Sonde - Introductory Letter

 Sonde - Confidentiality Agreement

 

January 31, 2013

Proposals Due: March 2013

2013 Sonde Resources Corp. Western Canadian Strategic Alternatives Process

Sonde Resources Corp. (“Sonde” or the “Company”) has initiated a process to identify strategic alternatives regarding its western Canadian assets and has retained FirstEnergy Capital Corp. (“FirstEnergy”) as its financial advisor for the process. Sonde may consider a number of scenarios, including a sale of all or a material portion of its western Canadian assets, an investment in its inventory of undeveloped Montney, Duvernay and Wabamun lands, a merger or other scenario. Assets are organized into southern, central and northern Alberta packages with total working interest sales of 2,100 BOE/d in November 2012 (34% light oil and NGL’s).

More than 80% of the production and reserves and most of the oil production is associated with the Southern Alberta Package, which hosts an Ellerslie waterflood pilot and horizontal Detrital/Banff oil locations. The central and northern Alberta packages contain large, high working interest land positions prospective for light oil development: 44,488 net acres of prospective Montney and 95,101 net acres of prospective Duvernay rights predominantly in the Central Alberta Package, plus 50,736 net acres of undeveloped Wabamun rights in the Northern Alberta Package. Sonde has recently commenced exploration activities on these lands, including the drilling of a Montney oil well.

Production, Income and Reserves Summary
Package		Production			Annualized	Reserves Volumes						Reserves Values
		November 2012 W.I. Sales			2012	Total Proved			Proved plus Probable			Pre-tax NPV@10%
		Liquids	Gas	Total	NOI	Liquids	Gas	Total	Liquids	Gas	Total	TP	P+P
		(bbl/d)	(Mcf/d)	(BOE/d)	(M$)	(Mbbl)	(MMcf)	(MBOE)	(Mbbl)	(MMcf)	(MBOE)	(M$)	(M$)
Southern Alberta		602	7,225	1,806	7,600	1,176	17,023	4,013	3,191	26,519	7,611	49,567	94,698
Central Alberta		52	694	167	349	115	3,701	732	200	6,703	1,317	5,788	10,255
Northern Alberta		64	374	126	796	80	889	228	113	1,576	376	2,724	4,120
Other Areas		0	0	0	-62	1	556	94	2	756	128	20	51
Total		718	8,293	2,100	8,683	1,372	22,169	5,067	3,506	35,554	9,432	58,099	109,124
Reserves as at December 31, 2012 as per GLJ Petroleum Consultants using GLJ January 2013 forecast pricing.
Production is from November 2012 Lease Operating statements. NPV's shown are before tax.

Key Attributes

In recent years, the Company has focused its western Canadian activities on assets within its Southern Alberta Package, in addition to accumulating Montney, Duvernay and Wabamun mineral rights and initiating activity. Sonde’s other assets have received minimal capital investment during this period.

Southern Alberta Package

• November 2012 W.I. sales of 1,806 BOE/d: 7.2 MMcf/d of gas, 463 bbl/d of light oil and 140 bbl/d of NGL’s
  • Low decline light oil production accounts for 26% of the package’s production
  • 2010 to 2012 drilling, workovers and recompletions virtually eliminated previous production declines

• Drumheller Mannville ‘I’ Pool (Ellerslie) waterflood pilot initiated in 2012; potential to expand across the pool
• Total Proved reserves of 4.0 MMBOE; Proved plus Probable reserves of 7.6 MMBOE (42% liquids)
  • GLJ has assigned 1.4 MMbbl of Probable oil reserves to the Mannville ‘I’ Pool waterflood

• Interests in 202,482 gross acres (135,712 net) of land; 66,614 gross acres (53,464 net) undeveloped
• An extensive inventory of opportunities including recompletions, reactivations and drilling
• Detrital/Banff horizontal drilling upside identified at Michichi
  • 4 Probable horizontal locations booked by GLJ with an EUR of 70 Mbbl per location
  • Up to 18 additional unbooked horizontal locations have been identified by Sonde

Central Alberta Package

• November 2012 W.I. sales of 167 BOE/d: 694 Mcf/d of gas, 33 bbl/d of light oil and 19 bbl/d of NGL’s
• Production is primarily from the Gething and Notikewin; Duvernay and Montney light oil production upside
  • Sonde drilled the 102/04-19-067-26W5 (100% W.I.) Montney oil well in July 2012; follow-up licenced

• Interests in 136,807 gross acres (124,094 net acres) of land; 114,532 gross acres (110,138 net) undeveloped
  • 44,488 net acres of prospective undeveloped Montney rights within the Montney subcrop
  • 90,621 net acres of prospective undeveloped Duvernay rights within the oil window

• Proved plus Probable reserves of 1.3 MMBOE assigned by GLJ; 732 MBOE of Total Proved reserves
• Large inventory of opportunities
  • 10 PDNP operations: 6 activations, 1 tie-in, 2 tie-in and equips and 1 complete and activate
  • 7 Probable opportunities: 1 tie-in and equip, 1 complete and tie-in, 2 activations, 1 tie-in, 1 re-entry and pipeline implementation and a water disposal well for the 102/04-19 Montney well
  • 100 plus unbooked horizontal Montney oil locations within prospective lands; 2 to 4 locations per section
  • 500 plus unbooked horizontal Duvernay oil locations within prospective lands; 4 locations per section
  • 13 unbooked horizontal Gething gas locations, reflecting spacing of up to 2 locations per section

Northern Alberta Package

• November 2012 W.I. sales of 126 BOE/d: 374 Mcf/d of gas, 60 bbl/d of light oil and 5 bbl/d of NGL’s
  • Production is primarily derived from the Wabamun and Charlie Lake; Wabamun light oil upside
  • Large Wabamun land position in Eaglesham/Cindy amenable to low cost Hz barefoot development

• Proved plus Probable reserves of 376 MBOE assigned by GLJ; 228 MBOE of Total Proved reserves
  • Total Proved reserves are 100% PDP; Total Proved is 61% of Proved plus Probable

• Interests in 80,669 gross acres (72,238 net acres) of land; 69,002 gross acres (65,593 net) undeveloped
  • 50,736 net acres of undeveloped Wabamun rights; no material expiry concerns

• Opportunities include
  • Probable 100% W.I. Upper Montney tie-in in Eaglesham; Probable activation in Grande Prairie
  • Up to 324 horizontal Wabamun oil infill locations, based on 2 to 4 locations per section; the permitting process for the first two of these is nearly complete

Description of the Process

FirstEnergy has prepared a comprehensive Information Memorandum (“IM”) which includes detailed information regarding production, land, reserves, and opportunities. The IM will be available the week of January 28, 2013 and electronic copies will be available for download from FirstEnergy’s website. Hard copies can be obtained by contacting FirstEnergy directly.

GLJ Petroleum Consultants Ltd. (“GLJ”) has completed updated NI 51-101-compliant reserves reports for the constituent properties within the three packages, with an effective date of December 31, 2012. The reports utilize GLJ’s January 2013 forecast pricing. To facilitate review, a Value Navigator database of the reserves is available within the confidential information.

Parties who execute a Confidentiality Agreement (“CA”) will have access to the confidential information available in an online data room, which will open the week of January 28, 2013. Proposals are due in mid-March 2013. Further information on the bid date will be communicated to parties that execute a CA. A copy of the CA is available on the FirstEnergy website at www.firstenergy.com/Sonde or can be obtained by contacting FirstEnergy directly.

Please direct all correspondence and inquiries relating to the opportunity to FirstEnergy at: