Comments
Description
Transcript
Document 2534294
NOTICE OF MEETINGS AND INFORMATION CIRCULAR relating to a proposed PLAN OF COMPROMISE AND ARRANGEMENT under the COMPANIES' CREDITORS ARRANGEMENT ACT (CANADA) concerning, affecting and involving LONE PINE RESOURCES INC. LONE PINE RESOURCES CANADA LTD. LONE PINE RESOURCES (HOLDINGS) INC. WISER DELAWARE LLC WISER OIL DELAWARE, LLC December 13, 2013 This information circular is being distributed to certain claimants of Lone Pine Resources Inc. and its subsidiaries listed above in connection with the meetings called to consider the plan of compromise and arrangement proposed by each of them, which are scheduled to be held at the offices of Bennett Jones LLP, 4500 Bankers Hall East, 855 - 2nd Street S.W., Calgary, Alberta on January 6, 2014 beginning at 10:00 a.m. (Calgary time). These materials require your immediate attention. You should consult your legal, financial, tax or other professional advisors in connection with the contents of these documents. Should you have any questions regarding voting or other procedures or should you wish to obtain additional copies of these materials, you may contact PricewaterhouseCoopers Inc., which acts as the Monitor, at PricewaterhouseCoopers Inc., 3100, 111 - 5th Avenue S.W., Calgary, Alberta, T2P 5L3 (Attention: Susan Shabluk), facsimile: (403) 781-1825, telephone (403) 509-7366 or email: [email protected], or access the Monitor's website at: www.pwc.com/car-lpr. TABLE OF CONTENTS LETTER TO AFFECTED UNSECURED CREDITORS ............................................................................................. 1 NOTICE TO AFFECTED UNSECURED CREDITORS ............................................................................................. 4 GENERAL .................................................................................................................................................................... 6 IMPORTANT INFORMATION ................................................................................................................................... 6 INFORMATION FOR UNITED STATES CREDITORS ............................................................................................ 7 CAUTIONARY NOTICE REGARDING FORWARD LOOKING INFORMATION ................................................ 8 FINANCIAL INFORMATION ................................................................................................................................... 10 GLOSSARY ................................................................................................................................................................ 11 SUMMARY INFORMATION .................................................................................................................................... 25 INFORMATION CONCERNING THE MEETINGS ................................................................................................ 34 General .................................................................................................................................................................... 34 Meeting Order ......................................................................................................................................................... 34 Time and Place of Meetings .................................................................................................................................... 35 Procedure for the Meetings ...................................................................................................................................... 35 Classification of Affected Unsecured Claims .......................................................................................................... 35 Entitlement to Vote .................................................................................................................................................. 36 Solicitation of Proxies ............................................................................................................................................. 37 Appointment of Proxyholders and Voting ............................................................................................................... 37 Revocation of Proxies .............................................................................................................................................. 38 Advice to Beneficial Holders................................................................................................................................... 38 Plan Supplements .................................................................................................................................................... 38 Claims Procedure Order .......................................................................................................................................... 39 Entitlement to Receive Distributions ....................................................................................................................... 39 BACKGROUND TO THE RECAPITALIZATION ................................................................................................... 39 Events prior to the commencement of Creditor Protection Proceedings ................................................................. 40 Creditor Protection Proceedings .............................................................................................................................. 43 Events Subsequent to the commencement of Creditor Protection Proceedings ....................................................... 44 DETAILS OF THE RECAPITALIZATION ............................................................................................................... 46 Purpose of the Plan .................................................................................................................................................. 46 Transactions to be effected pursuant to the Plan ..................................................................................................... 46 Effect of the Plan ..................................................................................................................................................... 47 New Shares to be Distributed to Affected Unsecured Creditors.............................................................................. 47 Treatment of Certain Parties under the Plan ............................................................................................................ 54 Description of the New Investment ......................................................................................................................... 55 Plan Implementation Date Transactions .................................................................................................................. 57 Effect of the Plan ..................................................................................................................................................... 61 Releases to be Given under the Plan ........................................................................................................................ 62 Procedural and Administrative Matters Relating to the Plan and its Implementation ............................................. 62 RESTRUCTURED GROUP ....................................................................................................................................... 68 REQUIRED APPROVALS AND OTHER CONDITIONS PRECEDENT TO IMPLEMENTATION ..................... 68 Creditor Approval .................................................................................................................................................... 68 Court Approvals ...................................................................................................................................................... 69 Conditions Precedent to Implementation of the Plan............................................................................................... 71 PROCEEDINGS UNDER U.S. BANKRUPTCY CODE ........................................................................................... 74 SUPPORT AGREEMENT .......................................................................................................................................... 74 - ii - Acknowledgments, Agreements and Covenants of the Consenting Noteholders .................................................... 74 Acknowledgments, Agreements and Covenants of the Lone Pine Group ............................................................... 76 Consenting Noteholder Termination Events............................................................................................................ 78 BACKSTOP AGREEMENT ....................................................................................................................................... 79 Conditions Precedent ............................................................................................................................................... 79 Backstopper Termination Events ............................................................................................................................. 80 New Backstoppers ................................................................................................................................................... 81 SECURITIES REGULATORY CONSIDERATIONS ............................................................................................... 81 Termination of reporting status under applicable securities laws ............................................................................ 81 Issuance and resale of securities distributed under the Recapitalization ................................................................. 82 MONITOR'S REPORT ............................................................................................................................................... 85 RECOMMENDATION OF THE BOARD OF DIRECTORS .................................................................................... 85 INCOME TAX CONSIDERATIONS ......................................................................................................................... 87 Certain Canadian Federal Income Tax Considerations............................................................................................ 87 Certain U.S. Federal Income Tax Considerations ................................................................................................... 96 INFORMATION RELATING TO THE LONE PINE GROUP................................................................................ 105 Group Companies .................................................................................................................................................. 105 Business of LPR Canada ....................................................................................................................................... 105 Documents Incorporated by Reference.................................................................................................................. 105 RISK FACTORS ....................................................................................................................................................... 106 Risks Relating to Non-Implementation of the Plan ............................................................................................... 107 Risks Relating to the Plan and its Implementation ................................................................................................ 108 Risks Relating to an Investment in New Shares .................................................................................................... 110 Risks Relating to the Business of the Lone Pine Group ........................................................................................ 112 OTHER MATTERS .................................................................................................................................................. 112 INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON ........................ 113 ADDITIONAL INFORMATION ............................................................................................................................. 113 SCHEDULES SCHEDULE A SCHEDULE B SCHEDULE C SCHEDULE D SCHEDULE E – – – – – APPROVAL RESOLUTION MEETING ORDER CLAIMS PROCEDURE ORDER PLAN MONITOR'S REPORT December 13, 2013 To: Affected unsecured creditors ("Affected Unsecured Creditors") of Lone Pine Resources Inc. ("LPRI"), Lone Pine Resources Canada Ltd. ("LPR Canada"), Lone Pine Resources (Holdings) Inc. ("LPR Holdings"), Wiser Oil Delaware, LLC ("Wiser Oil") and Wiser Delaware LLC ("Wiser Delaware") (collectively, the "Lone Pine Group") On September 25, 2013, the Lone Pine Group commenced proceedings under the Companies' Creditors Arrangement Act (the "CCAA") in the Court of Queen's Bench of Alberta (the "Court") and ancillary proceedings under Chapter 15 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. LPRI, LPR Canada and all other direct or indirect subsidiaries of LPRI are parties to the CCAA and Chapter 15 proceedings (collectively, the "Creditor Protection Proceedings"). The Creditor Protection Proceedings were filed in order to implement a comprehensive restructuring in accordance with support agreements (the "Support Agreement"), dated September 24, 2013, between the Lone Pine Group and certain holders of LPR Canada's outstanding unsecured 10.375% senior notes due 2017 (the "Notes") holding, in the aggregate, approximately 75% of the outstanding Notes (the "Consenting Noteholders"). Pursuant to the Support Agreement, the Lone Pine Group has agreed to pursue a restructuring through a plan of compromise and arrangement under the CCAA (the "Plan"), which will be subject to creditor and Court approval, and ancillary proceedings under Chapter 15 of the United States Bankruptcy Code for recognition of the CCAA proceeding. Subject to the terms and conditions of the Support Agreement, each of the Consenting Noteholders has agreed to support the Plan and vote their claims under the Notes in favour of its approval at any meeting of creditors to be held for that purpose. The Lone Pine Group is holding meetings (the "Meetings") of Affected Unsecured Creditors to consider a resolution (the "Approval Resolution") to approve the Plan. The Meetings will be held on January 6, 2014 beginning at 10:00 a.m. (Calgary time) as set out in the attached Notice of Meetings. In order for the Plan to be approved pursuant to the CCAA, the Approval Resolution must be approved at each Meeting by the affirmative vote of a majority in number of Affected Unsecured Creditors representing at least two-thirds in value of the voting claims of all such Affected Unsecured Creditors (the "Required Majorities") who are entitled to vote at the Meeting in accordance with the meeting order made by the Court and who are present in person or represented by proxy at the Meeting and vote on the Approval Resolution. The purpose of the Plan is to: (a) implement a recapitalization of the Lone Pine Group, which will significantly reduce the indebtedness of the Lone Pine Group and provide essential financing to address current and future liquidity needs; (b) provide for settlement of all allowed affected claims; (c) effect a release and discharge of all affected claims and released claims; and (d) ensure the continued viability and ongoing operations of the Lone Pine Group. The board of directors of LPRI, after consultation with its financial and legal advisors, and having considered the aggregate interests of all stakeholders of the Lone Pine Group, has unanimously determined that the Plan is in the best interests of the Lone Pine Group, has approved the Plan, and recommends that Affected Unsecured Creditors vote FOR the Approval Resolution. The Plan generally provides, among other things, for the following: (a) Debt Exchange – the exchange of all Notes and other unsecured claims of Affected Unsecured Creditors against the Lone Pine Group in consideration for new common equity in the restructured -2- corporate group consisting of voting common shares of LPR Canada and concurrently issued voting common shares of LPRI and, if applicable, any Backstopper's Pro-Rata Share of the Backstop Amount (as defined in the accompanying information circular), except for small claims eligible to be paid in cash as noted below; (b) New Investment – an offering to qualified Affected Unsecured Creditors of an amount between a minimum of US$100,000,000 and a maximum of US$110,000,000 (the "New Investment Amount"), in new redeemable convertible preferred shares of LPR Canada and concurrently issued multiple voting shares of LPRI, pursuant to which such qualified Affected Unsecured Creditors may, at their election, invest additional capital and purchase their pro rata share of the offered shares; (c) Backstop Commitment – the issuance of all such new preferred shares and concurrently issued multiple voting shares pursuant to a commitment by the Backstoppers (as defined in the accompanying information circular) to purchase any portion of the new share offering not taken up by other qualified Affected Unsecured Creditors, so as to ensure that the restructured company realizes the full New Investment Amount; (d) Repayment of Credit Facility – the repayment in full of secured bank debt with proceeds from the preferred share offering and borrowings under a new secured credit facility; (e) Cancellation of Existing Shares, Equity Interests and Equity Claims – the cancellation of all existing shares of common stock in the capital of LPRI and other existing equity interests for no consideration, which in the context of the Creditor Protection Proceedings is a necessary consequence of the Lone Pine Group's inability to pay the priority claims of Affected Unsecured Creditors in full and in compliance with the terms of the CCAA; and (f) Cash Pool Creditors – the payment in cash of Affected Unsecured Claims that are, or that the holder thereof elects to reduce to, $10,000 or less, subject to an aggregate maximum limit of $700,000 for all such claims and prorating in the event that eligible demand on the available cash pool exceeds this maximum. See "Details of the Recapitalization" in the accompanying information circular. The $700,000 cash pool has been established to provide Affected Unsecured Creditors (including holders of the Notes) with aggregate claims of $10,000 or less (including Affected Unsecured Creditors with larger claims who elect, by delivering an election form to the Monitor before January 3, 2013, to reduce their claims to $10,000) with the ability to participate in distributions from the cash pool rather than receive shares in the restructured corporate group. Based only on claims filed pursuant to the claims procedure order of the Court dated October 9, 2013, the amount of the cash pool is expected to be sufficient to provide for a full recovery to all Affected Unsecured Creditors with aggregate claims of $10,000 or less. However, as certain Affected Unsecured Creditors that may choose to participate in the cash pool were not required to file individual claims pursuant to the claims procedure order (such as holders of the Notes) and as Affected Unsecured Creditors may elect to reduce their claims to $10,000 in order to participate in the cash pool, the actual recovery of any individual Affected Unsecured Creditor that participates, whether automatically by reason of having an aggregate claim of $10,000 or less or by election to reduce its aggregate claim to $10,000, cannot be determined until after the Cash Election Deadline (as defined in the accompanying information circular). If eligible demand on the cash pool exceeds the $700,000 maximum, then participating Affected Unsecured Creditors will receive their pro rata share of the cash pool amount based on their claim amount and the aggregate claim amount of all other Affected Unsecured Creditors that elected to participate in the cash pool (as such claim amounts may have been reduced by election). The Plan is subject to the requisite approval of the Court and approval by the Required Majorities of each class of Affected Unsecured Creditors. -3- Affected Unsecured Creditors are being asked to consider and, if deemed appropriate, approve the Plan so that the Lone Pine Group can emerge as soon as practicable from Creditor Protection Proceedings, allowing it to focus on executing its business strategy. If the Plan is not implemented, possible alternatives would include a forced sale or liquidation of the Lone Pine Group through receivership, exercise of creditors' rights or bankruptcy. After careful consideration of all relevant factors relating to the Plan, the board of directors of LPRI UNANIMOUSLY RECOMMENDS that Affected Unsecured Creditors vote FOR the Approval Resolution. The Monitor has concluded that, in its view, the Plan is fair and reasonable, including the fact that the Plan provides for no recovery for existing shareholders of LPRI. A copy of the Monitor's report concerning the Plan is attached to the accompanying information circular. The accompanying information circular contains a detailed description of the Plan to be considered at the Meetings. It also includes disclosure on certain risk factors relating to the Plan, as well as certain risks relating to the implementation of, or the potential failure to implement, the Plan. Please give this material your careful consideration and, if you require assistance, consult your financial, tax or other professional advisors. Any proxy must be provided to the Monitor in the manner indicated in the instructions accompanying the proxy on or before 3:00 p.m. (Calgary time) on the business day before the Meetings or any adjournment or postponement thereof. We urge you to give serious attention to the Plan and we recommend that you vote in favour of it in person (if applicable) or by proxy at the Meetings. Please complete and return the applicable proxy enclosed with the information circular following the instructions set out in such proxy to ensure that you are represented at the Meetings. Yours very truly, (signed) "Tim Granger" Tim Granger President and Chief Executive Officer Lone Pine Resources Inc. Lone Pine Resources Canada Ltd. -4- NOTICE TO AFFECTED UNSECURED 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 LONE PINE RESOURCES CANADA LTD., LONE PINE RESOURCES (HOLDINGS) INC., LONE PINE RESOURCES INC., WISER OIL DELAWARE, LLC AND WISER DELAWARE LLC NOTICE IS HEREBY GIVEN that meetings (the "Meetings") of creditors of Lone Pine Resources Canada Ltd. ("LPR Canada"), Lone Pine Resources (Holdings) Inc. ("LPR Holdings"), Lone Pine Resources Inc. ("LPRI"), Wiser Oil Delaware, LLC ("Wiser Oil") and Wiser Delaware LLC ("Wiser Delaware", and collectively with LPR Canada, LPR Holdings, LPRI, and Wiser Oil, the "Applicants"), entitled to vote on a plan of compromise and arrangement (the "Plan") proposed by each of the Applicants under the Companies Creditors' Arrangement Act (the "CCAA") will be held for the following purposes: (1) to consider and, if deemed advisable, to pass, with or without variation, a resolution to approve the Plan; and (2) to transact such other business as may properly come before the Meetings or any adjournment thereof. The Meetings are being held pursuant to an order of the Court of Queen's Bench of Alberta (the "Court") dated December 13, 2013 (the "Meeting Order"). NOTICE IS ALSO HEREBY GIVEN that the Meeting Order established the procedures for the Applicants to call, hold and conduct the Meetings to consider and pass resolutions, if thought advisable, approving the Plan and to transact such other business as may be properly brought before the Meetings. For the purposes of considering and voting on the Plan, there will be five (5) meetings as follows: (1) a meeting of all of the Affected Unsecured Creditors of LPR Canada, where all such Affected Unsecured Creditors shall constitute a single class ("LPR Canada Meeting"); (2) a meeting of all of the Affected Unsecured Creditors of LPR Holdings, where all such Affected Unsecured Creditors shall constitute a single class ("LPR Holdings Meeting"); (3) a meeting of all of the Affected Unsecured Creditors of LPRI, where all such Affected Unsecured Creditors shall constitute a single class ("LPRI Meeting"); (4) a meeting of all of the Affected Unsecured Creditors of Wiser Oil, where all such Affected Unsecured Creditors shall constitute a single class ("Wiser Oil Meeting"); and (5) a meeting of all of the Affected Unsecured Creditors of Wiser Delaware, where all such Affected Unsecured Creditors shall constitute a single class ("Wiser Delaware Meeting"). NOTICE IS ALSO HEREBY GIVEN that the Meetings will be held at the following dates, times and location: Date: January 6, 2014 Time: 10:00 a.m. (Calgary time) – LPR Canada Meeting 10:30 a.m. (Calgary time) – LPR Holdings Meeting 11:00 a.m. (Calgary time) – LPRI Meeting 11:30 a.m. (Calgary time) – Wiser Oil Meeting 12:00 p.m. (Calgary time) – Wiser Delaware Meeting -5- Location: Bennett Jones LLP 4500 Bankers Hall East 855 - 2nd Street S.W. Calgary, Alberta Subject to paragraph 45 of the Meeting Order, only Affected Unsecured Creditors with Voting Claims against the applicable Applicant as at the Voting Record Date will be eligible to attend the applicable Meeting and vote on a resolution to approve the Plan. Holders of Notes cannot vote in person and must instead provide a proxy to the Monitor in accordance with the Meeting Order. The votes of Affected Unsecured Creditors holding Unresolved Claims will be separately tabulated and Unresolved Claims will not be counted unless, until and only to the extent that such Unresolved Claim is finally determined to be a Voting Claim. A holder of an Unaffected Claim shall not be entitled to attend or vote at the Meetings in respect of such Unaffected Claim. A holder of an Equity Claim shall not be entitled to attend or vote at the Meetings in respect of such Equity Claim. Notwithstanding anything else contained herein, in accordance with the Meeting Order, each Cash Pool Creditor shall be deemed to vote in favour of the Plan to the full extent of its Allowed Affected Unsecured Claim and shall not be entitled to attend or vote at the Meetings, whether in person or by proxy, unless such Cash Pool Creditor delivers an Affected Unsecured Creditors' Proxy to the Monitor so that it is received on or before 3:00 p.m. on the last Business Day before the date of the Meetings (or any adjournment thereof) in accordance with the instructions accompanying such Affected Unsecured Creditors' Proxy. Any Affected Unsecured Creditor who is unable to attend the applicable Meeting may vote by proxy, subject to the terms of the Meeting Order. Further, any Affected Unsecured Creditor who is not an individual may only attend and vote at the applicable Meeting if a proxy holder has been appointed to act on its behalf at such Meeting. Noteholders must vote by providing instructions to the Monitor in accordance with the terms of the Meeting Order. NOTICE IS ALSO HEREBY GIVEN that if the Plan is approved at the Meetings in accordance with the Meeting Order and the Plan and all other necessary conditions are met, the Applicants intend to make an application to the Court on January 9, 2014 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 a copy of the materials to be used to oppose the application and setting out the basis for such opposition upon the lawyers for the Applicants, the Monitor as well as those parties listed on the Service List posted on the Monitor's website. Such materials must be served by 4:00 p.m. (Calgary time) on January 2, 2014. NOTICE IS ALSO HEREBY GIVEN that in order for the Plan to become effective: i. the Plan must be approved by the required majorities of Affected Unsecured Creditors entitled to vote and voting on the Plan as required under the CCAA and in accordance with the terms 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 and summarized in the Information Circular must be satisfied or waived. Additional copies of the Affected Unsecured Creditor Meeting Materials and the Noteholder Meeting Materials (as those terms are defined in the Meeting Order), including the Information Circular and the Plan, may be obtained from the Monitor's Website at www.pwc.com/car-lpr, or by contacting the Monitor by telephone at (403) 509-7366 or by email at [email protected]. All capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Meeting Order. DATED at Calgary, Alberta, this 13th day of December, 2013. -6- GENERAL This Circular is furnished in connection with the Meetings and any adjournment(s) or postponement(s) thereof. No Person has been authorized to give any information or make any representation in connection with the Plan or other matters to be considered at the Meetings other than those contained in this Circular and if given or made, any such information or representation must not be relied upon as having been authorized. This Circular does not constitute an offer to sell or a solicitation of an offer to purchase any securities or the solicitation of a proxy by any Person in any jurisdiction in which such an offer or solicitation is not authorized or in which the Person making such offer or solicitation is not qualified to do so or to any Person to whom it is unlawful to make such an offer or solicitation of an offer or a proxy solicitation. The solicitation for proxies for the implementation of the Plan is being made on the basis of this Circular and is subject to the terms and conditions described herein. Each Affected Unsecured Creditor must comply with all applicable laws and regulations in force in any jurisdiction in which it participates in the solicitation for proxies for the Approval Resolution approving the Plan, or in which it possesses or distributes this Circular, and must obtain any consent, approval or permission required by it for participation in the solicitation for proxies for the Approval Resolution approving the Plan under the laws and regulations in force in any jurisdiction to which it is subject, and none of the Lone Pine Group or the Monitor nor any of their respective representatives shall have any responsibility therefor. The information contained in this Circular is given as of December 10, 2013, unless otherwise specifically stated, and is subject to change or amendment without notice. Neither the delivery of this Circular nor any distribution of the securities referred to in this Circular will, under any circumstances, create an implication that there has been no change in the information set forth herein since the date as of which such information is given in this Circular. Any statement contained in this Circular, a document incorporated by reference or referred to in this Circular, or any amendment hereof or supplement hereto, is to be considered modified or replaced to the extent that a statement contained herein or in any amendment or supplement or any subsequently filed document modifies or replaces such statement. Any statement so modified or replaced is not to be considered, except as so modified or replaced, to be a part of this Circular. The primary purpose of the Meetings is for Affected Unsecured Creditors to consider and, if determined advisable, pass the Approval Resolution. All summaries of and references to the Meeting Order, the Plan, the Support Agreement and the Backstop Agreement in this Circular are qualified in their entirety by reference to the complete text of the Meeting Order, the Plan, the Support Agreement and the Backstop Agreement. A copy of the Plan is attached as Schedule D to this Circular. A copy of the Meeting Order is attached as Schedule B to this Circular. Copies of the Support Agreement and the Backstop Agreement, together with copies of all court documents filed by the Lone Pine Group and the Monitor, including all reports of the Monitor, are posted on the website of the Monitor at www.pwc.com/car-lpr. Copies of the Support Agreement and Backstop Agreement are also attached as exhibits to the Form 8-K of LPRI dated September 25, 2013 which has been filed by LPRI on EDGAR and SEDAR. You are urged to carefully read the full text of the Meeting Order, the Plan, the Support Agreement and the Backstop Agreement, together with the reports of the Monitor and other court documents filed by the Lone Pine Group and the Monitor in connection with the CCAA Proceeding. A copy of the Monitor's Report concerning the Plan is attached as Schedule E to this Circular. All capitalized terms used in this Circular but not otherwise defined herein have the meanings set forth herein under "Glossary". IMPORTANT INFORMATION THIS CIRCULAR CONTAINS IMPORTANT INFORMATION THAT SHOULD BE READ BY AFFECTED UNSECURED CREDITORS BEFORE ANY DECISION IS MADE WITH RESPECT TO THE MATTERS REFERRED TO HEREIN. -7- NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE MATTERS TO BE CONSIDERED AT THE MEETINGS OTHER THAN THOSE CONTAINED IN THIS CIRCULAR AND IF GIVEN OR MADE, ANY SUCH INFORMATION OR REPRESENTATION SHOULD BE CONSIDERED AS NOT HAVING BEEN AUTHORIZED AND MUST NOT BE RELIED UPON. THIS CIRCULAR DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE SECURITIES DESCRIBED IN THIS CIRCULAR, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION, TO OR FROM ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OF AN OFFER OR PROXY SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS CIRCULAR NOR ANY DISTRIBUTION OF THE SECURITIES PURSUANT TO THE PLAN REFERRED TO IN THIS CIRCULAR SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN SINCE THE DATE OF THIS CIRCULAR. Affected Unsecured Creditors should not construe the contents of this Circular as investment, legal or tax advice. An Affected Unsecured Creditor should consult its own legal, financial, tax or other professional advisors with respect to the legal, tax, business, financial and related consequences of the Plan for such Affected Unsecured Creditor. In making a decision regarding the Plan, Affected Unsecured Creditors must rely on their own examination of the Lone Pine Group and the advice of their own advisors. Affected Unsecured Creditors should seek advice from their own advisors concerning the income tax consequences of the Plan. All summaries of and references to certain documents in this Circular, including the summary of the Plan in this Circular, are qualified in their entirety by reference to the complete text of each of those documents. Copies of documents referred to herein are either attached as Schedules hereto, are available on the Monitor's Website or will be made available to Affected Unsecured Creditors upon request to the Monitor. Affected Unsecured Creditors are urged to carefully read the full text of the Plan attached hereto as Schedule D. Copies of all Court documents filed by the Lone Pine Group and the Monitor, including all reports of the Monitor, are posted on the Website. A copy of the Monitor's Report concerning the Plan is attached hereto as Schedule E. Affected Unsecured Creditors are urged to carefully read the "Risk Factors" section of this Circular before making any decision regarding the Plan. THE ISSUANCE OF THE NEW SHARES PURSUANT TO THE PLAN WILL BE EXEMPT FROM THE PROSPECTUS REQUIREMENTS UNDER APPLICABLE CANADIAN SECURITIES LEGISLATION. AS A CONSEQUENCE OF THESE EXEMPTIONS, CERTAIN PROTECTIONS, RIGHTS AND REMEDIES PROVIDED BY CANADIAN SECURITIES LEGISLATION, INCLUDING STATUTORY RIGHTS OF RESCISSION OR DAMAGES, WILL NOT BE AVAILABLE IN RESPECT OF THE NEW SHARES TO BE ISSUED IN CONNECTION WITH THE PLAN. THE NEW SECURITIES TO BE ISSUED IN CONNECTION WITH THE PLAN WILL BE SUBJECT TO RESTRICTIONS ON TRANSFER. SEE "SECURITIES REGULATORY CONSIDERATIONS". All references to this Circular shall be deemed to include the Schedules attached hereto. INFORMATION FOR UNITED STATES CREDITORS The proxy solicitation rules under the U.S. Exchange Act are not applicable to this solicitation, and, accordingly, this solicitation is not being effected in accordance with such rules. Affected Unsecured Creditors in the United States should be aware that disclosure requirements in proxy statements under Canadian securities laws are different from requirements under United States federal securities laws. NEITHER THE PLAN NOR THE NEW SECURITIES ISSUABLE IN CONNECTION WITH THE PLAN HAVE BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY U.S. SECURITIES REGULATORY AUTHORITY OR ANY U.S. BANKRUPTCY COURT, NOR HAS THE SEC, ANY U.S. SECURITIES REGULATORY AUTHORITY OR ANY U.S. BANKRUPTCY COURT PASSED UPON THE FAIRNESS OR MERITS OF THE PLAN OR UPON THE ADEQUACY, COMPLETENESS OR ACCURACY OF THE INFORMATION CONTAINED IN THIS CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE. -8- The securities to be offered in connection with the Recapitalization have not been registered under the U.S. Securities Act, or any state securities laws and, unless so registered, may not be offered or sold in the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. This Circular shall not constitute an offer to sell or the solicitation of an offer to buy the securities nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. The New Shares to be issued and distributed pursuant to the Plan have not been registered under the U.S. Securities Act or the securities laws of any state of the United States and will be issued and distributed in reliance on available exemptions from the registration requirements of the U.S. Securities Act. In particular, it is intended that (a) the issuance of the new LPRC Class A Voting Common Shares and new LPRI Class A Voting Common Shares in exchange for Affected Unsecured Claims issuable pursuant to the Debt Exchange will be exempt from the registration requirements of the U.S. Securities Act pursuant to the exemption from registration set forth in Section 3(a)(9) of the U.S. Securities Act and/or the exemption from registration set forth in Section 3(a)(10) of the U.S. Securities Act, and (b) the issuance of the new LPRC Preferred Shares and new LPRI Multiple Voting Common Shares issuable pursuant to the New Investment be distributed to Subscribing Unsecured Creditors in reliance on the exemption from registration set forth in Section 4(a)(2) of the U.S. Securities Act or Regulation D promulgated thereunder. The New Investment will be offered only to accredited investors as that term is defined in Rule 501 of Regulation D under the U.S. Securities Act. See "Securities Regulatory Considerations". The enforcement by Affected Unsecured Creditors of civil liabilities under the United States federal securities laws may be affected adversely by the fact that some of the Applicants are incorporated or organized outside the United States, that the majority of the directors and officers of the Lone Pine Group reside principally in Canada and that all or a substantial portion of the assets of the Lone Pine Group and of their officers and directors are located outside the United States. Affected Unsecured Creditors may not be able to sue a corporation governed by the laws of Canada in a Canadian court for violations of United States federal securities laws and it may be difficult to compel the foregoing persons to subject themselves to a judgment by a United States court. CAUTIONARY NOTICE REGARDING FORWARD LOOKING INFORMATION Certain information contained in this Circular (including the documents incorporated by reference herein) constitutes "forward looking information" within the meaning of applicable securities laws. Forward looking information is frequently but not always characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" or other similar words, or statements that certain events or conditions "may" or "will" occur. Forward looking information involves significant known and unknown risks and uncertainties. A number of factors, many of which are beyond the control of the Lone Pine Group, could cause actual results to differ materially from the results discussed in the forward looking information. Although the forward looking information contained in this Circular is based upon assumptions which the Lone Pine Group believes to be reasonable, the Lone Pine Group cannot assure investors that actual results will be consistent with this forward looking information. The forward looking information contained herein is made as of the date of this Circular and the Lone Pine Group assumes no obligation to update or revise it to reflect new events or circumstances, except as required by Law. Because of the risks, uncertainties and assumptions inherent in forward looking information, Affected Unsecured Creditors should not place undue reliance on this forward looking information. The forward looking information contained in this Circular and the documents incorporated by reference herein includes, among other things: the Lone Pine Group's ability to implement the Plan under the CCAA; the perceived benefits of the Plan; the potential failure to implement the Plan on the terms described herein; the consequences to the Lone Pine Group, pursuant to the Canadian Tax Act, of the implementation of the Plan; -9 the adequacy of the consideration to be received by Affected Unsecured Creditors pursuant to the Plan; the steps in and timing of completion of the Plan; the ability of the Lone Pine Group to meet its financial obligations as they become due; the liquidity and financial resources of the Lone Pine Group and the continued availability of the Current Credit Facility; the ability of the Lone Pine Group to obtain financing; and the impact on operations of the Lone Pine Group from any strategic alternatives that they are pursuing. With respect to forward looking information contained in this Circular (including the documents incorporated by reference herein), the Lone Pine Group has made assumptions regarding, among other things: the regulatory framework affecting the Lone Pine Group, including the ability of the Lone Pine Group to obtain the necessary regulatory approvals for the Plan; and the ability to obtain financing on acceptable terms and to maintain the availability of the Lone Pine Group's current financing arrangements. Some of the risks that could affect future results and could cause results to differ materially from those expressed in forward looking information include: failure to obtain the necessary regulatory approvals for the implementation of the Plan; failure by the Lone Pine Group to satisfy the conditions precedent under the Plan; costs associated with the exploration, development and production of oil and natural gas; the impact of competition; the need to obtain required approvals and permits from regulatory authorities; the uncertainty of estimates by the Lone Pine Group's independent consultants with respect to its oil reserves and resources; the volatility of oil and natural gas prices; changes in the foreign exchange rate between the Canadian and U.S. dollar; risks that the Lone Pine Group's financial counterparties may not fulfill financial obligations to the Lone Pine Group; risks that the Lone Pine Group may not be able to repay its indebtedness when it is required to do so; general economic conditions in Canada and the United States; failure to obtain industry partner and other third party consents and approvals, when required; - 10 the impact of amendments to, and changes in the interpretation of, the Canadian Tax Act; the Lone Pine Group's ability to attract capital and the cost of that capital; and the other factors discussed under "Risk Factors" in this Circular. Additional risk factors relating to the Lone Pine Group and its business are included in documents filed by LPRI on SEDAR and EDGAR. Affected Unsecured Creditors should refer to such documents for additional risk factors that could affect the Lone Pine Group and its future results. FINANCIAL INFORMATION The financial statements incorporated by reference in this Circular are reported in Canadian dollars and have been prepared in accordance with United States generally accepted accounting principles. Financial results and other information presented and reported in accordance with United States generally accepted accounting principles will differ from similar measures presented and reported in accordance with Canadian generally accepted accounting principles or International Financial Reporting Standards. The differences may be material. Accordingly, the financial statements incorporated by reference in this Circular may not be comparable to the financial statements of Canadian companies. In this Circular, unless otherwise specified, all references to "dollars" or "$" are to Canadian dollars and all references to "U.S. dollars" or to "US$" are to United States dollars. On December 10, 2013, the noon spot rate of exchange published by the Bank of Canada for conversion of U.S. dollars into Canadian dollars was US$1.00 = Cdn$1.0623. - 11 - GLOSSARY Unless the context otherwise requires, when used in this Circular the following terms shall have the meanings set forth below. Words importing the singular shall include the plural and vice versa, and words importing any gender shall include all genders. "ABCA" means the Business Corporations Act (Alberta), as amended. "Accretion Rate" means (i) with respect to the LPRC Preferred Shares, the 10% per annum rate at which the redemption price per share of the LPRC Preferred Shares (which shall initially be equal to the Issue Price) will increase over time, and (ii) with respect to the LPRI Multiple Voting Common Shares, the 10% per annum rate at which the number of votes attached to each LPRI Multiple Voting Common Share (which shall initially be one vote per share), will increase over time. "Affected Claim" means any Claim that is not an Unaffected Claim, and, for certainty, includes any Equity Claim and the Note Obligations. "Affected Creditor" means any holder of an Affected Claim (or its permitted assignee), but only with respect to and to the extent of such Affected Claim. "Affected Unsecured Claims" means all Affected Claims other than Equity Claims. "Affected Unsecured Creditor" means any holder of an Affected Unsecured Claim (or its permitted assignee), but only with respect to and to the extent of such Affected Unsecured Claim. "Affected Unsecured Creditor's Pro-Rata Share" means, with respect to each Affected Unsecured Creditor (other than a Cash Pool Creditor) as at the relevant time, (x) the principal amount of the Allowed Affected Unsecured Claim held by such Affected Unsecured Creditor, divided by (y) the total principal amount of all Allowed Affected Unsecured Claims held by Affected Unsecured Creditors (other than Cash Pool Creditors). "Affected Unsecured Creditors Classes" means the classes of Affected Unsecured Creditors entitled to vote on the Plan at the Meetings in accordance with the terms of the Meeting Order, which, for certainty, are (i) the LPRC Class, (ii) the LPR Holdings Class, (iii) the LPRI Class, (iv) the Wiser Oil Class, and (v) the Wiser Delaware Class, and "Affected Unsecured Creditors Class" means any one of them. "Affected Unsecured Creditors' Proxy" means a proxy substantially in the form attached to the Meeting Order, to be submitted to the Monitor by any Affected Unsecured Creditor (other than a Noteholder or a Cash Pool Creditor) who wishes to vote by proxy at one or more Meetings. "affiliate" has the meaning ascribed to such term in the ABCA. "Agent" means JP Morgan Chase Bank, N.A., Toronto Branch, in its capacity as agent of the Syndicate. "Agreed Number" means, with respect to the LPRC Class A Voting Common Shares, LPRC Preferred Shares, LPRI Class A Voting Common Shares and LPRI Multiple Voting Common Shares to be issued on the Plan Implementation Date pursuant to the Plan, the number of such shares as is, in each case, agreed to by the Applicants, the Monitor and the Majority Initial Consenting Noteholders; provided that (i) the Agreed Number of LPRC Preferred Shares shall be equal to the Agreed Number of LPRI Multiple Voting Common Shares, (ii) the Agreed Number of LPRC Class A Voting Common Shares shall be equal to the Agreed Number of LPRI Class A Voting Common Shares, and (iii) the aggregate number of LPRC Preferred Shares issued on the Plan Implementation Date pursuant to the Plan shall be equal to three (3) times the aggregate number of LPRC Class A Voting Common Shares issued on the Plan Implementation Date pursuant to this Plan. "Agreed Number of Votes" means the number of votes attaching to the LPRC Class C Multiple Voting Share to be agreed to by the Applicants, the Monitor and the Majority Initial Consenting Noteholders; provided that such - 12 - number shall represent greater than 70% of the total voting rights attached to all voting securities of LPRC that are outstanding immediately following implementation of the Plan. "Allowed" means, with respect to a Claim, any Claim or any portion thereof that has been finally allowed pursuant to the Claims Procedure Order for purposes of receiving distributions under the Plan in accordance with the Claims Procedure Order or a Final Order of the Court. "Anticipated Implementation Date" means January 31, 2014, or such other date as may be agreed by the Applicants, the Monitor, the Agent and the Majority Initial Consenting Noteholders. "Applicable Law" means any law, statute, order, decree, consent decree, judgment, rule regulation, ordinance or other pronouncement having the effect of law, whether in Canada, the United States or any other country, of any domestic or foreign nation, province, territory, state, city or other political subdivision or of any Governmental Entity. "Applicants" or the "Lone Pine Group" means, collectively, LPRI, LPR Canada, LPR Holdings, Wiser Oil and Wiser Delaware. "Approval Resolution" means the resolution substantially in the form attached as Schedule A to this Circular providing for the approval of the Plan by Affected Unsecured Creditors. "Assigned Commitment" has the meaning ascribed to such term in the Backstop Agreement. "Backstop Agreement" means the backstop agreements dated September 24, 2013 between the Applicants and the Backstoppers, as may be amended, restated, supplemented or varied from time to time in accordance with the terms thereof. "Backstop Amount" means cash in an amount equal to 4% of the New Investment Amount. "Backstop Commitment" means the commitment to fund the entire New Investment Amount provided by the Backstoppers pursuant to and in accordance with the terms and conditions of the Backstop Agreement. "Backstop Deadline" has the meaning ascribed to such term in the Meeting Order. "Backstop Funding Deadline" has the meaning ascribed to such term under the heading "Details of the Recapitalization – Description of the New Investment". "Backstop Joinder" means an agreement in the form set out as Schedule B to the Backstop Agreement pursuant to which, subject to the terms and conditions of the Backstop Agreement, a Qualifying Unsecured Creditor may agree to become a Backstopper and be bound by the terms of the Backstop Agreement. "Backstop Payment Amount" has the meaning ascribed to such term under the heading "Details of the Recapitalization – Description of the New Investment". "Backstoppers" means those Qualifying Unsecured Creditors that are Consenting Creditors and are parties to the Backstop Agreement (and any of their permitted assignees or designees), either by having executed the original Backstop Agreement as at September 24, 2013 or a Backstop Joinder on or before the Backstop Deadline, and "Backstopper" means any one of them. "Backstopper's Pro-Rata Share" means, with respect to each Backstopper, (x) the amount of the Backstop Commitment committed to by such Backstopper pursuant to the Backstop Agreement, divided by (y) the New Investment Amount. "Backstopped Shares" has the meaning ascribed to such term under the heading "Details of the Recapitalization – Description of the New Investment". - 13 - "BIA" means the Bankruptcy and Insolvency Act (Canada), as amended. "Board" or "Board of Directors" means the board of directors of LPRI. "Beneficial Noteholder" means a beneficial owner of any Notes as at the Voting Record Date (or, if applicable, an investment advisor, manager or representative with voting discretion over the Notes owned by such beneficial owners), regardless of whether such beneficial owner is a Registered Noteholder or an Unregistered Noteholder. "Breaching Noteholder" means a Noteholder that has breached its obligations under the Support Agreement. "Business Day" means a day, other than Saturday, Sunday or a statutory holiday, on which banks are generally open for the transaction of commercial business in Calgary, Alberta and New York, New York. "Canadian Holder" has the meaning ascribed to such term under the heading "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations – Residents of Canada". "Canadian Tax Act" means the Income Tax Act (Canada), as amended. "Cash Election" means a written election by an Affected Unsecured Creditor which holds an Allowed Affected Unsecured Claim in an aggregate amount greater than the Cash Pool Cap to reduce the aggregate amount of such Allowed Affected Unsecured Claim to the Cash Pool Cap, made in the form attached as a Schedule to the Meeting Order. "Cash Election Deadline" has the meaning ascribed thereto in the Meeting Order. "Cash Pool" means a pool of cash in the amount of the Distributable Amount to be established on the Plan Implementation Date pursuant to the Plan. "Cash Pool Cap" means $10,000 (or such greater amount as may be agreed to by the Applicants, the Monitor and the Majority Initial Consenting Noteholders prior to the Plan Implementation Date). "Cash Pool Creditor" means an Affected Unsecured Creditor who, on the Plan Implementation Date, holds an Allowed Affected Unsecured Claim in an aggregate amount that either (i) is not greater than the Cash Pool Cap, or (ii) is greater than the Cash Pool Cap but which the Affected Unsecured Creditor elected, by providing a Cash Election to the Monitor before the Cash Election Deadline, to reduce to the Cash Pool Cap. "Cash Pool Creditor's Pro-Rata Share" means, with respect to each Cash Pool Creditor as at the relevant time, (x) the principal amount of the Allowed Affected Unsecured Claim held by such Cash Pool Creditor (as such amount may have been reduced by the Cash Election of such Cash Pool Creditor), divided by (y) the total principal amount of all Allowed Affected Unsecured Claims held by all Cash Pool Creditors (as such amounts may have been reduced by the Cash Elections of any such Cash Pool Creditors). "CCAA" means the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended. "CCAA Proceeding" means the proceeding commenced by the Applicants under the CCAA on the Filing Date. "Chair" means the Chair of the Meetings. "Charges" means the Administration Charge, the Directors' Charge, the DIP Lenders' Charge, the KERP Charge, and the Subordinated Advisor Charge, each as defined in the Initial Order, the Hedging Charge as defined in the Order of the Court dated November 27, 2013, and any other charges on the property of the Applicants granted by Order of the Court. "Circular" means this information circular of the Lone Pine Group dated December 13, 2013. - 14 - "Claim" has the meaning ascribed thereto in the Claims Procedure Order. "Claimant" has the meaning ascribed thereto in the Claims Procedure Order. "Claims Bar Date" means 5:00 p.m. (Mountain Time) on November 27, 2013, or such other date as may be ordered by the Court. "Claims Procedure Order" means the Order of the Court under the CCAA dated October 9, 2013 attached as Schedule C to this Circular, establishing a claims procedure in respect of the Applicants, as same may be amended, restated, supplemented or varied from time to time. "Company Advisors" means Bennett Jones LLP, Richards, Layton & Finger, P.A., Vinson & Elkins LLP and RBC. "Code" means the United States Internal Revenue Code of 1986, as amended. "Consenting Creditors" means the Initial Consenting Noteholders and any other Affected Unsecured Creditors that are parties to the Support Agreement (and any of their permitted assignees), either by having executed the original Support Agreement as at September 24, 2013 or a Support Joinder on or before the Backstop Deadline. "Court" means the Court of Queen's Bench of Alberta. "CRA" has the meaning ascribed to such term under the heading "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations". "Creditor" means any Person having a Claim, but only with respect to and to the extent of such Claim, including the transferee or assignee of a transferred Claim that is recognized as a Creditor in accordance with the Claims Procedure Order or a trustee, executor, liquidator, receiver, receiver and manager, or other Person acting on behalf of or through such Person. "Creditor Protection Proceedings" means the CCAA Proceeding and the U.S. Proceedings. "Current Credit Agreement" means the credit agreement dated March 18, 2011, as amended, among LPRI as parent, LPR Canada as borrower, the Agent, and the Syndicate. "Current Credit Facility" means the credit facility provided to LPR Canada, as borrower, pursuant to the Current Credit Agreement. "Current Bank Security" means all security agreements, security interests, liens, debentures, charges and other Encumbrances granted by the Applicants in favour of the Agent and/or the Syndicate to secure the obligations of any one or more of the Applicants under the Current Credit Facility or any other agreements, instruments or other arrangements contemplated by the Current Credit Agreement. "Debt Exchange" means the exchange by Affected Unsecured Creditors (other than Cash Pool Creditors) of their Affected Unsecured Claims for (i) LPRC Class A Voting Common Shares pursuant to the Plan, (ii) LPRI Class A Voting Common Shares pursuant to the Plan and (iii), if applicable, a Backstopper's Pro-Rata Share of the Backstop Amount. "Defaulting Backstopper" has the meaning ascribed to such term in the Backstop Agreement. "Deferred Plans" has the meaning ascribed to such term under the heading "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations". "DIP Agreement" means the debtor-in-possession credit agreement between LPR Canada, as borrower, LPRI, as guarantor, and the DIP Lenders, as such agreement may be modified, amended or supplemented in accordance with the terms thereof, the Initial Order or any other Order. - 15 - "DIP Facility" means the interim financing facility provided to LPR Canada, as borrower, by the DIP Lenders pursuant to the DIP Agreement. "DIP Lenders" means, collectively, JP Morgan Chase Bank, N.A., Toronto Branch, Bank of Montreal, Wells Fargo Bank, N.A., Canadian Branch, The Toronto Dominion Bank, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, and JP Morgan Chase Bank, N.A., Toronto Branch, as administrative agent. "Directors" means all current and former directors and individual managers (or their estates) of any one or more of the Applicants, in such capacity, and "Director" means any one of them. "Disputed Distribution Claim" means an Affected Unsecured Claim (including a contingent Affected Unsecured Claim which may crystallize upon the occurrence of an event or events occurring after the Filing Date) or such portion thereof which has not been Allowed, which is disputed for distribution purposes in accordance with the Claims Procedure Order and which remains subject to adjudication for distribution purposes in accordance with the Claims Procedure Order and for certainty, does not include any Equity Claims. "Disputed Distribution Claims Reserve" means the reserve, if any, to be established by the Applicants on the Plan Implementation Date, which shall be comprised of the consideration that would have been paid to holders of Disputed Distribution Claims if such Disputed Distribution Claims had been Allowed Claims as of such date and which shall be acceptable to the Applicants, the Monitor and the Majority Initial Consenting Noteholders. "Distributable Amount" means $700,000 (or such greater amount as may be agreed to by the Applicants, the Monitor and the Majority Initial Consenting Noteholders prior to the Plan Implementation Date). "Distribution Date" means the date or dates, excluding the Initial Distribution Date, determined by the Applicants and the Monitor from time to time on which to effect subsequent distributions in respect of Allowed Claims (including any Disputed Distribution Claim that becomes an Allowed Affected Unsecured Claim pursuant to the provisions of the Plan). "DTC" means The Depository Trust Company or Cede & Co. as its nominee, in its capacity as registered holder of the Notes, or any successor thereof. "Effective Time" means 12:01 a.m. (Calgary time) on the Plan Implementation Date or such other time on such date as the Applicants, the Monitor and the Majority Initial Consenting Noteholders may agree. "EDGAR" means the Electronic Data Gathering Analysis and Retrieval system of the SEC, through which reporting companies under U.S. federal securities laws file various disclosure documents, copies of which are accessible electronically through the internet at www.sec.gov/edgar/searchedgar/companysearch.html. "Employee Amounts" means all outstanding wages, salaries and employee benefits (including employee medical, dental, disability, life insurance and similar benefit plans or arrangements, incentive plans, share compensation plans and employee assistance programs and employee or employer contributions in respect of pension or group savings plans, and other benefits), vacation pay, commissions, bonuses and other incentive payments, termination and severance payments, and employee expenses and reimbursements, in each case incurred in the ordinary course of business and consistent with existing compensation policies and arrangements, and all equivalent amounts related to individuals who perform employment-like services for the Applicants as contractors. "Encumbrance" means any charge, mortgage, lien, pledge, claim, restriction, hypothec, adverse interest, security interest 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 and principles known under the law applicable to such property, interests or rights and whether or not they constitute specific or floating charges as those terms are understood under the laws of the Province of Alberta. - 16 - "Equity Claim" means a Claim that is an "equity claim" within the meaning of section 2(1) of the CCAA, and, for certainty, includes (i) any claims resulting from the ownership, purchase or sale of an Equity Interest, and (ii) any indemnification claims against the Applicants related to or arising from (i) above. "Equity Claimant" means any Person with an Equity Claim or holding an Equity Interest, but only in such capacity, and for certainty includes an Existing Shareholder in its capacity as such. "Equity Interests", with respect to LPRI, has the meaning ascribed thereto in section 2(1) of the CCAA and, for certainty, includes the Existing Parent Shares, the Options and any other interest in or entitlement to shares in the capital stock of LPRI. "Evi" means LPR Canada's light oil asset in northern Alberta. "Evi JV Proposal" has the meaning ascribed to such term under the heading "Background to the Recapitalization – Events prior to the commencement of Creditor Protection Proceedings". "Existing Common Shareholder" means beneficial holders of Existing Common Shares. "Existing Common Shares" means the shares of common stock, par value $0.01 per share in the capital of LPRI that are issued and outstanding immediately prior to the Effective Time. "Existing Parent Shares" means all shares in the capital stock of LPRI, of any class, whether shares of common stock, the Existing Common Shares or shares of preferred stock, par value US$0.01 per share (including shares of preferred stock of that certain series designated as Series A Junior Participating Stock), or otherwise, that are issued and outstanding immediately prior to the Effective Time, and for certainty does not include any New Shares in the capital stock of LPRI issued on the Plan Implementation Date pursuant to the Plan. "Existing Shareholder" means any Person who holds or is entitled to the Existing Parent Shares or any shares in the authorized capital stock of LPRI immediately prior to the Effective Time, but only in such capacity, and for certainty does not include any Person that is issued New Shares on the Plan Implementation Date pursuant to the Plan, in such capacity. "Filing Date" means September 25, 2013. "Final Order" means any order, ruling or judgment of the Court, or any other court of competent jurisdiction, which has not been reversed, modified or vacated, and is not subject to any stay, and in respect of which all applicable appeal periods shall have expired and any appeals therefrom shall have been disposed of by the applicable appellate court. "Funding Deadline" has the meaning ascribed to such term under the heading "Details of the Recapitalization – Description of the New Investment". "Goodmans" means Goodmans LLP in its capacity as counsel to the Initial Consenting Noteholders and the Initial Backstoppers. "Government Priority Claims" means all Claims of Governmental Entities against the Applicants in respect of amounts that are outstanding and that are of a kind that could reasonably be subject to a demand under: (a) subsections 224(1.2) of the Canadian Tax Act; (b) any provision of the Canada Pension Plan or the Employment Insurance Act (Canada) that refers to subsection 224(1.2) of the Canadian Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or employee's premium or employer's premium as defined in the Employment Insurance Act (Canada), or a premium under Part VII. I of that Act, and of any related interest, penalties or other amounts; or - 17 - (c) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Canadian Tax Act, or that refers to that subsection, to the extent that such provision provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum: (i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Canadian Tax Act; or (ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a "province providing a comprehensive pension plan" as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a "provincial pension plan" as defined in that subsection. "Governmental Entity" means any government, regulatory authority, government department, agency, commission, bureau, official, minister, Crown corporation, court, board, tribunal or dispute settlement panel or other law, rule or regulation-making body or entity: (a) having or purporting to have jurisdiction on behalf of any nation, province, territory or state or any other geographic or political subdivision of any of them; or (b) exercising, or entitled or purporting to exercise any administrative, executive, judicial, legislative, policy, regulatory or taxing authority or power. "Initial Backstoppers" means those Backstoppers (and any of their permitted assignees) that were the original signatories to the Backstop Agreement (as distinct from a Backstop Joinder) as at September 24, 2013. "Initial Consenting Noteholders" means those Noteholders (and any of their permitted assignees) that were the original signatories to the Support Agreement (as distinct from a Support Joinder) as at September 24, 2013 and "Initial Consenting Noteholder" means any one of them. "Initial Distribution Date" means the Plan Implementation Date or such other date as the Applicants, the Monitor and the Majority Initial Consenting Noteholders may agree. "Initial Order" means the Order of the Court under the CCAA dated September 25, 2013. "Insured Claim" means all or that portion of a Claim arising from a cause of action for which the applicable insurer has definitively and unconditionally confirmed that each applicable Applicant is insured, but only to the extent that such Claim, or portion thereof, is so insured. "Intercompany Claim" means a Claim by one or more of the Applicants against one or more other Applicants. "IRS" means the United States Internal Revenue Service. "Issue Price" means, for each LPRC Preferred Share issued on the Plan Implementation Date, the amount determined by dividing (x) the New Investment Amount by (y) the Agreed Number of LPRC Preferred Shares issued on the Plan Implementation Date pursuant to the Plan. "Joint Venture Partner" means any Person who has a working interest or joint ownership interest in any equipment, lands, properties, production, wells, facilities, plants, batteries, infrastructure or other assets associated with the oil and gas exploration business of the Applicants, in which the Applicants also have a working interest or joint ownership interest, in such capacity. "KERP" means the payments to be made to certain key employees of the Applicants, as approved under the Initial Order and as described in the key employee retention plan letters attached to, and filed with the Court together with, the confidential supplement to the Pre-Filing Report of the Monitor dated as of September 24, 2013. "Lone Pine Group" or the "Applicants" means, collectively, LPRI, LPR Canada, LPR Holdings, Wiser Oil and Wiser Delaware. - 18 - "LPR Canada" or "LPRC" means Lone Pine Resources Canada Ltd. "LPRC Class A Voting Common Shares" means the Class A voting common shares in the capital of LPRC, the terms of which shall, upon giving effect to the amendment to the articles of LPRC described in the Plan, be substantially economically equivalent to the terms of the LPRC Class B Non-Voting Common Shares. "LPRC Class B Non-Voting Common Shares" means the Class B non-voting common shares in the capital of LPRC, the terms of which shall, upon giving effect to the amendment to the articles of LPRC described in the Plan, be substantially economically equivalent to the terms of the LPRC Class A Voting Common Shares. "LPRC Class C Multiple Voting Share" means the new Class C multiple voting share in the capital of LPR Canada to be created upon giving effect to the amendment to the articles of LPR Canada described in the Plan, the terms of which shall be substantially the same as the terms of the LPRC Class A Voting Common Shares except that the LPRC Class C Multiple Voting Share shall have attached thereto the Agreed Number of Votes. "LPRC Preferred Shares" means the new redeemable convertible preferred shares in the capital of LPRC to be created upon giving effect to the amendment to the articles of LPRC described in the Plan, which shall be (i) redeemable at a redemption price per share that is initially equal to the Issue Price and will increase over time based on the Accretion Rate and (ii) convertible into LPRC Class B Non-Voting Common Shares initially on the basis of, for each LPRC Preferred Share converted, one LPRC Class B Non-Voting Common Share subject to increase over time based on the increase in the redemption price. "LPR Holdings" means Lone Pine Resources (Holdings) Inc. "LPRI" means Lone Pine Resources Inc. "LPRI Class A Voting Common Shares" means the new Class A voting common shares in the capital stock of LPRI to be created upon giving effect to the amendment to the certificate of incorporation of LPRI described in the Plan. "LPRI Multiple Voting Common Shares" means the new multiple voting common shares in the capital stock of LPRI to be created upon giving effect to the amendment to the certificate of incorporation of LPRI described in the Plan, the terms of which shall initially entitle the holder thereof to one (1) vote per share subject to increase over time based on the Accretion Rate. "LPRI Subscription Amount" means the aggregate amount paid by Subscribing Unsecured Creditors to subscribe, as part of the New Investment, for the LPRI Multiple Voting Common Shares to be issued on the Plan Implementation Date pursuant to this Plan, which will be the amount determined by dividing (x) the New Investment Amount by (y) 1,000,000. "Majority Initial Consenting Noteholders" means Initial Consenting Noteholders holding not less than a majority of the principal amount of the Notes held by all Initial Consenting Noteholders as at the time that any agreement, waiver, consent or approval is sought or required, as the case may be, and in each case as communicated to the Applicants by counsel to the Initial Consenting Noteholders in accordance with the Plan. "Material Adverse Change" has the meaning ascribed to such term in the Support Agreement, except as otherwise indicated herein. "Meetings" means the meetings of Affected Unsecured Creditors to be held on the Meeting Date called for the purpose of considering and voting on the Plan pursuant to the CCAA, and includes any adjournment, postponement or other rescheduling of such meetings in accordance with the Meeting Order. "Meeting Date" means the date on which the Meetings are held in accordance with the Meeting Order. - 19 - "Meeting Order" means the Order of the Court under the CCAA that, among other things, sets the date for the Meetings, a copy of which is attached as Schedule B to this Circular, as the same may be amended, restated or varied from time to time. "Monitor" means PricewaterhouseCoopers Inc., as Court-appointed Monitor of the Applicants in the CCAA Proceeding. "Monitor's Report" means the sixth report of the Monitor dated December 10, 2013, a copy of which is attached as Schedule E to this Circular. "Monitor Advisors" means McCarthy Tétrault LLP and Potter Anderson & Corroon LLP. "Narraway/Ojay" means LPR Canada's natural gas fields in Alberta and British Columbia. "New Credit Facility" means the credit facility or facilities required to be obtained by LPR Canada as a condition to the Recapitalization and the Support Agreement, and includes (i) the agreement or agreements pursuant to which such facility or facilities are provided and (ii) all security agreements, security interests, liens, debentures, charges and other encumbrances granted by the Applicants in favour of the providers of such facility or facilities to secure the obligations of LPR Canada thereunder or in connection therewith. "New Investment" means the new investment by Subscribing Unsecured Creditors in (i) LPRC Preferred Shares in the aggregate subscription amount equal to the New Investment Amount, and (ii) LPRI Multiple Voting Common Shares in the aggregate subscription amount equal to the LPRI Subscription Amount. "New Investment Amount" means such amount, between a minimum of US$100,000,000 and a maximum of US$110,000,000, as is agreed to by the Applicants, the Monitor and the Initial Backstoppers on or before January 8, 2014 (or such later date as may be agreed to by the Applicants, the Monitor and the Initial Backstoppers). "New Investment Subscription Deadline" has the meaning ascribed thereto in the Meeting Order. "New Investment Subscription Form" means the form pursuant to which each Qualifying Unsecured Creditor shall have the right, but not the obligation, to elect irrevocably to participate in the New Investment, conditional upon the implementation of the Plan and effective on the Plan Implementation Date, up to a maximum of such Affected Unsecured Creditor's Pro-Rata Share of the New Investment, which form is attached as a Schedule to the Meeting Order. "New Investment Subscription Privilege" means the right of a Qualifying Unsecured Creditor to participate in the New Investment by electing, in accordance with the provisions of the Plan, to subscribe for and purchase from the Applicants up to its Subscribing Unsecured Creditor's Pro-Rata Share of LPRC Preferred Shares under the New Investment, and the same number of LPRI Multiple Voting Common Shares. "New Shares" means the new shares in the capital of LPRC or in the capital stock of LPRI to be issued on the Plan Implementation Date by LPRC or LPRI, as applicable, pursuant to the provisions of the Plan. "Non-Resident Holder" has the meaning ascribed to such term under the heading "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations – Non-Residents of Canada". "Note Indenture" means the note indenture dated February 14, 2012 among LPR Canada as issuer, the other Applicants as guarantors, and U.S. Bank National Association as trustee, pursuant to which the Notes were issued, as it may be amended, restated, varied or supplemented in accordance with its terms. "Note Indenture Trustee" means U.S. Bank National Association, in its capacity as trustee under the Note Indenture, or any successor thereof. - 20 - "Note Obligations" means all obligations, liabilities and indebtedness of the Applicants (whether as borrower, guarantor, surety or otherwise) to the Note Indenture Trustee and/or the Noteholders under, arising out of or in connection with the Notes, the Note Indenture or the guarantees granted in connection with any of the foregoing, as well as any other agreements or documents relating thereto, as at the Plan Implementation Date. "Noteholder Advisors" means Goodmans and Stroock & Stroock & Lavan LLP. "Noteholder Claim" means any Claim by a Noteholder (or a trustee or other representative on the Noteholder's behalf) in respect of or in relation to the Notes owned or held by such Noteholder, including all principal and accrued interest payable to such Noteholder pursuant to such Notes or the Note Indenture. "Noteholder" means a holder of Notes, in such capacity. "Noteholders' Proxy" means a proxy substantially in the form attached to the Meeting Order, to be submitted to the Monitor by any Beneficial Noteholder that wishes to vote by proxy at one or more Meetings. "Notes" means the 10.375% senior notes due 2017 issued by LPR Canada pursuant to the Note Indenture. "NYSE" means the New York Stock Exchange. "Officers" means all current and former officers (or their estates) of any one or more of the Applicants, in such capacity, and "Officer" means any one of them. "Option Plans" means any plan or arrangement of any Applicant pursuant to which options, warrants or other rights to purchase or otherwise receive shares or other securities of any Applicant, in each case as such plan or arrangement may be amended, restated or varied from time to time in accordance with the terms thereof, including the Lone Pine Resources Inc. 2011 Stock Incentive Plan. "Options" means any options, warrants, rights, conversion privileges, puts, calls, subscriptions, or other rights, entitlements, agreements, arrangements, commitments or claims of any kind (whether pre-emptive, contingent, conditional or otherwise) obligating an Applicant to sell or otherwise issue, or to purchase or otherwise acquire, shares or other securities of any Applicant, or any securities or obligations of any kind convertible into or exchangeable for shares or other securities of any Applicant, in each case that are existing or are issued and outstanding immediately prior to the Effective Time, including any award made under the Lone Pine Resources Inc. 2011 Stock Incentive Plan pursuant to which the holder thereof may purchase or otherwise receive shares of common stock of LPRI, any preferred share purchase rights under the Rights Agreement, or any options, warrants or other rights pursuant to any other Option Plan, and any rights, entitlements, agreements, arrangements, commitments or claims of any kind to receive any other form of consideration in respect of any prior or future exercise of any of the foregoing. "Order" means any order, ruling or judgment of the Court or any other court of competent jurisdiction made in connection with the CCAA Proceeding. "Other Transaction" means any transaction that is alternative to the Recapitalization. "Outside Date" means February 15, 2014 (or such later date as the Applicants and the Majority Initial Consenting Noteholders may agree). "Participant Holder" means a Person whose name appears on any of the Participant Holders Lists as at the Voting Record Date but who is not a Beneficial Noteholder. "Participant Holders Lists" means the lists of holders of Notes to be provided to the Monitor by DTC or any similar depository or trust company with respect to the Notes in accordance with the Meeting Order. - 21 - "Person" means any individual, firm, corporation, limited or unlimited liability company, general or limited partnership, association, trust, unincorporated organization, joint venture, Governmental Entity or any agency, officer or instrumentality thereof or of any other entity. "Plan" means the Plan of Compromise and Arrangement filed by each of the Applicants under the CCAA, as it may be amended, supplemented or restated from time to time in accordance with the terms thereof. "Plan Implementation Date" means the Business Day on which the Plan becomes effective, which shall be the Business Day on which the Monitor delivers to the Applicants and Goodmans the certificate referenced in the Plan. "Plan Supplement Document" means any document or agreement that is entered into in order to supplement or implement the provisions of the Plan, and that is expressly established as a "Plan Supplement Document" in its terms, including any "Plan Supplement" within the meaning of the Meeting Order. "Post-Filing Trade Payables" means trade payables that were incurred by the Applicants in the ordinary course of business (i) after the Filing Date but before the Plan Implementation Date; and (ii) in compliance with the Initial Order and any other Orders issued in connection with the CCAA Proceeding. "Post-Implementation Boards" means (i) the board of directors of LPRC upon implementation of the Plan and (ii) the board of directors of LPRI upon implementation of the Plan, as appointed in accordance with the Sanction Order. "Post-Implementation Shareholder" means a holder of LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares after giving effect to the Debt Exchange, or of LPRC Preferred Shares and LPRI Multiple Voting Common Shares after giving effect to the New Investment. "Potential JV Candidate" has the meaning ascribed to such term under the heading "Background to the Recapitalization – Events prior to the commencement of Creditor Protection Proceedings." "Prior Ranking Secured Claims" means Claims existing on both the Filing Date and the Plan Implementation Date, other than (i) Syndicate Claims and (ii) Claims secured by the Charges, that in each case have the benefit of a valid and enforceable security interest in, mortgage or charge over, lien against or other similar interest in, any of the assets that the Applicants own or to which the Applicants are entitled, but only to the extent of the realizable value of the property subject to such security. "Proposed Amendments" has the meaning ascribed to such term under the heading "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations". "Qualifying Unsecured Creditor" means an Affected Unsecured Creditor as of the Voting Record Date that (i) is not a Cash Pool Creditor, and (ii) is an "accredited investor" as defined under Section 501 of Regulation D under the U.S. Securities Act. "RBC" means RBC Dominion Securities Inc., a member company of RBC Capital Markets. "Recapitalization" means the transactions contemplated in the Plan. "Redemption Price" means, with respect to the LPRC Preferred Shares, the Issue Price as adjusted pursuant to the Accretion Rate. "Registered Noteholder" means a Noteholder who is the legal owner or holder of one or more Notes and whose name appears on any Registered Noteholder List. "Registered Noteholder List" means each list of Registered Noteholders as at the Voting Record Date provided by the Note Indenture Trustee to the Monitor in accordance with the Meeting Order. - 22 - "Released Claim" has the meaning ascribed to such term in the Plan. "Released Party" and "Released Parties" have the meanings ascribed to such terms in the Plan. "Required Majorities" means, in respect of each Meeting, a majority in number of Affected Unsecured Creditors representing at least two-thirds in value of the Voting Claims of Affected Unsecured Creditors who are entitled to vote at the Meeting in accordance with the Meeting Order and who are present and voting in person or by proxy on the Approval Resolution at the Meeting. "Restructured Group" means, collectively, LPRI and LPR Canada after giving effect to implementation of the Plan and completion of the transactions provided therein. "Restructuring Claims Bar Date" means seven calendar days after termination, repudiation or resiliation of the applicable agreement or other event giving rise to the applicable Restructuring Period Claim. "Restructuring Period Claim" has the meaning ascribed to such term in the Claims Procedure Order. "Rights Agreement" means the rights agreement dated May 11, 2011 between LPRI and Mellon Investor Services LLC, as rights agent, relating to the preferred share purchase rights attached to the shares of common stock, par value $0.01 per share of LPRI. "RRIF" has the meaning ascribed to such term under the heading "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations". "RRSP" has the meaning ascribed to such term under the heading "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations". "Sanction Date" means the date that the Sanction Order is made by the Court. "Sanction Hearing" means the hearing for the Sanction Order. "Sanction Order" means the Order of the Court sanctioning and approving the Plan. "Sanction Recognition Order" means the order of the U.S. Court made in the U.S. Proceeding that, among other things, recognizes and gives effect to the Sanction Order in the United States. "SEC" means the United States Securities and Exchange Commission. "Securityholder" has the meaning ascribed to such term under the heading "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations". "SEDAR" means the System for Electronic Document Analysis and Retrieval through which reporting issuers under Canadian securities legislation file various disclosure documents, copies of which are accessible electronically through the internet at www.sedar.com. "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 Applicants and the Monitor; "Subscribing Unsecured Creditor" means (i) each Backstopper and (ii) every other Qualifying Unsecured Creditor that submits a duly executed New Investment Subscription Form electing to participate in the New Investment in accordance with the Plan. "Subscribing Unsecured Creditor's Pro-Rata Share" means, with respect to each Subscribing Unsecured Creditor, (x) the amount of the New Investment Amount to be taken up by such Subscribing Unsecured Creditor as at the Plan Implementation Date, divided by (y) the New Investment Amount. - 23 "Subscription Amount" has the meaning ascribed to such term under the heading "Details of the Recapitalization – Description of the New Investment". "Support Agreement" means the support agreements dated September 24, 2013 between the Applicants and the Consenting Creditors, as may be amended, restated, supplemented or varied from time to time in accordance with the terms thereof. "Support Joinder" means an agreement in the form set out as Schedule C to the Support Agreement or as contemplated by the Backstop Agreement pursuant to which an Affected Unsecured Creditor agrees to become a Consenting Creditor and to be bound by the terms of the Support Agreement. "Syndicate" means the syndicate of lenders pursuant to the Current Credit Agreement, at the relevant time, in their capacity as such. "Syndicate Claim" means a Claim of the Agent and/or the Syndicate in respect of the Current Credit Facility, the Current Credit Agreement or any other obligation of one or more of the Applicants the performance of which is secured by the Current Bank Security. "Tax" means all taxes, however denominated, including any instalments with respect thereto and any interest, penalties or other additions that may become payable in respect thereof, imposed by any Governmental Entity, which taxes shall include, without limiting the generality of the foregoing, all income or profits taxes (including, but not limited to, federal income taxes and provincial income taxes), payroll and employee withholding taxes, social insurance taxes, sales and use taxes, goods and services taxes, ad valorem taxes, duties, excise taxes, franchise taxes, gross receipts taxes, business license taxes, occupation taxes, real and personal property governmental charges, stamp taxes, insurance taxes, environmental taxes, transfer taxes, capital taxes and other obligations of the same or of a similar nature to any of the foregoing taxes including Canada Pension Plan and provincial pension plan contributions, employment insurance payments and workers' compensation premiums and other taxes which a party (or any of its subsidiaries) is required to pay, withhold, remit or collect. "TFSA" has the meaning ascribed to such term under the heading "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations". "Total Debt / EBITDA" means the total debt to EBITDA ratio (measured quarterly). "TSX" means the Toronto Stock Exchange. "Unaffected Claim" means any: (a) Claim secured by any of the Charges; (b) Syndicate Claim; (c) Insured Claim; (d) Intercompany Claim; (e) Post-Filing Trade Payable; (f) Claim by an Unaffected Trade Creditor arising from an Unaffected Trade Claim; (g) Claim by a Joint Venture Partner; (h) Prior Ranking Secured Claim; - 24 - (i) Claim that is not permitted to be compromised pursuant to section 19(2) of the CCAA, but only to the extent not permitted; (j) Claim in respect of an Employee Amount (other than in respect of Options); and (k) Government Priority Claim. "Unaffected Creditor" means a Creditor who has an Unaffected Claim, but only in respect of and to the extent of such Unaffected Claim. "Unaffected Trade Claim" means a Claim of an Unaffected Trade Creditor that is not a Post-Filing Trade Payable and that arises out of or in connection with any contract, license, lease, agreement, obligation, arrangement, understanding or document with the Applicants related to the business of the Applicants. "Unaffected Trade Creditor" means any Person that has been designated by the Applicants, with the consent of the Monitor, as a critical supplier in accordance with the Initial Order. "Undeliverable Distribution" has the meaning ascribed to such term in the Plan. "Unregistered Noteholder" means a Noteholder whose name does not appear on any Registered Noteholder List. "United States" or "U.S." means the United States of America, its territories and possessions, any State of the United States and the District of Columbia. "U.S. Bankruptcy Code" means title 11 of the United States Code, as amended from time to time. "U.S. Court" means the United States Bankruptcy Court for the District of Delaware. "U.S. Exchange Act" means the United States Securities Exchange Act of 1934, as amended. "U.S. Proceeding" means the proceeding commenced by LPR Canada, as authorized representative of the Lone Pine Group, under Chapter 15 of the U.S. Bankruptcy Code on the Filing Date. "U.S. Securities Act" means the United States Securities Act of 1933, as amended. "U.S. Treaty" has the meaning ascribed to such term under the heading "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations – Non-Residents of Canada". "Voting Claim" has the meaning ascribed thereto in the Claims Procedure Order. "Voting Record Date" has the meaning ascribed thereto in the Meeting Order. "Website" means www.pwc.com/car-lpr. "Wiser Delaware" means Wiser Delaware LLC. "Wiser Oil" means Wiser Oil Delaware, LLC. - 25 - SUMMARY INFORMATION The following is a summary of certain information contained elsewhere in this Circular, including the Schedules hereto, and is qualified in its entirety by reference to the more detailed information contained or referred to elsewhere in this Circular or the Schedules hereto. Terms with initial capital letters used in this summary are defined in the "Glossary". Meetings Pursuant to the Meeting Order, the Meetings have been called for the purpose of having Affected Unsecured Creditors with Allowed Affected Unsecured Claims consider and, if deemed advisable, adopt, with or without variation, the Approval Resolution to approve the Plan. The Meetings will be held at the offices of Bennett Jones LLP, 4500 Bankers Hall East, 855 – 2nd Street S.W., Calgary, Alberta, on January 6, 2014 beginning at 10:00 a.m. (Calgary time). The Meetings will be held in accordance with the Plan, the Meeting Order and any further Order. Subject to paragraph 45 of the Meeting Order, only Affected Unsecured Creditors with Voting Claims against the applicable Applicant as at the Voting Record Date will be eligible to attend the applicable Meeting and vote on a resolution to approve the Plan. Holders of Notes cannot vote in person and must instead provide a proxy to the Monitor in accordance with the Meeting Order. The votes of Affected Unsecured Creditors holding Unresolved Claims will be separately tabulated and Unresolved Claims will not be counted unless, until and only to the extent that such Unresolved Claim is finally determined to be a Voting Claim. A holder of an Unaffected Claim shall not be entitled to attend or vote at the Meetings in respect of such Unaffected Claim. A holder of an Equity Claim shall not be entitled to attend or vote at the Meetings in respect of such Equity Claim. In accordance with the Meeting Order, each Cash Pool Creditor shall be deemed to vote in favour of the Plan to the full extent of its Allowed Affected Unsecured Claim and shall not be entitled to attend or vote at the Meetings, whether in person or by proxy, unless such Cash Pool Creditor: (i) has not returned a Cash Election Form in accordance with the Meeting Order; and (ii) delivers an Affected Unsecured Creditors' Proxy to the Monitor so that it is received on or before 3:00 p.m. (Calgary time) on the last Business Day before the date of the Meetings (or any adjournment thereof) in accordance with the instructions accompanying such Affected Unsecured Creditors' Proxy. The quorum required at each Meeting will be one Affected Unsecured Creditor with a Voting Claim against the applicable Applicant present at the Meeting (in person or by proxy). Noteholders will have Voting Claims against each of the Applicants (and in each Class) given that each Applicant is either an issuer or guarantor of the Note Obligations. For greater certainty, the following Persons shall have no right to, and shall not, vote at the Meetings: (i) Unaffected Creditors, (ii) holders of Affected Unsecured Claims in respect of which a Proof of Claim has been filed in accordance with the Claims Procedure Order that has been designated by the Applicants or the Monitor as an Equity Claim, (iii) Equity Claimants, and (iv) any other Person asserting Claims against the Applicants whose Claims do not constitute Affected Unsecured Claims on the Voting Record Date. See "Information Concerning the Meetings – Procedure for the Meetings". As at the date of this Circular, Consenting Creditors holding approximately 75% of the outstanding principal amount of the Notes have agreed to vote in favour of and to support the Recapitalization and the Plan, in accordance with the terms - 26 - and conditions of the Support Agreement. See "Support Agreement". Purpose of the Plan The Plan, a copy of which is attached as Schedule D to this Circular, contemplates a series of steps leading to an overall capital reorganization of the Lone Pine Group. The following is a general description of certain transactions provided for under the Plan and is qualified in its entirety by reference to the more detailed information contained elsewhere in this Circular and to the full text of the Plan itself. See "Details of the Recapitalization – Plan Implementation Date Transactions" and Schedule D. The purpose of the Plan is to: (a) implement the Recapitalization, which will significantly reduce the indebtedness of the Lone Pine Group through the Debt Exchange and provide essential financing to address current and future liquidity needs through the New Investment; (b) provide for settlement of all Allowed Affected Claims; (c) effect a release and discharge of all Affected Claims and Released Claims; and (d) ensure the continued viability and ongoing operations of the Lone Pine Group. The Plan, if approved by the Affected Unsecured Creditors at the Meeting and thereafter by the Court pursuant to the Sanction Order, and if implemented in accordance with its terms, will effect a capital reorganization of the Lone Pine Group and generally provides, among other things, for the following: (a) Debt Exchange – the exchange of all Notes and other Affected Unsecured Claims in consideration for new common equity in the Restructured Group in the form of voting common shares of LPR Canada (being LPRC Class A Voting Common Shares), together with concurrently issued voting common shares of LPRI (being LPRI Class A Voting Common Shares) and, if applicable, any Backstopper's ProRata Share of the Backstop Amount, except for Affected Unsecured Claims of Cash Pool Creditors, as noted below; (b) New Investment – an offering to Qualifying Unsecured Creditors of an amount between a minimum of US$100,000,000 and a maximum of US$110,000,000 in new preferred equity in the Restructured Group in the form of new redeemable convertible preferred shares of LPR Canada (being LPRC Preferred Shares), together with concurrently issued multiple voting shares of LPRI (being LPRI Multiple Voting Common Shares), pursuant to which such Qualifying Unsecured Creditors may, at their election, invest additional capital and purchase their pro rata share of the New Investment; (c) Backstop Commitment – the issuance of all such LPRC Preferred Shares and concurrently issued LPRI Multiple Voting Common Shares pursuant to the Backstop Commitment, so as to ensure that the Restructured Group realizes the full New Investment Amount; (d) Repayment of Credit Facility – the repayment in full of secured bank debt with proceeds from the New Investment and borrowings under the New Credit Facility; (e) Cancellation of Existing Parent Shares, Equity Interests and Equity Claims – the cancellation of all Existing Parent Shares, Equity Interests and Equity Claims for no consideration, which in the context of the Creditor Protection Proceedings is a necessary consequence of the Lone Pine Group's inability to pay the priority claims of Affected Unsecured Creditors in full and in compliance with the terms of the - 27 - CCAA; and (f) Cash Pool Creditors – the payment in cash of Affected Unsecured Claims of Cash Pool Creditors that are, or that the holder thereof elects to reduce to, $10,000 or less, subject to an aggregate maximum Distributable Amount limit of $700,000 for all such claims and prorating in the event that such Affected Unsecured Claims exceed the maximum Distributable Amount. The foregoing description is generalized and is qualified in its entirety by reference to the specific provisions of the Plan, which among other things specifies the particular Recapitalization steps and their sequence. See "Details of the Recapitalization − Plan Implementation Date Transactions" below. The Plan is put forward based on the expectation that, overall and in the aggregate, parties who have an economic interest in the Lone Pine Group, when considered as a whole, will derive a greater benefit from the implementation of the Plan than would result from a forced sale or liquidation of the Lone Pine Group's assets through bankruptcy, exercise of creditors' rights or receivership proceedings. Additional information regarding LPR Canada and LPRI, including information relating to the rights, privileges, restrictions and conditions attaching to the New Shares, will be provided in the Plan Supplement to be issued in accordance with the terms of the Meeting Order. See "Details of the Recapitalization". Entitlement to Vote Subject to paragraph 45 of the Meeting Order, only Affected Unsecured Creditors with Voting Claims against the applicable Applicant as at the Voting Record Date will be eligible to attend the applicable Meeting and vote on a resolution to approve the Plan. Holders of Notes cannot vote in person and must instead provide a proxy to the Monitor in accordance with the Meeting Order. The votes of Affected Unsecured Creditors holding Unresolved Claims will be separately tabulated and Unresolved Claims will not be counted unless, until and only to the extent that such Unresolved Claim is finally determined to be a Voting Claim. A holder of an Unaffected Claim shall not be entitled to attend or vote at the Meetings in respect of such Unaffected Claim. A holder of an Equity Claim shall not be entitled to attend or vote at the Meeting in respect of such Equity Claim. Each Beneficial Noteholder that has a Voting Claim against the applicable Applicant shall be entitled to one vote as a member of the Affected Unsecured Creditors Class, which vote shall have a value equal to the principal owing under the Notes owned by such Beneficial Noteholder as at the Voting Record Date. Each Affected Unsecured Creditor with a Voting Claim against the applicable Applicant shall be entitled to one vote as a member of the Affected Unsecured Creditors Class, which vote shall have a value equal to the dollar value of such Affected Unsecured Creditor's Voting Claim. See "Information Concerning the Meetings – Entitlement to Vote". Appointment of Proxyholders and Voting In Person. Any Affected Unsecured Creditor (including a Beneficial Noteholder) that is entitled to vote at one or more Meetings and that wishes to vote at one or more Meetings in person must: (i) duly complete and sign an Affected Unsecured Creditors' Proxy or a Noteholders' Proxy, as applicable; (ii) identify itself in the Affected - 28 - Unsecured Creditors' Proxy or a Noteholder's Proxy, as applicable, as the Person with the power to attend and vote at the applicable Meeting(s) on behalf of such Affected Unsecured Creditor or Beneficial Noteholder, as the case may be; and (iii) deliver such Affected Unsecured Creditors' Proxy or Noteholders' Proxy, as the case may be, to the Monitor so that it is received on or before 3:00 p.m. on the last Business Day before the date of the Meetings (or any adjournment thereof). By Proxy. Any Affected Unsecured Creditor (including a Beneficial Noteholder) that is entitled to vote at one or more Meetings and that wishes to appoint a nominee to vote on its behalf at the Meetings must: (i) duly complete and sign an Affected Unsecured Creditors' Proxy or a Noteholders' Proxy, as applicable; (ii) identify its desired nominee in the Affected Unsecured Creditors' Proxy or Noteholders' Proxy, as applicable, as the Person with the power to attend and vote at the applicable Meeting(s) on behalf of such Affected Unsecured Creditor; and (iii) deliver such Affected Unsecured Creditors' Proxy or Noteholders' Proxy, as the case may be, to the Monitor so that it is received on or before 3:00 p.m. on the last Business Day before the date of the Meetings (or any adjournment thereof). Delivery of an Affected Unsecured Creditors' Proxy or Noteholders' Proxy to the Monitor must be made in accordance with the instructions accompanying such Affected Unsecured Creditors' Proxy or Noteholders' Proxy. See "Information Concerning the Meetings – Appointment of Proxyholders and Voting". See "Information Concerning the Meetings – Advice to Beneficial Noteholders" for important information for Noteholders in respect of voting at the Meetings. Classification and Voting The Plan provides for five classes of Affected Unsecured Claims for the purpose of considering and voting on the Plan: Affected Unsecured Creditors Class Affected Unsecured Claims LPR Canada Class ................................. Affected Unsecured Claims against LPR Canada LPR Holdings Class .............................. Affected Unsecured Claims against LPR Holdings LPRI Class ............................................ Affected Unsecured Claims against LPRI Wiser Oil Class ..................................... Affected Unsecured Claims against Wiser Oil Wiser Delaware Class ........................... Affected Unsecured Claims against Wiser Delaware If an Applicant is excluded from the Plan, the Affected Unsecured Claims against such Applicant and the corresponding Affected Unsecured Creditors Class set out above will be removed from the Plan and such Affected Unsecured Claims will no longer be Affected Unsecured Claims and shall be deemed to be Unaffected Claims for purposes of the Plan, and a Creditor will have no right to vote on or receive distributions under the Plan in respect of such removed Claim. For certainty, Noteholders shall be permitted to vote and to receive distributions under the Plan in respect of each Affected Unsecured Creditors Class as the Notes were either issued or guaranteed by each of the Applicants. For certainty, Equity Claimants shall not be entitled to vote on the Plan at any of the Meetings or to receive any distributions under the Plan. See "Information Concerning the Meetings – Classification of Affected Unsecured Claims". Claims Process On October 9, 2013, the Claims Procedure Order was issued authorizing the Lone Pine Group to conduct a process of calling for and determining the claims of the Affected Unsecured Creditors. Under the terms of the Claims Procedure Order, as amended - 29 - under further Order of the Court, November 27, 2013 was the Claims Bar Date for Affected Unsecured Creditors filing claims for voting purposes or distribution purposes. See "Information Concerning the Meetings – Claims Procedure Order". Treatment of Certain Parties Generally, the Plan provides for treatment of claims as follows: Cash Pool Creditors: (a) each Cash Pool Creditor, will receive an amount from the Cash Pool equal to the lesser of (i) the amount of its Allowed Affected Unsecured Claim (as such amount may have been reduced by the Cash Election of such Cash Pool Creditor), and (ii) its Cash Pool Creditor's Pro-Rata Share of the Cash Pool; provided that despite any other provisions of the Plan the total amount payable to all Cash Pool Creditors under the Plan shall not exceed the Distributable Amount; (b) any Cash Pool Creditor who receives a distribution in accordance with the Plan shall not be entitled to any other payment or consideration with respect to its Allowed Affected Unsecured Claim; and Affected Unsecured Creditors (other than Cash Pool Creditors): (c) each other Affected Unsecured Creditor (other than Cash Pool Creditors) with an Allowed Affected Unsecured Claim will receive in consideration for its Affected Unsecured Claims: (i) its Affected Unsecured Creditor's Pro-Rata Share of the Agreed Number of LPRC Class A Voting Common Shares; (ii) one LPRI Class A Voting Common Share for each LPRC Class A Voting Common Share issued pursuant to (i) immediately above; and (iii) if such Affected Unsecured Creditor is a Backstopper, its Backstopper's Pro-Rata Share of the Backstop Amount. All Affected Unsecured Claims shall be fully, finally, irrevocably and forever compromised, settled, released, discharged, extinguished, cancelled and barred on the Plan Implementation Date. Each Affected Unsecured Creditor that is a Qualifying Unsecured Creditor will also have the right, but not the obligation, to participate in the New Investment up to a maximum of such Affected Unsecured Creditor's Pro Rata Share of the New Investment. If a significant number of Affected Unsecured Creditors elect, by providing a Cash Election to the Monitor before the Cash Election Deadline, to reduce their Affected Unsecured Claims to the Cash Pool Cap, the Cash Pool will be distributed on a pro rata basis among all such electing Cash Pool Creditors, which may result in Cash Pool Creditors receiving less than expected under the Cash Pool Cap. - 30 - Equity Claims On the Plan Implementation Date, in accordance with the steps and sequence set forth in the Plan, all Equity Interests and all Equity Claims shall be fully, finally, irrevocably and forever compromised, settled, released, discharged, extinguished, cancelled and barred. Equity Claimants shall not receive any consideration or distributions under the Plan or otherwise recover anything in respect of their Equity Claims or Equity Interests, and shall not be entitled to vote on the Plan at the Meetings in respect of their Equity Claims. Unaffected Claims The Plan does not affect the Unaffected Creditors, who will not receive any consideration or distributions under the Plan in respect of their Unaffected Claims (except to the extent their Unaffected Claims are paid in full on the Plan Implementation Date), and shall not be entitled to vote on the Plan at the Meetings in respect of their Unaffected Claims. See "Details of the Recapitalization – Treatment of Certain Parties Pursuant to the Plan". Required Approvals and Other In accordance with creditor approval requirements under the CCAA, subject to Section 10.4 of the Plan, the Approval Resolution must be approved at each Meeting by the affirmative vote of the Required Majority of Affected Unsecured Creditors entitled to vote at the Meeting, being a majority in number representing at least two-thirds in value of the Voting Claims of all such Affected Unsecured Creditors who are entitled to vote at the Meeting in accordance with the Meeting Order and who are present and voting in person or by proxy on the Approval Resolution at the Meeting. If the Approval Resolution is passed by the Required Majorities, then the Lone Pine Group will apply to the Court for the Sanction Order. The Sanction Hearing is scheduled to take place at the Calgary Courts Centre, 601 – 5th Street S.W., Calgary, Alberta, Canada commencing on January 9, 2014 at 10:00 a.m. (Calgary time), or so soon thereafter as counsel may be heard. If the date of the Sanction Hearing is postponed, adjourned or otherwise rescheduled, the Lone Pine Group will provide notice of the new date by issuing a news release. If the Court grants the Sanction Order following the Sanction Hearing, the Lone Pine Group intends to apply to the U.S. Court as soon as practicable thereafter for the Sanction Recognition Order pursuant to the U.S. Proceedings. See "Required Approvals and Other Conditions Precedent to Implementation". Conditions Precedent to Implementation Implementation of the Plan is conditional upon satisfaction or waiver of, among others, the following conditions prior to or at the Effective Time, each of which is for the benefit of the Applicants and the Initial Consenting Noteholders, collectively, and may be waived only by the Applicants and the Majority Initial Consenting Noteholders, collectively: (a) the Plan shall have been approved by the Required Majorities and the Court, in each case in a form consistent with the Support Agreement or otherwise acceptable to the Applicants and the Majority Initial Consenting Noteholders; (b) the Sanction Order: (i) shall have been made prior to January 17, 2014 - 31 - (or such later date as the Applicants, the Agent and the Majority Initial Consenting Noteholders may agree); (ii) shall be in a form consistent with the Plan and the Support Agreement or otherwise acceptable to the Applicants and the Majority Initial Consenting Notheolders; and (iii) shall have become a Final Order; (c) the Sanction Recognition Order: (i) shall have been made prior to January 31, 2014 (or such later date as the Applicants, the Agent and the Majority Initial Consenting Noteholders may agree); (ii) shall be in a form consistent with the Sanction Order, the Plan and the Support Agreement and otherwise acceptable to the Applicants and the Majority Initial Consenting Noteholders; and (iii) shall have become a Final Order; (d) all conditions set out in the Support Agreement and the Backstop Agreement shall have been satisfied or waived by the applicable parties pursuant to the terms of the Support Agreement and the Backstop Agreement, as applicable; (e) the Support Agreement shall not have been terminated in accordance with its terms; (f) the Backstop Agreement shall not have been terminated in accordance with its terms; (g) the number and terms of the New Shares to be issued pursuant to the Plan shall be acceptable to the Applicants, the Monitor and the Majority Initial Consenting Noteholders; (h) the composition of the Post-Implementation Boards shall be consistent with the Support Agreement and acceptable to the Applicants and the Majority Initial Consenting Noteholders; (i) the transaction steps required to complete and implement the Plan shall be in form and in substance satisfactory to the Applicants and Majority Initial Consenting Noteholders; (j) the Plan Implementation Date shall have occurred no later than February 15, 2014 (or such later date as the Applicants, the Agent and the Majority Initial Consenting Noteholders may agree); (k) the Applicants shall have made arrangements for the payment in full of all amounts owing by the Applicants pursuant to or in respect of the Current Credit Facility and the Current Credit Agreement and the discharge of the Current Bank Security on implementation of the Plan; (l) LPRC shall have obtained the New Credit Facility on terms acceptable to the Applicants and the Majority Initial Consenting Noteholders; and (m) there shall not have occurred after the Filing Date a Material Adverse Change (as that term is defined in the Support Agreement). - 32 - The foregoing is a brief summary of certain of the conditions precedent to the implementation of the Plan. A comprehensive list of conditions precedent is set forth in Section 9.1 of the Plan and described below under "Required Approvals and Other Conditions Precedent to Implementation". Backstop Commitment In connection with entering into the Support Agreement, the Lone Pine Group and the Backstoppers entered into the Backstop Agreement pursuant to which the Backstoppers agreed, among other things, to ensure completion of the New Investment by purchasing all LPRC Preferred Shares (and LPRI Multiple Voting Common Shares) that are not purchased by other Affected Unsecured Creditors eligible to participate in the New Investment. As additional consideration for the settlement of their Affected Unsecured Claims under the Debt Exchange, any Backstopper (other than a Defaulting Backstopper) will receive its Backstopper's Pro Rata Share of the Backstop Amount, which is equal to 4% of the New Investment Amount. Other Affected Unsecured Creditors that are Qualifying Unsecured Creditors may become Backstoppers by returning a duly executed Backstop Joinder and Support Joinder to the Applicants, the Monitor and Goodmans prior to the Backstop Deadline, in accordance with the requirements set forth in the Meeting Order and the Backstop Agreement. Pursuant to the Backstop Agreement, the Lone Pine Group agreed to pay to the Initial Backstoppers (being those Backstoppers that entered into the Backstop Agreement on September 24, 2013) a break fee of US$2,000,000 if it enters into an agreement with respect to an Other Transaction, which amount would be payable to the Initial Backstoppers on a pro rata basis based on the principal amount of their Notes. See "Backstop Agreement". Timing of Plan Implementation It is anticipated that the Plan will be implemented in accordance with the following timetable: January 6, 2014 ..................................................Meetings No later than January 10, 2014 ...........................Sanction Order No later than January 31, 2014 ...........................Sanction Recognition Order No later than January 31, 2014 ...........................Implementation of the Plan Recommendations of the Board of Directors For the reasons set out in "Recommendation of the Board of Directors", the Board of Directors recommends that Affected Unsecured Creditors vote for the Approval Resolution to approve the Plan. Noteholder Support As at the date of this Circular, Consenting Creditors holding approximately 75% of the outstanding principal amount of the Notes have agreed to vote in favour of and to support the Recapitalization and the Plan, in accordance with the terms and conditions of the Support Agreement. See "Support Agreement". Tax Considerations Certain Canadian federal income tax considerations relating to the Plan are described in "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations". Certain U.S. federal income tax considerations relating to the Plan are described in "Income Tax Considerations – Certain U.S. Federal Income Tax Considerations". No representations are made with respect to the income tax consequences to any particular Affected Unsecured Creditor. Affected Unsecured Creditors should consult their own - 33 - tax advisors with respect to their individual circumstances. Risk Factors Affected Unsecured Creditors should carefully consider certain risk factors relating, among other things, to the non-implementation of the Plan, the Plan and its implementation, the LPRC Preferred Shares, the Lone Pine Group's business and risks associated with holding New Shares. These risks and uncertainties are intended to highlight risks and uncertainties that are specific to the Long Pine Group, but are not the only risks and uncertainties that the Lone Pine Group may face. Affected Unsecured Creditors are urged to carefully review the risk factors set forth in LPRI's annual report on Form 10-K for the year ended December 31, 2012, in LPRI's quarterly reports on Form 10-Q for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013, respectively, and in LPRI's current reports on Form 8-K since January 1, 2013, each of which is incorporated by reference in this Circular and has been filed with the SEC and with Canadian securities regulatory authorities and is available electronically on EDGAR and SEDAR. See "Risk Factors". - 34 - INFORMATION CONCERNING THE MEETINGS General This Circular is furnished in connection with the Meetings of Affected Unsecured Creditors of the Lone Pine Group to be held to consider and, if thought fit, approve a resolution approving a proposed plan of compromise and arrangement under the Companies' Creditors Arrangement Act (Canada), and the solicitation of proxies by and on behalf of the Lone Pine Group for use at the Meetings. The Plan, if approved by the Affected Unsecured Creditors at the Meeting and thereafter by the Court pursuant to the Sanction Order, and if implemented in accordance with its terms, will effect a capital reorganization of the Lone Pine Group and generally provides, among other things, for the following: (a) Debt Exchange – the exchange of all Notes and other Affected Unsecured Claims in consideration for new common equity in the Restructured Group in the form of voting common shares of LPR Canada (being LPRC Class A Voting Common Shares), together with concurrently issued voting common shares of LPRI (being LPRI Class A Voting Common Shares) and, if applicable, any Backstopper's Pro-Rata Share of the Backstop Amount, except for Affected Unsecured Claims of Cash Pool Creditors, as noted below; (b) New Investment – an offering to Qualifying Unsecured Creditors of an amount between a minimum of US$100,000,000 and a maximum of US$110,000,000 in new preferred equity in the Restructured Group in the form of new redeemable preferred shares of LPR Canada (being LPRC Preferred Shares), together with concurrently issued multiple voting shares of LPRI (being LPRI Multiple Voting Common Shares), pursuant to which such Qualifying Unsecured Creditors may, at their election, invest additional capital and purchase their pro rata share of the New Investment; (c) Backstop Commitment – the issuance of all such LPRC Preferred Shares and concurrently issued LPRI Multiple Voting Common Shares pursuant to the Backstop Commitment, so as to ensure that the Restructured Group realizes the full New Investment Amount; (d) Repayment of Credit Facility – the repayment in full of secured bank debt with proceeds from the New Investment and borrowings under the New Credit Facility; (e) Cancellation of Existing Parent Shares, Equity Interests and Equity Claims – the cancellation of all Existing Parent Shares, Equity Interests and Equity Claims for no consideration, which in the context of the Creditor Protection Proceedings is a necessary consequence of the Lone Pine Group's inability to pay the priority claims of Affected Unsecured Creditors in full and in compliance with the terms of the CCAA; and (f) Cash Pool Creditors – the payment in cash of Affected Unsecured Claims of Cash Pool Creditors that are, or that the holder thereof elects to reduce to, $10,000 or less, subject to an aggregate maximum Distributable Amount limit of $700,000 for all such claims and prorating in the event that such Affected Unsecured Claims exceed the maximum Distributable Amount. The foregoing description is generalized and is qualified in its entirety by reference to the specific provisions of the Plan, which among other things specifies the particular Recapitalization steps and their sequence. See "Details of the Recapitalization − Plan Implementation Date Transactions" below. Meeting Order The Meetings will be held and conducted in accordance with the Meeting Order and any further Order, notwithstanding the provisions of any other agreement or instrument, including any provision of the Note Indenture. - 35 - Time and Place of Meetings The Meetings are scheduled to be held beginning at 10:00 a.m. (Calgary time) on January 6, 2014 at the offices of Bennett Jones LLP, 4500 Bankers Hall East, 855 - 2nd Street S.W., Calgary, Alberta. Procedure for the Meetings Pursuant to the Meeting Order, the Meetings have been called for the purpose of having Affected Unsecured Creditors with Affected Unsecured Claims consider and, if deemed advisable, adopt, with or without variation, the Approval Resolution to approve the Plan. A representative of the Monitor will act as the Chair of the Meetings and, subject to the Meeting Order or any further Order, will decide all matters relating to the conduct of each of the Meetings. The quorum required at each Meeting will be one Affected Unsecured Creditor with a Voting Claim against the applicable Applicant present at the Meeting (in person or by proxy). The only Persons entitled to attend and speak at a Meeting are: (i) the Affected Unsecured Creditors entitled to vote at that Meeting (or, if applicable, any Person holding a valid Affected Unsecured Creditors' Proxy or Noteholders' Proxy on behalf of one or more such Affected Unsecured Creditors) and any such Affected Unsecured Creditor's or valid proxyholder's legal counsel and financial advisors; (ii) the Chair, 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 Applicants, as selected by the Applicants, and the Applicants' legal counsel and financial advisors; (v) counsel to the Directors and Officers of any of the Applicants; (vi) one or more representatives of the Initial Consenting Noteholders and the Initial Consenting Noteholders' legal counsel; (vii) one or more representatives of the Syndicate and the Syndicate's legal counsel and financial advisor; and (viii) the Note Indenture Trustee and its legal counsel. Any other person may be admitted to a Meeting on invitation of the Applicants, in consultation with the Monitor. Subject to Section 10.4 of the Plan, the Plan must receive an affirmative vote of the Required Majorities in order to be approved by the Affected Unsecured Creditors. For the purpose of calculating the two-thirds majority in value of Voting Claims at each Meeting, the aggregate amount of Voting Claims held by all Affected Unsecured Creditors that vote in favour of the Plan (in person or by proxy) at the Meeting shall be divided by the aggregate amount of all Voting Claims held by all Affected Unsecured Creditors that vote on the Plan (in person or by proxy) at the Meeting. For the purpose of calculating a majority in number of Affected Unsecured Creditors voting on the Plan at each Meeting, (i) each Affected Unsecured Creditor, other than a Noteholder, that votes on the Plan (in person or by proxy) at the Meeting shall only be counted once, without duplication; and (ii) each individual Beneficial Noteholder that votes on the Plan (in person or by proxy) at the Meeting shall only be counted once, without duplication, even if that Beneficial Noteholder holds Notes through more than one Registered Noteholder or Participant Holder. Classification of Affected Unsecured Claims In accordance with the Meeting Order, for the purpose of voting on the Plan, the Affected Unsecured Claims are divided into classes as set out below: Affected Unsecured Creditors Class Affected Unsecured Claims LPR Canada Class .............................................. Affected Unsecured Claims against LPR Canada LPR Holdings Class............................................ Affected Unsecured Claims against LPR Holdings LPRI Class .......................................................... Affected Unsecured Claims against LPRI Wiser Oil Class ................................................... Affected Unsecured Claims against Wiser Oil Wiser Delaware Class ......................................... Affected Unsecured Claims against Wiser Delaware - 36 - If an Applicant is excluded from the Plan, the Affected Unsecured Claims against such Applicant and the corresponding Affected Unsecured Creditors Class set out above will be removed from the Plan and such Affected Unsecured Claims will no longer be Affected Unsecured Claims and shall be deemed to be Unaffected Claims for purposes of the Plan, and a Creditor will have no right to vote on or receive distributions under the Plan in respect of such removed Claim. For certainty, Noteholders shall be permitted to vote and to receive distributions under the Plan in respect of each Affected Unsecured Creditors Class as the Notes were either issued or guaranteed by each of the Applicants. For certainty, Equity Claimants shall not be entitled to vote on the Plan or to receive any distributions under the Plan. Entitlement to Vote Subject to paragraph 45 of the Meeting Order, the only Persons entitled to vote at the Meetings (whether in person or by proxy) are Affected Unsecured Creditors (including Beneficial Noteholders) with Voting Claims against the applicable Applicant as at the Voting Record Date (which, for greater certainty, includes any transferee of an Affected Unsecured Claim that is a Voting Claim, provided that such transferee has been recognized as an Affected Unsecured Creditor in respect of such transferred Affected Unsecured Claim in accordance with the Meeting Order), or any such Affected Unsecured Creditor's validly appointed holder of its Affected Unsecured Creditors' Proxy. Given that each Applicant is either an issuer or a guarantor of the Note Obligations, a vote submitted by a Beneficial Noteholder shall be counted as a vote cast at each Meeting in respect of each Applicant. Subject to paragraph 45 of the Meeting Order, only Affected Unsecured Creditors with Voting Claims against the applicable Applicant as at the Voting Record Date will be eligible to attend the applicable Meeting and vote on a resolution to approve the Plan. Holders of Notes cannot vote in person and must instead provide a proxy to the Monitor in accordance with the Meeting Order. The votes of Affected Unsecured Creditors holding Unresolved Claims will be separately tabulated and Unresolved Claims will not be counted unless, until and only to the extent that such Unresolved Claim is finally determined to be a Voting Claim. A holder of an Unaffected Claim shall not be entitled to attend or vote at the Meetings in respect of such Unaffected Claim. A holder of an Equity Claim shall not be entitled to attend or vote at the Meetings in respect of such Equity Claim. Beneficial Noteholders Each Beneficial Noteholder that has a Voting Claim against the applicable Applicant shall be entitled to one vote as a member of the Affected Unsecured Creditors Class, which vote shall have a value equal to the principal owing under the Notes owned by such Beneficial Noteholder as at the Voting Record Date. For greater certainty, with respect to voting by Beneficial Noteholders, only the Beneficial Noteholders, and not Registered Noteholders or Participant Holders (unless any such Registered Noteholder or Participant Noteholder is itself a Beneficial Noteholder), shall be entitled to vote on the Plan as provided for in the Meeting Order. Affected Unsecured Creditors Each Affected Unsecured Creditor that has a Voting Claim against the applicable Applicant shall be entitled to one vote as a member of the Affected Unsecured Creditors Class, which vote shall have a value equal to the dollar value of such Affected Unsecured Creditor's Voting Claim. Subject to any restrictions contained in Applicable Laws, an Affected Unsecured Creditor may transfer or assign the whole of its Affected Unsecured Claim prior to the Meetings (or any adjournment thereof), provided that neither the Applicants nor the Monitor shall be obliged to deal with any transferee or assignee thereof as an Affected Unsecured Creditor in respect of such Affected Unsecured Claim, including allowing such transferee or assignee to attend or vote at the Meetings, 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 Lone Pine Group and the Monitor, which receipt and acknowledgment must have occurred on or before 3:00 p.m. (Calgary time) on the date that is the last Business Day prior to the date of the Meetings (or any adjournment thereof), failing which the original - 37 - transferor shall have all applicable rights as the 'Affected Unsecured Creditor' with respect to such Affected Unsecured Claim as if no transfer of the Affected Unsecured Claim had occurred. If such receipt and acknowledgment by the Applicants and the Monitor has occurred on or before 3:00 p.m. (Calgary time) on the date that is the last Business Day prior to the date of the Meetings (or any adjournment thereof): (i) the transferor of the applicable Affected Unsecured Claim shall no longer constitute an Affected Unsecured Creditor in respect of such Affected Unsecured Claim; and (ii) the transferee or assignee of the applicable Affected Unsecured Claim shall, for all purposes in accordance with the Meeting Order, constitute an Affected Unsecured Creditor in respect of such Affected Unsecured Claim and shall be bound by any and all notices previously given to the transferor or assignor in respect thereof and shall be bound by any Affected Unsecured Creditors' Proxy duly submitted to the Monitor in accordance with the Meeting Order. For greater certainty, the Applicants and the Monitor shall not recognize partial transfers or assignments of Affected Unsecured Claims. Cash Pool Creditors Each Cash Pool Creditor shall be deemed to vote in favour of the Plan to the full extent of its Allowed Affected Unsecured Claim and shall not be entitled to attend or vote at the Meetings, whether in person or by proxy, unless such Cash Pool Creditor: (i) has not returned a Cash Election Form in accordance with the Meeting Order; and (ii) delivers an Affected Unsecured Creditors' Proxy to the Monitor so that it is received on or before 3:00 p.m. (Calgary time) on the last Business Day before the date of the Meetings (or any adjournment thereof) in accordance with the instructions accompanying such Affected Unsecured Creditors' Proxy. Solicitation of Proxies Solicitation of proxies will be primarily by mail and the costs of such solicitation will be borne by the Lone Pine Group as a cost of the CCAA Proceeding. Appointment of Proxyholders and Voting In Person Any Affected Unsecured Creditor (including a Beneficial Noteholder) that is entitled to vote at one or more Meetings and that wishes to vote at one or more Meetings in person must: (i) duly complete and sign an Affected Unsecured Creditors' Proxy or a Noteholders' Proxy, as applicable; (ii) identify itself in the Affected Unsecured Creditors' Proxy or a Noteholders' Proxy, as applicable, as the Person with the power to attend and vote at the applicable Meeting(s) on behalf of such Affected Unsecured Creditor or Beneficial Noteholder, as the case may be; and (iii) deliver such Affected Unsecured Creditors' Proxy or Noteholders' Proxy, as the case may be, to the Monitor so that it is received on or before 3:00 p.m. on the last Business Day before the date of the Meetings (or any adjournment thereof), and such delivery must be made in accordance with the instructions accompanying such Affected Unsecured Creditors' Proxy or Noteholders' Proxy. By Proxy Any Affected Unsecured Creditor (including a Beneficial Noteholder) that is entitled to vote at one or more Meetings and that wishes to appoint a nominee to vote on its behalf at one or more Meetings must: (i) duly complete and sign an Affected Unsecured Creditors' Proxy or a Noteholders' Proxy, as applicable; (ii) identify its desired nominee in the Affected Unsecured Creditors' Proxy or Noteholders' Proxy, as applicable, as the Person with the power to attend and vote at the applicable Meeting(s) on behalf of such Affected Unsecured Creditor; and (iii) deliver such Affected Unsecured Creditors' Proxy or Noteholders' Proxy, as the case may be, to the Monitor so that it is received on or before 3:00 p.m. on the last Business Day before the date of the Meetings (or any adjournment thereof), and such delivery must be made in accordance with the instructions accompanying such Affected Unsecured Creditors' Proxy or Noteholders' Proxy. In order to be effective, any Noteholders' Proxy must clearly state the name and contain the signature of the applicable Participant Holder, the applicable account number or numbers of the account or accounts maintained by - 38 - the applicable Beneficial Noteholder with such Participant Holder, and the principal amount of Notes that such Beneficial Noteholder holds in each such account or accounts. Where a Beneficial Noteholder holds Notes through more than one Participant Holder, its Noteholders' Proxy is required to be executed by only one of those Participant Holders, provided that the Beneficial Noteholder shall provide the information required in its Noteholders' Proxy with respect to its Notes held with all Participant Holders to allow the Monitor to verify the aggregate amount of Notes held by such Beneficial Noteholder for the purposes of voting on the Plan. Notwithstanding any minor error or omission in any Affected Unsecured Creditors' Proxy or Noteholders' Proxy that is submitted to the Monitor, the Chair shall have the discretion to accept for voting purposes any Affected Unsecured Creditors' Proxy or Noteholders' Proxy submitted to the Monitor in accordance with the Meeting Order. Revocation of Proxies In addition to any other manner permitted by law, an Affected Unsecured Creditor may revoke a proxy by depositing a valid proxy bearing or deemed to bear a later date. Advice to Beneficial Holders The information set forth in this section is of significant importance to Beneficial Noteholders. The Notes are registered under the name of DTC, which acts as nominee for many U.S. brokerage firms. As such, Beneficial Noteholders do not hold Notes registered in their own name, but rather, hold Notes that are held in the name of a Participant Holder, such as an investment dealer, broker, bank, trust company, trustee, custodian or other nominee, or a clearing agency in which the Participant Holder participates. The Meeting Order requires each Participant Holder, within five Business Days of such Participant Holder's receipt of the Noteholder meeting materials from the Monitor pursuant to the Meeting Order, to: (i) complete and sign the applicable section of the Noteholders' Proxy relating to Participant Holders for each Unregistered Noteholder that has an account (directly or through an agent or custodian) with such Participant Holder; and (ii) deliver by courier or personal delivery to each such Unregistered Noteholder the Noteholders' Proxy as so completed and signed together with one copy of the Noteholder meeting materials. Each Participant Holder shall take any other action reasonably required to enable any Unregistered Noteholder that has an account (directly or through an agent or custodian) with such Participant Holder to provide a Noteholders' Proxy to the Monitor with respect to the Notes owned by or held for the benefit of such Unregistered Noteholder. However, the Meeting Order provides that where: (i) a Participant Holder or its agent has a standard practice for distribution of meeting materials to Unregistered Noteholders and for the gathering of information and proxies or voting instructions from Unregistered Noteholders; (ii) the Participant Holder has discussed such standard practice in advance with the Lone Pine Group, the Monitor and counsel to the Initial Consenting Noteholders; and (iii) such standard practice is acceptable to the Lone Pine Group, the Monitor and counsel to the Initial Consenting Noteholders, such Participant Holder or its agent may, in lieu of following the procedure set out above, follow such standard practice provided that all applicable proxies or voting instructions are received by the Monitor no later than 3:00 p.m. on the last Business Day before the Meetings. Each Beneficial Noteholder should contact his, her, or its broker or other nominee and carefully follow the voting instructions provided by such broker or nominee. Plan Supplements The Meeting Order provides that the Applicants shall serve and file the Plan Supplement, and the Monitor shall post the Plan Supplement on the Website, no later than ten (10) days prior to the Meetings. Thereafter, the Applicants may, at any time and from time to time prior to or at the Meetings, or in advance of the Sanction Hearing, as the case may be, amend, restate, modify and/or supplement the Plan Supplement, subject to the terms of the Plan, provided that (i) the Monitor, the Applicants or the Chair shall communicate the details of any such amendments, restatements, modifications and/or supplements made prior to or at the Meetings to Affected Unsecured Creditors present at the Meetings prior to any vote being taken at the Meetings; (ii) the Applicants shall forthwith provide - 39 - notice to the Service List of any such amendments, restatements, modifications and/or supplements and shall file a copy thereof with the Court forthwith and in any event prior to the Meetings 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 Meetings or the Sanction Hearing, as the case may be. Claims Procedure Order The procedure for determining the validity and value of the Claims of Claimants for voting and distribution purposes is set forth in the Claims Procedure Order (a copy of which is attached hereto as Schedule C), the Meeting Order (a copy of which is attached hereto as Schedule B), the CCAA and the Plan (a copy of which is attached hereto as Schedule D). The Claims Procedure Order provides for, among other things: (a) a Claims Bar Date (or in the case of Claimants asserting Restructuring Period Claims, a Restructuring Period Claims Bar Date) prior to which Claimants are required to file their Proofs of Claim; (b) the procedures pursuant to which the validity and value of Claims are quantified and determined for voting and distribution purposes, including the procedures by which any Claims that were disputed would be adjudicated and resolved for voting and distribution purposes; and (c) the conversion of Claims denominated in a foreign currency into Canadian dollars. Any Claims denominated in a foreign currency shall be converted to Canadian dollars at the Bank of Canada's noon exchange rate in effect on the Filing Date. Pursuant to the Claims Procedure Order, with the exception of the Agent, Syndicate and the Noteholders, any Claimant that does not file its Proof of Claim before the Claims Bar Date or Restructuring Claims Bar Date will be forever barred from making or enforcing any Claim against the Lone Pine Group, its Directors and Officers. All Claimants should refer to the Claims Procedure Order and the Meeting Order for a complete description of these procedures. Entitlement to Receive Distributions The validity and value of Claims will be determined for distribution purposes in accordance with the Claims Procedure Order, the Meeting Order, the CCAA and the Plan. An Affected Unsecured Creditor holding a Disputed Distribution Claim will not be entitled to receive a distribution under the Plan in respect of such Disputed Distribution Claim or any portion thereof unless and until, and then only to the extent that, such Disputed Distribution Claim becomes an Allowed Claim. If there is any dispute as to the principal amount or number of Notes held by any Beneficial Noteholder and such dispute is not resolved by such Beneficial Noteholder and the Monitor by the date of the Meeting (or any adjournment thereof), the Monitor shall tabulate the vote for or against the Plan in respect of the disputed principal amount of such Beneficial Noteholder's Notes separately. If: (i) any such dispute remains unresolved as of the date of the Sanction Hearing; and (ii) the approval or non-approval of the Plan would be affected by the votes cast in respect of such disputed principal amount of Notes, then such result shall be reported to the Court at the Sanction Hearing and, if necessary, the Monitor may make a request to the Court for directions. The Plan does not affect Unaffected Claims. Persons with Unaffected Claims will not be entitled to receive any distributions under the Plan in respect of such claims. Unaffected Claims will be dealt with in accordance with the Plan. BACKGROUND TO THE RECAPITALIZATION The Lone Pine Group is insolvent. It is unable to meet its debt and other obligations as they become due, and its liabilities exceed the value of its assets. Accordingly, on September 25, 2013, the Applicants made an application to the Court for, among other things, protection from its creditors under the CCAA so as to provide the Lone Pine Group with the opportunity to develop and propose to its creditors a comprehensive restructuring plan and avoid a forced sale or liquidation of its assets through bankruptcy, exercise of creditors' rights or receivership proceedings. - 40 - The proposed Recapitalization pursuant to the Plan follows an extensive and thorough strategic review process commenced by the Lone Pine Group in 2012 and arising from a need to improve its financial position. After over a year of efforts to identify and develop transaction and refinancing alternatives and, ultimately, lengthy arm's length negotiations with the Initial Consenting Noteholders, the Lone Pine Group entered into the Support Agreement and the Backstop Agreement and determined that the proposed Plan should be pursued in accordance with the terms and conditions of those agreements and applicable laws. Events prior to the commencement of Creditor Protection Proceedings In August 2012, the Lone Pine Group announced that, in light of declining commodity prices and persistent widening of the differential between realized prices for Canadian crude oil and West Texas intermediate oil prices, it had elected to reduce capital spending for the balance of 2012 and expected a reduction in the borrowing base under the Current Credit Facility at the next scheduled redetermination date of November 1, 2012. Adjusting the capital spending rate was, at the time, regarded as a first step towards improving the Lone Pine Group's financial strength and flexibility. The Lone Pine Group also announced that it was considering other methods of debt reduction including the divestiture of certain non-core assets, but cautioned that there could be no assurance regarding its ability to identify or complete any such potential transaction. As at August 9, 2012, the borrowing base under the Current Credit Facility was $375 million, with approximately $240 million outstanding, in addition to the US$200 million aggregate principal amount of Notes then outstanding. In connection with its consideration of alternatives to improve its financial position, LPRI engaged RBC on August 13, 2012 to assist in completing a review of the Lone Pine Group's asset portfolio to identify and evaluate potential transaction alternatives to, among other things, reduce debt and improve liquidity. LPRI also engaged Scotia Waterous on August 27, 2012 and its mandate was to market certain non-core assets of the Lone Pine Group. The asset portfolio review process commenced in September 2012 and was initially focused on potential transaction alternatives involving LPR Canada's two core assets, being Evi and Narraway/Ojay. The Lone Pine Group, through RBC, conducted an extensive and thorough marketing process with respect to its Evi and Narraway/Ojay assets. Targeting strategic and financial buyers in Canada, the United States, Asia and elsewhere, 135 parties were contacted regarding interest in Evi and 43 parties were contacted regarding interest in Narraway/Ojay. Confidentiality agreements were entered into with any interested parties who wanted to review the Applicants' confidential data room, pursuant to which the Lone Pine Group shared confidential information with a view to eliciting transaction proposals, and management presentations were given to all interested parties who requested them. With respect to Evi, interested parties were advised that LPR Canada's preference was for a joint venture transaction but that it was open to alternatives – including an outright disposition. Discussions with potential counterparties continued through the end of 2012 and into 2013. RBC solicited transaction proposals in December 2012 and January 2013. The process yielded five disparate proposals, all of which were focused on Evi. After carefully considering the proposed transaction terms under each and receiving the advice of management and RBC, the Board determined to further pursue one of the proposals, which involved a potential joint venture at Evi (the "Evi JV Proposal"). Other proposals were not pursued because they either did not align with LPRI's objectives or were determined to be unfinanceable by the counterparty and were subsequently withdrawn. The counterparty that made the Evi JV Proposal is referred to hereinafter as the "Potential JV Candidate". The Lone Pine Group successfully completed approximately $101 million in non-core asset dispositions during the second half of 2012, the proceeds of which were primarily directed towards repayment of the Syndicate debt under the Current Credit Facility. These dispositions, together with continued weakness in the commodity price environment, resulted in a reduction in the borrowing base under the Current Credit Facility to $275 million by December 2012. As at December 17, 2012, after the non-core asset dispositions were completed, the borrowing base under the Current Credit Facility was $275 million, against which approximately $155 million was outstanding in addition to the US$200 million aggregate principal amount of Notes then outstanding. - 41 - The Lone Pine Group's core asset review continued through the first quarter of 2013. Previous efforts to identify and develop transaction opportunities in respect of core properties were supplemented with solicitations of interest by RBC for a corporate acquisition to 21 parties in February, 2013. No expressions of interest were received for a corporate acquisition. During the first quarter of 2013, the Lone Pine Group engaged in active discussions with the Potential JV Candidate with respect to the Evi JV Proposal, involving the sale of a 50% interest in its Evi asset. A confidential non-binding letter of intent was signed between the parties in early March 2013. General concurrence between the Applicants and the Potential JV Candidate was reached on a development plan for the Evi asset in April 2013, and the parties and their respective legal advisors commenced preparation of definitive transaction documents and due diligence in furtherance of continuing commercial discussions. Liquidity and capital resource constraints remained a significant factor for the Applicants, and in March 2013 the Lone Pine Group announced an interim 2013 capital budget that aimed to align its capital expenditure plan for the first half of 2013 with expected cash flow from operations together with proceeds from further non-core asset dispositions during that period. In April 2013, the Syndicate completed its semi-annual review of the borrowing base under the Current Credit Facility, reducing it further from $275 million to $185 million. To avoid a future financial covenant default under the Current Credit Facility, the Applicants had to obtain the Syndicate's agreement to amend the financial covenant under the Current Credit Facility. The Syndicate agreed to amend the Applicants' financial covenant to maintain Total Debt / EBITDA of not more than 4.0 to 1.0, so as to allow a higher ratio of up to 4.5 to 1.0 for any period ending on or before June 30, 2013, after which time the covenant would revert to the original permitted Total Debt / EBITDA ratio of 4.0 to 1.0. The additional liquidity afforded by the financial covenant relaxation was expected to provide the Lone Pine Group with sufficient near term liquidity temporarily to allow the Applicants to complete the asset portfolio review process, which at the time included discussions with the Potential JV Candidate regarding the Evi JV Proposal. On May 9, 2013, the Lone Pine Group disclosed in its quarterly report that, absent an improvement in natural gas prices, significant deleveraging from a strategic or equity capital markets transaction, reduced interest costs on its debt through refinancing or significant reductions to its operating costs, it did not believe that it would be able to comply with its financial covenants under the Current Credit Agreement through the end of 2013 and would therefore require additional covenant relief or otherwise refinancing of the indebtedness outstanding under the Current Credit Facility. Shortly thereafter, both Moody's and S&P downgraded LPR Canada and the outstanding Notes, citing liquidity constraints and declining production and reserves. In June 2013, the Lone Pine Group engaged another financial advisor to assist in its efforts to obtain a second lien secured credit facility to refinance the Current Credit Facility. Initial feedback from prospective lenders was somewhat positive but emphasized that a cost-effective refinancing would require a significant reduction in the outstanding principal amount of the Notes because the overall leverage of the Lone Pine Group was viewed to be too high. Throughout this period from March 2012 through late June 2012, the Lone Pine Group also continued efforts to advance the prospective Evi JV Proposal, including reaching an agreement in principle on a comprehensive, multiyear development plan for the Evi asset. However, in May 2013, the Potential JV Candidate began expressing concern to the Applicants about its own lack of liquidity and ability to fund its share of the future development costs. Then in late June 2013, the Potential JV Candidate indicated that it was no longer willing to proceed on the previous terms set out in the non-binding letter of intent, and discussions ceased after agreement in principle could not be reached on revised terms. Contact with other potential transaction counterparties was also maintained following commencement of the sales process in September 2012. No offers had been made in respect of Narraway/Ojay prior to the initial bid deadline of December 2012, but in the second quarter of 2013 the Applicants received two expressions of interest in respect of Narraway/Ojay. The Board decided not to pursue either of these offers because they did not, either individually or in aggregate with the other transactions being considered, solve the Lone Pine Group's liquidity problems. - 42 - Additionally, LPR Canada would have been selling its natural gas assets into what appeared to be the bottom of the market at that time. In connection with its refinancing efforts, the Lone Pine Group and its advisors initiated discussions in early July 2013 with one of the Initial Consenting Noteholders regarding a consensual exchange of the Notes for replacement securities on terms that would improve the Lone Pine Group's financial position. These discussions continued throughout the third quarter of 2013, with various proposals exchanged between the parties involving an exchange of Notes, in whole or in part, for different debt securities, for convertible securities or for equity securities, or some combination thereof. In late July 2013, the Lone Pine Group required further covenant relief from the Syndicate, failing which it would not have been in compliance with its Total Debt / EBITDA financial covenant under the Current Credit Facility for the period ended June 30, 2013. The Syndicate agreed to further amend the covenant to allow for Total Debt / EBITDA of up to 5.75 to 1.0 for any period on or before June 30, 2013, after which time it would revert to Total Debt / EBITDA of 4.0 to 1.0 for all periods thereafter. The Lone Pine Group disclosed that it did not, however, expect to meet the ratio for the next quarter ending September 30, 2013, and noted that such non-compliance could lead to an event of default and acceleration of all outstanding debt due under both the Current Credit Facility and, pursuant to the "cross-default" provisions thereof, the Note Indenture. The amendment also eliminated the grace period within which the Lone Pine Group would be required to repay excess loan amounts in the event of a borrowing base deficiency. As at July 26, 2013, the Lone Pine Group's available liquidity under the Current Credit Facility was $5 million based on $178 million in outstanding borrowings and $2 million in outstanding letters of credit against the borrowing base of $185 million. Through July and August, discussions and negotiations continued with various parties regarding a refinancing of the Current Credit Facility, and with one of the Initial Consenting Noteholders regarding a consensual exchange of the Notes for replacement securities on terms that would facilitate a refinancing of the Current Credit Facility. In addition, follow-up expressions of interest were sought from potential transaction counterparties with respect to an asset or corporate sale. The Board decided not to pursue these offers because they did not, either individually or in aggregate with the other transactions being considered, solve the Lone Pine Group's liquidity problems. Additionally, LPR Canada would have been selling its natural gas assets into what appeared to be the bottom of the market at that time. On August 15, 2013, LPR Canada did not make its semi-annual interest payment of approximately US$10.1 million due that day in respect of the outstanding Notes. Under the terms of the Note Indenture, LPR Canada had 30 days to cure its default and make the interest payment, failing which there would be an event of default under the Note Indenture, entitling the Note Indenture Trustee or holders of at least 25% aggregate principal amount of Notes to declare the Notes immediately due and payable, as well as a cross-default under the Current Credit Facility, entitling the Syndicate to accelerate the outstanding bank debt. The Lone Pine Group remained in active discussions with the Initial Consenting Noteholders during the 30-day cure period regarding a restructuring or refinancing of the Notes and indebtedness under the Current Credit Facility. Efforts to source new debt to refinance the existing bank debt and discussions with potential transaction counterparties also continued. Ultimately, however, the refinancing efforts proved unsuccessful and the asset valuation ascribed by the updated expressions of interest received in September 2013 was insufficient to provide a path forward to improving the Lone Pine Group's financial position. On September 11, 2013, the Lone Pine Group entered into a forbearance agreement pursuant to which the Syndicate agreed to forbear from exercising rights or remedies against the Applicants or from realizing on their security until the earlier of September 30, 2013 or the occurrence of an event of default within the meaning of the forbearance agreement. The Lone Pine Group also received confirmation from counsel to the Initial Consenting Noteholders that such holders had agreed to a "standstill" and to not provide any direction to the Note Indenture Trustee, on or before September 30, 2013, to take any steps to enforce any rights of the Note Indenture Trustee or the holders of Notes occasioned by the failure of LPR Canada to make the August 15, 2013 interest payment on the Notes. - 43 - Lengthy arm's length negotiations between the Lone Pine Group and its advisors, on the one hand, and the Initial Consenting Noteholders and their advisors, on the other, regarding the terms of the Recapitalization continued into the forbearance and "standstill" period. Those negotiations concluded late in the evening on September 24, 2013, whereupon the Applicants entered into the Support Agreement with the Initial Consenting Noteholders and the Backstop Agreement with the Initial Backstoppers. The following morning, on September 25, 2013, the Applicants commenced the Creditor Protection Proceedings in the Court pursuant to the CCAA, and in the U.S. Court pursuant to Chapter 15 of the U.S. Bankruptcy Code. LPRI, LPR Canada and all other subsidiaries of LPRI are parties to the Creditor Protection Proceedings. Throughout the period from commencement of the asset portfolio review process in 2012 to commencement of the Creditor Protection Proceedings on September 25, 2013, the Board of Directors met frequently, at regular intervals and on an ad hoc basis, along with RBC, other financial advisors, legal advisors and management, to review and discuss actions taken, responses received, the state of the asset portfolio review process generally, and broader strategic considerations relevant to the Lone Pine Group and the continued development of its properties, including associated capital requirements, as well as to receive advice from management and from financial and legal advisors (including independent legal counsel to the Board of Directors), and to provide direction to management and such advisors with respect to next steps. Creditor Protection Proceedings The Creditor Protection Proceedings were commenced to provide the Lone Pine Group with the opportunity to develop and propose to its creditors a comprehensive restructuring pursuant to a plan of compromise and arrangement under the CCAA in accordance with the terms and conditions of the Support Agreement, and avoid a forced sale or liquidation of its assets through bankruptcy, exercise of creditors' rights or receivership proceedings. The particulars of that restructuring are now provided for in the Plan, the implementation of which is subject to, among other conditions precedent, the approval of Affected Unsecured Creditors at the Meetings and the Court following the Sanction Hearing, which approvals are mandatory under the CCAA, as well as recognition of the Sanction Order (if granted) by the U.S. Court in the U.S. Proceedings. Subject to the terms and conditions of the Support Agreement, each of the Consenting Creditors has agreed to support the Plan and vote their Affected Unsecured Claims under the Notes in favour of the Approval Resolution at the Meetings. Although commencement of the Creditor Protection Proceedings constituted an event of default under the Note Indenture (pursuant to which approximately US$207.4 million in principal amount and accrued but unpaid interest was outstanding in respect of the Notes as of September 25, 2013) and the Current Credit Agreement (pursuant to which approximately $180 million in principal amount and accrued but unpaid interest was outstanding in respect of the Current Credit Facility as of September 25, 2013), as a result of which all obligations under the Note Indenture and the Current Credit Agreement automatically accelerated and became immediately due and payable, the Initial Order granted by the Court and the ancillary relief obtained from the U.S. Court in the U.S. Proceedings imposed a general stay of proceedings against the Applicants, including most actions to collect indebtedness incurred prior to Filing Date or to exercise control over property of a debtor. Accordingly, despite defaults under these instruments, any efforts to enforce such payment obligations are stayed and creditors' rights of enforcement in respect thereof are subject to the applicable provisions of the CCAA and the U.S. Bankruptcy Code. Absent an Order of the Court, substantially all pre-filing liabilities are subject to compromise under a plan of compromise and arrangement. In connection with the Initial Order, the Lone Pine Group received approval from the Court to pay or otherwise honor certain pre-filing obligations generally designed to stabilize its operations, including payment to certain critical suppliers and joint venture partners. The Lone Pine Group is paying, and intends to continue paying, claims arising after the Filing Date in the ordinary course of business, and has retained, pursuant to the Initial Order, legal and financial professionals to advise it in connection with the Creditor Protection Proceedings. The Lone Pine Group has incurred and expects to continue to incur significant costs associated with the restructuring and the Creditor Protection Proceedings. The amount of these expenses is expected to significantly affect the Company's financial position and results of operations, but the Lone Pine Group cannot accurately predict the effect the Creditor Protection Proceedings will have on its business at this time. - 44 - Events Subsequent to the commencement of Creditor Protection Proceedings Exchange Listings Trading in the Existing Common Shares on the TSX was halted on September 25, 2013, and the Existing Common Shares were subsequently delisted on October 31, 2013. Trading in the Existing Common Shares on the NYSE was suspended on September 16, 2013, and the Existing Common Shares was subsequently removed from listing and registration on the NYSE on October 22, 2013. As a result of Lone Pine's financial position and the Creditor Protection Proceedings, its outstanding equity securities have no value and will be cancelled on implementation of the Plan. Claims Procedure Order On October 9, 2013, the Court issued the Claims Procedure Order establishing a process to identify and quantify claims of creditors of the Lone Pine Group in the CCAA Proceeding. A copy of the Claims Procedure Order is attached as Schedule C to this Circular. By further Orders dated November 8, 2013 and November 27, 2013, respectively, the Claims Bar Date was changed to November 27, 2013, and the date by which the Applicants or the Monitor must send a notice of revision or disallowance in respect of any revised or rejected claims, as applicable, was changed to December 13, 2013. CCAA Extension Orders On October 24, 2013, the Court granted an Order extending the stay of proceedings to November 13, 2013 or, if on or prior to that date the Monitor filed a certificate certifying that the Monitor and the Syndicate so consent, November 29, 2013. The Monitor's certificate was filed on November 12, 2013 and the stay was therefore extended to November 29, 2013. On November 27, 2013, the Court granted a further Order extending the stay of proceedings to January 10, 2014. Financing during the Creditor Protection Proceedings In connection with the Creditor Protection Proceedings and in order to provide liquidity during the Creditor Protection Proceedings, on October 24, 2013, LPRI and LPR Canada entered into the DIP Agreement with respect to a $10 million debtor-in-possession DIP Facility. Certain of the lenders under the Current Credit Facility are lenders under the DIP Facility, and the Agent under the Current Credit Facility serves as administrative agent under the DIP Facility. Pursuant to the terms of the DIP Facility, (i) the DIP Lenders agreed to lend LPR Canada up to $10,000,000, which loans will bear interest at the Canadian Prime Rate (as defined in the DIP Facility), plus 5.00%, (ii) LPRI and each Restricted Subsidiary (as defined in the DIP Facility) agreed to guarantee LPR Canada's obligations thereunder, and (iii) the Obligations (as defined in the DIP Facility) are and shall be at all times secured by the liens in all collateral created by the DIP Charge (as defined in the DIP Facility) and all such liens shall be first priority liens subject only to the Administration Charge (as defined in the DIP Facility). Proceeds of loans under the DIP Facility may be used to provide for working capital, capital expenditures and other expenditures during the course of the CCAA Proceeding, in accordance with the terms of the DIP Facility. The DIP Facility matures on March 25, 2014. The DIP Facility contains customary negative covenants restricting certain of LPRI and LPR Canada's activities, including restrictions on their ability to incur indebtedness, incur liens, consummate certain fundamental changes, make investments, dispose of assets, enter into sale and lease transactions, enter into hedging agreements, make restricted payments and enter into transactions with affiliates. Furthermore, the DIP Facility contains customary events of default, which include a plan of compromise and arrangement not being sanctioned by the Court prior to January 31, 2014 and certain other insolvency proceeding-related events of default. - 45 - During the pendency of the Creditor Protection Proceedings, the Lone Pine Group is funding operations pursuant to an Order permitting LPRI's use of cash balances, working capital and available borrowings under the DIP Facility. As of December 10, 2013, no amount was outstanding under the DIP Facility. Commitment Letter for New Credit Facility On November 11, 2013, the Lone Pine Group entered into a commitment letter with a syndicate of lenders to provide for the New Credit Facility to be effective upon completion of the proposed restructuring. Funding of the New Credit Facility, which remains subject to the negotiation and execution of definitive documentation, is conditional on, among other things, completion of the proposed restructuring. It is estimated that the available borrowing base of the New Credit Facility will be $130 million at the time of closing. As part of the proposed restructuring, the Lone Pine Group expects that proceeds from the New Investment, together with a portion of the borrowings available under the New Credit Facility, will be used to repay all secured indebtedness under the Lone Pine Group's Current Credit Facility. The commitment letter and the term sheet attached to the commitment letter established a commitment to provide LPRC or a successor thereto pursuant to the Recapitalization with credit facilities in the amount of the lower of the Borrowing Base (as defined in the term sheet) and Cdn$130 million comprised of: (a) a Cdn$70 million term credit facility provided in full by Morgan Stanley and (b) a Cdn$60 million revolving credit facility provided equally by Alberta Treasury Branches and Societe Generale, up to Cdn$10 million of which may be provided by Alberta Treasury Branches as an operating facility. The Borrowing Base will represent the loan value of proved reserves attributable to LPRC's and any of its subsidiaries' oil and gas properties located in Canada, and will be determined semi-annually on each April 1 and October 1 beginning April 1, 2014, with interim unscheduled redeterminations as described in the term sheet. It is estimated that the Borrowing Base will be Cdn$130 million at the time of closing. Alberta Treasury Branches, as cash manager under the New Credit Facility, may also provide certain ancillary facilities, including (i) credit cards for commercial purposes up to a maximum principal obligation of Cdn$250,000 and (ii) cash or treasury management services or similar transactions. LPRC's obligations under the New Credit Facility are supported by a guarantee by its current and future direct and indirect subsidiaries and by LPRI and its direct and indirect subsidiaries. Under the New Credit Facility, Alberta Treasury Branches will serve as administrative agent and collateral agent, Morgan Stanley Capital Group Inc. will serve as documentation agent and Societe Generale will serve as syndication agent. The New Credit Facility will mature on the earlier of (i) four years from the closing date, (ii) the date of maturity of the revolving facility, which is extendible annually (if sooner), or (iii) such earlier date as may be set forth in definitive documentation for the New Credit Facility. Closing on the New Credit Facility is expected to occur on or before January 31, 