken together shall constituteone and the same document. Executed copies may be delivered by facsimile transmissionor electronic mail transmission and it will not be necessary to confirm execution bydelivery of originally executed documents. Without limiting the foregoing, the words"execution", "signed", "signature" and words of like import in this Commitment Letter, anySecurity or any other document delivered in connection with this Commitment Letter shallbe deemed to include electronic signatures or the keeping of records in electronic form,each of which shall be of the same legal effect, validity or enforceability as a manuallyexecuted signature or the use of a paper-based recordkeeping system, as the case may be, tothe extent and as provided for in any Law, including Parts 2 and 3 of thepersonal Information Protection and Electronic Documents Act (Canada) and other similarfederal or provincial laws based on the Uniform Electronic Commerce Act of the UniformLaw Conference of Canada or its Uniform Electronic Evidence Act, as the case may be,

Set-Off: The Lender shall have the. right to set-off and apply any indebtedness owing to any LoanParty by the Lender against any of the amounts outstanding to the Lender under thisCommitment Letter or Security from time to time,

Judgment If for the purpose of obtaining judgment in any court in any jurisdiction with respect to thisCurrency: Commitment Letter it is necessary to convert into the currency of such jurisdiction (the

"Judgment Currency") any amount due hereunder in any currency other than theJudgment Currency, then such conversion shall be made at the rate of exchange prevailingon the business day before the day on which judgment is given. For this purpose, rate ofexchange means the rate at which the Lender would, on the relevant day, be prepared tosell a similar amount of such currency against the Judgment Currency.

Rights and The rights, remedies and powers of the Lender under this Commitment Letter and theRemedies Security, at law and in equity are cumulative and not alternative and are not in substitutionCumulative: for any other remedies, rights or powers of the Lender, and no delay or omission in

exercise of any such right, remedy or power shall exhaust such rights, remedies and powersto be construed as a waiver of any of them,

Waivers and No term, provision or condition of this Commitment Letter or any of the Security, may beAmendments: waived, varied or amended unless in writing and signed by a duly authorized officer of the


Elmo Exploration Inc.Commitment Letter, May 17, 2019

Lender,

23

Interest Act Any interest rate set forth in this Commitment Letter based on a period less than a year(Canada): expressed as an annual rate for the purposes of the Interest Act (Canada) is equivalent to

such interest rate multiplied by the actual number of days in the calendar year in which thesame is to be ascertained and divided by the number of days in the period upon which itwas based, Each Loan Party hereby waives, to the fullest extent it may do so under law,any provisions of law, including specifically the Interest Act (Canada) or the JudgmentInterest Act (Alberta), which may be inconsistent with this Commitment Letter.

IFRS:

Governing Law:

All financial statements required to be furnished to the Lender hereunder shall be preparedin accordance with International Financial Reporting Standards ("IFRS") consistentlyapplied which are in effect from time to time, as issued by the Accounting StandardsBoard, Each accounting term used in this Commitment Letter, unless otherwise definedherein, has the meaning assigned to it under IFRS and, except as otherwise providedherein, reference to any balance sheet item, statement of income item or statement of cashflows item means such item as computed from the applicable financial statement preparedin accordance with IFRS. If there occurs a change in IFRS (an "Accounting Change"), andsuch change would result in a change (other than an immaterial change) in the calculationof any financial covenant, standard or term used hereunder, then at the request of theBorrower or the Lender, the Borrower and the Lender shall enter into negotiations toamend such provisions so as to reflect such Accounting Change with the result that thecriteria for evaluating the financial condition of the Borrower or any other party, asapplicable, shall be the same after such Accounting Change, as if such Accounting Changehad not occurred. If, however, within 30 days of the foregoing request by the Borrower orthe Lender, the Borrower and the Lender have not reached agreement on such amendment,the method of calculation shall not be revised and all amounts to be determined thereundershall be determined without giving effect to the Accounting Change,

This Commitment Letter shall be construed, governed and enforced in accordance with,and the rights of the parties shall be governed by, the law of the Province of Alberta andthe law of Canada applicable therein. The Lender may commence and prosecute legalproceedings against any Loan Party pursuant to or in relation to this Commitment Letter orthe Security in the courts of Alberta or such other jurisdiction or jurisdictions as the Lendermay, in its sole and absolute discretion, deem advisable, and each Loan Party attorns to thenon-exclusive jurisdiction of the court or courts so selected by the Lender.




Notice:

Officers'Certificate priorto Dischargingthe Security

All notices which may or are required to be given pursuant to this Commitment Letter shallbe in writing and shall be addressed as follows:

If to any Loan Party:

Elcano Exploration Inc.Suite 1600, 521-3rd Avenue SWCalgary, Alberta T2P 3T3Email: [email protected]: Richard Fulton, CEO

If to the Lender:

Tallinn Capital Energy Limited PartnershipSuite 418, 100 — 4th Ave SWCalgary, AB, T2P 3N2Tel: (403) 850 3483Email: [email protected]: President

or such other addresses or facsimile numbers as the parties may advise by notice in writing.All communications provided for or permitted hereunder shall be in writing, personallydelivered to an officer or other responsible employee of the addressee or sent by confirmedfacsimile to the address or facsimile number set forth above or to such other address orfacsimile number as the recipient may from time to time designate to the other in suchmanner. Any communication so personally delivered or sent by confirmed facsimile shallbe deemed to have been validly and effectively given on the date of such delivery orfacsimile, as the case may be.

Upon. full repayment of the Credit Facility including all interest, fees and any other costs,and prior to the release and discharge of the Security, the President of each Loan Party, orits general partner, shall sign an Officer's Certificate, in their capacity as an officer of theapplicable Loan Party, and not in any personal capacity and without any personal liability,confirming that as of the date of the full payout of the Credit Facility:

1. he has made such investigations of corporate records and inquiries of other officersand senior management of the Loan Party as he has deemed reasonably necessary tosign the Officer's Certificate; and

2. the Loan Party is up to date in paying all its potential prior-ranking claims including:

a, all obligations to its employees and all obligations to others which relate to itsemployees, including all wages, payroll source deduction remittances (CPPcontributions, EI premiums, employee income taxes), WCB assessments, pensionremittances, remittances owed to third party benefit holders and other duties, levies,government fees, claims and dues related to its employees;

b. all GST and HST remittances; and

c, all taxes (including income, capital, business and property taxes), assessments,



Joint and SeveralLiability:

Brokers' Fees:

Waiver of JuryTrial:

PermittedEncumbrances:

Lapsing Date:

Expiry Date:

rates, duties, levies, government fees, claims and dues lawfully levied, assessed orimposed upon it or its property; and

3, to the best of his knowledge, there does not at that date exist any litigation, event oraction, which could adversely affect the payout of the Credit Facility by a Loan Party.

If more than one person is designated as Guarantors, then each such person shall be jointlyand severally liable for all of the indebtedness, liabilities, covenants, representations,warranties and other obligations of the Guarantors set out in this Commitment Letter, Ifmore than one person is designated as Loan Parties, then each such person shall be jointlyand severally liable for all of the indebtedness, liabilities, covenants, representations,warranties and other obligations of the Loan Parties set out in this Commitment Letter.

Fees for any Lender's or broker's services are the Loan Parties sole responsibility,

Each Loan Party hereby irrevocably waives, to the fullest extent permitted by applicablelaw, any right it may have to a trial by jury in any legal proceeding directly or indirectlyarising out of or relating to this Commitment Letter, the Security or any other document orthe transactions contemplated hereby or thereby (whether based on contract, tort or any ofother theory).

Any reference to Permitted Encumbrances contained in this Commitment Letter shall notexpressly or by implication result in any Permitted Encumbrance ranking in priority to theSecurity.

Unless funds are drawn by July 31, 2019, the Lender's commitment to fund shall, at theLender's option, expire.

This Commitment Letter is open for acceptance until 5;00 pm MDT (Calgary time) on June3, 2019 at which time, at the option of the Lender, it will expire unless extended by theLender,

Signature page follows.



If the foregoing terms and conditions are acceptable then in order to accept, you must sign four copies of thisCommitment Letter.

Yours very truly,

Tallinn Capital Energy Limited Partnershipby its general partner Tallinn Capital Energy Corp.

Per: 5714;'67 /14,4.4.-Henry A. DethmersCEO

Per: Shari K. SentnerPresident & COO

AGREED AND ACCEPTED as of the day of , 2019,

Borrower:


ACKNOWLEDGED AND AGREED to as as of the day of , 2019.

Guarantors:


Per:Name:Title:

Per:N.m

Elcano Exploration Partnership by its partners:


Per:Name,Titl

Elcano

Per:NatT'


xR)lora o Ltd.

&?4f)(47re,A14N-


APPENDIX "A"

COMPLIANCE CERTIFICATE

TO: Tallinn Capital Energy Limited Partnership

I , of the City of , in the Province of , hereby certify as at the date of this Certificate as follows:

1. I am the of , ("Borrower") and I am authorized to providethis certificate to you for and on behalf of the Borrower;

This certificate applies to the fiscal quarter ended

3. I am familiar with and have examined the provisions of the Commitment Letter dated 2019between the Loan Parties and Tallinn Capital Energy Limited Partnership and Tallinn Capital Energy Corp.("Commitment Letter") and I have made such investigations of corporate and partnership records, asapplicable, and inquiries of other officers and senior personnel of the Loan Parties as I have deemed reasonablynecessary for purposes of the Certificate;

4. As of the date hereof, the Borrower confirms that all of its subsidiaries (if any) are Loan Parties;

5. The representations and warranties set forth in the Commitment Letter are in all material respects trueand correct on the date hereof;

6. The Borrower and each of the Guarantors are up to date in paying all its priority payables andremittances including, without limitation:

a. all obligations to its employees and all obligations to others which relate to its employees, includingwithout limitation all Wages, Payroll source deduction remittances (CPP contributions, EI premiums, Employeeincome taxes), WCB Assessments, Pension remittances, Remittances owed to third party benefit holders andother Duties, Levies, Government fees, Claims and Dues related to its employees;

b, all GST and HST remittances; and

a. all Taxes (including without limitation Income, Capital, Business and Property taxes), Assessments,Rates, Duties, Levies, Government fees, Claims and Dues lawfully levied, assessed or imposed upon it or itsproperty.

