WTI OIL: US$98.43-$0.35 per barrelMarch delivery

NYMEX: N Gas: US$2.467-$0.246 per MMBTUFebruary delivery

Published By NEWS COMMUNICATIONS since 1977 Canadian Edition Wednesday February 1, 2012

NORTH AMERICAN RIG COUNTSThe U.S. rotary rig count was unchanged at 2,008 for the week of January 27, 2012. It is 276 rigs (15.9%) higher than last year. The number of rotary rigs drilling for oil was up 2 at 1,227. There are 416 more rigs targeting oil than last year. Rigs drilling for oil represent 61.0% percent of all drilling activity which is the highest percentage since December 1991. Rigs directed toward natural gas were down 3 at 777. The number of rigs currently drilling for gas is 136 lower than last year's level of 913. Year-over-year oil exploration in the U.S. is up 51.4 percent. Gas exploration is down 14.9 percent. The weekly average of crude oil spot prices is 14.1 percent higher than last year and natural gas spot prices are 42.5 percent lower. Canadian rig activity is up 28 at 682 for the week of January 27, 2012 and is 45 (7.1%) higher than last year's rig count.

GULF SETS PLAN FOR HORMUZ CLOSURE

Coastguards and naval forces of the Gulf Coopera-tion Council (GCC) group of Arab countries have contingency plans for a possible attempt by Iran to shut the Strait of Hormuz, a Kuwaiti maritime official said on Monday. Five of the six GCC members — Saudi Arabia, Bahrain, the United Arab Emirates (UAE), Qatar and Kuwait — rely on the world’s most important energy shipping lane being open to export most of their oil or gas. Tehran has threatened to close the narrow shipping lane between Oman, the only GCC member which does not depend on Hormuz, and Iran if Western sanctions aimed at starving Iran’s disputed nuclear programme of funds stop it from selling oil. ommander Mubarak Ali Al-Sabah chief of maritime operations at Kuwait’s Coast Guard said the planning included coordinating both between coastguards and navies of GCC countries and with Western naval forces patrolling the area — including US, Australian and French navies. Kuwaiti and Iranian coastguards hold regular meetings on how to manage their shared maritime border, with the next one scheduled for next month.

CHESAPEAKE CUTS NATURAL-GAS OUTPUT

Chesapeake Energy Corp., the second- largest U.S. natural-gas producer, will cut output, idle drilling rigs and reduce spending in gas fields by 70 percent after prices for the fuel hit a 10-year low. Gross production at wells it operates will drop by as much as 1 billion cubic feet a day and the Oklahoma City-based company will defer gas-well completions wherever possible, according to a statement today. Chesapeake, which accounts for about 9 percent of U.S. gas output, will cut spending on gas wells to $900 million this year from $3.1 billion in 2011. Natural gas for February delivery rose 7.8 percent, the most since Dec. 10, 2009, to settle at $2.525 per million British thermal units on

ilfield NEWSoilfieldnews.ca www.markmilne.com

Chief Power Engineer - Competition # 24.26.09.11

Reporting to the Maintenance Manager, the Chief Power Engineer will:

Richardson Oilseed Limited provides a comprehensive compensation package including competitive salary, flexible benefit plan and an opportunity to join a successful and dynamic organization.

I n t e r e s t e d a p p l i c a n t s s h o u l d v i s i t www.richardson.ca to upload their cover letter (quoting Competition # 24.26.09.11) and resume by February 17, 2012.

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Richardson International is a worldwide handler and merchandiser of major Canadian-grown grains and oilseeds.

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supervise the overall operation and maintenance of all plant utility systems to ensure reliable and efficient service plan, schedule and coordinate regular preventative and shutdown maintenance for all utilities and site services supervise union personnel initiate and manage utilities and site services capital projects monitor department and utility budgets

valid 2nd Class Power Engineer Certificate five years experience with post secondary education and extensive management and technical experience of all utilities and comprehensive supervisory experience superior communication, organizational, leadership and interpersonal skills willing to obtain Advanced First Aid

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volumes were primarily due to natural reservoir decline. Gross production of natural gas during the fourth quarter of 2011 was 240 million cubic feet a day, down from 275 million cubic feet in the same period last year. The lower production volume was primarily a result of the impact of divested producing properties. In the fourth quarter, the company sold its interests in shallow gas properties in the Medicine Hat, Alberta area and the Coleville-Hoosier natural gas