2104. Loans under the New Credit Facility may be utilized only for: (i) repayment on the closing date of indebtedness outstanding under LPRC's existing secured credit facility, (ii) capital expenditures on LPRC's oil and gas assets, and (iii) general corporate purposes. Funding of the New Credit Facility is conditional on, among other things, completion of the Recapitalization and satisfactory completion of title review and other due diligence. LPR Canada's obligations under the New Credit Facility will be secured by substantially all of the assets of each of the Applicants, to be evidenced by, among other agreements, a Cdn$500 million demand debenture. The New Credit Facility will require that LPRC enter into commodity hedging agreements at certain minimum required levels with respect to its oil and natural gas production through 2017. LPRC may also be required, at the request of the lenders, to enter into certain additional interest rate hedging agreements. On November 27, 2013, the Court approved the commitment letter for the New Credit Facility and authorized the Lone Pine Group to perform its obligations thereunder, and also approved a charge on the property of the Lone Pine Group as security for the benefit of counterparties under the crude oil and natural gas hedge arrangements contemplated by the commitment letter. - 46 - Meeting Order On December 13, 2013, the Court granted the Meeting Order authorizing the Lone Pine Group to call the Meetings of Affected Unsecured Creditors on January 6, 2014 and establishing, among other things, procedures for proxies and voting. A copy of the Meeting Order is attached as Schedule B to this Circular. DETAILS OF THE RECAPITALIZATION The following is a summary only of certain material terms of the Plan and the Recapitalization. This summary is qualified in its entirety by reference to the complete text of the Plan. Affected Unsecured Creditors are urged to read the Plan in its entirety. A copy of the Plan is attached as Schedule D to this Circular. Purpose of the Plan The purpose of the Plan is to: (a) implement the Recapitalization, which will significantly reduce the indebtedness of the Lone Pine Group through the Debt Exchange and provide essential financing to address current and future liquidity needs through the New Investment; (b) provide for settlement of all Allowed Affected Claims; (c) effect a release and discharge of all Affected Claims and Released Claims; and (d) ensure the continued viability and ongoing operations of the Lone Pine Group. The Plan is put forward based on the expectation that, overall and in the aggregate, parties who have an economic interest in the Lone Pine Group, when considered as a whole, will derive a greater benefit from the implementation of the Plan than would result from a forced sale or liquidation of the Lone Pine Group's assets through bankruptcy, exercise of creditors' rights or receivership proceedings. The Plan has the support of the Initial Consenting Noteholders, which as at the date hereof hold over 75% of the aggregate principal amount of the Notes and have agreed, in accordance with terms and conditions of the Support Agreement, to vote their Affected Unsecured Claims in favour of the Plan. Transactions to be effected pursuant to the Plan The Plan, if approved by the Affected Unsecured Creditors at the Meeting and thereafter by the Court pursuant to the Sanction Order, and if implemented in accordance with its terms, will effect a capital reorganization of the Lone Pine Group and generally provides, among other things, for the following: (a) Debt Exchange – the exchange of all Notes and other Affected Unsecured Claims in consideration for new common equity in the Restructured Group in the form of voting common shares of LPR Canada (being LPRC Class A Voting Common Shares), together with concurrently issued voting common shares of LPRI (being LPRI Class A Voting Common Shares) and, if applicable, any Backstopper's Pro-Rata Share of the Backstop Amount, except for Affected Unsecured Claims of Cash Pool Creditors, as noted below; (b) New Investment – an offering to Qualifying Unsecured Creditors of an amount between a minimum of US$100,000,000 and a maximum of US$110,000,000 in new preferred equity in the Restructured Group in the form of new redeemable convertible preferred shares of LPR Canada (being LPRC Preferred Shares), together with concurrently issued multiple voting shares of LPRI (being LPRI Multiple Voting Common Shares), pursuant to which such Qualifying Unsecured Creditors may, at their election, invest additional capital and purchase their pro rata share of the New Investment; (c) Backstop Commitment – the issuance of all such LPRC Preferred Shares and concurrently issued LPRI Multiple Voting Common Shares, pursuant to the Backstop Commitment, so as to ensure that the Restructured Group realizes the full New Investment Amount; - 47 - (d) Repayment of Credit Facility – the repayment in full of secured bank debt with proceeds from the New Investment and borrowings under the New Credit Facility; (e) Cancellation of Existing Parent Shares, Equity Interests and Equity Claims – the cancellation of all Existing Parent Shares, Equity Interests and Equity Claims for no consideration, which in the context of the Creditor Protection Proceedings is a necessary consequence of the Lone Pine Group's inability to pay the priority claims of Affected Unsecured Creditors in full and in compliance with the terms of the CCAA; and (f) Cash Pool Creditors – the payment in cash of Affected Unsecured Claims of Cash Pool Creditors that are, or that the holder thereof elects to reduce to, $10,000 or less, subject to an aggregate maximum Distributable Amount limit of $700,000 for all such claims and prorating in the event that such Affected Unsecured Claims exceed the maximum Distributable Amount. The foregoing description is generalized and is qualified in its entirety by reference to the specific provisions of the Plan, which among other things specifies the particular Recapitalization steps and their sequence. See "−Plan Implementation Date Transactions" below. These steps include certain preliminary and intermediate transactions to effect the desired ending structure. Effect of the Plan The Plan provides for, among other things, the full and final release and discharge of the Affected Claims and Released Claims, a settlement of, and consideration for, all Allowed Affected Unsecured Claims and a recapitalization of the Lone Pine Group. Implementation of the Plan will result in the Affected Unsecured Creditors of the Lone Pine Group becoming, in accordance with the transactions provided for under the Plan and in place of the Existing Shareholders, the shareholders of the Restructured Group on the Plan Implementation Date. More particularly, Affected Unsecured Creditors will receive: in connection with the compromise of their Affected Unsecured Claims, new common equity in the Restructured Group in the form of LPRC Class A Voting Common Shares and concurrently issued LPRI Class A Voting Common Shares and, if applicable, any Backstopper's Pro-Rata Share of the Backstop Amount; and for those qualified Affected Unsecured Creditors that are also Subscribing Unsecured Creditors and, as such, have elected to participate in the New Investment and invest additional funds into the Restructured Group, new preferred shares in the Restructured Group in the form of LPRC Preferred Shares and concurrently issued LPRI Multiple Voting Common Shares. New Shares to be Distributed to Affected Unsecured Creditors Number of New Shares to be issued The actual number of New Shares of each class to be distributed to Affected Unsecured Creditors on the Plan Implementation Date will be as agreed to by the Applicants, the Monitor and the Majority Initial Consenting Noteholders prior to the Plan Implementation Date. As between the Affected Unsecured Creditors (including, as applicable, Subscribing Unsecured Creditors) to which New Shares are distributable, however, the proportionate share of the total number of New Shares of each such class to be distributed to each such Affected Unsecured Creditor will be determined on a pro rata basis in accordance with the Plan. If, for example, the proportionate share of an Affected Unsecured Creditor is such that it is entitled under the Plan to receive 2.8% of the aggregate number of new LPRC Class A Voting Common Shares, then it will receive 28,000 shares if the Agreed Number of LPRC Class A Voting Common Shares is 1,000,000, and 280,000 shares if the Agreed Number of LPRC Class A Voting Common Shares is 10,000,000. - 48 - In determining the Agreed Number of New Shares, the number of new LPRC Preferred Shares to be distributed to Subscribing Unsecured Creditors pursuant to the New Investment will be three (3) times the number of new LPRC Class A Voting Common Shares to be distributed to Affected Unsecured Creditors (other than Cash Pool Creditors) pursuant to the Debt Exchange. The effect of this is that the new LPRC Preferred Shares will be initially convertible, in aggregate, into such number of LPRC Class B Non-Voting Common Shares as is equal to 75% of the total number of LPRC Class A Voting Common Shares and LPRC Class B Non-Voting Common Shares that would be outstanding immediately following the Plan Implementation Date assuming conversion of all such LPRC Preferred Shares into LPRC Class B Non-Voting Common Shares in accordance with their terms. See "– Overview of New Share characteristics" below. In addition, in order to give effect to the effective separation of economic rights and voting rights as described below, (i) the Agreed Number of LPRC Preferred Shares will be equal to the Agreed Number of LPRI Multiple Voting Common Shares, and (ii) the Agreed Number of LPRC Class A Voting Common Shares will be equal to the Agreed Number of LPRI Class A Voting Common Shares. One New Share of LPRI for every one New Share of LPR Canada For every New Share of LPR Canada that is distributed to an Affected Unsecured Creditor (including, as applicable, Subscribing Unsecured Creditors) pursuant to the Plan there will also be distributed one corresponding New Share of LPRI. In the case of new common equity interests distributed in connection with the compromise of Affected Unsecured Claims pursuant to the Debt Exchange, each Affected Unsecured Creditor (other than Cash Pool Creditors) will receive, for every LPRC Class A Voting Common Share distributed to such creditor, one LPRI Class A Voting Common Share. In the case of new preferred equity interests distributed in connection with the investment of new capital pursuant to the New Investment, each Subscribing Unsecured Creditor will receive, for every LPRC Preferred Share distributed to such creditor, one LPRI Multiple Voting Common Share. Separation of economic and voting rights The Plan will effectively separate the economic rights and the voting rights of a Post-Implementation Shareholder with respect to the Restructured Group, in that Affected Unsecured Creditors who become Post-Implementation Shareholders will, for so long as that post-implementation structure remains in effect, generally look to their shares of LPR Canada for future economic returns and to their shares of LPRI for the exercise of voting rights only. This will primarily be a function of (i) LPRI retaining a controlling voting interest in LPR Canada through a "super voting" share (being the LPRC Class C Multiple Voting Share) issued by LPR Canada to LPRI as part of the Recapitalization steps to which will be attached greater than 70% of the total voting rights attached to all LPR Canada shares post-implementation, (ii) the New Shares issued by LPRI, whether LPRI Class A Voting Common Shares pursuant to the Debt Exchange or LPRI Multiple Voting Common Shares pursuant to the New Investment, carrying voting rights in respect of LPRI, and (iii) LPRI holding, after implementation of the Plan, only the LPRC Class C Multiple Voting Share and not otherwise holding any shares or other investment interest in LPR Canada or any other material assets. Accordingly, the rights, privileges, restrictions and conditions attached to each class of New Shares will be such that each Affected Unsecured Creditor that becomes, as a result of the Plan, a Post-Implementation Shareholder, will be expected to primarily: realize any future economic benefits attributable to its equity ownership in the Restructured Group, whether through dividends or other distributions on or in respect of its New Shares or otherwise, as a consequence of being a shareholder of LPR Canada; and - 49 other than in respect of Majority Actions described below (as applicable), exercise voting rights with respect to the Restructured Group in its capacity as a shareholder of LPRI, which will in turn hold a controlling voting interest in LPR Canada. Economic rights in respect of equity interests of Post-Implementation Shareholders in the Restructured Group LPR Canada Affected Unsecured Creditors (other than Cash Pool Creditors) will receive LPRC Class A Voting Common Shares pursuant to the Debt Exchange, and Subscribing Unsecured Creditors will receive LPRC Preferred Shares pursuant to the New Investment. The LPRC Preferred Shares will (i) be convertible into LPRC Class B Non-Voting Common Shares as described below, (ii) be subject to redemption after four years at the option of LPR Canada and after eight years at the option of the holder, (iii) participate in any declared dividends (if any) on a pari passu basis with the LPRC Class Voting Common shares and LPRC Class B Non-Voting Common Shares, and (v) have preferential rights in any distribution of assets on liquidation, winding-up or dissolution of LPR Canada. The terms of the LPRC Class A Voting Common Shares and the terms of the LPRC Class B Non-Voting Common Shares will be substantially economically equivalent. More particularly, the LPRC Class A Voting Common Shares and the LPRC Class B Non-Voting Common Shares will rank pari passu and participate on a pro rata basis, according to the number of shares held, in any distribution of assets on liquidation, winding-up or dissolution. In addition, the LPRC Class A Voting Common Shares and LPRC Class B Non-Voting Common Shares will participate in any declared dividends (if any) on a pari passu basis with the LPRC Preferred Shares. The LPRC Class A Voting Common Shares and LPRC Class B Non-Voting Common Shares will rank subordinate to the LPRC Preferred Shares, however, in any distribution of assets on liquidation, winding-up or dissolution of LPR Canada. On any such distribution, the holders of LPRC Preferred Shares will have a preferential right to receive, in cash or other assets, for every LPRC Preferred Share held, an amount based on the then-applicable Redemption Price and the number of Class B Non-Voting Common Shares into which the LPRC Preferred Share is then convertible. The Redemption Price will initially be equal to the Issue Price and will thereafter increase over time based on the Accretion Rate of 10% per annum. The LPRC Preferred Shares will be convertible into LPRC Class B Non-Voting Common Shares according to a conversion ratio determined by dividing (x) the then-applicable Redemption Price by (y) the Issue Price. This formula results in an escalating conversion ratio by which each LPRC Preferred Share is convertible into LPRC Class B Non-Voting Common Shares initially on a one-for-one basis but subject to increase over time based on the annual 10% increase in the Redemption Price. In effect, there will be an annual 10% increase in the number of LPRC Class B Non-Voting Common Shares into which each LPRC Preferred Share is convertible. Accordingly, during the first year following the Plan Implementation Date each LPRC Preferred Share will be convertible into one LPRC Class B Non-Voting Common Share, and each year thereafter each LPRC Preferred Share will be convertible into such number of LPRC Class B Non-Voting Common Shares as is equal to 110% of the previous year's conversion ratio. Holders of LPRC Class A Voting Common Shares will have their equity interest in LPR Canada diluted over time as a result of the annual Accretion Rate on the LPRC Preferred Shares. See "Risk Factors – Dilutive effect of New Investment". Each LPRC Preferred Share will be redeemable after four (4) years at the option of LPR Canada and eight (8) years at the option of the holder. Any redemption of LPRC Preferred Shares by LPR Canada will be subject to the statutory prohibition under the ABCA against a corporation making any payment to purchase or otherwise acquire shares issued by it if there are reasonable grounds for believing that the corporation is, or would after the payment be, unable to pay its liabilities as - 50 - they become due, or the realizable value of the corporation's assets would after the payment be less than the aggregate of its liabilities and stated capital of all classes. LPRI The LPRI Class A Voting Common Shares distributable to Affected Unsecured Creditors (other than Cash Pool Creditors) pursuant to the Debt Exchange, and the LPRI Multiple Voting Common Shares distributable to Subscribing Unsecured Creditors pursuant to the New Investment, are expected to have nominal economic value. This will be a function of LPRI holding, after implementation of the Plan, only the single "super voting" LPRC Class C Multiple Voting Share by which it retains a controlling voting interest in LPR Canada (but only a nominal economic interest) and not otherwise holding any shares or other investment interest in LPR Canada or any other material assets. Pursuant to the Plan, if LPRI shall at any time after the Plan Implementation Date receive payment of any amount pursuant to any legal proceedings commenced by LPRI, by LPR Canada or by LPRI on behalf of LPR Canada in respect of a cause of action arising prior to the Effective Time, or in settlement of any such proceedings, LPRI shall receive such payment in trust for the benefit of LPR Canada and shall promptly remit the same to LPR Canada. Voting rights in respect of equity interests of Post-Implementation Shareholders in the Restructured Group LPR Canada Although Affected Unsecured Creditors will receive LPRC Class A Voting Common Shares pursuant to the Debt Exchange, and such shares will be voting shares, the Plan provides that LPRI will retain a controlling voting interest in LPR Canada through the "super voting" LPRC Class C Multiple Voting Share to be issued by LPR Canada to LPRI as part of the Recapitalization steps. Accordingly, the voting rights attached to the new LPRC Class A Voting Common Shares distributed to Affected Unsecured Creditors (other than Cash Pool Creditors) will be effectively subordinated to the voting rights attached to the "super voting" LPRC Class C Multiple Voting Share held by LPRI. As the LPRC Preferred Shares to be distributed to Subscribing Unsecured Creditors (as well as any Class B NonVoting Common Shares issued on the conversion thereof) are themselves non-voting shares, they will not affect the general allocation of voting rights at the LPR Canada level. As a result of the LPRC Class C Multiple Voting Share, the LPRC Class A Voting Common Shares will be "subordinate voting securities" within the meaning of applicable Canadian securities legislation. LPR Canada is currently a wholly-owned subsidiary of LPRI and, assuming implementation of the Plan, will remain a subsidiary of LPRI – albeit not wholly-owned as a result of the distribution of LPRC Class A Voting Common Shares to Affected Unsecured Creditors (other than Cash Pool Creditors) and LPRC Preferred Shares to Subscribing Unsecured Creditors. Maintenance of this parent-subsidiary relationship as between LPRI and LPR Canada is intended to preserve the existing assets and entitlements of LPRI and LPR Canada, respectively. The number of votes attached to the "super voting" LPRC Class C Multiple Voting Share will be as agreed to by the Applicants, the Monitor and the Majority Initial Consenting Noteholders prior to completion, and will in any event be greater than 70% of the total voting rights attached to all LPR Canada shares post-implementation. Accordingly, for purposes of general shareholder approval requirements under the ABCA, LPRI will have sufficient voting power to approve any transaction or other matter in respect of LPR Canada that requires shareholder approval by an ordinary resolution (being a resolution passed by a majority of the votes cast by the shareholders who voted in respect of that resolution), including the election of directors or appointment of an auditor for LPR Canada, or a special resolution (being a resolution passed by a majority of not less than two-thirds of the votes cast by the shareholders who voted in respect of that resolution). Notwithstanding that the voting rights attached to the new LPRC Class A Voting Common Shares distributed to Affected Unsecured Creditors (other than Cash Pool Creditors) will be effectively subordinated by the voting rights - 51 - attached to the "super voting" LPRC Class C Multiple Voting Share held by LPRI, and that the LPRC Preferred Shares to be distributed to Subscribing Unsecured Creditors (as well as any Class B Non-Voting Common Shares issued on the conversion thereof) are themselves non-voting shares, certain transactions and matters affecting LPR Canada will, if any one holder of LPRC Preferred Shares acquires (together with its affiliates) on implementation of the Plan at least one-third of the total number of LPRC Preferred Shares distributed on the Plan Implementation Date, and for so long as such holder (together with its affiliates) continues to hold at least one-third of the total number of LPRC Preferred Shares then outstanding, require the consent of the holders of a majority of the LPRC Preferred Shares then outstanding. These matters (herein referred to as "Majority Actions") include: any authorization or issuance of, or agreement to authorize or issue, any equity securities of LPR Canada, or securities or rights of any kind convertible into or exchangeable for any equity securities of LPR Canada, including, without limitation, the adoption of any new stock option or other equity compensation plan; any material amendment, modification or restatement of the articles or bylaws of LPR Canada, or any modification of the number of directors constituting the entire board of directors of LPR Canada; any declaration or payment of any dividend or other distribution on or in respect of any shares in the capital of LPR Canada; other than in respect of a redemption of the LPRC Preferred Shares in accordance with their terms, any redemption, purchase, repurchase or other acquisition for value of any equity securities of LPR Canada (other than pursuant to an employee benefit plan, agreement or arrangement); any amalgamation, merger or consolidation of LPR Canada with or into one or more persons, or sale or transfer of all or substantially all of the assets of LPR Canada; any recapitalization or reorganization or any voluntary liquidation of LPR Canada under applicable bankruptcy or reorganization legislation, or any dissolution or winding up of LPR Canada; other than the New Credit Facility and drawings thereunder, LPR Canada issuing or becoming liable for any long-term debt in excess of US$10 million individually or US$20 million in the aggregate; any acquisition by LPR Canada of assets or equity securities of any entity in excess of US$10 million individually, or US$20 million in the aggregate; any material change in accounting methods or policies of the LPR Canada; and any change in auditor of LPR Canada. The articles of LPR Canada will also provide for certain shareholder protections and other rights agreed between the Applicants and the Majority Initial Consenting Noteholders, including drag-along, tag-along, pre-emptive, registration and piggy-back rights, which will be described in the Plan Supplement to be issued in accordance with the terms of the Meeting Order. LPRI With respect to voting rights in respect of LPRI following the Plan Implementation Date (with LPRI, in turn, retaining a controlling voting interest of greater than 70% in LPR Canada through the LPRC Class C Multiple Voting Share), Affected Unsecured Creditors (other than Cash Pool Creditors) will receive (i) pursuant to the Debt Exchange, new LPRI Class A Voting Common Shares, and (ii) if they are qualified to participate in the New Investment and elect as Subscribing Unsecured Creditors to invest additional capital pursuant thereto, new LPRI Multiple Voting Common Shares. The LPRI Class A Voting Common Shares (which will be issued together with the LPRC Class A Voting Common Shares) distributed to Affected Unsecured Creditors (other than Cash Pool Creditors) are ordinary voting shares to - 52 - which will be attached one vote for every such share held. The LPRI Multiple Voting Common Shares (which will be issued for nominal consideration together with the LPRC Preferred Shares) distributed to Subscribing Unsecured Creditors will be "special voting" shares to which will be attached voting rights entitling the holder thereof to, initially, one (1) vote per share subject to increase over time based on the Accretion Rate of 10% per annum. The escalating voting right to be attached to the LPRI Multiple Voting Shares will result in an annual 10% increase in the number of votes attached to each such share, such that during the first year following the Plan Implementation Date each LPRI Multiple Voting Common Share will carry one (1) vote per share, and each year thereafter each LPRI Multiple Voting Common Share will carry such number of votes as is equal to 110% of the previous year's per share voting entitlement. This year-over-year increase in the voting rights of the LPRI Multiple Voting Common Shares distributed pursuant to the New Investment will dilute the proportionate voting rights of the LPRI Class A Voting Common Shares distributed pursuant to the Debt Exchange. Holders of LPRI Class A Voting Common Shares will have their voting interest in LPRI diluted over time as a result of the annual Accretion Rate on the LPRI Multiple Voting Shares. See "Risk Factors – Dilutive effect of New Investment". The certificate of incorporation of LPRI will also provide for certain shareholder protections and other rights substantially similar to those that will be provided for in the articles of LPR Canada, which will be described in the Plan Supplement to be issued in accordance with the terms of the Meeting Order. Overview of New Share characteristics The following tables highlight certain principal characteristics of the different classes of New Shares to be distributed to Affected Unsecured Creditors (including, as applicable, Subscribing Unsecured Creditors) pursuant to the Plan. New Shares distributed pursuant to the Debt Exchange Shares issued by LPR Canada Shares issued by LPRI LPRC Class A Voting Common Shares LPRI Class A Voting Common Shares ordinary voting rights (one vote for each share held), but effectively subordinated (as a class) to the "super voting" LPRC Class C Multiple Voting Share to be issued to LPRI and pursuant to which LPRI will retain a controlling voting interest in LPR Canada (greater than 70% of the total voting rights attached to all LPR Canada shares post-implementation) substantially economic equivalent to the Class B Non-Voting Common Shares (into which the LPRC Preferred Shares are convertible) ordinary voting rights (one vote for each share held), but effectively subordinated (as a class) by the superior voting rights attached to the LPRI Multiple Voting Common Shares, which initially carry one (1) vote per share but subject to increase over time based on the Accretion Rate of 10% per annum right to participate in any declared dividends (if any) on a pari passu basis with the LPRC Class B Non-Voting Common Shares (into which the LPRC Preferred Shares are convertible) and the LPRC Preferred Shares right to participate in any declared dividends (if any) on a pari passu basis with the LPRI Multiple Voting Common Shares, pro rata according to the number of shares held subject to the preferential distribution rights of the holders of LPRC Preferred Shares described herein, right to participate in any further distribution of assets on liquidation, winding-up or dissolution on a pari passu basis with the LPRC Class B Non-Voting Common Shares (into which the LPRC Preferred Shares are convertible), pro rata according to the number of shares held right to participate in any distribution of assets on liquidation, winding-up or dissolution on a pari passu basis with the LPRI Multiple Voting Common Shares, pro rata according to the number of shares held - 53 - New Shares distributed pursuant to the New Investment Shares issued or issuable by LPR Canada Shares issued by LPRI LPRC Preferred Shares LPRI Multiple Voting Common Shares no voting rights (except in those limited circumstances required by law and with respect to Majority Actions in the circumstances described herein) right to participate in any declared dividends (if any) on a pari passu basis with the LPRC Class A Voting Common Shares and the LPRC Class B Non-Voting Common Shares "special" voting rights pursuant to which each LPRI Multiple Voting Share will initially carry one (1) vote per share but subject to increase over time based on the Accretion Rate of 10% per annum in the event of a distribution of assets on liquidation, winding-up or dissolution, preferential right to receive, in cash or other assets, for every LPRC Preferred Share held, in priority to any distribution to the holders of any other class of shares, an amount based on the then-applicable Redemption Price (which will initially be equal to the Issue Price and will increase over time based on the Accretion Rate of 10% per annum) and the number of Class B Non-Voting Common Shares into which the LPRC Preferred Share is then convertible right to participate in any declared dividends (if any) on a pari passu basis with the LPRI Class A Voting Common Shares, pro rata according to the number of shares held right to participate in any distribution of assets on liquidation, winding-up or dissolution on a pari passu basis with the LPRI Class A Voting Common Shares, pro rata according to the number of shares held convertible at the holder's option into LPRC Class B Non-Voting Preferred Shares, initially on a one-for-one basis but subject to increase over time based on the annual 10% increase in the Redemption Price redeemable after four (4) years at the option of LPR Canada and after eight (8) years at the option of the holder LPRC Class B Non-Voting Common Shares (into which the LPRC Preferred Shares are convertible) no voting rights (except in those limited circumstances required by law) substantially economic equivalent to the Class A Voting Common Shares right to participate in any declared dividends (if any) on a pari passu basis with the LPRC Class A Voting Common Shares and the LPRC Preferred Shares subject to the preferential distribution rights of the holders of LPRC Preferred Shares described herein, right to participate in any further distribution of assets on liquidation, winding-up or dissolution on a pari passu basis with the LPRC Class A Voting Common Shares, pro rata according to the number of shares held The foregoing is a summary only of certain intended principal characteristics of the different classes of New Shares to be distributed to Affected Unsecured Creditors (including, as applicable, Subscribing Unsecured Creditors) pursuant to the Plan and are subject to finalization by the Applicants, the Monitor and the Majority Initial Consenting Noteholders. Further information regarding the rights, privileges, restrictions and conditions, as finally determined, that will be attached to each class of New Shares will be provided in the Plan Supplement to be issued in accordance with the terms of the Meeting Order. - 54 - Treatment of Certain Parties under the Plan The Plan will become effective at the Effective Time in accordance with its terms and the steps and sequence set forth in the Plan, and shall be binding on and enure to the benefit of the Lone Pine Group, all Affected Creditors (including Equity Claimants), all Released Parties and all other Persons named or referred to in, or subject to, the Plan. An Affected Creditor shall receive distributions in respect of its Affected Claim as set forth below only to the extent that such Claim is an Allowed Affected Claim and has not been paid, released, discharged or otherwise satisfied prior to the Plan Implementation Date. All distributions made pursuant to the Plan will be allocated towards the repayment of the principal amount in respect of an Affected Claim. Cash Pool Creditors: (a) each Cash Pool Creditor, will receive an amount from the Cash Pool equal to the lesser of (i) the amount of its Allowed Affected Unsecured Claim (as such amount may have been reduced by the Cash Election of such Cash Pool Creditor), and (ii) its Cash Pool Creditor's Pro-Rata Share of the Cash Pool; provided that despite any other provisions of the Plan the total amount payable to all Cash Pool Creditors under the Plan shall not exceed the Distributable Amount; (b) any Cash Pool Creditor who receives a distribution in accordance with the Plan shall not be entitled to any other payment or consideration with respect to its Allowed Affected Unsecured Claim; and Affected Unsecured Creditors (other than Cash Pool Creditors): (c) each other Affected Unsecured Creditor (other than Cash Pool Creditors) with an Allowed Affected Unsecured Claim will receive in consideration for its Affected Unsecured Claim: (i) its Affected Unsecured Creditor's Pro-Rata Share of the Agreed Number of LPRC Class A Voting Common Shares; (ii) one LPRI Class A Voting Common Share for each LPRC Class A Voting Common Share issued pursuant to (i) immediately above; and (iii) if such Affected Unsecured Creditor is a Backstopper, its Backstopper's Pro-Rata Share of the Backstop Amount. All Affected Unsecured Claims shall be fully, finally, irrevocably and forever compromised, settled, released, discharged, extinguished, cancelled and barred on the Plan Implementation Date. Each Affected Unsecured Creditor that is a Qualifying Unsecured Creditor will also have the right, but not the obligation, to participate in the New Investment up to a maximum of such Affected Unsecured Creditor's Pro Rata Share of the New Investment. See "−Description of New Investment" below. If a significant number of Affected Unsecured Creditors elect, by providing a Cash Election to the Monitor before the Cash Election Deadline, to reduce their Affected Unsecured Claims to the Cash Pool Cap, the Cash Pool will be distributed on a pro rata basis among all such electing Cash Pool Creditors, which may result in Cash Pool Creditors receiving less than expected under the Cash Pool Cap. - 55 - Equity Claims On the Plan Implementation Date, in accordance with the steps and sequence set forth in the Plan, all Equity Interests and all Equity Claims shall be fully, finally, irrevocably and forever compromised, settled, released, discharged, extinguished, cancelled and barred. Equity Claimants shall not receive any consideration or distributions under the Plan or otherwise recover anything in respect of their Equity Claims or Equity Interests, and shall not be entitled to vote on the Plan at the Meetings in respect of their Equity Claims. Unaffected Claims The Plan does not affect the Unaffected Creditors, who will not receive any consideration or distributions under the Plan in respect of their Unaffected Claims (except to the extent their Unaffected Claims are paid in full on the Plan Implementation Date), and shall not be entitled to vote on the Plan at the Meetings in respect of their Unaffected Claims. Description of the New Investment Each Affected Unsecured Creditor that is a Qualifying Unsecured Creditor will have the right, but not the obligation, to participate in the New Investment up to a maximum of such Affected Unsecured Creditor's Pro Rata Share of the New Investment. Pursuant to the Backstop Agreement, the Backstoppers agreed to ensure completion of the New Investment by purchasing all LPRC Preferred Shares that are not purchased by other Qualifying Unsecured Creditors, in each case based on its Backstopper's Pro Rata Share. The number of new LPRC Preferred Shares to be distributed to Subscribing Unsecured Creditors pursuant to the New Investment will be three times the number of new LPRC Class A Voting Common Shares to be distributed to Affected Unsecured Creditors pursuant to the Debt Exchange. The effect of this is that the new LPRC Preferred Shares will be initially convertible, in aggregate, into such number of LPRC Class B Non-Voting Common Shares as is equal to 75% of the total number of LPRC Class A Voting Common Shares and LPRC Class B Non-Voting Common Shares that would be outstanding immediately following the Plan Implementation Date assuming conversion of all such LPRC Preferred Shares into LPRC Class B Non-Voting Common Shares in accordance with their terms. A New Investment Subscription Form has been delivered to each Affected Unsecured Creditor as of the Voting Record Date together with this Circular. Each Qualifying Unsecured Creditor as of the Voting Record Date shall have the right, but not the obligation, to elect irrevocably to participate in the New Investment, conditional upon the implementation of the Plan and effective on the Plan Implementation Date, up to a maximum of such Affected Unsecured Creditor's Pro-Rata Share of the New Investment. In order to validly elect to participate in the New Investment, a Qualifying Unsecured Creditor (including any Backstopper) must return a duly executed New Investment Subscription Form to the Applicants, the Monitor and Goodmans pursuant to the Plan on or before the New Investment Subscription Deadline. Any New Investment Subscription Forms received after the New Investment Subscription Deadline will be invalid and not effective and shall be disregarded for all purposes of the Plan. Only Qualifying Unsecured Creditors are eligible to submit New Investment Subscription Forms. Acceptance of a New Investment Subscription Form in accordance with the Plan will constitute a subscription by the applicable Subscribing Unsecured Creditor for and a commitment by the applicable Subscribing Unsecured Creditor to participate in the New Investment by purchasing LPRC Preferred Shares (the aggregate subscription price for all such shares to be issued on the Plan Implementation Date being the New Investment Amount) and concurrently issued LPRI Multiple Voting Common Shares (the aggregate subscription price for all such shares to be issued on the Plan Implementation Date being the LPRI Subscription Amount) under the New Investment in accordance with the Plan. Pursuant to the Plan, for each LPRC Preferred Share issued to a Subscribing Unsecured Creditor pursuant to the Plan as part of the New Investment, one LPRI Multiple Voting Common Share shall also be issued to that Subscribing Unsecured Creditor as part of the New Investment. Any Qualifying Unsecured Creditor who also wishes to become a Backstopper shall submit a duly executed Backstop Joinder to the Applicants, the Monitor and Goodmans pursuant to the Plan before the Backstop Deadline. - 56 - Any Backstop Joinders received after the Backstop Deadline will be invalid and not effective and shall be disregarded for all purposes of the Plan. For certainty, only Qualifying Unsecured Creditors are eligible to submit Backstop Joinders. In accordance with the Plan, the following steps set out the funding of the New Investment: (a) Not less than ten (10) Business Days prior to the Anticipated Implementation Date (or such other date as the Applicants, the Monitor and the Majority Initial Consenting Noteholders may agree), the Monitor shall inform each Subscribing Unsecured Creditor of: (i) the Anticipated Implementation Date; (ii) the number of LPRC Preferred Shares and LPRI Multiple Voting Common Shares that will be acquired by such Subscribing Unsecured Creditor on the Plan Implementation Date pursuant to the New Investment Subscription Privilege; (iii) the amount of funds required to be deposited in escrow with the Monitor by such Subscribing Unsecured Creditor pursuant to its New Investment Subscription Privilege (its "Subscription Amount", which, for certainty, shall include its Subscribing Unsecured Creditor's Pro-Rata Share of the LPRI Subscription Amount) by the Funding Deadline; and (iv) the manner in which such deposit of the Subscription Amount must be completed. (b) At or before 2:00 p.m. on the date that is five (5) Business Days prior to the Anticipated Implementation Date (or such other date as the Applicants, the Monitor and the Majority Initial Consenting Noteholders may agree) (the "Funding Deadline"), each Subscribing Unsecured Creditor shall deposit in escrow with the Monitor its respective Subscription Amount; provided, however, that this obligation shall not apply in respect of a Backstopper who has delivered to the Applicants cash or a letter of credit in accordance with the terms and conditions of the Backstop Agreement. (c) A Subscribing Unsecured Creditor (other than a Backstopper who has delivered to the Applicants cash or a letter of credit in accordance with the terms and conditions of the Backstop Agreement) who does not deposit its full Subscription Amount in escrow with the Monitor at or before the Funding Deadline shall thereupon cease to be an Subscribing Unsecured Creditor, and its subscription for LPRC Preferred Shares and LPRI Multiple Voting Common Shares pursuant to the New Investment Subscription Privilege and right to receive LPRC Preferred Shares and LPRI Multiple Voting Common Shares shall be null and void; provided, however that nothing in the Plan shall relieve such Subscribing Unsecured Creditor from liability to the Applicants, the Backstoppers or any other Person for failing to complete its subscription. (d) At least five (5) Business Days prior to the Anticipated Implementation Date (or such other date as the Applicants, the Monitor and the Majority Initial Consenting Noteholders may agree), the Applicants shall provide the Monitor with a copy of the Backstop Agreement (including any Backstop Joinders). (e) As soon as practicable following the Funding Deadline, and in any event on the date that is four (4) Business Days prior to the Anticipated Implementation Date (or such other date as the Applicants, the Monitor and the Majority Initial Consenting Noteholders may agree), the Monitor shall inform the Applicants and each Backstopper of: (i) the total number of LPRC Preferred Shares (and corresponding LPRI Multiple Voting Common Shares) not validly subscribed for pursuant to the Subscription Privilege (the "Backstopped Shares"); and - 57 - (ii) the number of Backstopped Shares to be acquired by such Backstop Party pursuant to its Backstop Commitment and the amount of funds (by way of cash or a letter of credit) required to be deposited with the Monitor by such party to purchase such Backstopped Shares (the "Backstop Payment Amount") by the Backstop Funding Deadline. (f) At or before 2:00 p.m. (Calgary time) on the date that is two (2) Business Days prior to the Anticipated Implementation Date (or such other date as the Applicants, the Monitor and the Majority Initial Consenting Noteholders may agree) (the "Backstop Funding Deadline"), each Backstopper shall, if it has not already delivered to the Applicants cash or a letter of credit in accordance with the terms and conditions of the Backstop Agreement, deposit in escrow with the Monitor funds in an amount equal to its Backstop Payment Amount, in each case to be held in escrow in accordance with the Backstop Agreement until all conditions to the New Investment and the Plan have been satisfied or waived in accordance with the Backstop Agreement and the Plan and with irrevocable instructions to use such cash or letter of credit, as applicable, to the extent required to enable such Backstop Party to comply with its Backstop Commitment. (g) Each Subscribing Unsecured Creditor who complies with paragraph (b) above shall participate in the New Investment and shall subscribe for that number of LPRC Preferred Shares and LPRI Multiple Voting Common Shares in an amount equal to the Subscription Amount deposited in escrow with the Monitor by that Subscribing Unsecured Creditor in accordance with paragraph (b) above divided by the Issue Price. (h) Each Backstopper shall purchase its Backstopper's Pro Rata Share of the Backstopped Shares in accordance with the Backstop Agreement such that the New Investment is completed and fully paid to the Applicants. (i) Within three (3) Business Days following the earlier of termination of the Backstop Agreement or the Plan Implementation Date, to the extent not required to enable a Backstopper to comply with its Backstop Commitment, the Applicants will return to each Backstopper the cash deposit (or, as applicable, such portion thereof as may remain after its application towards the Backstop Payment Amount) or the letter of credit (or, as applicable, such portion thereof as may be undrawn after payment of the Backstop Payment Amount) provided by that Backstopper to the Applicants pursuant to the Backstop Agreement and paragraph (f) above. Plan Implementation Date Transactions Upon the fulfillment, satisfaction or waiver of the conditions set out in the Plan, the following steps, compromises and releases to be taken and effected on the implementation of the Plan shall occur, and be deemed to have occurred, in the following order in ten minute increments (or at such other times as may be agreed to by the Applicants and the Majority Initial Consenting Noteholders), without any further act or formality, on the Plan Implementation Date beginning at the Effective Time (or in such other sequence or order or such other time or times as the Applicants, the Monitor and the Majority Initial Consenting Noteholders may agree), except that the dissolutions of Wiser Oil and Wiser Delaware pursuant to paragraphs (a) and (b) below, the amendments to the LPRC articles described in paragraph (c) below and the issue by LPRC of one LPRC Class C Multiple Voting Share to LPRI pursuant to paragraph (d) below may be completed prior to the Plan Implementation Date on a day or days to be agreed to by the Applicants and the Majority Initial Consenting Noteholders: Pre-Implementation Date Steps (a) upon the consent of LPRI, as sole member of Wiser Oil, Wiser Oil shall be dissolved and, in connection therewith, all shares or fractions of shares in the capital of LPRC then held by Wiser Oil and all other assets (if any) held by Wiser Oil shall be transferred to LPRI, and to the extent necessary LPRI shall be authorized to wind up the affairs of Wiser Oil; - 58 - (b) upon the consent of LPRI, as sole member of Wiser Delaware (after giving effect to paragraph (a) above), Wiser Delaware shall be dissolved and, in connection therewith, all shares or fractions of shares in the capital of LPRC then held by Wiser Delaware and all other assets (if any) held by Wiser Delaware shall be transferred to LPRI, and to the extent necessary LPRI shall be authorized to wind up the affairs of Wiser Delaware; (c) the articles of LPRC shall be amended to: (d) (i) convert all outstanding LPRC Class B Non-Voting Common Shares into LPRC Class A Voting Common Shares by changing the issued LPRC Class B Non-Voting Common Shares into the same number of issued LPRC Class A Voting Common Shares; (ii) redesignate the LPRC Class A Voting Common Shares by changing the designation thereof to "Class A Voting Common Shares", and change the rights, privileges, restrictions and conditions thereof as described in the Plan, in this Circular and, as applicable, in the Plan Supplement Documents; (iii) redesignate the LPRC Class B Non-Voting Common Shares by changing the designation thereof to "Class B Non-Voting Common Shares", and change the rights, privileges, restrictions and conditions of thereof as described in the Plan, in this Circular and, as applicable, in the Plan Supplement Documents; (iv) add a new class of shares to the authorized share capital of LPRC by creating a new class of shares, being the new LPRC Class C Multiple Voting Share, which class shall consist of one share designated as the "Class C Multiple Voting Share" having the rights, privileges, restrictions and conditions as described in the Plan, in this Circular and, as applicable, in the Plan Supplement Documents; (v) add a new class of shares to the authorized share capital of LPRC, being the new LPRC Preferred Shares, which class shall consist of an unlimited number of shares designated as "Preferred Shares" having the rights, privileges, restrictions and conditions as described in the Plan, in this Circular and, as applicable, in the Plan Supplement Documents; and (vi) consolidate the issued LPRC Class A Voting Common Shares by changing all of the issued and outstanding LPRC Class A Voting Common Shares (including, for certainty, the LPRC Class A Voting Common Shares resulting from the conversion of the LPRC Class B Non-Voting Common Shares into the same number of issued LPRC Class A Voting Common Shares pursuant to paragraph (c)(i) above) into an aggregate of three (3) LPRC Class A Voting Common Shares; LPRC shall issue one LPRC Class C Multiple Voting Share to LPRI in consideration for LPRI agreeing to issue the LPRI Class A Voting Common Shares pursuant to paragraph (j)(ii) below; Plan Implementation Date Pre-Distribution Steps (e) all Options shall be cancelled and terminated without any liability, payment or other compensation in respect thereof; (f) all Option Plans shall be terminated and be of no further force or effect; (g) the Rights Agreement shall be terminated and be of no further force or effect; (h) all accrued and unpaid interest in respect of the Affected Claims shall be settled and extinguished for no consideration; - 59 - (i) the certificate of incorporation of LPRI shall be amended to: (i) add a new class of shares to the authorized capital stock of LPRI by creating a new class of shares, being the new LPRI Class A Common Shares, which class shall consist of shares designated as "Class A Common Shares" having the rights, privileges, restrictions and conditions described herein, in the Circular and, as applicable, in the Plan Supplement Documents; and (ii) add a new class of shares to the authorized capital stock of LPRI by creating a new class of shares, being the new LPRI Multiple Voting Common Shares, which class shall consist of shares designated as "Class B Multiple Voting Shares" having the rights, privileges, restrictions and conditions described herein, in the Circular and, as applicable, in the Plan Supplement Documents; Distribution Steps for Affected Unsecured Creditors (other than Cash Pool Creditors) (j) each Affected Unsecured Creditor (excluding any Cash Pool Creditors) shall and shall be deemed to irrevocably exchange and transfer its Affected Unsecured Claim, and all of its rights in, to and under such Affected Unsecured Claim, in consideration for: (i) the issuance by LPRC to each such Affected Unsecured Creditor of such number of LPRC Class A Voting Common Shares as is equal to its Affected Unsecured Creditor's Pro-Rata Share of the Agreed Number of LPRC Class A Voting Common Shares to be issued pursuant to the Plan, and each such Affected Unsecured Creditor shall be added to the register of shareholders of the LPRC Class A Voting Common Shares; (ii) the issuance by LPRI of one LPRI Class A Voting Common Share to such Affected Unsecured Creditor for each LPRC Class A Voting Common Share issued to that Affected Unsecured Creditor pursuant to (i) immediately above, and each such Affected Unsecured Creditor shall be added to the register of shareholders of the LPRI Class A Voting Common Shares; and (iii) in respect of any Affected Unsecured Creditor that is a Backstopper, the payment by LPRC to each such Affected Unsecured Creditor of its Backstopper's Pro-Rata Share of the Backstop Amount; Cancellation of Equity Claims and Equity Interests (k) the Existing Parent Shares and all other remaining Equity Interests in LPRI (other than the LPRI Class A Common Shares and the LPRI Multiple Voting Common Shares created and issued pursuant to the Plan) shall be cancelled without any repayment of capital thereon or any other compensation therefor and, for certainty, no Existing Shareholder shall be entitled to receive any interest, dividends, premium or other payment in connection therewith; Distribution Steps for Parties Electing to Participate in the New Investment (l) the Applicants shall become entitled to the total amount of funds deposited in escrow with the Monitor in respect of Subscription Amounts or by Backstoppers pursuant to the Plan, and all such funds shall be released from escrow, paid to the Applicants and applied towards payment of the subscription price for the LPRC Preferred Shares and LPRI Multiple Voting Common Shares; (m) any funds delivered to the Applicants by a Backstopper pursuant to the Backstop Agreement, or obtained by the Applicants by drawing upon any letter of credit so delivered to the Applicants by a Backstopper, shall, if the total funds released from escrow and paid to the Applicants pursuant to paragraph (l) immediately above are: - 60 - (i) less than the New Investment Amount, to the extent of such deficiency, be paid to the Applicants and applied towards payment of the subscription price for the LPRC Preferred Shares and the LPRI Multiple Voting Common Shares, and the balance shall be returned to the Backstoppers in accordance with the terms and conditions of the Backstop Agreement; or (ii) at least equal to the New Investment Amount and the LPRI Subscription Amount, be returned to the Backstoppers in accordance with the terms and conditions of the Backstop Agreement; and any undrawn letters of credit delivered to the Applicants by a Backstopper pursuant to the Backstop Agreement shall be returned to the applicable Backstopper in accordance with the provisions hereof; (n) LPRC shall issue to each Subscribing Unsecured Creditor, such number of LPRC Preferred Shares as is equal to its Subscribing Unsecured Creditor's Pro-Rata Share of the Agreed Number of LPRC Preferred Shares, and each such Subscribing Unsecured Creditor shall be added to the register of shareholders of the LPRC Preferred Shares; (o) LPRI shall issue to each Subscribing Unsecured Creditor, such number of LPRI Multiple Voting Common Shares as is equal to its Subscribing Unsecured Creditor's Pro-Rata Share of the Agreed Number of LPRI Multiple Voting Common Shares, and each such Subscribing Unsecured Creditor shall be added to the register of shareholders of the LPRI Multiple Voting Common Shares; (p) the New Credit Facility shall become effective, and LPR Canada shall be entitled, in accordance with the terms and conditions thereof, to borrow funds thereunder; (q) LPR Canada shall pay in full to the DIP Lenders all amounts owed pursuant to the DIP Agreement in full and final satisfaction of the DIP Facility; (r) the DIP Agreement and the DIP Facility shall be deemed to be terminated and the Applicants, and each of them, shall be fully, finally, irrevocably and forever released from any and all claims, liabilities or obligations of any kind to the DIP Lenders under or in respect of the DIP Agreement or the DIP Facility; (s) LPR Canada shall pay in full to the Agent all amounts owed pursuant to the Current Credit Agreement in full and final satisfaction of the Current Credit Facility; (t) the Current Credit Agreement and the Current Credit Facility shall be deemed to be terminated and the Applicants, and each of them, shall be fully, finally, irrevocably and forever released from any and all claims, liabilities or obligations of any kind to the Agent, the Syndicate or any lender forming part of the Syndicate under or in respect of the Current Credit Agreement or the Current Credit Facility; (u) the Current Bank Security shall be deemed to be terminated, released and discharged; (v) LPR Canada shall pay to each Cash Pool Creditor the amount of cash from the Cash Pool to be paid to it in accordance with the Plan in full, final and irrevocable compromise, settlement and satisfaction of the Affected Unsecured Claims of the Cash Pool Creditors; (w) except only for the limited purpose of facilitating the distributions under the Plan, all Affected Claims, and all of the Affected Creditors' entitlements with respect to any Affected Claims, shall be, and shall be deemed to be, fully, finally, irrevocably and forever compromised, settled, released, discharged, extinguished, cancelled and barred, and the Applicants, and each of them, - 61 - shall be fully, finally and irrevocably released from any and all claims, liabilities or obligations of any kind to an Affected Creditor; (x) the Disputed Distribution Claims Reserve shall be created; (y) LPR Canada shall pay in cash all reasonable fees and expenses incurred by the Note Indenture Trustee, including its reasonable legal fees, in connection with the performance of its duties under the Note Indenture or the Plan; (z) LPR Canada shall make all distributions to KERP participants in accordance with the terms of the KERP; (aa) LPR Canada shall pay all reasonable fees and disbursements of the Company Advisors, the Monitor and the Monitor Advisors to the extent not already satisfied by the Applicants; (bb) LPR Canada shall pay all reasonable fees and disbursements of the Noteholder Advisors to the extent not already satisfied by the Applicants; (cc) each of the Charges shall be terminated, discharged and released; (dd) the releases set forth in the Plan shall become effective; and (ee) the appointment of the Post-Implementation Boards shall become effective, and each member thereof shall thereupon become a director of LPR Canada and/or LPRI, as applicable. Additional information regarding LPR Canada and LPRI, including information relating to the New Shares, will be provided in the Plan Supplement to be issued in accordance with the terms of the Meeting Order. At the Plan Implementation Date each of the relevant parties shall execute and deliver such closing documents and instruments and forthwith proceed to file the Sanction Order and such other documents as may be required to give effect to the Plan, whereupon the steps set out in the Plan shall be deemed to have occurred in the order set out therein without any further act or formality. Effect of the Plan The Plan will become effective on the Plan Implementation Date. On the Plan Implementation Date: (a) the treatment of Affected Claims and Released Claims under the Plan shall be final and binding for all purposes and shall be binding upon and enure to the benefit of the Applicants, the Released Parties, all Affected Creditors, any Person having a Released Claim and all other Persons named or referred to in, or subject to, the Plan and their respective heirs, executors, administrators and other legal representatives, successors and assigns; (b) all Affected Claims shall be forever discharged and released, excepting only the obligations in the manner and to the extent provided for in the Plan; (c) all Released Claims shall be forever discharged and released; (d) each Affected Creditor and each Person holding a Released Claim shall be deemed to have consented and agreed to all of the provisions of the Plan, in its entirety; and (e) each Affected Creditor and each Person holding a Released Claim shall be deemed to have executed and delivered to the Applicants and to the Directors and Officers, as applicable, all consents, releases, assignments and waivers, statutory or otherwise, required to implement and carry out the Plan in its entirety. - 62 - Releases to be Given under the Plan On the Plan Implementation Date, the Released Parties, and each of them, will be released and forever discharged from any and all demands, claims, actions, 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 any liability, obligation, demand or cause of action of whatever nature, including claims for contribution or indemnity, which any Creditor or other Person may be entitled to assert (including pursuant to common law or statutory liabilities of directors, officers, managers or members of any of the Applicants), whether known or unknown, matured or unmatured, direct, indirect or derivative, foreseen or unforeseen, existing or hereafter arising, based in whole or in part on any act, omission, transaction, duty, responsibility, indebtedness, liability, obligation, conduct, dealing or other occurrence existing or taking place on or prior to the later of the Plan Implementation Date and the date on which actions are taken to implement the Plan, that are in any way relating to, arising out of or in connection with the Affected Claims, the Note Indenture, the Current Credit Agreement, the Current Credit Facility, the Equity Interests, any Equity Claims, the Support Agreement, any Support Joinder, the Backstop Agreement, the New Shares, any Claims, the business and affairs of the Lone Pine Group whenever or however conducted, the administration and/or management of the Lone Pine Group, the Recapitalization, the Plan, the CCAA Proceeding, the U.S. Proceeding, or any matter or transaction involving any of the Applicants done, occurring or undertaken in connection with the Recapitalization or the Plan (referred to collectively as the "Released Claims"), and all Released Claims shall be fully, finally, irrevocably and forever waived, discharged, released, cancelled and barred as against the Released Parties, all to the fullest extent permitted by Applicable Law; provided that nothing in the releases contained in the Plan will release or discharge (w) the right to enforce the obligations of any Person under the Plan, (x) any Released Party if the Released Party is determined by a Final Order of a court of competent jurisdiction to have committed fraud or wilful misconduct, (y) the Lone Pine Group 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 (z) any Director or Officer from any Claim that is not permitted to be released pursuant to section 5.1(2) of the CCAA. Notwithstanding anything to the contrary in the Plan, from and after the Plan Implementation Date, a Person may only commence an action against a Released Party for fraud or willful misconduct if such Person has first obtained leave of the Court on notice to the applicable Released Party, the Applicants, the Monitor (unless previously discharged), the Initial Consenting Noteholders and any applicable insurers. Procedural and Administrative Matters Relating to the Plan and its Implementation Non-Consummation of the Plan The Lone Pine Group reserves the right to revoke or withdraw the Plan at any time prior to the Plan Implementation Date. If the Lone Pine Group revokes or withdraws the Plan, or if the Sanction Order is not issued, or if the Plan Implementation Date does not occur, (i) the Plan shall be null and void in all respects, (ii) any settlement or compromise embodied in the Plan, including the fixing or limiting to an amount certain any Claim, and any document or agreement executed pursuant to the Plan, shall be deemed null and void, and (iii) nothing contained in the Plan, and no acts taken in preparation for consummation of the Plan, shall (A) constitute or be deemed to constitute a waiver or release of any Claims by or against the Lone Pine Group or any other Person, (B) prejudice in any manner the rights of the Applicants or any other Person in any further proceedings involving the Lone Pine Group, or (C) constitute an admission of any sort by the Lone Pine Group or any other Person. Exclusion from the Plan At any time prior to the Plan Implementation Date, with (i) the consent of the Majority Initial Consenting Noteholders, or (ii) an Order of the Court, LPR Canada may exclude any one or more of the other Applicants (other than LPR Canada) from the Plan and proceed with the Plan, which will thereafter be applicable to LPR Canada and any remaining Applicants only. Forthwith after obtaining such consent of the Majority Initial Consenting Noteholder or such an Order of the Court, LPR Canada will: (x) if LPR Canada is proceeding by way of consent from the Majority Initial Consenting Noteholders, file a notice regarding the exclusion of any excluded Applicant(s) with the Court, (y) post the notice on the Website, and (z) send a copy of the notice by regular pre-paid mail to all Affected Creditors of the excluded Applicant(s). If one or more Applicant(s) is so excluded, the Plan will be read - 63 - and interpreted in all respects as if such Applicant(s), and all Claims against such Applicant(s) are unaffected by the Plan, and the Plan will apply to such excluded Applicant(s) and all Creditors thereof mutatis mutandis. Modification of the Plan The Lone Pine Group may, at any time and from time to time, amend, restate, modify and/or supplement the Plan with the consent of the Majority Initial Consenting Noteholders, provided that the Agent must be satisfied with any such amendment, restatement, modification and/or supplement that affects the treatment of Syndicate Claims under the Plan in any material respect; and provided further that any such amendment, restatement, modification or supplement must be contained in a written document which is filed with the Court and (i) if made prior to or at the Meetings, communicated to the Affected Creditors; and (ii) if made following the Meetings, approved by the Court. Notwithstanding the foregoing, any amendment, restatement, modification or supplement may be made by the Lone Pine Group with the consent of the Monitor and the Majority Initial Consenting Noteholders, without further Court Order or approval, provided that it concerns a matter which, in the opinion of the Applicants, the Monitor and the Majority Initial Consenting Noteholders, each acting reasonably, is of an administrative nature required to better give effect 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 Unsecured Creditors. Any amended, restated, modified or supplementary plan or plans of compromise filed with the Court and, if required by the Plan, approved by the Court, shall, for all purposes, be and be deemed to be a part of and incorporated in the Plan. Procedures for Distributions of Cash Pool Amounts to Cash Pool Creditors Based on the documents received by the Monitor pursuant to the Claims Procedure Order and the Meeting Order, the Monitor shall calculate, with respect to each Cash Pool Creditor, its Cash Pool Creditor's Pro-Rata Share, and the Monitor shall provide all such information to the Applicants and Goodmans at least ten (10) Business Days prior to the Anticipated Implementation Date (unless extended by the Applicants, with the consent of the Majority Initial Consenting Noteholders). On the Initial Distribution Date, upon receipt of and in accordance with a written direction of the Monitor prepared based on the information received by the Monitor pursuant to the Plan, as so directed by the Monitor, the Applicants shall deliver to each Cash Pool Creditor its Cash Pool Creditor's Pro-Rata Share. Procedures for Distributions of New Shares to Noteholders Under the Recapitalization DTC is the sole registered holder of the Notes. Upon receipt of and in accordance with written instructions from the Monitor, the Note Indenture Trustee shall instruct DTC to, and DTC shall: (i) establish an escrow position representing the respective positions of the Noteholders as of the Plan Implementation Date for the purpose of making distributions to the Noteholders on and after the Plan Implementation Date; and (ii) block any further trading in the Notes, effective as of the close of business on the Business Day immediately prior to the Plan Implementation Date, all in accordance with the customary practices and procedures of DTC. If both the LPRC Class A Voting Common Shares and the LPRI Class A Voting Common Shares are eligible to be settled through DTC on the Initial Distribution Date, then: (a) the registration and delivery of LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares to be distributed to each Noteholder pursuant to the provisions of the Plan shall be made through the facilities of DTC to DTC participants who, in turn, shall effect the delivery of interests in such LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares to the beneficial holders of such Notes pursuant to standing instructions and customary practices and procedures; and (b) the Applicants and the Monitor shall have satisfied their responsibilities in respect of the distribution of LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares to the Noteholders in accordance with the provisions of the Plan once such shares have been - 64 - delivered to DTC; and will have no liability or obligation in respect of deliveries from DTC, or its nominee, to DTC participants or from DTC participants to beneficial holders of the Notes. If the LPRC Class A Voting Common Shares or the LPRI Class A Voting Common Shares are not eligible to be settled through DTC on the Initial Distribution Date, then the registration and delivery of LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares to be distributed to each Noteholder pursuant to the provisions of the Plan shall be made in accordance with a written direction of the Monitor prepared based on information obtained through DTC and DTC participants (by way of a letter of transmittal process or such other process as is agreed to by the Applicants, the Monitor, the Majority Initial Consenting Noteholders and the Note Indenture Trustee) regarding registration and delivery of such LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares to or for the benefit of Noteholders. Noteholders whose Notes are registered in the name of a broker, investment dealer, bank, trust company or other intermediary should contact that intermediary for instructions and assistance in providing details of registration and delivery of their New Shares. Procedures for Distributions to Affected Unsecured Creditors other than Noteholders and Cash Pool Creditors Based on the documents received by the Monitor pursuant to the Claims Procedure Order and the Meeting Order, the Monitor shall calculate, with respect to each such Affected Unsecured Creditor, its Affected Unsecured Creditor's Pro-Rata Share, and the Monitor shall provide all such information to the Applicants and Goodmans at least three (3) Business Days prior to the Anticipated Implementation Date (unless extended by the Applicants, with the consent of the Majority Initial Consenting Noteholders). On the Initial Distribution Date, upon receipt of and in accordance with a written direction of the Monitor prepared based on the information received by the Monitor pursuant to the Plan, as so directed by the Monitor, the Applicants shall register and deliver to each such Affected Unsecured Creditor its Affected Unsecured Creditor's Pro-Rata Share of the LPRC Class A Voting Common Shares and the LPRI Class A Voting Common Shares. Distributions of LPRC Preferred Shares and LPRI Multiple Voting Common Shares to Subscribing Unsecured Creditors On the Initial Distribution Date, upon receipt of and in accordance with a written direction of the Monitor prepared based on the information received by the Monitor in the New Investment Subscription Election Form, and as so directed by the Monitor, the Applicants shall register and deliver to the Subscribing Unsecured Creditors the applicable number of LPRC Preferred Shares and LPRI Multiple Voting Common Shares to be distributed to such Subscribing Unsecured Creditors. Disputed Distribution Claims Any Affected Unsecured Creditor holding a Disputed Distribution Claim will not be entitled to receive any distribution under the Plan in respect of such Disputed Distribution Claim or any portion thereof unless and until, and then only to the extent that, such Disputed Distribution Claim becomes an Allowed Affected Unsecured Claim. Distributions After Disputed Distribution Claim Resolved (a) Distributions in relation to a Disputed Distribution Claim of an Affected Unsecured Creditor will be held by the Applicants, in a segregated account constituting the Disputed Distribution Claims Reserve, for the benefit of the Affected Unsecured Creditors with Allowed Affected Unsecured Creditor Claims until the final determination of the Disputed Distribution Claim in accordance with the Claims Procedure Order and the Plan. (b) To the extent that any Disputed Distribution Claim becomes an Allowed Affected Unsecured Claim in accordance with the Plan, the Applicants shall distribute (on the next Distribution Date) to the holder of such Allowed Affected Unsecured Claim, the distribution from the Disputed - 65 - Distribution Claims Reserve equal to the distribution that such Affected Unsecured Creditor would have been entitled to receive in respect of its Allowed Affected Unsecured Claim on the Initial Distribution Date had such Disputed Distribution Claim been an Allowed Affected Unsecured Claim on such date. (c) On the date that all Disputed Distribution Claims have been finally resolved in accordance with the Claims Procedure Order and any required distributions contemplated in paragraph (b) above have been made, LPR Canada shall release to LPRI or LPR Canada any cash or New Shares held in the Disputed Distribution Claims Reserve, as the case may be. Extinguishment of Claims On the Plan Implementation Date, in the sequence set forth in the Plan and in accordance with the provisions of the Sanction Order and the Sanction Recognition Order, the treatment of Affected Claims (including Allowed Claims and Disputed Distribution Claims), Equity Interests and all Released Claims, in each case as set forth in the Plan, shall be final and binding on the Lone Pine Group, all Affected Creditors (and their respective heirs, executors, administrators, legal personal representatives, successors and assigns) and any Person holding an Equity Interest or a Released Claim, and all Affected Claims, Equity Interests and all Released Claims shall be fully, finally, irrevocably and forever released, discharged, cancelled and barred, and the Released Parties shall thereupon have no further obligation whatsoever in respect of the Affected Claims, Equity Interests and the Released Claims, as applicable, provided that nothing in the Plan releases the Lone Pine Group or any other Person from their obligations to make distributions in the manner and to the extent provided for in the Plan, and provided further that such discharge and release of the Lone Pine Group shall be without prejudice to the right of a Creditor in respect of a Disputed Distribution Claim to prove such Disputed Distribution Claim in accordance with the Claims Procedure Order so that such Disputed Distribution Claim may become an Allowed Unsecured Claim entitled to receive consideration under the Plan. Guarantees and Similar Covenants No Person who has a Claim under any guarantee, surety, indemnity or similar covenant in respect of any Claim that is compromised and released under the Plan, or who has any right to claim over in respect of or to be subrogated to the rights of any Person in respect of a Claim that is compromised and released under the Plan, shall be entitled to any greater rights as against the Lone Pine Group than the Person whose Claim is compromised and released under the Plan. Multiple Affected Unsecured Claims Notwithstanding the division of Affected Unsecured Creditors into classes by the Applicants for the purpose of voting on the Plan, all Affected Unsecured Creditors will participate in the same distribution scheme under the Plan. At the Effective Time, for distribution purposes under the Plan, in respect of all Affected Unsecured Creditors and their rights in respect of Affected Unsecured Claims: (a) all guarantees of an Applicant of the payment or performance by another Applicant with respect to any Affected Unsecured Claim will be deemed eliminated and cancelled; (b) any Affected Unsecured Claim and all guarantees by an Applicant of any Affected Unsecured Claim will be treated as a single Affected Unsecured Claim against the Applicants; (c) any joint obligation of any Applicant with another Applicant will be treated as a single Affected Unsecured Claim against the Applicants; and (d) each Affected Unsecured Claim in respect of any Applicant will be deemed to be one Affected Unsecured Claim against, and obligation of, the Applicants. For certainty, the treatment of Affected Unsecured Claims in the Plan as set out above will not affect the legal and corporate structures of the Applicants or cause any Applicant to be liable for any Claim for which it is not otherwise liable. - 66 - Cancellation of Certificates and Notes Following completion of the steps in the sequence set forth in the Plan, all notes (including the Notes and the Note Obligations), debentures, certificates, agreements, indentures, statements, bills, invoices, instruments or other documents representing or evidencing (or purporting to represent or evidence) Affected Claims or Equity Interests will not entitle any holder thereof or party thereto to any compensation or participation other than as expressly provided for in the Plan and will be cancelled and be null and void. Notwithstanding the foregoing, the Note Indenture shall remain in effect for the purpose of and to the extent necessary to: (i) allow the Note Indenture Trustee to make distributions to the Noteholders on the Initial Distribution Date; and (ii) maintain all of the protections the Note Indenture Trustee enjoys as against the Noteholders, including its rights with respect to any distributions under the Plan, until all distributions are made to Noteholders thereunder. Any and all obligations, including the Note Obligations, of the Lone Pine Group (as borrower, guarantor, surety or otherwise) under and with respect to the Notes and the Note Indenture shall not continue beyond the Plan Implementation Date. Currency Unless specifically provided for in the Plan or the Sanction Order, for the purposes of distributions under the Plan, a Claim shall be denominated in Canadian dollars and all payments and distributions to the Affected Creditors on account of their Claims shall be made in Canadian dollars. Any Claims denominated in a foreign currency shall be converted to Canadian dollars at the Bank of Canada noon exchange rate in effect at the Filing Date. Interest Interest shall not accrue or be paid on Affected Claims on or after the Filing Date, and no holder of an Affected Claim shall be entitled to interest accruing on or after the Filing Date. All accrued and unpaid interest outstanding on the Effective Date in respect of the Affected Claims will be settled and extinguished for no consideration in accordance with the Plan. Allocation of Distributions All distributions made pursuant to the Plan will be allocated towards the repayment of the principal amount in respect of an Affected Claim. Treatment of Undeliverable Distributions If any distribution to a Person under the Plan is returned as undeliverable, no further distributions to such Person shall be made unless and until the Lone Pine Group is notified by such Person of such Person's current address, at which time all such distributions shall be made to such Person. All claims for Undeliverable Distributions must be made on or before the date that is six (6) months following the final Distribution Date, after which date any entitlement with respect to such Undeliverable Distribution shall be forever released, discharged, cancelled and barred, without any compensation therefor, notwithstanding any federal or provincial, territorial, state or local laws to the contrary, at which time any such Undeliverable Distributions shall be returned to the Applicants. Nothing contained in the Plan will require the Applicants, the Monitor or any other Person to attempt to locate any holder or intended recipient of an Undeliverable Distribution. No interest is payable in respect of an Undeliverable Distribution. Any distribution under the Plan on account of the Notes, if delivered to DTC in accordance with the provisions hereof, shall be deemed made when delivered to DTC for subsequent distribution to Noteholders in accordance with the Plan. Withholding Rights The Applicants, DTC, the Monitor and/or any other Person making a payment contemplated under the Plan (each, a "Payor") will be entitled to deduct and withhold from any distributions or other amounts payable to any Person such amounts as it is required, as determined in the Payor's discretion, acting reasonably, to deduct and withhold with respect to such payment under the Canadian Tax Act, corresponding provisions of provincial or territorial laws, the United States Internal Revenue Code of 1986, as amended or any other Applicable Laws. To the extent that - 67 - amounts are so withheld or deducted, such withheld or deducted amounts shall be treated for all purposes as having been paid to the Person in respect of which such withholding was made, provided that such amounts are actually remitted to the appropriate Taxing Authority. The Payor is authorized to sell or otherwise dispose of such portion of any non-cash consideration payable to any such Person as is necessary to provide the Payor with sufficient funds to enable it to comply with such deduction or withholding requirement or entitlement, and shall notify the applicable Person thereof and remit to such Person any unapplied balance of the net proceeds of such sale. If such sale is not reasonably possible, the Payor shall not be required to make any excess payment of consideration or other amounts until the Person has directly satisfied any such withholding obligation and provides evidence thereof to the Payor. Fractional Interests No fractional interests in New Shares will be issued under the Plan. With respect to fractional New Shares that would otherwise be issuable to an Affected Unsecured Creditor, the entitlement of such Affected Unsecured Creditor will be adjusted downwards to the nearest whole number of New Shares of that class, as applicable, to eliminate any such fractional interests, and no compensation will be given for the fractional interest. For certainty, the LPRC Class A Voting Common Shares resulting from the consolidation of the then-issued LPRC Class A Voting Common Shares into an aggregate of three (3) LPRC Class A Voting Common Shares pursuant to the Plan are not New Shares. Registration of New Shares Any New Shares issued pursuant to the Plan may, at the Applicants' option, be registered and issued (i) in certificated form or (ii) in book-entry form pursuant to a direct registration system without issuance of physical certificates. Calculations All amounts of consideration to be received under the Plan will be calculated to the nearest whole cent ($0.01). All calculations and determinations made by the Monitor and/or the Applicants for the purposes of and in accordance with the Plan, including, without limitation, the allocation of consideration, shall be conclusive, final and binding upon the Affected Creditors and the Lone Pine Group. Share Terms The rights, privileges, restrictions and conditions attached to New Shares shall be as described in the Plan, in this Circular and, as applicable, in the Plan Supplement Documents. Paramountcy From and after the Effective Time on the Plan Implementation Date, any conflict between: (a) the Plan or the Sanction Order; and (b) the covenants, warranties, representations, terms, conditions, provisions or obligations, expressed or implied, of any contract, mortgage, security agreement, indenture, trust indenture, note, loan agreement, commitment letter, agreement for sale, lease or other agreement, written or oral and any and all amendments or supplements thereto existing between one or more of the Affected Creditors and the Applicants as at the Plan Implementation Date and the articles, certificate of incorporation or bylaws of the Applicants at the Plan Implementation Date; will be deemed to be governed by the terms, conditions and other provisions of the Plan, any Plan Supplement Document and the Sanction Order, which shall take precedence and priority; provided, however, that if there is a conflict between the Plan and any Plan Supplement Document, the Plan Supplement Document shall govern and control; and provided, further, however, that to the extent that any provision of the Plan or any Plan Supplement - 68 - Document conflicts with or is in any way inconsistent with any provision of the Sanction Order, the Sanction Order shall govern. RESTRUCTURED GROUP The following chart shows the anticipated corporate structure of the Restructured Group following implementation of the Plan. Subscribing Unsecured Creditors Affected Unsecured Creditors (other than Subscribing Unsecured Creditors) LPRI Multiple Voting Common Shares LPRC Preferred Shares LPRI Class A Voting Common Shares LPRC Class A Voting Common Shares Lone Pine Resources Inc. LPRC Class C Multiple Voting Share New Secured Lenders New Credit Facility Lone Pine Resources Canada Ltd. Lone Pine Resources (Holdings) Inc. Operating Assets REQUIRED APPROVALS AND OTHER CONDITIONS PRECEDENT TO IMPLEMENTATION Creditor Approval In accordance with creditor approval requirements under the CCAA, subject to Section 10.4 of the Plan, the Approval Resolution must be approved at each Meeting by the affirmative vote of the Required Majority of Affected Unsecured Creditors entitled to vote at the Meeting, being a majority in number representing at least two-thirds in value of the Voting Claims of all such Affected Unsecured Creditors who are entitled to vote at the Meeting in - 69 - accordance with the Meeting Order and who are present and voting in person or by proxy on the Approval Resolution at the Meeting. Court Approvals Prior to the mailing of this Circular, the Lone Pine Group obtained the Meeting Order providing for, among other things, the calling and holding of the Meetings, acceptance of filing the Plan with the Court, mailing of this Circular and other related procedural matters. A copy of the Meeting Order is attached as Schedule B to this Circular. The Plan cannot be implemented unless approved by the Court pursuant to the CCAA. If the Approval Resolution is passed by the Required Majorities, then the Lone Pine Group will apply to the Court for the Sanction Order. The Sanction Hearing is scheduled to take place at the Calgary Courts Centre, 601 – 5th Street S.W., Calgary, Alberta, Canada commencing on January 9, 2014 at 10:00 a.m. (Calgary time), or so soon thereafter as counsel may be heard. Interested parties should consult their legal advisors with respect to the legal rights available to them in relation to the Plan and the Sanction Hearing. If the date of the Sanction Hearing is postponed, adjourned or otherwise rescheduled, the Lone Pine Group will provide notice of the new date by issuing a news release. Persons who wish to receive individual notification of the date of any adjourned, postponed or otherwise rescheduled Court hearing by facsimile or electronic mail should contact the Monitor at PricewaterhouseCoopers Inc., as Court-appointed Monitor of the Lone Pine Group, at PricewaterhouseCoopers Inc., 3100, 111 – 5th Avenue S.W., Calgary, Alberta, T2P 5L3 (Attention: Monitor of the Lone Pine Group), telephone (403) 509-7366 or email at [email protected], and provide a facsimile number or an e-mail address for delivery of notice. Any Person who wishes to oppose the Sanction Hearing must serve on the Lone Pine Group, 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 4:00 p.m. on January 2, 2014. The authority and discretion of the Court is very broad under the CCAA. The Lone Pine Group has been advised by its legal counsel, Bennett Jones LLP, that in determining whether to grant the Sanction Order the Court will consider, among other things, the fairness and reasonableness of the terms and conditions of the Plan. Prior to the Sanction Hearing, the Court will be advised that the Sanction Hearing and the Sanction Order will be relied upon by the Lone Pine Group, including the fairness of the terms and conditions of the Debt Exchange thereunder, for the purpose of relying on the exemption from the registration requirements of the U.S. Securities Act pursuant to Section 3(a)(10) thereof for the issuance of the new LPRC Class A Voting Common Shares and new LPRI Class A Voting Common Shares to be distributed pursuant to the Debt Exchange under the Plan. If the Court grants the Sanction Order following the Sanction Hearing, the Lone Pine Group intends to apply to the U.S. Court as soon as practicable thereafter for the Sanction Recognition Order pursuant to the U.S. Proceedings. See "Proceedings under U.S. Bankruptcy Code". The Plan contemplates that the Sanction Order will, among other things: (a) declare that (i) the Plan has been approved by the Required Majorities in conformity with the CCAA; (ii) the activities of the Lone Pine Group have been in material compliance with the provisions of the CCAA and the Orders of the Court made in the CCAA Proceeding in all respects; (iii) the Court is satisfied that the Lone Pine Group has not done or purported to do anything that is not authorized by the CCAA; and (iv) the Plan and the transactions contemplated thereby are fair and reasonable; (b) declare that as of the Effective Time, the Plan and all associated steps, compromises, transactions, arrangements, releases and reorganizations effected thereby are approved, binding and effective as - 70 - set out in the Plan upon and with respect to the Lone Pine Group, all Affected Creditors, the Directors and Officers, the Released Parties and all other Persons named or referred to in, or subject to, the Plan; (c) declare that the steps to be taken and the compromises and releases to be effective on the Plan Implementation Date are deemed to occur and be effected in the sequence and at the times set forth in the Plan; (d) confirm the amount of the Disputed Distribution Claims Reserve; (e) compromise, discharge and release the Lone Pine Group from any and all Affected Claims of any nature in accordance with the Plan, and declare that the ability of any Person to proceed against the Applicants or any of the Released Parties in respect of or relating to any Affected Claims shall be forever discharged and restrained, and 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; (f) declare that all Existing Parent Shares and other Equity Interests are fully, finally and irrevocably cancelled; (g) declare certain Affected Claims to be Equity Claims; (h) declare that, subject to performance by the Lone Pine Group of its obligations under the Plan and except as provided in the Plan, all obligations, agreements or leases to which any of the Applicants is a party on the Plan Implementation Date shall be and remain in full force and effect, unamended, as at the Plan Implementation Date and no party to any such obligation or agreement shall on or following the Plan Implementation Date, accelerate, terminate, refuse to renew, rescind, refuse to perform or otherwise disclaim or resiliate its obligations thereunder, or enforce or exercise (or purport to enforce or exercise) any right or remedy under or in respect of any such obligation or agreement, by reason: (i) of any event which occurred prior to, and not continuing after, the Plan Implementation Date, or which is or continues to be suspended or waived under the Plan, which would have entitled any other party thereto to enforce those rights or remedies; (ii) that the Lone Pine Group has sought or obtained relief or has taken steps as part of the Plan or under the CCAA; (iii) of any default or event of default arising as a result of the financial condition or insolvency of the Lone Pine Group; (iv) of the effect upon the Lone Pine Group of the completion of any of the transactions contemplated under the Plan; or (v) of any compromises, settlements, restructurings, recapitalizations or reorganizations effected pursuant to the Plan; (i) barring, stopping, staying and enjoining the 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 the Plan; (j) declare that section 36.1 of the CCAA, sections 95 to 101 of the BIA and any other federal or provincial law relating to preferences, fraudulent conveyances or transfers at undervalue, shall - 71 - not apply to the Plan or to any payments, distributions, transfers, allocations or transactions made or completed in connection with the Recapitalization, whether before or after the Filing Date, including, without limitation, to any and all of the payments, distributions, transfers, allocations or transactions contemplated by and to be implemented pursuant to the Plan; (k) authorize the Monitor to perform its functions and fulfil its obligations under the Plan to facilitate the implementation of the Plan; (l) declare that upon completion by the Monitor of its duties in respect of the Lone Pine Group pursuant to the CCAA and the Orders, the Monitor may file with the Court a certificate stating that all of its duties in respect of the Lone Pine Group pursuant to the CCAA and the Orders have been completed and thereupon, PricewaterhouseCoopers Inc. shall be deemed to be discharged from its duties as Monitor of the Lone Pine Group and released of all claims relating to its activities as Monitor; (m) subject to payment of any amounts secured thereby, declare that each of the Charges shall be terminated, discharged and released; (n) declare that the Lone Pine Group and the Monitor may apply to the Court for advice and direction in respect of any matters arising from or under the Plan; (o) authorizing and empowering LPR Canada to seek the recognition of the Sanction Recognition Order; and (p) declare the Persons to be appointed to the board of directors of LPRI and LPRC on the Plan Implementation Date shall be the Persons on a certificate to be filed with the Court by the Applicants prior to the Plan Implementation Date. Conditions Precedent to Implementation of the Plan The Plan provides that implementation thereof is conditional upon satisfaction or waiver of the following conditions prior to or at the Effective Time, each of which is for the benefit of the Applicants and the Initial Consenting Noteholders, collectively, and may be waived only by the Applicants and the Majority Initial Consenting Noteholders, collectively; provided, however, that such conditions shall not be enforceable by the Applicants or the Initial Consenting Noteholders if any failure to satisfy such conditions results from an action, error, omission by or are within the control of the party seeking enforcement: Plan Approval Matters (a) the Plan shall have been approved by the Required Majorities and the Court, in each case in a form consistent with the Support Agreement or otherwise acceptable to the Applicants and the Majority Initial Consenting Noteholders; (b) the Sanction Order: (i) shall have been made prior to January 17, 2014 (or such later date as the Applicants, the Agent and the Majority Initial Consenting Noteholders may agree); (ii) shall be in a form consistent with the Plan and the Support Agreement or otherwise acceptable to the Applicants and the Majority Initial Consenting Noteholders; and (iii) shall have become a Final Order; (c) the Sanction Recognition Order: (i) shall have been made prior to January 31, 2014 (or such later date as the Applicants, the Agent and the Majority Initial Consenting Noteholders may agree); (ii) shall be in a form consistent with the Sanction Order, the Plan and the Support Agreement and otherwise acceptable to the Applicants and the Majority Initial Consenting Noteholders; and (iii) shall have become a Final Order; - 72 - (d) all filings under Applicable Laws that are required in connection with the Recapitalization shall have been made, and any regulatory consents or approvals that are required in connection with the Recapitalization shall have been obtained and, in the case of waiting or suspensory periods, such waiting or suspensory periods shall have expired or been terminated; (e) there shall not be in effect any preliminary or final decision, order or decree by a Governmental Entity, no application shall have been made to any Governmental Entity, and no action or investigation shall have been announced, threatened or commenced by any Governmental Entity, in consequence of or in connection with the Plan and the Recapitalization that restrains, impedes or prohibits (or if granted could reasonably be expected to restrain, impede or prohibit) the implementation of the Plan and the Recapitalization or any material part thereof or requires or purports to require a variation of the Plan; Support and Backstop Agreement Matters (f) all conditions set out in the Support Agreement and the Backstop Agreement shall have been satisfied or waived by the applicable parties pursuant to the terms of the Support Agreement and the Backstop Agreement, as applicable; (g) the Majority Initial Consenting Noteholders shall be satisfied that no "change of control" payments or similar payments or compensation will be payable to any officer of any of the Applicants solely as a result of the Recapitalization; (h) the Support Agreement shall not have been terminated in accordance with its terms; (i) the Backstop Agreement shall not have been terminated in accordance with its terms; LPRC and LPRI Matters (j) the form of amended articles of LPRC and amended certificate of incorporation of LPRI, respectively, to become effective in connection with the implementation of the Plan shall be acceptable to the Applicants and the Majority Initial Consenting Noteholders; (k) the number and terms of the New Shares to be issued pursuant to the Plan shall be acceptable to the Applicants, the Monitor and the Majority Initial Consenting Noteholders; (l) the composition of the Post-Implementation Boards shall be consistent with the Support Agreement and acceptable to the Applicants and the Majority Initial Consenting Noteholders; (m) the Applicants and the Majority Initial Consenting Noteholders shall have agreed on the terms of a share incentive plan pursuant to which there shall be reserved for issuance, after the Plan Implementation Date, to management and employees of LPRC and LPRI, such number of shares of the Applicants as are agreed to by the Applicants and the Majority Initial Consenting Noteholders, which reserved shares shall, for certainty, be in addition to the New Shares issued on the Plan Implementation Date; (n) except as expressly set out in or contemplated by the Plan or the Orders, or as consented to by the Majority Initial Consenting Noteholders, neither LPRC nor LPRI shall have, since the Filing Date: (i) issued or authorized the issuance of any shares, notes, options, warrants or other securities of any kind (other than Existing Parent Shares), (ii) become subject to any new Encumbrance with respect to its property; (iii) become liable to pay any new material indebtedness or liability of any kind; or (iv) entered into any material agreement; (o) any securities that are created in connection with the Plan, including the New Shares, when issued and distributed pursuant to the Plan, shall be duly authorized, validly issued and fully paid and - 73 - non-assessable, and the issuance and distribution thereof shall be exempt from the registration requirements of the U.S. Securities Act and the prospectus requirements of Canadian provincial and territorial securities legislation; (p) LPRC shall not be a reporting issuer (or equivalent) under the securities legislation of any province or territory of Canada; Plan Matters (q) the aggregate amount of Disputed Distribution Claims Reserve shall be acceptable to the Applicants, the Monitor and the Majority Initial Consenting Noteholders and shall have been confirmed in the Sanction Order; (r) the Applicants, the Monitor and the Majority Initial Consenting Noteholders, each acting reasonably, shall be satisfied with the proposed use of proceeds and payments to be made pursuant to or in connection with the Recapitalization and the Plan (except as expressly set out in or contemplated by the Plan or the Orders), including, without limitation, consent fees, transaction fees, third party fees payable by any of the Applicants to any Person (other than a Governmental Entity) or amounts payable pursuant to any employment agreement or incentive plan of any of the Applicants; (s) the transaction steps required to complete and implement the Plan shall be in form and in substance satisfactory to the Applicants and Majority Initial Consenting Noteholders; (t) any and all Court-imposed charges on any assets, property or undertaking of the Applicants, including the Charges, shall be discharged on the Plan Implementation Date on terms acceptable to the Applicants and the Majority Initial Consenting Noteholders; (u) the Plan Implementation Date shall have occurred no later than February 15, 2014 (or such later date as the Applicants, the Agent and the Majority Initial Consenting Noteholders may agree); (v) the Applicants shall have made arrangements for the payment in full of all amounts owing by the Applicants under or in respect of the Current Credit Facility and the Current Credit Agreement and the discharge of the Current Bank Security on implementation of the Plan; (w) funds in an aggregate amount equal to the New Investment Amount and the LPRI Subscription Amount shall have been deposited in escrow with the Monitor pursuant to the Plan or delivered to the Applicants by a Backstopper pursuant to the Backstop Agreement, or available to the Applicants by drawing upon any letter of credit delivered to the Applicants by a Backstopper pursuant to the Backstop Agreement; (x) LPRC shall have obtained the New Credit Facility on terms acceptable to the Applicants and the Majority Initial Consenting Noteholders; (y) all fees and expenses owing to the Company Advisors, the Noteholder Advisors and the Indenture Trustee shall have been paid as of the Plan Implementation Date, and the Applicants and the Majority Initial Consenting Noteholders shall be satisfied that adequate provision has been made for any fees and expenses due or accruing due to the Company Advisors and the Noteholder Advisors from and after the Plan Implementation Date; and (z) there shall not have occurred after the Filing Date a Material Adverse Change (as that term is defined in the Support Agreement). - 74 - PROCEEDINGS UNDER U.S. BANKRUPTCY CODE In order to obtain the assistance of the U.S. Court in effecting the Recapitalization and to ensure enforcement in the United States of the relief granted in the CCAA Proceeding, LPR Canada, as representative of the Lone Pine Group, also commenced the U.S. Proceedings on the Filing Date, whereupon the U.S. Court granted and order for provisional relief providing for, among other things, a stay of proceedings and a prohibition against acceleration or termination of contractual obligations triggered by the Creditor Protection Proceedings. Final recognition of the CCAA Proceeding was granted by the U.S. Court on October 18, 2013. As part of the relief granted upon final recognition, all previously extended provisional relief was granted on a final basis. LPR Canada, on behalf of the Lone Pine Group, intends to request the continued assistance of the U.S. Court as necessary or appropriate to enforce further Orders that may be entered in the CCAA Proceeding to effectuate the Recapitalization, including, but not limited to, the Sanction Order. The Plan provides that LPR Canada, as authorized representative of the Applicants, shall file a motion with the U.S. Court for the Sanction Recognition Order as soon as practicable after the Sanction Order is granted. Implementation of the Plan is conditional upon the Sanction Recognition Order being made prior to January 31, 2014 (or such later date as the Applicants and the Majority Initial Consenting Noteholders may agree). SUPPORT AGREEMENT Following extensive arm's length negotiations, the Lone Pine Group and the Initial Consenting Noteholders agreed on the framework for a restructuring of its business and entered into the Support Agreement on September 24, 2013. Noteholders representing an aggregate of over 75% of the outstanding principal amount of the Notes are party to the Support Agreement and have agreed, in accordance with the terms and conditions thereof, to vote in favour of and to support the Recapitalization and the Plan. A copy of the Support Agreement is attached as an exhibit to the current report on Form 8-K of LPRI dated September 25, 2013, which was filed by LPRI with applicable securities regulatory authorities in Canada and with the SEC, and is available electronically on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar/searchedgar/companysearch.html. Subsequent to entering into the Support Agreement, the Lone Pine Group and the Initial Consenting Noteholders agreed to change the Outside Date under the Support Agreement to February 15, 2014 (or such later date as the Applicants and the Majority Initial Consenting Noteholders may agree). Capitalized terms used in this section but not otherwise defined in this Circular have the meanings given to such terms in the Support Agreement. Acknowledgments, Agreements and Covenants of the Consenting Noteholders Under the Support Agreement, each Consenting Noteholder has agreed, among other things: (a) to tender or vote (or cause to be tendered or voted) all of its Debt and any other applicable claims, and any Notes and other applicable claims acquired after the date of the Support Agreement: (i) in favour of the approval, consent, ratification and adoption of the Recapitalization and the Plan; and (ii) against the approval, consent, ratification and adoption of any matter or transaction that, if approved, consented to, ratified or adopted could reasonably be expected to delay, challenge, frustrate or hinder the consummation of the Recapitalization or the Plan, as applicable, and shall tender its proxy for any such vote in a timely manner in compliance with any deadlines set forth in the Meeting Order; (b) to support the approval of the Plan by the Court (and in the case of the U.S. Proceedings, by the U.S. Court), on terms consistent with the Support Agreement; - 75 - (c) to not take any action, or omit to take any action, to delay, challenge, frustrate or hinder the consummation of the Recapitalization or implementation of the Plan; (d) not to, directly or indirectly, sell, assign, lend, pledge, hypothecate (except with respect to security generally applying to its investments which does not adversely affect such Consenting Noteholders' ability to perform its obligations under the Support Agreement) or otherwise transfer any of its Relevant Notes or other Debt or any interest therein (or permit any of the foregoing with respect to any of its Relevant Notes or other Debt), or relinquish or restrict the Consenting Noteholder's right to vote any of the Relevant Notes or other Debt (including without limitation by way of a voting trust or grant of proxy or power of attorney or other appointment of an attorney or attorney-in-fact), or enter into any agreement, arrangement or understanding in connection therewith, except that the Consenting Noteholder may transfer some or all of its Debt to (i) any other fund managed by the Consenting Noteholder for which the Consenting Noteholder has discretionary authority to manage or administer funds and continues to exercise investment and voting authority with respect to the transferred Debt, (ii) any other Consenting Noteholder, or (iii) any other Person provided such Person agrees to be bound by the terms of the Support Agreement with respect to the transferred Debt that is subject to such transfer; (e) at or prior to the time at which the Recapitalization is completed and the Plan is implemented, to make or assist the Lone Pine Group to make all necessary notifications to Governmental Entities and use commercially reasonable efforts to obtain or assist the Lone Pine Group to obtain any and all required regulatory approvals and/or material third party approvals in connection with the Recapitalization, in each case at the Lone Pine Group's expense; (f) except with the consent of the Lone Pine Group, not to solicit, discuss or negotiate, directly or indirectly, any alternative transaction to the Plan and the New Investment with any Person (other than the Lone Pine Group); (g) to consent to a stay of any existing and potential defaults under the Notes; (h) not to support any other holder of the Notes in taking any enforcement action in respect of the Notes, and to provide the Note Indenture Trustee or the Lone Pine Group with such directions, requests or consents as may reasonably be required to prevent or restrain any such enforcement action; (i) that: (j) (i) subject to Section 3(o) of the Support Agreement, LPRI and LPR Canada will honour all obligations under applicable executive employment agreements and severance agreements, as the case may be, which provide for aggregate severance payments of not greater than $3,900,000 based on current base salaries of the officers who are party to such agreements and current premiums for other benefits for such officers, and such agreements will not be compromised in connection with the Plan; and (ii) LPR Canada has implemented the KERP with a view to maintaining employee engagement and continuity through the implementation and completion of the Plan; provided that (A) the aggregate amount to be paid under the KERP shall not exceed $2,500,000, (B) the KERP payments to the employees (other than the President and Chief Executive Officer of LPRI and LPR Canada) shall be made on January 31, 2014, and (C) the KERP payments to the President and Chief Executive Officer of Lone Pine and LPR Canada shall be made as follows: 50% on January 31, 2014 and the remaining 50% on implementation of the Plan; that, following implementation of the Plan, the LPRC Preferred Shares and any other securities distributed under the Plan may not be freely tradable in Canada, the United States or any other - 76 - jurisdiction and may be subject to resale restrictions under Securities Legislation; and LPRI shall file or cause to be filed with the SEC and with applicable securities regulatory authorities in Canada such forms, notices, applications or other documents as may be necessary to seek to terminate its reporting obligations (or, as applicable, any reporting obligations of its successor) under Securities Legislation effective as at (or immediately before) the effective time of the Plan or as soon as practicable thereafter; and (k) that, subject to the occurrence of and at the Effective Time, the provisions of the Plan in relation to the Recapitalization shall include provisions satisfactory to the Lone Pine Group, acting reasonably, to the effect that at the Effective Time, the Lone Pine Group and their respective present and former shareholders, officers, directors, employees, auditors, financial advisors, legal counsel and agents shall be released and discharged from any and all demands, claims, liabilities, causes of action, debts, accounts, covenants, damages, executions and other recoveries based in whole or in part on any act or omission, transaction, dealing or other occurrence existing or taking place on or prior to the date of implementation of the Plan, as the case may be. Acknowledgments, Agreements and Covenants of the Lone Pine Group Under the Support Agreement, the Lone Pine Group has agreed, among other things: (a) to pursue the completion of the Recapitalization in good faith by way of the Plan; (b) to file the Plan on a timely basis consistent with the terms and conditions of the Support Agreement, and to use their commercially reasonable efforts to achieve approval or sanction of the Plan by the Court and pursue implementation of the Recapitalization as soon as reasonably possible and in any event no later than the Outside Date; (c) to provide draft copies of all motions or applications and other documents with respect to the Recapitalization and the Plan that the Lone Pine Group intends to file with the Court or the U.S. Court to the Noteholder Advisors at least two days prior to the date when the Lone Pine Group intends to file or otherwise disseminate such documents (or, where circumstances make it impracticable to allow for two days' review, with as much opportunity for review and comment as is practically possible in the circumstances), and all such filings shall be acceptable to the Initial Consenting Noteholders, acting in a manner consistent with the terms of the Support Agreement and, notwithstanding the foregoing, the Initial Order, the Sanction Order, the Claims Procedure Order, the Meeting Order and the Plan shall only be submitted to the Court in a form mutually agreed by the Lone Pine Group and the Initial Consenting Noteholders; (d) not to, without the prior consent of Goodmans or the Initial Consenting Noteholders, such consent not to be unreasonably withheld, amend, modify, replace, terminate, repudiate, disclaim or waive any rights under or in respect of its Material Contracts (other than as expressly required by such Material Contracts or in the ordinary course of performing their obligations under such Material Contracts) in any manner that would reasonably be expected to be Material; (e) that following a reasonable advance request by Goodmans or any of the Consenting Noteholders who are parties to a Noteholder Confidentiality Agreement (which in any case shall not require more than two Business Days' advance notice), the Lone Pine Group shall, to the extent permitted by Law and the terms of any confidentiality obligations to which the Lone Pine Group is subject, and subject to and in accordance with the terms of the Advisor Confidentiality Agreement and applicable Noteholder Confidentiality Agreement, provide Goodmans or such Consenting Noteholders, or any of them, as the case may be, with reasonable access to the Lone Pine Group's books and records (other than books or records that are subject to solicitor-client privilege) for review in connection with the Recapitalization; - 77 - (f) not, directly or indirectly through any Representative, without the knowledge and consent of Goodmans or the Consenting Noteholders, unless otherwise required by the Court: (i) solicit, initiate, facilitate or encourage an Other Transaction; (ii) participate in any substantive discussions or negotiations with any Person regarding any Other Transaction; (iii) accept, approve, endorse or recommend or propose publicly to accept, approve, endorse or recommend any Other Transaction; or (iv) enter into, or publicly propose to enter into, any agreement in respect of any Other Transaction; provided, however, that notwithstanding anything to the contrary in the Support Agreement: (i) the Board of Directors retains the right to support an Other Transaction if, after receiving advice from its advisors and after consulting with the Noteholder Advisors, the Board of Directors determines that: (A) such Other Transaction would result in (i) the payment of all amounts due in respect of the Notes in full in cash on or in connection with implementation of such Other Transaction (including by way of a change of control offer under the Note Indenture) or (ii) another transaction that is more favourable to the Lone Pine Group and its stakeholders, including the Noteholders, than the Plan (including the New Investment thereunder); and (B) the support of such Other Transaction would be necessary for compliance with their fiduciary duties as directors of a Delaware corporation; and (ii) following satisfaction of the conditions set forth in clause (i) directly above, the Lone Pine Group shall be entitled to respond to inquiries and take such other steps as may be necessary to pursue and support such potential Other Transaction; (g) that except with the consent of Goodmans or the Consenting Noteholders, the Lone Pine Group shall, and shall cause their applicable Representatives to, immediately terminate any existing solicitations, discussions or negotiations with any Person (other than the Consenting Noteholders, lenders under the Current Credit Agreement and each of their respective representatives) that has made, indicated any interest in or may reasonably be expected to propose, any Other Transaction; (h) to promptly (and in any event within one Business Day of receipt by any of the Lone Pine Group) notify the Noteholder Advisors, at first orally and thereafter in writing, of any proposal in respect of any Other Transaction of which it or any of its Representatives are or become aware, any request for discussions or negotiations, any requests made or responses provided pursuant to the provisions of Section 4(k) of the Support Agreement, or any other request for non-public information relating to the Lone Pine Group in connection with any such Other Transaction, or for access to the books or records of the Lone Pine Group by any person that informs the Lone Pine Group that it is considering making, or has made, a proposal with respect to any Other Transaction and any amendment thereto; (i) that except as contemplated by the KERP, the Lone Pine Group shall not materially increase compensation or severance entitlements or other benefits payable to directors, officers or employees, or make any Bonus Payments whatsoever, other than as required by Law or pursuant to the terms of existing benefit, bonus, incentive or retention plans or arrangements or employment or severance contracts that are disclosed in the Information; (j) that except as may be ordered by the Court or with the consent of the Consenting Noteholders, or as contemplated by the Support Agreement and the transactions contemplated hereby, or in respect of an Other Transaction, none of the Applicants shall amalgamate, consolidate with or merge into, or sell all or substantially all of their assets to, another entity, or change the nature of their business or their corporate or capital structure; (k) that except as may be ordered by the Court or with the consent of the Consenting Noteholders, or as contemplated by the Support Agreement and the transactions contemplated hereby, or in respect of an Other Transaction, the Lone Pine Group shall not: (i) prepay, redeem prior to maturity, defease, repurchase or make other prepayments in respect of any non-revolving indebtedness; (ii) - 78 - directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any indebtedness of any kind whatsoever (except for indebtedness that is incurred in the ordinary course of business and that is not Material); or (iii) create, incur, assume or otherwise cause or suffer to exist or become effective any new lien, charge, mortgage, hypothec or security interest of any kind whatsoever on, over or against any of their assets or property (except for any lien, charge, hypothec or security interest that is incurred in the ordinary course of business and that is not Material); (l) to maintain and continue to maintain appropriate insurance coverage in amounts and on terms that are customary in the industry of the Lone Pine Group; (m) to operate its businesses in the ordinary course of business, having regard to the Lone Pine Group's financial condition; and (n) to consult with the Noteholder Advisors, on behalf of the Initial Consenting Noteholders, with respect to the conduct of Chapter 15 proceedings. Consenting Noteholder Termination Events The Consenting Noteholders may terminate the Support Agreement upon the occurrence and, if applicable, continuation of any of the following events: (a) the Plan Implementation Date has not occurred on or before the Outside Date; (b) the Lone Pine Group enters into an agreement with respect to an Other Transaction in accordance with Section 4(k) of the Support Agreement, provided that in such event Lone Pine shall pay to the Backstoppers the break fee provided for under the Backstop Agreement; (c) failure by the Lone Pine Group to comply in all material respects with, or default by the Lone Pine Group in the performance or observance of, any material term, condition, covenant or agreement set forth in the Support Agreement, which, if capable of being cured, is not cured within five Business Days after the receipt of written notice of such failure or default and provided that, for greater certainty, no cure period shall apply with respect to any termination pursuant to paragraph (a), (b) or (f) of this Section; (d) any representation, warranty or acknowledgement of any Applicant made in the Support Agreement shall prove untrue in any material respect as of the date when made; (e) the issuance of any final decision, order or decree by a Governmental Entity, in consequence of or in connection with the Recapitalization, which restrains or impedes in any material respect or prohibits the Recapitalization or any material part thereof or requires or purports to require a material variation of the Recapitalization; (f) the appointment of a receiver, interim receiver, receiver and manager, trustee in bankruptcy, liquidator or administrator in respect of LPR Canada, unless such event occurs with the prior written consent of the Consenting Noteholders; (g) the amendment, modification or filing of a pleading by the Lone Pine Group seeking to amend or modify the Recapitalization Terms or the Plan, or any material document or Order relating thereto, if such amendment or modification is not acceptable to the Consenting Noteholders, acting in a manner consistent with the terms of the Support Agreement; (h) if as a result of (A) one or more terminations of the Support Agreement as to one or more Breaching Noteholders pursuant to Section 13(b) of the Support Agreement or (B) one or more terminations of its obligations under the Support Agreement by one or more Objecting - 79 - Noteholders pursuant to Section 18(m) of the Support Agreement, the aggregate amount of Relevant Notes held by the Consenting Noteholders that remain party to the Support Agreement equals less than two-thirds of the aggregate amount of Notes; or (i) the Consenting Noteholders determine, acting reasonably, that there is no reasonable prospect that the conditions set forth in Section 8 of the Support Agreement will be satisfied or waived by the Outside Date; provided that the Consenting Noteholders' right to terminate the Support Agreement under this provision shall only be exercisable by the Consenting Noteholders if they have requested and received a written notice from the Lone Pine Group confirming the Lone Pine Group's unconditional inability to satisfy any such conditions, which response shall be provided within three Business Days of any such request. BACKSTOP AGREEMENT In connection with entering into the Support Agreement, the Lone Pine Group and the Backstoppers entered into the Backstop Agreement pursuant to which the Backstoppers agreed, among other things, to ensure completion of the New Investment by purchasing all LPRC Preferred Shares that are not purchased by other Affected Unsecured Creditors eligible to participate in the New Investment. As additional consideration for their Affected Unsecured Claims, each Backstopper will receive its Backstopper's Pro-Rata Share of the Backstop Amount, which is equal to 4% of the New Investment Amount. The Lone Pine Group also agreed under the Backstop Agreement to pay to the Backstoppers (other than any Defaulting Backstoppers) a break fee of US$2,000,000 if it enters into an agreement with respect to an Other Transaction, which amount would be payable to such Backstoppers on a pro rata basis based on the principal amount of their Notes. A copy of the Backstop Agreement is attached as an exhibit to the current report on Form 8-K of LPRI dated September 25, 2013, which was filed by LPRI with applicable securities regulatory authorities in Canada and with the SEC, and is available electronically on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar/searchedgar/companysearch.html. Subsequent to entering into the Backstop Agreement, the Lone Pine Group and the Backstoppers agreed to change the deadline under the Backstop Agreement for completion of the New Investment to February 15, 2014 (or such later date as the Applicants and the Initial Backstoppers may agree). Capitalized terms used in this section but not otherwise defined in this Circular have the meanings given to such terms in the Support Agreement. Conditions Precedent The respective obligations of each of LPRI and the Backstoppers to complete the transactions contemplated in the Backstop Agreement are subject to the reasonable satisfaction of the following conditions prior to or at the Effective Time, each of which is for the mutual benefit of the Lone Pine Group, on the one hand, and the Backstoppers, on the other hand, and may be waived, in whole or in part, jointly by the Lone Pine Group and the Consenting Noteholders: (a) the Plan, as filed and approved, shall be acceptable to LPRI and the Initial Backstoppers; (b) all conditions precedent to implementation of the Plan shall have been satisfied or waived in accordance with the terms of the Plan; (c) there shall not be any actions, investigations or proceedings, including appeals and applications for review, in progress, or to the knowledge of LPRI or the Backstoppers, pending or threatened, by or before any Governmental Entity, in relation to the LPRC Preferred Shares or the New Investment, any of which is reasonably likely to be successful against LPRI and which operates to - 80 - prevent or restrict the lawful distribution of the LPRC Preferred Shares (which prevention or restriction is continuing); (d) there shall not be any order issued by a Governmental Entity pursuant to Applicable Laws, nor shall there be any change of applicable Law, in either case which operates to prevent or restrict the lawful distribution of the Preferred Shares (which prevention or restriction is continuing); and (e) the Parties shall have performed all of their material obligations under and in accordance with the Backstop Agreement and the Support Agreement. The obligations of the Backstoppers to complete the purchase of the Backstopped Shares are subject to satisfaction of the following conditions on or before the Plan Implementation Date, each of which is for the benefit of the Backstoppers and may be waived, in whole or in part, by the Initial Backstoppers: (f) all actions required to be taken by or on behalf of LPRI, including the passing of all requisite resolutions of the directors of LPRI and all requisite filings with, or approvals, orders, rulings and consents of, any Governmental Entity will have occurred on or prior to the Plan Implementation Date, so as to validly authorize the New Investment, the creation and issuance of the LPRC Preferred Shares and the purchase of Backstopped Shares by the Backstoppers as contemplated by the Backstop Agreement (but excluding, for greater certainty, such filings, approvals, orders, rulings and consents, as may be required to permit the Backstoppers to acquire all of the LPRC Preferred Shares that may be issued to them pursuant to the New Investment and the Backstop Agreement); (g) except as contemplated by the Backstop Agreement, the terms of the New Investment and the LPRC Preferred Shares shall not have been changed in any material respect; (h) the representations and warranties of the Lone Pine Group contained in the Backstop Agreement and the Support Agreement continue to be true and correct except as such representations and warranties may be affected by the occurrence of events or transactions contemplated and permitted by the Backstop Agreement and the Support Agreement or where the failure of such representations and warranties to be true and correct would not reasonably be expected to result in a Material Adverse Change; (i) there shall not have occurred after the date of the Backstop Agreement a Material Adverse Change; and (j) there shall not exist, after giving effect to the Recapitalization and the other transactions contemplated by the Backstop Agreement and the Support Agreement and assuming implementation of the Plan, any Material default or event of default under any Material Contract now in effect that will remain in effect following the Plan Implementation Date (other than those defaults or events of default that are remedied, waived, stayed, extinguished or otherwise in any way rendered inoperative as part of the CCAA Proceeding). Each of the Lone Pine Group and the Backstoppers agree that it will use commercially reasonable efforts to cause the conditions set forth above to be satisfied on or before the Plan Implementation Date to the extent that such conditions relate to acts to be performed or caused to be performed by such Party. Backstopper Termination Events The Backstoppers may terminate the Backstop Agreement upon the occurrence and, if applicable, continuation of any of the following events: (a) the Support Agreement has been terminated for any reason; - 81 - (b) the New Investment is not completed on or before February 15, 2014 (or such other date as the Lone Pine Group and the Initial Backstoppers may agree in writing); (c) failure by any Applicant to comply in all material respects with, or default by any Applicant in the performance or observance of, any material term, condition, covenant or agreement set forth in the Backstop Agreement or the Support Agreement, which is not cured within five Business Days after the receipt of written notice of such failure or default; (d) if any representation or warranty of the Lone Pine Group made in the Backstop Agreement or the Support Agreement shall prove untrue in any material respect as of the date when made; (e) if any order is issued by a Governmental Entity pursuant to Applicable Laws, or if there is any change of Law, either of which operates to prevent or restrict the lawful distribution of the LPRC Preferred Shares; and (f) the occurrence of a Material Adverse Change after the date of the Backstop Agreement. New Backstoppers A Qualifying Affected Creditor that is not already a Backstopper may become a new Backstopper by executing and delivering to the Lone Pine Group and the other Backstoppers, not later than 3:00 p.m. (Calgary time) on January 13, 2014, both: (i) a Backstop Joinder; and (ii) if the Qualifying Affected Creditor is a Noteholder and not already a party to the Support Agreement, a Support Joinder. The Assigned Commitment shall be as calculated and specified in the Backstop Joinder. Upon execution and delivery of a Backstop Joinder and, as applicable, a Support Joinder, the other Backstoppers shall be deemed to have severally assigned to the new Backstoppers such portion of the total Backstop Commitment as is equal to the Assigned Commitment, and the amount of total Backstop Commitment assigned by each other Backstopper shall be its pro rata share of the Assigned Commitment (based on the fraction that its respective Backstop Commitment immediately prior to the assignment to the Additional Backstopper represents of the New Investment). Any Affected Unsecured Creditor who wishes to become a Backstopper should contact Brendan O'Neill of Goodmans by telephone at (416) 849-6017 or by email at [email protected]. Goodmans is counsel to the Initial Consenting Noteholders. SECURITIES REGULATORY CONSIDERATIONS Termination of reporting status under applicable securities laws Canada LPRI is currently a reporting issuer under the securities legislation of each province of Canada other than Quebec and therefore subject to timely and periodic disclosure obligations thereunder. LPR Canada is not currently a reporting issuer in any Canadian jurisdiction. LPRI intends to apply to the applicable Canadian securities regulatory authorities for an order that it be deemed to no longer be a reporting issuer under the securities legislation of any Canadian jurisdiction, such that its reporting obligations thereunder shall terminate in connection with the Implementation Date. To the extent necessary such order will also apply to LPR Canada. It is a condition precedent to implementation of the Plan that LPRI shall have ceased to be a reporting issuer under applicable Canadian securities laws. - 82 - United States As an issuer that has previously filed a registration statement with the SEC pursuant to the U.S. Securities Act, LPRI is currently subject to reporting obligations under U.S. federal securities laws pursuant section 15(d) of the U.S. Exchange Act. Although LPR Canada has also previously filed a registration statement with the SEC in respect of the outstanding Notes, it is exempt from the requirements of section 15(d) of the U.S. Securities Act as a subsidiary issuer of a guaranteed debt security pursuant to applicable SEC rules and regulations. On or as soon as practicable following the Implementation Date, LPRI intends to take all such steps as are available to it under U.S. federal securities laws to terminate and/or suspend its reporting obligations under section 15(d) of the U.S. Exchange Act or any other provision of U.S. federal securities laws. Issuance and resale of securities distributed under the Recapitalization The following is a general summary of certain Canadian and U.S. federal securities laws applicable to the Recapitalization. All Persons are urged to consult their own counsel to ensure compliance with applicable securities laws, including in connection with resales of any security issued pursuant to the Recapitalization. Canada The issuance and distribution of the New Shares pursuant to the Plan will be exempt from the prospectus requirements of Canadian securities legislation, to the extent applicable, pursuant to section 2.11 of National Instrument 45-106 – Prospectus and Registration Exemptions of the Canadian Securities Administrators. As a consequence, certain protections, rights and remedies provided by such laws, including statutory rights of rescission or damages, will not be available in respect of the New Shares. Any subsequent trade of New Shares in Canada will be subject to resale restrictions, and if LPRI or LPR Canada, as applicable, as issuer of the New Shares proposed to be traded, is not a reporting issuer in a Canadian jurisdiction then such restrictions will generally require that the trade qualify for a further exemption from the prospectus requirements. The certificates for the New Shares shall have a legend which will provide that unless permitted under securities legislation, the holder of the security must not trade the security before the date that is four months and a day after the later of (i) the distribution date, and (ii) the date the issuer became a reporting issuer in any province or territory. As noted above, LPRI intends to apply to the applicable Canadian securities regulatory authorities for an order terminating its status as a reporting issuer under the securities legislation of any Canadian jurisdiction. United States The Lone Pine Group intends that the issuance and distribution, pursuant to the Plan, of: (a) the new LPRC Class A Voting Common Shares and new LPRI Class A Voting Common Shares in exchange for Affected Unsecured Claims (including, in the case of each Noteholder, its Affected Unsecured Claim in respect of the Notes and including all rights in respect thereof, including for greater certainty, in respect of the guarantee by LPRI of the Notes) will be exempt from the registration requirements of the U.S. Securities Act pursuant to one or both of Section 3(a)(9) and Section 3(a)(10) thereof; and (b) the new LPRC Preferred Shares and new LPRI Multiple Voting Common Shares to be issued in connection with the New Investment will be exempt from the registration requirements of the U.S. Securities Act pursuant to Section 4(a)(2) thereof or Regulation D promulgated thereunder. The new LPRC Preferred Shares and new LPRI Multiple Voting Common Shares will be offered only to accredited investors as that term is defined in Rule 501 of Regulation D under the U.S. Securities Act. The certificates for the new LPRC Preferred Shares and new LPRI Multiple Voting Common Shares will bear a legend providing notice that the securities have not been registered under the U.S. Securities Act or the securities laws of any state or other jurisdiction. The legend will provide that such securities are "restricted securities" for purposes of the U.S. Securities Act and may not be offered or resold unless such securities have been registered under the U.S. Securities Act or an exemption from such registration requirements is available. The Plan also - 83 - provides that, upon the granting of the Sanction Order, any Person named or referred to in the Plan, and the heirs, administrators, executors, legal personal representatives, successors and assigns of any such Person, shall act in good faith to ensure the intended treatment of the issuance and distribution of the New Shares set forth in the Plan. The following discussion is a general overview of certain requirements of U.S. federal securities laws that may be applicable to Affected Unsecured Creditors in the United States. All Affected Unsecured Creditors are urged to consult with their own legal counsel to ensure that any subsequent resale of securities issued to them under the Recapitalization complies with applicable U.S. securities laws. The following discussion does not address the Canadian securities laws that will apply to the issuance to or the resale by Affected Unsecured Creditors within Canada of securities of the Lone Pine Group. Affected Unsecured Creditors reselling their securities in Canada must comply with all applicable Canadian securities laws. Exemption from the registration requirements of the U.S. Securities Act The Lone Pine Group intends that the issuance and distribution of the new LPRC Class A Voting Common Shares and new LPRI Class A Voting Common Shares in exchange for Affected Unsecured Claims (including, in the case of each Noteholder, its Affected Unsecured Claim in respect of the Notes and the guarantee by LPRI of the Notes) to Affected Unsecured Creditors pursuant to the Debt Exchange will be exempt from the registration requirements of the U.S. Securities Act pursuant to one or both of Section 3(a)(9) and Section 3(a)(10) thereof. Section 3(a)(9) of the U.S. Securities Act exempts from the registration requirements of the U.S. Securities Act the issuance of any security exchanged by an issuer with its existing security holders exclusively where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange of securities. Section 3(a)(10) of the U.S. Securities Act exempts from the registration requirements of the U.S. Securities Act the issuance of any security issued in exchange for one or more bona fide outstanding securities, claims or property interests or partly in such exchange and partly for cash, where the terms and conditions of such issuance and exchange are approved, after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange shall have the right to appear, by a court or governmental authority expressly authorized by law to grant such approval. In accordance with the requirements of the SEC, the Lone Pine Group will advise the Court prior to the Sanction Hearing that the new LPRC Class A Voting Common Shares and new LPRI Class A Voting Common Shares will not be registered under the U.S. Securities Act in reliance upon the Section 3(a)(10) exemption and that such reliance will be based on the Court's approval of the fairness of the terms and conditions of the Plan, including the fairness of the terms and conditions of the Debt Exchange. In connection with the Sanction Hearing the Court will determine the fairness of the terms and conditions of the Plan, including the fairness of the terms and conditions of the Debt Exchange. Accordingly, the Lone Pine Group believes that the Sanction Order will, if granted, constitute a basis for the exemption from the registration requirements of the U.S. Securities Act with respect to the new LPRC Class A Voting Common Shares and new LPRI Class A Voting Common Shares issued pursuant to the Plan. The Lone Pine Group intends that the issuance and distribution of the new LPRC Preferred Shares and new LPRI Multiple Voting Common Shares to Subscribing Unsecured Creditors pursuant to the New Investment will be exempt from the registration requirements of the U.S. Securities Act pursuant to Section 4(a)(2) thereof or Regulation D promulgated thereunder. The new LPRC Preferred Shares and new LPRI Multiple Voting Common Shares will be offered only to accredited investors as that term is defined in Rule 501 of Regulation D under the U.S. Securities Act. Resales of LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares after completion of the Recapitalization Persons who are not affiliates of the Lone Pine Group after the Recapitalization (and were not affiliates of the Lone Pine Group prior to the Recapitalization) may resell the new LPRC Class A Voting Common Shares and the new LPRI Class A Voting Common Shares that they receive in the Debt Exchange without restriction under the U.S. Securities Act. A Person who will be an affiliate of the Lone Pine Group after the Recapitalization (or was an - 84 - affiliate of the Lone Pine Group within 90 days of the Plan Implementation Date) will be subject to certain restrictions on resale imposed by the U.S. Securities Act. As defined in Rule 144 under the U.S. Securities Act, an "affiliate" of an issuer is a Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the issuer and may include certain officers and directors of such issuer as well as principal shareholders of such issuer. Persons who are affiliates (as defined above) of the Lone Pine Group after the Recapitalization (or who were affiliates of the Lone Pine Group within 90 days of the Plan Implementation Date) may not resell the New Shares that they receive in the Recapitalization in the absence of registration under the U.S. Securities Act, unless an exemption from registration is available, such as the exemptions contained in Rule 144 or Regulation S under the U.S. Securities Act. LPRI is a domestic issuer under U.S. securities laws. Pursuant to Rule 905 of Regulation S under the U.S. Securities Act, equity securities of domestic issuers acquired from the issuer, a distributor, or any of their respective affiliates in a transaction subject to the conditions of Rule 901 or Rule 903 of Regulation S under the U.S. Securities Act are deemed to be "restricted securities" as defined in Rule 144 under the U.S. Securities Act. Resales of any of such restricted securities by an offshore purchaser must be made in accordance with this Regulation S under the U.S. Securities Act, the registration requirements under the U.S. Securities Act or an exemption therefrom. Any "restricted securities," as defined in Rule 144 under the U.S. Securities Act, that are equity securities of a domestic issuer will continue to be deemed to be restricted securities, notwithstanding that they were acquired in a resale transaction made pursuant to Regulation S under the U.S. Securities Act. Resales of LPRC Preferred Shares and LPRI Multiple Voting Common Shares after completion of the Recapitalization The new LPRC Preferred Shares and the new LPRI Multiple Voting Common Shares to be issued upon the election of an Affected Unsecured Creditor will be "restricted securities" within the meaning of Rule 144 under the U.S. Securities Act. Share certificates representing such new LPRC Preferred Shares and new LPRI Multiple Voting Common Shares will bear a legend to that effect, and such shares issuable may not be offered or resold unless such securities have been registered under the U.S. Securities Act or an exemption from such registration requirements is available, such as the exemptions contained in Rule 144 or Regulation S under the U.S. Securities Act. LPRI is a domestic issuer under U.S. securities laws. Pursuant to Rule 905 of Regulation S under the U.S. Securities Act, equity securities of domestic issuers acquired from the issuer, a distributor, or any of their respective affiliates in a transaction subject to the conditions of Rule 901 or Rule 903 of Regulation S under the U.S. Securities Act are deemed to be "restricted securities" as defined in Rule 144 under the U.S. Securities Act. Resales of any of such restricted securities by an offshore purchaser must be made in accordance with this Regulation S under the U.S. Securities Act, the registration requirements under the U.S. Securities Act or an exemption therefrom. Any "restricted securities," as defined in Rule 144 under the U.S. Securities Act, that are equity securities of a domestic issuer will continue to be deemed to be restricted securities, notwithstanding that they were acquired in a resale transaction made pursuant to Regulation S under the U.S. Securities Act. Applicability of state securities laws In addition to complying with the U.S. Securities Act, any resale of securities received in the Recapitalization within the United States must be made in compliance with any applicable state securities laws. Persons who wish to sell securities within the United States should consult with legal counsel as to the applicability of any such laws. Stock exchange listings The New Shares distributed under the Plan will not be listed on any stock exchange, Trading in LPRI's common stock on the TSX was halted on September 25, 2013, and LPRI's common stock was subsequently delisted on October 31, 2013. Trading in LPRI's common stock on the NYSE was suspended on September 16, 2013, and LPRI's common stock was subsequently removed from listing and registration on the NYSE on October 22, 2013. As a result of LPRI's financial position and the Creditor Protection Proceedings, its outstanding equity securities have no value and will be cancelled under any plan of compromise and arrangement including the Plan. - 85 - Since the New Shares will not be listed on any stock exchange, no corporation in the Restructured Group will be a "public company" and, as a consequence, the New Shares may constitute "taxable Canadian property", within the meaning of the Canadian Tax Act, to holders who are non-residents of Canada, resulting in potential Canadian tax consequences. See "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations – NonResidents of Canada". MONITOR'S REPORT PricewaterhouseCoopers Inc. was appointed the Monitor of the Lone Pine Group pursuant to the Initial Order. Copies of various non-confidential documents filed with the Court by the Monitor and other parties in connection with the CCAA Proceeding, including previously-filed reports of the Monitor to the Court, are available to Affected Unsecured Creditors and other interested parties on the Website. On December 10, 2013, the Monitor filed the Monitor's Report with the Court and subsequently posted a copy to the Website. A complete copy of the Monitor's Report is attached as Schedule E to this Circular. Affected Unsecured Creditors and other interested parties are recommended to carefully review the Monitor's Report in its entirety before making any decisions with respect to the Plan or voting at the applicable Meeting(s). The stated purpose of the Monitor's Report is to, among other things, provide the Monitor's assessment of the Plan and recommendations thereon, provide the Court with a detailed analysis of the value of the Lone Pine Group's various oil and gas properties, other non-core assets and certain potential contingent claims, and provide the Monitor's views on the RBC sales process referred to above under "Background to the Recapitalization". The Monitor's Report sets out the Monitor's conclusion that the Plan is, in its view, fair and reasonable, including the fact that the Plan provides for no recovery for Equity Claimants. More particularly, the Monitor's Report expresses the Monitor's views that: (a) the Plan provides for payments to Cash Pool Creditors which will exceed the payment that the Cash Pool Creditors would likely receive in a liquidation; (b) the New Shares will have an implied value that is greater than the low range of the potential recoveries for unsecured creditors under a liquidation (although there is no certainty that Affected Unsecured Creditors who receive these shares will be able to trade them unless a liquidity event such as a public offering or a secondary market develops in the future); (c) implementation of the Plan is beneficial as it will result in the preservation of the business of the Lone Pine Group as a going concern, thereby providing additional benefit to employees, suppliers and joint venture partners; and (d) based on the Monitor's liquidation analysis as described in the Monitor's Report, and the Monitor’s analysis and conclusion relative to the recoveries for the contingent litigation claims, the Existing Shareholders have no economic interest in Lone Pine Group. RECOMMENDATION OF THE BOARD OF DIRECTORS Following receipt of advice and assistance of the Company Advisors, independent legal counsel to the Board of Directors and the Monitor, and having considered the aggregate interests of all stakeholders of the Lone Pine Group, the Board of Directors carefully evaluated the terms and conditions of the Plan and unanimously determined that the Plan is in the best interests of the Lone Pine Group, approved the Plan, and resolved to recommend that Affected Unsecured Creditors vote in favour of the Approval Resolution. During the course of its deliberations and in reaching these determinations and approvals the Board of Directors carefully considered many factors, including among others the following: - 86 The inability of the Lone Pine Group to meet its payment obligations outside of the Creditor Protection Proceedings. The extensive and thorough strategic alternatives review process conducted by the Lone Pine Group since the middle of 2012 with the assistance of RBC and other financial advisors, which involved extensive contacts and discussions with third parties and advice from the Company Advisors and the independent legal counsel to the Board of Directors, and the failure of that process to generate any alternate transaction that would allow the Lone Pine Group to meet its obligations. The determination that the only options available to the Lone Pine Group are the Plan or liquidation. The support of Noteholders representing an aggregate of over 75% of the outstanding principal amount of the Notes as at the date hereof, who have agreed to vote in favour of and to support the Recapitalization and the Plan in accordance with the terms and conditions of the Support Agreement. The ability of the Board of Directors to consider and respond to Other Proposals subject to the terms and conditions set forth in the Support Agreement. The risk factors described in this Circular and potential tax liabilities. The challenges faced by the Lone Pine Group to meet its expected cash requirements, including to service and repay its existing debt. The impact on the Lone Pine Group and its stakeholders, including employees, creditors and shareholders, of possible alternatives to the Recapitalization, including the sale of assets or liquidation of the Lone Pine Group, and the risks associated with such alternatives, including the timing and uncertainties associated with successfully completing such alternatives. The fact that if the Recapitalization is not completed, there would be no assurance that the Lone Pine Group would be able to complete a restructuring of its businesses or that any such restructuring will be on terms that provide equivalent value to Affected Unsecured Creditors compared to the consideration to be received by Affected Unsecured Creditors pursuant to the Recapitalization and the Plan. The expectation that a liquidation of the Lone Pine Group's assets appears to be the likely result in the event the Plan is not implemented, and that a liquidation would not provide equivalent value to Affected Unsecured Creditors compared to the consideration to be received by Affected Unsecured Creditors pursuant to the Plan. The required approvals of the Recapitalization by the Affected Unsecured Creditors, the Court and regulatory authorities. The foregoing discussion of the information and factors considered by the Board of Directors is not intended to be exhaustive, but includes the material factors considered by the Board of Directors. In view of the variety of factors considered in connection with its evaluation of the Recapitalization, the Board of Directors did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching their recommendations. In addition, individual members of the Board of Directors may have given differing weights to the different factors. - 87 - INCOME TAX CONSIDERATIONS The following summaries are of a general nature only and are not intended to be, nor should they be construed to be, legal or tax advice to any particular Noteholder. Consequently, Noteholders are urged to consult their own tax advisors for advice as to the tax considerations in respect of the Recapitalization having regard to their particular circumstances. Certain Canadian Federal Income Tax Considerations The following is a summary of the principal Canadian federal income tax considerations, pursuant to the Canadian Tax Act, generally applicable as of the date hereof, to Beneficial Noteholders and to Existing Shareholders (collectively, each is hereinafter referred to as a "Securityholder") who, for the purposes of the Canadian Tax Act and at all relevant times, (i) deal at arm's length with and are not affiliated with the Lone Pine Group; (ii) hold their Notes and Existing Parent Shares, as the case may be, and will hold their LPRC Class A Voting Common Shares, LPRC Class B Non-Voting Common Shares, LPRC Preferred Shares, LPRI Class A Voting Common Shares, and LPRI Multiple Voting Common Shares, as the case may be, as capital property; and (iii) who dispose, or are deemed to have disposed, of their Notes or Existing Parent Shares, as applicable, pursuant to the Recapitalization, or who otherwise acquire LPRC Preferred Shares and LPRI Multiple Voting Common Shares pursuant to the Recapitalization or who acquire LPRC Class B Non-Voting Common Shares pursuant to the conversion of LPRC Preferred Shares. The Notes, Existing Parent Shares, LPRC Class A Voting Common Shares, LPRC Class B NonVoting Common Shares, LPRC Preferred Shares, LPRI Class A Voting Common Shares, and LPRI Multiple Voting Common Shares, as the case may be, will generally be considered to be capital property to a Securityholder provided that such Securityholder does not hold such securities in the course of carrying on a business and has not acquired them in a transaction or transactions considered to be an adventure or concern in the nature of trade. This summary does not apply to a Securityholder: (i) that is a "financial institution" for purposes of the "mark-tomarket" rules; (ii) that is a "specified financial institution"; (iii) that is a partnership; (iv) an interest in which would be a "tax shelter investment"; (v) that has elected to determine its Canadian tax results in a foreign currency pursuant to the functional currency reporting rules, (vi) for whom LPRI would constitute a "foreign affiliate"; (vii) that is exempt from tax under Part I of the Canadian Tax Act (which includes a trust governed by a registered retirement savings plan ("RRSP"), registered retirement income fund ("RRIF"), tax-free savings account ("TFSA") registered education savings plan, deferred profit sharing plan or registered disability savings plan (collectively, "Deferred Plans")), all within the meaning of the Canadian Tax Act; or (vi) that has entered or will enter into, in respect of the Notes, Existing Parent Shares, LPRC Class A Voting Common Shares, LPRC Class B Non-Voting Common Shares, LPRC Preferred Shares, LPRI Class A Voting Common Shares, or LPRI Multiple Voting Common Shares, as the case may be, a "synthetic disposition arrangement" or a "derivative forward agreement" as those terms are defined in the Proposed Amendments (as defined herein). Such Securityholders should consult with their own tax advisors to determine the particular Canadian federal income tax consequences to them of the Recapitalization. The Recapitalization may have adverse Canadian federal income tax consequences to a holder of Notes that is a Deferred Plan and, in particular that is an RRSP, RRIF, or TFSA, and such holders, if any, are strongly encouraged to consult their own tax advisors. This summary does not discuss the Canadian federal income or other tax implications of the Recapitalization to any other person, including, without limitation Cash Pool Creditors, holders of Options, or participants in the KERP. This summary assumes that LPRI will, at all relevant times, be a non-resident of Canada for the purposes of the Canadian Tax Act. This summary is based on the facts set out in this Circular, the assumptions set out herein, the current provisions of the Canadian Tax Act and the regulations thereto in force as at the date of this Circular, all specific proposals to amend the Canadian Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) before the date hereof (the "Proposed Amendments") and the Lone Pine Group's understanding of the current published administrative policies and assessing practices of the Canada Revenue Agency (the "CRA"). Except for the Proposed Amendments, this summary does not take into account or anticipate any changes in law, whether by legislative, governmental or judicial action, nor does it take into account any provincial, territorial or foreign income tax legislation or considerations which may differ significantly from the Canadian federal income tax considerations - 88 - discussed herein. No assurance can be given that the Proposed Amendments will be enacted in the form publicly announced or at all. This summary is of a general nature only and is not exhaustive of all possible Canadian federal income tax considerations applicable to the Recapitalization. The income and other tax consequences of acquiring, holding or disposing of securities will vary depending on a purchaser's particular status and circumstances, including the country, province or territory in which the Securityholder resides or carries on business. This summary is not intended to be, nor should it be construed to be, legal or tax advice to any particular Securityholder. No representations are made with respect to the income tax consequences to any particular Securityholder. Securityholders should consult their own tax advisors for advice with respect to the income tax consequences of the Recapitalization in their particular circumstances, including the application and effect of the income and other tax laws of any applicable country, province, state or local tax authority. This summary does not discuss any non-Canadian income or other tax consequences of the Recapitalization. Securityholders resident or subject to taxation in a jurisdiction other than Canada should be aware that the Recapitalization may have tax consequences both in Canada and in such other jurisdiction. Such consequences are not described herein. Securityholders should consult with their own tax advisors with respect to their particular circumstances and the tax considerations applicable to them. See "Income Tax Considerations – Certain U.S. Federal Income Tax Considerations". Exchange Rates All amounts, including the cost of, interest or dividends, received and accrued on, and proceeds of disposition from Notes, Existing Parent Shares, LPRC Class A Voting Common Shares, LPRC Class B Non-Voting Common Shares, LPRC Preferred Shares, LPRI Class A Voting Common Shares, or LPRI Multiple Voting Common Shares, as the case may be, must be determined in Canadian dollars at applicable exchange rates for the purposes of the Canadian Tax Act. Any amount denominated in U.S. dollars must be converted into Canadian dollars, generally at the exchange rate quoted by the Bank of Canada as its noon rate on the date the amount first arose. The amount of interest, dividends, and any capital gain or capital loss of a Securityholder may be affected by fluctuations in Canadian dollar exchange rates. Residents of Canada The following discussion applies to Securityholders who, for the purposes of the Canadian Tax Act and any applicable income tax treaty or convention, and at all relevant times, are residents of Canada (each, a "Canadian Holder"). Debt Exchange On the Plan Implementation Date, at the times specified in the Plan, all accrued and unpaid interest in respect of the Notes will be settled and extinguished for no consideration and the Notes held by any Beneficial Noteholder will be irrevocably exchanged and transferred in consideration for the issuance of LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares and, in respect of any Noteholder that is a Backstopper, the delivery of such Noteholder's share of the Backstop Amount. Disposition of Notes A Canadian Holder will be considered to have disposed of its Notes upon the exchange and transfer of such Canadian Holder's Notes pursuant to the Plan. Generally, a Canadian Holder will realize a capital gain (or sustain a capital loss) on the transfer of its Notes equal to the amount by which the proceeds of disposition exceed (or are exceeded by) the adjusted cost base to the Canadian Holder of the Notes, plus any reasonable costs of disposition. The tax treatment of any such capital gain (or capital loss) is as described below under "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations – Residents of Canada – Taxation of Capital Gains and Capital Losses". - 89 - A Canadian Holder's proceeds of disposition of its Notes will be an amount equal to the aggregate fair market value (at the time of the exchange) of the LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares and, if applicable, the Canadian Holder's share of the Backstop Amount, received in exchange for the Notes. The Lone Pine Group intends to take the position that the Notes are being exchanged for aggregate consideration consisting of the LPRC Class A Voting Common Shares, the LPRI Class A Voting Common Shares, and the Backstop Amount, all allocated to the principal amount of the Notes. If all or a portion of such consideration is not considered to be received as consideration for the settlement of the Notes, Canadian Holders may be required to include an amount in income for Canadian federal income tax purposes. Canadian Holders should consult their own tax advisors. A Canadian Holder that is a corporation, partnership, unit trust or any trust of which a corporation or partnership is a beneficiary will generally be required to include in income the amount of interest accrued or deemed to accrue on the Notes up to the Plan Implementation Date or that became receivable or was received on or before the Plan Implementation Date, to the extent that such amounts have not otherwise been included in the Canadian Holder's income for the year or a preceding taxation year. Any other Canadian Holder, including an individual, will be required to include in income for a taxation year any interest on the Notes received or receivable by such Canadian Holder in the year (depending upon the method regularly followed by the Canadian Holder in computing income) except to the extent that such amount was otherwise included in its income for the year or a preceding taxation year. Where a Canadian Holder is required to include an amount in income on account of interest on the Notes, the Canadian Holder should be entitled to a deduction of an equivalent amount in computing income, to the extent that such amounts were not received and did not become receivable by the Canadian Holder. A Canadian Holder of Notes that is a "Canadian-controlled private corporation" (as defined in the Canadian Tax Act) may be liable to pay an additional refundable tax of 6⅔% on certain investment income including amounts in respect of interest. Acquisition of LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares A Canadian Holder who acquires LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares in exchange for the exchange and transfer of its Notes will be considered to have acquired such LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares at an aggregate cost equal to their fair market value at the time such shares are issued. Dividends on LPRC Class A Voting Common Shares A Canadian Holder that is an individual (other than certain trusts) will be required to include in computing the Canadian Holder's income for a taxation year any taxable dividends received or deemed to be received on the LPRC Class A Voting Common Shares. Such taxable dividends will be subject to the gross-up and dividend tax credit rules in the Canadian Tax Act, including the enhanced dividend tax credit rules applicable to any dividend validly designated as an "eligible dividend" by LPR Canada. There can be no assurance that any dividend paid by LPR Canada will be designated as an "eligible dividend". Dividends realized by an individual (other than certain trusts) may give rise to a liability for alternative minimum tax under the Canadian Tax Act. A Canadian Holder that is a corporation will be required to include taxable dividends received or deemed to be received on the LPRC Class A Voting Common Shares in computing its income for tax purposes and generally will be entitled to deduct the amount of such dividends in computing its taxable income. Certain corporations, including private corporations or subject corporations (as such terms are defined in the Canadian Tax Act), may be liable to pay a refundable tax under Part IV of the Canadian Tax Act at the rate of 33 ⅓% of the dividends received or deemed to be received on the LPRC Class A Voting Common Shares to the extent that such dividends are deductible in computing taxable income. Dispositions of LPRC Class A Voting Common Shares or LPRI Class A Voting Common Shares A Canadian Holder who disposes of or is deemed to dispose of LPRC Class A Voting Common Shares or LPRI Class A Voting Common Shares, as the case may be, will generally realize a capital gain (or sustain a capital loss) to the extent that the Canadian Holder's proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of such shares to the Canadian Holder. The tax treatment of such capital gain (or capital loss) is as described below under "Income Tax Considerations – Certain Canadian Federal Income Tax - 90 Considerations – Residents of Canada – Taxation of Capital Gains and Capital Losses". In determining a Canadian Holder's adjusted cost base of the LPRC Class A Voting Common Shares or LPRI Class A Voting Common Shares, as the case may be, reference will need to be made to the cost-averaging rules in the Canadian Tax Act. New Investment Acquisition of LPRC Preferred Shares and LPRI Multiple Voting Common Shares A Canadian Holder who participates in the New Investment and who accordingly acquires LPRC Preferred Shares and LPRI Multiple Voting Common Shares will be considered to have acquired the LPRC Preferred Shares at a cost equal to such Canadian Holder's share of the New Investment Amount paid by such Canadian Holder and to have acquired the LPRI Multiple Voting Common Shares at a cost equal to such Canadian Holder's share of the LPRI Subscription Amount paid by such Canadian Holder. Dividends on LPRC Preferred Shares A Canadian Holder that receives or is deemed to have received a taxable dividend on the LPRC Preferred Shares will be subject to the same Canadian federal income tax treatment as that described above under "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations – Residents of Canada – Transfer of Notes to LPR Canada – Dividends on LPRC Class A Voting Common Shares". In addition, the LPRC Preferred Shares will be "taxable preferred shares" as defined in the Canadian Tax Act and, as a consequence, a Canadian Holder which is a corporation (other than a private corporation) may be subject to a tax of 10% under Part IV.1 of the Canadian Tax Act on taxable dividends received or deemed to be received on the LPRC Preferred Shares. Canadian Holders should consult their own tax advisors. Conversion of LPRC Preferred Shares into LPRC Class B Non-Voting Common Shares The conversion of the LPRC Preferred Shares into LPRC Class B Non-Voting Common Shares will not generally constitute a disposition of property for purposes of the Canadian Tax Act and, accordingly, will not give rise to a capital gain or capital loss. The cost to a Canadian Holder of the LPRC Class B Non-Voting Common Shares received on the conversion will, subject to the averaging rules contained in the Canadian Tax Act, be deemed to be equal to the Canadian Holder's adjusted cost base of the converted LPRC Preferred Shares immediately before the conversion. A Canadian Holder that receives or is deemed to have received a taxable dividend on the LPRC Class B Non-Voting Common Shares will be subject to the same Canadian federal income tax treatment as that described above under "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations – Residents of Canada – Transfer of Notes to LPR Canada - Dividends on LPRC Class A Voting Common Shares". Disposition of LPRC Preferred Shares, LPRI Multiple Voting Common Shares, or LPRC Class B Non-Voting Common Shares A Canadian Holder who disposes of or is deemed to dispose of LPRC Preferred Shares (on the redemption of such shares or otherwise but not including on a conversion), LPRI Multiple Voting Common Shares, or LPRC Class B Non-Voting Common Shares, as the case may be, will generally realize a capital gain (or sustain a capital loss) to the extent that the Canadian Holder's proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of such shares to the Canadian Holder. The amount of any deemed dividend arising on the redemption, acquisition or cancellation by LPR Canada of LPRC Preferred Shares (as discussed below) will generally not be included in computing the Canadian Holder's proceeds of disposition for purposes of computing the capital gain (or capital loss) arising on the disposition of such LPRC Preferred Shares. In determining a Canadian Holder's adjusted cost base of the LPRC Preferred Shares, LPRI Multiple Voting Common Shares, or LPRC Class B Non-Voting Common Shares, as the case may be, reference will need to be made to the costaveraging rules in the Canadian Tax Act. - 91 - If LPR Canada redeems the LPRC Preferred Shares or otherwise acquires or cancels the LPRC Preferred Shares (other than by a purchase by LPR Canada of the LPRC Preferred Shares in the open market in the manner in which shares are normally purchased by any member of the public in the open market), the Canadian Holder will be deemed to have received a dividend equal to the amount, if any, paid by LPR Canada in excess of the paid-up capital (as determined for purposes of the Canadian Tax Act) of such LPRC Preferred Shares at such time. In the case of a Canadian Holder that is a corporation, it is possible that in certain circumstances all or part of any such deemed dividend may be treated as proceeds of disposition and not as a dividend. Specified Foreign Property The Canadian Tax Act imposes information reporting requirements on most Canadian residents that hold "specified foreign property" (as such term is defined in the Canadian Tax Act) having an aggregate cost amount of Cdn.$100,000 at any time in a taxation year or fiscal period. The LPRI Class A Voting Common Shares and the LPRI Multiple Voting Common Shares will be specified foreign property for these purposes. Canadian Holders should consult their own tax advisors to determine whether they are or may be subject to these reporting requirements. Canadian Holders are advised to consult their own tax advisors for a detailed understanding of the foreign investment entity rules in the Canadian Tax Act, and their potential applicability to an investment in LPRI, including the LPRI Class A Voting Common Shares and the LPRI Multiple Voting Common Shares. Existing Shareholders – Cancellation of Existing Parent Shares The Recapitalization will result in the cancellation of the Existing Parent Shares and all other remaining Equity Interests in LPRI (other than the LPRI Class A Common Shares and the LPRI Multiple Voting Common Shares created and issued pursuant to the Plan) for nil consideration. A Canadian Holder will realize a capital loss on the cancellation of its Existing Parent Shares equal to the adjusted cost base to the Canadian Holder of such Existing Parent Shares, plus any reasonable costs of disposition. The tax treatment of any such capital loss is the same as described below in respect of capital losses under "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations – Residents of Canada – Taxation of Capital Gains and Capital Losses". A deemed dividend will not arise on the cancellation of the Existing Parent Shares. Taxation of Capital Gains and Capital Losses Generally, one-half of any capital gain realized in a taxation year will be included in computing the Canadian Holder's income in that taxation year as a taxable capital gain and, generally, one-half of any capital loss realized in a taxation year (an "allowable capital loss") must be deducted from the taxable capital gains realized by the Canadian Holder in the same taxation year, in accordance with the rules contained in the Canadian Tax Act. Allowable capital losses in excess of taxable capital gains realized by a Canadian Holder in a particular taxation year may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any subsequent taxation year against net taxable capital gains realized by the Canadian Holder in such taxation year, subject to and in accordance with the rules contained in the Canadian Tax Act. Capital gains realized by an individual may give rise to a liability for alternative minimum tax under the Canadian Tax Act. Taxable capital gains of a "Canadian-controlled private corporation", as defined in the Canadian Tax Act, may be subject to an additional refundable tax at a rate of 6⅔%. The amount of any capital loss realized by a Canadian Holder that is a corporation on the disposition of a LPRC Class A Voting Common Share, a LPRC Class B Non-Voting Share, or a LPRC Preferred Share, as the case may be, may be reduced by the amount of dividends received or deemed to be received by it on such share (or on a share for which the share has been substituted) to the extent and under the circumstances prescribed by the Canadian Tax Act. Similar rules may apply where a corporation is a member of a partnership or a beneficiary of a trust that owns shares, directly or indirectly through a partnership or a trust. Canadian Holders to whom these rules may apply should consult their own tax advisors. - 92 - Non-Residents of Canada The following discussion applies to a Securityholder who, for the purposes of the Canadian Tax Act and any applicable income tax treaty or convention, and at all relevant times, is not resident in, and is not deemed to be resident in, Canada and does not use or hold the Notes or the Existing Parent Shares, as the case may be, and will not use LPRC Class A Voting Common Shares, LPRC Class B Non-Voting Common Shares, LPRC Preferred Shares, LPRI Class A Voting Common Shares, or LPRI Multiple Voting Common Shares, as the case may be, in carrying on a business in Canada (each, a "Non-Resident Holder"). In addition, this discussion does not apply to an insurer who carries on an insurance business in Canada and elsewhere or an authorized foreign bank that carries on a Canadian banking business. Such Non-Resident Holders should consult their own tax advisors. The following discussion assumes that the Notes do not constitute "taxable Canadian property" within the meaning of the Canadian Tax Act to any particular Non-Resident Holder. Debt Exchange On the Plan Implementation Date, at the times specified in the Plan, all accrued and unpaid interest in respect of the Notes will be settled and extinguished for no consideration and the Notes held by any Beneficial Noteholder will be irrevocably exchanged and transferred in consideration for the issuance of LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares and, in respect of any Noteholder that is a Backstopper, the delivery of such Noteholder's share of the Backstop Amount. Disposition of Notes A Non-Resident Holder will be considered to have disposed of its Notes upon the exchange and transfer of such Non-Resident Holder's Notes pursuant to the Plan. Provided that the Notes do not constitute "taxable Canadian property", within the meaning of the Canadian Tax Act, to a Non-Resident Holder, no taxes will be payable under the Canadian Tax Act by a Non-Resident Holder upon the transfer of their Notes pursuant to the Plan. Acquisition of LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares A Non-Resident Holder who acquires LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares in exchange for the transfer of its Notes will be considered to have acquired such LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares at an aggregate cost equal to their fair market value at the time such shares are issued. Dividends on LPRC Class A Voting Common Shares Dividends paid or credited or deemed under the Canadian Tax Act to be paid or credited to a Non-Resident Holder will generally be subject to Canadian withholding tax at a rate of 25% on the gross amount of such dividend, subject to any applicable reduction in the rate of withholding pursuant to any applicable income tax treaty or convention. For example, the withholding rate is generally reduced under the Canada-United States Tax Convention (1980), as amended (the "US Treaty") to 15% if the beneficial owner of such dividend is a resident of the United States who is a qualifying person for purposes of the US Treaty. The rate of withholding tax is further reduced to 5% if the beneficial owner of such dividend is a United States resident company that is a qualifying person for purpose of the US Treaty and that owns at least 10% of the voting stock of LPR Canada. Non-Resident Holders who may be eligible for a reduced rate of withholding tax on dividends pursuant to any applicable income tax treaty or convention should consult with their own tax advisors with respect to taking all appropriate steps in this regard. Dispositions of LPRC Class A Voting Common Shares or LPRI Class A Voting Common Shares It is not anticipated that either the LPRC Class A Voting Common Shares or the LPRI Class A Voting Common Shares will be listed on the TSX, NYSE or any other "designated stock exchange" within the meaning of the - 93 - Canadian Tax Act. On that basis, the LPRC Class A Voting Common Shares and the LPRI Class A Voting Common Shares will generally constitute "taxable Canadian property", within the meaning of the Canadian Tax Act, to a Non-Resident Holder where, at any time during the 60-month period immediately preceding a disposition of the shares, more than 50% of the fair market value of the shares is derived, directly or indirectly, from one or any combination of: (a) real or immoveable property situated in Canada, (b) "Canadian resource properties" (as defined in the Canadian Tax Act), (c) "timber resource properties" (as defined in the Canadian Tax Act), and (d) any option in respect of, or interest in, such properties. As LPRI's sole material asset is shares of LPR Canada, and based on the current properties of LPR Canada, which consist primarily of "Canadian resource properties", it is anticipated that the LPRC Class A Voting Common Shares and the LPRI Class A Voting Common Shares will constitute "taxable Canadian property" to a Non-Resident Holder at the time of a disposition of such shares by the Non-Resident Holder. This may have a significant impact on the Non-Resident Holder's liability for tax and requirement to file tax returns under the Canadian Tax Act. Non-Resident Holders should consult their own tax advisors. Where the LPRC Class A Voting Common Shares or the LPRI Class A Voting Common Shares, as the case may be, of a Non-Resident Holder constitute "taxable Canadian property" and do not constitute "treaty-protected property", both within the meaning of the Canadian Tax Act, a Non-Resident Holder who disposes of or is deemed to dispose of the LPRC Class A Voting Common Shares or the LPRI Class A Voting Common Shares, as the case may be, will generally realize a capital gain (or sustain a capital loss) to the extent that the Non-Resident Holder's proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of such shares to the Non-Resident Holder. In determining a Non-Resident Holder's adjusted cost base of the LPRC Class A Voting Common Shares and the LPRI Class A Voting Common Shares, as the case may be, reference will need to be made to the cost-averaging rules in the Canadian Tax Act. The tax consequences to a Non-Resident Holder of such capital gain or loss will generally be the same as described above under "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations – Residents of Canada – Taxation of Capital Gains and Capital Losses". Where a Non-Resident Holder disposes of LPRC Class A Voting Common Shares or LPRI Class A Voting Common Shares, as the case may be, which constitute "taxable Canadian property" and do not constitute "treatyprotected property", both within the meaning of the Canadian Tax Act, to the Non-Resident Holder, such NonResident Holder may be required to give notice of any such disposition and obtain a clearance certificate from the CRA under section 116 of the Canadian Tax Act, failing which the purchaser will generally withhold and remit to the CRA 25% of the gross purchase price of such shares. Even where an amount has been withheld and remitted by the purchaser to the CRA, Non-Resident Holders may nevertheless be required to notify the CRA within 10 days of the disposition of taxable Canadian property. Failure to do so can give rise to an assessment for penalties and interest. Such a Non-Resident Holder may also be required to file a tax return in Canada reporting any such disposition for each year in which a disposition occurs. Non-Resident Holders who dispose of "taxable Canadian property" should consult their own tax advisors for advice having regard to their particular circumstances including regarding any resulting Canadian tax reporting requirements. New Investment Acquisition of LPRC Preferred Shares and LPRI Multiple Voting Common Shares A Non-Resident Holder who participates in the New Investment and who accordingly acquires LPRC Preferred Shares and LPRI Multiple Voting Common Shares will be considered to have acquired the LPRC Preferred Shares at a cost equal to such Non-Resident Holder's share of the New Investment Amount paid by such Non-Resident Holder and to have acquired the LPRI Multiple Voting Common Shares at a cost equal to such Non-Resident Holder's share of the LPRI Subscription Amount paid by such Non-Resident Holder. It is anticipated that the LPRC Preferred Shares and the LPRI Multiple Voting Common Shares will constitute "taxable Canadian property" to a Non-Resident Holder. See the discussion above under "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations – Non-Residents of Canada – Transfer of Notes to LPR Canada – Dispositions of LPRC Class A Voting Common Shares or LPRI Class A Voting Common Shares". - 94 - Dividends on LPRC Preferred Shares A Non-Resident Holder that receives or is deemed to have received a taxable dividend on the LPRC Preferred Shares will be subject to the same Canadian federal income tax treatment as that described above under "Certain Canadian Federal Income Tax Considerations – Non-Residents of Canada – Transfer of Notes to LPR Canada – Dividends on LPRC Class A Voting Common Shares". If LPR Canada redeems the LPRC Preferred Shares or otherwise acquires or cancels the LPRC Preferred Shares (other than by a purchase by LPR Canada of the LPRC Preferred Shares in the open market in the manner in which shares are normally purchased by any member of the public in the open market), LPR Canada will be deemed to have paid a dividend equal to the amount, if any, paid by LPR Canada in excess of the paid-up capital (as determined for purposes of the Canadian Tax Act) of such LPRC Preferred Shares at such time. Generally, the difference between the amount paid and the amount of the deemed dividend will be treated as proceeds of disposition for purposes of computing the capital gain or capital loss arising on the disposition of such shares. Conversion of LPRC Preferred Shares into LPRC Class B Non-Voting Common Shares The conversion of the LPRC Preferred Shares into LPRC Class B Non-Voting Common Shares by a Non-Resident Holder will not generally constitute a disposition of property for purposes of the Canadian Tax Act and, accordingly, will not give rise to a capital gain or capital loss. The cost to a Non-Resident Holder of the LPRC Class B NonVoting Common Shares received on the conversion will, subject to the averaging rules contained in the Canadian Tax Act, be deemed to be equal to the Non-Resident Holder's adjusted cost base of the converted LPRC Preferred Shares immediately before the conversion. Where the LPRC Preferred Shares of a Non-Resident Holder to be converted into LPRC Class B Non-Voting Common Shares constitute "taxable Canadian property", within the meaning of the Canadian Tax Act, to the NonResident Holder at the time of the conversion, the requirements of section 116 of the Canadian Tax Act may need to be complied with prior to the release of the LPRC Class B Non-Voting Common Shares by LPR Canada to the NonResident Holder. Where the LPRC Preferred Shares of a Non-Resident Holder to be converted into LPRC Class B Non-Voting Common Shares constitute "taxable Canadian property", within the meaning of the Canadian Tax Act, to the Non-Resident Holder, the LPRC Class B Non-Voting Common Shares issued to the Non-Resident Holder will be deemed to be "taxable Canadian property" at any time that is within 60 months of the conversion. Non-Resident Holders who wish to convert LPRC Preferred Shares which constitute "taxable Canadian property" should consult their own tax advisors for advice having regard to their particular circumstances including regarding any resulting Canadian tax reporting requirements. A Non-Resident Holder that receives or is deemed to have received a taxable dividend on the LPRC Class B NonVoting Common Shares will be subject to the same Canadian federal income tax treatment as that described above under "Income Tax Considerations – Certain Canadian Federal Income Tax Considerations – Non-Residents of Canada – Transfer of Notes to LPR Canada - Dividends on LPRC Class A Voting Common Shares". Dispositions of LPRC Preferred Shares, LPRI Multiple Voting Common Shares, or LPRC Class B Non-Voting Shares Where the LPRC Preferred Shares, LPRI Multiple Voting Common Shares, or LPRC Class B Non-Voting Shares, as the case may be, of a Non-Resident Holder constitute "taxable Canadian property" and do not constitute "treatyprotected property", both within the meaning of the Canadian Tax Act, a Non-Resident Holder who disposes of or is deemed to dispose of the LPRC Preferred Shares (including on a redemption but not including on a conversion), LPRI Multiple Voting Common Shares, or LPRC Class B Non-Voting Common Shares will generally realize a capital gain (or sustain a capital loss) to the extent that the Non-Resident Holder's proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of such shares to the Non-Resident Holder. In determining a Non-Resident Holder's adjusted cost base of the LPRC Preferred Shares, LPRI Multiple Voting Common Shares, or LPRC Class B Non-Voting Common Shares, as the case may be, reference will need to be made to the cost-averaging rules in the Canadian Tax Act. The tax consequences to a Non-Resident Holder of such capital gain or loss will generally be the same as described above under "Income Tax Considerations – Certain - 95 Canadian Federal Income Tax Considerations – Residents of Canada – Taxation of Capital Gains and Capital Losses". Where a Non-Resident Holder disposes of LPRC Preferred Shares, LPRI Multiple Voting Common Shares, or LPRC Class B Non-Voting Common Shares, as the case may be, which constitute "taxable Canadian property" and do not constitute "treaty-protected property", both within the meaning of the Canadian Tax Act, to the Non-Resident Holder, such Non-Resident Holder may be required to give notice of any such disposition and obtain a clearance certificate from the CRA under section 116 of the Canadian Tax Act, failing which the purchaser will generally withhold and remit to the CRA 25% of the gross purchase price of such shares. Even where an amount has been withheld and remitted by the purchaser to the CRA, except on a conversion of LPRC Preferred Shares, NonResident Holders may nevertheless be required to notify the CRA within 10 days of the disposition of taxable Canadian property. Failure to do so can give rise to an assessment for penalties and interest. Such a Non-Resident Holder may also be required to file a tax return in Canada reporting any such disposition for each year in which a disposition occurs. Non-Resident Holders who dispose of "taxable Canadian property" should consult their own tax advisors for advice having regard to their particular circumstances including regarding any resulting Canadian tax reporting requirements. Existing Shareholders – Cancellation of Existing Parent Shares The Recapitalization will result in the cancellation of the Existing Parent Shares and all other remaining Equity Interests in LPRI (other than the LPRI Class A Common Shares and the LPRI Multiple Voting Common Shares created and issued pursuant to the Plan) for nil consideration. The Existing Parent Shares have been delisted from the NYSE and the TSX and will not be listed on another "designated stock exchange" within the meaning of the Canadian Tax Act. As the Existing Parent Shares derive greater than 50% of their value from "Canadian resource properties" within the meaning of the Canadian Tax Act, the Existing Parent Shares will constitute "taxable Canadian property" within the meaning of the Canadian Tax Act to a Non-Resident Holder. Unless such Existing Parent Shares constitute "treaty-protected property", within the meaning of the Canadian Tax Act, to a Non-Resident Holder, such Non-Resident Holder will be required to give notice of the disposition within 10 days of the Plan Implementation Date. Failure to do so can give rise to an assessment for penalties and interest. Such a Non-Resident Holder may also be required to file a tax return in Canada reporting any such disposition for each year in which a disposition. Where a Non-Resident Holder of Existing Parent Shares is a resident of the United States who is a qualifying person for purposes of the US Treaty, the Existing Parent Shares held by such Non-Resident Holder should generally constitute "treaty protected property" for the purposes of the Canadian Tax Act. Non-Resident Holders whose Existing Parent Shares do not constitute "treaty-protected property" within the meaning of the Canadian Tax Act should consult their own tax advisors for advice and assistance in respect of their Canadian federal income tax filing obligations. A deemed dividend will not arise on the cancellation of the Existing Parent Shares held by a Non-Resident Holder. Consequences to LPR Canada Debt Forgiveness The Recapitalization will result, among other things, in the settlement or extinguishment of the Notes and all accrued and unpaid interest thereon. The "forgiven amount", as defined in the Canadian Tax Act, arising from the Recapitalization will reduce, in prescribed order, certain tax attributes of LPR Canada, including non-capital losses, net capital losses, undepreciated capital cost of depreciable property, cumulative eligible capital, resource expenditures, and the adjusted cost base of certain capital property (the "Tax Shield"). Generally, one half of the amount by which the forgiven amount exceeds the Tax Shield will be required to be included in LPR Canada's income for the taxation year in which the Plan Implementation Date takes place, subject to a potential off-setting deduction for insolvent corporations. Based on LPR Canada's currently available Tax Shield, the Lone Pine Group - 96 - does not anticipate that the settlement or extinguishment of the Notes will result in any income inclusion or in any Canadian federal income tax liability to LPR Canada. Dividends on LPRC Preferred Shares The LPRC Preferred Shares will constitute "taxable preferred shares" for the purposes of the Canadian Tax Act. Accordingly, LPR Canada will, subject to certain exceptions, be subject to a tax under Part VI.1 of the Canadian Tax Act on dividends paid or deemed to be paid on the LPRC Preferred Shares. Although LPR Canada will also be entitled to deduct 3.5 times the amount of any Part VI.1 tax payable in computing its taxable income, because LPR Canada does not anticipate having any taxable income in the foreseeable future, such deduction is not anticipated to reduce LPR Canada's overall tax burden under Part I of the Canadian Tax Act. LPR Canada does not currently anticipate any liability for Part VI.1 tax. Certain U.S. Federal Income Tax Considerations TO ENSURE COMPLIANCE WITH U.S. TREASURY DEPARTMENT CIRCULAR 230, PARTICIPANTS IN THE PLAN ARE HEREBY NOTIFIED THAT: (1) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES IN THIS CIRCULAR IS NOT INTENDED OR WRITTEN BY LPR CANADA TO BE RELIED UPON, AND CANNOT BE RELIED UPON, BY PARTICIPANTS IN THE PLAN FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON PARTICIPANTS IN THE PLAN UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"); (2) SUCH DISCUSSION IS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (3) PARTICIPANTS IN THE PLAN SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM THEIR OWN INDEPENDENT TAX ADVISORS. The following is a discussion of the material U.S. federal income tax considerations to U.S. holders (as defined below), relating to (i) the exchange of the Notes for LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares (and in the case of certain U.S. Holders, a portion of the Backstop Amount) pursuant to the Plan (referred to herein as the "Note Exchange"), (ii) the ownership and disposition of the LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares, (iii) the effect of the Plan on holders of Existing Parent Shares and (iv) the ownership and disposition of LPRC Preferred Shares and the LPRC Class B Non-Voting Common Shares into which they are convertible and the LPRI Multiple Voting Common Shares. This discussion is based on U.S. federal income tax law, including the provisions of the Code, Treasury Regulations promulgated under the Code (the "Treasury Regulations"), administrative rulings and judicial authority, all as in effect as of the date of this Circular. Subsequent developments in U.S. federal income tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income tax consequences of participating in the Plan and of owning and disposing of the LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares received in respect of the Notes and the ownership and disposition of LPRC Preferred Shares, LPRC Class B Non-Voting Common Shares, and LPRI Multiple Voting Common Shares, in each case as described in this discussion. No assurance can be given that the Internal Revenue Service (the "IRS") will not challenge one or more of the tax results described in this discussion, and no ruling from the IRS has been, or will be, sought with respect to the U.S. federal tax consequences of the Plan or the ownership and disposition of the LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares received in respect of the Notes, the LPRC Preferred Shares, LPRC Class B Non-Voting Common Shares or the LPRI Multiple Voting Common Shares. This discussion is not tax advice, and holders are urged to consult their independent tax advisors regarding the tax consequences to them of the Plan and of the ownership and disposition of the LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares received in respect of the Notes and the ownership and disposition of the LPRC Preferred Shares, LPRC Class B Non-Voting Shares and LPRI Multiple Voting Common Shares. This discussion addresses only the U.S. federal income tax considerations that are relevant to holders that hold Notes and that will hold LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares received in the Plan, LPRC Preferred Shares and LPRI Multiple Voting Common Shares acquired in the preferred share offering - 97 - pursuant to the Plan, and LPRC Class B Non-Voting Common Shares into which the LPRC Preferred Shares are convertible, as capital assets within the meaning of section 1221 of the Code (generally property held for investment). This discussion does not address all of the tax considerations that may be relevant to a particular holder. In particular, it does not address the U.S. federal estate and gift or alternative minimum tax consequences, or any state, local or foreign tax consequences, of participating in the Plan or of owning or disposing of the LPRC Class A Voting Common Shares, LPRI Class A Voting Common Shares, LPRC Preferred Shares, LPRC Class B Non-Voting Common Shares, and LPRI Multiple Voting Common Shares. Additionally, this discussion does not address any of the tax consequences to holders that may be subject to special tax treatment with respect to their participation in the Plan or their ownership or disposition of LPRC Class A Voting Common Shares, LPRI Class A Voting Common Shares, LPRC Preferred Shares, LPRC Class B Non-Voting Common Shares, and LPRI Multiple Voting Common Shares, including: banks, thrift institutions, or other financial institutions, regulated investment companies, real estate investment trusts, any person owning directly, indirectly or constructively 5% of more of the total voting power or total value of the stock of LPR Canada or Parent, partnerships or other pass-through entities and holders of interests therein, tax-exempt organizations, insurance companies, persons who elect to use a mark-to-market method of accounting for their securities holdings, persons who hold the Notes or will hold the LPRC Class A Voting Common Shares, LPRI Class A Voting Common Shares, LPRC Preferred Shares, LPRC Class B Non-Voting Common Shares, and LPRI Multiple Voting Common Shares in a "straddle or as part of a "hedging," "conversion" or "constructive sale transaction, U.S. holders whose "functional currency" is not the U.S. dollar, controlled foreign corporations or passive foreign investment companies, certain former citizens or residents of the United States, or brokers, traders or dealers in securities or currencies. This discussion assumes that (i) the LPRI Class A Voting Common Shares and the LPRI Multiple Voting Common Shares have nominal value and (ii) the Notes are treated as debt instruments for U.S. federal income tax purposes. For purposes of this discussion, a "U.S. holder" is a beneficial owner of a Note, Existing Parent Shares, LPRC Class A Voting Common Shares, LPRI Class A Voting Common Shares, LPRC Preferred Shares, LPRC Class B NonVoting Common Shares or LPRI Multiple Voting Common Shares, as applicable, that is, for U.S. federal income tax purposes: an individual who is a citizen or resident of the United States; - 98 a corporation, or other business entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state of the United States or the District of Columbia; an estate, if its income is subject to U.S. federal income taxation regardless of its source; or a trust, if (i) a U.S. Court can exercise primary supervision over the trust's administration and one or more U.S. persons (within the meaning of the Code) have the authority to control all of its substantial decisions or (ii) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. If a partnership or other entity or arrangement treated as a partnership for U.S. federal income tax purposes holds a Note and participates in the Plan, the tax treatment of a partner in such partnership will generally depend on the status of the partner and on the activities of the partnership. Partners of partnerships holding Notes are encouraged to consult their independent tax advisors regarding the tax consequences to them of the Plan and of the ownership and disposition of LPRC Class A Voting Common Shares, LPRI Class A Voting Common Shares, LPRC Preferred Shares, LPRC Class B Non-Voting Common Shares or LPRI Multiple Voting Common Shares. Passive Foreign Investment Company Rules If LPR Canada is in the current taxable year, or were to become in a future taxable year, a "passive foreign investment company" or "PFIC" for U.S. federal income tax purposes, the tax consequences of the exchange of Notes for LPRC Class A Voting Common Shares and of the ownership, conversion and disposition of the LPRC Class A Voting Common Shares, the LPRC Preferred Shares and the LPRC Class B Non-Voting Common Shares (as applicable) could differ in material and adverse respects from the tax consequences described below. In general, LPR Canada would be a PFIC with respect to a U.S. holder for any taxable year in which such holder held LPRC Class A Voting Common Shares, LPRC Preferred Shares or LPRC Class B Non-Voting Common Shares if either (i) at least 75% of LPR Canada's gross income for the taxable year is "passive income" or (ii) at least 50% of the average value of all LPR Canada's assets (determined on the basis of a quarterly average) produce or are held for the production of passive income. For this purpose, passive income generally includes, among other things, dividends, interest, certain rents and royalties, annuities and gains from assets that produce passive income. If a foreign corporation owns at least 25% by value of the stock of another corporation, the foreign corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, and as receiving directly its proportionate share of the other corporation's income. LPR Canada does not believe that it has been a PFIC in any prior taxable year and does not expect to become a PFIC in any future taxable year. However, since PFIC status is inherently factual in nature and depends upon the composition of a company's income and assets and the market value of its assets (including, among others from time to time, and because the determination of PFIC status is made on an annual basis, there can be no assurance that LPR Canada will not be considered a PFIC for any taxable year. The remainder of this discussion assumes that LPR Canada is not currently a PFIC and will not become a PFIC in a future taxable year. However, U.S. holders are encouraged to consult their tax advisors regarding the possibility that LPR Canada is or could become a PFIC, the effect of such status, and any elections that might be available to mitigate the adverse consequences associated with ownership of stock of a PFIC. Controlled Foreign Corporation A foreign corporation is treated as a "controlled foreign corporation" or "CFC" for U.S. federal income tax purposes if more than 50% of the total combined voting power of all classes of its stock entitled to vote or more than 50% of the total value of its stock is owned, or treated as owned by applying constructive ownership rules, by "United States shareholders" (shareholders that own, or are treated as owning by applying constructive ownership rules, 10% or more of the total combined voting power of stock of the corporation). If a corporation is classified as a CFC, the corporation becomes subject to a complex set of rules that, among other things, may require the recognition of - 99 - income by such United States shareholders in advance of, or without, the receipt of cash. LPR Canada has been classified as a CFC and will continue to be classified as a CFC following implementation of the Plan as a result of the ownership by LPRI of the LPRC Class C Multiple Voting Share. Participants in the Plan who are or will become U.S. holders are encouraged to consult their independent tax advisors regarding the potential tax consequences to them of LPR Canada's classification as a CFC. Treatment of the Backstop Amount The tax treatment of the receipt of a portion of the Backstop Amount by a U.S. holder in connection with the Plan is unclear. The Plan provides that the Backstop Amount is consideration received in the Note Exchange, in which case it would be taxed as cash received in the Note Exchange as described below under "Exchange of Notes for LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares." However, it is also possible that it could be treated as a reduction in the purchase price of the LPRC Preferred Shares by a U.S. holder that is Backstopper, as a payment of principal or interest on a Note held by such a U.S. holder that is a Backstopper or as a fee treated as ordinary income. U.S. holders that will receive a Pro-Rata Share of the Backstop Amount should consult their independent tax advisors regarding the U.S. federal income treatment of such amount. Exchange of Notes for LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares Treatment of the Note Exchange as a Recapitalization An exchange of notes for stock of the issuer of the notes generally will qualify as a tax-free recapitalization provided the notes are treated as securities for U.S. federal income tax purposes. If cash or other property also is received in the exchange, then the gain, if any, to the recipient will be recognized in an amount not in excess of the sum of the cash and the fair market value of the other property received. The term "security" is not defined in the Code or in the Treasury Regulations and has not been clearly defined by judicial decisions. In the case of a debt instrument, neither the Code nor the Treasury Regulations define the term "security." Rather, whether a debt instrument is a security is based on all of the facts and circumstances, including the nature of the debt and the degree of participation and continuing interest in the debtor's business. Most authorities have held that the term to maturity of the debt instrument is one of the most significant factors in determining whether a debt instrument is a security. In this regard, debt instruments with a term of ten years or more generally qualify as securities, debt instruments with a term between five and ten years may qualify as securities, and debt instruments with a term of less than five years generally do not qualify as securities. There is some authority, however, suggesting that notes of a shorter term can qualify as securities in a corporate reorganization. The Notes had an initial term of five years and, although not free from doubt, LPR Canada intends to take the position that the Notes constitute securities and the exchange constitutes a recapitalization for U.S. federal income tax purposes. It is possible, however, that the IRS could disagree with such a characterization and, if such a challenge were sustained, the tax consequences of the Note Exchange could be different than those described below. As described above, it is assumed that the LPRI Class A Voting Common Shares have nominal value and, thus, if such shares were treated as "other property" received in the recapitalization, the receipt of such shares should result in the recognition of little, if any, gain by an exchanging U.S. holder of Notes. As a result, the receipt of such LPRI Class A Voting Common Shares is generally ignored for purposes of the tax consequences described below. If the Notes are treated as securities for U.S. federal income tax purposes, then the material U.S. federal income tax consequences of the Note Exchange to U.S. holders of Notes will be as follows: A U.S. holder would not recognize loss and would not recognize income or gain except with respect to consideration received that is deemed attributable to accrued but unpaid interest, and to the extent of any cash or other property received in the Note Exchange by such U.S. holder, if applicable; - 100 The holding period of the LPRC Class A Voting Common Shares (excluding any LPRC Class A Voting Common Shares deemed attributable to accrued and unpaid interest, if any) will include the holding period of the Notes exchanged for the LPRC Class A Voting Common Shares; The adjusted tax basis of the LPRC Class A Voting Common Shares (excluding any LPRC Class A Voting Common Shares deemed attributable to accrued and unpaid interest, if any) will be equal to the adjusted tax basis of the Notes exchanged (increased by any gain recognized as a result of the receipt of cash or other property received in the Note Exchange, and decreased by the amount of any such cash or other property, if applicable); The holding period of the LPRC Class A Voting Common Shares deemed attributable to accrued but unpaid interest, if any, will start on the day following the exchange and the adjusted tax basis of those shares will be equal to the amount of the interest deemed paid by such shares; and The holding period of the LPRI Class A Voting Common Shares will begin the day after the Note Exchange and the adjusted tax basis of th LPRI Class A Voting Common Shares will be zero. Treatment of the Note Exchange as a Taxable Transaction If the Notes do not constitute securities for U.S. federal income tax purposes, the Note Exchange would be a taxable transaction, and the material U.S. federal income tax consequences of the exchange to a U.S. holder would be as follows: Gain or loss would be recognized in an amount equal to the difference between (1) the sum of the fair market value of the LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares (excluding consideration that is deemed attributable to accrued but unpaid interest, if any) plus any cash or other property received in the exchange by the U.S. holder, if applicable, and (2) the U.S. holder's adjusted tax basis in the Notes; A U.S. holder's tax basis in a Note generally will be equal to the cost of the Note to the U.S. holder, increased by any market discount previously included in income by the U.S. holder pursuant to an election to include income currently as it accrues (as described below under "Market Discount") and decreased by any amortizable bond premium that the U.S. holder has previously deducted with respect to the Note. Subject to the discussion of "market discount' below, any such gain or loss will be capital gain or loss and will be long-term capital gain or loss if the U.S. holder's holding period for the Note is more than one year at the time of the exchange. The deduction of capital losses for U.S. federal income tax purposes is subject to limitations; The holding period of the LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares will start on the day following the exchange; and The adjusted tax basis of the LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares will equal their fair market value on the day of the Note Exchange. Market Discount A U.S. holder that purchased its Notes at a market discount (defined as the excess, subject to a de minimis threshold, of the stated redemption price of the Note at maturity over the U.S. holder's basis in such note immediately after its acquisition) may be subject to the market discount rules of the Code. Under those rules, any gain recognized on the exchange of such Notes generally would be treated as ordinary income to the extent of the market discount accrued during the U.S. holder's period of ownership, unless the U.S. holder elected to include the market discount in income as it accrued. If the Note Exchange constitutes a recapitalization, as discussed above, then any accrued market discount not recognized on the Note Exchange may carry over to the LPRC Class A Voting Common Shares (other than LPRC Class A Voting Common Shares deemed attributable to accrued but unpaid interest, if any) such that any - 101 - gain recognized by the U.S. holder upon a subsequent disposition of such LPRC Class A Voting Common Shares would be treated as ordinary income to the extent of any such accrued market discount not previously included in income. U.S. holders who acquired their Notes other than at original issuance should consult their independent tax advisors regarding the possible application of the market discount rules of the Code to an exchange of the Notes pursuant to the Plan. Accrued and Unpaid Interest To the extent that any amount of the consideration received by a U.S. holder of a Note is deemed to be attributable to accrued and unpaid interest, (i) if not previously included in income, such amount should be taxable to the U.S. holder as interest income or (ii) the U.S. holder may recognize a loss to the extent the amount of such consideration is less than the amount of accrued and unpaid interest that has been previously included in income. Application of Section 367 of the Code to the Note Exchange In certain circumstances, Section 367 of the Code and the Treasury Regulations issued thereunder (the "Section 367 Rules") may require the recognition of any gain realized on a transfer by a U.S. person of property to a foreign corporation, even if the transaction would otherwise qualify as a tax-free reorganization. If the Note Exchange is treated as a recapitalization, no gain should be recognized by a U.S. holder under the Section 367 Rules. The determination of whether the Notes constitute "securities" for U.S. federal income tax purposes is inherently factual. U.S. holders are urged to consult their independent tax advisors regarding the classification of the Notes as securities and the U.S. federal income tax consequences of the treatment of the Note Exchange as either a recapitalization or a taxable transaction. Ownership and Taxable Disposition of LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares Received in the Plan Distributions and Dividends Distributions, if any, paid by LPR Canada on the LPRC Class A Voting Common Shares will constitute dividends to the extent of LPR Canada's current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) and will constitute foreign source dividend income for U.S. foreign tax credit purposes. The amount of a dividend will include any amounts withheld by LPR Canada or its paying agent in respect of Canadian taxes. If a distribution exceeds LPR Canada's current and accumulated earnings and profits, the excess will be treated as a taxfree return of capital to the extent of such U.S. holder's adjusted tax basis in the LPRC Class A Voting Common Shares, and thereafter as gain from a taxable disposition of the LPRC Class A Voting Common Shares. Under current law, such dividends received by individual U.S. holders generally will be subject to tax at capital gain rates (and may be subject to the additional 3.8% tax rate discussed below). Corporate U.S. holders will not be eligible for the dividends received deduction generally allowed to U.S. corporations under the Code. Dividends paid in Canadian dollars by LPR Canada will be included in a U.S. holder's income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of the U.S. holder's receipt of the dividend, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. holder generally should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. holder may have foreign currency gain or loss if it does not convert the amount of such dividend into U.S. dollars on the date of its receipt. Sale, Exchange or Other Disposition A U.S. holder generally will recognize capital gain or loss on a taxable disposition of the LPRC Class A Voting Common Shares or LPRI Class A Voting Common Shares (as the case may be) equal to the difference (if any) between the proceeds received and the U.S. holder's adjusted tax basis in the LPRC Class A Voting Common Shares or LPRI Class A Voting Common Shares (as the case may be). Such capital gain or loss will be long-term capital gain or loss if the U.S. holder's holding period in such LPRC Class A Voting Common Shares or LPRI Class A - 102 - Voting Common Shares (as the case may be) exceeds one year immediately prior to such disposition. Long-term capital gains of individuals generally are subject to a reduced maximum tax rate of 20% (and may be subject to the additional 3.8% tax rate discussed below). The deductibility of net capital losses is subject to limitations. Treatment of Canadian Taxes Canadian taxes withheld from dividends paid on LPRC Class A Voting Common Shares and any Canadian income taxes imposed on gain from a sale or other disposition of such shares may be allowable as a credit against a U.S. holder's U.S. federal income tax liability or as a deduction in determining the U.S. holder's taxable income, subject to applicable limitations that may vary depending upon a U.S. holder's circumstances. The rules governing foreign tax credits are complex and, therefore, U.S. holders should consult their own tax advisor regarding the availability of foreign tax credits in their particular circumstances. Instead of claiming a credit, a U.S. holder may, at its election, deduct such otherwise creditable Canadian taxes in computing its taxable income, subject to generally applicable limitations under U.S. law. Ownership and Taxable Disposition of LPRC Preferred Shares and LPRI Multiple Voting Common Shares A U.S. holder that elects to participate in the preferred share offering pursuant to the Plan and that accordingly acquires LPRC Preferred Shares and LPRI Multiple Voting Shares will be considered to have acquired such shares at a cost equal to the respective subscription prices paid by the U.S. holder for such LPRC Preferred Shares and LPRI Multiple Voting Shares (as the case may be). Distributions and Dividends The LPRC Preferred Shares will not be entitled to any mandatory or cumulative dividends. However, to the extent any distributions are made with respect to the LPRC Preferred Shares, such distributions generally will be subject to the rules discussed above under "Ownership and Taxable Disposition of LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares Received in the Plan -- Distributions and Dividends." Increase in Liquidation Preference The liquidation preference of the LPRC Preferred Shares will increase by a fixed percentage per year, and the conversion ratio of the LPRC Preferred Shares into LPRC Class B Non-Voting Common Shares will be adjusted accordingly. Adjustments that have the effect of increasing the proportionate interest of U.S. holders of the LPRC Preferred Shares in the assets or earnings of LPR Canada can give rise to a deemed dividend to such holders to the extent LPRC Canada has earnings and profits, as determined for U.S. federal income tax purposes. Such a deemed dividend generally would be taxable to such holders in the taxable year of the adjustment. Accordingly, U.S. holders of the LPRC Preferred Shares could potentially have an income tax liability with no related distribution of cash or stock. The foregoing rules that may give rise to a deemed dividend relate to stock that is treated as “preferred stock” under applicable Treasury Regulations. Stock that not only enjoys a priority as to dividends and on liquidation but that also participates in corporate growth to a significant extent generally would not be classified as preferred stock for purposes of these rules unless at the time a distribution is made or deemed made there is little or no likelihood of such stock actually participating in current and anticipated earnings and upon liquidation beyond its preferred interest. U.S. holders that will invest in the LPRC Preferred Shares are encouraged to consult their independent tax advisors regarding the effect of the accretion of the liquidation preference of the LPRC Preferred Shares, the resulting change in the conversion ratio of the LPRC Preferred Shares into LPRC Class B Non-Voting Common Shares and whether the LPRC Preferred Shares would be treated as preferred stock for purposes of the rules described above. Conversion of LPRC Preferred Shares into LPRC Class B Non-Voting Common Shares A U.S. holder generally will not recognize (i.e., take into account for U.S. federal income tax purposes) gain or loss upon the conversion of LPRC Preferred Shares into LPRC Class B Non-Voting Common Shares. The adjusted tax - 103 - basis of LPRC Class B Non-Voting Common Shares received on conversion generally will equal the adjusted tax basis of the LPRC Preferred Shares converted and the holding period of such LPRC Class B Non-Voting Common Shares received on conversion generally will include the period during which the U.S. holder held its converted LPRC Preferred Shares prior to conversion. Application of Section 367 of the Code to the Conversion of LPRC Preferred Shares into LPRC Class B Non-Voting Common Shares The conversion of the LPRC Preferred Shares into LPRC Class B Non-Voting Common Shares should be treated as a tax-free recapitalization for U.S. federal income tax purposes. In such case, no gain should be recognized by a U.S. holder under the Section 367 Rules as a result of such a conversion. Sale, Exchange or Other Disposition A U.S. holder generally will recognize capital gain or loss on a taxable disposition of the LPRC Preferred Shares or the LPRC Class B Non-Voting Common Shares (as the case may be) equal to the difference (if any) between the proceeds received and the U.S. holder's adjusted tax basis in the LPRC Preferred Shares or the LPRC Class B NonVoting Common Shares (as the case may be). Such capital gain or loss will be long-term capital gain or loss if the U.S. holder's holding period in such LPRC Preferred Shares or the LPRC Class B Non-Voting Common Shares (as the case may be) exceeds one year immediately prior to such disposition. Long-term capital gains of individuals generally are subject to a reduced maximum tax rate of 20% (and may be subject to the additional 3.8% tax rate discussed below). The deductibility of net capital losses is subject to limitations. Redemptions A payment made in redemption of LPRC Preferred Shares may be treated for U.S. federal income tax purposes as a distribution, rather than as payment pursuant to a sale or exchange of LPRC Preferred Shares, unless the redemption: is "not essentially equivalent to a dividend" with respect to a U.S. holder under Section 302(b)(1) of the Code; is a "substantially disproportionate" redemption with respect to a U.S. holder under Section 302(b)(2) of the Code; results in a "complete redemption" of a U.S. holder's stock interest in LPR Canada under Section 302(b)(3) of the Code; or is a redemption of stock held by a non-corporate U.S. holder which results in a "partial liquidation" of the Company under Section 302(b)(4) of the Code. In determining whether any of the tests described above has been met, a U.S. holder must take into account not only shares of LPRC Preferred Shares and LPRC common stock that the U.S. holder actually owns, but also shares that the U.S. holder constructively owns within the meaning of Section 318 of the Code. If a U.S. holder owns only an insubstantial percentage of LPRC Preferred Shares, and does not participate in LPR Canada's control or management, a redemption of such holder's LPRC Preferred Shares generally will qualify for sale or exchange treatment. Each U.S. holder of LPRC Preferred Shares should consult its own tax advisors to determine whether a payment made in redemption of LPRC Preferred Shares will be treated for U.S. federal income tax purposes as a distribution or as payment in exchange for such LPRC Preferred Shares. - 104 - Treatment of Canadian Taxes Canadian taxes withheld from dividends paid on LPRC Preferred Shares or LPRC Class B Non-Voting Common Shares and any Canadian income taxes imposed on gain from a sale, redemption or other disposition of the LPRC Preferred Shares or LPRC Class B Non-Voting Common Shares generally may be allowable as a credit against a U.S. holder's U.S. federal income tax liability or as a deduction in determining the U.S. holder's taxable income, subject to applicable limitations that may vary depending upon a U.S. holder's circumstances. The rules governing foreign tax credits are complex and, therefore, U.S. holders should consult their own tax advisor regarding the availability of foreign tax credits in their particular circumstances. Instead of claiming a credit, a U.S. holder may, at its election, deduct such otherwise creditable Canadian taxes in computing its taxable income, subject to generally applicable limitations under U.S. law. Treatment of Exiting Parent Shares Under the Plan, the Existing Parent Shares will be cancelled for no consideration. A U.S. holder will recognize a capital loss as a result of the cancellation of the Existing Parent Shares, with such capital loss based on the U.S. holder's adjusted basis in its Existing Parent Shares at the time of the cancellation. Such capital loss will be a longterm capital loss if the U.S. holder's holding period for the Existing Parent Shares is more than one year. The deductibility of net capital losses is subject to limitations. Each U.S. holder should consult its own tax advisor to determine the deductibility of net capital losses, if any. Medicare Tax on Net Investment Income Certain U.S. holders that are individuals, trusts or estates will be subject to an additional 3.8% Medicare tax on unearned income, which generally will include dividends received and gain recognized with respect to the sale of stock. For individual U.S. holders, the additional Medicare tax applies to the lesser of (i) "net investment income," or (ii) the excess of "modified adjusted gross income" over $200,000 ($250,000 if married and filing jointly or $125,000 if married and filing separately). "Net investment income" generally equals a holder's gross investment income reduced by the deductions that are allocable to such income. Investment income generally includes passive income such as interest, dividends, annuities, royalties, rents and capital gains. U.S. holders are urged to consult their own tax advisors regarding the implications of this additional Medicare tax to their particular circumstances. Certain Reporting Requirements Certain specified persons are required to report information to the IRS relating to an interest in "specified foreign financial assets," including (i) stocks and securities issued by non-U.S. persons; (ii) financial instruments and contracts held for investment that have non-U.S. issuers or counterparties; and (iii) interests in foreign entities. The LPRC Class A Voting Common Shares, LPRI Class A Voting Common Shares, LPRC Preferred Shares, LPRC Class B Non-Voting Common Shares and LPRI Multiple Voting Shares generally will constitute specified foreign financial assets subject to these reporting requirements, unless such shares are held in an account at a financial institution. In general, such reporting requirements apply to individuals, but under certain circumstances, an entity may be treated as an individual for purposes of these rules. Accordingly, a U.S. holder may be required, subject to certain exceptions, to file IRS Form 8938 (Statement of Specified Foreign Financial Assets) with respect to the holder's interests in the LPRC Class A Voting Common Shares, LPRI Class A Voting Common Shares, LPRC Preferred Shares, LPRC Class B Non-Voting Common Shares and LPRI Multiple Voting Shares. U.S. holders are encouraged to consult their independent tax advisors regarding the reporting requirements described above as well as any other reporting requirements that may be applicable to their ownership or disposition of the shares described above. Information Reporting and Backup Withholding Payments of dividends, if any, on the LPRC Class A Voting Common Shares, the LPRC Preferred Shares or the LPRC Class B Non-Voting Common Shares and the proceeds received on the disposition of the Notes, the LPRC Class A Voting Common Shares, LPRI Class A Voting Common Shares, LPRC Preferred Shares, LPRC Class B Non-Voting Common Shares and LPRI Multiple Voting Shares may be reported to the IRS and may be subject to - 105 - backup withholding unless the U.S. holder (i) is a corporation or other exempt recipient and certifies to such status if requested, or (ii) provides a valid taxpayer identification number and certifies that no loss of exemption from backup withholding has occurred. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or credit against a U.S. holder's U.S. federal income tax liability, provided the required information is timely furnished to the IRS. The preceding discussion of certain U.S. federal income tax consequences is for general information only and is not tax advice. Each U.S. holder is encouraged to consult its own independent tax advisor regarding the particular U.S. federal, state, local and foreign tax consequences of the Note exchange and the ownership and disposition of the LPRC Class A Voting Common Shares, LPRI Class A Voting Common Shares, the LPRC Preferred Shares, the LPRC Class B Non-Voting Class B Shares and the LPRI Multiple Voting Common Shares. INFORMATION RELATING TO THE LONE PINE GROUP Group Companies The business operations of the Lone Pine Group are primarily carried out by LPR Canada, an Alberta corporation and wholly-owned subsidiary of LPRI. LPRI is a Delaware corporation and the parent company of the Lone Pine Group. The Plan contemplates that LPR Canada will remain a controlled subsidiary of LPRI following the Plan Implementation Date, and that the Affected Unsecured Creditors (including Subscribing Unsecured Creditors, as applicable) will, in accordance with the Recapitalization steps, become the shareholders of both LPR Canada and LPRI. Each of Wiser Oil and Wiser Delaware is a Delaware limited liability company and, directly or indirectly, a whollyowned subsidiary of LPRI. Each is currently a non-voting shareholder of LPR Canada, and will be dissolved pursuant implementation of the Plan. LPR Holdings is an Alberta corporation and a wholly-owned subsidiary of LPR Canada. LPR Holdings does not hold any tangible assets and will remain a wholly-owned subsidiary of LPR Canada following the Plan Implementation Date. Business of LPR Canada LPR Canada is an oil and gas exploration, development, and production company with operations solely in Canada. Its reserves, producing properties and exploration prospects are located in Alberta, British Columbia, Quebec and the Northwest Territories. If the Plan is implemented, the business of the Restructured Group will continue to be carried out primarily by LPR Canada. Neither LPRI nor LPR Holdings will own any material assets other than equity or inter-company debt interests in LPR Canada. Documents Incorporated by Reference LPRI is required to file annual, quarterly and current reports, proxy statements and other information with the SEC. As a reporting issuer under the securities legislation of each province of Canada other than Quebec, LPRI is also required to file timely and periodic disclosure reports with applicable provincial securities commissions or similar authorities. Information has been incorporated by reference in this Circular from documents filed with securities commissions or similar authorities in Canada and with the SEC, copies of which are available electronically on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar/searchedgar/companysearch.html. Copies of the documents - 106 - incorporated herein by reference may also be obtained on request without charge from the Vice President, General Counsel and Corporate Secretary of LPRI at 1100, 640 – 5th Avenue S.W., Calgary, Alberta T2P 3G4. The following public disclosure documents of LPRI, filed with or furnished to the SEC on EDGAR and filed with Canadian securities regulatory authorities on SEDAR, are incorporated by reference into and form an integral part of this Circular: annual report on Form 10-K for the year ended December 31, 2012 (dated March 14, 2013); quarterly reports on Form 10-Q for the periods ended March 31, 2013 (dated May 9, 2013), June 30, 2013 (dated August 8, 2013) and September 30, 2013 (dated November 8, 2013); current reports on Form 8-K dated February 19, 2013, February 27, 2013, March 6, 2013, March 14, 2013, March 15, 2013, April 19, 2013, May 6, 2013, May 9, 2013, May 16, 2013, May 28, 2013, June 6, 2013, June 19, 2013, July 29, 2013, August 8, 2013, August 15, 2013, September 11, 2013, September 25, 2013, October 18, 2013, October 30, 2013, November 15, 2013 and December 12, 2013; and proxy statement dated April 5, 2013 relating to the annual meeting of LPRI Shareholders held on May 15, 2013. LPRI's Statement of Reserves Data and Other Oil and Gas Information (Form 51-101F1) and related Report on Reserves Data by Independent Qualified Reserves Evaluator or Auditor (Form 51-101F2) and Report of Management and Directors on Oil and Gas Disclosure (Form 51-101F3), filed on SEDAR on March 14, 2013, are also incorporated by reference herein. Any current report of LPRI filed with the SEC and Canadian securities regulatory authorities subsequent to the date of this Circular and prior to the Meetings shall also be deemed to be incorporated by reference in this Circular. Any statement contained in this Circular or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Circular to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such prior statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement is not to be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary in order to make a statement in the light of the circumstances under which it was made, not misleading. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to be incorporated by reference herein or to constitute a part of this Circular. RISK FACTORS Any investment in New Shares involves substantial risk. In evaluating the Plan and determining whether to vote for the Approval Resolution and, if applicable, participate in the New Investment and/or the Backstop, Affected Unsecured Creditors are urged to read and consider carefully the risk factors described below and in the documents incorporated by reference herein, together with the other information in this Circular and such documents incorporated by reference. If any such risks occur, the business, financial condition, cash flows, and results of operations of the Lone Pine Group and the Restructured Group, as applicable, could materially and adversely suffer, the value of any interest in the Lone Pine Group or the Restructured Group, as applicable, could be significantly impaired, and the holders of any such interest might lose all or a major part of their investment. - 107 - These risk factors described below and in the documents incorporated by reference herein are not the only risks and uncertainties relating to the Plan, the Lone Pine Group or, if the Plan Implementation Date occurs, the Restructured Group. There are and will always be additional risks and uncertainties not currently known or reasonably identifiable. Additionally, conditions that may currently be considered immaterial to the Lone Pine Group may, as a consequence of future events or developments, become material and give rise to risk and uncertainties that could materially and adversely affect the business, financial condition, cash flows, and results of operations of the Lone Pine Group or, if the Plan Implementation Date occurs, the Restructured Group. Risks Relating to Non-Implementation of the Plan Failure to Implement the Plan If the Plan is not implemented before the Outside Date, the Lone Pine Group may remain under CCAA protection for an indefinite period of time and its business could continue to substantially erode, or an insolvency proceeding involving the liquidation of the assets of the Lone Pine Group could result. If the Recapitalization is not completed, there is no assurance that the Lone Pine Group will be able to complete a restructuring of its businesses or that any such restructuring will be on terms that provide equivalent value to Affected Unsecured Creditors compared to the consideration to be received by Affected Unsecured Creditors pursuant to the Recapitalization and the Plan. Pursuant to the terms of the Support Agreement, if the Recapitalization is not implemented on or before the Outside Date, the Support Agreement may be terminated by the Consenting Creditors. If the Support Agreement is terminated and the Plan is not consummated, the Lone Pine Group will have an immediate need to pursue other alternatives to manage its liquidity needs, including potentially filing under the insolvency laws of various jurisdictions. There can be no assurance as to the value, if any, that would be available to Affected Unsecured Creditors, including holders of the Notes, in the case of any such insolvency filing. The Lone Pine Group may be unable to continue as a going concern If the Recapitalization is not implemented and the Lone Pine Group's business operations continue at their current levels, the Lone Pine Group will not be able to generate sufficient cash for its operations. The Lone Pine Group may need to raise additional capital to continue as a going concern. The Lone Pine Group can give no assurances that additional capital will be available to the Lone Pine Group on favourable terms, or at all. The Lone Pine Group's inability to obtain additional capital, if and when needed, would have a material adverse effect on the Lone Pine Group's financial condition and the Lone Pine Group's ability to continue as a going concern. The September 30, 2013 unaudited interim consolidated financial statements incorporated by reference in this Circular are presented on the assumption that the Lone Pine Group will continue as a going concern. The going concern basis of presentation assumes that the Lone Pine Group will continue operations for the foreseeable future and will be able to realize assets and discharge liabilities and commitments in the normal course of business. If this assumption is not appropriate, adjustments will have to be made to the carrying value of the Lone Pine Group's assets and liabilities, reported revenues and expenses and balance sheet classifications. Alternatives other than Implementation of the Plan could have a more negative effect on the Lone Pine Group and its stakeholders, including the sale of core assets or non-consensual proceedings under insolvency statutes If the Recapitalization is not implemented and creditor protection is no longer available under the CCAA, the Lone Pine Group will be required to pursue other alternatives that could have a more negative effect on the Lone Pine Group and its stakeholders, including the sale of core assets or non-consensual proceedings under insolvency statutes. Should creditor protection no longer be available under the CCAA, then: - 108 - (a) the Syndicate may enforce their remedies against the Lone Pine Group pursuant to the Current Credit Agreement as a result of the defaults currently existing under the terms of that agreement; (b) the Noteholders may enforce their remedies against the Lone Pine Group pursuant to the Note Indenture as a result of the defaults caused by the missed interest payment under the terms of that agreement; and (c) the Lone Pine Group believes its cash flow from operations and available liquidity would be insufficient to provide adequate funds to finance its operations and the Lone Pine Group would be unable to meet its obligations as they generally become due. In addition, any distributions in respect of Affected Claims under a liquidation or under a protracted reorganization under insolvency laws, other than in connection with the Plan, would likely be substantially delayed and the value of any potential recovery would likely be adversely impacted by such delay. Furthermore, in the event of any foreclosure, dissolution, winding-up, liquidation or reorganization, or other insolvency proceeding other than in connection with the Plan, there can be no assurance as to the value, if any, that would be available to Affected Creditors. The Affected Claims including the Notes are unsecured obligations and rank junior to the secured obligations under the Current Credit Agreement. Accordingly, upon any distribution to creditors in any foreclosure, dissolution, winding-up, liquidation or reorganization, or other insolvency proceeding relating to the Lone Pine Group or its property other than in connection with the Plan, the indebtedness under the Current Credit Agreement will be entitled to be paid in full before any payment may be made with respect to the Affected Claims. If the Plan is not approved, Affected Creditors may receive less value for their Affected Claims in the event of any foreclosure, dissolution, winding-up, liquidation or reorganization, or other insolvency proceeding other than the Plan than they would under the Recapitalization. Risks Relating to the Plan and its Implementation Consummation of the CCAA Plan is subject to Affected Unsecured Creditors' approval and Court approval Before the Plan can be consummated, it must have been approved by the Required Majorities and sanctioned, after notice and a hearing on any objection, by the Court. There can be no assurance that the Plan will be approved by the Required Majorities, and that even if approved, the Court will sanction the Plan. The failure of any of these conditions will delay or prevent the consummation of the Plan. The Lone Pine Group has filed petitions under Chapter 15 of the U.S. Bankruptcy Code to recognize certain Orders of the Court effectuating the Recapitalization as set forth in the Plan, but can provide no assurance that the Orders of the Court will be recognized by the U.S. Court Pursuant to Chapter 15 of the U.S. Bankruptcy Code, the Long Pine Group intends to seek recognition by the U.S. Court of certain Orders entered by the Court in connection with the Recapitalization and the Plan. The Lone Pine Group cannot ensure that any Order entered by the Court, including but not limited to any Sanction Order, will be recognized by the U.S. Court. If any of the conditions to implementation of the Plan are not satisfied or an alternative plan is not approved, the Lone Pine Group may be forced to liquidate If any of the conditions precedent as described in the Plan, including Court sanction and the satisfaction of the implementation conditions, are not satisfied (or waived, if applicable) and the Plan is not implemented, there can be no assurance that the CCAA Proceeding will continue, or that an alternative plan of compromise and arrangement, if any, would be on comparable terms for the Affected Unsecured Creditors. The most likely alternative to a continuation of the CCAA Proceeding, which itself could be protracted, is liquidation. For more information on the potential risks involved in a protracted reorganization, see "Undue delay in implementation of the Recapitalization may significantly disrupt the operations of the Lone Pine Group" below. The Lone Pine Group believes that a - 109 - liquidation would not provide equivalent value to Affected Unsecured Creditors compared to the consideration to be received by Affected Unsecured Creditors pursuant to the Plan. Affected Unsecured Claims of Cash Pool Creditors may be materially diminished if a significant number of Affected Unsecured Creditors elect to reduce their Affected Unsecured Claims to the Cash Pool Cap If a significant number of Affected Unsecured Creditors elect, by providing a Cash Election to the Monitor before the Cash Election Deadline, to reduce their Affected Unsecured Claims to the Cash Pool Cap, the Cash Pool will be distributed on a pro rata basis among all such electing Cash Pool Creditors, which may result in Cash Pool Creditors receiving less than expected under the Cash Pool Cap. The intention of Affected Unsecured Creditors to reduce their Affected Unsecured Claims to the Cash Pool Cap is beyond the knowledge and control of the Lone Pine Group. Undue delay in implementation of the Recapitalization may continue to significantly disrupt the operations of the Lone Pine Group The Lone Pine Group has incurred significant costs and expenses to date in connection with its ongoing restructuring efforts. Even if the Recapitalization is completed, it may not be completed on the schedule described in this Circular or on or prior to the Outside Date. Accordingly, Affected Unsecured Creditors participating in the Recapitalization may have to wait longer than expected to receive consideration, if any, for their Affected Unsecured Claims. In addition, if the Recapitalization is not completed on the schedule described in this Circular, the Lone Pine Group may incur additional expenses. Although the Plan is designed to minimize the length of the CCAA Proceeding, it is not possible to predict the amount of time the Lone Pine Group may spend in the CCAA Proceeding or to provide any assurance as to whether or not the Plan will be confirmed or sanctioned. The continuation of the CCAA Proceeding, particularly if the Plan is not approved or confirmed in the time frame currently contemplated, could materially and adversely affect the Lone Pine Group's operations and relationships with its authorized intermediaries, suppliers, customers, employees and regulators. Also, transactions outside the ordinary course of business are subject to the prior approval of the Court, which may limit the Lone Pine Group's ability to respond timely to certain events or take advantage of certain opportunities. A prolonged CCAA Proceeding may also make it more difficult to retain and attract management and other key personnel, and would require senior management to continue to spend a significant amount of time and effort dealing with the Lone Pine Group's restructuring instead of focusing on the operation of the Lone Pine Group Business. If the Recapitalization is not completed on the schedule described in this Circular, the Lone Pine Group may incur additional expenses. The Recapitalization may not improve the financial condition of the Lone Pine Group's business Management believes that the completion of the Recapitalization will enhance the Lone Pine Group's liquidity and provide it with improved operating flexibility. However, such belief is based on certain assumptions, including, without limitation, that the Lone Pine Group's consolidated sales and relationships with suppliers, customers and competitors will not be materially adversely affected while the Recapitalization is underway and that they will be stable or will improve following the completion of the Recapitalization, that general economic conditions and the markets for the Lone Pine Group's products or for the products of its partners will remain stable or improve, as well as the Lone Pine Group's continued ability to manage costs. Should any of these assumptions prove false, the financial position of the Lone Pine Group may be materially adversely affected and the Lone Pine Group may not be able to pay its debts as they become due. The Recapitalization will divert management's attention from the operations of the business The Recapitalization has required and will continue to require senior management of the Lone Pine Group to spend a significant amount of time developing the Plan and dealing with the Recapitalization, instead of focusing exclusively on the operation of the Lone Pine Group's business. This could have a negative impact on the business of the Lone Pine Group. - 110 - Tax Risks The Lone Pine Group intends to take the position that the LPRC Class A Voting Common Shares, the LPRI Class A Voting Common Shares, and the Backstop Amount are being delivered to Noteholders (and other Affected Unsecured Claims) in consideration of the full settlement of the principal amount of the Notes (and other Affected Unsecured Claims). No assurance can be given that this position will be accepted by the CRA. If it is not accepted, the tax considerations to Noteholders may be different from that described above under "Income Tax Considerations - Certain Canadian Federal Income Tax Considerations". In particular, Noteholders who are Canadian Holders (as defined under "Income Tax Considerations - Certain Canadian Federal Income Tax Considerations") may be required to include a portion of the value of the LPRC Class A Voting Common Shares, the LPRI Class A Voting Common Shares, or, if applicable, the Backstop Amount, in income for Canadian federal income tax purposes. Noteholders who are Canadian Holders are advised to consult with their own tax advisors regarding the potential tax consequences. Risks Relating to an Investment in New Shares If the Plan is implemented, Affected Unsecured Creditors will become holders of New Shares and should be aware that holding New Shares contains certain risks. In addition to the risks and uncertainties described below, additional risks and uncertainties in owning equity in the Lone Pine Group are outlined in the documents incorporated by reference herein. Implementation of the Recapitalization Even if the Recapitalization is completed, the Lone Pine Group will continue to face the risks that it currently faces with respect to its business, operations, affairs and future prospects. See "Risk Factors – Risks Relating to the NonImplementation of the Plan". No Market for the New Shares There is currently no market through which the New Shares may be sold and there is no intention to seek any listing in the future. Accordingly, Affected Unsecured Creditors receiving New Shares may not be able to resell their New Shares acquired pursuant to the Plan. This may affect the pricing of the New Shares in the secondary market, the transparency and the availability of trading prices and the liquidity of the New Shares. There can be no assurance that an active trading market will develop for the New Shares after completion of the Plan, or if developed, that such a market will be sustained. The Lone Pine Group does not intend to apply for listing of the New Shares on any securities exchange or for quotation through any automated quotation system. Dilutive effect of New Investment An Affected Unsecured Creditor (other than a Cash Pool Creditor) who receives LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares pursuant to the Debt Exchange but does not elect to participate in the New Investment and therefore does not acquire LPRC Preferred Shares and LPRI Multiple Voting Common Shares may suffer annual dilution with respect to its equity interests in LPR Canada and in LPRI as a result of the Accretion Rate. As described above under "Details of the Recapitalization – New Shares to be Distributed to Affected Unsecured Creditors – Separation of economic and voting rights", it is anticipated that the Post-Implementation Shareholders will primarily (i) realize any future economic benefits attributable to their equity ownership in the Restructured Group as a consequence of being a shareholder of LPR Canada, and (ii) exercise voting rights with respect to the Restructured Group in their capacity as a shareholder of LPRI (which will in turn hold a controlling voting interest in LPR Canada). For Affected Unsecured Creditors (other than Cash Pool Creditors) who do not participate in the New Investment, these shareholdings will be in the form of LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares distributed pursuant to the Debt Exchange. In aggregate, the LPRC Class A Voting Common Shares will initially represent not more than 25% of the total equity in LPR Canada, and the LPRI Class A Voting Common Shares will initially represent not more than 25% of the total voting rights in LPRI. The remaining - 111 - equity interest in LPR Canada and voting rights in LPRI will be represented by the LPRC Preferred Shares and LPRI Multiple Voting Common Shares distributed pursuant to the New Investment. The proportionate equity interest of holders of LPRC Class A Voting Common Shares, and the proportionate voting power of holders of LPRI Class A Voting Common Shares, will be diluted over time as a result of the annual Accretion Rate of 10% per annum on both the LPRC Preferred Shares and the LPRI Class A Voting Common Shares. Only by participating in the New Investment to the full extent of its pro rata entitlement (if eligible to do so as a Qualifying Unsecured Creditor) will an Affected Unsecured Creditor avoid this dilution. The Recapitalization may not sufficiently improve the financial condition of the Lone Pine Group's business to allow it to continue as a going concern Management believes that the Recapitalization would enhance the Lone Pine Group's liquidity and provide it with continued operating flexibility in the short-term. However, such belief is based on certain assumptions, including, without limitation, that the Lone Pine Group's consolidated sales and relationships with suppliers, customers and competitors will not be materially adversely affected while the Recapitalization is underway and that they will be stable or will improve following the completion of the Recapitalization in the increasingly competitive marketplace in which the Lone Pine Group operates, that general economic conditions and the markets for the Lone Pine Group's products will remain stable or improve, as well as the Lone Pine Group's continued ability to manage costs. Should any of those assumptions prove false, the financial position of the Lone Pine Group may be materially adversely affected and the Lone Pine Group may not be able to pay its debts as they become due. In addition, even if the Recapitalization is completed, there is no assurance that the significant changes to the capital structure of the Lone Pine Group provided by the Plan will be sufficient to allow the Lone Pine Group to continue as a going concern. Despite the completion of the Recapitalization, the Lone Pine Group may not be able to generate sufficient cash for its operations and may be required to raise additional capital to continue as a going concern. The Lone Pine Group can give no assurances that additional capital will be available to the Lone Pine Group on favourable terms, or at all. The Lone Pine Group's inability to obtain additional capital, if and when needed, would have a material adverse effect on the Lone Pine Group's financial condition and the Lone Pine Group's ability to continue as a going concern. Adverse publicity related to the CCAA Proceeding may affect the Lone Pine Group's business Adverse publicity or news coverage relating to the Creditor Protection Proceedings could have an adverse effect on the Lone Pine Group's business. Following the implementation of the Plan, there can be no assurance that negative publicity will not have a long-term negative effect on the business. In addition, the Creditor Protection Proceedings may adversely affect the Lone Pine Group's relationships with its customers. Following the implementation of the Plan, customers may continue to be concerned about the financial condition of the Lone Pine Group and, as a result, they may demand faster payment terms or not extend normal trade credit, both of which could adversely affect the Lone Pine Group's working capital position. The Lone Pine Group may not be successful in obtaining alternative customers if the need arises and this would adversely affect the Lone Pine Group's results from operations and ability to conduct its business. The Lone Pine Group has not commissioned an independent valuation for the Notes The Lone Pine Group has not obtained or requested, and does not intend to obtain or request, an opinion from any banking or other firm as to relative values of the Notes or the fairness of the Plan to Affected Unsecured Creditors. Even if the Plan is implemented, the Lone Pine Group will continue to face risks The Plan is intended to reduce the amount of the Lone Pine Group's indebtedness and cash interest expense and improve its liquidity. Even if the Plan is implemented, the Lone Pine Group will continue to face a number of risks, including certain risks that are beyond its control, such as changes in economic conditions, changes in its industry, regulatory changes and changes in consumer demand for its products. As a result of these risks and others, there is no guarantee that the Recapitalization will achieve the Lone Pine Group's stated goals. - 112 - After the Recapitalization certain former Noteholders may have significant influence over matters that come before a vote of shareholders and their interests may conflict with the interests of other stakeholders Following the completion of the Recapitalization certain former Noteholders may hold a significant portion of the New Shares. Each of these significant former Noteholders acting independently, would have significant influence in any matter coming before a vote of shareholders. The interests of these significant former Noteholders in the Lone Pine Group's business, operations and financial condition from time to time may not be aligned with, or may conflict with, the interests of other stakeholders. In addition, these significant former Noteholders may be in a position to impede any future sale of the Restructured Group following the Recapitalization. Stakeholders might have difficulty enforcing civil liabilities against the Lone Pine Group in the United States The enforcement by investors of civil liabilities under the United States federal securities laws may be affected adversely by the fact that certain of the companies comprising the Lone Pine Group are incorporated or organized outside the United States, that some or all of the officers and directors of the Lone Pine Group and the experts named herein are residents of a foreign country, and that all or a substantial portion of the assets of the Lone Pine Group and said persons are located outside the United States. As a result, it may be difficult or impossible for holders of the Lone Pine Group's securities in the United States to effect service of process within the United States upon the Lone Pine Group, and its subsidiaries and their officers and directors and the experts named herein, or to realize against them, upon judgments of courts of the United States predicated upon civil liabilities under the federal securities laws of the United States or "blue sky" laws of any state within the United States. In addition, holders of the Lone Pine Group's securities in the United States should not assume that the courts of Canada: (a) would enforce judgments of United States courts obtained in actions against such persons predicated upon civil liabilities under the federal securities laws of the United States or "blue sky" laws of any state within the United States; or (b) would enforce, in original actions, liabilities against such persons predicated upon civil liabilities under the federal securities laws of the United States or "blue sky" laws of any state within the United States. Resale of New Shares issued pursuant to the Recapitalization will be subject to restrictions under Canadian and U.S. securities laws New Shares issued pursuant to the Recapitalization will be subject to resale restrictions imposed by applicable Canadian and U.S. securities laws. See "Securities Regulatory Considerations". Risks Relating to the Business of the Lone Pine Group The risks associated with the business of the Lone Pine Group are described in LPRI's annual report on Form 10-K for the year ended December 31, 2012, in LPRI's quarterly reports on Form 10-Q for the periods ended March 31, 2013, June 30, 2013 and September 30, 2013 and in LPRI's current reports on Form 8-K, each of which is incorporated by reference in this Circular and has been filed with the SEC and with Canadian securities regulatory authorities and is available electronically on EDGAR and SEDAR. The risks associated with the Lone Pine Group's business will continue to apply to the Lone Pine Group whether or not the Recapitalization is completed. Affected Unsecured Creditors should carefully review and consider all risk factors associated with the Lone Pine Group's business, as well as the other information contained in the documents forming LPRI's public disclosure record. OTHER MATTERS Except as disclosed in this Circular (including under the heading "Details of the Recapitalization – Releases to be Given under the Plan"), management of the Lone Pine Group is not aware of any matter to come before the Meetings other than the matters referred to in the Notice of Meetings of Affected Unsecured Creditors. However, if any other matter properly comes before the Meetings, the accompanying forms of proxy confer discretionary authority to vote with respect to amendments or variations to matters identified in the Notice of Meetings of Affected Unsecured Creditors and with respect to other matters that properly may come before the Meetings. - 113 - INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON The Lone Pine Group's management is not aware of any material interest of any director or officer or anyone who has held office as such since the beginning of the Lone Pine Group's last financial period or of any associate or affiliate of any of the foregoing in any matter to be acted on at the Meetings other than as disclosed in this Circular (including the documents incorporated by reference herein). ADDITIONAL INFORMATION Additional information relating to the Lone Pine Group may be found on SEDAR at www.sedar.com or on EDGAR at www.sec.gov/edgar/searchedgar/companysearch.html. SCHEDULE A APPROVAL RESOLUTION WHEREAS all capitalized terms not otherwise defined in this resolution shall have the same meanings given to such terms in the notice of meetings and information circular of the Lone Pine Group (as defined below) dated December 13, 2013 (the "Circular"); BE IT RESOLVED THAT: (a) the plan of compromise and arrangement (the "Plan") under the Companies' Creditors Arrangement Act (Canada) concerning, affecting and involving Lone Pine Resources Inc. ("LPRI"), Lone Pine Resources Canada Ltd. ("LPR Canada"), Lone Pine Resources (Holdings) Inc., Wiser Oil Delaware, LLC and Wiser Delaware LLC (collectively, the "Lone Pine Group"), substantially in the form attached as Schedule D to the Circular, as such Plan may be amended, supplemented or restated from time to time in accordance with the terms thereof, and all events and transactions contemplated thereby, be and are hereby irrevocably accepted, agreed to, authorized, approved and adopted; (b) notwithstanding the passing of this resolution by each Affected Unsecured Creditor Class or the passing of similar resolutions by any Affected Unsecured Creditor Class or other interested person(s), or the filing of the Plan with or the approval thereof by the Court of Queen's Bench of Alberta (the "Court"), the directors of the Lone Pine Group, without further notice to, or approval of, the Affected Unsecured Creditors, subject to the terms of the Plan, may amend, supplement or restate the Plan, may revoke or withdraw the Plan, may deci0de not to proceed with the Plan and the events and transactions contemplated thereby or may revoke this resolution at any time prior to the Plan becoming effective, provided that any such decision after the issuance of a sanction order by the Court shall require the approval of the Monitor and the Court; and (c) any director or officer of LPRI or LPR Canada is hereby authorized, for and on behalf of the Lone Pine Group, to execute and deliver, or cause to be executed and delivered, with or without corporate seal, any and all agreements, documents and instruments and to take or cause to be taken such other actions as he or she may deem necessary or advisable to implement this resolution and the matters authorized and approved hereby, including the Plan and the events and transactions contemplated thereby, such determination to be conclusively evidenced by the execution and delivery of any such agreement, document or instrument or the taking of any such action. SCHEDULE B MEETING ORDER (see attached) CLERK'S STAMP CLER-RZWEi COURT FILE NUMBER COURT DEC 1 3 2013 1301-11352 COURT JUDICIAL CENTRE OF CALGARY 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 IN THE MATTER OF THE BUSINESS CORPORATIONS ACT,R.S.A. 2000, c. B-9, as amended AND IN THE MATTER OF LONE PINE RESOURCES CANADA LTD., LONE PINE RESOURCES(HOLDINGS)INC., LONE PINE RESOURCES INC., WISER OIL DELAWARE, LLC AND WISER DELAWARE LLC. DOCUMENT MEETING ORDER ADDRESS FOR SERVICE AND CONTACT INFORMATION OF PARTY FILING THIS DOCUMENT BENNETT JONES LLP Barristers and Solicitors 4500, 855- 2" Street SW Calgary, Alberta T2P 4K7 Attention: Chris Simard Telephone No.: 403-298-4485 Fax No.: 403-265-7219 Client File No.: 68261.10 DATE ON WHICH ORDER WAS PRONOUNCED: December 13, 2013 LOCATION OF HEARING OR TRIAL: Calgary NAME OF JUDGE WHO MADE THIS ORDER: The Honourable Mme. Justice B.E. Romaine beigeby eat* this te be a bue eepy the original AtkiitiDated this WSLegal\068261\00010\9599,150v10 - 2UPON the Application of Lone Pine Resources Canada Ltd. ("LPR Canada"), Lone Pine Resources (Holdings) Inc. ("LPR Holdings"), Lone Pine Resources Inc. ("LPRI"), Wiser Oil Delaware, LLC ("Wiser Oil") and Wiser Delaware LLC ("Wiser") (collectively, the "Applicants", and each, an "Applicant") for a Meeting Order, among other things,(i) accepting the filing of the Plan; (ii) authorizing the classification of creditors for purposes of voting on the Plan;(iii) authorizing and directing the Applicants to call, hold and conduct meetings of Affected Unsecured Creditors to vote on a resolution to approve the Plan; (iv) authorizing and directing the mailing and distribution of the Affected Unsecured Creditors Meeting Materials and the Noteholder Meeting Materials; (v) approving the procedures to be followed with respect to the meetings of Affected Unsecured Creditors; and (vi) setting a date of the hearing of the Applicants' application for Court approval of the Plan; AND UPON reading the pleadings and proceedings herein, the notice of this Application, the Affidavit No. 4 of Tim S. Granger sworn December 6, 2013, and the Fifth Report of PricewaterhouseCoopers Inc.(the "Monitor") dated December 9, 2013; AND UPON hearing the submissions of counsel for the Applicants, counsel for the Monitor, counsel for the Syndicate, counsel for the Initial Consenting Noteholders, counsel for certain shareholders of LPR Holdings, and counsel for other interested parties and stakeholders; IT IS HEREBY ORDERED AND DECLARED THAT: SERVICE 1. 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. 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, 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. WSLegal\068261\000 I 0\9599450vI 0 -33. 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 wilful misconduct on its part; (iii) be entitled to rely on the books and records of the Applicants and any information provided by the Applicants and the Affected Unsecured Creditors without independent investigation; and (iv) not be liable for any claims or damages resulting from any errors or omissions in such books, recordsor information. 4. The Monitor and the Applicants are hereby authorized to retain such agents as they deem to be advisable to assist them in connection with calling and conducting the Meetings, including with respect to the distribution of the= Affected Unsecured Creditor- Meeting Materials and Noteholder Meeting Materials, the identification of the applicable Affected - Unsecured Creditors, and the solicitation of proxies from Persons entitled to vote at the Meetings. DEFINITIONS 5. Any capitalized terms used herein but not otherwise defined herein have the meanings ascribed thereto in the Plan or in the October 24 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 October 24 Order, the following terms shall have the following meanings: (a) "Affected Unsecured Creditor Meeting Materials" means copies of: (i) the Notice to Affected Unsecured Creditors; (ii) the Plan; (iii) the Information Circular; (iv) the Meeting Order; WSLega1\068261\00010\9599450v10 - -4- (b) (v) a blank form of the Affected Unsecured Creditors' Proxy; (vi) the Cash Election Form; and (vii) the New Investment Subscription Form; "Affected Unsecured Creditors' Proxy" means a proxy substantially in the form attached as Schedule "C" hereto, to be submitted to the Monitor by any Affected Unsecured Creditor (other than a Noteholder or a Cash Pool Creditor) who wishes to vote by proxy at one or more Meetings; (c) "Backstop Deadline" means January 13, 2014; (d) "Beneficial Noteholder" means a beneficial owner of any Notes as at the Votingkecord Date (or, if applicable, an investment advisor, manager or representative with voting discretion over the Notes owned by such beneficial owners), regardless of whether such beneficial owner is a RegiStered Noteholder or an Unregistered Noteholder; (e) "Cash Election Deadline" means January 3, 2014; (f) "Cash Election Form" means the election form substantially in the form attached as Schedule "I" hereto, to be submitted to the Monitor and the Applicants by any Affected Unsecured Creditor which, as at the Voting Record Date, holds Affected Unsecured Claims in an aggregate amount in excess of $10,000 and who wishes to reduce the aggregate amount of such Affected Unsecured Claims to $10,000; (g) "Information Circular" means the information circular in respect of the Plan and the Meetings substantially in the form attached as Schedule "A" hereto, as the same may be amended, supplemented or restated from time to time; (h) "Instructions to Participant Holders" means the instructions substantially in the form attached to Schedule "E" hereto; (i) "Instructions to Registered Noteholders" means the instructions substantially in the form attached as Schedule "F" hereto; WSLega1\068261\0001019599450v10 -5(i) "Instructions to Unregistered Noteholders" means the instructions substantially in the form attached to Schedule "G" hereto; (k) "Mailing Date" means the first Business Day following the date of this Meeting Order; (1) "Meeting Date" means January 6, 2014, provided that the Applicants may, with the consent of the Monitor and the Majority Initial Consenting Noteholders, extend the date on which one or more of the Meetings will be held; (m) "Meeting Order" means this Order, as it may be amended by any f- urther Order of the Court; (n) "New Investment Subscription Deadline" means January 13, 2014; - (o) "New Investment Subscription Form" means the subscription form substantially -. in the form-attached as Schedule "H" hereto; (p) "Noteholder" means, as at the Voting Record Date, any Registered Noteholder, Unregistered Noteholder, Participant Holder, or Beneficial Noteholder, as the context requires, in such capacity; (q) "Noteholder Meeting Materials" means copies of; (i) the Notice to Affected Unsecured Creditors; (ii) the Plan; (iii) the Information Circular; (iv) the Meeting Order; (v) a blank form of the Noteholders' Proxy; (vi) the Instructions to Registered Noteholders; (vii) the Instructions to Unregistered Noteholders; WSLega1\06826 I \00010\9599450v10 -6(viii) the New Investment Subscription Form; and (ix) (r) the Cash Election Form; "Noteholders' Proxy" means a proxy substantially in the form of Schedule "D", to be submitted to the Monitor by any Beneficial Noteholder that wishes to vote by proxy at one or more Meetings; (s) "Notice to Affected Unsecured Creditors" means the notice to Affected Unsecured Creditors substantially in the form attached as Schedule "B" hereto; (t) "October 24 Order" means the Order of the Court under the CCAA dated October 24, 2013; (u) "Plan Supplement" means the supplement(s) to the Plan, which shall contain relevant documents concerning -LPR Holdings and LPR Canada following Plan Implementation (including the terms of the New Shares), and such other documents as the Applicants and the Monitor may consider appropriate or necessary for purposes of the Meetings and voting on the Plan; (v) "Restructuring Period Claim" has the meaning ascribed thereto in the ClaimsProcedure Order; (w) "Sanction Hearing Date" means January 9, 2014; (x) "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 Applicants and the Monitor; (y) "Unregistered Noteholder" means a Noteholder whose name does not appear on any Registered Noteholder List; (z) "Unresolved Claim" means an Affected Unsecured Creditor Claim in respect ofwhich 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; provided, however, that an Affected WSLegal\068261\00010\0599450v10 -7Unsecured Creditor Claim in respect of which a Proof of Claim has been filed in accordance with the Claims Procedure Order that has been designated by the Applicants or the Monitor as an Equity Claim is not an "Unresolved Claim"; and (aa) "Voting Record Date" means (i) in the case of Noteholders, October 25, 2013, and (ii) in the case of all other Affected Unsecured Creditors, the Business Day prior to the Meetings. 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 referende§ to the singular herein shall include the plural, the plural include the singular and any gender includes the other gender. THE PLAN 1.0. The Plan is hereby accepted for filing and the Applicants are hereby authorized and, subject to Section 10,4(b) of the Plan, directed to call the Meetings for the purpose of having the Affected Unsecured Creditors vote on the Plan in the manner set out herein. 11. The Applicants may, at any time and from time to time prior to or at the Meetings, or iii 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 Applicants or the Chairperson shall communicate the details of any such amendments, restatements, modifications and/or supplements made prior to or at the Meetings to Affected Unsecured Creditors present at the Meetings prior to any vote being taken at the Meetings; (ii) the Applicants shall f- orthwith 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 Meetings 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 WSLega1\068261\00010\9599450v10 -8forthwith and in any event prior to the Meetings or the Sanction Hearing, as the case may be, 12. The Applicants shall serve and file the Plan Supplement, and the Monitor shall post the Plan Supplement on the Website, no later than ten (10) days prior to the Meetings. Thereafter, the Applicants may, at any time and from time to time prior to or at the Meetings, or in advance of the Sanction Efearing, as the case may be, amend, restate, modify and/or supplement the Plan Supplement, subject to the terms of the Plan, provided that (i) the Monitor, the Applicants or the Chairperson shall communicate the details of any such amendments, restatements, modifications and/or supplements made prior to or at the Meetings to Affected Unsecured Creditors present at the Meetings prior to any vote being taken at the Meetings; (ii) the 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 Meetings 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 Meetings or the Sanction Hearing, as the case May be. FORMS OF DOCUMENTS 13. The forms of Information Circular, Notice to Affected Unsecured Creditors, Affected Unsecured Creditors' Proxy, Noteholders' Proxy, Instructions to Registered Noteholders, Instructions to Unregistered Noteholders, Instructions to Participant Holders, Cash Election Form, and New Investment Subscription Form are hereby approved. The 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 Meetings, amend, restate, modify and/or supplement any of such materials, subject to the terms of the Plan, provided that: WSLegal\068261 \00010\9599450v10 -9- (i) the Monitor, the Applicants or the Chairperson shall communicate the details of any such amendments, restatements, modifications and/or supplements to Affected Unsecured Creditors present at the Meetings prior to any vote being taken at the Meetings; (ii) the 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 Meetings; 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 Meetings. 14, The Cash Election Form provides each Affected Unsecured Creditor which, as- at the Voting Record Date, holds Affected Unsecured Claims in an aggregate amount in excess of $10,000 with the right, conditional upon the implementation of the Plan and effective on the Plan Implementation Date, but not the obligation, to elect irrevocably to reduce the aggregate amount of such Affected Unsecured Creditor's Affected Unsecured Claims to $10,000. Such an electing Affected Unsecured Creditor must return the duly executed Cash Election Form to the Applicants and to the Monitor on or before the Cash Election Deadline, 15. The New Investment Subscription Form provides each Qualifying Unsecured Creditor as of the Voting Record Date with the right, conditional upon the implementation of thePlan and effective on the Plan Implementation Date, but not the obligation, to elect irrevocably to participate in the New Investment up to a maximum of such Affected Unsecured Creditor's Pro-Rata Share of the New Investment. In order to elect to participate in the New Investment, the Qualifying Unsecured Creditor must return the duly executed New Investment Subscription Form to the Applicants and to the Monitor on or before the New Investment Election Deadline. In addition, in the event that any Qualifying Unsecured Creditor wishes to become a Backstopper under the Backstop Agreement, any such Qualifying Unsecured Creditor must return a duly executed WSLegnI\068261\00010\9599450v10 - 10 Backstop Joinder and Support Joinder to the Applicants, the Monitor and Goodmans LLP prior to the Backstop Deadline. VOTING BY CREDITORS 16. For the purposes of considering and voting on the Plan, there will be five (5) meetings as follows: (a) a meeting of all of the Affected Unsecured Creditors of LPR Canada, where all such Affected Unsecured Creditors shall constitute a single class; (b) a meeting of all of the Affected Unsecured Creditors of LPR Holdings, where all such Affected Unsecured Creditors shall constitute a single class; (c) a meeting of all of the Affected Unsecured Creditors of LPRI, where all such Affected Unsecured Creditors shall constitute a single class; (d) a meeting of all of the Affected Unsecured Creditors of Wiser Oil, where all such Affected Unsecured Creditors shall constitute a single class; and (e) a meeting of all of the Affected Unsecured Creditors of Wiser, where all such Affected Unsecured Creditors shall constitute a single class. NOTICE TO AFFECTED UNSECURED CREDITORS (OTHER THAN NOTEHOLDERS) 17. The Monitor shall, no later than the first Business Day following the date of this Meeting Order, post an electronic copy of the Notice to Affected Unsecured Creditors, the Plan, the Information Circular, the Affected Unsecured Creditors' Proxy, the Cash Election Form, and the New Investment Subscription Form (in the forms provided by the Applicants as at the date of this Meeting Order) on the Website. 18. The Monitor shall, on the Mailing Date, deliver the Affected Unsecured Creditor Meeting Materials by courier, personal delivery or email to each Affected Unsecured Creditor other than a Noteholder with a Voting Claim and/or an Unresolved Claim at the address set out in such Affected Unsecured Creditor's Proof of Claim (or in any other written WSLega1\068261\00010\9599450v10 notice that has been received by the Monitor in advance of such date regarding a change of address for an Affected Unsecured Creditor). NOTICE TO NOTEHOLDERS 19. No later than the first Business Day following the date of this Meeting Order, the Monitor shall post an electronic copy of the Notice to Affected. Unsecured Creditors, the Plan,- the Information Circular, the Noteholders' Proxy, the Instructions to Participant Noteholders, the Instructions to Registered Noteholders, the Instructions to Unregistered Noteholders, and the New Investment Subscription Form (in the forms provided by the Applicants as at the date of this Meeting Order) on the Website, 20. On the Mailing Date, the Monitor shall deliver the Noteholder Meeting Materials by courier, personal delivery or email_ to (i) the Note Indenture Trustee, (ii) DTC, and (iii) _ each Person listed on the Registered Noteholder List. 21. On the Mailing Date, the Monitor shall deliver by courier, personal delivery or -email- to each Participant Holder a copy of the Instructions to Participant Holders together with. that number of copies of the Noteholder Meeting Materials required by such Participant Holder for distribution to the Unregistered Noteholders that are its customers or principals. 22. As soon as practicable, but in any event within f- ive (5) Business Days of any Participant Holder's receipt of the Noteholder Meeting Materials from the Monitor pursuant to paragraph 21, such Participant Holder shall: (i) complete and sign the applicable section of the Noteholders' Proxy relating to Participant Holders for each Unregistered Noteholder that has an account (directly or through an agent or custodian) with such Participant Holder; and (ii) deliver by courier or personal delivery to each such Unregistered Noteholder the Noteholders' Proxy as so completed and signed-together with one copy of the Noteholder Meeting Materials. Each Participant Holder shall take any other action reasonably required to enable any Unregistered Noteholder that has an account (directly or through an agent or custodian) with such Participant Holder to provide a Noteholders' Proxy to the Monitor with respect to the Notes owned by or held for the benefit of such Unregistered Noteholder. WSLegal%068261100010\959945000 - 12 23. Where: (i) a Participant Holder or its agent has a standard practice for distribution of meeting materials to Unregistered Noteholders and for the gathering of information and proxies or voting instructions from Unregistered Noteholders; (ii) the Participant Holder has discussed such standard practice in advance with the Applicants, the Monitor and counsel to the Initial Consenting Noteholders; and (iii) such standard practice is acceptable to the Applicants, the Monitor and counsel to the Initial Consenting Noteholders, such Participant Holder or its agent may, in lieu of f- ollowing the procedure set out in paragraph 22 above, follow such standard practice provided that all applicable proxies or voting instructions are received by the Monitor no later than 3:00 p.m. on the last Business Day before the Meeting. NOTICE,SERVICE AND DELIVERY 24. 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 Meetings, 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 MEETINGS AND DELIVERY OF PROXIES 25. The Applicants are hereby authorized and directed to call the Meetings and to hold and conduct the Meetings on the Meeting Date at the offices of Bennett Jones LLP, 4500 Bankers Hall East, 855 - 2" Street S.W., Calgary, Alberta, for the purpose of seeking approval of the Plan by the Affected Unsecured Creditors with Voting Claims at the Meetings in the manner set forth herein. In the event that the Meeting Date is extended aftefthe 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. 26. Paul Darby or another representative of the Monitor, designated by the Monitor, shall preside as the chair of each of the Meetings (the "Chairperson") and, subject to this WSLega1\06826 I \000I 0\9599450v 10 - 13 Meeting Order or any further Order of the Court, shall decide all matters relating to the conduct of each of the Meetings. 27. 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 Meetings (the "Scrutineer"), One or more people designated by the Monitor shall act as secretary at each of the Meetings (the "Secretary"). 28. The quorum required at each Meeting shall be one Affected Unsecured Creditor with a Voting Claim against the applicable Applicant present at the Meeting (in person or by proxy). 29. If the requisite quorum is not present at any Meeting, or one or more of the Meetings is postponed by the vote of a majority in value of Voting Claims of the Affected Unsectired Creditors present at the said Meeting (in person or by proxy), then such Meeting shall be 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 said Meeting at that Meeting or at any adjourned Meeting. Any adjournment or adjournments described in this paragraph 29 shall be for a period of not more than seven (7) days in total unless otherwise agreed to by the Applicants, the Monitor and counsel to the Initial Consenting Noteholders, In the event of any adjournment described in this paragraph• 29, 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 Unsecured Creditor Proxies and Noteholder Proxies validly delivered in connection with the Meeting shall be accepted as proxies in respect of any adjourned Meeting. 30. The only Persons entitled to attend and speak at a Meeting are: (i) the Affected Unsecured Creditors entitled to vote at that Meeting (or, if applicable, any Person holding a valid Affected Unsecured Creditors' Proxy or Noteholders' Proxy on behalf of one or more such Affected Unsecured Creditors) and any such Affected Unsecured Creditor's or WSLegal\068261 100010\9599450v I 0 - 14 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 Applicants, as selected by the Applicants, and the Applicants' legal counsel and financial advisors;(v) counsel to the Directors and Officers of any of the Applicants; (vi) one or more representatives of the Initial Consenting Noteholders and the Initial Consenting Noteholders' legal counsel; (vii) one or more representatives of the Syndicate and the Syndicate's legal counsel and financial advisor; and (viii) the Note Indenture Trustee and its legal counsel. Any other person may be admitted to a Meeting on invitation of the Applicants, in consultation with the Monitor. 31. The Monitor may, with the consent of the Applicants, waive in writing the time limits imposed on Affected Unsecured 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 UNSECURED CLAIMS PRIOR TO THE MEETING 32. Subject to any restrictions contained in Applicable Laws, an Affected Unsecured Creditor may transfer or assign the whole of its Affected Unsecured - Claim prior to the Meetings (or any adjournment thereof), provided that neither the Applicants nor the Monitor shall- be obliged to deal with any transferee or assignee thereof as an Affected Unsecured Creditor in respect of such Affected Unsecured Claim, including allowing such transferee or assignee to attend or vote at the Meetings, 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 Applicants and the Monitor, which receipt rand acknowledgment must have occurred on or before 3:00 p.m. on the date that is the last 7 Business Day prior -to the date of the Meetings (or any adjournment thereof), fditing which the original transferor shall have all applicable rights -as the "Affected Unsectired Creditor" with respect to such Affected Unsecured Claim as if no transfer of the Affected Unsecured Claim had occurred. If such receipt and acknowledgment by the Applibants and the Monitor has occurred on or before 3:00 p.m. on the date that is the last Business Day prior to the date of the Meetings (or any adjournment thereof): (i) the transferor of WSLegal\068261 \000 I 0\9599450vI - 15 the applicable Affected Unsecured Claim shall no longer constitute an Affected Unsecured Creditor in respect of such Affected Unsecured Claim; and (ii) the transferee or assignee of the applicable Affected Unsecured Claim shall, for all purposes in accordance with this Meeting Order, constitute an Affected Unsecured Creditor in respect of such Affected Unsecured Claim and shall be bound by any and all notices previously given to the transferor or assignor in respect thereof and shall be bound by any Affected Unsecured Creditors' Proxy duly submitted to the Monitor in accordance with this Meeting Order, For greater certainty, the Applicants and the Monitor shall not recognize partial transfers or assignments of Affected Unsecured Claims. 33, Only those Beneficial Noteholders that have beneficial ownership of one or more Notes as at the Voting Record Date shall be entitled to vote at the Meeting. Nothing in this Meeting Order, including paragraph 32, restricts the Beneficial Noteholders from transferring or assigning such Notes prior to or after the Voting Record Date, provided that if such transfer or assignment occurs after the Voting Record Date, only the original Beneficial Noteholder of such Notes as at the Voting Record Date (and not any transferee) shall be treated as a Beneficial Noteholder for purposes of this Meeting Order and the Meetings. VOTING PROCEDURE 34, At each Meeting, the Chairperson shall direct a vote, by written ballot, on a resolution to approve the Plan and any amendments thereto. 35. Subject to paragraph 45, the only Persons entitled to vote at a Meeting (whether in personor by proxy) are Affected Unsecured Creditors with Voting Claims against the applicable Applicant as at the Voting Record Date (which, for greater certainty, includes any transferee of an Affected Unsecured Claim that is a Voting Claim, provided that such • transferee has been recognized as an Affected Unsecured Creditor in respect of such :transferred Affected Unsecured Claim in accordance with paragraphs 32 and 33)(or any such Affected Unsecured Creditor's validly appointed holder. of its Affected Unsecured Creditors' Proxy). WSLegak068261 \000 I 0\9599450v10 - 16 36. Each Affected Unsecured Creditor that has a Voting Claim against the applicable Applicant shall be entitled to one vote as a member of the Affected Unsecured Creditor Class, which vote shall have a value equal to the dollar value of such Affected Unsecured Creditor's Voting Claim (which, in the case of a Beneficial Noteholder, shall be a value equal to the principal owing under the Notes owned by such Beneficial Noteholder as atthe Voting Record Date). For greater certainty, with respect to voting by Beneficial Noteholders, only the Beneficial Noteholders, and not Registered Noteholders or Participant Holders (unless any such Registered Noteholder or Participant Holder is itself a Beneficial Noteholder), shall be entitled to vote on the Plan as provided for in- this Meeting Order, 37, For the purpose of calculating the two-thirds majority in value of Voting Claims at each Meeting, the aggregate amount of Voting Claims held by all Affected Unsecured Creditors that vote in favour of the Plan (in person or by proxy) at the Meeting shall be divided by the aggregate amount of all Voting Claims held by all Affected .Unsecured Creditors that vote on the Plan (in person or by proxy) at the Meeting, For the purpose of calculating a majority in number of Affected Unsecured Creditors voting on the Plan at each Meeting, (i) each Affected Unsecured Creditor, other than a Noteholder, that votes on the Plan (in person or by proxy) at the Meeting shall only be counted once, without duplication; and (ii) each individual Beneficial Noteholder that votes on the Plan (in person or by proxy) at the Meeting shall only be counted once, without duplication, even if that Beneficial Noteholder holds Notes through more than one Registered Noteholder or Participant Holder. 38, _For purposes of tabulating_ the votes cast on any matter that may come before a Meeting, the Chairperson shall be entitled to rely on any vote cast by a holder of an Affected -Unsecured Creditors' Proxy and/or a Noteholders' Proxy -that .has been duly submitted to the Monitor in the manner set forth in this Meeting Order. 39, Any Affected Unsecured Creditor (including a Beneficial Noteholder) that is entitled to vote at one or more Meetings and that wishes to vote at one or more Meetings in person must: (i) duly complete and sign an Affected Unsecured Creditors' Proxy or a Noteholders' Proxy, as applicable; (ii) identify itself in the Affected Unsecured Creditors' WSLega1\06826 1\00010\9599450v10 - 17 Proxy or a Noteholders' Proxy, as applicable, as the Person with the power to attend and vote at the applicable Meeting(s) on behalf of such Affected Unsecured Creditor or Beneficial Noteholder, as the case may be; and (iii) deliver such Affected Unsecured Creditors' Proxy or Noteholders' Proxy, as the case may be, to the Monitor so that it is received on or before 3:00 p.m, on the last Business Day before the date of the Meetings (or any adjournment thereof), and such deliverY must be made in accordance with the instructions accompanying such Affected Unsecured Creditors' Proxy or Noteholders' Proxy. 40. Any Affected Unsecured Creditor (including a Beneficial Noteholder) that is entitled to vote at one or more Meetings and that wishes to appoint a nominee to vote on its behalf at one or more Meetings must: (i) duly complete and sign an Affected Unsecured Creditors' Proxy or a Noteholders' Proxy, as applicable; (ii) identify its desired nominee in the Affected Unsecured Creditors' Proxy or Noteholders' Proxy, as applicable, as the Person with the power to attend and vote at the applicable Meeting(s) on behalf of such Affected Unsecured Creditor; and (iii) deliver such Affected Unsecured Creditors' Proxy or Noteholders' Proxy, as the case may be, to the Monitor so that it is received on or before 3:00 p.m. on the last Business Day before the date of the Meetings (or any adjournment thereof), -and such delivery must be made in accordance with the instructions accompanying such Affected Unsecured Creditors' Proxy or Noteholders' Proxy. 41. In order to be effective, any Noteholders' Proxy must clearly state the name and contain the signature of the applicable Participant Holder, the applicable account number or numbers of the account or accounts maintained by the applicable Beneficial Noteholder with such Participant Holder, and the principal amount of Notes that such Beneficial Noteholder holds in each such account or accounts. Where a Beneficial Noteholder holds Notes through more than one Participant Holder, its Noteholders' Proxy is required to be executed by only one of those Participant Holders, provided -that the Beneficial Noteholder shall provide the information required in its Noteholders' Proxy with respect to its Notes held with all Participant Holders to allow the Monitor to verify the aggregate amount of Notes held by such Beneficial Noteholder for the purposes of voting on the Plan. WSLega1\068261 \0001 0\9599450vI 0 -1842, Notwithstanding anything in paragraphs 39, 40 or 41 or any minor error or omission in any Affected Unsecured Creditors' Proxy or Noteholders' Proxy that is submitted to the Monitor, the Chair shall have the discretion to accept for voting purposes any Affected Unsecured Creditors' Proxy or Noteholders' Proxy submitted to the Monitor in accordance with the Meeting Order. 43, If there is any dispute as to the principal amount or number of Notes held by any Beneficial Noteholder, the Monitor will request the Participant Holder, if any, who maintains book entry records or other records evidencing such Beneficial Noteholder's ownership of Notes, to confirm with the Monitor the information provided 'by Such Beneficial Noteholder, If any such dispute is not resolved by such Beneficial Noteholder and the Monitor by the date of the Meeting (or any adjournment thereof), the Monitor shall tabulate the vote for-or against the Plan in respect of the disputed principal amount of such Beneficial Noteholder's- Notes separately. If: (i) any such dispute remains unresolved -as of the .ate- of the Sanction Hearing; and (ii) the approval or non-approval of the Plan would -be affected by the votes cast in respect of such disputed principal amount of Notes, then such result shall be reported to the Court at the Sanction Hearing and, if necessary, the Monitor may make a request to the Court for directions. 44. Each Cash Pool Creditor shall be deemed to vote in favour of the Plan to the full extent of its Allowed Affected Unsecured Claim and shall not be entitled to attend or vote at the Meetings, whether in person or by proxy, unless such Cash Pool Creditor: (i) has -not returned a Cash Election Form in accordance with paragraph 14; and (ii) delivers an Affected Unsecured Creditors' Proxy to the Monitor so that it is received on or before 3:00 p.m.- on the last Business Day before the date of the Meetings (or any adjournment thereof) in accordance with the instructions accompanying such Affected UnsecuredCreditors' Proxy. VOTING OF UNRESOLVED CLAIMS 45. Notwithstanding anything to the contrary herein or in the Plan, each Affected UnsecuredCreditor with an Unresolved Claim against one or more Applicants as at the Voting Record Date shall be entitled to attend the applicable Meeting(s) and shall be entitled to one vote at said Meeting(s) in respect of such Unresolved Claim, Any vote cast in WSLcgal\068261\000 I 0\9599,I50v I 0 - 19 respect of an Unresolved Claim shall be dealt with in accordance with paragraph 46, 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. - 46. The Monitor shall keep a separate record of votes cast by Affected Unsecured Creditors -with Unresolved Claims and shall report to the Court with respect thereto at the Sanction Hearing, If approval or non-approval of the Plan by Affected Unsecured Creditors 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 Meetings; (ii) if a deferral of the Sanction Hearing is deemed to be necessary or advisable by the Monitor (in consultation with the Applicants and counsel to the Initial Consenting Noteholders), the Monitor shall request an appropriate deferral of the Sanction Hearing; and (iii) the Monitor may make a request to the Court for directions, 47. The Applicants and the Mbnitor 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 48. 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) holders of Affected Unsecured Claims in respect of which a --Proof of Claim has been filed in- accordance with the Claims Procedure Order that has been designated by the Applicants or the Monitor as an Equity Claim, (iii) Equity Claimants, and (iv) any other Person asserting Claims against the Applicants whose Claims do not constitute Affected Unsecured Claims on the Voting Record Date. WSLegal\068261\00010\9599450v10 - 20 APPROVAL OF THE PLAN 49. Subject to Section 10.4(b) of the Plan, the Plan must receive an affirmative vote of the Required Majorities in order to be approved by the Affected Unsecured Creditors. 50. The result of any vote at any of the Meetings shall be binding on all Affected Creditors, regardless of whether such Affected Creditor was present at or voted at the Meetings, or was entitled to be present or vote at the Meetings. PLAN SANCTION 51. The Monitor shall report to the Court the results of any votes taken at the Meetings as soon as reasonably practicable after the Meetings (or any adjournment thereof). 52. -The Applicants may apply to the Court at a time to be determined on the Sanction. Hearing Date for the Sanction Order (the "Sanction Hearing"). 53. Service of this Meeting Order by the Monitor or the 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 51, 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 January 2, 2014. 54. Any Person who wishes to oppose the Sanction Hearing shall serve on the Applicants, the 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 January 2, 2014. MISCELLANEOUS 55. Notwithstanding anything contained in this Meeting Order, the Applicants may, with the - consent of the Majority Initial Consenting Noteholders, decide not to call, hold and conduct one or more of the Meetings, provided that: WSLegah068261\000 I 0\9599450v I 0 - 21 - (i) the Monitor, the Applicants or the Chairperson shall communicate such decision to Affected Unsecured Creditors present at the Meetings prior to any vote being taken at the Meetings; (ii) the 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. 56. 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 Allowed Claims for purposes of the Plan. 57. 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 jurisdiction, to give effect to this Meeting Order and to assist the Applicants, or any of them, 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 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 LPR Canada in any foreign proceeding, or to assist the Applicants, or any of them, and the Monitor and their respective agents in carrying out the terms of this Meeting Order. 58. - The 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. lablviAlt0E %\ J.C.Q.B.A. or Clerk of the Court WSCega1\06826 I \000 I 0\959945000 SCHEDULES TO MEETING ORDER NOT REPRODUCED Please see the Monitor's website at www.pwc.com/car-lpr for a copy of the Meeting Order together with all schedules thereto SCHEDULE C CLAIMS PROCEDURE ORDER (see attached) ,LERK OF THE COURT FILED OCT 0 9 2013 JUDICIAL,CaITRE Orl CALGARY COURT FILE NUMBER 1301 - 11352 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 BUSINESS CORPORATIONS ACT,R.S.A. 2000, c. B-9, as amended AND IN THE MATTER OF LONE PINE RESOURCES CANADA LTD., LONE PINE RESOURCES (HOLDINGS) INC., LONE PINE RESOURCES INC., WISER OIL DELAWARE,LLC and WISER DELAWARE LLC DOCUMENT CLAIMS PROCEDURE ORDER ADDRESS FOR SERVICE AND CONTACT INFORMATION OF PARTY FILING THIS DOCUMENT BENNETT JONES LLP Barristers and Solicitors 4500 Bankers Hall East 855 — 2nd Street S.W. Calgary, Alberta T2P 4K7 Attention: Chris Simard Telephone No.: 403-298-4485 Fax No.: 403-265-7219 Client File No.: 68261.10 DATE ON WHICH ORDER WAS PRONOUNCED: October 9, 2013 LOCATION WHERE ORDER WAS PRONOUNCED: Calgary NAME OF JUSTICE WHO MADE THIS ORDER: The Honourable Mme. Justice Strekaf UPON the application of Lone Pine Resources Canada Ltd.("LPR Canada"), Lone Pine Resources (Holdings) Inc. ("LPR Holdings"), Lone Pine Resources Inc, ("LPRI"), Wiser Oil Delaware, LLC ("Wiser Delaware") and Wiser Delaware LLC ("Wiser Oil") pursuant to the CCAA (as defined below) for an order approving a procedure for the determination and WSLegal\068261\00010\96 I 0050v3 - 2resolution of claims against the Applicants (as defined below) and authorizing and directing the Applicants and the Monitor (as defined below) to administer the said claims procedure in accordance with its terms; AND UPON having read the Application, the Affidavit of Shane K. Abel sworn October 4, 2013, and the 1st Report of the Monitor dated October 7, 2013, all filed; AND UPON hearing the submissions of counsel for the Applicants, counsel for the Monitor, counsel for the Syndicate (as defined below), counsel for holders of the Senior Notes and the Backstop Parties (as defined below), and counsel for other interested parties; IT IS HEREBY ORDERED THAT: SERVICE OF APPLICATION 1. 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. DEFINITIONS 2. In this Order: (a) "Administration Charge" means the Administration Charge as defined in the Initial Order; (b) "Agent" means JP Morgan Chase Bank, N.A., Toronto Branch, in its capacity as agent of the Syndicate; (c) "Applicants" means LPR Canada, LPR Holdings, LPRI, Wiser Oil and Wiser Delaware; (d) "Backstop Parties" means those Noteholders who are signatories to the Backstop Agreement with the Applicants dated September 24, 2013; (e) "BIA" means the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended; WSLega1\068261\00010\9610050v3 -3- (f) "Business Day" means a day, other than a Saturday, Sunday or a statutory holiday, on which banks are generally open for business in Calgary, in the province of Alberta, Canada; (g) "Calendar Day" means a day, including Saturday, Sunday and any statutory holidays in the Province of Alberta, Canada; (h) "CCAA" means the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C36, as amended; (i) "CCAA Proceedings" means the proceedings commenced by the Applicants under the CCAA in the Court, under Action No. 1301-11352; "Claim" means: (i) any right or claim of any Person that may be asserted or made in whole or in part against the Applicants, or any of them, whether or not asserted or made, in connection with any indebtedness, liability or obligation of any kind whatsoever, and any interest accrued thereon or costs payable in respect thereof, including without limitation, by reason of the commission of a tort (intentional or unintentional), by reason of any breach of contract or other agreement (oral or written), by reason of any breach of duty (including, without limitation, any legal, statutory, equitable or fiduciary duty) or by reason of any right of ownership of or title to property or assets or right to a trust or deemed trust (statutory, express, implied, resulting, constructive or otherwise), and whether or not any indebtedness, liability or obligation is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, unsecured, present or future, known or unknown, by guarantee, surety or otherwise, and whether or not any right or claim is executory or anticipatory in nature including, without limitation, any right or ability of any Person to advance a claim for contribution or indemnity or otherwise with respect to any matter, action, cause or chose in action whether existing at present or commenced in the future, which WSLega1\068261\00010\9610050v3 -4indebtedness, liability or obligation, and any interest accrued thereon or costs payable in respect thereof(A) is based in whole or in part on facts prior to the Filing Date, (B) relates to a time period prior to the Filing Date, or (C) is a right or claim of any kind that would be a debt provable in bankruptcy within the meaning of the BIA had the Applicants become bankrupt on the Filing Date; (ii) a Restructuring Period Claim; (iii) a D&O Claim; (iv) a D&O Indemnity Claim; and (v) a Secured Claim; provided, however, that "Claim" shall not include an Excluded Claim; (k) "Claimant" means any Person asserting a Claim and includes without limitation the transferee or assignee of a Claim transfer and recognized as a Claimant in accordance with paragraph 39 hereof or a trustee, executor, liquidator, receiver, receiver and manager, or other Person acting on or behalf of or through such Person; (1) "Claims Bar Date" means 5:00 p.m. (Calgary time) on November 13, 2013, or any later date ordered by the Court; (m) "Claims Officer" means any Persons designated by the Court to act as a claims officer pursuant to paragraph 11 of this Order; (n) "Claims Package" means the materials to be provided by the Monitor to Persons who may have a Claim, which materials shall include a blank Proof of Claim and a Proof of Claim Instruction Letter, and such other materials as the Applicants or the Monitor may consider appropriate or desirable. (o) "Claims Procedure" means the procedures outlined in this Order, including the Schedules; WSLegal\068261\00010\9610050v3 -5(p) "Court" means the Court of Queen's Bench of Alberta in the Judicial Centre of Calgary; (q) "Credit Agreement" means the Credit Agreement dated March 18, 2011, as amended, among LPRI as parent, LPR Canada as borrower, the Agent, and the Syndicate Members; (r) "Creditors' Meeting" means any meeting of creditors called for the purpose of considering and voting in respect of the Plan, if one is filed, to be scheduled pursuant to further order of the Court; (s) "Critical Suppliers' Charge" means the Critical Suppliers' Charge as defined in the Initial Order; (t) "D&O Claim" means: (i) any right or claim of any Person that may be asserted or made in whole or in part against one or more Directors or Officers that relates to a Claim for which such Directors or Officers are by law liable to pay in their capacity as Directors or Officers; or (ii) any right or claim of any Person that may be asserted or made in whole or in part against one or more Directors or Officers, in that capacity, whether or not asserted or made, in connection with any indebtedness, liability or obligation of any kind whatsoever, and any interest accrued thereon or costs payable in respect thereof, including by reason of the commission of a tort (intentional or unintentional), by reason of any breach of contract or other agreement (oral or written), by reason of any breach of duty (including any legal, statutory, equitable or fiduciary duty) or by reason of any right of ownership of or title to property or assets or right to a trust or deemed trust (statutory, express, implied, resulting, constructive or otherwise), and whether or not any indebtedness, liability or obligation, and any interest accrued thereon or costs payable in respect thereof, is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, WSLega1\068261\00010\9610050v3 -6unmatured, disputed, undisputed, legal, equitable, secured, unsecured, present or future, known or unknown, by guarantee, surety or otherwise, and whether or not any right or claim is executory or anticipatory in nature, including any right or ability of any Person to advance a claim for contribution or indemnity from any such Directors or Officers or otherwise with respect to any matter, action, cause or chose in action, whether existing at present or commenced in the future, which indebtedness, liability or obligation, and any interest accrued thereon or costs payable in respect thereof(A) is based in whole or in part on facts prior to the Filing Date, or (B) relates to a time period prior to the Filing Date; (u) "D&O Indemnity Claim" means any existing or future right of any Director or Officer against any of the Applicants which arose or arises as a result of any Person filing a Proof of Claim in respect of such Director or Officer for which such Director or Officer is entitled to be indemnified by any of the Applicants; (v) "DIP Lender's Charge" means the DIP Lender's Charge as defined in the Initial Order; "Director" means anyone who is or was, or may be deemed to be or have been, whether by statute, operation of law or otherwise, a director or defacto director of any of the Applicants; "Directors' Charge" means the Directors' Charge as defined in the Initial Order; "Distribution Claim" means the amount of the Claim of a Claimant as finally determined for distribution purposes, in accordance with the provisions of this Order and the CCAA; (z) "Employee Amounts" means all outstanding wages, salaries and employee benefits (including employee medical, dental, disability, life insurance and similar benefit plans or arrangements, incentive plans, share compensation plans and employee assistance programs and employee or employer contributions in respect WSLegaR068261\00010\9610050v3 - 7of pension or group savings plans, and other benefits), vacation pay, commissions, bonuses and other incentive payments, termination and severance payments, and employee expenses and reimbursements, in each case incurred in the ordinary course of business and consistent with existing compensation policies and arrangements, and all equivalent amounts related to individuals who perform employment-like services for the Applicants as contractors; (aa) "Excluded Claim" shall mean: (i) any claim secured by the Administration Charge, the DIP Lender's Charge, the Directors' Charge, the KERP Charge, the Subordinated Advisor Charge or the Critical Suppliers' Charge; (ii) any other claim secured by a Court-ordered charge in the CCAA Proceedings arising after the date of this Order; (iii) any claim in respect of Employee Amounts; (iv) any claim by a Joint Venture Partner, in its capacity as such; (v) any claim arising under a contract entered into by any Applicant after the Filing Date or with respect to goods or services provided to any of the Applicants on or after the Filing Date; and (vi) any inter-company Claim existing among the Applicants; (bb) "Filing Date" means September 25, 2013; (cc) "Governmental Authority" means a federal, provincial, state, territorial, municipal or other government or government department, agency or authority (including a court of law) having jurisdiction over the Applicants or their business; (dd) "Indenture" has the meaning set forth in paragraph 2(xx) hereof; WSLegal\068261\00010\9610050v3 -8(ee) "Indenture Trustee" means U.S. Bank National Association, in its capacity as trustee in connection with the Senior Notes; (ff) "Initial Order" means the Initial Order in the CCAA Proceedings granted by the Honourable Madam Justice K.M. Eidsvik granted on the Filing Date; (gg) "Joint Venture Partner" means any Person who has a working interest or joint ownership interest in any equipment, lands, properties, production, wells, facilities, plants, batteries, infrastructure or other assets associated with the oil and gas exploration business of the Applicants, in which the Applicants also have a working interest or joint ownership interest; (hh) "KERP Charge" means the KERP Charge as defined in the Initial Order; (ii) "Known Claimant" means: (i) any Person who, based upon the books and records of the Applicants, was owed monies by any of the Applicants as of the Filing Date and which monies remain unpaid in whole or in part; (ii) any Person who has commenced a legal proceeding in respect of a Claim or D&O Claim or given any of the Applicants written notice of an intention to commence a legal proceeding or a demand for payment in respect of a Claim or D&O Claim, provided that where a lawyer of record has been listed in connection with any such proceedings, the "Known Claimant" for the purposes of any notice required herein or to be given hereunder shall be, in addition to that Person, its lawyer of record; (iii) any Person who was at or prior to the Filing Date party to a material lease, contract, or other agreement or obligation of any of the Applicants entered into on or after January 1, 2011, with respect to which such Person may assert a Claim; and (iv) any Person who is a party to a lease, contract, or other agreement or obligation of any of the Applicants which was restructured, terminated, WSLegal\068261 \00010\9610050v3 -9repudiated or disclaimed by any of the Applicants between the Filing Date and the date ofthis Order; (jj) "Monitor" means PricewaterhouseCoopers Inc., in its capacity as Courtappointed monitor of the Applicants; (kk) "Monitor's Website" means http://www.pwc.comicar-lpr; (11) "Newspaper Notice to Claimants" means the notice for publication pursuant to paragraph 25 of this Order, substantially in the form attached as Schedule "A"; (mm) "Noteholder" means a registered or beneficial holder on or after the Filing Date of a Senior Note in that capacity, and, for greater certainty, does not include former registered or beneficial holders of Senior Notes; (nn) "Notice of Dispute of Revision or Disallowance" means the notice referred to in paragraphs 28 and 33 hereof, substantially in the form attached as Schedule "E" hereto, which may be delivered to the Monitor by a Claimant disputing a Notice of Revision or Disallowance, with reasons for its dispute; (oo) "Notice of Revision or Disallowance" means the notice referred to in paragraphs 28 and 33 hereof, substantially in the form of Schedule "D" advising a Claimant that the Applicants have revised or rejected all or part of such Claimant's Claim set out in its Proof of Claim; (pp) "Officer" means anyone who is or was, or may be deemed to be or have been, whether by statute, operation of law or otherwise, an officer or de facto officer of any of the Applicants; (qq) "Person" is to be broadly interpreted and includes any individual, firm, corporation, limited or unlimited liability company, general or limited partnership, association, trust, unincorporated organization, joint venture, Government Authority or any agency, officer or instrumentality thereof or any other entity, wherever situate or domiciled, and whether or not having legal status; WSLega1\068261\00010\9610050v3 - 10 (rr) "Plan" means any proposed plan(s) of compromise or arrangement to be filed in respect of the Applicants, or any of them, pursuant to the CCAA as the same may be amended, supplemented or restated from time to time in accordance with the terms thereof; (ss) "Proof of Claim" means the Proof of Claim referred to herein, substantially in the form attached as Schedule "B"; (tt) "Proof of Claim Instruction Letter" means the instruction letter to Claimants, substantially in the form attached as Schedule "C" hereto, regarding the completion of a Proof of Claim by a Claimant and the claims procedure described herein; (uu) "Restructuring Period Claim" means any right or claim of any Person against one or more of the Applicants in connection with any indebtedness, liability or obligation of any kind whatsoever resulting from the restructuring, disclaimer, resiliation, termination or breach by one or more of the Applicants on or after the Filing Date of any contract, lease, or other agreement, whether written or oral and whether such restructuring, disclaimer, resiliation, termination or breach took place or takes place before or after the date of this Order; (vv) "Restructuring Period Claims Bar Date" means seven (7) Calendar Days after termination, repudiation or resiliation of the applicable agreement or other event giving rise to the applicable Restructuring Period Claim; (ww) "Secured Claim" means that portion of a Claim that is (i) secured by security validly charging or encumbering property or assets of the Applicants, or any of them,(including statutory and possessory liens that create security interests) up to the value of such collateral, and (ii) duly and properly perfected in accordance with the relevant legislation in the appropriate jurisdiction as of the Filing Date; (xx) "Senior Notes" means the 10.375% senior notes due 2017 that were issued and were outstanding as of the Filing Date, pursuant to the indenture dated February 14, 2012 among LPR Canada, as issuer, the other Applicants as guarantors, and WSLega1\068261\00010\9610050v3 the Indenture Trustee (the "Indenture"), which Indenture continues to govern the Senior Notes; (yy) "Subordinated Advisor Charge" means the Subordinated Advisor Charge as defined in the Initial Order; (zz) "Syndicate" means the syndicate of lenders under the Credit Agreement, in such capacity; and (aaa) "Syndicate Member" means any lender who is a member of the Syndicate, in its capacity as such. (bbb) "Unknown Claimants" are Claimants which are not Known Claimants, the Agent, a Syndicate Member, the Indenture Trustee, a Noteholder, or a Claimant with an Excluded Claim. (ccc) "Voting Claim" means the amount of the Claim of a Claimant as finally determined for voting at the Creditors' Meeting, in accordance with the provisions of this Order and the CCAA. GENERAL PROVISIONS 3. All references as 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 5:00 p.m. on such Business Day unless otherwise indicated herein. 4. All references to the word "including" shall mean "including without limitation". 5. All references to the singular herein include the plural, the plural include the singular, and any gender includes the other gender. 6. All Claims shall be denominated in Canadian dollars. Any Claims denominated in a foreign currency shall be converted to Canadian dollars for purposes of any Plan at the Bank of Canada's noon exchange rate in effect on the Filing Date. WSLegan068261 \00010\9610050v3 -127, Interest and penalties that would otherwise accrue after the Filing Date shall not be included in any Claims, 8. Copies of all forms delivered hereunder, as applicable, and determinations of Claims by a Claims Officer or the Court, as the case may be, shall be maintained by the Applicants and, subject to further order of the Court, the applicable Claimant will be entitled to have access thereto by appointment during normal business hours on written request to the Applicants or the Monitor. 9. Notwithstanding anything to the contrary in this Order, in respect of any Claim that exceeds $500,000 as submitted in a Proof of Claim, the Applicants shall consult with counsel to the Backstop Parties prior to: accepting, admitting, settling, resolving, valuing, revising or rejecting such Claim; referring the determination of such Claim to a Claims Officer or the Court; appealing any determination of such Claim by the Claims Officer; or adjourning any Creditors' Meeting on account of a dispute with respect to such Claim. 10. Any Person with an Excluded Claim shall not file a Proof of Claim in this process in respect of such Excluded Claim, unless required to do so by further order of the Court, nor shall the Monitor send a Claims Package to Persons with Excluded Claims. CLAIMS OFFICER 11. On application of the Applicants (in consultation with the Monitor and counsel to the Backstop Parties), this Court may from time to time appoint one or more Persons as Claims Officers for purposes of the Claims Procedure described herein and in respect of one more Claims to be determined pursuant to the Claims Procedure. 12. Subject to the discretion of the Court, when appointed pursuant to paragraph 11 hereof, a Claims Officer shall determine the validity and amount of the disputed Claims in respect of which it was appointed in accordance with this Order and to the extent necessary may determine whether any such Claim or part thereof constitutes an Excluded Claim. A Claims Officer shall determine all procedural matters which may arise in respect of his or her determination of these matters, including the manner in which any evidence may be WSLegall068261\00010\9610050v3 - 13 adduced. A Claims Officer shall have the discretion to determine by whom and to what extent the costs of any hearing before a Claims Officer shall be paid. 13. Notwithstanding anything to the contrary herein, an Applicant may with the consent of the Monitor and, if applicable pursuant to paragraph 9 hereof, in consultation with counsel to the Backstop Parties, refer a Claim for resolution to a Claims Officer or to the Court for voting and/or distribution purposes, where in the Applicant's view such a referral is preferable or necessary for the resolution or the valuation of the Claim. MONITOR'S ROLE 14. The Monitor, in addition to its prescribed rights, duties, responsibilities and obligations under the CCAA and under the Initial Order, shall assist the Applicants in connection with the administration of the claim procedure provided for herein, and is hereby directed and empowered to take such other actions and fulfill such other roles as are contemplated by this Order or incidental thereto. 15. In carrying out the terms of this Order, the Monitor shall: (a) have all of the protections given to it by the CCAA, the Initial Order, and this Order, or as an officer of the Court, including the stay of proceedings in its favour; (b) incur no liability or obligation as a result of the carrying out of the provisions of this Order, save and except for any gross negligence or willful misconduct on its part; (c) be entitled to rely on the books and records of the Applicants and any information provided by the Applicants, all without independent investigation; and (d) not be liable for any claims or damages resulting from any errors or omissions in such books, records or information, save and except for any gross negligence or willful misconduct on its part. 16. The Applicants and the Monitor are hereby authorized to use reasonable discretion as to the adequacy of compliance with respect to the manner in which forms delivered VVSLegah068261\00010\9610050v3 - 14 hereunder are completed and executed, and may, where they are satisfied that a Claim has been adequately proven, waive strict compliance with the requirements of this Order as to completion and execution of such forms and to request any further documentation from a Person that the Applicants or the Monitor may require in order to enable them to determine the validity of a Claim. CLAIMS PROCEDURE FOR SYNDICATE MEMBERS 17. Notwithstanding any other provision of this Order, the Agent and the Syndicate Members are not required to file a Proof of Claim in respect of Claims pertaining to the Credit Agreement, and the Applicants shall not be required to send a Claims Package or a Notice of Claim to the Agent or any Syndicate Member, The Applicants and the Monitor may disregard any Proofs of Claim filed by the Agent or any Syndicate Member claiming debt pursuant to the Credit Agreement, and any such Proofs of Claim shall be ineffective for all purposes. 18. Within seven (7) Business Days of the date of this Order, the Applicants shall send to the Agent (as representative of the Syndicate Members' Voting Claim), with a copy to counsel to the Agent (Norton Rose Fulbright Canada LLP), a notice stating the accrued amounts owing directly by each of the Applicants under the Credit Agreement and the guarantees executed by the Applicants in respect of the Credit Agreement (including, in each case, principal and accrued interest thereon) up to the Filing Date (plus any amounts that became due under the Credit Agreement after the Filing Date, as a result of the termination of eligible financial contracts). The Agent shall confirm whether such amounts are accurate to the Monitor within fifteen (15) Calendar Days of receipt of the Applicants' notice. If such amounts are confirmed by the Agent, or in the absence of any response by the Agent within fifteen (15) Calendar Days of receipt of the Applicants' notice, such amounts shall be deemed to be the accrued amounts owing directly by each of the Applicants under the Credit Agreement and the guarantees executed by the Applicants in respect of the Credit Agreement for the purposes of voting and for the purposes of distributions under the Plan, unless the amounts of such Claims are otherwise agreed to in writing by the Applicants, the Agent and the Backstop Parties, in which case such agreement shall govern. If the Agent indicates that it cannot confirm the acerued WSLega1\068261\00010\9610050v3 - 15 amounts owing directly by each of the Applicants under the Credit Agreement and the guarantees executed by the Applicants in respect of the Credit Agreement, such amounts shall be determined by the Court for the purposes of voting and distributions under the Plan, unless the amount of such Claims are otherwise agreed to in writing by the Applicants, the Agent and the Backstop Parties, in which case such agreement shall govern. CLAIMS PROCEDURE FOR NOTEHOLDERS 19. Notwithstanding any other provision of this Order, the Indenture Trustee and the Noteholders are not required to file a Proof of Claim in respect of Claims pertaining to the Senior Notes, and the Applicants shall not be required to send a Claims Package or a Notice of Claim to the Indenture Trustee or any Noteholder. The Applicants and the Monitor may disregard any Proofs of Claim filed by the Indenture Trustee or any Noteholder claiming debt pursuant to the Senior Notes, and any such Proofs of Claim shall be ineffective for all purposes. 20. Within seven (7) Business Days of the date of this Order, the Applicants shall send to the Indenture Trustee (as representative of the Noteholders' Voting Claim), with a copy to counsel to the Backstop Parties (Goodmans LLP), a notice stating the accrued amounts owing directly by each of the Applicants under the Indenture and the guarantees executed by the Applicants in respect of the Senior Notes (including, in each case, principal and accrued interest thereon) up to the Filing Date. The Indenture Trustee shall confirm whether such amounts are accurate to the Monitor within fifteen (15) Calendar Days of receipt of the Applicants' notice. If such amounts are confirmed by the Indenture Trustee, or in the absence of any response by the Indenture Trustee within fifteen (15) Calendar Days of receipt of the Applicants' notice, such amounts shall be deemed to be the accrued amounts owing directly by each of the Applicants under the Indenture and the guarantees executed by the Applicants in respect of the Senior Notes for the purposes of voting and for the purposes of distributions under the Plan, unless the amounts of such Claims are otherwise agreed to in writing by the Applicants, the Backstop Parties, and the Indenture Trustee, in which case such agreement shall govern. If the Indenture Trustee indicates that it cannot confirm the accrued amounts owing directly by each of the WSLegal\068261\00010\9610050v3 - 16 Applicants under the Indenture and the guarantees executed by the Applicants in respect of the Senior Notes, such amounts shall be determined by the Court for the purposes of voting and distributions under the Plan, unless the amount of such Claims are otherwise agreed to in writing by the Applicants, the Backstop Parties and the Indenture Trustee, in which case such agreement shall govern. CLAIMS PROCEDURE FOR KNOWN CLAIMANTS (i) Disclaimers and Resiliations 21. Any action taken by the Applicants to restructure, disclaim, resiliate, terminate or breach any contract, lease or other agreement, whether written or oral, pursuant to the terms of the Initial Order, must occur on or before the day that is ten (10) Calendar Days prior to the date of the Creditors' Meeting. Any notices of disclaimer or resiliation delivered to Claimants in connection with the foregoing shall be accompanied by a Claims Package. 22. Any Claimant that wishes to assert a Restructuring Period Claim must return a completed Proof of Claim to the Monitor such that it is received by the Monitor by no later than 5:00 p.m. on the Restructuring Period Claims Bar Date. (ii) Notice of Claims to Known Claimants 23. The Monitor shall send a Claims Package to each of the Known Claimants by prepaid ordinary mail before 11:59 p.m. on October 16, 2013. CLAIMS PROCEDURE FOR UNKNOWN CLAIMANTS (i) Notice of Claims 24. The Monitor will cause the Newspaper Notice to Claimants to be published on two separate dates prior to October 18, 2013 in each of,the New York Times, the Calgary Herald and the Globe and Mail (National Edition). The Monitor will also post electronic copies of the Newspaper Notice to Claimants, the Proof of Claim, and this Order on the Monitor's Website as soon as practically possible after the date on which this Order is granted. WSLega1\068261100010\9610050v3 -1725. In addition, the Monitor shall send a Claims Package to any Unknown Claimant who requests these documents. Any such Unknown Claimant must return a completed Proof of Claim to the Monitor by no later than the Claims Bar Date. CLAIMS BAR DATE,ADJUDICATION AND RESOLUTION OF CLAIMS (i) Barring of Claims 26. Any Claimant that does not return a Proof of Claim to the Monitor by the Claims Bar Date (or, for a Claimant asserting a Restructuring Period Claim, by the Restructuring Period Claims Bar Date), unless otherwise ordered by the Court, shall: (a) not be entitled to vote at any Creditor's Meeting; (b) not be entitled to receive any distribution under any Plan; (c) not be entitled to any further notice in, and shall not be entitled to participate as a Claimant or creditor in, the CCAA Proceedings in respect of such Claim; (d) be forever barred from making or enforcing any such Claim against any of the Applicants, their Directors and their Officers, and all such Claims will be forever extinguished and barred without any further act or notification by the Applicants; and (e) be forever barred from making or enforcing any such Claim as against any other Person who could claim contribution or indemnity from the Applicants, their Directors and their Officers, or any of them and all such Claims will be forever extinguished and barred without any further act or notification by the Applicants. (ii) Adjudication of Claims 27. The Applicants and the Monitor shall review all Proofs of Claim received by the Claims Bar Date and shall accept, revise or reject the amount of each Claim set out therein for voting and/or distribution purposes. The Applicants or the Monitor shall by no later than 11:59 p.m. on November 29, 2013, notify each Claimant who has delivered a Proof of Claim as to whether such Claimant's Claim as set out therein has been revised or rejected WSLegal\068261 \00010\9610050v3 - 18 for voting purposes (and for distribution purposes, if the Applicants elect to do so), and the reasons therefor, by sending a Notice of Revision or Disallowance. Where the Applicants do not send by such date a Notice of Revision or Disallowance to a Claimant, the Applicants shall be deemed to have accepted such Claimant's Claim in the amount set out in that Claimant's Proof of Claim as a Voting Claim for voting purposes only, which shall be deemed to be that Claimant's Voting Claim. The Applicants shall take each of the foregoing steps in accordance with paragraph 9 hereof, as applicable. 28. Any Claimant who intends to dispute a Notice of Revision or Disallowance sent pursuant to the immediately preceding paragraph shall deliver a Notice of Dispute of Revision or Disallowance to the Monitor by no later than 5:00 p.m. on the date that is ten (10) Calendar Days after receipt of the Notice of Revision or Disallowance. (iii) Resolution of Claims 29. Where a Claimant that receives a Notice of Revision or Disallowance pursuant to paragraph 27 above does not file a Notice of Dispute of Revision or Disallowance by the time set out in paragraph 28 above, the value of such Claimant's Voting Claim or Distribution Claim (if the Notice of Revision or Disallowance dealt with the Distribution Claim) shall be deemed to be as set out in the Notice of Revision or Disallowance. 30. In the event that an Applicant, with the assistance of the Monitor (and in consultation with counsel to the Backstop Parties, as applicable pursuant to paragraph 9 hereof), is unable to resolve a dispute regarding any Voting Claim with a Claimant, the Applicant or the Claimant shall so notify the Monitor, and the Claimant or the Applicant, as the case may be. The decision as to whether the Claimant's Voting Claim should be adjudicated by the Court or a Claims Officer shall be in the sole discretion of the Applicant (subject to consultation with the Monitor and counsel to the Backstop Parties, as applicable pursuant to paragraph 9 hereof); provided, however that to the extent a Claim is referred under this paragraph to the Court or a Claims Officer, it shall be on the basis that the value of the Claim shall be resolved or adjudicated both for voting and distribution purposes (and that it shall remain open to the parties to agree that the Claimant's Voting Claim may be settled by the Claimant and the Applicant (in consultation with counsel to the Backstop Parties, as applicable pursuant to paragraph 9 hereof) without prejudice to a WSLega1\068261\00010\9610050v3 - 19 future hearing by the Court or a Claims Officer to determine the Claimant's Distribution Claim). Thereafter, the Court or a Claims Officer, as the case may be, shall resolve the dispute between the Applicant and such Claimant, and in any event, it is anticipated that the Court or a Claims Officer shall, by no later two (2) Calendar Days prior to the date of the Creditors' Meeting, notify the Applicant, such Claimant and the Monitor (and counsel to the Backstop Parties, as applicable pursuant to paragraph 9 hereof) of the determination of the value of the Claimant's Voting Claim and Distribution Claim. Such determination of the value of the Voting Claim and Distribution Claim by the Court or the Claims Officer shall be deemed to be the Claimant's Voting Claim and Distribution Claim for voting and distribution purposes. 31. Where the value of a Claimant's Voting Claim has not been finally determined by the Court or the Claims Officer by the date of the Creditors' Meeting, the relevant Applicant shall (in consultation with counsel to the Backstop Parties, as applicable pursuant to paragraph 9 hereof) either: (a) accept the Claimant's determination of the value of the Voting Claim as set out in the applicable Notice of Dispute of Revision or Disallowance only for the purposes of voting and conduct the vote of the creditors on that basis subject to a final determination of such Claimant's Voting Claim, and in such case the Monitor shall record separately the value of such Claimant's Voting Claim and whether such Claimant voted in favour of or against the Plan; (b) adjourn the Creditors' Meeting until a final determination of the Voting Claim(s) is made; or (c) deal with the matter as the Court may otherwise direct or as the relevant Applicant, the Monitor and the Claimant (and in consultation with counsel to the Backstop Parties, if applicable pursuant to paragraph 9 hereof) may otherwise agree. 32. The Applicants, with the assistance of the Monitor, shall review and consider all Proofs of Claim filed in accordance with this Claims Procedure Order, in order to determine the Distribution Claims. The relevant Applicants or the Monitor shall notify each Claimant WSLegah068261\00010\9610050v3 - 20 who filed a Proof of Claim and who did not receive a Notice of Revision or Disallowance for distribution purposes pursuant to paragraph 27 hereof as to whether such Claimant's Claim as set out in such Claimant's Proof of Claim has been revised or rejected for distribution purposes, and the reasons therefor, by delivery of a Notice of Revision or Disallowance. Where the relevant Applicants or the Monitor do not send a Notice of Revision or Disallowance for distribution purposes to a Claimant, the relevant Applicants and the Monitor shall be deemed to have accepted the amount of such Claimant's Claim as set out in such Claimant's Proof of Claim as such Claimant's Distribution Claim. The Applicants shall take each of the foregoing steps in accordance with paragraph 9 hereof, as applicable. 33. Any Claimant who intends to dispute a Notice of Revision or Disallowance for distribution purposes shall no later than ten (10) Calendar Days after receiving the notice referred to in paragraph 32, deliver a Notice of Dispute of Revision or Disallowance to the Monitor. 