7. No Default or Event of Default has occurred and is continuing of which we are aware and the financialratios and production requirements described under "Financial Covenants" have been calculated as indicated andare within the covenants required under the Commitment Letter;

8. As required, I have calculated the Current Ratio for the above-noted fiscal quarter as follows: : 1.0, being not less than the required ratio of 1.25:1.0 during the fiscal quarter ending September 30,2019 and thereafter;

9, As required, I have calculated the Secured Debt to Trailing Cash Flow for the above-noted fiscal quarteras follows: 1.0, being not greater than the required ratio of 1.5:1.0 during the fiscal quarter endingJune 30, 2019 and thereafter•;


Elmo Exploration Inc,

Commitment Lotter, May 17, 2019 28

10. Monthly net oil and liquids sales production for each month of the quarter ended , bbl/d respectively, meeting the net sales production minimum of 500 bbl/d.

was:

11. Except where the context otherwise requires, all capitalized terms used herein have the same meaning asthe Commitment Letter; and

12. This Certificate is given by the undersigned officer in his/her capacity as an officer ofthe Borrower without any personal liability on the part of such officer,

*please attach a calculations worksheet for items 8, 9, and 10.Executed at the City of , in the Province of , this day of20

Name of Officer:Title of Officer:


of


APPENDIX "B"

PERMITTED ENCUMBRANCES

"Permitted Encumbrances" means as at any particular time any of the following encumbrances on the propertyor any part of the property of the Loan Parties:

(a) all agreements pursuant to which a Loan Party has agreed to (or is committed to) sell, for fairmarket value, petroleum, natural gas and/or related hydrocarbons from any petroleum, naturalgas or related hydrocarbon property to an arm's length purchaser and in the ordinary course of itsbusiness;

(b) all reservations in the original grant or patent from the Crown of any lands or interests thereinand all statutory exceptions, qualifications and reservations in respect of title;

(i) undetermined or inchoate liens or charges incidental to current operations which have not atthe time been duly registered in accordance with applicable law against a Loan Party or itsproperty and of which no notice has been served upon such Loan Party and which are not due ordelinquent or, if due or delinquent, the validity of which is being contested in good faith,provided such lien or charge does not relate to an amount which exceeds $25,000;

(c)

(ii) liens for taxes, assessments or governmental charges not at the time due or delinquent or, ifdue or delinquent, the validity of which is being contested in good faith, provided such lien doesnot relate to an amount which exceeds $25,000;

(iii) liens incurred or created in the ordinary course of business and in accordance with soundindustry practice in respect of the exploration, development or operation of petroleum andnatural gas rights, related production or processing facilities in which such Person has an interestor the transmission of hydrocarbons as security in favour of any other Person conducting theexploration, development, operation or transmission of the property to which such liens relate,for a Loan Party's portion of the costs and expenses of such exploration, development, operationor transmission, provided that such costs or expenses are not due or delinquent or, if due ordelinquent, the validity of which is being contested in good faith, provided such lien does notrelate to an amount which exceeds $25,000;

(iv) deemed liens and trusts arising by operation of law in connection with workers'compensation, employment insurance and other social security legislation, in each case, whichsecure obligations not at the time due or delinquent or, if due or delinquent, the validity of whichis being contested in good faith, provided such lien or trust does not relate to an amount whichexceeds $25,000;

(v) liens under or pursuant to any judgment rendered, or claim filed, against a Loan Party, whichsuch Loan Party shall be contesting at the time in good faith provided such lien or claim doesnot relate to an amount which exceeds $25,000;

provided that the aggregate amount of all of the aforementioned liens, charges, trusts and claimsand the amounts secured thereby does not exceed $100,000;



(d) any right of first refusal or preferential right of purchase contained in any instrument affectingthe Mortgaged Property (as defined in the Cdn, $10,000,000 debenture granted by a Loan Partyin favour of the Lender on or about the date hereof (as amended or restated from time to time,the "Debenture") that is customary in the oil and gas industry in Canada;

the Security and any security interests now or at any time hereafter made or granted by a LoanParty to the Lender to secure any of the present or future debts, liabilities or obligations of aLoan Party to the Lender under the Commitment Letter to which this Appendix "B" is attached;

those encumbrances listed in Schedule "A" of the Debenture;

easements, rights of way, servitudes or other similar rights in land (including, without in anyway limiting the generality of the foregoing, rights of way and servitudes for railways, sewers,drains, gas and oil and other pipelines, gas and water mains, electric light and power andtelecommunication, telephone or telegraph or cable television conduits, poles, wires and cables)granted to or reserved or taken by other Persons which individually or in the aggregate do notmaterially detract from the value of any of the Mortgaged Property or materially impair its usein the operation of the business of the Loan Parties, taken as a whole;

(h) security given by a Loan Party to a public utility or any municipality or governmental or otherpublic authority when required by such utility or municipality or other authority in connectionwith the operations of the Loan Party, all in the ordinary course of its business whichindividually or in the aggregate do not materially detract from the value of any of the MortgagedProperty or materially impair its use in the operation of the business of the Loan Parties, taken asa whole;

(i) liens for penalties arising under non participation or independent operations provisions ofoperating or similar agreements in respect of a Loan Party's petroleum and natural gas rights,provided that such liens do not materially detract from the value of any of the MortgagedProperty of the Loan Parties, taken as a whole;

(j) any encumbrance or agreement entered into in the ordinary course of business relating tofarmout, joint ownership, pooling or a plan of unitization affecting the property of a Loan Party,or any part thereof;

(k) the right reserved or vested in any municipality or governmental or other public authority by theterms of any petroleum and natural gas leases in which a Loan Party has any interest or by anystatutory provision to terminate any petroleum and natural gas leases in which a Loan Party hasany interest, or to require annual or other periodic payments as a condition of the continuancethereof;

(1) security interests relating to operating leases;

(in) security interests relating to capital lease transactions (according to IFRS) or sale-leasebacktransactions where the indebtedness represented by all such transactions does not at any timeexceed $50,000 in aggregate;

(n) security interests granted. or assumed to finance the purchase of any property or asset (a"Purchase Money Security Interest") where:

i) the security interest is granted at the time of or within 60 days after the purchase,


Eleano Exploration Inc.Commitment Letter, May 17, 2019 31

ii) the security interest is limited to the property and assets acquired, and

iii) the indebtedness represented by all Purchase Money Security Interests does not at anytime exceed $25,000 in aggregate;

security interests or liens (other than those hereinbefore listed) of a specific nature (andexcluding for greater certainty floating charges) on properties and assets having a fair marketvalue not in excess of $25,000 in aggregate;

the right reserved to or vested in any governmental authority by the terms of any lease, license,franchise, grant or permit or by any applicable laws, to terminate any such lease, license,franchise, grant or permit or to require payment of rent or other periodic payments as a conditionof the continuance thereof;

rights of general application reserved to or vested in any governmental authority to levy taxes onany of the assets or the income therefrom, or to limit, control or regulate any of the assets, oroperations pertaining thereto, in any manner;

royalties, net profits and other interests and obligations arising in accordance with standardindustry practice and in the ordinary course of business, under petroleum and natural gasesleases in which a Loan Party thereof has any interest;

landlords' liens or any other rights of distress reserved in or exercisable under any lease of realproperty for rent and for compliance with the terms of such lease; provided that such lien doesnot attach generally to all or substantially all of the undertaking, assets and property of a LoanParty;

(t) (i) deposits to secure performance of (i) bids, tenders, contracts (other than contracts for thepayment of money) or (ii) leases of real property (other than petroleum and natural gas leases)entered into in the ordinary course of business, in each case, to which a Loan Party is a party;and

(ii) security interests resulting from the deposit of cash or securities as security when a LoanParty is required to do so by a governmental authority or by normal business practice inconnection with contracts, licenses or tenders or similar matters in the ordinary course ofbusiness and for the purpose of carrying on the same, or to secure workers' compensation, suretyor appeal bonds or to secure costs of litigation when required by applicable law;

provided the aggregate amount of such deposits of cash and securities does not exceed $100,000and the security interests only attach to such deposits;

(u) minor defects of title which, individually and in the aggregate, do not materially affect the titleof a Loan Party to its assets; and

(v) all such other claims and encumbrances that the Lender agrees in writing to accept as PermittedEncumbrances,



Elcano Exploration Ltd,

Elcano Exploration Partnership

Cook Exploration Ltd.

APPENDIX "C"

ELCANO SUBSIDIARIES


EXHIBIT 3

THIS IS EXHIBIT "3" REFERREDTO IN THE AFFIDAVIT NO, 2 OFRICHARD FULTON SWORNBEFORE ME THIS 31st DAY OFMAY, 20191

CHRIS SIMARDBarrister and Solicitor

0.FirstEnergy

GMP SECURITIES L.P.311— 6th Avenue South West, Suite 1100

Calgary, Alberta, Canada T2P 3H2

Tel: +1(403) 262-0600

Summary of the Elcano Sale and Investment Solicitation Process

GMP Securities L.P. ("GMP FirstEnergy") was engaged by Elcano Exploration Inc. ("Elcano" or the

"Company") on February 26, 2019 to conduct a Sale and Investment Solicitation Process ("SISP") in

connection with the initial order obtained by the Company under the Companies' Creditors

Arrangement Act ("CCAA").

From February 27, 2019 to March 7, 2019, GMP FirstEnergy, with the assistance of the Company,

collected and reviewed pertinent data on the Company, its assets and financial performance and

prepared SISP marketing materials including an introductory letter ("Teaser"), confidential information

memorandum ("CIM"), confidentiality agreement ("CA") and virtual data room ("VDR").

On March 7, 2019, GMP FirstEnergy and the Company issued a press release through Cision (formerly

CNW Group) and the Daily Oil Bulletin announcing the commencement of the SISP.

On March 8, 2019, GMP FirstEnergy and the Company completed the Teaser, CIM and VDR and

continued to broadly market the SISP by sending an email to approx. 1,200 individuals at over 600

companies, containing a brief description of the Company, assets, process timing, process contacts and

links to the Teaser and CA on GMP FirstEnergy's website. The SISP was also posted on the website of the

Court appointed Monitor, Hardie & Kelly Inc.

From March 8, 2019 to April 26, 2019, GMP FirstEnergy conducted the marketing process by continuing

to contact potential transaction counterparties. In total 27 CAs were received, with all being successfully

designated as Phase 1 Qualified Bidders. Parties that signed the CA were granted access to the VDR. In

addition, GMP FirstEnergy and Elcano conducted management presentations to interested parties. A

total of five management presentations were completed.

The Phase 1 Bid Deadline was set for April 26, 2019. GMP FirstEnergy and the Company received a

number of Phase 1 Qualified Bids, which were structured either as an asset acquisition, corporate

acquisition or financing. The Company designated a number of the bidders as Phase 2 Qualified Bidders.

The Phase 2 Bid Deadline was set for May 17, 2019. GMP FirstEnergy and the Company received a

number of Phase 2 Qualified Bids.

From May 17, 2019 to May 24, 2019, GMP FirstEnergy and the Company engaged in discussions to

clarify and negotiate the terms of the Phase 2 Qualified Bids that were received.

On May 24, 2019, the Company designated Tallinn Capital Energy Corp. ("Tallinn") as the Successful

Bidder and entered into a binding agreement with Tallinn.

www.gmpsecurities.com

EXHIBIT 4

THIS IS EXHIBIT "4" REFERRED

TO IN THE AFFIDAVIT NO. 2 OF

RICHARD FULTON SWORN

BEFORE ME THIS 31st DAY OF

MAY, 2019

(7?