the New York Mercantile Exchange after the announcement. They had fallen by half in the past year and declined the most among the Standard & Poor’s GSCI Spot Index (SPGSCI) of raw materials. “Chesapeake is a big player,” Scott Hanold, a Minneapolis-based analyst for RBC Capital Markets who rates Chesapeake at “sector-perform” and owns no shares, said today in a telephone interview. “It’s going to be a collective effort by the industry to right the market and you’ll see more announcements this quarter.” Gas sold from U.S. output in 2011 rose by about 4.5 billion cubic feet a day, or 7.4 percent, the largest annual gain in history, according to the Energy Information Administration. U.S. production and reserves have been driven by the increased use of hydraulic fracturing. Chesapeake said it will “immediately curtail” output of 500 million cubic feet a day, 8 percent of production, and will idle half its drilling rigs by the second quarter in fields that produce only gas, including the Barnett Shale of Texas, the Marcellus Shale and the Haynesville Shale. Spending on undeveloped leases will fall to $1.4 billion in 2012 from $3.4 billion in 2011 and will be limited to areas where the company already is active, Chesapeake said. Chesapeake’s output curtailment f o l l o w s E Q T C o r p . ’ s J a n . 2 0 announcement that it will suspend drilling in i ts Huron Fie ld in Kentucky. Southwestern Energy Co. (SWN) Chief Executive Officer Steven Mueller said in a Jan. 5 interview his company may slow production in Arkansas’s Fayetteville Shale if prices stay low.

IMPERIAL OIL Q4 RESULTSImperial Oil’s earnings in the fourth quarter of 2011 were $1,005 million, up 26 percent from the fourth quarter of 2010. Strong operating performance in Imperial’s business segments allowed us to capture higher crude oil realizations in the Upstream and improved margins in the Downstream petroleum product markets. Another record quarterly production at Cold Lake highlighted our consistent focus on operations excellence and production reliability. The same focus in all areas of our business is fundamental to sustaining operating performance while advancing our company growth plans. Earnings for the full year 2011 were $3,371 million, the second highest in our company’s history and up $1,161 million or 53% from $2,210 million in 2010. Gross production of Cold Lake bitumen averaged 162 thousand barrels a day, equalling the production record achieved in the previous quarter. Cold Lake production was up ten percent from 147 thousand barrels in the same quarter last year. Increased volumes were due to contributions from new wells steamed in 2010 and 2011, increased recoveries as a result of technology applications and the cyclic nature of production at Cold Lake. The company's share of Syncrude's gross production in the fourth quarter was 63 thousand barrels a day, versus 79 thousand barrels in the fourth quarter of 2010. Lower production was primarily the result of higher planned and unplanned maintenance activities. Gross production of conventional crude oil averaged 20 thousand barrels a day in the fourth quarter, down from 24 thousand barrels in the fourth quarter of 2010. Lower

primarily due to stronger overall margins of about $65 million partially offset by the unfavourable impact of higher maintenance activities on refinery operations and expenses totalling about $60 million.

SUNSHINE IPOSunshine Oilsands Ltd, a Canadian oil explorer backed by Chinese state-owned enterprises, could raise up to $700 million through a Hong Kong initial public offering

producing property in Saskatchewan, realizing a gain of about $72 million. Natural gas production for the company’s share of the properties averaged about 52 million cubic feet a day in 2010. Also in the quarter, the company recorded a gain of about $40 million from an exchange of oil sands leases with third parties. Downstream net income was $272 million in the fourth quarter of 2011, compared with $266 million in the same period a year ago. Earnings increased

(IPO), in what is set to be the biggest new listing in Asia in the new year. The IPO will consist of all new shares, representing 25 percent of the company's expanded capital. Sunshine Oilsands and its bankers started drumming up demand for the offering on Monday and will launch the IPO on Feb. 6, added a second source. Pricing is slated for Feb. 14, with its debut on the Hong Kong stock exchange set for Feb. 21. Thomson Reuters publication IFR reported on Friday the IPO could raise between $500-700 million, valuing the company at up to $2.8 billion. Sunshine Oilsands, which owns 1.14 million acres of oil sands leases in the Athabasca region in Canada, raised about $230 million in March last year from a group of investors including a unit of Bank of China, China Life Insurance (Overseas) and Hong Kong private equity fund Cross-Strait Common Development Fund, a company statement showed. Orient International Resources Group Ltd, controlled by Hong Kong businessman Hok Ming Tseung, is also a major shareholder of Sunshine Oilsands. The Canadian company has been eyeing a Hong Kong IPO since the middle of last year, according to local press reports. Sunshine Oilsands said in September it filed its A1 listing application with the Hong Kong exchange for the proposed IPO. The Sunshine Oilsands IPO would follow a series of energy takeovers by Chinese companies in recent months as the world's second-largest economy seeks to secure

steady oil supply to support growth in the coming years. Most of the recent deals have been i n sha le and o the r unconventional oil sources and technology, including a $2.2 billion deal between China's Sinopec and Devon Energy Corp. this month to develop five shale oil fields. CNOOC Ltd closed a $2 billion deal in November for a stake in a Canadian oil sands project and also started talks to buy a stake in Frac Tech International, which operates technology used in hydraulic fracturing.