34. Where a Claimant that receives a Notice of Revision or Disallowance pursuant to paragraph 32 above does not return a Notice of Dispute of Revision or Disallowance for distribution purposes to the Monitor by the time set out in paragraph 33 above, the value of such Claimant's Distribution Claim shall be deemed to be as set out in the Notice of Revision or Disallowance for distribution purposes and the Claimant will be barred from disputing or appealing same. 35. In the event that an Applicant (in consultation with counsel to the Backstop Parties, as applicable pursuant to paragraph 9 hereof) is unable to resolve a dispute with a Claimant regarding any Distribution Claim, the Applicant or the Claimant shall so notify the Monitor, and the Claimant or the Applicant, as the case may be. The decision as to whether the Claimant's Distribution Claim should be adjudicated by the Court or a Claims Officer shall be in the sole discretion of the Applicant (subject to consultation with counsel to the Backstop Parties, as applicable pursuant to paragraph 9 hereof). Thereafter, the Court or a Claims Officer shall resolve the dispute between the Applicant and such Claimant. WSLegal\068261 100010\9610050v3 -2136. Either a Claimant or an Applicant (subject to consultation with counsel to the Backstop Parties, as applicable pursuant to paragraph 9 hereof) may, within seven (7) Calendar Days of notification of a Claims Officer's determination of the value of a Claimant's Voting Claim or Distribution Claim, appeal such determination to the Court by filing a notice of appeal, and the appeal shall be initially returnable within ten (10) Calendar Days of the filing of such notice of appeal, such appeal to be an appeal based on the record before the Claims Officer and not a hearing de novo. 37. If neither party appeals the determination of value of a Voting Claim or Distribution Claim by a Claims Officer within the time set out in paragraph 36 above, the decision of the Claims Officer in determining the value of a Claimant's Voting Claim or Distribution Claim shall be final and binding upon the relevant Applicant, the Monitor and the Claimant for voting and distribution purposes and there shall be no further right of appeal, review or recourse to the Court from the Claims Officer's final determination of a Voting Claim or Distribution Claim. NOTICE OF TRANSFEREES 38. If, after the Filing Date, the holder of a Claim transfers or assigns the whole of such Claim to another Person, neither the Applicants nor the Monitor shall be obligated to give notice or otherwise deal with the transferee or assignee of such Claim in respect thereof unless and until actual notice of transfer or assignment, together with satisfactory evidence of such transfer or assignment, shall have been received and acknowledged by the relevant Applicant and the Monitor in writing and thereafter such transferee or assignee shall for the purposes hereof constitute the "Claimant" in respect of such Claim. Any such transferee or assignee of a Claim shall be bound by any notices given or steps taken in respect of such Claim in accordance with this Order prior to receipt and acknowledgement by the relevant Applicant and the Monitor of satisfactory evidence of such transfer or assignment. A transferee or assignee of a Claim takes the Claim subject to any rights of set-off to which any Applicant may be entitled with respect to such Claim. For greater certainty, a transferee or assignee of a Claim is not entitled to set-off, apply, merge, consolidate or combine any Claims assigned or transferred to it against or on account or in reduction of any amounts owing by such Person to any of the VVSLega1\068261\00010\9610050v3 - 22 Applicants. No transfer or assignment shall be received for voting purposes unless such transfer shall have been received by the Monitor no later than ten (10) Business Days prior to the date to be fixed by the Court for the Creditors' Meeting, failing which the original transferor shall have all applicable rights as the "Claimant" with respect to such Claim as if no transfer of the Claim had occurred. Reference to transfer in this Order includes a transfer or assignment whether absolute or intended as security. 39. If a Claimant, or any subsequent holder of a Claim, who has been acknowledged by the Monitor as the holder of such, transfers or assigns the whole of such Claim to more than one Person or part of such Claim to another Person, such transfers or assignments shall not create separate Claims and such Claims shall continue to constitute and be dealt with as a single Claim notwithstanding such transfers or assignments. The Monitor shall not, in each case, be required to recognize or acknowledge any such transfers or assignments and shall be entitled to give notices to and otherwise deal with such Claim only as a whole and then only to and with the Person last holding such Claim provided such Claimant may, by notice in writing delivered to the Monitor, direct that subsequent dealings in respect of such Claim, but only as a whole, shall be dealt with by a specified Person and in such event such Person shall be bound by any notices given or steps taken in respect of such Claim with such Claimant in accordance with the provisions of this Order, 40. Neither the Applicants nor the Monitor are under any obligation to give notice to any Person other than a Claimant holding a Claim and shall have no obligation to give notice to any Person holding a security interest, lien or charge in, or a pledge or assignment by way of security in, a Claim as applicable in respect of any Claim, SERVICE AND NOTICE 41. The Monitor and the Applicants may, unless otherwise specified by this Order, serve and deliver any letters, notices or other documents contemplated by this Order and the Claims Procedure to Claimants, Directors or Officers, and any other interested Persons, by forwarding true copies thereof by prepaid ordinary mail, courier, personal delivery or electronic or digital transmission to such Persons (with copies to their counsel if applicable) at the address as last shown on the records of the Applicants or set out in such WSLegah068261\00010\9610050v3 - 23 Person's Proof of Claim. Any such service or notice by courier, personal delivery or electronic or digital transmission shall be deemed to have been received: (i) if sent by ordinary mail, on the third Business Day after mailing within Alberta, the fifth Business Day after mailing within Canada (other than within Alberta), and the tenth Business Day after mailing internationally; (ii) if sent by courier or personal delivery, on the next Business Day following dispatch; and (iii) if delivered by electronic or digital transmission by 5:00 p.m. on a Business Day, on such Business Day, and if delivered after 5:00 p.m. or other than on a Business Day, on the following Business Day. 42. Any notice or other communication (including Proofs of Claim) to be given under this Order by any Person to the Monitor shall be in writing in substantially the form, if any, provided for in this Order and will be sufficiently given only if delivered by prepaid registered mail, courier, personal delivery or electronic or digital transmission addressed to the following address and any such notice or other communication by a Person shall be deemed received only upon actual receipt thereof during normal business hours on a Business Day, or if delivered outside of a normal business hours, the next Business Day: PricewaterhouseCoopers Inc. Monitor of Lone Pine Resources Inc. et al 3100, 111 - 5th Avenue S.W. Calgary, Alberta T2P 5L3 Attention: Susan Shabluk Fax: Phone: Email: 43. 403-781-1825 403-509-7366 [email protected] If during any period during which notices or other communications are being given pursuant to this Order a postal strike or postal work stoppage of general application should occur, such notices or other communications sent by ordinary mail and then not received shall not, absent further order of the Court, be effective and notices and other communications given hereunder during the course of any such postal strike or work stoppage of general application shall only be effective if given by courier, personal delivery or electronic or digital transmission in accordance with this Order. VVS1egu1\068261\00010\9610050v3 -2444. In the event that this Order is later amended by further order of the Court, the Monitor shall post such further order on the Monitor's Website and such posting shall constitute adequate notice of such amended claims procedure. SET-OFF 45. The Applicants (or any of them) may set-off (whether by way of legal, equitable or contractual set-off) against payments or other distributions to be made pursuant to the Plan to any Claimant, any claims of any nature whatsoever that the Applicants (or any of them) may have against such Claimant, however, neither the failure to do so nor the allowance of any claim hereunder shall constitute a waiver or release by the Applicants (or any of them)of any such claim that the Applicants may have against such Claimant. MISCELLANEOUS 46. Notwithstanding any other provision of this Order, the sending of Notices to Claimant and the solicitation of Proofs of Claim, and the filing by a Person of any Proof of Claim, shall not, for that reason only, grant any Person any standing in the CCAA Proceedings or rights under the Plan. Notwithstanding any other provision of this Order, the Applicants shall not oppose counsel to the Backstop Parties or the Indenture Trustee seeking standing in any proceedings before this Court, a Claims Officer or otherwise in respect of the determination of any Claims in excess of $500,000. 47. Nothing in this Order shall constitute or be deemed to constitute an allocation or assignment of Claims or Excluded Claims by the Applicants into particular affected or unaffected classes for the purpose of a Plan and, for greater certainty, the treatment of Claims, Excluded Claims, or any other claims are to be subject to a Plan and the class or classes of creditors for voting and distribution purposes shall be subject to the terms of any proposed Plan or further Order of the Court. 48. In the event that no Plan is approved by the Court, the Claims Bar Date and the Restructuring Period Claims Bar Date shall be of no effect in any subsequent proceeding or distribution with respect to any and all Claims made by Claimants. WSLega1\068261\00010\9610050v3 -2549. Nothing in this Order shall prejudice the rights and remedies of any Directors or Officers under any existing Director and Officer insurance policy or prevent or bar any Person from seeking recourse against or payment from any Director's and/or Officer's liability insurance policy or policies that exist to protect or indemnify the Directors and/or Officers; whether such recourse or payment is sought directly by the Person asserting a Claim from the insurer or derivatively through the Director or Officer or one or more of the Applicants; provided, however, that nothing in this Order shall create any rights in favour of such Person under any policies of insurance nor shall anything in this Order limit, remove, modify or alter any defence to such claim available to the insurer pursuant to the provisions of any insurance policy or at law. 50. 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 Order and to assist the Applicants, or any of them, the Monitor and their respective agents in carrying out the terms of this Order. All courts, tribunals, regulatory and administrative bodies are hereby respectfully requested to make such orders and to provide such assistance to the Applicants, or any of them, and to the Monitor, as an officer of the Court, as may be necessary or desirable to give effect to this Order, to grant representative status to LPR Canada in any foreign proceeding, or to assist the Applicants, or any of them, and the Monitor and their respective agents in carrying out the terms of this Order, 51. This 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. 52. The Applicants or the Monitor may from time to time apply to this Court to amend, vary, supplement or replace this Order or for advice and direction concerning the discharge of their respective powers and duties under this Order or the interpretation or application of this Order, WSLega1\068261\00010\96100500 SCHEDULE "A" NEWSPAPER NOTICE TO CLAIMANTS AND OTHERS IN RESPECT OF CLAIMS IN THE MATTER OF THE CCAA PROCEEDINGS OF LONE PINE RESOURCES CANADA LTD., LONE PINE RESOURCES(HOLDINGS)INC., LONE PINE RESOURCES INC., WISER OIL DELAWARE, LLC AND WISER DELAWARE LLC (collectively, the "APPLICANTS",and each, an "APPLICANT") PLEASE TAKE NOTICE that this Newspaper Notice to Claimants is being published pursuant to an order of the Honourable Justice J. Strekaf of the Court of Queen's Bench of Alberta, Judicial Centre of Calgary, dated October 9, 2013 (the "Claims Procedure Order"). All capitalized terms not otherwise defined in this Newspaper Notice to Claimants shall bear the meaning given to them in the Claims Procedure Order, which is posted on the website of the Monitor at http://www.pwc.comicar-lpr (the "Monitor's Website"). Any Person who believes he, she, or it has a Claim against any of the Applicants or their Directors or Officers shall submit his, her or its Claim in a Proof of Claim form (which can be found on the Monitor's Website), other than an Excluded Claim (which includes Claims of any Person who provided goods and/or services to any Applicant on or after the Filing Date). Proof of Claim forms can also be obtained by contacting the Monitor at the address below and providing particulars as to your name, address, facsimile number and e-mail address. Once the Monitor has this information, you will receive, as soon as practicable, a Proof of Claim form. All Claimants must submit their Proofs of Claim by submitting them to the Applicants care of the Monitor by no later than 5:00 p.m.(Mountain Time) on November 13, 2013 (the "Claims Bar Date") by registered mail, personal delivery, e-mail (in PDF format), courier or facsimile transmission, and all Proofs of Claim must be actually received by the Monitor before the Claims Bar Date, at the following addresses: PricewaterhouseCoopers Inc. Court-appointed Monitor of Lone Pine Resources Inc. et al. #3100, 111 - 5 Avenue SW Calgary, AB T2P 5L3 Attention: Susan Shabluk Telephone: (403)509-7366 Fax: (403) 781-1825 Email: susan.l.shabluk!,ca.pwc.com CLAIMS WHICH ARE NOT RECEIVED BY THE MONITOR BY THE CLAIMS BAR DATE WILL BE BARRED AND EXTINGUISHED FOREVER. The publication of this Notice to Claimant,the solicitation of Proofs of Claim by the Monitor or the Applicants, and/or the sending of a Proof of Claim by a Claimant to the Monitor, does not grant any Claimant or any Person standing in the CCAA Proceedings or any rights under any Plan filed in respect of any of the Applicants, their Directors or Officers. WSLega1\068261\00010\9550879v3 SCHEDULE "B" PROOF OF CLAIM (See attached for instructions) IN THE MATTER OF THE CCAA PROCEEDINGS OF LONE PINE RESOURCES CANADA LTD., LONE PINE RESOURCES(HOLDINGS)INC., LONE PINE RESOURCES INC., WISER OIL DELAWARE, LLC AND WISER DELAWARE LLC (collectively, the "APPLICANTS",and each, an "APPLICANT") Regarding the claim of this form as "the Claimant"). (referred to in (name ofClaimant) All notices or correspondence regarding this claim to be forwarded to the Claimant at the following address: Telephone Number: Facsimile Number: Attention (Contact Person): Email Address: (All future correspondence will be delivered to the designated email address unless the Claimant specifically requests that hardcopies be provided) ❑ Please provide hardcopies of materials to the address above, Claimant), of 1. (name of the Claimant or representative of the (City, Province or State) do hereby certify that: I am the Claimant; OR I am 2. (state position/title) of the Claimant, I have knowledge of all the circumstances connected with the claim referred to in this form. WSLega1\068261\00010\9551110v3 -23. Check box the Applicant against whom you make this claim. ❑ Lone Pine Resources Canada Ltd. ❑ Lone Pine Resources Inc. ❑ Lone Pine Resources (Holdings)Inc. ❑ Wiser Delaware LLC ❑ Wiser Oil Delaware, LLC ❑ Directors and Officers The Applicant or Applicants (check appropriate box(es) above) was or were, at September 25, 2013 (or, for Restructuring Period Claimants, as at the date on which the subject agreement was disclaimed, restructured, terminated or resiliated), and still is or are indebted to the Claimant in the sum of CDN$ (insert CDN $ value ofclaim) as shown by the statement of account attached hereto and marked Schedule A. Claims should not include the value of goods and/or services supplied after September 25, 2013. If a Claimant's claim is to be reduced by deducting any counterclaims to which the CCAA Applicant or Applicants is or are entitled and/or amounts associated with the return of equipment and/or assets by the CCAA Applicant or Applicants, please specify. The statement of account must sped 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. 4. ❑ A. UNSECURED CLAIM OF $ . That in respect of this claim, the Claimant does not hold and has not held any assets as security. SECURED CLAIM OF $ B. ❑ claim, the Claimant holds assets valued at $ which are as follows: . That in respect of this as security, particulars of Givefull particulars ofthe security, including the date on which the security was given and the value at which the Claimant assesses the security together with the basis ofvaluation, and attach a copy of the security documents as Schedule B. 5. Have you acquired this Claim by assignment? (if yes, attach documents evidencing assignment) (if yes) Full Legal Name of original creditor(s): DATED this day of , 2013 Per: Witness WSLega1\068261\00010\9551 I I Ov3 Yes ❑ No ❑ -3Print name of Claimant: If Claimant is other than an individual, print name and title ofauthorized signatory Name: Title: WSLega1\068261\00010\9551110v3 SCHEDULE "C" INSTRUCTION LETTER FOR THE CLAIMS PROCEDURE FOR CLAIMANTS (INCLUDING RESTRUCTURING PERIOD CLAIMANTS) IN THE MATTER OF THE CCAA PROCEEDINGS OF LONE PINE RESOURCES CANADA LTD., LONE PINE RESOURCES(HOLDINGS)INC., LONE PINE RESOURCES INC., WISER OIL DELAWARE, LLC AND WISER DELAWARE LLC (collectively, the "APPLICANTS",and each, an "APPLICANT") PLEASE TAKE NOTICE that this Instruction Letter is being sent pursuant to an order of the Honourable Justice Strekaf of the Court of Queen's Bench of Alberta, Judicial Centre of Calgary, dated October 9, 2013 (the "Claims Procedure Order"). All capitalized terms not otherwise defined in this Instruction Letter shall bear the meaning given to them in the Claims Procedure Order, which is posted on the website of the Monitor, at http://www.pwc.com/car-lpr. Claims Procedure This letter provides instructions for completing the Proof of Claim. A blank Proof of Claim form is included with this letter. The Claims Procedure is intended for any Person asserting a Claim (other than an Excluded Claim) of any kind or nature whatsoever against any of the Applicants and/or any of their Directors and/or Officers arising before September 25, 2013, or a Restructuring Period Claim arising after September 25, 2013. If you wish to file a Claim (including a Restructuring Period Claim), you must file a Proof of Claim to avoid the barring and extinguishment of any Claim (or Restructuring Period Claim) which you may have against any of the Applicants and/or any of their Directors and/or Officers. If you have any questions regarding the Claims Procedure, please contact the Monitor at the following addresses: PricewaterhouseCoopers Inc. Court-appointed Monitor of Lone Pine Resources Inc. et al. #3100, 111 - 5 Avenue SW Calgary, AB T2P 5L3 Attention: Susan Shabluk Telephone: (403)509-7366 Fax: (403)781-1825 Email: [email protected] WSLega1\068261\00010\9557478v3 - 2For Claimants or Restructuring Period Claimants Submitting a Proof of Claim In the case of a Claim other than a Restructuring Period Claim, you are required to file a Proof of Claim, in the form enclosed herewith, and ensure that it is received by the Monitor by 5:00 p.m. (Mountain Time) on November 13, 2013 (the "Claims Bar Date") to avoid the barring and extinguishment of any Claim you may have against any of the Applicants and/or any of their Directors and/or Officers, if any. In the case of a Restructuring Period Claim, you are required to file a Proof of Claim, in the form enclosed herewith, and ensure that it is received by the Monitor by 5:00 p.m. on the day that is 7 Calendar Days after after termination, repudiation or resiliation of the applicable agreement or other event giving rise to the applicable Restructuring Period Claim (the "Restructuring Period Claims Bar Date"), to avoid the barring and extinguishment of any Restructuring Period Claim you may have against any of the Applicants and/or any of their Directors and/or Officers, if any. Additional Proof of Claim forms can be found on the Monitor's Website or obtained by contacting the Monitor at the address indicated above and providing particulars as to your name, address, facsimile number and e-mail address. Once the Monitor has this information, you will receive, as soon as practicable, a Proof of Claim form. If you are submitting your Proof of Claim electronically, please submit it in PDF file and ensure the name of the file is [legal name of creditor]poc.pdf. IF A PROOF OF CLAIM IN RESPECT OF YOUR CLAIM OR RESTRUCTURING PERIOD CLAIM IS NOT RECEIVED BY THE MONITOR BY THE CLAIMS BAR DATE OR THE RESTRUCTURING PERIOD CLAIMS BAR DATE: (A) YOUR CLAIM SHALL BE FOREVER BARRED AND EXTINGUISHED AND YOU WILL BE PROHIBITED FROM MAKING OR ENFORCING A CLAIM AGAINST ANY OF THE APPLICANTS AND/OR ANY OF THEIR DIRECTORS AND/OR OFFICERS AND/OR AS AGAINST ANY OTHER PERSON WHO COULD CLAIM CONTRIBUTION OR INDEMNITY FROM THE APPLICANTS, THEIR DIRECTORS AND THEIR OFFICERS; (B) YOU SHALL NOT BE PERMITTED TO VOTE ON ANY PLAN OF ARRANGEMENT THAT IS ADVANCED ON BEHALF OF THE APPLICANTS OR ANY OF THEM,OR ENTITLED TO ANY FURTHER NOTICE OR DISTRIBUTION UNDER SUCH A PLAN,IF ANY; AND (C) YOU SHALL NOT BE ENTITLED TO PARTICIPATE AS A CREDITOR IN THE CCAA PROCEEDINGS OF THE APPLICANTS, NOTING,HOWEVER,THAT THE SENDING OF A NOTICE TO CLAIMANT, A NOTICE TO RESTRUCTURING PERIOD CLAIMANT, THE SOLICITATION OF PROOFS OF CLAIM BY THE MONITOR OR THE APPLICANTS AND/OR THE SENDING OF A PROOF OF CLAIM BY A CLAIMANT TO THE MONITOR DOES NOT GRANT ANY CLAIMANT OR ANY PERSON STANDING IN THE CCAA PROCEEDINGS OR ANY RIGHTS UNDER ANY PLAN FILED IN RESPECT OF ANY OF THE APPLICANTS,THEIR DIRECTORS OR OFFICERS. WSLega11068261\00010\9557478v3 SCHEDULE "D" NOTICE OF REVISION OR DISALLOWANCE IN THE MATTER OF THE CCAA PROCEEDINGS OF LONE PINE RESOURCES CANADA LTD., LONE PINE RESOURCES(HOLDINGS)INC., LONE PINE RESOURCES INC., WISER OIL DELAWARE, LLC AND WISER DELAWARE LLC (collectively, the "APPLICANTS",and each, an "APPLICANT") TO:[insert name and address of Claimant or Restructuring Period Claimant] PLEASE TAKE NOTICE that this Notice of Revision or Disallowance is being sent pursuant to an order of the Honourable Justice Strekaf of the Court of Queen's Bench of Alberta, Judicial Centre of Calgary, dated October 9, 2013 (the "Claims Procedure Order"). All capitalized terms not otherwise defined in this Notice of Revision or Disallowance shall bear the meaning given to them in the Claims Procedure Order, which is posted on the website of the Monitor, at bap://vvvvw.pwc.com/car-lpr. The Monitor has reviewed your Proof of Claim dated revised or disallowed your Claim for the following reasons: , 2013, and has Subject to further dispute by you in accordance with the provisions of the Claims Procedure Order, your Claim will be allowed as a(Voting and/or Distribution) Claim as follows: Applicable Applicant Claim per Proof of Claim $ Amount Revised/ Allowed as(Voting Disallowed (for and/or Voting/Distribution) Distribution) Claim $ $ If you intend to dispute this Notice of Revision or Disallowance, you must, no later than 5:00 p.m. (Mountain Time) on the day that is 10 days after your receipt of this Notice of WSLega1\068261\00010\9588439v3 2 Revision or Disallowance, deliver a Notice of Dispute of Revision or Disallowance by registered mail, personal delivery, e-mail (in PDF format), courier or facsimile transmission to the following address: PricewaterhouseCoopers Inc. Court-appointed Monitor of Lone Pine Resources Inc. et al. #3100, 111 - 5 Avenue SW Calgary, AB T2P 5L3 Attention: Susan Shabluk Telephone: (403)509-7366 Fax: (403) 781-1825 Email: [email protected] Any Claimant who fails to deliver a Notice of Dispute of Revision or Disallowance by the date set out above shall be deemed to accept the classification and the amount of its Claim as set out in this Notice of Revision or Disallowance and such Claim as set out herein shall constitute a (Voting and/or Distribution) Claim and the Claimant will have those rights set out in the Claims Procedure Order with respect to such (Voting and/or Distribution) Claim. If you do not deliver a Notice of Dispute of Revision or Disallowance by the deadline stated above, you: (a) shall be forever barred from making or enforcing any Claim against any of the Applicants, their Directors and their Officers (other than with respect to such Claim as has been allowed in this Notice of Revision or Disallowance), and all such Claims will be forever extinguished; (b) shall not be entitled to vote on (and/or receive any distribution under) any Plan of Arrangement that is advanced on behalf of the Applicants or any of them, or entitled to any further notice or distribution under such a Plan, if any (other than with respect to such Claim as has been allowed in this Notice of Revision or Disallowance). Dated at Calgary, Alberta, this WSLega1\068261\00010\9588439v3 day of ,2013. SCHEDULE "E" NOTICE OF DISPUTE OF REVISION OR DISALLOWANCE OF THE CLAIMANT (INCLUDING RESTRUCTURING PERIOD CLAIMANT)LISTED HEREIN IN THE MATTER OF THE CCAA PROCEEDINGS OF LONE PINE RESOURCES CANADA LTD., LONE PINE RESOURCES(HOLDINGS)INC., LONE PINE RESOURCES INC., WISER OIL DELAWARE, LLC AND WISER DELAWARE LLC (collectively, the "APPLICANTS",and each, an "APPLICANT") By order of the Court of Queen's Bench of Alberta (the "Court") dated October 9, 2013 (as may be amended, restated or supplemented from time to time (the "Claims Procedure Order"), in the proceeding commenced by the Applicants under the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the "CCAA"), the Applicants have been authorized to conduct a claims procedure (the "Claims Procedure"). A copy of the Claims Procedure Order, with all schedules, may be found on the Monitor's website at: http://www.pwc.com/car-lpr (the "Monitor's Website"). Capitalized terms used in this letter not otherwise defined in this letter shall have the meaning given to them in the Claims Procedure Order. Name of Claimant: Address: Telephone Number: Facsimile Number: Email Address: PLEASE TAKE NOTICE THAT, pursuant to the Claims Procedure Order, we hereby give you notice of our intention to dispute the Notice of Revision or Disallowance dated , 2013 issued by PricewaterhouseCoopers Inc., in its capacity as Court-appointed Monitor of the Applicants, in respect of our Claim. We accept/dispute the following portion(s) of our Claim as revised and/or disallowed in the said Notice of Revision or Disallowance: Claim as Revised Claim as Revised Disputed Accepted($CDN) ($CDN) Reason for the dispute (attach copies of any supporting documentation): WSLegal\068261\00010\9554769v2 2 Address for Service of Notice of Dispute of Revision or Disallowance: PricewaterhouseCoopers Inc. Court-appointed Monitor of Lone Pine Resources Inc. et al. #3100, 111 - 5 Avenue S.W. Calgary, AB T2P 5L3 Attention: Susan Shabluk Telephone: (403)509-7366 Fax: (403) 781-1825 Email: [email protected] THIS FORM AND ANY REQUIRED SUPPORTING DOCUMENTATION MUST BE RETURNED TO THE MONITOR BY REGISTERED MAIL, PERSONAL SERVICE, EMAIL (IN PDF FORMAT),FACSIMILE OR COURIER TO THE ADDRESS INDICATED ABOVE AND MUST BE ACTUALLY RECEIVED BY THE MONITOR BY 5:00 P.M. (MOUNTAIN TIME) ON THE DAY WHICH IS TEN DAYS AFTER THE DATE ON WHICH THE NOTICE OF REVISION OR DISALLOWANCE IS ACTUALLY RECEIVED BY YOU. DATED this day of ,2013 Per: Witness Name of Claimant/Restructuring Period Claimant: If Claimant/Restructuring Period Claimant is other than an individual, print name and title ofauthorized signatory Name: Title: VVSLegA068261\00010\9554769v2 SCHEDULE D PLAN (see attached) CLERK'S STAMP COURT FILE NUMBER 1301 – 11352 COURT COURT OF QUEEN'S BENCH OF ALBERTA JUDICIAL CENTRE CALGARY 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 COMPROMISE OR ARRANGEMENT OF LONE PINE RESOURCES CANADA LTD., LONE PINE RESOURCES INC., LONE PINE RESOURCES (HOLDINGS) INC., WISER DELAWARE LLC and WISER OIL DELAWARE, LLC DOCUMENT PLAN OF COMPROMISE AND ARRANGEMENT ADDRESS FOR SERVICE AND CONTACT INFORMATION OF PARTY FILING THIS DOCUMENT BENNETT JONES LLP Barristers and Solicitors 4500, 855 – 2nd Street S.W. Calgary, Alberta T2P 4K7 Attention: Chris Simard Telephone No.: 403-298-4485 Fax No.: 403-265-7219 Client File No.: 68261.10 D-1 PLAN OF COMPROMISE AND ARRANGEMENT WHEREAS Lone Pine Resources Canada Ltd. ("LPRC"), Lone Pine Resources (Holdings) Inc. ("LPR Holdings"), Lone Pine Resources Inc. ("LPRI"), Wiser Oil Delaware, LLC ("Wiser Oil") and Wiser Delaware LLC ("Wiser Delaware") (collectively, the "Applicants") are debtor companies under the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the "CCAA"); AND WHEREAS the Applicants obtained an order (as may be amended, restated or varied from time to time, the "Initial Order") of the Court of Queen's Bench of Alberta (the "Court") under the CCAA dated September 25, 2013 (the "Filing Date"); AND WHEREAS each of the Applicants hereby proposes and presents this plan of compromise and arrangement to its respective Affected Unsecured Creditors Class (as defined below) under and pursuant to the CCAA: ARTICLE 1 INTERPRETATION 1.1 Definitions In this Plan, unless otherwise stated or unless the subject matter or context otherwise requires: "ABCA" means the Business Corporations Act (Alberta), as amended. "Accretion Rate" means (i) with respect to the LPRC Preferred Shares, the 10% per annum rate at which the redemption price per share of the LPRC Preferred Shares (which shall initially be equal to the Issue Price) will increase over time, and (ii) with respect to the LPRI Multiple Voting Common Shares, the 10% per annum rate at which the number of votes attached to each LPRI Multiple Voting Common Share (which shall initially be one vote per share) will increase over time. "Affected Claim" means any Claim that is not an Unaffected Claim, and, for certainty, includes any Equity Claim and the Note Obligations. "Affected Creditor" means any holder of an Affected Claim (or its permitted assignee), but only with respect to and to the extent of such Affected Claim. "Affected Unsecured Claims" means all Affected Claims other than Equity Claims. "Affected Unsecured Creditor" means any holder of an Affected Unsecured Claim (or its permitted assignee), but only with respect to and to the extent of such Affected Unsecured Claim. "Affected Unsecured Creditor's Pro-Rata Share" means, with respect to each Affected Unsecured Creditor (other than a Cash Pool Creditor) as at the relevant time, (x) the principal amount of the Allowed Affected Unsecured Claim held by such Affected Unsecured Creditor, divided by (y) the total principal amount of all Allowed Affected Unsecured Claims held by Affected Unsecured Creditors (other than Cash Pool Creditors). "Affected Unsecured Creditors Classes" means the classes of Affected Unsecured Creditors entitled to vote on this Plan at the Meetings in accordance with the terms of the Meeting Order, which, for certainty, D-2 are (i) the LPRC Class, (ii) the LPR Holdings Class, (iii) the LPRI Class, (iv) the Wiser Oil Class, and (v) the Wiser Delaware Class, and "Affected Unsecured Creditors Class" means any one of them. "Agent" means JP Morgan Chase Bank, N.A., Toronto Branch, in its capacity as agent of the Syndicate. "Agreed Number" means, with respect to the LPRC Class A Voting Common Shares, LPRC Preferred Shares, LPRI Class A Voting Common Shares and LPRI Multiple Voting Common Shares to be issued on the Plan Implementation Date pursuant to this Plan, the number of such shares as is, in each case, agreed to by the Applicants, the Monitor and the Majority Initial Consenting Noteholders; provided that (i) the Agreed Number of LPRC Preferred Shares shall be equal to the Agreed Number of LPRI Multiple Voting Common Shares, (ii) the Agreed Number of LPRC Class A Voting Common Shares shall be equal to the Agreed Number of LPRI Class A Voting Common Shares, and (iii) the aggregate number of LPRC Preferred Shares issued on the Plan Implementation Date pursuant to this Plan shall be equal to three (3) times the aggregate number of LPRC Class A Voting Common Shares issued on the Plan Implementation Date pursuant to this Plan. "Agreed Number of Votes" means the number of votes attaching to the LPRC Class C Multiple Voting Share to be agreed to by the Applicants, the Monitor and the Majority Initial Consenting Noteholders; provided that such number shall represent greater than 70% of the total voting rights attached to all voting securities of LPRC that are outstanding immediately following Plan Implementation. "Allowed" means, with respect to a Claim, any Claim or any portion thereof that has been finally allowed pursuant to the Claims Procedure Order for purposes of receiving distributions under this Plan in accordance with the Claims Procedure Order or a Final Order of the Court. "Anticipated Implementation Date" means January 31, 2014, or such other date as may be agreed by the Applicants, the Monitor, the Agent and the Majority Initial Consenting Noteholders. "Applicable Law" means any law, statute, order, decree, consent decree, judgment, rule regulation, ordinance or other pronouncement having the effect of law, whether in Canada, the United States or any other country, of any domestic or foreign nation, province, territory, state, city or other political subdivision or of any Governmental Entity. "Applicants" has the meaning ascribed thereto in the recitals. "Backstop Agreement" means the backstop agreement dated September 24, 2013 between the Applicants and the Backstoppers, as it may be amended, restated, supplemented or varied from time to time in accordance with the terms thereof. "Backstop Amount" means cash in an amount equal to 4% of the New Investment Amount. "Backstop Commitment" means the commitment to fund the entire New Investment Amount provided by the Backstoppers pursuant to and in accordance with the terms and conditions of the Backstop Agreement. "Backstop Deadline" has the meaning ascribed thereto in the Meeting Order. "Backstop Funding Deadline" has the meaning ascribed to such term in Section 4.5(f). "Backstop Joinder" means an agreement in the form set out as Schedule B to the Backstop Agreement pursuant to which, subject to the terms and conditions of the Backstop Agreement, a Qualifying D-3 Unsecured Creditor may agree to become a Backstopper and be bound by the terms of the Backstop Agreement. "Backstop Payment Amount" has the meaning ascribed to such term in Section 4.5(e)(ii). "Backstopped Shares" has the meaning ascribed to such term in Section 4.5(e)(i). "Backstoppers" means those Qualifying Unsecured Creditors that are Consenting Creditors and are parties to the Backstop Agreement (and any of their permitted assignees or designees), either by having executed the original Backstop Agreement as at September 24, 2013 or a Backstop Joinder on or before the Backstop Deadline, and "Backstopper" means any one of them. "Backstopper's Pro-Rata Share" means, with respect to each Backstopper, (x) the amount of the Backstop Commitment committed to by such Backstopper pursuant to the Backstop Agreement, divided by (y) the New Investment Amount. "BIA" means the Bankruptcy and Insolvency Act (Canada), as amended. "Business Day" means a day, other than Saturday, Sunday or a statutory holiday, on which banks are generally open for the transaction of commercial business in Calgary, Alberta and New York, New York. "Canadian Tax Act" means the Income Tax Act (Canada), as amended. "Cash Election" means a written election by an Affected Unsecured Creditor which holds an Allowed Affected Unsecured Claim in an aggregate amount greater than the Cash Pool Cap to reduce the aggregate amount of such Allowed Affected Unsecured Claim to the Cash Pool Cap, made in the form attached as Schedule I to the Meeting Order. "Cash Election Deadline" has the meaning ascribed thereto in the Meeting Order. "Cash Pool" means a pool of cash in the amount of the Distributable Amount to be established on the Plan Implementation Date pursuant to Section 4.1. "Cash Pool Cap" means $10,000 (or such greater amount as may be agreed to by the Applicants, the Monitor and the Majority Initial Consenting Noteholders prior to the Plan Implementation Date). "Cash Pool Creditor" means an Affected Unsecured Creditor who, on the Plan Implementation Date, holds an Allowed Affected Unsecured Claim in an aggregate amount that either (i) is not greater than the Cash Pool Cap, or (ii) is greater than the Cash Pool Cap but which the Affected Unsecured Creditor elected, by providing a Cash Election to the Monitor before the Cash Election Deadline, to reduce to the Cash Pool Cap; "Cash Pool Creditor's Pro-Rata Share" means, with respect to each Cash Pool Creditor as at the relevant time, (x) the principal amount of the Allowed Affected Unsecured Claim held by such Cash Pool Creditor (as such amount may have been reduced by the Cash Election of such Cash Pool Creditor), divided by (y) the total principal amount of all Allowed Affected Unsecured Claims held by all Cash Pool Creditors (as such amounts may have been reduced by the Cash Elections of any such Cash Pool Creditors). "CCAA" has the meaning ascribed thereto in the recitals. D-4 "CCAA Proceeding" means the proceeding commenced by the Applicants under the CCAA on the Filing Date. "Charges" means the Administration Charge, the Directors' Charge, the DIP Lenders' Charge, the KERP Charge and the Subordinated Advisor Charge, each as defined in the Initial Order, the Hedging Charge as defined in the Order of the Court dated November 27, 2013, and any other charges on the property of the Applicants granted by Order of the Court. "Claim" has the meaning ascribed thereto in the Claims Procedure Order. "Claims Procedure Order" means the Order of the Court under the CCAA dated October 9, 2013, establishing a claims procedure in respect of the Applicants, as same may be amended, restated or varied from time to time. "Company Advisors" means Bennett Jones LLP, Richards, Layton & Finger, P.A., Vinson & Elkins LLP and RBC Dominion Securities Inc. "Consenting Creditors" means the Initial Consenting Noteholders and any other Affected Unsecured Creditors that are parties to the Support Agreement (and any of their permitted assignees), either by having executed the original Support Agreement as at September 24, 2013 or a Support Joinder on or before the Backstop Deadline. "Court" has the meaning ascribed thereto in the recitals. "Creditor" means any Person having a Claim, but only with respect to and to the extent of such Claim, including the transferee or assignee of a transferred Claim that is recognized as a Creditor in accordance with the Claims Procedure Order or a trustee, executor, liquidator, receiver, receiver and manager, or other Person acting on behalf of or through such Person. "Current Credit Agreement" means the credit agreement dated March 18, 2011, as amended, among LPRI as parent, LPRC as borrower, the Agent, and the Syndicate. "Current Credit Facility" means the credit facility provided to LPRC, as borrower, pursuant to the Current Credit Agreement. "Current Bank Security" means all security agreements, security interests, liens, debentures, charges and other Encumbrances granted by the Applicants in favour of the Agent and/or the Syndicate to secure the obligations of any one or more of the Applicants under the Current Credit Facility or any other agreements, instruments or other arrangements contemplated by the Current Credit Agreement. "DIP Agreement" means the debtor-in-possession credit agreement between LPRC, as borrower, LPRI, as guarantor, and the DIP Lenders, as such agreement may be modified, amended or supplemented in accordance with the terms thereof, the Initial Order or any other Order. "DIP Facility" means the interim financing facility provided to LPRC, as borrower, by the DIP Lenders pursuant to the DIP Agreement. "DIP Lenders" means, collectively, JP Morgan Chase Bank, N.A., Toronto Branch, Bank of Montreal, Wells Fargo Bank, N.A., Canadian Branch, The Toronto Dominion Bank, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, and JP Morgan Chase Bank, N.A., Toronto Branch, as administrative agent. D-5 "Directors" means all current and former directors and individual managers (or their estates) of any one or more of the Applicants, in such capacity, and "Director" means any one of them. "Disputed Distribution Claim" means an Affected Unsecured Claim (including a contingent Affected Unsecured Claim which may crystallize upon the occurrence of an event or events occurring after the Filing Date) or such portion thereof which has not been Allowed, which is disputed for distribution purposes in accordance with the Claims Procedure Order and which remains subject to adjudication for distribution purposes in accordance with the Claims Procedure Order and, for certainty, does not include any Equity Claims. "Disputed Distribution Claims Reserve" means the reserve, if any, to be established by the Applicants on the Plan Implementation Date, which shall be comprised of the consideration that would have been paid to holders of Disputed Distribution Claims if such Disputed Distribution Claims had been Allowed Claims as of such date and which shall be acceptable to the Applicants, the Monitor and the Majority Initial Consenting Noteholders. "Distributable Amount" means $700,000 (or such greater amount as may be agreed to by the Applicants, the Monitor and the Majority Initial Consenting Noteholders prior to the Plan Implementation Date). "Distribution Date" means the date or dates, excluding the Initial Distribution Date, determined by the Applicants and the Monitor from time to time on which to effect subsequent distributions in respect of Allowed Claims (including any Disputed Distribution Claim that becomes an Allowed Affected Unsecured Claim pursuant to the provisions of this Plan). "DTC" means The Depository Trust Company or Cede & Co. as its nominee, in its capacity as registered holder of the Notes, or any successor thereof. "Effective Time" means 12:01 a.m. (Calgary time) on the Plan Implementation Date or such other time on such date as the Applicants, the Monitor and the Majority Initial Consenting Noteholders may agree. "Employee Amounts" means all outstanding wages, salaries and employee benefits (including employee medical, dental, disability, life insurance and similar benefit plans or arrangements, incentive plans, share compensation plans and employee assistance programs and employee or employer contributions in respect of pension or group savings plans, and other benefits), vacation pay, commissions, bonuses and other incentive payments, termination and severance payments, and employee expenses and reimbursements, in each case incurred in the ordinary course of business and consistent with existing compensation policies and arrangements, and all equivalent amounts related to individuals who perform employment-like services for the Applicants as contractors. "Encumbrance" means any charge, mortgage, lien, pledge, claim, restriction, hypothec, adverse interest, security interest 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 and principles known under the law applicable to such property, interests or rights and whether or not they constitute specific or floating charges as those terms are understood under the laws of the Province of Alberta. "Equity Claim" means a Claim that is an "equity claim" within the meaning of section 2(1) of the CCAA, and, for certainty, includes (i) any claims resulting from the ownership, purchase or sale of an Equity Interest, and (ii) any indemnification claims against the Applicants related to or arising from (i) above. D-6 "Equity Claimant" means any Person with an Equity Claim or holding an Equity Interest, but only in such capacity, and for certainty includes an Existing Shareholder in its capacity as such. "Equity Interests", with respect to LPRI, has the meaning ascribed thereto in section 2(1) of the CCAA and, for certainty, includes the Existing Parent Shares, the Options and any other interest in or entitlement to shares in the capital stock of LPRI. "Existing Parent Shares" means all shares in the capital stock of LPRI, of any class, whether shares of common stock, par value US$0.01 per share or shares of preferred stock, par value US$0.01 per share (including shares of preferred stock of that certain series designated as Series A Junior Participating Stock), or otherwise, that are issued and outstanding immediately prior to the Effective Time, and for certainty does not include any New Shares in the capital stock of LPRI issued on the Plan Implementation Date pursuant to this Plan. "Existing Shareholder" means any Person who holds or is entitled to the Existing Parent Shares or any shares in the authorized capital stock of LPRI immediately prior to the Effective Time, but only in such capacity, and for certainty does not include any Person that is issued New Shares on the Plan Implementation Date pursuant to this Plan, in such capacity. "Filing Date" has the meaning ascribed thereto in the recitals. "Final Order" means any order, ruling or judgment of the Court, or any other court of competent jurisdiction, which has not been reversed, modified or vacated, and is not subject to any stay, and in respect of which all applicable appeal periods shall have expired and any appeals therefrom shall have been disposed of by the applicable appellate court. "Fractional Interests" has the meaning ascribed to such term in Section 4.13. "Funding Deadline" has the meaning ascribed to such term in Section 4.5(b). "Government Priority Claims" means all Claims of Governmental Entities against the Applicants in respect of amounts that are outstanding and that are of a kind that could reasonably be subject to a demand under: (a) subsections 224(1.2) of the Canadian Tax Act; (b) any provision of the Canada Pension Plan or the Employment Insurance Act (Canada) that refers to subsection 224(1.2) of the Canadian Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, or employee's premium or employer's premium as defined in the Employment Insurance Act (Canada), or a premium under Part VII. I of that Act, and of any related interest, penalties or other amounts; or (c) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Canadian Tax Act, or that refers to that subsection, to the extent that such provision provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum: (i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Canadian Tax Act; or D-7 (ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a "province providing a comprehensive pension plan" as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a "provincial pension plan" as defined in that subsection. "Governmental Entity" means any government, regulatory authority, government department, agency, commission, bureau, official, minister, Crown corporation, court, board, tribunal or dispute settlement panel or other law, rule or regulation-making body or entity: (a) having or purporting to have jurisdiction on behalf of any nation, province, territory or state or any other geographic or political subdivision of any of them; or (b) exercising, or entitled or purporting to exercise any administrative, executive, judicial, legislative, policy, regulatory or taxing authority or power. "Information Circular" has the meaning ascribed thereto in the Meeting Order. "Initial Backstoppers" means those Backstoppers (and any of their permitted assignees) that were the original signatories to the Backstop Agreement (as distinct from a Backstop Joinder) as at September 24, 2013. "Initial Consenting Noteholders" means those Noteholders (and any of their permitted assignees) that were the original signatories to the Support Agreement (as distinct from a Support Joinder) as at September 24, 2013 and "Initial Consenting Noteholder" means any one of them. "Initial Distribution Date" means the Plan Implementation Date or such other date as the Applicants, the Monitor and the Majority Initial Consenting Noteholders may agree. "Initial Order" has the meaning ascribed thereto in the recitals. "Insured Claim" means all or that portion of a Claim arising from a cause of action for which the applicable insurer has definitively and unconditionally confirmed that each applicable Applicant is insured, but only to the extent that such Claim, or portion thereof, is so insured. "Intercompany Claim" means a Claim by one or more of the Applicants against one or more other Applicants. "Issue Price" means, for each LPRC Preferred Share issued on the Plan Implementation Date, the amount determined by dividing (x) the New Investment Amount by (y) the Agreed Number of LPRC Preferred Shares issued on the Plan Implementation Date pursuant to this Plan. "Joint Venture Partner" means any Person who has a working interest or joint ownership interest in any equipment, lands, properties, production, wells, facilities, plants, batteries, infrastructure or other assets associated with the oil and gas exploration business of the Applicants, in which the Applicants also have a working interest or joint ownership interest, in such capacity. "KERP" means the payments to be made to certain key employees of the Applicants, as approved under the Initial Order and as described in the key employee retention plan letters attached to, and filed with the Court together with the confidential supplement to the Pre-Filing Report of the Monitor dated as of September 24, 2013. "LPRC" has the meaning ascribed thereto in the recitals. D-8 "LPRC Class A Voting Common Shares" means the Class A voting common shares in the capital of LPRC, the terms of which shall, upon giving effect to the amendment to the articles of LPRC described in Section 5.5(c), be substantially economically equivalent to the terms of the LPRC Class B Non-Voting Common Shares. "LPRC Class B Non-Voting Common Shares" means the Class B non-voting common shares in the capital of LPRC, the terms of which shall, upon giving effect to the amendment to the articles of LPRC described in Section 5.5(c), be substantially economically equivalent to the terms of the LPRC Class A Voting Common Shares. "LPRC Class C Multiple Voting Share" means the new Class C multiple voting share in the capital of LPRC to be created upon giving effect to the amendment to the articles of LPRC described in Section 5.5(c), the terms of which shall be substantially the same as the terms of the LPRC Class A Voting Common Shares except that the LPRC Class C Multiple Voting Share shall have attached thereto the Agreed Number of Votes. "LPRC Preferred Shares" means the new redeemable convertible preferred shares in the capital of LPRC to be created upon giving effect to the amendment to the articles of LPRC described in Section 5.5(c), which shall be (i) redeemable at a redemption price per share that is initially equal to the Issue Price and will increase over time based on the Accretion Rate and (ii) convertible into LPRC Class B Non-Voting Common Shares initially on the basis of, for each LPRC Preferred Share converted, one LPRC Class B Non-Voting Common Share subject to increase over time based on the increase in the redemption price. "LPR Holdings" has the meaning ascribed thereto in the recitals. "LPRI" has the meaning ascribed thereto in the recitals. "LPRI Class A Voting Common Shares" means the new Class A voting common shares in the capital stock of LPRI to be created upon giving effect to the amendment to the certificate of incorporation of LPRI described in Section 5.5(i). "LPRI Multiple Voting Common Shares" means the new multiple voting common shares in the capital stock of LPRI to be created upon giving effect to the amendment to the certificate of incorporation of LPRI described in Section 5.5(i), the terms of which shall initially entitle the holder thereof to one (1) vote per share subject to increase over time based on the Accretion Rate. "LPRI Subscription Amount" means the aggregate amount paid by Subscribing Unsecured Creditors to subscribe, as part of the New Investment, for the LPRI Multiple Voting Common Shares to be issued on the Plan Implementation Date pursuant to this Plan, which will be the amount determined by dividing (x) the New Investment Amount by (y) 1,000,000. "Majority Initial Consenting Noteholders" means Initial Consenting Noteholders holding not less than a majority of the principal amount of the Notes held by all Initial Consenting Noteholders as at the time that any agreement, waiver, consent or approval is sought or required, as the case may be, and in each case as communicated to the Applicants by counsel to the Initial Consenting Noteholders in accordance with Section 10.6. "Meetings" means the meetings of Affected Unsecured Creditors to be held on the Meeting Date called for the purpose of considering and voting on this Plan pursuant to the CCAA, and includes any D-9 adjournment, postponement or other rescheduling of such meetings in accordance with the Meeting Order. "Meeting Date" means the date on which the Meetings are held in accordance with the Meeting Order. "Meeting Order" means the Order of the Court under the CCAA that, among other things, sets the date for the Meetings, as the same may be amended, restated or varied from time to time. "Monitor" means PricewaterhouseCoopers Inc., as Court-appointed Monitor of the Applicants in the CCAA Proceeding. "Monitor Advisors" means McCarthy Tétrault LLP and Potter Anderson & Corroon LLP. "New Credit Facility" means the credit facility or facilities required to be obtained by LPRC as a condition to the Recapitalization and the Support Agreement, and includes (i) the agreement or agreements pursuant to which such facility or facilities are provided and (ii) all security agreements, security interests, liens, debentures, charges and other encumbrances granted by the Applicants in favour of the providers of such facility or facilities to secure the obligations of LPRC thereunder or in connection therewith. "New Investment" means the new investment by Subscribing Unsecured Creditors in (i) LPRC Preferred Shares in the aggregate subscription amount equal to the New Investment Amount, and (ii) LPRI Multiple Voting Common Shares in the aggregate subscription amount equal to the LPRI Subscription Amount. "New Investment Amount" means such amount, between a minimum of US$100,000,000 and a maximum of US$110,000,000, as is agreed to by the Applicants, the Monitor and the Initial Backstoppers on or before January 8, 2014 (or such later date as may be agreed to by the Applicants, the Monitor and the Initial Backstoppers). "New Investment Subscription Deadline" has the meaning ascribed thereto in the Meeting Order. "New Investment Subscription Form" means the form pursuant to which each Qualifying Unsecured Creditor shall have the right, but not the obligation, to elect irrevocably to participate in the New Investment, conditional upon the implementation of this Plan and effective on the Plan Implementation Date, up to a maximum of such Affected Unsecured Creditor's Pro-Rata Share of the New Investment, which form is attached as Schedule H to the Meeting Order. "New Investment Subscription Privilege" means the right of a Qualifying Unsecured Creditor to participate in the New Investment by electing, in accordance with the provisions of this Plan, to subscribe for and purchase from the Applicants up to its Subscribing Unsecured Creditor's Pro-Rata Share of LPRC Preferred Shares under the New Investment, and the same number of LPRI Multiple Voting Common Shares. "New Shares" means the new shares in the capital of LPRC or in the capital stock of LPRI to be issued on the Plan Implementation Date by LPRC or LPRI, as applicable, pursuant to the provisions of this Plan. "Note Indenture" means the note indenture dated February 14, 2012 among LPRC as issuer, the other Applicants as guarantors, and U.S. Bank National Association as trustee, pursuant to which the Notes were issued, as it may be amended, restated, varied or supplemented in accordance with its terms. D-10 "Note Indenture Trustee" means U.S. Bank National Association, in its capacity as trustee under the Note Indenture, or any successor thereof. "Note Obligations" means all obligations, liabilities and indebtedness of the Applicants (whether as borrower, guarantor, surety or otherwise) to the Note Indenture Trustee and/or the Noteholders under, arising out of or in connection with the Notes, the Note Indenture or the guarantees granted in connection with any of the foregoing, as well as any other agreements or documents relating thereto, as at the Plan Implementation Date. "Noteholder Advisors" means Goodmans LLP and Stroock & Stroock & Lavan LLP. "Noteholder" means a holder of Notes, in such capacity. "Notes" means the 10.375% senior notes due 2017 issued by LPRC pursuant to the Note Indenture. "Officers" means all current and former officers (or their estates) of any one or more of the Applicants, in such capacity, and "Officer" means any one of them. "Option Plans" means any plan or arrangement of any Applicant pursuant to which options, warrants or other rights to purchase or otherwise receive shares or other securities of any Applicant, in each case as such plan or arrangement may be amended, restated or varied from time to time in accordance with the terms thereof, including the Lone Pine Resources Inc. 2011 Stock Incentive Plan. "Options" means any options, warrants, rights, conversion privileges, puts, calls, subscriptions, or other rights, entitlements, agreements, arrangements, commitments or claims of any kind (whether pre-emptive, contingent, conditional or otherwise) obligating an Applicant to sell or otherwise issue, or to purchase or otherwise acquire, shares or other securities of any Applicant, or any securities or obligations of any kind convertible into or exchangeable for shares or other securities of any Applicant, in each case that are existing or are issued and outstanding immediately prior to the Effective Time, including any award made under the Lone Pine Resources Inc. 2011 Stock Incentive Plan pursuant to which the holder thereof may purchase or otherwise receive shares of common stock of LPRI, any preferred share purchase rights under the Rights Agreement, or any options, warrants or other rights pursuant to any other Option Plan, and any rights, entitlements, agreements, arrangements, commitments or claims of any kind to receive any other form of consideration in respect of any prior or future exercise of any of the foregoing. "Order" means any order, ruling or judgment of the Court or any other court of competent jurisdiction made in connection with the CCAA Proceeding. "Person" means any individual, firm, corporation, limited or unlimited liability company, general or limited partnership, association, trust, unincorporated organization, joint venture, Governmental Entity or any agency, officer or instrumentality thereof or of any other entity. "Plan" means this Plan of Compromise and Arrangement filed by each of the Applicants under the CCAA, as it may be amended, supplemented or restated from time to time in accordance with the terms hereof. "Plan Implementation Date" means the Business Day on which this Plan becomes effective, which shall be the Business Day on which the Monitor delivers to the Applicants and Goodmans LLP the certificate referenced in Section 9.2. D-11 "Plan Supplement Document" means any document or agreement that is entered into in order to supplement or implement the provisions of this Plan, and that is expressly established as a "Plan Supplement Document" in its terms, including any "Plan Supplement" within the meaning of the Meeting Order. "Post-Filing Trade Payables" means trade payables that were incurred by the Applicants in the ordinary course of business (i) after the Filing Date but before the Plan Implementation Date and (ii) in compliance with the Initial Order and any other Orders issued in connection with the CCAA Proceeding. "Post-Implementation Boards" means (i) the board of directors of LPRC upon implementation of the Plan and (ii) the board of directors of LPRI upon implementation of the Plan, as appointed in accordance with the Sanction Order. "Prior Ranking Secured Claims" means Claims existing on both the Filing Date and the Plan Implementation Date, other than (i) Syndicate Claims and (ii) Claims secured by the Charges, that in each case have the benefit of a valid and enforceable security interest in, mortgage or charge over, lien against or other similar interest in, any of the assets that the Applicants own or to which the Applicants are entitled, but only to the extent of the realizable value of the property subject to such security. "Proof of Claim" has the meaning ascribed thereto in the Claims Procedure Order. "Qualifying Unsecured Creditor" means an Affected Unsecured Creditor as of the Voting Record Date that (i) is not a Cash Pool Creditor, and (ii) is an "accredited investor" as defined under Section 501 of Regulation D under the U.S. Securities Act. "Recapitalization" means the transactions contemplated by this Plan. "Released Claim" has the meaning ascribed to such term in Section 7.1. "Released Party" and "Released Parties" have the meanings ascribed to such terms in Section 7.1. "Required Majorities" means, in respect of each Meeting, a majority in number of Affected Unsecured Creditors representing at least two-thirds in value of the Voting Claims of Affected Unsecured Creditors who are entitled to vote at the Meeting in accordance with the Meeting Order and who are present and voting in person or by proxy on the resolution approving this Plan at the Meeting. "Rights Agreement" means the rights agreement dated May 11, 2011 between LPRI and Mellon Investor Services LLC, as rights agent, relating to the preferred share purchase rights attached to the shares of common stock, par value $0.01 per share of LPRI. "Sanction Date" means the date that the Sanction Order is made by the Court. "Sanction Order" means the Order of the Court sanctioning and approving this Plan. "Sanction Recognition Order" means the order of the U.S. Court made in the U.S. Proceeding that, among other things, recognizes and gives effect to the Sanction Order in the United States. "Subscribing Unsecured Creditor" means (i) each Backstopper and (ii) every other Qualifying Unsecured Creditor that submits a duly executed New Investment Subscription Form electing to participate in the New Investment in accordance with Section 4.4. D-12 "Subscribing Unsecured Creditor's Pro-Rata Share" means, with respect to each Subscribing Unsecured Creditor, (x) the amount of the New Investment Amount to be taken up by such Subscribing Unsecured Creditor as at the Plan Implementation Date, divided by (y) the New Investment Amount. "Subscription Amount" has the meaning ascribed to such term in Section 4.5(a). "Support Agreement" means the Support Agreement dated September 24, 2013 between the Applicants and the Consenting Creditors, as it may be amended, restated, supplemented or varied from time to time in accordance with the terms thereof. "Support Joinder" means an agreement in the form set out as Schedule C to the Support Agreement or as contemplated by the Backstop Agreement pursuant to which an Affected Unsecured Creditor agrees to become a Consenting Creditor and to be bound by the terms of the Support Agreement. "Syndicate" means the syndicate of lenders pursuant to the Current Credit Agreement, at the relevant time, in their capacity as such. "Syndicate Claim" means a Claim of the Agent and/or the Syndicate in respect of the Current Credit Facility, the Current Credit Agreement or any other obligation of one or more of the Applicants the performance of which is secured by the Current Bank Security. "Taxing Authority" means any one of Her Majesty the Queen, Her Majesty the Queen in right of Canada, Her Majesty the Queen in right of any province or territory of Canada, the Canada Revenue Agency, any similar revenue or taxing agency or authority of Canada and each and every province or territory of Canada and any political subdivision thereof, the United States Internal Revenue Service, any similar revenue or taxing agency or authority of the United States and each and every state of the United States, and any Canadian, United States or other government, regulatory authority, government department, agency, commission, bureau, official, minister, court, board, tribunal or other law, rule or regulation making body or entity exercising taxing authority or power. "U.S. Bankruptcy Code" means title 11 of the United States Code, as amended from time to time. "U.S. Court " means the United States Bankruptcy Court for the District of Delaware. "U.S. Proceeding" means the proceeding commenced by LPRC, as authorized representative of the Applicants, under Chapter 15 of the U.S. Bankruptcy Code on the Filing Date. "U.S. Securities Act" means the United States Securities Act of 1933, as amended. "Unaffected Claim" means any: (a) Claim secured by any of the Charges; (b) Syndicate Claim; (c) Insured Claim; (d) Intercompany Claim; (e) Post-Filing Trade Payable; (f) Claim by an Unaffected Trade Creditor arising from an Unaffected Trade Claim; D-13 (g) Claim by a Joint Venture Partner; (h) Prior Ranking Secured Claim; (i) Claim that is not permitted to be compromised pursuant to section 19(2) of the CCAA, but only to the extent not permitted; (j) Claim in respect of an Employee Amount (other than in respect of Options); and (k) Government Priority Claim. "Unaffected Creditor" means a Creditor who has an Unaffected Claim, but only in respect of and to the extent of such Unaffected Claim. "Unaffected Trade Claim" means a Claim of an Unaffected Trade Creditor that is not a Post-Filing Trade Payable and that arises out of or in connection with any contract, license, lease, agreement, obligation, arrangement, understanding or document with the Applicants related to the business of the Applicants. "Unaffected Trade Creditor" means any Person that has been designated by the Applicants, with the consent of the Monitor, as a critical supplier in accordance with the Initial Order. "Undeliverable Distribution" has the meaning ascribed to such term in Section 4.11. "Voting Claim" has the meaning ascribed thereto in the Claims Procedure Order. "Voting Record Date" has the meaning ascribed thereto in the Meeting Order. "Website" means http://www.pwc.com/car-lpr. "Wiser Delaware" has the meaning ascribed thereto in the recitals. "Wiser Oil" has the meaning ascribed thereto in the recitals. 1.2 Certain Rules of Interpretation For the purposes of this Plan: (a) any reference in this Plan to an Order, document or exhibit filed or to be filed means such Order, document or exhibit as it may have been or may be amended, modified, or supplemented in accordance with its terms, the Support Agreement, any Orders and this Plan, as applicable; (b) unless otherwise specified, all references to currency are in Canadian dollars; (c) the division of this Plan into "articles" and "sections" are for convenience of reference only and do not affect the construction or interpretation of this Plan, and the descriptive headings of "articles" and "sections" are not intended as complete or accurate descriptions of the content thereof; D-14 1.3 (d) the use of words in the singular or plural, or with a particular gender, including a definition, shall not limit the scope or exclude the application of any provision of this Plan to such Person (or Persons) or circumstances as the context otherwise permits; (e) the words "includes" and "including" and similar terms of inclusion shall not, unless expressly modified by the words "only" or "solely", be construed as terms of limitation, but rather shall mean "includes but is not limited to" and "including but not limited to", so that references to included matters shall be regarded as illustrative without being either characterizing or exhaustive; (f) unless otherwise specified, all references to time herein and in any document issued pursuant hereto mean local time in Calgary, Alberta and any reference to an event occurring on a Business Day shall mean prior to 5:00 p.m. (Calgary time) on such Business Day; (g) unless otherwise specified herein or in the Meeting Order, time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends and by extending the period to the next succeeding Business Day if the last day of the period is not a Business Day; (h) unless otherwise provided, any reference to a statute or other enactment of parliament or a legislature includes all regulations made thereunder, all amendments to or reenactments of such statute or regulations in force from time to time, and, if applicable, any statute or regulation that supplements or supersedes such statute or regulation; (i) references to a specified "article" or "section" shall, unless something in the subject matter or context is inconsistent therewith, be construed as references to that specified article or section of this Plan, whereas the terms "this Plan", "hereof", "herein", "hereto", "hereunder" and similar expressions shall be deemed to refer generally to this Plan and not to any particular "article", "section" or other portion of this Plan and include any documents supplemental hereto; and (j) the word "or" is not exclusive. Successors and Assigns This Plan shall be binding upon and shall enure to the benefit of the heirs, administrators, executors, legal personal representatives, successors and assigns of any Person named or referred to in this Plan. 1.4 Governing Law This Plan shall be governed by and construed in accordance with the laws of the Province of Alberta and the federal laws of Canada applicable therein. All questions as to the interpretation of or application of this Plan and all proceedings taken in connection with this Plan and its provisions shall be subject to the jurisdiction of the Court. D-15 ARTICLE 2 PURPOSE AND EFFECT OF PLAN 2.1 Purpose The purpose of this Plan is: (a) to implement the Recapitalization, which will significantly reduce the Applicants' indebtedness and provide the Applicants with essential financing to address their current and future liquidity needs; (b) to provide for a settlement of all Allowed Affected Claims; (c) to effect a release and discharge of all Affected Claims and Released Claims; and (d) to ensure the continued viability and ongoing operations of the Applicants, in the expectation that the Persons who have an economic interest in the Applicants, when considered as a whole, will derive a greater benefit from the implementation of this Plan than would result from a bankruptcy of the Applicants. 2.2 Persons Affected This Plan provides for (i) a full and final release and discharge of the Affected Claims and Released Claims, (ii) a settlement of, and consideration for, all Allowed Affected Unsecured Claims, and (iii) a recapitalization of the Applicants. This Plan will become effective at the Effective Time in accordance with its terms and the steps and sequence set forth in Section 5.5, and shall be binding on the Applicants, all Affected Creditors (including Equity Claimants), all Released Parties and all other Persons named or referred to in, or subject to, this Plan. 2.3 Persons Not Affected This Plan does not affect the Unaffected Creditors. Nothing in this Plan shall affect the Applicants' rights and defences, both legal and equitable, with respect to any Unaffected Claims, including all rights with respect to legal and equitable defences or entitlements to set-offs or recoupments against such Unaffected Claims. ARTICLE 3 CLASSIFICATION AND TREATMENT OF CREDITORS AND RELATED MATTERS 3.1 Claims Procedure The procedure for determining the validity and quantum of the Affected Claims for voting and distribution purposes under this Plan shall be governed by the Claims Procedure Order, the Meeting Order, the CCAA, this Plan and any further Order of the Court. 3.2 Classification of Affected Unsecured Claims In accordance with the Meeting Order, for the purpose of voting on this Plan, the Affected Unsecured Claims are divided into classes as set out below: D-16 Affected Unsecured Creditors Class Affected Unsecured Claims LPRC Class ................................................. Affected Unsecured Claims against LPRC LPR Holdings Class .................................... Affected Unsecured Claims against LPR Holdings LPRI Class .................................................. Affected Unsecured Claims against LPRI Wiser Oil Class ........................................... Affected Unsecured Claims against Wiser Oil Wiser Delaware Class ................................. Affected Unsecured Claims against Wiser Delaware If an Applicant is excluded from this Plan pursuant to Section 10.4(b), the Affected Unsecured Claims against such Applicant and the corresponding Affected Unsecured Creditors Class set out above will be removed from this Plan and such Affected Unsecured Claims will no longer be Affected Unsecured Claims and shall be deemed to be Unaffected Claims for purposes of this Plan; and, for certainty, a Creditor will have no right to vote on or receive distributions under this Plan in respect of such removed Claims. For certainty, Noteholders shall be permitted to vote and to receive distributions under the Plan in respect of each Affected Unsecured Creditors Class as the Notes were either issued or guaranteed by each of the Applicants. For certainty, Equity Claimants shall not be entitled to vote on this Plan or to receive any distributions hereunder. 3.3 Creditors' Meetings The Meetings shall be held in accordance with the Meeting Order and any further Order of the Court. The only Persons entitled to attend the Meetings are those specified in the Meeting Order. 3.4 Treatment of Affected Unsecured Claims An Affected Unsecured Creditor shall receive distributions in respect of its Affected Unsecured Claim as set forth below only to the extent that such Claim is an Allowed Affected Unsecured Claim and has not been paid, released, discharged or otherwise satisfied prior to the Plan Implementation Date. On the Plan Implementation Date, in accordance with the steps and sequence set forth in Section 5.5, and in full and final satisfaction of all Affected Unsecured Claims: For Cash Pool Creditors: (a) each Cash Pool Creditor, will receive an amount from the Cash Pool equal to the lesser of (i) the amount of its Allowed Affected Unsecured Claim (as such amount may have been reduced by the Cash Election of such Cash Pool Creditor), and (ii) its Cash Pool Creditor's Pro-Rata Share of the Cash Pool; provided that despite any other provisions of this Plan the total amount payable to all Cash Pool Creditors under this Section 3.4 shall not exceed the Distributable Amount; (b) any Cash Pool Creditor who receives a distribution in accordance with Section 3.4(a) shall not be entitled to any other payment or consideration with respect to its Allowed Affected Unsecured Claim; and D-17 For Affected Unsecured Creditors (other than Cash Pool Creditors): (c) each other Affected Unsecured Creditor (other than Cash Pool Creditors) with an Allowed Affected Unsecured Claim will receive: (i) its Affected Unsecured Creditor's Pro-Rata Share of the Agreed Number of LPRC Class A Voting Common Shares; (ii) one LPRI Class A Voting Common Share for each LPRC Class A Voting Common Share issued pursuant to (i) immediately above; and (iii) if such Affected Unsecured Creditor is a Backstopper, its Backstopper's Pro-Rata Share of the Backstop Amount. All Affected Unsecured Claims shall be fully, finally, irrevocably and forever compromised, settled, released, discharged, extinguished, cancelled and barred on the Plan Implementation Date. 3.5 Treatment of Equity Claims On the Plan Implementation Date, in accordance with the steps and sequence set forth in Section 5.5, all Equity Interests and all Equity Claims shall be fully, finally, irrevocably and forever compromised, settled, released, discharged, extinguished, cancelled and barred. Equity Claimants shall not receive any consideration or distributions under this Plan or otherwise recover anything in respect of their Equity Claims or Equity Interests, and shall not be entitled to vote on this Plan at the Meetings in respect of their Equity Claims. 3.6 Treatment of Unaffected Claims Unaffected Creditors will not receive any consideration or distributions under this Plan in respect of their Unaffected Claims (except to the extent their Unaffected Claims are paid in full on the Plan Implementation Date in accordance with the express terms of Section 5.5), and shall not be entitled to vote on this Plan at the Meetings in respect of their Unaffected Claims. 3.7 Disputed Distribution Claims Any Affected Unsecured Creditor with a Disputed Distribution Claim shall not be entitled to receive any distribution hereunder with respect to such Disputed Distribution Claim unless and until such Claim becomes an Allowed Affected Unsecured Claim. A Disputed Distribution Claim shall be resolved in accordance with the Claims Procedure Order. Distributions pursuant to Section 3.4 shall be paid from the Disputed Distribution Claims Reserve in accordance with Section 6.2 in respect of any Disputed Distribution Claim that is finally determined to be an Allowed Affected Unsecured Claim in accordance with the Claims Procedure Order. 3.8 Extinguishment of Claims On the Plan Implementation Date, in the sequence set forth in Section 5.5 and in accordance with the provisions of the Sanction Order and the Sanction Recognition Order, the treatment of Affected Claims (including Allowed Claims and Disputed Distribution Claims), Equity Interests and all Released Claims, in each case as set forth herein, shall be final and binding on the Applicants, all Affected Creditors (and their respective heirs, executors, administrators, legal personal representatives, successors and assigns) and any Person holding an Equity Interest or a Released Claim, and all Affected Claims, Equity Interests D-18 and all Released Claims shall be fully, finally, irrevocably and forever released, discharged, cancelled and barred, and the Released Parties shall thereupon have no further obligation whatsoever in respect of the Affected Claims, Equity Interests and the Released Claims, as applicable; provided that nothing herein releases the Applicants or any other Person from their obligations to make distributions in the manner and to the extent provided for in this Plan; and provided further that such discharge and release of the Applicants shall be without prejudice to the right of a Creditor in respect of a Disputed Distribution Claim to prove such Disputed Distribution Claim in accordance with the Claims Procedure Order so that such Disputed Distribution Claim may become an Allowed Unsecured Claim entitled to receive consideration under Section 3.4, Section 3.7 and Section 6.2. 3.9 Guarantees and Similar Covenants No Person who has a Claim under any guarantee, surety, indemnity or similar covenant in respect of any Claim that is compromised and released under this Plan, or who has any right to claim over in respect of or to be subrogated to the rights of any Person in respect of a Claim that is compromised and released under this Plan, shall be entitled to any greater rights as against the Applicants than the Person whose Claim is compromised and released under this Plan. 3.10 Multiple Affected Unsecured Claims Notwithstanding the division of Affected Unsecured Creditors into classes by the Applicants for the purpose of voting on this Plan, all Affected Unsecured Creditors will participate in the same distribution scheme under this Plan. At the Effective Time, for distribution purposes under this Plan, in respect of all Affected Unsecured Creditors and their rights in respect of Affected Unsecured Claims: (a) all guarantees of an Applicant of the payment or performance by another Applicant with respect to any Affected Unsecured Claim will be deemed eliminated and cancelled; (b) any Affected Unsecured Claim and all guarantees by an Applicant of any Affected Unsecured Claim will be treated as a single Affected Unsecured Claim against the Applicants; (c) any joint obligation of any Applicant with another Applicant will be treated as a single Affected Unsecured Claim against the Applicants; and (d) each Affected Unsecured Claim in respect of any Applicant will be deemed to be one Affected Unsecured Claim against, and obligation of, the Applicants. For certainty, the treatment of Affected Unsecured Claims in this Section 3.10 will not affect the legal and corporate structures of the Applicants or cause any Applicant to be liable for any Claim for which it is not otherwise liable. 3.11 Set-Off The law of set-off applies to all Claims. ARTICLE 4 ELECTIONS, DISTRIBUTIONS AND PAYMENTS 4.1 Distributions of Cash Pool Amounts to Cash Pool Creditors (a) This Section 4.1 sets forth the distribution mechanics with respect to the Cash Pool to be distributed to Cash Pool Creditors, as determined for each Cash Pool Creditor pursuant to Section 3.4(a). (b) Based on the documents received by the Monitor pursuant to the Claims Procedure Order and the Meeting Order, the Monitor shall calculate, with respect to each Cash Pool D-19 Creditor, its Cash Pool Creditor's Pro-Rata Share, and the Monitor shall provide all such information to the Applicants and Goodmans LLP at least ten (10) Business Days prior to the Anticipated Implementation Date (unless extended by the Applicants, with the consent of the Majority Initial Consenting Noteholders). (c) 4.2 On the Initial Distribution Date, upon receipt of and in accordance with a written direction of the Monitor prepared based on the information received by the Monitor pursuant to Section 4.1(b), as so directed by the Monitor, the Applicants shall deliver to each Cash Pool Creditor its Cash Pool Creditor's Pro-Rata Share. Distributions of New Shares to Noteholders (a) This Section 4.2 sets forth the distribution mechanics with respect to the LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares that are to be distributed to the Noteholders in respect of their Notes, as determined for each Noteholder pursuant to Section 3.4(c). (b) Upon receipt of and in accordance with written instructions from the Monitor, the Note Indenture Trustee shall instruct DTC to, and DTC shall: (i) establish an escrow position representing the respective positions of the Noteholders as of the Plan Implementation Date for the purpose of making distributions to the Noteholders on and after the Plan Implementation Date; and (ii) block any further trading in the Notes, effective as of the close of business on the Business Day immediately prior to the Plan Implementation Date, all in accordance with the customary practices and procedures of DTC. (c) If both the LPRC Class A Voting Common Shares and the LPRI Class A Voting Common Shares are eligible to be settled through DTC on the Initial Distribution Date, then: (d) (i) the registration and delivery of LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares to be distributed to each Noteholder pursuant to the provisions of this Plan shall be made through the facilities of DTC to DTC participants, who, in turn, shall effect the delivery of interests in such LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares to the beneficial holders of such Notes pursuant to standing instructions and customary practices and procedures; and (ii) the Applicants and the Monitor shall have satisfied their responsibilities in respect of the distribution of LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares to the Noteholders in accordance with the provisions of this Plan once such shares have been delivered to DTC; and will have no liability or obligation in respect of deliveries from DTC, or its nominee, to DTC participants or from DTC participants to beneficial holders of the Notes. If the LPRC Class A Voting Common Shares or the LPRI Class A Voting Common Shares are not eligible to be settled through DTC on the Initial Distribution Date, then the registration and delivery of LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares to be distributed to each Noteholder pursuant to the provisions of this Plan shall be made in accordance with a written direction of the Monitor prepared based on information obtained through DTC and DTC participants (by way of a letter of transmittal process or such other process as is agreed to by the Applicants, the Monitor, D-20 the Majority Initial Consenting Noteholders and the Note Indenture Trustee) regarding registration and delivery of such LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares to or for the benefit of Noteholders. 