The Elcano Group

Cash Flow Forecast

For the per

iod May 27 to August 4, 2019

(Unaudited -

prepared by

management)

Rec

eipt

s

Week of

27-May-19

Week of

3-Jun-19

Week of

10-Jun-19

Week of

17-Jun-19

Week of

24-Jun-19

Week of

1-Jul-19

Week of

8-Jul-19

Week of

Week of

15-J

ul-19

22-Jul-19

Week of

29-Jul-19

Tota

l

Production revenues

1,207,979

1,117,331

2,32

5,31

0

SH Loans

275,000

275,000

Net Pla

n Proceeds

7,425,000

7,425,000

-1,207,979

7,700,000

-

1,117,331

10,0

25,3

10

Disbursements

Roy

alti

es290,345

-

277,835

568,180

GST Remittance

56,296

56,296

Transportation

8,500

8,500

8,500

8,500

8,500

8,500

8,500

8,500

8,500

8,500

85,000

OPEX

50,000

25,000

15,000

15,000

15,000

15,000

15,000

15,000

60,000

50,000

275,000

Power

20,000

53,500

45,000

50,000

-

45,000

45,000

258,500

Gen

eral

and administrative

63,480

5,000

49,500

13,000

61,480

5,000

46,500

5,000

58,355

5,000

312,315

Bank int

eres

t33,045

5,000

--

--

38,045

Financial advisory

-140,000

140,000

Secured

250,000

500,000

6,310,000

7,060,000

Hedges

91,500

91,500

Initial Pl

an Distribution

r, 1,696

,660T

--

1,69

6,00

0

Restructuring

80,000

-210,000

-290,000

Professional fees

15,000

20,000

-

-35,000

369,776

342,000

378,345

81,500

618,025

8,459,500

70,000

28,500

449,690

108,500

10,905,836

Net cash flo

w for pe

riod

(369,776)

(342,000)

(378,345)

(81,500)

589,954

(759,500)

(70,000)

(28,500)

667,641

(108,500)

(880,526)

Cash - beg

inni

ngCash - clo

sing

ti16

11;'

6906

6111

1,15

9,28

4817,284

438,939

357,439

947,393

187,893

117,893

89,393

757,034

1,52

9,06

0

1,159,284

817,284

438,939

357,439

947,393

187,893

117,893

89,393

757,034

648,534

648,534

Est

imat

ed accruals at July 31

June Royalties

(256,986)

Jul

y Re

ceip

ts1,

084,

473

Jul

y Royalties

(249,429)

Misc Accrued Expenses

-

578,058

EXHIBIT 5


72


ACCEPTEDUNSECURED

CLAIMS

102008548 SASKATCHEWAN LTD. 2,399.25

1448868 ALBERTA LTD. 1,518.69

1610635 ALBERTA INC. (0/A GLOBAL ENERGY SERVICES) 8,432.20

1815624 ALBERTA LTD. 0/A TJ HAGAN CONTRACTING 378.14

3 Way Power Tongs 18,219.88

3C TECH LTD. 1,625.47

3G RENTALS 339.00

572H> 3,200.00

6712771 MANITOBA LTD. 5,767.00

6733621 MANITOBA LTD 2,718,28

6780033 MANITOBA LTD. 3,655.31

6901027 MANITOBA LTD. 2,744.52

6901671 MANITOBA LTD. 4,087.10

6901701 MANITOBA LTD. 1,288.24

7040793 MANITOBA LTD. 1,288.24

ADVANCED FLOW TECHNOLOGIES INC. 5,040.00

AEC PROPERTY TAX INC. 1,699.43

AGAT LABORATORIES 845.25

AIR LIQUIDE CANADA INC. 22,94

ALAN GLEN WALKER 2,767.50

ALCHEM ENERGY SERVICES LTD. 12,162,21

ALEXANDER SCOTT DUNBAR 11,150.00

ALFORD WILLIAM LESLIE & DEBBIE LESLIE 2,500.00

ALLIANCE BOREALIS CANADA CORP. 1,417.50

AMANDA ETHIER 427.69

ANTRIM RESOURCES LTD 3,926.67

APEX DISTRIBUTION INC 5,790.03

B & B OILFIELD HAULING 2,812.94

B. DOUD FARMS LTD. 992.25

BAKER HUGHES CANADA COMPANY 3,228,99

BIG SKY CALL CENTERS INC. 206.86

BITCO SERVICES LTD. 9,450.00

BLAIN MALLER 2,215.13

BORDER ENERGY LTD 14,655.59

BORETS CANADA LTD. 249,436.90

BRETT RUSSELL CLARK 3,200.00

BURNOUT ALLEY REPAIRS & SERVICE 12,999.86

Canada Revenue Agency 505.35

CANADIAN ADVANCED ESP INC. - assigned to CRG Financial LLC 58,722.36

CANART BACKHOE 74,058.10

CANPAR HOLDINGS LTD. 18,244.34

CAPP: IRT FUNDING 105.00

CATHERINE ANNETTE GERRAND 666.12

CJ OILFIELD HAULING LTD. 6,609.48

COMPUTER SHARE TRUST COMPANY OF CANADA 1,877.56

COMPUTER SHARE TRUST COMPANY OF CANADA 4,520.19

CORE LABORATORIES CANADA LTD 421,05

CRITICAL CONTROL ENERGY SERVICES INC. 210.00

CULLIGAN WATER 34.00

DATA SCAVENGER INC. 151.88

DATASAFE RECOVERY SERVICES LTD. 1,488.38

DEPARTMENT OF INNOVATION ENERGY & MINES (PETROLEUM BRANCH) 1,335.47

DYNAMIC OFFICE PRODUCTS LTD. 975.29

EAGLE OILFIELD SERVICES LTD. 3,210,88

ECLIPSE DOWNHOLE SOLUTIONS INC. 3,600.85

ENERPLUS CORPORATION 774,06

ENMAX COMMERCIAL SERVICE INC 211,610.87

EQUAL TRANSPORT - assigned to CRG Financial LLC 8,023.00

ESTATE OF DOROTHY MAY WOODS 4,234.91

1/3

ESTATE OF FREDERICK HARRIS WEBSTER

ESTATE OF GORDON JAMES KELLY

ESTATE OF LAUREL MYRIL WEBSTER

ESTATE OF MICHAEL ALBERT KEICHINGER

ESTATE OF MURRAY CREIGHTON HAY

FALCON VAC SERVICES LTD.

FLAGSTAFF COUNTY

FLORANNE AND RONALD BALAK

FONTANA'S TRUCKING (2006) LTD. - assigned to CRG Financial LLC

FOX TAIL HAULING LTD.

FREEHOLD ROYALTIES PARTNERSHIP

GARTH SODER

GAW PETROLEUM LTD

GEM OIL INC.

GEOMATICS DATA MANAGEMENT INC.

GEORGE OILFIELD SERVICES

GERRY DAVID GERRAND

GIBSON ENERGY INFASTRUCTURE PARTNERSHIP

GLORIA JEAN MALITEARE

GO HARD OILFIELD SERVICES INC.

GOVERNMENT OF ALBERTA

HANK'S MAINTENANCE & SERVICE CO. LTD. - assigned to CRG Financial LLC

HARVEST OPERATIONS CORP

HUGH ERNEST BOWEY

INDEPENDENT ENERGY SOLUTIONS CORP

INDIAN OIL AND GAS CANADA

INTEGRITY OILFIELD HAULING LTD. - assigned to CRG Financial LLC

J & B OILFIELD CONTRACTING LTD.

J & R SODER ENERGY HOLDINGS LTD.

K. KILFORD CONSTRUCTION LTD.- assigned to CRG Financial LLC

KIRBY TODD RACHER & JULIE ALICE RACHER

KONICA MINOLTA BUSINESS SOLUTIONS (CANADA) LTD.

KPMG LLP

LINDSEY CAROL GALLINGER

LJ ENERGY SERVICES LTD

LLOYD JOHN MCLEOD

LONGSHOT SERVICES- assigned to CRG Financial LLC

LRB ELECTRIC

MANITOBA FINANCE TAXATION DIVISION

MANITOBA HYDRO

MARK SODER

MARY AGRICULTURE HOLDINGS INC.

MATRIX SOLUTIONS INC.

MAXIMUM OILFIELD SERVICES LTD

MERRILL COMMUNICATIONS LLC

MICHAEL J. KROETSCH

MINISTER OF FINANCE MANITOBA

MORRIS FRACTURING & ACIDIZING LTD

MORRIS' OILFIELD SERVICES LTD.

MUNICIPALITY OF TWO BORDERS

NETSET COMMUNICATIONS

NORTH MOUNTAIN WELDING LTD.

OSY RENTALS LTD.

P2 ENERGY SOLUTIONS ALBERTA ULC

PANDELL TECHNOLOGY CORPORATION

PERFORMANCE PUMP SERVICE LTD.

PERRY JAMES PALAHICKY

PETRONET SYSTEMS LP

PHIL'S OILFIELD CONTRACTING INC.

ACCEPTED

UNSECURED

CLAIMS

9,239.51

14,660.00

20,504.52

2,450.00501.00

2,388.7534,900.16

3,971.30

9,124.5056,485.75

4,440.61951.28

16,533.24

4,520.19

1,260.00

1,417.50644.12

1,833.30699.53

5,487.24258.81

5,331.3931.50

3,975.00327.00964.76

31,542.00539.06855.92

1,281.00

3,200.00583.94

3,932.2510.00

5,914.48

2,365.84

2,134.50

272,673.26

4,835.75

78,040.41427.69

3,500.00

3,833.74

15,616.50566.13

5,850,00

295,751.22

18,003.90

73,319.17

3,739.991,344.70

7,916.391,391,25

9,718.372,919.00

23,487.68

3,575.00

1,561.80

1,594.95

2/3

ACCEPTED

UNSECURED

CLAIMS

PHYLLIS HARPER 1,288.24

PNG EXCHANGE LTD. 1,785.00

PRAIRIE STORM CONTROLS INC.- assigned to CRG Financial LLC 12,400.65

PRAIRIE VIEW MUNICIPALITY 71,955.17

PRAIRIESKY ROYALTY LTD. 5,000.00

PTARMIGAN OIL AND GAS ACCOUNTING LTD. 4,725.00

PURECHEM SERVICES - assigned to CRG Financial LLC 73,467.40

R. M. OF BROKENSHELL NO. 68 172,64

R.M. OF LAURIER NO. 38 6,982.68

RACHER ACRES LTD. 3,550.00

RALF MARKUS AND KARIN SIBYLLE KELLER 3,015.00

RANDY & CARLA BRYANT 7,250.00

REDA OILFIELD CANADA LTD. 19,536.20

RELIANCE OFS CANADA LTD. 73,954.73

RESOURCE ENERGY SOLUTIONS INC- assigned to CRG Financial LLC 13,518.75

RM OF ELLICE-ARCHIE 20,278.90

RM OF ROCANVILLE NO. 151 157.67

ROBERT JAMES MCLEOD 2,555.62

ROBERTSON'S OILFIELD SERVICE LTD. 1,509.38

RODNEY FREDERICK 7,850.00

RUNCIBLE OIL CORP. 353.19

RURAL MUNICIPALITY OF WALLACE-WOODWORTH 151,919.09

RUTH SODER 855.92

SANJEL ENERGY SERVICES INC. 43,498.65

SIMMLAND FARMS INC. 367.50

SOLUTIONCORP INC 990.54

STAPLES ADVANTAGE 140.32

STRAD OILFIELD RENTALS LTD 53,511.47

SUNCOR ENERGY 1,286.47

SUPERIOR PROPANE 9,672.81

TECTONIC ENERGY CONSULTING INC. - assigned to CRG Financial LLC 10,394.31

TELUS 287.22

TENARIS GLOBAL SERVICES CANADA INC 61,677.99

TERVITA CORPORATION 17,258.34

TNT INSTRUMENTATION INC 677.36

TRENLI OILFIELD SUPPLY 3,748.50

TRINIDAD DRILLING (do Ensign) 99,736.08

TS&M SUPPLY 6,923.96

TSL INDUSTRIES- assigned to CRG Financial LLC 21,467.67

TUTTHILL CONSTRUCTION 24,954.29

TYRIC ENERGY INC 1,634.33

UNIVERSITY OF MANITOBA 160,072.50

VERN MALLER 4,173,05

VISION INTEGRITY ENGINEERING LTD. assigned to CRG Financial LLC 3,105.18

VORTEX PRODUCTION SERVICES LTD. 4,569.92

W & D BROWN RESOURCES LTD. 1,283.61

WALTER DOUGLAS HEAMAN 3,315.00

WANDA LEE STADNICK 3,466.74

WEIR SEABOARD 23,895.07

WESTERN UNDERGROUND CONSULTING LTD. 15,540.00

WILLIAM THOMAS WALKER 2,767.50

WYTHE RESOURCES LTD. 43,075.08

ZEDI CANADA INC. 16.90

$ 2,998,504.64

3/3

EXHIBIT 6

THIS IS EXHIBIT "6" REFERREDTO IN THE AFFIDAVIT NO. 2 OFRICHARD FULTON SWORNBEFORE ME THIS 31st DAY OFMAY, 2019


NAME

CREDITOR CLAIM

ELCANO POSITION

META CAPITAL ADVISORS CORPORATION

$315,000.00

$240,581.25

MANITOBA MINISTER OF FINANCE - REAL ESTATE SERVICES DIVISION

4,586.52

-

MUNICIPALITY OF GRASSLAND

2,79

2.46

2,597.64

PR EAU CLAIRE PLACE LIMITED PARTNERSHIP - do TRIOVEST

600,

820.

