pace november presentation

An Intermediate-SizedOil-Weighted Company

Matziwin Resource Play

Inve

stor

Upd

ate

| N

OVE

MB

ER 2

012

BUILDING A TOP TIER ENERGY COMPANY,SOLID RESULTS, GREAT EXECUTION, EXCELLENT POTENTIAL

2PACE OIL & GAS | NOVEMBER 2012 UPDATE

Forward Looking StatementsForward-Looking Statements: This presentation contains certain forward-looking statements and forward-lookinginformation (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadiansecurities laws. All statements other than statements of present or historical fact are forward-looking statements. In somecases, forward-looking statements can be identified by terminology such as "may", "will", "should", "believes", "expects","intends", "projects", "plans", "anticipates", “positions”, “potential”, “objective”, “continuous”, “ongoing”, "estimates" or"contains" or similar words or the negative thereof. In particular, this presentation contains forward-looking statementsrelating to: the estimated production of Pace Oil & Gas Ltd. (“Pace”), the estimated reserves of Pace Oil & Gas Ltd., theestimated pro-forma funds from operation of Pace Oil & Gas Ltd., the expected credit facility available to Pace Oil & GasLtd., the anticipated number of wells and completions to be carried out, the anticipated replacement production from ournew completions, the expected reserve additions, future plans and expenditures of Pace Oil & Gas Ltd., the forecastedcommodity prices.

These statements represent management's expectations or beliefs concerning, among other things, future capitalexpenditures and future operating results and various components thereof or the economic performance of Pace andinclude, without limitation, statements with respect to the future financial position, business strategy, budgets, projectedcosts and plans, objectives of or involving Pace or any of its respective affiliates; access to credit facilities; capital taxes;income taxes; commodity prices; administration costs; commodity price risk management activities; expectation of futureproduction rates and components of cash flow and earnings. Actual events or results may differ materially. Theprojections, estimates and beliefs contained in such forward-looking statements are based on management's estimates,opinions and assumptions at the time the statements were made including assumptions relating to the productionperformance of Pace’s oil and gas assets, the cost and competition for services throughout the oil and gas industry in2012 and beyond and the continuation of the current regulatory and tax regime in Canada, and necessarily involve knownand unknown risks and uncertainties which may cause actual performance and financial results in future periods to differmaterially from any projections of future performance or results expressed or implied by such forward-looking statements.Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from thosepredicted. Pace does not undertake to update any forward-looking information contained in this presentation whether asto new information, future events or otherwise except as required by securities rules and regulations. Barrels of OilEquivalency: Barrels of oil equivalent (BOE's) may be misleading, particularly if used in isolation. In accordance with NI51-101, a BOE conversion ratio for natural gas of 6 Mcf:1 bbl has been used, which is based on an energy equivalencyconversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

PACE OIL & GAS | NOVEMBER 2012 UPDATE 3

Corporate HighlightsCurrent – September 30, 2012

Basic Shares Outstanding (mm) 46.9

FD Shares Outstanding (mm) 50.2

Bank Debt (mm) $215

Net Debt (mm) $210

Credit Facility (mm) (1) $300

Proved Reserves (mmboe) (2) 44.4

2P Reserves (mmboe) (2) ~50% Oil 69.6

Q3 YTD2012

Outlook Oil & NGLs (bbls/d) 6,519 ~ 6,500Natural Gas (mmcf/d) 42.9 ~ 42

CapEx 2012 (mm) 68.3 ~ $801. Banking syndicate - CIBC, NBF, BMO, BNS, HSBC, ATB – renewed June 20122. Reserves December 31, 2011 evaluated by McDaniel & Associates Consultants Ltd.