PURESTREAM DEPLOYS SECOND WATER TREATMENT PILOT

Purestream Technology successfully initiated a pilot project in Strathmore, Alberta using its AVARA System to treat produced water from oil and gas operations in the Manville Sandstones of Southern S a s k a t c h e w a n . P u r e s t r e a m i s demonstrating its ability to treat and recycle water for potential future use in enhanced gas recovery in the Manville and for hydraulic fracturing in the Saskatchewan portion of the Bakken Shale. In November, Purestream signed a commercial contract with Whiting Petroleum to recycle water from its Bakken operations in North Dakota. Oil and Gas producers, government officials and the media will tour the Purestream pilot facility in Strathmore to learn about the technology's ability to effectively treat and recycle produced and flowback water from hydraulic fracturing

responsible resource development and protection of Canada's water resources," said CAPP President Dave Collyer. "Applying these new operating practices wi l l contr ibute to improv ing our env i ronmen ta l pe r fo rmance and transparency over time, both of which contribute to stronger understanding of industry activity and better relationships with the public, stakeholders and government." Developed by natural gas producers, the hydraulic fracturing operating practices apply to all CAPP members exploring for and producing natural gas in Canada. In September 2011, CAPP announced the industry's Guiding Principles for Hydraulic Fracturing, which obligate CAPP members to sound wellbore construction, fresh water alternatives, recycling where feasible, voluntary water reporting, fracturing fluid disclosure, and technical advancement and collaboration. The operating practices announced support the guiding principles for hydraulic fracturing and strengthen industry's focus on continuous performance improvement. Natural gas from unconvent ional formations is abundant and found across Canada. CAPP expects the hydraulic fracturing operating practices to inform and complement regulatory requirements. Canada's shale and tight gas industry supports a responsible approach to water management and is committed to continuous performance improvement. Protecting our water resources during

operations. "We are excited about this pilot project and the potential to treat and recycle water for oil and gas operations in Saskatchewan and elsewhere in Canada," said Purestream CEO Neil Richardson. "Our AVARA technology is uniquely capable of helping producers across Canada meet increasingly stringent environmental requirements. Late last year, Purestream performed a successful pilot project near Edson, Alberta that demonstrated the AVARA's ability to treat produced and flowback water from several Canadian oil and gas production facilities. The AVARA System can treat water with a broad range of characteristics and allow for beneficial reuse. Purestream's AVARA System was developed in partnership with Utah State University's Energy and Space Dynamics Labs. It cleans and recycles wastewater using an accelerated vapor recompression p r o c e s s w h i c h r e m o v e s h a r m f u l contaminants and renders it cleaner than drinking water.

CANADA-WIDE OPERATINGPRACTICES FOR SHALE

The Canadian Association of Petroleum Producers today announced new Canada-wide hydraulic fracturing operating practices designed to improve water management and water and fluids reporting for shale gas and tight gas development across Canada. "The hydraulic fracturing operating practices demonstrate the Canadian natural gas industry's continued efforts to ensure

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(780) 447 - R E N T7 3 6 8sourcing, use and handling is a key priority for our industry. We support and abide by all regulations governing hydraulic fracturing operations, water use and protection. In addition, we commit to following these operating practices for hydraulic fracturing: 1) Fracturing Fluid Additive Disclosure: Purpose: To disclose on a well-by-well basis the chemical ingredients in fracturing fluid additives which are identified on Material Safety Data Sheets (MSDS) for each additive, including trade names, general purpose and concentrations. This information will be made publicly available. 2) Fracturing Fluid Risk Assessment and Management: Purpose: To better identify and manage the potential health and environmental risks associated with fracturing fluid additives and ultimately increase the market demand for more environmentally sound fracturing fluids. The process for developing well-specific risk management plans for hydraulic fracturing fluid additives will be made publicly available. 3) Baseline Groundwater Testing; Purpose: To develop

domestic water well sampling programs and to participate in regional groundwater monitoring programs; establish a process for addressing stakeholder concerns regarding water well performance; and to continue to collaborate with government and other industry operators. 4) Wellbore Construction and Quality Assurance; Purpose: To ensure that wellbores are designed and installed in a manner that maintains integrity before hydraulic fracturing begins, including creating a continuous cement barrier to protect groundwater and developing remedial plans in the unlikely event that a wellbore is compromised. Wellbore construction and quality assurance practices will be made publicly available as they relate to this practice.5) Water Sourcing, Measurement and Reuse Purpose: To safeguard surface water and groundwater quantity by assessing and measuring water sources, ensuring no withdrawal limits are exceeded, monitoring water sources as required to demonstrate the sustainability of the source; and collecting and reporting

fracturing principles and practices is part of the natural gas industry's ongoing efforts to ensure safe development of Canada's shale gas resources," Collyer said. "Shale gas can and is produced responsibly every day across Canada and the United States with almost 200,000 wells fractured in Western Canada over the last 60 years. With increased focus on fracturing from coast-to-coast, the Canadian industry wants to be at the forefront of transparency and to establish clear and consistent practices across the country."

water use data. Water measurement, sourcing and reuse practices will be made publicly available. 6) Fluid Transport, Handling, Storage and Disposal Purpose: To identify, evaluate and mitigate potential risks related to the transport, handling, storage and disposal of fluids (i.e. fracturing fluids, produced water, flowback water and fracturing fluid wastes) and ensure a quick response to accidental spills. Fluid transport, handling, storage and disposal practices will be made publicly available. "The establishment of Canada-wide hydraulic