87-

SFIERR1LL DAWN BERRY

63,3

50.0

03,

350.

00

THE ESTATE OF WILLIAM BRUCE ROPER

TBD

4,234.91

TORC OIL & GAS LTD.

29,856.23

-

VERTEX OILFIELD SERVICES LTD.- ass

igne

d to

CRG Financial LLC

107,9/1'1.12

104,

960.

32

VERTEX PROFESSIONAL SERVICES LTD.- ass

igne

d to

CRG Financial LLC

25,991.07

11,592.00

1,15

0,34

1.27

$367,316.12

EXHIBIT 7

THIS IS EXHIBIT "7" REFERREDTO IN THE AFFIDAVIT NO. 2 OFRICHARD FULTON SWORNBEFORE ME THIS 31st DAY OFMAY, 2019

-6)


PRIVATE AND CONFIDENTIAL

October 29,2018


Suite 1600, 521 — 3rd Avenue SW

Calgary, AB T2P 3T3

Attention: Mr. Richard Fulton, President & CEO

Re: Engagement Agreement for Advisory Services

Meta Capital Advisors Corporation ("Meta" or "Advisor") understands that Elcano Exploration Inc.

("Elcano" or "Company") seeks to retain Meta as its non-exclusive advisor to provide financial, strategic,

and capital advisory services, herein referred to in this Engagement Agreement as the "Advisory Services".

1. Engagement and Services to be Rendered by Meta

Meta will be an Advisor to Elcano during the term of our engagement hereunder and in that capacity we

will provide general financial and strategic advice and related services (the "Advisory Services") to. Elcano

during the term hereof in connection with such matters as Eicano may request, including the services

referred to above in the opening paragraph of this letter agreement (the "Engagement Agreement"), as

well as:

(a) Advice concerning the capital structure and related matters as discussed with Elcano

(b) Review and evaluation of Elcano capital structure, financial model, investor presentation and

related materials

(c) Identifying, analyzing, introducing and recommending suitable capital providers, including equity,

debt, joint venture and/or merger and acquisition parties (collectively, the "Prospective Capital

Providers")

(d) Development of potential alternative strategies and structures for optimizing the company's

capital structure for future growth and value maximization for all key stakeholders

(e) Developing an appropriate negotiation strategy to facilitate and optimize capital raising initiatives

(f) Assistance in negotiating the terms and structure of equity and debt capital with

Prospective Capital Providers; and

(g) Presentations to the Board and, if requested by Elcano, to certain shareholders of Elcano,

indicating the views of the Advisor with respect to matters relevant to the Advisory Services

Nothing described in this paragraph shall require the Advisor to provide a formal valuation of Elcano or

any of the shares, options, warrants, securities, assets or the business of Elcano. The Advisor hereby

agrees to provide the Advisory Services on the terms and conditions contained herein.

If Meta is requested to provide any other services in addition to those described in this Section 1 above,

the terms and conditions relating to such future services will be outlined in a separate letter agreement

and the fees for such services will be in addition to the fees payable hereunder.

dL

2. Access to Information

Elcano will use all reasonable efforts to provide, on a timely basis, the Advisor with access to all such

information (financial or otherwise), data, documents, materials, advice, valuations, appraisals and

opinions respecting Elcano and its subsidiaries as the Advisor may request in order to perform our

engagement, Including without limitation:

(a) access to directors, officers and employees of Elcano and to information, data, documents, materials,

valuations, appraisals and opinions related to Elcano (and Its subsidiaries) possessed by Elcano or within

its control; and

(b) upon request, access to advisors and consultants to Elcano and to reports prepared by them; and

(c) access to relevant capital providers, including key shareholders and lenders.

Elcano shall ensure that the Advisor is provided (on a timely basis) with copies of all information and

documentation, including final copies of all documents or other material filed or to be filed by Elcano with

any securities commission or other regulatory authority, domestic or foreign.

Elcano acknowledges and agrees that the ability of the Advisor to provide the Advisory Services hereunder

is dependent upon, among other things, all relevant information, data, documents, valuations, appraisals,

opinions and other information being made available to us and to our being provided with access to Elcano

and other relevant parties including directors, officers, employees and advisors and consultants to Elcano.

Subject to the exercise of the Advisor's professional judgment, the Advisor shall be entitled to rely upon

and assume the accuracy and fair presentation of all information provided to the Advisor by Elcano or

other relevant information relating to Elcano (or its subsidiaries) that has been or may be released by

Elcano to the public or provided to the Advisor by Elcano management, counsel, consultants, auditors and

other advisors. Subject to the exercise of the Advisor's professional judgment, the Advisor shall be entitled

to assume that any projections to be provided to us. by Elcano or Elcano advisors were prepared using

assumptions identified therein and that such assumptions were reasonable at the time of preparation,

Subject to the exercise of the Advisor's professional judgment, the Advisor shall be under no obligation to

attempt to verify independently or to investigate the accuracy or completeness of the information

provided pursuant to this Section 2 and the Advisor shall be under no obligation to investigate changes

that may occur in such information during or subsequent to the provision of the Advisory Services.

3. Representations and Warranties

Elcano hereby represents and warrants to the Advisor that the information concerning Elcano or its

subsidiaries provided or to be provided to the Advisor, verbally or in writing, by Elcano and its agents and

advisors in connection with the engagement hereunder will be true and correct in all material respects

and will not contain any misrepresentation (as defined in the Securities Act (Alberta)) and will not

knowingly omit to state any fact or information which might reasonably be considered material to the

Advisory Services provided hereunder. Elcano further represents and warrants to the Advisor that all

information released to the public by Elcano (including, without limitation, press releases, material change

reports, and financial statements) was true and correct in all material respects and did not contain any

misrepresentation (as defined in the Securities Act (Alberta)), as of the respective dates of such

information or statements.

4. Notice of Changes in information

Elcano will, until the completion of the Advisory Services or termination of the engagement of the Advisor,

whichever is earlier, advise the Advisor promptly of any material change or change in material fact of

which it is aware (actual or contemplated, financial or otherwise) relating to the business or affairs of

Elcano, or any change of a material nature of any of the information or representations provided to the

Advisor by Elcano or its agents and advisors or of any intervening event that occurs that might reasonably

be considered material to the Advisory Services hereunder. Elcano agrees to comply promptly with all

a pplicable requirements of regulatory authorities in respect of the occurrence of any such material

change, change in material fact or intervening event.

5. Requests of Regulatory Authorities

Elcano shall advise us promptly after it has received any communication from or request by any securities

commission, stock exchange or regulatory authority, domestic or foreign, for any information, meeting or

hearing relating to Elcano, the Advisory Services, or of the issuance or threatened or contemplated

issuance of any cease trading order or restraining order or of the initiation of any meeting, hearing,

proceeding, litigation or investigation by a regulatory authority with respect to Elcano or the Advisory

Services.

6. Fees and Expenses

Far the purposes of this section and this Engagement Agreement:

"Capital Value" is defined as the total debt and/or equity capital investment agreed to pursuant to the

Advisory Services.

"Post Completion Period" is defined as the period ending 12 months following the termination of this

Engagement Agreement.

"Transaction" is defined as the potential sale, merger, joint venture, combination, amalgamation,

divestiture or similar related sale or monetization of any or all of Elcano assets.

"Transaction Value" is defined as the total value of committed capital from a third-party which can be in

the form of debt, equity and or capital spending in respect of the Transaction.

In consideration of the Advisor providing the Advisory Services hereunder, Elcano agrees to compensate

the Advisor in the manner outlined below:

(a) Monthly Work Fee: Elcano agrees to pay to the Advisor a monthly work fee of $20,000 (in cash) payable

by Elcano to Meta at the commencement of this engagement and every month thereafter..

(h) Success Fee: If during the term of our engagement (or during the Post Completion Period in the

circumstances described below in this Section 6), a prospective capital provider (other than the entities

listed in Appendix 1) completes an equity or debt investment and/or placement, or a prospective capital

provider, who signed a non-disclosure agreement and entered the virtual data room completes a

Transaction, Elcano shal l pay at the closing of the subject financing, to the Advisor a success fee in cash

equal to:

(i) 3.0% of the Capital Value if new debt securities or debt facilities are raised; and

(ii) 6.0% of the Capital Value on new equity capital raised; and

(iii) 3,0% of the Transaction Value in the event of a completed Transaction.

For greater clarity, any Transaction which is completed with a prospective capital provider who did not

sign a non-disclosure agreement and enter the virtual data room, will not be subject to any Success Fees

under this agreement.

(c) Consulting Fee: If during the term of our engagement (or during the Post Completion Period in the

circumstances described below in this Section 6), Elcano completes a financing or capital injection (an

"Excluded Financing") into the Company from any entities or individuals listed in Appendix 1 ("Excluded

Parties"), then Elcano will pay to Meta a consulting fee equal to 1.5% of the amount of funds raised (-pursuant to the Excluded Financing.

(c) Expenses: In addition to the foregoing compensation, Elcano shall reimburse the Advisor at our cost

(i.e., no mark-up) for our reasonable out-of-pocket expenses, including, without limiting the generality of

the foregoing, long distance telephone, telecopier, courier, printing and travel expenses and the

reasonable costs of any outside professional services including engineers, accountants and the fees and

disbursements of our legal counsel, incurred by us in providing services hereunder. The out-of-pocket

expenses will be limited to $2,000, unless prior notice is provided to Elcano and such additional expenses

are approved in advance by Elcano.

All or part of the amounts payable pursuant to this letter may be subject to Goods and Services Tax

("GST"), Where GST is applicable, an additional amount equal to the amount of GST owing will be charged

to and paid by Elcano.

To the extent not prohibited by law, the Elcano shall reimburse the Advisor for any expense incurred by

the Advisor in protecting or enforcing its rights under this Agreement, including, without limitation,

reasonable legal expenses and all other related costs and disbursements.

7. Indemnity

Elcano hereby agrees to indemnify and hold harmless the Advisor and each and every one of its directors,

officers, employees, shareholders, partners and agents (the "Personnel") from and against any and all

fees, costs, expenses, losses (other than loss of profits or similar economic loss), claims, actions, damages,

fines, penalties or liabilities of any nature whatsoever, joint or several (including the aggregate amount

paid in reasonable settlement of any actions, suits, proceedings or claims that may he made against or

involve the Advisor or the Personnel and the reasonable fees and expenses of its or their counsel (subject

to the limitations on such reasonable fees and expenses set out in this Section 7) provided that no

settlement shal l be made without the prior written consent of Elcano which shall not be unreasonably

withheld) which the Advisor and/or the Personnel may suffer or incur, insofar as such fees, costs,

expenses, losses, claims, actions, damages, fines, penalties, or liabilities arise out of or are based, directly

or indirectly, on the services provided by the Advisor or the Personnel hereunder or otherwise incurred

i n connection with providing the Advisory Services provided, however, that this indemnity shall not apply

to the extent that a court of competent jurisdiction in a final judgment that has become non-appealable

shall determine that the fees, costs, expenses, losses, claims, actions, damages, fines, penalties or

liabilities as to which indemnification is claimed, were caused by a breach of this Engagement Agreement

or Transaction

by the Advisor or its Personnel, as applicable, or the bad faith, negligence or willful misconduct of the

Advisor or the Personnel, as applicable.

Elcano wil l not, without the prior written consent of the Advisor (which will not be unreasonably withheld

or delayed), settle, compromise or consent to any judgment or decision in any proceeding in respect of

which indemnification may be sought hereunder unless the settlement, compromise or consent includes

an unconditional release of the Advisor and the Personnel, as applicable, from all liability arising out of

such proceeding.

If for any reason (other than breach of this Engagement Agreement by the Advisor or its Personnel or the

bad faith, negligence or willful misconduct of the Advisor or its Personnel) the foregoing indemnification

is unavailable to the Advisor or the Personnel, as applicable, or is insufficient to hold it or them harmless,

then Elcano shall contribute to the amount paid or payable by the Advisor or the Personnel, as applicable,

as a result of such fees, costs, expenses, losses, claims, damages, fines, penalties or liabilities in such

proportion as is appropriate to reflect not only the relative benefits received by Elcano on the one hand

and the Advisor on the other hand but also the relative fault of Elcano and the Advisor, as well as any

relevant equitable considerations, provided that Elcano shall in any event contribute to the amount paid

or payable by the Advisor as a result of such fees, costs, expenses, losses, claims, damages, fines, penalties

or liabilities, any excess of such amount over the amount of the fees received by the Advisor hereunder.

Elcano acknowledges that the Advisor acts as trustee for any of its Personnel entitled to indemnity

hereunder, including the Personnel, of Elcano covenants under this indemnity and rights of contribution

herein with respect to such persons and the Advisor shall be entitled to enforce such covenants on behalf

of such persons.

Within 10 business days of the date that it receives notice of the assertion of any claim against or the

commencement of any action, investigation or proceeding involving the Advisor or any of its Personnel in

respect of which a right of indemnity may exist hereunder, Elcano may determine, at its option, to

participate in such action, investigation or proceeding and assume the defence of any action, investigation

or proceeding in respect of which indemnification may be sought hereunder, including employment of

counsel of Elcano selection who are satisfactory to the Advisor, acting reasonably, and the fees and

disbursements of which counsel shall be paid by Elcano.

The Advisor and its Personnel shall not be liable for the fees and disbursements of counsel retained by

the Advisor or any of the Personnel in connection with such investigation or proceeding. The Advisor and

its Personnel shall have the right to participate and to retain their own counsel In any such action,

investigation or proceeding and the fees and disbursements of such counsel to the Advisor shall be paid

by Elcano.

Elcano agrees that, in case any legal proceeding shall be brought against Elcano and/or the Advisor and/or

the Personnel by any governmental commission or regulatory authority in connection with the provision

of the Advisory Services and any of the Advisor or the Personnel shal l be required to testify in connection

therewith or shall be required to respond to procedures designed to discover information regarding, in

connection with, or by reason of the performance of professional services rendered hereunder to Elcano

by the Advisor, the Advisor and the Personnel shal l have the right to employ their own counsel in

connection therewith at such time as, in the reasonable opinion of counsel to the Advisor (expressed in

writing addressed to both the Advisor and Elcano), a conflict of interest arises between Elcano and the

Advisor and/or any of the Personnel and al l parties cannot be adequately represented by Elcano's counsel,

in which case, the reasonable fees and expenses of such counsel shall be paid by Elcano as they occur,

provided that, in no circumstances, will Elcano be responsible or liable for the fees, disbursements or

expenses of more than one separate law firm for all persons indemnified under this Section 7, in respect

of any proceeding arising out of the same general allegations or circumstances and provided further that

Elcano shall he entitled to recover from the Advisor and its Personnel, as applicable, any amounts so paid,

if it is later determined by a court of competent jurisdiction in a final judgment that has become non-

appealable that the Advisor breached this Engagement Agreement or acted in bad faith or negligently in

respect of the matter giving rise to the foregoing legal proceeding or the Advisor or any of its Personnel

are determined to have acted negligently or engaged in willful misconduct in respect of the matters giving

rise to such legal proceeding. In addition, unless such investigation arises out of or is based, directly or

i ndirectly, upon the Advisor's or its Personnel's breach of this Engagement Agreement, bad faith,

negligence or willful misconduct, Elcano will pay to the Advisor consulting fees for the services of its

professional staff in relation to such investigation based on the Advisor's then prevailing per diem rate for

such staff, together with its reasonable out-of-pocket expenses.

The obligations of Elcano hereunder are in addition to any liabilities which Elcano may otherwise have to

the Advisor or any of the Personnel, shall be binding upon any successors of Elcano and shall ensure to

the benefit of any successors, assigns, heirs or personal representatives of, the Advisor and any of the

Personnel. The foregoing provisions shall survive completion of the professional services rendered under

this Engagement Agreement or any termination hereof.

8. Confidentiality

The Advisors and Elcano mutually agree to keep the existence and terms of this Engagement Agreement

confidential during the term of the engagement and thereafter and shall not, without the prior written

consent of both parties, disclose the terms of this Engagement Agreement not otherwise in the public

domain except:

(a) to respective employees, who are subject to implied or written confidentiality covenants, and advisors

who require access to same specifically for the purposes of this Engagement Agreement; and

(b) as and only to the extent as may be required by law or in connection with legal or regulatory

proceedings,

Subject to the provisions hereof, any written or verbal advice and opinions of the Advisor, and any

background or supporting materials or analyses, shall not be publicly disclosed or referred to or provided

to any third party by Elcano without the prior written consent of the Advisor, not to be unreasonably

withheld, except as required by applicable securities law requirements or the rules or policies of any

regulatory authority. In addition, except as expressly provided herein, no reference to the Advisor or its

engagement hereunder will be made for any reason whatsoever without the prior written consent of the

Advisor.

All Prospective Capital Providers introduced by Meta Capital Advisors ("Meta Introduced Parties") shal l

remain the confidential property of Meta. Elcano may not, without prior written consent from Meta,

directly contact these Meta Introduced Parties during or following the termination of this engagement

u ntil after the Post Completion Period.

For greater certainty, the Company agrees that it shall not provide any information regarding any Meta

Introduced parties or the terms of a potential financing proposal hereunder to any of the parties listed in

Appendix 1 which may complete an Excluded Financing and shall, if necessary to comply with this

provision, exclude insiders of the Company from deliberations regarding the subject matter hereof.

9. Term of Engagement

The term of our engagement hereunder shall expire on the first to occur of termination of this

engagement by either Elcano or the Advisor pursuant to Section 10 hereof or 12 months from date of

execution of this Engagement Agreement, unless extended by mutual agreement.

10. Termination

The engagement of the Advisor hereunder may be terminated at any time by either party providing

written notice to the other party, subject to the payment of any fees and expenses owing or that may

become owing to the Advisor under Section 6 hereof.

I n the event the Company determines to commence proceedings under the Companies' Creditor

Arrangement Act (Canada) ("CCAA"), the Bankruptcy and Insolvency Act (Canada) ("BIA") or any applicable

similar legislation or statute in Canada or elsewhere ("Insolvency Proceedings") or any such Insolvency

Proceedings are commenced without the consent of the Company, whether in Canada or any other

applicable jurisdiction, the Company agrees, if so requested by the Advisor, to promptly seek to have the

court in which the Insolvency Proceedings wil l take place approve of (a) this agreement and (b) the

Advisor's retention by the Company under the terms of this agreement, including the payments and

expense reimbursements to be made to the Advisor hereunder. The Company shall supply the Advisor

with a draft of such application and any such proposed order with sufficient time to enable the Advisor to

review and comment thereon. The continuing obligations of the Advisor under this agreement are

conditional upon the court making the order contemplated above on terms and conditions satisfactory to

the Advisor and such order remaining in full force and effect, unamended and unstayed. If the order

approving this agreement and retaining the Advisor is not obtained, or is later reversed or set aside for

any reason, the Advisor may terminate this agreement, and the Company shall reimburse the Advisor for

all fees and out-of-pocket expenses reasonably incurred prior to the date of such termination as

contemplated by the terms of this agreement. Prior to any Insolvency Proceedings being commenced by

or in respect of the Company under the CCAA, the BIA or any applicable similar legislation or statute in

Canada or elsewhere, the Company shall pay all amounts due and payable to the Advisor as at that date

in cash. The terms of this Section are solely for the benefit of the Advisor, and may be waived, in whole

or in part, only by the Advisor.

11. Notices

Any notice or other communication required or permitted to be given under this Engagement Agreement

shal l be in writing and shall be sufficiently given or made by delivery or by telecopier or email (receipt

confirmed) to the respective parties as follows:

If to Elcano, to:


Suite 1600, 521-3rd Avenue SW

Calgary, AB T2P 3T3

Attention: Mr. Richard Fulton, President & CEO

E-Mail: RFultotipelcano.ca

If to Meta, to:

Meta Capital Advisors Corporation

Suite 2000

125 9 Avenue SE

Calgary, AB

T2G 0P6

Attention: Mr. Adil Lalani or Mr. Mark Reynolds

E-Mail: alalaniPmetacapadvisors.com or [email protected]

Any notice so given shall be deemed conclusively to have been given and received when so personally

delivered or so telecopied or transmitted via electronic mail. Either party may change its address by notice

to the other in the manner set forth.

12. General

This Engagement Agreement shall be governed by and construed in accordance with the laws of the

Province of Alberta. Each of the parties hereto irrevocably submits to the jurisdiction of the courts of the

Province of Alberta over any action or proceeding arising out of or relating to this Engagement Agreement

and the parties hereto irrevocably agree that all claims in respect of such action or proceeding may be

heard and determined in such courts and all courts competent to hear appeals therefrom. The parties

hereto agree that a final judgment in any such action or proceeding after all appeals are exhausted shall

be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner

provided by law The representations, warranties, indemnity and other agreements provided by Elcano

and Meta in connection herewith shal l remain in full force and effect regardless of any termination of our

engagement.

All dollar amounts herein are in Canadian dollars.

Please confirm the foregoing is in accordance with Elcano's understanding by signing the below, which

shall thereupon constitute a binding agreement between Elcano Exploration Inc. and Meta Capital

Advisors.

Yours very truly,

META CAPITAL ADVISORS CORPORATION

Per:

Adil Lalani

Principal

ELCANO EXPLORATION INC.