Corporate Strategy

Near Term (1-2 years)Oil Focused – maintain Gas option

Mid Term (2-4 years)Advance Oil add Gas/Liquids

Long Term (5+ years)Balanced Oil & Gas/Liquids

Exploit and develop existing oil resource inventory Divest non-core assets, reduce leverage & generate free

cash flow Identify new oil resource plays/concepts

Engineered oil enhancements – Waterflood/ASP Acquire strategic synergetic opportunities Expand resource opportunity base

Full scale development of resource assets Apply technology to enhance recovery and production Monitor and identify the key innovative technologies


Low Finding Costs with Strong Oil Additions

AAV

NGL

ARXBXEBIR

PXX

BNE

CLT

CKE

CPG

LEG

NVA

PCE

POU

PGF

PBN

PRQ

TT

TET

WFE

BTE

TOUCQE

0

10

20

30

40

50

60

70

80

90

0% 20% 40% 60% 80% 100%

TP F

&D

($/b

oe)

% TP Oil & NGL Additions

2011 2010

AAVNGLARX BXE

BIR

PXXBNECLT

CKE

CPG

LEG

NVA

PCE

POU

PGF

PBN

PRQTTTET

WFE

BTETOU

0

10

20

30

40

50

60

70

80

90

0% 20% 40% 60% 80% 100%TP

F&

D ($

/boe

)

% TP Oil & NGL Additions

Below line = high recycle ratios Oil weighted adds delivered “Best in Class” recycle ratios

* Data from Canoils


Top Quality Reserves – Oil Weighted

- 5

10 15 20 25 30

PDP Oil & NGLs

mm

bbls

Large and growing oil reserves are low risk Proved Developed Producing

Large Proved Developed Producing is increasingly oil weighted

Large legacy oil pools -existing waterflood & EOR potential are platform for low base decline now and future

* Data from Canoils

0%20%40%60%80%

100%Value Oil % of TP

0%

10%

20%

30%

40%

50% Base Decline %


Key Attributes

Play Type Project Capital

MM$

Gross Operated

Wells

Net Wells

Southern Alberta

PekiskoGlauconite

Lithic Waterflood

$35 11 10.4

Dixonville Montney C Waterflood

$15 - -

Red Earth Slave Point $2.5 - -

NorthwestAlberta

Pekisko $15 4 4

Total Oil $67.5 15 14.4

Deep Basin $2.5 - -

Land, Seismic, G&A other

$10 - -

Grand Total $80 15 14.4

Large and growing oil opportunity base Matziwin - new resource development area

Balance of 2012 CapEx funded by Cash Flow 2012 CapEx directed towards oil program

Matziwin

Significant Upside & Visible Long Term Growth Areas


Pace Land

Pace Matziwin

Pace Matziwin

Southern Alberta Multi-Zone Oil Potential

361,000 net acres land

Multiple prospective oil zones

Extensive oil drilling inventory

- Matziwin 60-100 locations - SAB Glauc/Lithic 50 locations

Well cost: $1.5 to $2.5 MM

EUR per well: 80 to 150Mboe

Oil gravity: 15 – 30 API

Current Pace Key Oil Zones

Pace SAB Glauc/Lithic

Pace SAB Glauc/Lithic


Resource

69,000 net acres – 100% working interest

20-28º API oil gravity

60 – 100 net well locations

160 acre well spacing – may be downspaced

Limited regional aquifer identified at Matziwin

Current Activity/Future Plans

5 Hz wells drilled to date

20 – 25 wells planned for 2012 – 2013

Step out delineation & reservoir characterization

Design and install oil handling facilitiesIndustry Pekisko WellsPace Land

Pace Wells

Matziwin Pekisko – New Resource Development Area


Matziwin Inventory

Type Well Recovery Factor 5-10%

OOIP 8-10 MMbbl/Section

Well control in area – 38 vertical producers Pekisko and Mannville targets at 160 acre spacing

Conduct township step out delineation to de-risk inventory

Well performance and recoveries will vary well density requirements

14-12-23-14W4M

02/2-13-23-14W4 Horizontal target

Low Risk 38 LocLow / Medium Risk 49Medium / High Risk 51


Matziwin Pekisko – 8 to 26 m thick

GR = Gamma RayDen = Density PorosityRes = Resistivity

Pekisko

Banff

Limestone

Limestone

Sandstone

Sandstone

7.9m

26m

13m

10m

GR DEN RES GR DEN RES GR DEN RES GR DEN RES

100/06-12-023-15W4/00 100/12-10-023-14W4/00 100/14-12-023-14W4/00 102/14-18-023-13W4/00

A A”

K K J F

F

G

G

L

GKF

L

U

F

U

G

GFG

F

F

G

U

G

U

K

U

F

G

G

FUKU

FK

F

KKF

GLF

JLFG

G

GGE

F

LF

G

G

G

KU

G

GF

CF

G

V

IE

FK

IF

F

L

FC

J

G

J

FU

JF

F

E

KK

LE

I

FU

LUKU

G

G

F

E

E

G

E

E

K

G

KE

E

KF

LU

E

G

F

E

G

F

C

K

E

C

E

E

G

G

EU

EC

EU

E

LF

F

E

IC

F

KF

L

CFE

GE

F

GGKC

E

GE

LF

GF

E

G

E

G

K

G

G

E

KKK

G

K

F

LC

G

EU

LF

GLLF

FU

LG

JF

CK

JCF

JFG

G

KK

F

KC

C

G

FK

LLF

LGG

KF

G

C

LGG

G

I

U

F

U

LF

G

G U

G UK UK UF U

GUGUFU

GI

F

G

GU

J

GGU

GF

GCC

FC

F

CF

FF

G

KKK

GIF

G

JJFFE

L

G

G

C

CF

F

GG

JG

L

JI

IJE

GJJ

E

FF

C

V

I

E

EC

GCE

GFG

G

GEE

V

ICJ

A

F

JE

E

JJI

E

V

C

V

E

G

E

GUFU

G

F

G

G

F

FGGGG

GGGFC

GLFC

G

F

G

FU

GFA

E

E

V

F

U

A

U

JL

GI

JG

E

E

KE

EA

E

JL

E

J

E

GUEU

JGF

J

ILEC

JJG

G

F

G

G

J

GU

IU

CU

G

F

U

G

GUGUGUGUKU

GUGUGUFUA

U

G

GG

G

G

G

GU

G

G

G

KC

G

G

G

J

I

EJU

K

G

J

J

G

LC

G

JG

G U

GU

G

FCC

G

EL

E

G

E

F

J

G

F

F

G

JU

E

E

G

JGK

E

FF

F

GF

F

GUFUG

LL

L

E

F

GF

L

K

G

JG

FU

FC

G

CV

CV

KV

CV

FU

F

JF

F

F

G

KFG

K

G

F

G

GLG

FC

E

E

F

G

E

J

F

J

J

J

F

E

J

E

G

J

E

E

G

E

G

G

I

G

E

I

G

I

E

E

E

LUG

G

I

JL

GL

G

G

L

GF

I

G

LGLK

JFA

JF

G

J

G

IKF

GFA

EG

CF

IF

ELFA

G

G

FA

KF

G

G

U

F

U

L

G

LKFUUU

G

KKF

G

G

F

C V

G

GF

G

F

G

KF

G

F

G

G

G

G

G

G

GG

LC

C

G

FK

FF

GK

G

LGF

GK

G

JGFL

F

FK

GGJ

G

G

LG

G

CK

G

G

GL

G

GU

G

FL

F

F

CF

GU

G

G

GU

F

L

GU

FKK

F

K

G

F

G

GG

JULU

K

LKC

FFG

GG

G

G

G

KF

G

G

JG

G

J

CFG

G

JJ

CG

L

CI

LG

JEJGG

J

EJ

I

G

J

G

J

S

J

IIFJ

JJ

F

J

G

E

C

I

MF

LAL

GDC

J

J

GJ

G

J

FJ

J

I

JG

GJ

F

JG

G

G

J

J

LG

J

I

E

GL

E

E

J

I

E

E

E

I

JG

E

IC

J

IF

IU

I

I

I

I

I

I

JJ

LGGGGGGG

L

G

LL

G

GU

G

G

FF

A

UF

GU

G

G

K

F

Nisku Disposal Well

Medium / High Risk 51Low / Medium Risk 49Low Risk 38 Loc

I

T22

T23

T24

T22

T23

T24

R12W4R13R14R15

R12W4R13R14R15

AA”


