Coalbed Methane (CBM)
Approximately 19% of our canadian production is from our commercial CBM developments at Corbett, Doris and Thunder in the Fort Assiniboine area of central Alberta. We began commercial operations in the Upper Mannville coals in 2005, progressively developing opportunities on our land base. We are applying horizontal well technology to increase gas production rates and reduce de-watering time from water-saturated coal. Upper Mannville coals are generally deeper than the Horseshoe Canyon “dry coal” play, which is also being commercially developed in Alberta.

At the end of 2008, we held more than 725 net sections of land in Alberta with CBM potential, some of which overlay existing conventional producing lands. In 2009, we plan to tie-in existing wells, drill additional wells, fund anticipated partner-initiated development and invest in new potential CBM plays in the Wetaskiwin and Camrose areas.

Shale Gas
As part of our growth strategy in unconventional Canadian resource plays, we have approximately 195 net sections of land in an emerging Devonian shale gas play in the Horn River Basin in northeastern British Columbia. Shale gas is natural gas produced from reservoirs composed of organic shale. The gas is stored in pore spaces, fractures or absorbed into organic matter. Currently, the United States is the largest producer of shale gas.

This shale gas play has the potential to become a significant resource play in North America. It has been compared to the Barnett Shale in Texas as it displays similar rock properties and play characteristics. To date, we have invested in land, infrastructure and wells in the Horn River Basin to progress our shale gas strategy toward potential development and reserve recognition. Initial production test results are meeting expectations in terms of resource, initial production and decline profile. In 2009, we plan to continue our evaluation program, furthering our technical experience in the play and to test drilling and completion designs for potential commercial development.

We have approximately 88,000 acres in the Dilly Creek area and 38,000 acres in the Cordova area in northeast British Columbia with a 100% working interest in each. As previously announced on April 22, 2008, we estimate our Dilly Creek lands contain between 3 and 6 trillion cubic feet of recoverable contingent resource which could double our total proved reserves.

Limited infrastructure of gas pipeline and processing capacity in the Horn River Basin could potentially constrain early development of our lands. To ensure sufficient gathering, processing and transportation capacity for our early development programs, we have contracted gas pipeline capacity of 96 mmcf/d during a five year term. We have entered into additional agreements that will allow us to participate in projects that are expanding infrastructure in the region.

Dilly Creek Information