Per:

/Richard/Fulton

President & CEO

Agreed to as of the /1 day of October, 2018

Appendix 1 (Excluded Parties):

Firm Name Individual Name Date of Last Communication

with Elcano Management

Elcano Shareholder group N/A

Perrison Petroleum Corp. Wayne Rousch

Direct Oil & Gas Inc. Warren Coles

Vermilion Energy Inc. Travis Monk

Freehold Royalty Trust

Keystone Royalty Corp John Benson

Stream Asset Financial Management Ryan Dunfield

Horizon One Asset Management Inc. James Mahoney

Stanford Petroleum Ron Cawston

Corval Energy Ltd. Dale Timmons

Reserve Royalty Income Trust Mike Lock

Business Development Bank of Canada Mamadou, Tradore

Spring Mountain GMP/FE

Toscana Energy Income Corporation Joe Durante

Burgess Creek Exploration Kory Galbraith

Bluesky Equities / RFM Investments Judith Romanchuck

Torc Oil & Gas Ltd. Robert Bodzioch

EXHIBIT 8

THIS IS EXHIBIT "8" REFERREDTO IN THE AFFIDAVIT NO. 2 OFRICHARD FULTON SWORNBEFORE ME THIS 31st DAY OFMAY, 201r)

CHR1E SIMARD':,..iarrister and ,..3olicitor

ELCANO EXPLO ATION INC.1600, 521 - 3RD AVENUE S,W. CALGARY, ALBERTA T2P 3T3 TEL: (403) 460 - 41 88 FAX: (403) 460-4965

February 22, 2019

Meta Capital Advisors Corporation2000, 125 — 9th Avenue SECalgary, AB T2G OP6

RE: Engagement Agreement for Advisory Services (the "Agreement")Dated October 29, 2018Between Eicano Exploration inc. ("Elcano") andMeta Capital Advisors Corporation ("Meta")

Subject to Clause 10 of the above referenced Agreement, Elcano hereby terminates our engagementagreement effective immediately.

Elcano asks that Meta immediately return all the data and information that has been supplied under thisAgreement.

Elcano thanks you for your services.

Sincerely,ELCANO EXPLORATION INC.

Ri`Zhard F-7177-fit n*

EXHIBIT 9


• z


PROOF OF CLAIM

In the Matter of the CCAA Proceedings of Elea►zo Exploration Inc. ("EEl"), ElcanoExploration Ltd. ("EEL") and Elcano Energy Partnership ("EEP", and together with ELIand EEL, the "Elcano Cro►►p")

Regarding the claim of Meta Capital Advisors Corporation (the "Claimant")

All notices or correspondence regarding this claim are to be forwarded to the Claimant at thefollowing address: 125 9 Ave SE 112000, Calgary, AB T20 OP6

Telephone Number: (403) 863 - 2035 or (403) 681 - 3561

Facsimile Number: ( )

Email addre [email protected] OR [email protected]

Attention (Contact Person): Adil Lalani OR Mark Reynolds

(All fitture correspondence will he delivered to the designated email address unless theClaimant specifically requests hard copies)

0 Please provide hard copies of correspondence to the. address above.

I, Adil Lalani (Principal of Meta Capital Advisors) _ (name of Claimant or authorizedrepresentative), of Calgary, Alberta (City, Province or State), do hereby certify that:

The Claimant:

X has requested a Claims Package from the Monitor, and wishes to assert a Claim

OR

has received a Claims Package from the Monitor, and wishes to dispute the amount of theClaim as set forth by the Elcano Group in the Claims Package.

2. 1 am the Claimant,

OR

I am a Principal (position/title) of the Claimant.

3. 1 have knowledge of all the circumstances connected with the claim referred to in this form,

4. The Claimant states that El I [EE1, EEL and/or EH] was/were, as of February 26,

2019, and still is/are, indebted to the Claimant in the sum of CD-N$315.000

(contingent) (insert CDATS value of claim) as shown by the statement of account attached

hereto and marked Schedule "A"

Any Claims denominated in a foreign currency need to be converted to Canadian dollars at the

Bank of Canada's noon exchange rate in effect on February 26, 2019.

Claims should not include the value of goods and/or services supplied after February 26, 2019. If

the claim is to be reduced by deducting any counterclaim to which the Dean() Group is

entitled, or amounts associated with the return of equipment or assets by the Marto Group,

please spec i

The statement of account must specify the evidence in,suPport of the claim including the date and

location of the delivery of all services and materials. Any claim for interest must be supported

by contractual documentation evidencing the entitlement to interest.

5, A. UNSECURED CLAIM OF $315,000 (contingent). That in respect of this claim the Claimantdoes not hold and has not held any assets as security.

B. SECURED CLAIM OF $ , That in respect of this claim the Claimantholds assets valued at as security, particulars of which are as follows:

Give full particulars of the security; including the date on which the security was given and thevalue at which the claimant assesses the security together with the basis of valuation, and attacha copy oldie security documents as Schedule "B".

6. Have you acquired this Claim by assignment? Yes X No(ii -yes, attach doeiements evidencing assignment)

DATED this 9th day of May, 2019

W 'mess 'Y

Name:

Title:

2

Per:

Name of Claimant:

keTA CA rf AL Ab iS;eSS C-oPAP.AT(0 P./(if Claimant is not an individual,

print name and title of authorized signatory

ALA, (Ni

As is contractually stated in the Meta Engagement Agreement (including Appendix 1 thereto) as well as

is provided in the Bennett Jones letter of March 7, 2019 (including Schedule A thereto), Meta has made

an estimate of the approximate Success and/or Consulting Fees that would be owing to Meta (the

"Meta Claim") upon closing of a financing, transaction or similar event and based upon the knowledge

that Meta had during its engagement by EEI of the approximate funding and transaction amounts that

were being discussed between EEI and certain parties.

This estimate of the Meta Claim is $300,000 + GST.

Further information regarding the results of the SISP process, in conjunction with the contractual terms

of the Meta Engagement Agreement will allow for a more accurate calculation.

Background and Important Facts

Meta Capital Advisors entered into an engagement agreement for advisory services with Elcano

Exploration Inc (EEI) on October 29, 2018. The Meta Engagement Agreement is referenced in the

Originating Application filed February 20, 2019, Exhibit 14 of the Affidavit of Scott Pincock (February 20,

2019) as well as the Pre-Fi ling Report of Hardie Kelly Inc. filed February 20, 2019.

Elcano terminated this agreement with Meta on February 22, 2019 while on February 20, 2019 the

Originating Application was filed with the Court in respect of Elcano having made an application to the

Court seeking protection under the Companies' Creditors Arrangement Act ("CCAA"). Elcano did NOT

provide Meta with the contractually required notice to Meta in regards to the initiation an insolvency

proceeding (Clause 4 (Notice of Changes in Information) and Clause 10 (Termination) of the Meta

Engagement Agreement).

Following termination of the Engagement Agreement, Meta formally communicated (via email) our

concerns to Elcano and it's legal counsel (Bennett Jones) via email on February 24, 2019 BEFORE the

i nitial CCAA hearing date of February 25, 2019, including noting in our email that:

• "We have verifiable evidence and facts (including from arms length third parties) of the many

events and occurrences whereby you breached these above clauses and withheld information

and facts from Meta that were critical and material to our process and related ability to be

successful. Arleta also made repeated attempts to obtain material information requests from

Elcano and consistently encountered opposition and silence to our requests (including, but not

limited to, Elcano withholding information related to discussions it was having with interested

parties outside of the Meta process as well as updates to the Forbearance Agreement, which

were not provided to Meta)."

• "as per Clause 6 of the Engagement Agreement, the "Post Completion Period" is defined as the

period ending 12 months following the termination of this Engagement Agreement, Given that

you terminated our Engagement Agreement on February 22 2019, the Post Completion Period

(and all related obligations) will be in effect until February 22, 2020."

e Meta ran a full, fair and transparent process approaching in excess of 130 Prospective Capital

Providers (defined in the Engagement Agreement) which resulted in multiple offers from arms-

length parties which both satisfied the bank's requirements and allowed for a return of some

value to shareholders. Meta highlighted that there were numerous financials solutions that

achieved the required result of the process that were not entertained by Elcano. Among these

solutions were proposals that met the terms and requirements to repay the secured creditors

and met the financial terms and thresholds that Elcano stated (at the beginning of our

engagement) Elcano would agree to if Meta was able to find those solutions,

Despite the material facts and statements made by Meta (our email of February 24, 2019) in regards to

material breaches by EEI (prior to the court session of February 25, 2019), our email was not

acknowledged by EEI or its legal counsel until AFTER the court granted the CCAA Initial Order and SISP

a pproval.

A subsequent letter from Elcano's legal counsel (Bennett Jones) dated March 7, 2019 (attached

herewith) states that:

"ED acknowledges that Meta may become entitled to a claim for a "Success Fee" pursuant to clause 6(b)

or a "Consulting Fee" pursuant to 6(c) of the Agreement, in the event that EEI enters into a transaction

within one year following February 22, 2019, that falls within the parameters set out in clause 6(b) or

clause 6(c).

For clarity,

a) Section 6(c) of the agreement refers to the "Consulting Fee" and excludes the subsequent

section (c) "Expenses"; and

b) Appendix 1, Excluded Parties, forms part of the Agreement.

Meta confirms that the attached Schedule "A" contains a list of the parties whom EEI has identified as

those who signed a non-disclosure agreement and entered into the virtual data room during the process

run by Meta (as described in clause 6(b) of the Agreement).

EEI further agrees that if, at the conclusion of the sales and investment solicitation process (the "SISP")

being conducted in the CCAA proceedings, EEI applies to the court to approve a transaction that falls

within the parameters set out in clause 6(b) or 6(c) of the Agreement, EEI will provide reasonable prior

notice to Meta and will seek authority from the court to pay to Meta the amount to which it would

become entitled as a Success Fee or a Consulting Fee under the Agreement."

Meta continues to be prepared and wil ling to provide evidence and substantiated documentation which

supports our claim. We welcome any questions or inquiries that the Monitor or the Court may have in

respect of this matter.

Sincerely,

Add Lalani and Mark Reynolds

META CAPITAL ADVISORS

PRIVATE AND CONFIDENTIAL.

October 29, 2018


Suite 1600, 521 — 3rd Avenue SW

Calgary, AB T2P 373

Attention: Mr. Richard Fulton, President Rz CEO

Re: Engagement Agreement for Advisory Services

Meta Capital Advisors Corporation ("Meta" or "Advisor") understands that Elcano Exploration Inc,

("Elcano" or "Company") seeks to retain Meta as its non-exclusive advisor to provide financial, strategic,

and capital advisory services, herein referred to in this Engagement Agreement as the "Advisory Services",

1, Engagement and Services to be Rendered by Meta

Meta will be an Advisor to Elcano during the term of cur engagement hereunder and in that capaClty we

w ill provide general financial and strategic advice and related services (the "Advisory Services") to Elcano

d uring the term hereof in connection with such matters as Elcano may request, including the services

referred to above in the opening paragraph of this letter agreement (the "Engagement Agreement"), as

wel l as:

(a) Advice concerning the capital structure and related matters as discussed with Elcano

(b) Review and evaluation of Elcano capital structure, financial model, investor presentation and

related materials

(c) Identifying, analyzing, introducing and recommending suitable capital providers, including equity,

debt, joint venture and/or merger and acquisition parties (collectively, the "Prospective Capital

Providers")

(d) Development of potential alternative strategies and structures for optimizing the company's

capital structure for future growth and value maximization for all key stakeholders

(e) Developing an appropriate negotiation strategy to facilitate and optimize capital raising initiatives

(f) Assistance in negotiating the terms and structure of equity and debt capital with

Prospective Capital Providers; and

(g) Presentations to the Board and, if requested by Elcano, to certain shareholders of Elcano,

i ndicating the views of the Advisor with respect to matters relevant to the Advisory Services

Nothing described in this paragraph shal l require the Advisor to provide a formal valuation of Elcano or

any of the shares, options, warrants, securities, assets or the business of Elcano, The Advisor hereby

agrees to provide the Advisory Services on the terms and conditions contained herein.