Matziwin Pekisko Production Profile

*$83 Wellhead Price

Single Well Economics*D,C, Equip $2.1mm

Production, bbl/d (IP 30 day) 100

Reserves (Mbbl/Mboe) 125/134

NPV 10%($mm/well) $2.2

Profit to Investment 1.1

Rate of Return 87%

Reserve Cost ($/boe) $15.70

Netback (1st year) ($/boe) $66.50

38 producing vertical wells

02/4-13 Hz acid wash only

New wells exceeding type curve early time

03/4-13-23-14W4 shut in to test 2-13 capability

0

50

100

150

200

250

0 10 20 30 40 50 60

Oil

Rat

e, b

bl/d

Months

Average Verticals Wells

Verticals

100 Mbbl

125 Mbbl

Vertical X 3

02/02-13-23-14W4

03/04-13-23-14W4

02/04-13-23-14W4

04/06-13-23-14W4

0

50

100

150

200

250

0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340

Oil

Rat

e, b

opd

Oil Cumulative, Mbbl

100 Mbbl

125 Mbbl

02/02-13-23-14W4

03/04-13-23-14W4

02/04-13-23-14W4

04/06-13-23-14W4


Completions drive performanceFirst 150 days production

102/2-13-23-14WM

1,169 m lateral

20 frac stages/250+ T sand

~3,000 to 4,000+ m3/well

Actual Well cost: $2.5-2.8MM DCE*

Expected well cost: $2.0 to $2.2 MM

Early in completion optimization

IP30 day ~ 250 bopd

*First wells had one time costs of $300K for micro seismic & frac stringAll other tied in Matziwin wells shut-in while 2-13 was sped up


Matziwin Completion Improvements


Matziwin Cost Drivers - Pads

Target D,C,& E well cost from $2.8 MM/well to $2.0 - $2.2 MM/well

Drilling Costs Initiatives Complete and Equip Cost Initiatives

1.71.5

0.1 0.2

0.1

1.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

$MM

1.3

0.2

0.20.1

0.10.1

0.8

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

$MM


Costs expectations of $2.0 to $2.2 MM/well in 2013 including tie-ins

Returns approaching 90%

Upside for early time performance improvement

Break even BT PV10% price of ~$40/bbl wellhead

$2.1 MM/well D,C,E capital

Matziwin Price/Capital Sensitivity

Matziwin – Wellhead Oil Price Sensitivity

0

20

40

60

80

100

120

2000 2500 3000

RR,%

Capital $M/well

Matziwin ‐ Capital Sensitivity

‐

20

40

60

80

100

120

140

160

40 60 80 100

RR,%

Wellhead Price, $/bbl

Oil Price Sensitivity

175 Mbbl125 Mbbl100 Mbbl

Hardisty Bow River 25API (AB) ‐ 20$/bbl offset$2,1MM Capital


Matziwin Field Oil Production

Field production over 600 bbl/d with 3 new horizontals

Facility equipment sourced internally.

Single well batteries will allow further production growth with new drills

Good year round access for trucking


Hardisty Bow River 25API (AB) - 20$/bbl offsetFirst year netback $60-$70/bbl with Royalty incentive

Oil ReservesMbbl

ReservesMboe

Capital$MM

RR,%

Cost of Reserve

$/boeMatziwin 5 Year Full Cycle (excld land) 14,100 15,100 ~300 44 ~19.80

Single Well 125 134 2.1 87 15.70

Type Curve IP/EUR 100 bbl/day IP & 125

Mbbl EUR

Upside with performance improvements

15% oil growth exit 2013

Economics include major facility capital & pipelines

Surplus 100% Pace battery located in Southern Alberta

Matziwin 5 Year Development24 Well/Year Scenario – 1 Rig


Matziwin Summary

Large Captured Resource 8-10 mmbbls/section

100% Pace working interest

Excellent year round access

Strong economics - >50% IRR

Upside to current type curve with completion evolution

Significant oil growth potential

*Early Resource play – a range of outcomes are expected

Low Risk 38 LocLow / Medium Risk 49Medium / High Risk 51


Total Acreage (Excluding Matziwin)