If Meta is requested to provide any other services in addition to those described in this Section 1 above,

the terms and conditions relating to such future services wil l be outlined in a separate letter agreement

and the fees for such services wi l l be in addition to the fees payable hereunder.

2. Access to Information

Eltano will use all reasonable efforts to provide, on a timely basis, the Advisor with access to all suchinformation (financial or otherwise), data, documents, materials, advice, valuations, appraisals andopinions respecting Elcano and its subsidiaries as the Advisor may request In order to perform ourengagement, including without limitation:

(a) access to directors, officers and employees of Elcano and to Information, data, documents, Materials,valuations, appraisals and opinions related to Elcano (and its subsidiaries) possessed by Elcano or withinits control; and

(b) upon request, access to advisors and consultants to Elcano and to reports prepared by them; and

(c) access to relevant capital providers, Including key shareholders and lenders.

Elcano shall ensure that the Advisor is provided (on a timely basis) with copies of all information anddocumentation, including final copies of all documents or other material filed or to be filed by Elcano withany securities commission or other regulatory authority, domestic or foreign.

Elcano acknowledges and agrees that the ability of the Advisor to provide the Advisory SerVices hereunderis dependent upon, among other things, all relevant Information, data, documents, valuations, appraisals,opinions and other information being made available to us and to our being provided with access to Elcanoand other relevant parties including directors, officers, employees and advisors and donsultants to Elcano.

Subject to the exercise of the Advisor's professional judgment, the Advisor shall be entitled to rely uponand assume the accuracy and fair presentation of all information provided to the Advisor by Elcano orother relevant information relating to Elcano (or its subsidiaries) that has been or may be released byElcano to the public or provided to the Advisor by Elcano management, counsel, consultants, auditors andother advisors, Subject to the exercise of the Advisor's professional judgment, the shall be entitledto assume that any projections to he provided to us by Elcano or Elcano advisors were prepared usingassumptions identified therein and that such assumptions were reasonable at the time of preparation.

Subject to the exercise of the Advisor's professional judgment, the Advisor shall be under no obligation toattempt to verify independently or to investigate the accuracy or completeness of the informationprovided pursuant to this Section 2 and the Advisor shall be under no obligation to investigate changesthat may occur in such information during or subsequent to the provision of the Advisory Services.

3. Representations and Warranties

Elcano hereby represents and warrants to the Advisor that the information concerning Elcano or itssubsidiaries provided or to be provided to the Advisor, verbally or in writing, by Elcano and its agents andadvisors in connection with the engagement hereunder will be true and correct in all material respectsa nd will not contain any misrepresentation (as defined in the Securities Act (Alberta)) and will not

knowingly omit to state any fact or information which might reasonably be considered material to the

Advisory Services provided hereunder. Elcano further represents and warrants to the Advisor that all

information released to the public by Elcano (including, without limitation, press releases, material change

reports, and financial statements) was true and correct in all material respects and did not contain any

misrepresentation (as defined in the Securities Act (Alberta)), as of the respective dates of such

information or statements.

A y

4. Notice of Changes in information

Elcano will, until the completion of the Advisory Services or termination of the engagement of the Advisor,

whichever is earlier, advise the Advisor promptly of any material change or change in material fact of

which it is aware (actual or contemplated, financial or otherwise) relating to the business or affairs of

Elcano, or any change of a material nature of any of the information, or representations provided to the

Advisor by Elcano or its agents and advisors or of any intervening event that occurs that might reasonably

be considered material to the Advisory Services hereunder. Elcano agrees to comply promptly with allapplicable requirements of regulatory authorities In respect of the occurrence of any such mate al

change, change in material fact or intervening event.

5, Requests of Regulatory Authorities

Elcano shall advise us promptly after it has received any communication from or request by any securities

commission, stock exchange or regulatory authority, domestic or foreign, for any information, meeting orhearing relating to Elcano, the Advisory Services, or of the issuance or threatened or contemplated

issuance of any cease trading order or restraining order or of the Initiation of any meeting, hearing,

proceeding, litigation or investigation by a regulatory authority with respect to Elcano or the Advisory

Services.

6. Fees and Expenses

For the purposes of this section and this Engagement Agreement:

"Capital Value" is defined as the total debt and/or equity capital investment agreed to pursuant to the

Advisory Services.

"Post Completion Period" is defined as the period ending 12 months following the termination of this

Engagement Agreement.

"Transaction" is defined as the potential sale, merger, joint venture, combination, amalgamation,

divestiture or similar related sale or monetization of any or all of Elcano assets.

"Transaction Value" is defined as the total value of committed capital from a third-party which can be in

the form of debt, equity and or capital spending in respect of the Transaction.

I n consideration of the Advisor providing the Advisory Services hereunder, Elcano agrees to compensate

the Advisor in the manner outlined below:

(a) Monthly Work Fee: Elcano agrees to pay to the Advisor a monthly work fee of $20,000 (in cash) payable

by Elcano to Meta at the commencement of this engagement and every month thereafter..

(b) Success Fee: If during the term of our engagement (or during the Post Completion Period in the

circumstances described below in this Section 6), a prospective capital provider (other than the entities

listed in Appendix 1) completes an equity or debt investment and/or placement, or a prospective capital

provider, who signed a non-disclosure agreement and entered the virtual data room completes a

Transaction, Elcano shall pay at the closing of the subject financing, to the Advisor a success fee in cash

equal to:

3.0% of the Capital Value if new debt securities or debt facilities are raised; and

(ii) 6,0% of the Capital Value on new equity capital raised; and

(iii) 3,0% of the Transaction Value in the event of a completed Transaction.

For greater clarity, any Transaction which is completed with a prospective capital provider who did notsign a non-disclosure agreement and enter the virtual data room, will not be subject to any Success Feesunder this agreement,

(c) Consulting Fee: Irduring the term of our engagement (or during the Post Completion Period in thcircumstances described below In this SeCtion Elcano completes a financing or capital injection"Exeiiidd Financing"), into the Corripany-from any entities or individuals listed in Appendix 1('Parties" then Elcano, will pay to N100, a consulting fee equal to 1,5.% of the amount ...;..F.ath'ImatieWpursuant to the Excluded Financing,

(c) Expenses: in addition to the foregoing compensation, Elcano shall reimburse the Advisor at our cost(i.e., no mark-up) for our reasonable out-of-pocket expenses, including, without limiting the generality ofthe foregoing, long distance telephone; teiecopier, courier, printing and travel expenses and thereasonable costs of any outside professional services including engineers, accountants and the fees anddisbursements of our legal counsel, incurred by us in providing services hereunder. The out-of-pocketexpenses will be limited to $2,000, unless prior notice is provided to Elcano and such additional expensesare approved in advance by Elcano.

All or part of the amounts payable pursuant to this letter may be subject to Goods and Services Tax("GST"). Where GST is applicable, an additional amount equal to the amount of GST owing will be chargedto arid paid by_Elcano.

To the extent not prohibited by lam the Elcano shall reimburse the Advisor for any expense incurred bythe Advisor In protecting or enforcing Its rights under this Agreement, including, without limitation,reasonable legal expenses and all other related costs and disbursements.

7. Indemnity

Elcano hereby agrees to indemnify and hold harmless the Advisor and each and every one of its directors,officers, employees, shareholders, partners and agents (the "Personnel") from and against any arid allfees, costs, expenses, losses (other than loss of profits or similar economic loss), claims, actions, damages,fines, penalties or liabilities of any nature whatsoever, joint or several (including the aggregate amountpaid in reasonable settlement of any actions, suits, proceedings or claims that may be made against orInvolve the Advisor or the Personnel and the reasonable fees and expenses of its or their counsel (subjectto the limitations on such reasonable fees and expenses set out in this Section 7) provided that nosettlement shall be made without the prior written consent of Elcano which shall not be unreasonablywithheld) which the Advisor and/or the Personnel may suffer or incur, insofar as such fees, costs,expenses, losses, claims, actions, damages, fines, penalties, or liabilities arise out of or are based, directlyor indirectly, on the services provided by the Advisor or the Personnel hereunder or otherwise incurredIn connection with providing the Advisory Services provided, however, that this indemnity shall not applyto the extent that a court of competent jurisdiction in a final judgment that has become non-appealableshall determine that the fees, costs, expenses, losses, claims, actions, damages, fines, penalties orl iabilities as to which Indemnification is claimed, were caused by a breach of this Engagement Agreement

or Transaction

by the Advisor or its Personnel, as applicable, or the bad faith, negligence or willful misconduct of the

Advisor or the Personnel, as applicable.

Elcano will not, without the prior written consent of the Advisor (which will not be unreasonably withheld

or delayed), settle, compromise or consent to any judgment or decision in any proceeding In respect of

which indemnification may be sought hereunder unless the settlement, compromise or consent includes

an unconditional release of the Advisor and the Personnel, as applicable, from all liability arising out of

such proceeding.

If for any reason (other than breach of this Engagement Agreement by the Advisor or its Personnel or the

bad faith, negligence or willful misconduct of the Advisor or its Personnel) the foregoing indemnificationis unavailable to the Advisor or the Personnel, as applicable, or Is insufficient to hold it or them harmless,

then Elcano shall contribute to the amount paid or payable by the Advisor or the Personnel, as applicable,

as a result of such fees, costs, expenses, losses, claims, damages, fines, penalties or liabilities in such

proportion as is appropriate to reflect not only the relative benefits received by Elcano on the one hand

and the Advisor on the other hand but also the relative fault of Elcano and the Advisor, as well as any

relevant equitable considerations, provided that Elcano shall In any event contribute to the amount paid

or payable by the Advisor as a result of such fees, costs, expenses, losses, claims, damages, fines, penalties

or liabilities, any excess of such amount over the amount of the fees received by the Advisor hereunder.

Elcano acknowledges that the Advisor acts as trustee for any of its Personnel entitled to indemnity

hereunder, including the Personnel, of Elcano covenants under this indemnity and rights of contribution

herein with respect to such persons and the Advisor shall be entitled to enforce such covenants on behalf

of such persons.

Within 10 business days of the date that it receives notice of the assertion of any claim against or the

commencement of any action, Investigation or proceeding involving the Advisor or any of its Personnel in

respect of which a right of indemnity may exist hereunder, Elcano may determine, at its option, to

participate in such action, investigation or proceeding and assume the defence of any action, investigation

or proceeding in respect of which indemnification may be sought hereunder, including employment of

counsel of Elcano selection who are satisfactory to the Advisor, acting reasonably, and the fees and

disbursements of which counsel shall be paid by Elcano.

The Advisor and its Personnel shall not be liable for the fees and disbursements of counsel retained by

the Advisor or any of the Personnel in connection with such investigation or proceeding. The Advisor and

its Personnel shall have the right to participate and to retain their own counsel in any such action,

investigation or proceeding and the fees and disbursements of such counsel to the Advisor shall be paid

by Elcano.

Elcano agrees that, in case any legal proceeding shall be brought against Elcano and/or the Advisor and/or

the Personnel by any governmental commission or regulatory authority in connection with the provision

of the Advisory Services and any of the Advisor or the Personnel shall be required to testify in connection

therewith or shall be required to respond to procedures designed to discover information regarding, in

connection with, or by reason of the performance of professional services rendered hereunder to Elcano

by the Advisor, the Advisor and the Personnel shall have the right to employ their own counsel in

connection therewith at such time as, in the reasonable opinion of counsel to the Advisor (expressed in

writing addressed to both the Advisor and Elcano), a conflict of interest arises between Elcano and the

Advisor and/or any of the Personnel and all parties cannot be adequately represented by Elcano's counsel,

in which case, the reasonable fees and expenses of such counsel shall be paid by Elcano as they occur,

provided that, in no circumstances, will Elcano be responsible or liable for the fees, disbursements or

expenses of more than one separate law firm for all persons indemnified under this Section 7, in respect

of any proceeding arising out of the same general allegations or circumstances and provided further that

Elcano shall be entitled to recover from the Advisor and its Personnel, as applicable, any amounts so paid,

if It is later determined by a court of competent jurisdiction in a final judgment that has become non-

appealable that the Advisor breached this Engagement Agreement or acted in bad faith or negligently in

respect of the matter giving rise to the foregoing legal proceeding or the Advisor or any of its Personnel

are determined to have acted negligently or engaged In willful misconduct in respect of the matters giving

rise to such legal proceeding. In addition, unless such investigation arises out of or is based, directly or

i ndirectly, upon the Advisor's or its Personnel's breach of this Engagement Agreement, bad faith,

negligence or willful misconduct, Elcano will pay to the Advisor consulting fees for the services of its

professional staff in relation to such investigation based on the Advisor's then prevailing per diem rate for

such staff, together with its reasonable out-of-pocket expenses.

The obligations of Elcano hereunder are in addition to any liabilities which Elcano may otherwise have to

the Advisor or any of the Personnel, shall be binding upon any successors of Elcano and shall ensure to

the benefit of any successors, assigns, heirs or personal representatives of, the Advisor and any of the

Personnel. The foregoing provisions shall survive completion of the professional services rendered under

this Engagement Agreement or any termination hereof.

8. Confidentiality

The Advisors and Elcano mutually agree to keep the existence and terms of this Engagement Agreement

confidential during the term of the engagement and thereafter and shall not, without the prior written

consent of both parties, disclose the terms of this Engagement Agreement not otherwise in the public

domain except:

(a) to respective employees, who are subject to implied or written confidentiality covenants, and advisors

who require access to same specifically for the purposes of this Engagement Agreement; and

(b) as and only to the extent as may be required by law or in connection with legal or regulatory

proceedings,

Subject to the provisions hereof, any written or verbal advice and opinions of the Advisor, and any

background or supporting materials or analyses, shall not be publicly disclosed or referred to or provided

to any third party by Elcano without the prior written consent of the Advisor, not to be unreasonably

withheld, except as required by applicable securities law requirements or the rules or policies of any

regulatory authority. In addition, except as expressly provided herein, no reference to the Advisor or its

engagement hereunder will be made for any reason whatsoever without the prior written consent of the

Advisor,

All Prospective Capital Providers introduced by Meta Capital Advisors ("Meta Introduced Parties") shall

remain the confidential property of Meta. Elcano may not, without prior written consent from Meta,

directly contact these Meta Introduced Parties during or following the termination of this engagement

until after the Post Completion Period.

For greater certainty, the Company agrees that it shall not provide any information regarding any Meta

Introduced parties or the terms of a potential financing proposal hereunder to any of the parties listed in

Appendix 1 which may complete an Excluded Financing and shall, if necessary to comply with this

provision, exclude insiders of the Company from deliberations regarding the subject matter hereof.

9. Term of Engagement

The term of our engagement hereunder shall expire on the first to occur of termination of this

engageMent by either Elcano or the Advisor pursuant to Section 10 hereof or 12 months from date of

execution of this Engagement Agreement, unless extended by mutual agreement.

10. Termination

The engagement of the Advisor hereunder may be terminated at any time by either party providing

written notice to the other party, subject to the payment of any fees and expenses owing or-that may

become owing to the Advisor under Section 6 hereof.

In the event the Company determines to commence proceedings under the Companies' Creditor

Arrangement Act (Canada) ("CCAA"), the Bankruptcy and Insolvency Act (Canada) ("BIA") or any applicable

similar legislation or statute in Canada or elsewhere ("Insolvency Proceedings") or any such Insolvency

Proceedings are commenced without the consent of the Company, whether in Canada or any other

applicable jurisdiction, the Company agrees, if so requested by the Advisor, to promptly seek to have the

court in which the Insolvency Proceedings will take place approve of (a) this agreement and (b) the

Advisor's retention by the Company under the terms of this agreement, including the payments and

expense reimbursements to be made to the Advisor hereunder. The Company shall supply the Advisor

with a draft of such application and any such proposed order with sufficient time to enable the Advisor to

review and comment thereon. The continuing obligations of the Advisor under this agreement are

conditional upon the court making the order contemplated above on terms and conditions satisfactory to

the Advisor and such order remaining in full force and effect, unamended and unstayed. If the order

approving this agreement and retaining the Advisor is not obtained, or is later reversed or set aside for

any reason, the Advisor may terminate this agreement, and the Company shall reimburse the Advisor for

all fees and out-of-pocket expenses reasonably incurred prior to the date of such termination as

contemplated by the terms of this agreement. Prior to any Insolvency Proceedings being commenced by

or in respect of the Company under the CCAA, the BIA or any applicable similar legislation or statute in

Canada or elsewhere, the Company shall pay all amounts due and payable to the Advisor as at that date

in cash. The terms of this Section are solely for the benefit of the Advisor, and may be waived, in whole

or In part, only by the Advisor.

11, Notices

Any notice or other communication required or permitted to be given under this Engagement Agreement

shall be in writing and shall be sufficiently given or made by delivery or by telecopier or email (receipt

confirmed) to the respective parties as follows:

If to Elcano, to:


Suite 1600, 521 —3rd Avenue SW

Calgary, AB T2P 3T3

Attention; Mr. Richard Fulton, President & CEO

E-Mail: AFUltPn@eicana,ca

If to Meta, to:

Meta Capital Advisors Corporation

Suite 2000

125 9 Avenue SE

Cilggni., AR.

T20 opoAttention:

a ta gni meta a dVi SOT; corn or m re ynoi iS! ietpcapadVIso rs.:com

Mr. Adil Lalani or Mr. Mark Reynolds

Any notice so given shall be deemed cbnclusively to have been given and received when so personally

delivered or so telecopied or transmitted via electronic mail. Either party may change its address by noticeto the other in the manner set forth,

12, General

This Engagement Agreement shall be governed by and construed in accordance with the laws of the

Province of Alberta. Each of the parties hereto irrevocably submits to the jurisdiction of the courts of theProvince of Alberta over any action or proceeding arising out of or relating to this Engagement Agreementand the parties hereto irrevocably agree that all claims ih respect of such action or proceeding may be

heard and determined in such courts and all courts competent to hear appeals therefrom. The parties

hereto agree that a final judgment in any such action.or proceeding after all appeals are exhausted shallbe conclusive and may be enforced In other jurisdictions by suit on the judgment or in any other mannerprovided by law. The representations; warranties, indemnity and other agreements provided by Elcano

and Meta in connection herewith shall remain In full force and effect regardless of any termination of ourengagement.

All dollar amounts herein are in Canadian dollars.

Please confirm the foregoing is in accordance with Elcano's understanding by signing the below, whichshall thereupon constitute a binding agreement between Elcano Exploration Inc. and Meta CapitalAdvisors.

Yours very truly,

META CAPITAI, ADVISORS CORPORATION

Per:

A4110101.

Pitriti#41,

ELCANO EXPLORATION INC,

P -

Agreed to as of the 21 day of October, 2018

Appendix 1 (Excluded Parties):

Firiin Narne Individual Name Date of. Last Communicationwith Elcano Management

Elcano Shareholder group .N/APerrlson Petroleum Corp. Wayne Rousch—_-__DWect Oil & Gas Inc. Warren Coles

Vermilion Energy Inc. Travis MonkFreehold Royalty TrustKeystone Royalty Corp John Benson

Stream Asset Financial Management Ryan Dunfieldtioriz6n One Asset Management Inc. James MaThoney

Stanford Petroleum_ ._ Ron Cawston

toryal Energy Ltd. Dale TIrritnonsReserve Royalty Income Trust Mike. LockBusiness Development Bank of Canada IVIarnadou,ltradPreSpring o n in GMP/FE

Toscana Energy Income Corporation Joe Durante

BUrgess Creek Exploration Kory Galbraith

13luesky Equities / RFM Investments Judith Romanchuck

ro rc- Oil Ltd, Robert t3odzloch

Bennett Jones

Chris SimardDirool Lino: 403.298.4485o-in nil: simartleDeune11.iones.00mOur File No.: 86037.1

March 7, 2019

Via Email ([email protected])

Mr. Quentin PlesterBarrister and SolicitorBox 1034Black Diamond, AB TOL 0I-10

Dear Mr, Plaster:

Bennett Jones LIP

4500 Bankers Hall East, 855. 2nd Street SW

Calgary, Alberta, Canada 12P 4K7

Tel: 401298,3100 Fax; 403.265,7219

Re: In the Matter of the Plan of Compromise or Arrangement of Elcano Exploration Inc.,Elcano Exploration Ltd. and Eleano Energy Partnership - Court File No, 1901-02578

I am writing to confirm the matters we discussed in our telephone conversation on March 5, 2019.

On February 22, 2019, my client, Elcano Exploration Inc. ("EEI") terminated the October 29, 2018Engagement Agreement for Advisory Services (the "Agreement') entered into between EEI andyour client, Meta Capital Advisors Corporation ("Meta"), by written notice pursuant to clause 10 ofthe Agreement. Meta shall continue to be bound by the terms of the Non-Disclosure Agreemententered into between EEI and Meta on September 26, 2018.

EEI acknowledges that Meta may become entitled to a claim for a "Success Fee" pursuant to clause6(b) or a "Consulting Fee" pursuant to 6(c) of the Agreement, in the event that EEI enters into atransaction within one year following February 22, 2019, that falls within the parameters set out inclause 6(b) or clause 6(c),

For clarity,

a) Section 6(c) of the agreement refers to the "Consulting Fee" and excludes the subsequentsection (c) "Expenses"; and

b) Appendix 1, Excluded Parties, forms part of the Agreement.

Meta confirms that the attached Schedule "A" contains a list of the parties whom BET has identifiedas those who signed a non-disclosure agreement and entered into the virtual data room during theprocess run by Meta (as described in clause 6(b) of the Agreement).

EEI further agrees that if, at the conclusion of the sales and investment solicitation process (the•"SISP") being conducted in the CCAA proceedings, FBI applies to the court to approve a transaction

WSLEGA1.\086037\00001 \2 19465042

March 7, 2019Page 2

that falls within the parameters set out in clause 6(b) or 6(c) of the Agreement, BEI will providereasonable prior notice to Meta and will seek authority from the court to pay to Meta the amount towhich it would become entitled as a Success Fee or a Consulting Fee under the Agreement.

Meta confirms that GMP and Memo are entitled to contact any parties whatsoever for purposes ofconducting the SISP, including parties who received the teaser and Confidential InformationMemorandum from Meta. As well, Meta confirms that if Meta is contacted by any past, present orpotential bidders with respect to Eleano, it will refrain from having any communications with thoseparties and will immediately refer those parties to GMP.

I believe that this letter accurately summarizes our discussion. Please confirm that you agree:Thank you.

Yours truly,

Bennett JonesWSLEGAL\086037\00001\219(16508v2:

SCHEDULE "A"

Forge Oil & GasPoint LomaPoint Bar ResourcesPike ResourcesSource RockAxiomLoyal EnergyHemisphereCorval EnergyMelitaBurinisCambioTallinn CapitalPrairie StormRC MorrisJOB Capital

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