Net 260,000 – 406 sections

Repeatable Drilling & EOR potential

50 well inventory and growing

Execution efficiency gains drive lower D,C & costs

90 MMbbls DPIIP and growing

2012 Plan

Implement waterflood in NNN/BBB – commenced Q1 2012

Other pool waterflood

optimization

Southern Alberta – Glauconite Oil Play

Pace LandPace Locations


Southern Alberta Waterflood Management Opportunities

Implement waterflood in NNN/BBB May 2012. $5 MM capital 24 MMbbl OOIP 52% IRR, 1.5 mmbbls PDP

additions

Good early response with decreasing GOR and stable oil rate

Infill horizontals when pool pressures restored

Feb-April 2012 – 10 producers converted to water disposal

R17W4R18W4

T13

T12

2012 Activity

Decreasing GOR


Pace Dixonville

Pace Whitelaw

Pace Leddy

Triassic SubcropEdge

Montney Coquina

Montney Shoreface

Dixonville Asset Overview Resource

> 180 MMbbls in place

31 API Oil

Waterflood & EOR Potential

Strategy/Execution Finish waterflood expansion & pool

management plan

EOR study started/plan pilot area

Test Worsley potential

Explore for analog Montney pools

Continue reservoir characterization

Evaluate stimulation potential


Dixonville: Montney C Reservoir Simulation

Waterflood response exceeds base case (booked reserves) and current model

3,100 bbls/d

Prod, 5.7 Prod, 5.7 Prod, 5.7

1P, 16.2 1P, 16.2 1P, 16.2

2P, 7.0 2P, 7.0 2P, 7.0

Upside, 9.4 Upside, 9.4

Tertiary, 28.2

15%

20%

35%

‐

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0

10

20

30

40

50

60

70

Base Case WaterfloodOptimization

EUR (SP)

ULTIM

ATE RE

COVE

RY OF OOIP (%

)

REMAINING REC

OVE

RABLE OIL (M

MBB

L)

DIXONVILLE: MONTNEY C

Prod 1P 2P Upside Total OOIP Rec.


Key Investment Highlights Solid Program delivers Solid Results

Oil focused program drives cash flow

New Repeatable Resource Play at Matziwin

Great Execution - Performance Metrics

Operating results – Increased oil weighting – Op costs reduced

Execution Efficiency – Low finding costs – Top tier recycle

Excellent Potential - Significant Upside

Portfolio of oil resource plays – Large OOIP

Multiple valued-added visible growth opportunities

Clear Path to Sustained Visible Oil Growth


Hedging

Commodity Term Type Volume Price

(CDN$)

Oil 2012 fiscal Collar 500 bbl/d $95.00 to $117.75

Oil 2012 fiscal Collar 500 bbl/d $100.00 to 108.70

Oil 2012 fiscal Swap 1,500 bbl/d $97.07

Oil 2013 fiscal Swap 500 bbl/d $97.00

Natural Gas Jun - Dec 2012 Swap 4,740 mcf/d $2.37/mcf

Natural Gas 2013 fiscal Swap 4,740 mcf/d $3.23/mcf

Natural Gas 2013 fiscal Collar 4,740 mcf/d $2.90 to $3.56/mcf

Interest Rate Swap

July 2012 – July 2014

Swap $75 MM 1.145% (CAD-BA-CDOR)

26PACE OIL & GAS | NOVEMBER 2012 UPDATE

Pace Corporate InformationManagement

Fred WoodsPresident & CEO

Todd BrownVice President & COO

Chad KalmakoffVice President, Finance & CFO

Volker BraunVice President, Exploration

Colin MerrickVice President, HR, IR & Administration

Darrell OsinchukVice President, Exploitation

Martin SaizewVice President, Engineering

Andrew WeldonVice President, Business Development

Directors

Fred Woods Tom SimonsTom Buchanan Jeff SmithPeter Harrison Jay SquiersMike Shaikh David Tuer

Banking Syndicate

CIBCNational BankBank of MontrealBank of Nova ScotiaAlberta Treasury BranchesHSBC Bank of Canada

AuditorsPriceWaterhouse Coopers LLP

Legal CounselHeenan Blaikie LLP

Evaluation EngineersMcDaniel & Associates Consultants Ltd.

Registrar & Transfer AgentComputershare Trust Company of Canada

TSX Listing Symbol OTC Pinks SymbolPCE PACEF

Address

Livingston Place, West TowerSuite 1700, 250 – 2nd Avenue SWCalgary, Alberta, Canada T2P 0C1Ph: 403-303-8500Investor Relations Email: [email protected]: www.paceoil.ca

pace november presentation

Investor Relations

operation of pace oil

expenditures of pace

pace oil gasltd

strong oil additions

tp oil ngl additions

gas assets

statements of present

barrels of oil equivalent