4.3 4.4 Distributions of New Shares to Affected Unsecured Creditors other than Noteholders and Cash Pool Creditors (a) This Section 4.3 sets forth the distribution mechanics with respect to the LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares that are to be distributed to Affected Unsecured Creditors (other than Noteholders and Cash Pool Creditors), as determined for each Affected Unsecured Creditor pursuant to Section 3.4(c). (b) Based on the documents received by the Monitor pursuant to the Claims Procedure Order and the Meeting Order, the Monitor shall calculate, with respect to each such Affected Unsecured Creditor, its Affected Unsecured Creditor's Pro-Rata Share, and the Monitor shall provide all such information to the Applicants and Goodmans LLP at least three (3) Business Days prior to the Anticipated Implementation Date (unless extended by the Applicants, with the consent of the Majority Initial Consenting Noteholders). (c) On the Initial Distribution Date, upon receipt of and in accordance with a written direction of the Monitor prepared based on the information received by the Monitor pursuant to Section 4.3(b), as so directed by the Monitor, the Applicants shall register and deliver to each such Affected Unsecured Creditor its Affected Unsecured Creditor's ProRata Share of the LPRC Class A Voting Common Shares and the LPRI Class A Voting Common Shares. Election to Participate in New Investment (a) Each Affected Unsecured Creditor that is a Qualifying Unsecured Creditor shall be entitled to participate in the New Investment. (b) Pursuant to and in accordance with the Meeting Order, the Monitor shall deliver a New Investment Subscription Form to each Affected Unsecured Creditor as of the Voting Record Date. Each Qualifying Unsecured Creditor as of the Voting Record Date shall have the right, but not the obligation, to elect irrevocably to participate in the New Investment, conditional upon the implementation of this Plan and effective on the Plan Implementation Date, up to a maximum of such Affected Unsecured Creditor's Pro-Rata Share of the New Investment. (c) In order to validly elect to participate in the New Investment, a Qualifying Unsecured Creditor (including any Backstopper) must return a duly executed New Investment Subscription Form to the Applicants, the Monitor and Goodmans LLP pursuant to Section 10.12 on or before the New Investment Subscription Deadline. Any New Investment Subscription Forms received after the New Investment Subscription Deadline will be invalid and not effective and shall be disregarded for all purposes of this Plan. For certainty, only Qualifying Unsecured Creditors are eligible to submit New Investment Subscription Forms. (d) Submission of a New Investment Subscription Form in accordance with this Section 4.4 shall constitute a subscription by the applicable Subscribing Unsecured Creditor for and a D-21 commitment by the applicable Subscribing Unsecured Creditor to participate in the New Investment by purchasing LPRC Preferred Shares (the aggregate subscription price for all such shares to be issued on the Plan Implementation Date being the New Investment Amount) and LPRI Multiple Voting Common Shares (the aggregate subscription price for all such shares to be issued on the Plan Implementation Date being the LPRI Subscription Amount) under the New Investment in accordance with Section 4.5. Pursuant to Section 4.6(b) and Section 5.5(o), for each LPRC Preferred Share issued to a Subscribing Unsecured Creditor pursuant to this Plan as part of the New Investment, one LPRI Multiple Voting Common Share shall also be issued to that Subscribing Unsecured Creditor as part of the New Investment. (e) 4.5 Any Qualifying Unsecured Creditor who also wishes to become a Backstopper shall submit a duly executed Backstop Joinder to the Applicants, the Monitor and Goodmans LLP pursuant to Section 10.12 before the Backstop Deadline. Any Backstop Joinders received after the Backstop Deadline will be invalid and not effective and shall be disregarded for all purposes of this Plan. For certainty, only Qualifying Unsecured Creditors are eligible to submit Backstop Joinders. Funding of New Investment (a) Not less than ten (10) Business Days prior to the Anticipated Implementation Date (or such other date as the Applicants, the Monitor and the Majority Initial Consenting Noteholders may agree), the Monitor shall inform each Subscribing Unsecured Creditor of: (i) the Anticipated Implementation Date; (ii) the number of LPRC Preferred Shares and LPRI Multiple Voting Common Shares that will be acquired by such Subscribing Unsecured Creditor on the Plan Implementation Date pursuant to the New Investment Subscription Privilege; (iii) the amount of funds required to be deposited in escrow with the Monitor by such Subscribing Unsecured Creditor pursuant to its New Investment Subscription Privilege (its "Subscription Amount", which, for certainty, shall include its Subscribing Unsecured Creditor's Pro-Rata Share of the LPRI Subscription Amount) by the Funding Deadline; and (iv) the manner in which such deposit of the Subscription Amount must be completed. (b) At or before 2:00 p.m. (Calgary time) on the date that is five (5) Business Days prior to the Anticipated Implementation Date (or such other date as the Applicants, the Monitor and the Majority Initial Consenting Noteholders may agree) (the "Funding Deadline"), each Subscribing Unsecured Creditor shall deposit in escrow with the Monitor its respective Subscription Amount; provided, however, that this obligation shall not apply in respect of a Backstopper who has delivered to the Applicants cash or a letter of credit in accordance with the terms and conditions of the Backstop Agreement. (c) A Subscribing Unsecured Creditor (other than a Backstopper who has delivered to the Applicants cash or a letter of credit in accordance with the terms and conditions of the Backstop Agreement) who does not deposit its full Subscription Amount in escrow with D-22 the Monitor at or before the Funding Deadline shall thereupon cease to be an Subscribing Unsecured Creditor, and its subscription for LPRC Preferred Shares and LPRI Multiple Voting Common Shares pursuant to the New Investment Subscription Privilege and right to receive LPRC Preferred Shares and LPRI Multiple Voting Common Shares shall be null and void; provided, however that nothing in this Section 4.5(c) shall relieve such Subscribing Unsecured Creditor from liability to the Applicants, the Backstoppers or any other Person for failing to complete its subscription. (d) At least five (5) Business Days prior to the Anticipated Implementation Date (or such other date as the Applicants, the Monitor and the Majority Initial Consenting Noteholders may agree), the Applicants shall provide the Monitor with a copy of the Backstop Agreement (including any Backstop Joinders). (e) As soon as practicable following the Funding Deadline, and in any event on the date that is four (4) Business Days prior to the Anticipated Implementation Date (or such other date as the Applicants, the Monitor and the Majority Initial Consenting Noteholders may agree), the Monitor shall inform the Applicants and each Backstopper of: (i) the total number of LPRC Preferred Shares (and corresponding LPRI Multiple Voting Common Shares) not validly subscribed for pursuant to the Subscription Privilege (the "Backstopped Shares"); and (ii) the number of Backstopped Shares to be acquired by such Backstop Party pursuant to its Backstop Commitment and the amount of funds (by way of cash or a letter of credit) required to be deposited with the Monitor by such party to purchase such Backstopped Shares (the "Backstop Payment Amount") by the Backstop Funding Deadline. (f) At or before 2:00 p.m. (Calgary time) on the date that is two (2) Business Days prior to the Anticipated Implementation Date (or such other date as the Applicants, the Monitor and the Majority Initial Consenting Noteholders may agree) (the "Backstop Funding Deadline"), each Backstopper shall, if it has not already delivered to the Applicants cash or a letter of credit in accordance with the terms and conditions of the Backstop Agreement, deposit in escrow with the Monitor funds in an amount equal to its Backstop Payment Amount, in each case to be held in escrow in accordance with the Backstop Agreement until all conditions to the New Investment and this Plan have been satisfied or waived in accordance with the Backstop Agreement and this Plan and with irrevocable instructions to use such cash or letter of credit, as applicable, to the extent required to enable such Backstop Party to comply with its Backstop Commitment. (g) Each Subscribing Unsecured Creditor who complies with Section 4.5(b) shall participate in the New Investment and shall subscribe for that number of LPRC Preferred Shares and LPRI Multiple Voting Common Shares in an amount equal to the Subscription Amount deposited in escrow with the Monitor by that Subscribing Unsecured Creditor in accordance with Section 4.5(b) divided by the Issue Price. (h) Each Backstopper shall purchase its Backstopper's Pro Rata Share of the Backstopped Shares in accordance with the Backstop Agreement such that the New Investment is completed and fully paid to the Applicants. D-23 (i) 4.6 4.7 Within three (3) Business Days following the earlier of termination of the Backstop Agreement or the Plan Implementation Date, to the extent not required to enable a Backstopper to comply with its Backstop Commitment, the Applicants will return to each Backstopper the cash deposit (or, as applicable, such portion thereof as may remain after its application towards the Backstop Payment Amount) or the letter of credit (or, as applicable, such portion thereof as may be undrawn after payment of the Backstop Payment Amount) provided by that Backstopper to the Applicants pursuant to the Backstop Agreement and Section 4.5(f). Distributions of LPRC Preferred Shares and LPRI Multiple Voting Common Shares to Subscribing Unsecured Creditors (a) The distributions to be made to Subscribing Unsecured Creditors (including the Backstoppers) pursuant to Section 5.5 shall be made in accordance with Section 4.4, Section 4.5 and this Section 4.6. (b) On the Initial Distribution Date, upon receipt of and in accordance with a written direction of the Monitor prepared based on the information received by the Monitor in the New Investment Subscription Election Form, and as so directed by the Monitor, the Applicants shall register and deliver to the Subscribing Unsecured Creditors the applicable number of LPRC Preferred Shares and LPRI Multiple Voting Common Shares to be distributed to such Subscribing Unsecured Creditors. Cancellation of Certificates and Notes Following completion of the steps in the sequence set forth in Section 5.5, all notes (including the Notes and the Note Obligations), debentures, certificates, agreements, indentures, statements, bills, invoices, instruments or other documents representing or evidencing (or purporting to represent or evidence) Affected Claims or Equity Interests will not entitle any holder thereof or party thereto to any compensation or participation other than as expressly provided for in this Plan and will be cancelled and be null and void. Notwithstanding the foregoing, the Note Indenture shall remain in effect for the purpose of and to the extent necessary to: (i) allow the Note Indenture Trustee to make distributions to the Noteholders on the Initial Distribution Date; and (ii) maintain all of the protections the Note Indenture Trustee enjoys as against the Noteholders, including its rights with respect to any distributions under this Plan, until all distributions are made to Noteholders hereunder. For certainty, any and all obligations, including the Note Obligations, of the Applicants (as borrower, guarantor, surety or otherwise) under and with respect to the Notes and the Note Indenture shall not continue beyond the Plan Implementation Date. 4.8 Currency Unless specifically provided for in this Plan or the Sanction Order, for the purposes of distributions under this Plan, a Claim shall be denominated in Canadian dollars and all payments and distributions to the Affected Creditors on account of their Claims shall be made in Canadian dollars. Any Claims denominated in a foreign currency shall be converted to Canadian dollars at the Bank of Canada noon exchange rate in effect at the Filing Date. 4.9 Interest Interest shall not accrue or be paid on Affected Claims on or after the Filing Date, and no holder of an Affected Claim shall be entitled to interest accruing on or after the Filing Date. All accrued and unpaid D-24 interest outstanding on the Effective Date in respect of the Affected Claims will be settled and extinguished for no consideration. 4.10 Allocation of Distributions All distributions made pursuant to this Plan shall be allocated towards the repayment of the principal amount in respect of an Affected Claim. 4.11 Treatment of Undeliverable Distributions If any distribution to a Person under this Plan is returned as undeliverable (an "Undeliverable Distribution"), no further distributions to such Person shall be made unless and until the Applicants are notified by such Person of such Person's current address, at which time all such distributions shall be made to such Person. All claims for Undeliverable Distributions must be made on or before the date that is six (6) months following the final Distribution Date, after which date any entitlement with respect to such Undeliverable Distribution shall be forever released, discharged, cancelled and barred, without any compensation therefor, notwithstanding any federal, provincial, territorial, state or local laws to the contrary, at which time any such Undeliverable Distributions shall be returned to the Applicants. Nothing contained in this Plan shall require the Applicants, the Monitor or any other Person to attempt to locate any holder or intended recipient of an Undeliverable Distribution. No interest is payable in respect of an Undeliverable Distribution. Any distribution under this Plan on account of the Notes, if delivered to DTC in accordance with the provisions hereof, shall be deemed made when delivered to DTC for subsequent distribution to Noteholders in accordance with this Article 4. 4.12 Withholding Rights The Applicants, DTC, the Monitor and/or any other Person making a payment contemplated herein (each, a "Payor") shall be entitled to deduct and withhold from any distributions or other amounts payable to any Person such amounts as it is required, as determined in the Payor's discretion, acting reasonably, to deduct and withhold with respect to such payment under the Canadian Tax Act, corresponding provisions of provincial or territorial laws, the United States Internal Revenue Code of 1986, as amended or any other Applicable Laws. To the extent that amounts are so withheld or deducted, such withheld or deducted amounts shall be treated for all purposes hereof as having been paid to the Person in respect of which such withholding was made, provided that such amounts are actually remitted to the appropriate Taxing Authority. The Payor is authorized to sell or otherwise dispose of such portion of any non-cash consideration payable to any such Person as is necessary to provide the Payor with sufficient funds to enable it to comply with such deduction or withholding requirement or entitlement, and shall notify the applicable Person thereof and remit to such Person any unapplied balance of the net proceeds of such sale. If such sale is not reasonably possible, the Payor shall not be required to make any excess payment of consideration or other amounts until the Person has directly satisfied any such withholding obligation and provides evidence thereof to the Payor. 4.13 Fractional Interests No fractional interests in New Shares ("Fractional Interests") will be issued under this Plan. Recipients of New Shares of any class will have their entitlements adjusted downwards to the nearest whole number of New Shares of that class, as applicable, to eliminate any such Fractional Interests, and no compensation will be given for the Fractional Interest. For certainty, the LPRC Class A Voting Common Shares resulting from the consolidation of the then-issued LPRC Class A Voting Common Shares into an aggregate of three (3) LPRC Class A Voting Common Shares pursuant to Section 5.5(c)(vi) are not New Shares. D-25 4.14 Registration of New Shares Any New Shares issued pursuant to this Plan may, at the Applicants' option, be registered and issued (i) in certificated form or (ii) in book-entry form pursuant to a direct registration system without issuance of physical certificates. 4.15 Calculations All amounts of consideration to be received hereunder will be calculated to the nearest whole cent ($0.01). All calculations and determinations made by the Monitor and/or the Applicants for the purposes of and in accordance with this Plan, including, without limitation, the allocation of consideration, shall be conclusive, final and binding upon the Affected Creditors and the Applicants. 4.16 Share Terms The rights, privileges, restrictions and conditions attached to New Shares shall be as described herein, in the Information Circular and, as applicable, in the Plan Supplement Documents. ARTICLE 5 RECAPITALIZATION TRANSACTIONS 5.1 Corporate Actions The adoption, execution, delivery, implementation and consummation of all matters contemplated under this Plan involving corporate action of the Applicants will occur and be effective as of the Plan Implementation Date or in such other manner or time as may be expressly provided for in Section 5.5, and will be authorized and approved under this Plan and by the Court, where appropriate, as part of the Sanction Order, in all respects and for all purposes, without any requirement of further action by shareholders, members, directors, managers or officers of the Applicants. All necessary approvals of and from the shareholders, members, directors, managers or officers of the Applicants, as applicable (including all necessary resolutions, whether ordinary, special or otherwise, of the shareholders, members, directors, managers or officers of the Applicants, as applicable) to take all actions hereunder or contemplated hereby shall be deemed to have been made, given, passed or obtained; no agreement between or among the shareholders or members of any Applicant, 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 by this Plan, shall be effective, and all such agreements shall be deemed to be of no force or effect. 5.2 Issuance of Shares On the Plan Implementation Date, in accordance with the steps and sequence set forth in Section 5.5, LPRC and LPRI, as applicable, shall issue the Agreed Number in respect of each class of New Shares, all of which shall be allocated and distributed in the manner set forth in this Plan, as applicable, and upon distribution shall be deemed to be issued and outstanding as fully-paid and non-assessable shares of LPRC and LPRI, as applicable. 5.3 Backstop Amount On the Plan Implementation Date, in accordance with the Backstop Agreement and the steps and sequence set forth in Section 5.5, each Backstopper shall be paid its Backstopper's Pro-Rata Share of the D-26 Backstop Amount as additional consideration on the settlement of its Affected Unsecured Claim pursuant to Section 3.4(c)(iii). 5.4 Cash Pool On the Plan Implementation Date, in accordance with the steps and sequence set forth in Section 5.5, the Cash Pool will be created and each Cash Pool Creditor shall be paid its Cash Pool Creditor's Pro-Rata Share, provided that (i) no Cash Pool Creditor shall be entitled to receive an amount greater than its Affected Unsecured Claim as at the Filing Date and (ii) the aggregate amount of the Cash Pool shall not exceed the Distributable Amount. 5.5 Plan Implementation The following steps, compromises and releases to be effected on the implementation of this Plan shall occur, and be deemed to have occurred, in the following order in ten minute increments (or at such other times as may be agreed to by the Applicants and the Majority Initial Consenting Noteholders), without any further act or formality, on the Plan Implementation Date beginning at the Effective Time (or in such other manner or sequence or such other time or times as the Applicants, the Monitor and the Majority Initial Consenting Noteholders may agree), except that the dissolutions of Wiser Oil and Wiser Delaware pursuant to Sections 5.5(a) and 5.5(b), the amendments to the LPRC articles described in Section 5.5(c) and the issue by LPRC of one LPRC Class C Multiple Voting Share to LPRI pursuant to Section 5.5(d) may be completed prior to the Plan Implementation Date on a day or days to be agreed to by the Applicants and the Majority Initial Consenting Noteholders: Pre-Implementation Date Steps (a) upon the consent of LPRI, as sole member of Wiser Oil, Wiser Oil shall be dissolved and, in connection therewith, all shares or fractions of shares in the capital of LPRC then held by Wiser Oil and all other assets (if any) held by Wiser Oil shall be transferred to LPRI, and to the extent necessary LPRI shall be authorized to wind up the affairs of Wiser Oil; (b) upon the consent of LPRI, as sole member of Wiser Delaware (after giving effect to Section 5.5(a) above), Wiser Delaware shall be dissolved and, in connection therewith, all shares or fractions of shares in the capital of LPRC then held by Wiser Delaware and all other assets (if any) held by Wiser Delaware shall be transferred to LPRI, and to the extent necessary LPRI shall be authorized to wind up the affairs of Wiser Delaware; (c) the articles of LPRC shall be amended to: (i) convert all outstanding LPRC Class B Non-Voting Common Shares into LPRC Class A Voting Common Shares by changing the issued LPRC Class B NonVoting Common Shares into the same number of issued LPRC Class A Voting Common Shares; (ii) redesignate the LPRC Class A Voting Common Shares by changing the designation thereof to "Class A Voting Common Shares", and change the rights, privileges, restrictions and conditions thereof to be as described herein, in the Information Circular and, as applicable, in the Plan Supplement Documents; (iii) redesignate the LPRC Class B Non-Voting Common Shares by changing the designation thereof to "Class B Non-Voting Common Shares", and change the D-27 rights, privileges, restrictions and conditions of thereof to be as described herein, in the Information Circular and, as applicable, in the Plan Supplement Documents; (d) (iv) add a new class of shares to the authorized share capital of LPRC by creating a new class of shares, being the new LPRC Class C Multiple Voting Share, which class shall consist of one share designated as the "Class C Multiple Voting Share" having the rights, privileges, restrictions and conditions described herein, in the Information Circular and, as applicable, in the Plan Supplement Documents; (v) add a new class of shares to the authorized share capital of LPRC, being the new LPRC Preferred Shares, which class shall consist of an unlimited number of shares designated as "Preferred Shares" having the rights, privileges, restrictions and conditions described herein, in the Information Circular and, as applicable, in the Plan Supplement Documents; and (vi) consolidate the issued LPRC Class A Voting Common Shares by changing all of the issued and outstanding LPRC Class A Voting Common Shares (including, for certainty, the LPRC Class A Voting Common Shares resulting from the conversion of the LPRC Class B Non-Voting Common Shares into the same number of issued LPRC Class A Voting Common Shares pursuant to Section 5.5(c)(i) above) into an aggregate of three (3) LPRC Class A Voting Common Shares; LPRC shall issue one LPRC Class C Multiple Voting Share to LPRI in consideration for LPRI agreeing to issue the LPRI Class A Voting Common Shares pursuant to Section 5.5(j)(ii); Plan Implementation Date Pre-Distribution Steps (e) all Options shall be cancelled and terminated without any liability, payment or other compensation in respect thereof; (f) all Option Plans shall be terminated and be of no further force or effect; (g) the Rights Agreement shall be terminated and be of no further force or effect; (h) all accrued and unpaid interest in respect of the Affected Claims shall be settled and extinguished for no consideration; (i) the certificate of incorporation of LPRI shall be amended to: (i) add a new class of shares to the authorized capital stock of LPRI by creating a new class of shares, being the new LPRI Class A Common Shares, which class shall consist of shares designated as "Class A Common Shares" having the rights, privileges, restrictions and conditions described herein, in the Information Circular and, as applicable, in the Plan Supplement Documents; and (ii) add a new class of shares to the authorized capital stock of LPRI by creating a new class of shares, being the new LPRI Multiple Voting Common Shares, D-28 which class shall consist of shares designated as "Class B Multiple Voting Shares" having the rights, privileges, restrictions and conditions described herein, in the Information Circular and, as applicable, in the Plan Supplement Documents; Distribution Steps for Affected Unsecured Creditors (other than Cash Pool Creditors) (j) each Affected Unsecured Creditor (excluding any Cash Pool Creditors) shall and shall be deemed to irrevocably exchange and transfer its Affected Unsecured Claim, and all of its rights in, to and under such Affected Unsecured Claim, in consideration for: (i) the issuance by LPRC to each such Affected Unsecured Creditor of such number of LPRC Class A Voting Common Shares as is equal to its Affected Unsecured Creditor's Pro-Rata Share of the Agreed Number of LPRC Class A Voting Common Shares to be issued pursuant to this Section 5.5, and each such Affected Unsecured Creditor shall be added to the register of shareholders of the LPRC Class A Voting Common Shares; (ii) the issuance by LPRI of one LPRI Class A Voting Common Share to such Affected Unsecured Creditor for each LPRC Class A Voting Common Share issued to that Affected Unsecured Creditor pursuant to (i) immediately above, and each such Affected Unsecured Creditor shall be added to the register of shareholders of the LPRI Class A Voting Common Shares; and (iii) in respect of any Affected Unsecured Creditor that is a Backstopper, the payment by LPRC to each such Affected Unsecured Creditor of its Backstopper's Pro-Rata Share of the Backstop Amount; Cancellation of Equity Claims and Equity Interests (k) the Existing Parent Shares and all other remaining Equity Interests in LPRI (other than the LPRI Class A Common Shares and the LPRI Multiple Voting Common Shares created and issued pursuant to this Plan) shall be cancelled without any repayment of capital thereon or any other compensation therefor and, for certainty, no Existing Shareholder shall be entitled to receive any interest, dividends, premium or other payment in connection therewith; Distribution Steps for Parties Electing to Participate in the New Investment (l) the Applicants shall become entitled to the total amount of funds deposited in escrow with the Monitor in respect of Subscription Amounts or by Backstoppers pursuant to Section 4.5, and all such funds shall be released from escrow, paid to the Applicants and applied towards payment of the subscription price for the LPRC Preferred Shares and LPRI Multiple Voting Common Shares; (m) any funds delivered to the Applicants by a Backstopper pursuant to the Backstop Agreement, or obtained by the Applicants by drawing upon any letter of credit so delivered to the Applicants by a Backstopper, shall, if the total funds released from escrow and paid to the Applicants pursuant to Section 5.5(l) are: D-29 (i) less than the New Investment Amount, to the extent of such deficiency, be paid to the Applicants and applied towards payment of the subscription price for the LPRC Preferred Shares and the LPRI Multiple Voting Common Shares, and the balance shall be returned to the Backstoppers in accordance with the terms and conditions of the Backstop Agreement; or (ii) at least equal to the New Investment Amount and the LPRI Subscription Amount, be returned to the Backstoppers in accordance with the terms and conditions of the Backstop Agreement; and any undrawn letters of credit delivered to the Applicants by a Backstopper pursuant to the Backstop Agreement shall be returned to the applicable Backstopper in accordance with the provisions hereof; (n) LPRC shall issue to each Subscribing Unsecured Creditor, such number of LPRC Preferred Shares as is equal to its Subscribing Unsecured Creditor's Pro-Rata Share of the Agreed Number of LPRC Preferred Shares, and each such Subscribing Unsecured Creditor shall be added to the register of shareholders of the LPRC Preferred Shares; (o) LPRI shall issue to each Subscribing Unsecured Creditor, such number of LPRI Multiple Voting Common Shares as is equal to its Subscribing Unsecured Creditor's Pro-Rata Share of the Agreed Number of LPRI Multiple Voting Common Shares, and each such Subscribing Unsecured Creditor shall be added to the register of shareholders of the LPRI Multiple Voting Common Shares; (p) the New Credit Facility shall become effective, and LPRC shall be entitled, in accordance with the terms and conditions thereof, to borrow funds thereunder; (q) LPRC shall pay in full to the DIP Lenders all amounts owed pursuant to the DIP Agreement in full and final satisfaction of the DIP Facility; (r) the DIP Agreement and the DIP Facility shall be deemed to be terminated and the Applicants, and each of them, shall be fully, finally, irrevocably and forever released from any and all claims, liabilities or obligations of any kind to the DIP Lenders under or in respect of the DIP Agreement or the DIP Facility; (s) LPRC shall pay in full to the Agent all amounts owed pursuant to the Current Credit Agreement in full and final satisfaction of the Current Credit Facility; (t) the Current Credit Agreement and the Current Credit Facility shall be deemed to be terminated and the Applicants, and each of them, shall be fully, finally, irrevocably and forever released from any and all claims, liabilities or obligations of any kind to the Agent, the Syndicate or any lender forming part of the Syndicate under or in respect of the Current Credit Agreement or the Current Credit Facility; (u) the Current Bank Security shall be deemed to be terminated, released and discharged; (v) LPRC shall pay to each Cash Pool Creditor the amount of cash from the Cash Pool to be paid to it in accordance with Section 3.4 and Section 4.1 in full, final and irrevocable compromise, settlement and satisfaction of the Affected Unsecured Claims of the Cash Pool Creditors; D-30 5.6 (w) except only for the limited purpose of facilitating the distributions under this Plan, all Affected Claims, and all of the Affected Creditors' entitlements with respect to any Affected Claims, shall be, and shall be deemed to be, fully, finally, irrevocably and forever compromised, settled, released, discharged, extinguished, cancelled and barred, and the Applicants, and each of them, shall be fully, finally and irrevocably released from any and all claims, liabilities or obligations of any kind to an Affected Creditor; (x) the Disputed Distribution Claims Reserve shall be created; (y) LPRC shall pay in cash all reasonable fees and expenses incurred by the Note Indenture Trustee, including its reasonable legal fees, in connection with the performance of its duties under the Note Indenture or this Plan; (z) LPRC shall make all distributions to KERP participants in accordance with the terms of the KERP; (aa) LPRC shall pay all reasonable fees and disbursements of the Company Advisors, the Monitor and the Monitor Advisors to the extent not already satisfied by the Applicants; (bb) LPRC shall pay all reasonable fees and disbursements of the Noteholder Advisors to the extent not already satisfied by the Applicants; (cc) each of the Charges shall be terminated, discharged and released; (dd) the releases set forth in Article 7 shall become effective; and (ee) the appointment of the Post-Implementation Boards shall become effective, and each member thereof shall thereupon become a director of LPRC and/or LPRI, as applicable. Securities Law Matters The Applicants intend that the issuance and distribution, pursuant to this Plan, of: (a) the new LPRC Class A Voting Common Shares and the new LPRI Class A Voting Common Shares in exchange for Affected Unsecured Claims (including, in the case of each Noteholder, its Affected Unsecured Claim in respect of the guarantee by LPRI of the Notes) will be exempt from the registration requirements of the U.S. Securities Act, to the extent applicable, pursuant to one or more of section 3(a)(9) and section 3(a)(10) thereof; (b) the new LPRC Preferred Shares and the new LPRI Multiple Voting Common Shares will be exempt from the registration requirements of the U.S. Securities Act, to the extent applicable, pursuant to section 4(a)(2) thereof or Regulation D promulgated thereunder; and (c) the New Shares will be exempt from the prospectus requirements of Canadian securities legislation, to the extent applicable, pursuant to section 2.11 of National Instrument 45106 – Prospectus and Registration Exemptions of the Canadian Securities Administrators. D-31 The certificates for the New Shares will bear such legends regarding resale restrictions as are described in the Information Circular or the Plan Supplement Documents. Upon the granting of the Sanction Order, any Person named or referred to in this Plan, and the heirs, administrators, executors, legal personal representatives, successors and assigns of any such Person, shall act in good faith to ensure the intended treatment of the issuance and distribution of the New Shares set forth in this Section 5.6. 5.7 Issuances Free and Clear Any securities or other consideration issued, transferred or distributed pursuant to this Plan will be issued, transferred or distributed free and clear of any Encumbrances. 5.8 Stated Capital Accounts The stated capital accounts maintained for each class of New Shares and any adjustments thereto as a result of the transactions provided in this Plan, including the steps set forth in Section 5.5, will be as determined by the applicable Post-Implementation Board in accordance with the requirements of the Applicable Law. 5.9 Governmental and Regulatory Filings In furtherance of the transactions provided in this Plan, including the steps set forth in Section 5.5, the Applicants are authorized to file with all applicable Governmental Entities, pursuant to the ABCA, the Delaware General Corporation Law, the Delaware Limited Liability Company Act, U.S. federal securities laws, applicable Canadian securities legislation and all other Applicable Laws, all such forms, certificates, applications, returns, statements or other records as are necessary or appropriate to record such transactions. 5.10 Proceeds from Legal Proceedings If LPRI shall at any time after the Plan Implementation Date receive payment of any amount pursuant to any legal proceedings commenced by LPRI, by LPRC or by LPRI on behalf of LPRC in respect of a cause of action arising prior to the Effective Time, or in settlement of any such proceedings, LPRI shall receive such payment in trust for the benefit of LPRC and shall promptly remit the same to LPRC. ARTICLE 6 PROCEDURE FOR DISPUTED DISTRIBUTION CLAIMS 6.1 No Distribution Pending Allowance An Affected Unsecured Creditor holding a Disputed Distribution Claim will not be entitled to receive a distribution under this Plan in respect of such Disputed Distribution Claim or any portion thereof unless and until, and then only to the extent that, such Disputed Distribution Claim becomes an Allowed Unsecured Claim. 6.2 Distributions After Disputed Distribution Claims Resolved (a) Distributions in relation to a Disputed Distribution Claim of an Affected Unsecured Creditor will be held by the Applicants, in a segregated account constituting the Disputed Distribution Claims Reserve, for the benefit of the Affected Unsecured Creditors with Allowed Affected Unsecured Creditor Claims until the final determination of the D-32 Disputed Distribution Claim in accordance with the Claims Procedure Order and this Plan. (b) To the extent that any Disputed Distribution Claim becomes an Allowed Affected Unsecured Claim in accordance with this Plan, the Applicants shall distribute (on the next Distribution Date) to the holder of such Allowed Affected Unsecured Claim, the distribution from the Disputed Distribution Claims Reserve equal to the distribution that such Affected Unsecured Creditor would have been entitled to receive in respect of its Allowed Affected Unsecured Claim on the Initial Distribution Date had such Disputed Distribution Claim been an Allowed Affected Unsecured Claim on such date. (c) On the date that all Disputed Distribution Claims have been finally resolved in accordance with the Claims Procedure Order and any required distributions contemplated in Section 6.2(b) have been made, LPRC shall release to LPRI or LPRC any cash or New Shares held in the Disputed Distribution Claims Reserve, as the case may be. ARTICLE 7 RELEASES 7.1 Plan Releases On the Plan Implementation Date, in accordance with the sequence set forth in Section 5.5, the Applicants, the Directors, the Officers, the Monitor, the Note Indenture Trustee, the Consenting Creditors, the Backstoppers, the Agent, the Syndicate, the Company Advisors, the Noteholder Advisors and the Monitor Advisors, and their respective directors, officers, partners and employees (the "Released Parties", and individually a "Released Party"), and each of them, shall be released and forever discharged from any and all demands, claims, actions, 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 any liability, obligation, demand or cause of action of whatever nature, including claims for contribution or indemnity, which any Creditor or other Person may be entitled to assert (including pursuant to common law or statutory liabilities of directors, officers, managers or members of any of the Applicants), whether known or unknown, matured or unmatured, direct, indirect or derivative, foreseen or unforeseen, existing or hereafter arising, based in whole or in part on any act, omission, transaction, duty, responsibility, indebtedness, liability, obligation, conduct, dealing or other occurrence existing or taking place on or prior to the later of the Plan Implementation Date and the date on which actions are taken to implement this Plan, that are in any way relating to, arising out of or in connection with the Affected Claims, the Note Indenture, the Current Credit Agreement, the Current Credit Facility, the Equity Interests, any Equity Claims, the Support Agreement, any Support Joinder, the Backstop Agreement, any Backstop Joinder, the New Shares, any Claims, the business and affairs of the Applicants whenever or however conducted, the administration and/or management of the Applicants, the Recapitalization, this Plan, the CCAA Proceeding, the U.S. Proceeding, or any matter or transaction involving any of the Applicants done, occurring or undertaken in connection with the Recapitalization or this Plan (referred to collectively as the "Released Claims"), and all Released Claims shall be fully, finally, irrevocably and forever waived, discharged, released, cancelled and barred as against the Released Parties, all to the fullest extent permitted by Applicable Law; provided that nothing herein will release or discharge (w) the right to enforce the obligations of any Person under this Plan, (x) any Released Party if the Released Party is determined by a Final Order of a court of competent jurisdiction to have committed fraud or wilful misconduct, (y) the Applicants 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 (z) any Director or Officer from any D-33 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. 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 connection with (x) or (z) above if such Person has first obtained leave of the Court on notice to the applicable Released Party, the Applicants, the Monitor (unless previously discharged), the Initial Consenting Noteholders and any applicable insurers. 7.2 Injunctions All Persons are permanently and forever barred, estopped, stayed and enjoined, on and after the Effective Time, with respect to any and all Released Claims, from: (i) commencing, conducting or continuing in any manner, directly or indirectly, any action, suits, demands or other proceedings of any nature or kind whatsoever (including, without limitation, any proceeding in a judicial, arbitral, administrative or other forum) against the Released Parties; (ii) enforcing, levying, attaching, collecting or otherwise recovering or enforcing by any manner or means, directly or indirectly, any judgment, award, decree or order against the Released Parties or their property; (iii) commencing, conducting or continuing in any manner, directly or indirectly, any action, suits or demands, including without limitation, by way of contribution or indemnity or other relief, in common law, or in equity, breach of trust or breach of fiduciary duty or under the provisions of any statute or regulation, or other proceedings of any nature or kind whatsoever (including any proceeding in a judicial, arbitral, administrative or other forum) against any Person who makes such a claim or might reasonably be expected to make such a claim, in any manner or forum, against one or more of the Released Parties; (iv) creating, perfecting, asserting or otherwise enforcing, directly or indirectly, any lien or Encumbrance of any kind against the Released Parties or their property; or (v) taking any actions to interfere with the implementation or consummation of this Plan; provided, however, that the foregoing shall not apply to the enforcement of any obligations under this Plan. ARTICLE 8 COURT SANCTION 8.1 Application for Sanction Order If the Required Majorities approve this Plan, the Applicants shall apply for the Sanction Order on or before the date set for the hearing of the Sanction Order or such later date as the Court may set. 8.2 Sanction Order The Sanction Order shall, among other things: (a) declare that (i) this Plan has been approved by the Required Majorities in conformity with the CCAA; (ii) the activities of the Applicants have been in material compliance with the provisions of the CCAA and the Orders of the Court made in the CCAA Proceeding in all respects; (iii) the Court is satisfied that the Applicants have not done or purported to do anything that is not authorized by the CCAA; and (iv) this Plan and the transactions contemplated thereby are fair and reasonable; (b) declare that as of the Effective Time, this Plan and all associated steps, compromises, transactions, arrangements, releases and reorganizations effected thereby are approved, binding and effective as herein set out upon and with respect to the Applicants, all Affected Creditors, the Directors and Officers, the Released Parties and all other Persons named or referred to in, or subject to, this Plan; D-34 (c) declare that the steps to be taken and the compromises and releases to be effective on the Plan Implementation Date are deemed to occur and be effected in the sequence and at the times set forth in Section 5.5; (d) confirm the amount of the Disputed Distribution Claims Reserve; (e) compromise, discharge and release the Applicants from any and all Affected Claims of any nature in accordance with this Plan, and declare that the ability of any Person to proceed against the Applicants or any of the Released Parties in respect of or relating to any Affected Claims shall be forever discharged and restrained, and 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 this Plan in respect of their Affected Claims; (f) declare that all Existing Parent Shares and other Equity Interests are fully, finally and irrevocably cancelled; (g) declare certain Affected Claims to be Equity Claims; (h) declare that, subject to performance by the Applicants of their obligations under this Plan and except as provided in this Plan, all obligations, agreements or leases to which any of the Applicants is a party on the Plan Implementation Date shall be and remain in full force and effect, unamended, as at the Plan Implementation Date and no party to any such obligation or agreement shall on or following the Plan Implementation Date, accelerate, terminate, refuse to renew, rescind, refuse to perform or otherwise disclaim or resiliate its obligations thereunder, or enforce or exercise (or purport to enforce or exercise) any right or remedy under or in respect of any such obligation or agreement, by reason: (i) (i) of any event which occurred prior to, and not continuing after, the Plan Implementation Date, or which is or continues to be suspended or waived under this Plan, which would have entitled any other party thereto to enforce those rights or remedies; (ii) that the Applicants have sought or obtained relief or have taken steps as part of this Plan or under the CCAA; (iii) of any default or event of default arising as a result of the financial condition or insolvency of the Applicants; (iv) of the effect upon the Applicants of the completion of any of the transactions contemplated under this Plan; or (v) of any compromises, settlements, restructurings, reorganizations effected pursuant to this Plan; recapitalizations or barring, stopping, staying and enjoining the 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 hereof; D-35 (j) declare that section 36.1 of the CCAA, sections 95 to 101 of the BIA and any other federal or provincial law relating to preferences, fraudulent conveyances or transfers at undervalue, shall not apply to the Plan or to any payments, distributions, transfers, allocations or transactions made or completed in connection with the Recapitalization, whether before or after the Filing Date, including, without limitation, to any and all of the payments, distributions, transfers, allocations or transactions contemplated by and to be implemented pursuant to this Plan; (k) authorize the Monitor to perform its functions and fulfil its obligations under this Plan to facilitate the implementation of this Plan; (l) declare that upon completion by the Monitor of its duties in respect of the Applicants pursuant to the CCAA and the Orders, the Monitor may file with the Court a certificate stating that all of its duties in respect of the Applicants pursuant to the CCAA and the Orders have been completed and thereupon, PricewaterhouseCoopers Inc. shall be deemed to be discharged from its duties as Monitor of the Applicants and released of all claims relating to its activities as Monitor; (m) subject to payment of any amounts secured thereby, declare that each of the Charges shall be terminated, discharged and released; (n) declare that the Applicants and the Monitor may apply to the Court for advice and direction in respect of any matters arising from or under this Plan; (o) authorizing and empowering LPRC to seek the recognition of the Sanction Recognition Order; and (p) declare the Persons to be appointed to the board of directors of LPRI and LPRC on the Plan Implementation Date shall be the Persons on a certificate to be filed with the Court by the Applicants prior to the Plan Implementation Date. ARTICLE 9 CONDITIONS PRECEDENT AND IMPLEMENTATION 9.1 Conditions Precedent to Implementation of this Plan The implementation of this Plan shall be conditional upon satisfaction or waiver of the following conditions prior to or at the Effective Time, each of which is for the benefit of the Applicants and the Initial Consenting Noteholders, collectively, and may be waived only by the Applicants and the Majority Initial Consenting Noteholders, collectively; provided, however, that such conditions shall not be enforceable by the Applicants or the Initial Consenting Noteholders if any failure to satisfy such conditions results from an action, error, omission by or within the control of the party seeking enforcement: Plan Approval Matters (a) this Plan shall have been approved by the Required Majorities and the Court, in each case in a form consistent with the Support Agreement or otherwise acceptable to the Applicants and the Majority Initial Consenting Noteholders; D-36 (b) the Sanction Order: (i) shall have been made prior to January 17, 2014 (or such later date as the Applicants, the Agent and the Majority Initial Consenting Noteholders may agree); (ii) shall be in a form consistent with the Plan and the Support Agreement or otherwise acceptable to the Applicants and the Majority Initial Consenting Noteholders; and (iii) shall have become a Final Order; (c) the Sanction Recognition Order: (i) shall have been made prior to January 31, 2014 (or such later date as the Applicants, the Agent and the Majority Initial Consenting Noteholders may agree); (ii) shall be in a form consistent with the Sanction Order, the Plan and the Support Agreement and otherwise acceptable to the Applicants and the Majority Initial Consenting Noteholders; and (iii) shall have become a Final Order; (d) all filings under Applicable Laws that are required in connection with the Recapitalization shall have been made, and any regulatory consents or approvals that are required in connection with the Recapitalization shall have been obtained and, in the case of waiting or suspensory periods, such waiting or suspensory periods shall have expired or been terminated; (e) there shall not be in effect any preliminary or final decision, order or decree by a Governmental Entity, no application shall have been made to any Governmental Entity, and no action or investigation shall have been announced, threatened or commenced by any Governmental Entity, in consequence of or in connection with the Plan and the Recapitalization that restrains, impedes or prohibits (or if granted could reasonably be expected to restrain, impede or prohibit) the implementation of the Plan and the Recapitalization or any material part thereof or requires or purports to require a variation of the Plan; Support and Backstop Agreement Matters (f) all conditions set out in the Support Agreement and the Backstop Agreement shall have been satisfied or waived by the applicable parties pursuant to the terms of the Support Agreement and the Backstop Agreement, as applicable; (g) the Majority Initial Consenting Noteholders shall be satisfied that no "change of control" payments or similar payments or compensation will be payable to any officer of any of the Applicants solely as a result of the Recapitalization; (h) the Support Agreement shall not have been terminated in accordance with its terms; (i) the Backstop Agreement shall not have been terminated in accordance with its terms; LPRC and LPRI Matters (j) the form of amended articles of LPRC and amended certificate of incorporation of LPRI, respectively, to become effective in connection with the implementation of the Plan shall be acceptable to the Applicants and the Majority Initial Consenting Noteholders; (k) the number and terms of the New Shares to be issued pursuant to this Plan shall be acceptable to the Applicants, the Monitor and the Majority Initial Consenting Noteholders; D-37 (l) the composition of the Post-Implementation Boards shall be consistent with the Support Agreement and acceptable to the Applicants and the Majority Initial Consenting Noteholders; (m) the Applicants and the Majority Initial Consenting Noteholders shall have agreed on the terms of a share incentive plan pursuant to which there shall be reserved for issuance, after the Plan Implementation Date, to management and employees of LPRC and LPRI, such number of shares of the Applicants as are agreed to by the Applicants and the Majority Initial Consenting Noteholders, which reserved shares shall, for certainty, be in addition to the New Shares issued on the Plan Implementation Date; (n) except as expressly set out in or contemplated by this Plan or the Orders, or as consented to by the Majority Initial Consenting Noteholders, neither LPRC nor LPRI shall have, since the Filing Date: (i) issued or authorized the issuance of any shares, notes, options, warrants or other securities of any kind (other than Existing Parent Shares), (ii) become subject to any new Encumbrance with respect to its property; (iii) become liable to pay any new material indebtedness or liability of any kind; or (iv) entered into any material agreement; (o) any securities that are created in connection with the Plan, including the New Shares, when issued and distributed pursuant to the Plan, shall be duly authorized, validly issued and fully paid and non-assessable, and the issuance and distribution thereof shall be exempt from the registration requirements of the U.S. Securities Act and the prospectus requirements of Canadian provincial and territorial securities legislation; (p) LPRC shall not be a reporting issuer (or equivalent) under the securities legislation of any province or territory of Canada; Plan Matters (q) the aggregate amount of Disputed Distribution Claims Reserve shall be acceptable to the Applicants, the Monitor and the Majority Initial Consenting Noteholders and shall have been confirmed in the Sanction Order; (r) the Applicants, the Monitor and the Majority Initial Consenting Noteholders, each acting reasonably, shall be satisfied with the proposed use of proceeds and payments to be made pursuant to or in connection with the Recapitalization and the Plan (except as expressly set out in or contemplated by this Plan or the Orders), including, without limitation, consent fees, transaction fees, third party fees payable by any of the Applicants to any Person (other than a Governmental Entity) or amounts payable pursuant to any employment agreement or incentive plan of any of the Applicants; (s) the transaction steps required to complete and implement the Plan shall be in form and in substance satisfactory to the Applicants and Majority Initial Consenting Noteholders; (t) any and all Court-imposed charges on any assets, property or undertaking of the Applicants, including the Charges, shall be discharged on the Plan Implementation Date on terms acceptable to the Applicants and the Majority Initial Consenting Noteholders; D-38 9.2 (u) the Plan Implementation Date shall have occurred no later than February 15, 2014 (or such later date as the Applicants, the Agent and the Majority Initial Consenting Noteholders may agree); (v) the Applicants shall have made arrangements for the payment in full of all amounts owing by the Applicants under or in respect of the Current Credit Facility and the Current Credit Agreement and the discharge of the Current Bank Security on implementation of the Plan; (w) funds in an aggregate amount equal to the New Investment Amount shall have been deposited in escrow with the Monitor pursuant to Section 4.5 or delivered to the Applicants by a Backstopper pursuant to the Backstop Agreement, or available to the Applicants by drawing upon any letter of credit delivered to the Applicants by a Backstopper pursuant to the Backstop Agreement; (x) LPRC shall have obtained the New Credit Facility on terms acceptable to the Applicants and the Majority Initial Consenting Noteholders; (y) all fees and expenses owing to the Company Advisors, the Noteholder Advisors and the Indenture Trustee shall have been paid as of the Plan Implementation Date, and the Applicants and the Majority Initial Consenting Noteholders shall be satisfied that adequate provision has been made for any fees and expenses due or accruing due to the Company Advisors and the Noteholder Advisors from and after the Plan Implementation Date; and (z) there shall not have occurred after the Filing Date a Material Adverse Change (as that term is defined in the Support Agreement). Monitor's Certificate Upon delivery of written notice from the Applicants and the Majority Initial Consenting Noteholders of the satisfaction or waiver of the conditions set forth in Section 9.1, the Monitor shall forthwith deliver to the Applicants and Goodmans LLP a certificate stating that the Plan Implementation Date has occurred and that this Plan is effective in accordance with its terms and the terms of the Sanction Order. As soon as practicable following the Plan Implementation Date, the Monitor shall file such certificate with the Court. ARTICLE 10 GENERAL 10.1 Binding Effect This Plan will become effective on the Plan Implementation Date. On the Plan Implementation Date: (a) the treatment of Affected Claims and Released Claims under this Plan shall be final and binding for all purposes and shall be binding upon and enure to the benefit of the Applicants, the Released Parties, all Affected Creditors, any Person having a Released Claim and all other Persons named or referred to in, or subject to, this Plan and their respective heirs, executors, administrators and other legal representatives, successors and assigns; D-39 10.2 (b) all Affected Claims shall be forever discharged and released, excepting only the obligations in the manner and to the extent provided for in this Plan; (c) all Released Claims shall be forever discharged and released; (d) each Affected Creditor and each Person holding a Released Claim shall be deemed to have consented and agreed to all of the provisions of this Plan, in its entirety; and (e) each Affected Creditor and each Person holding a Released Claim shall be deemed to have executed and delivered to the Applicants and any other Related Parties, as applicable, all consents, releases, assignments and waivers, statutory or otherwise, required to implement and carry out this Plan in its entirety. Waiver of Defaults From and after the Plan Implementation Date, all Persons shall be deemed to have waived any and all defaults of the Applicants then existing or previously committed by the Applicants, or caused by the Applicants, by any of the provisions in this Plan or steps contemplated in this Plan, or non-compliance with any covenant, warranty, representation, term, provision, condition or obligation, expressed or implied, in any contract, instrument, credit document, indenture, note, lease, guarantee, agreement for sale or other agreement, written or oral, and any and all amendments or supplements thereto, existing between such Person and the Applicants and any and all notices of default and demands for payment or any step or proceeding taken or commenced in connection therewith under any such agreement shall be deemed to have been rescinded and of no further force or effect, provided that nothing shall be deemed to excuse the Applicants from performing their obligations under this Plan or be a waiver of defaults by the Applicants under this Plan and the related documents. 10.3 Deeming Provisions In this Plan, the deeming provisions are not rebuttable and are conclusive and irrevocable. 10.4 Non-Consummation; Exclusion from this Plan (a) The Applicants reserve the right to revoke or withdraw this Plan at any time prior to the Plan Implementation Date. If the Applicants revoke or withdraw this Plan, or if the Sanction Order is not issued, or if the Plan Implementation Date does not occur, (i) this Plan shall be null and void in all respects, (ii) any settlement or compromise embodied in this Plan, including the fixing or limiting to an amount certain any Claim, and any document or agreement executed pursuant to this Plan, shall be deemed null and void, and (iii) nothing contained in this Plan, and no acts taken in preparation for consummation of this Plan, shall (A) constitute or be deemed to constitute a waiver or release of any Claims by or against the Applicants or any other Person, (B) prejudice in any manner the rights of the Applicants or any other Person in any further proceedings involving the Applicants, or (C) constitute an admission of any sort by the Applicants or any other Person. (b) At any time prior to the Plan Implementation Date, with (i) the consent of the Majority Initial Consenting Noteholders, or (ii) an Order of the Court, LPRC may exclude any one or more of the other Applicants (other than LPRC) from this Plan and proceed with this Plan, which will thereafter be applicable to LPRC and any remaining Applicants only. Forthwith after obtaining such consent of the Majority Initial Consenting Noteholders or D-40 such an Order of the Court, LPRC will: (x) if LPRC is proceeding by way of consent from the Majority Initial Consenting Noteholders, file a notice regarding the exclusion of any excluded Applicant(s) with the Court, (y) post the notice on the Website, and (z) send a copy of the notice by regular pre-paid mail to all Affected Creditors of the excluded Applicant(s). If one or more Applicant(s) is so excluded, this Plan will be read and interpreted in all respects as if such Applicant(s), and all Claims against such Applicant(s) are unaffected by this Plan, and Section 10.4(a) of this Plan will apply to such excluded Applicant(s) and all Creditors thereof mutatis mutandis. 10.5 10.6 Modification of this Plan (a) The Applicants reserve the right, at any time and from time to time, to amend, restate, modify and/or supplement this Plan, but only with the consent of the Majority Initial Consenting Noteholders; provided that the Agent must be satisfied with any such amendment, restatement, modification and/or supplement that affects the treatment of Syndicate Claims under this Plan in any material respect; and provided further that any such amendment, restatement, modification or supplement must be contained in a written document which is filed with the Court and (i) if made prior to or at the Meetings, communicated to the Affected Creditors; and (ii) subject to Section 10.5(b), if made following the Meetings, approved by the Court. (b) Notwithstanding Section 10.5(a), any amendment, restatement, modification or supplement may be made by the Applicants with the consent of the Monitor and the Majority Initial Consenting Noteholders, without further Court Order or approval, provided that it concerns a matter which, in the opinion of the Applicants, the Monitor and the Majority Initial Consenting Noteholders, each acting reasonably, is of an administrative nature required to better give effect to the implementation of this 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 Unsecured Creditors. (c) Any amended, restated, modified or supplementary plan or plans of compromise filed with the Court and, if required by this section, approved by the Court, shall, for all purposes, be and be deemed to be a part of and incorporated in this Plan. Majority Initial Consenting Noteholders For the purposes of this Plan, the Applicants shall be entitled to rely on written confirmation from Goodmans LLP that the Majority Initial Consenting Noteholders have agreed to, waived, consented to or approved a particular matter. Goodmans LLP shall be entitled to rely on a communication in any form acceptable to Goodmans LLP, in its sole discretion, from any Initial Consenting Noteholder for the purpose of determining whether such Initial Consenting Noteholder has agreed to, waived, consented to or approved a particular matter, and the principal amount of Notes held by such Initial Consenting Noteholder. 10.7 Paramountcy From and after the Effective Time on the Plan Implementation Date, any conflict between: (a) this Plan or the Sanction Order; and D-41 (b) the covenants, warranties, representations, terms, conditions, provisions or obligations, expressed or implied, of any contract, mortgage, security agreement, indenture, trust indenture, note, loan agreement, commitment letter, agreement for sale, lease or other agreement, written or oral and any and all amendments or supplements thereto existing between one or more of the Affected Creditors and the Applicants as at the Plan Implementation Date and the articles, certificate of incorporation or bylaws of the Applicants at the Plan Implementation Date; will be deemed to be governed by the terms, conditions and other provisions of this Plan, any Plan Supplement Document and the Sanction Order, which shall take precedence and priority; provided, however, that if there is a conflict between this Plan and any Plan Supplement Document, the Plan Supplement Document shall govern and control; and provided, further, however, that to the extent that any provision of this Plan or any Plan Supplement Document conflicts with or is in any way inconsistent with any provision of the Sanction Order, the Sanction Order shall govern. 10.8 Foreign Recognition LPRC, as authorized representative of the Applicants, shall file a motion with the U.S. Court seeking entry of the Sanction Recognition Order as soon as practicable after entry of the Sanction Order. 10.9 Severability of Plan Provisions If, prior to the Sanction Date, any provision of this Plan is held by the Court to be invalid, void or unenforceable, the Court, at the request of the Applicants and with the consent of the Monitor and the Majority Initial Consenting Noteholders, shall have the power to either (a) sever such provision from the balance of this Plan and provide the Applicants with the option to proceed with the implementation of the balance of this Plan as of and with effect from the Plan Implementation Date, or (b) alter and interpret such provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the provision held to be invalid, void or unenforceable, and such provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration or interpretation, and provided that the Applicants proceed with the implementation of this Plan, the remainder of the provisions of this Plan shall remain in full force and effect and shall in no way be affected, impaired or invalidated by such holding, alteration or interpretation. 10.10 Responsibilities of the Monitor The Monitor is acting in its capacity as Monitor in the CCAA Proceeding and this Plan with respect to the Applicants and will not be responsible or liable for any obligations of the Applicants. 10.11 Different Capacities Persons who are affected by this Plan may be affected in more than one capacity. Unless expressly provided herein to the contrary, a Person will be entitled to participate hereunder in each such capacity. Any action taken by a Person in one capacity will not affect such Person in any other capacity, unless expressly agreed by the Applicants and the Person in writing or unless its Claims overlap or are otherwise duplicative. D-42 10.12 Notices Any notice or other communication to be delivered hereunder must be in writing and reference this Plan and may, subject as hereinafter provided, be made or given by personal delivery, ordinary mail or by facsimile or email addressed to the respective parties as follows: (a) If to the Applicants: c/o Lone Pine Resources Canada Ltd. 1100, 640 – 5th Avenue S.W. Calgary, Alberta, Canada T2P 3G4 Attention: Fax: Email: Charles R. Kraus (403) 292-8001 [email protected] with a copy to: Bennett Jones LLP 4500 Bankers Hall East 855 – 2nd Street S.W. Calgary, Alberta, Canada T2P 4K7 Attention: Fax: Email: (b) Chris Simard / Colin Perry (403) 265-7219 [email protected] / [email protected] If to Goodmans LLP or a Consenting Noteholder or Backstopper represented by Goodmans LLP: c/o Goodmans LLP Bay Adelaide Centre 333 Bay Street, Suite 3400 Toronto, Ontario, Canada M5H 2S7 Attention: Fax: Email: (c) Robert Chadwick / Brendan O'Neill (416) 979-1234 [email protected] / [email protected] If to an Affected Creditor (other than a Consenting Noteholder represented by Goodmans LLP), to the mailing address, facsimile address or email address provided on such Affected Creditor's Proof of Claim; D-43 (d) If to the Monitor: PricewaterhouseCoopers Inc. 111 – 5th Avenue S.W., Suite 3100 Calgary, Alberta, Canada T2P 5L3 Attention: Fax: Email Paul Darby (403) 781-1825 [email protected] with a copy to: McCarthy Tetrault LLP 421 – 7th Avenue S.W., Suite 3300 Calgary, Alberta, Canada T2P 4K9 Attention: Fax: Email: Sean Collins (403) 260-3501 [email protected] or to such other address as any party may from time to time notify the others in accordance with this section. Any such communication so given or made shall be deemed to have been given or made and to have been received on the day of delivery if delivered, or on the day of faxing or sending by other means of recorded electronic communication, provided that such day in either event is a Business Day and the communication is so delivered, faxed or sent before 5:00 p.m. (Calgary time) on such day. Otherwise, such communication shall be deemed to have been given and made and to have been received on the next following Business Day. 10.13 Further Assurances Each of the Persons named or referred to in, or subject to, this Plan will execute and deliver all such documents and instruments and do all such acts and things as may be necessary or desirable to carry out the full intent and meaning of this Plan and to give effect to the transactions contemplated herein. DATED as of the 6th day of December, 2013. SCHEDULE E MONITOR'S REPORT (see attached) Clerk's stamp: Court File Number 1301 - 11352 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 IN THE MATTER OF THE BUSINESS CORPORATIONS ACT, R.S.A. 2000, c. B-9, as amended AND IN THE MATTER OF THE COMPROMISE OR ARRANGEMENT OF LONE PINE RESOURCES CANADA LTD., LONE PINE RESOURCES INC., LONE PINE RESOURCES (HOLDINGS) INC., WISER DELAWARE LLC and WISER OIL DELAWARE, LLC MONITOR’S SIXTH REPORT TO COURT SUBMITTED BY PRICEWATERHOUSECOOPERS INC. DATED DECEMBER 10, 2013 Address for Service and Contact Information of Party Filing this Document: McCarthy Tétrault LLP 3300, 421-7th Avenue SW Calgary, AB T2P 4K9 Phone: 403-260-3500 Fax: 403-260-3501 Sean Collins Walker MacLeod [email protected] [email protected] LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 TABLE OF CONTENTS 1. INTRODUCTION ............................................................................................................... 1 2. BACKGROUND TO THE CCAA FILING...............................................................................2 3. STATUS OF THE CLAIMS PROCEDURE.............................................................................3 4. REFINANCING ..................................................................................................................5 5. SUMMARY OF PLAN OF ARRANGEMENT .........................................................................6 6. ALTERNATIVES TO THE PLAN ....................................................................................... 12 7. OVERVIEW OF THE OIL AND GAS PROPERTIES ............................................................ 13 8. SALES PROCESS FOR CORE ASSETS............................................................................... 15 9. ESTIMATED VALUE OF NON-CORE ASSETS ...................................................................24 10. FOREST OIL SPIN-OFF RESTRICTIONS ..........................................................................28 11. MONITORS VIEW ON THE SALES PROCESS ................................................................... 31 12. BLOW-DOWN SCENARIO AND RESERVE ANALYSIS......................................................32 13. LIQUIDATION ANALYSIS ............................................................................................... 35 14. MONITOR’S COMMENTARY ON THE PLAN .................................................................... 37 15. MONITOR’S CONCLUSION ON FAIRNESS AND REASONABLENESS OF THE PLAN ........ 41 16. OTHER POTENTIAL RECOVERIES..................................................................................43 APPENDICES A. SEC definition of Accredited Investor B. Evi Properties Teaser C. Summary of 2013 Oil Transactions D. Narraway/Ojay Properties Teaser E. Summary of 2013 Gas Transactions F. Analysis of Lone Pine Resources book values and accounting methods G. Blow-down Scenario Calculation LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 1. INTRODUCTION 1.1 On September 25, 2013, on the application of Lone Pine Resources Canada Ltd. (“LPRC”), Lone Pine Resources Inc. (“LPRI”), Lone Pine Resources (Holdings) Inc. (LPR Holdings”), Wiser Delaware LLC (“Wiser Delaware”) and Wiser Oil Delaware, LLC (“Wiser Oil”) (collectively referred to as “Lone Pine Resources” or the “Companies”), the Court of Queen’s Bench of Alberta (the “Court”) made an order (the “Initial Order”) granting Lone Pine Resources protection from its creditors pursuant to the Companies’ Creditors Arrangement Act (the “CCAA”). Under the Initial Order, PricewaterhouseCoopers Inc. (“PwC”) was appointed monitor of the Companies (the “Monitor”). 1.2 On October 18, 2013, the Companies sought and obtained an order granting recognition of these proceedings as a foreign main proceeding (the “Recognition Order”) from the United States Bankruptcy Court for the District of Delaware (the “US Court”) pursuant to Chapter 15 of the US Bankruptcy Code. Among other things, the Recognition Order recognises and enforces the CCAA Initial Order including any extensions, amendments, or modifications thereto, on a final basis, declares Canada to be the centre of main interest of each of the Companies, and recognises the CCAA Proceedings as a foreign main proceeding. 1.3 Pursuant to the Initial Order and the November 27, 2013 order of the Court, among other things, all creditors are stayed from commencing or continuing any proceedings against Lone Pine Resources until, and including, January 10, 2013. 1.4 The Monitor has filed five reports to date. Additionally, a pre-filing report dated September 24, 2013 was provided to the Court by PwC as proposed Monitor. Copies of the filed reports are available on the Monitor’s website www.pwc.com/car-lpr. All prescribed materials filed by Lone Pine Resources and the Monitor relating to this CCAA proceeding are available to creditors and other interested parties in electronic format on the Monitor’s website. The Monitor will make regular updates to the website containing documents filed with the Court not otherwise sealed. 1 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 1.5 2. This is the Monitor’s sixth report to Court (the “Sixth Report”) which has been prepared in connection with the Companies’ Plan and the Monitor’s opinion thereon. The Purpose of this Sixth Report is to: 1.5.1 Inform this Court of the Companies’ proposed Plan of Compromise and Arrangement dated December 6, 2013 (the “Plan”) and estimated distributions thereunder; 1.5.2 Provide the Court with a detailed analysis of the value of the Companies’ various oil and gas properties and certain potential contingent claims (the latter potential contingent claims being the subject of a Confidential Supplement (the “Confidential Supplement”) to the Sixth Report); 1.5.3 Provide the Monitor’s views on the sales process run by the Companies’ Financial Advisor (as hereinafter defined); and 1.5.4 Provide the Monitor’s assessment of the Plan and its recommendations thereon. 1.6 Unless otherwise stated, all monetary amounts noted herein are expressed in Canadian dollars. Capitalized terms, not otherwise defined herein, are as defined in the Companies’ application materials for the Initial Application and the Comeback Application, including the Affidavit No. 4 of Tim S. Granger (the “Fourth Granger Affidavit”), the Meeting Order, the Plan, and the Monitor’s reports filed to date. 1.7 Certain information contained in this report is based on information obtained from the Companies’ books and records and discussions with management and staff. The Monitor has not independently verified the accuracy or completeness of such information; accordingly the Monitor does not express an opinion thereon. BACKGROUND TO THE CCAA FILING 2.1 As detailed in the First Granger Affidavit and the Monitor’s Second Report, sustained declines in natural gas prices, drilling/operational challenges and limited access to liquidity are the primary causes of Lone Pine Resources’ financial difficulty and insolvency. Liquidity constraints and limited access to capital have also restricted the Companies’ drilling/capital programs, negatively impacting development of its various oil and gas properties. 2 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 3. 2.2 In the past year, Lone Pine Resources sold certain of its non-core assets and used the proceeds to reduce amounts owing under the Facility. These asset sales, combined with weaker commodity prices, resulted in reductions to the borrowing base under the Facility (which was close to fully drawn) from $325 million in November 2012 to $185 million by April 2013. 2.3 Continued liquidity constraints during the summer of 2013 resulted in LPRC not making a $10.1 million semi-annual interest payment in respect of the Senior Notes that was due on August 15, 2013. Additionally, LPRC did not make the interest payment within the 30 day cure period, which resulted in an event of default under the Senior Notes and also triggered a cross-default under the Facility. 2.4 These issues persist today and are significant factors in limiting the restructuring options available to Lone Pine Resources and the recoveries of creditors. STATUS OF THE CLAIMS PROCEDURE 3.1 On October 9, 2013, the Companies applied to the Court seeking an order (the “Claims Procedure Order”) to establish a procedure (the “Claims Procedure”) for determining the claims of creditors against the Companies. The Court granted the Claims Procedure Order which set a bar date for the filing of Proofs of Claim of 5:00PM Mountain Standard Time on November 13, 2013. 3.2 Subsequent to the granting of the Claims Procedure Order, on November 8, 2013, the Court granted an order (the “Claims Bar Date Extension Order”), which, among other things, extended the Claims Bar Date to 5:00PM Mountain Standard Time on November 27, 2013 (the “Claims Bar Date”). 3 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 3.3 Set out below is a summary of the admitted claims and claims still being reviewed as at December 9, 2013. ($000's) Admitted Disputed Claims Claims No. Amount 4 188,383 No. Amount Claims Being Reviewed No. Amount Total No. Amount Secured Claims Syndicate Other Total Secured claims - - 4 6 1,984 - - 6 188,383 1,984 4 188,383 6 1,984 - - 10 190,367 148 6,554 64 1,562 - - 212 8,116 Unsecured Claims Trade creditors Noteholders Total Unsecured Claims 1 213,681 - - - 1 213,681 149 220,235 64 1,562 - - 213 221,797 153 408,618 70 3,546 Other Claims Total Claims 65 757,406 65 757,406 65 757,406 288 1,169,570 3.4 The Monitor notes that the majority of claims in the ‘Disputed Claims’ category are claims by Unaffected Creditors per the Claims Procedure Order, primarily from Joint Venture partners and Critical Suppliers. As of December 9, 2013, the Monitor has received five Notices of Objection for disputed claims totalling $16,418.18. Additionally, the Monitor notes that the majority of the claims in the ‘Claims Being Reviewed’ category appear to be equity claims by shareholders and claims seeking indemnity regarding potential shareholder claims. 3.5 The Monitor and the Companies will continue to review all Proofs of Claim and, in accordance with the Claims Procedure Order, will respond to all Proofs of Claim by no later than December 13, 2013. The Monitor or the Companies will issue a notice of revision or disallowance relative to claims that will ultimately be entitled to vote upon the Companies’ CCAA plan of compromise and arrangement for any Proofs of Claim where the amounts claimed are not in agreement with the Companies’ books and records or the amount claimed is not adequately supported. 3.6 In light of the provisions of the Plan and the matters addressed in this Sixth Report, which support the conclusion that there is no value attributable to the Company's shareholders, Proofs of Claim filed in respect of "equity claims" under the CCAA will not be determined pursuant to the Claims Procedure but rather, will be sought to be 4 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 discharged in connection with the relief to be sought by the Companies on the Sanction Hearing. 4. REFINANCING 4.1 The Monitor has been advised that as part of its restructuring initiatives, Lone Pine Resources has, over the past six months, explored numerous refinancing options, but has been unable to secure a refinancing package that would provide it with sufficient liquidity to pursue its capital programs while satisfying its secured and unsecured creditors. In June 2013, Lone Pine Resources engaged an advisor to assist the Companies with their efforts to obtain a second lien secured credit facility to refinance the existing Facility. The Companies discussed the refinancing with approximately ten prospective lenders and feedback received indicated that long-term sustainable refinancing would require a significant reduction in the outstanding principal of the Senior Notes. 4.2 The Syndicate of secured lenders has been supportive of Lone Pine Resources while it attempted to obtain refinancing prior to the CCAA filing and has continued to be supportive of the Companies’ proposed restructuring under the CCAA. However, the Syndicate has stated that if the Companies’ proposed restructuring is not completed by January 31, 2014, the Syndicate will seek to require that the Companies immediately commence a liquidation process for their assets. 4.3 As discussed in the Monitor’s Fourth Report, the Companies have obtained a commitment letter for a senior secured asset backed lending facility in the amount of up to $130 million (the “ABL Commitment Letter”) from a new syndicate of lenders. The refinancing proposal has numerous conditions, including the successful completion of the proposed CCAA restructuring by January 31, 2014 (which includes a conversion of the Senior Notes into equity and the cancellation of all existing equity interests) and an injection of at least $110 million of new cash from the issuance of new share capital and/or non-core asset dispositions. The ABL Commitment Letter was approved by order of Justice Yamauchi granted in these proceedings on November 27, 2013. 4.4 The Companies have advised the Monitor that they have thoroughly explored all feasible refinancing options and that the current $130 million refinancing proposal outlined in the ABL Commitment Letter is, on balance, the best available option. As discussed in the Monitor’s Fourth Report, the Monitor is supportive of the Companies entering into the ABL Commitment Letter and continuing negotiations toward definitive loan documents. 5 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 5. SUMMARY OF PLAN OF ARRANGEMENT 5.1 To assist readers in understanding and evaluating the Plan, the Monitor has reproduced its summary of the Plan from the Monitor’s Fifth Report below. 5.1 Generally, the Plan would effect a recapitalization of Lone Pine Resources by the unsecured creditors and conversion into equity of the majority of unsecured creditors (the “Affected Unsecured Creditors”) holding Affected Unsecured Claims (as defined in the Plan), as well as the cancellation of all existing equity interests in the Companies, including the interest held by stockholders of LPRI. A summary of the key elements of the Plan is set out below. 5.2 An information circular (the “Information Circular”) has been prepared by Lone Pine Resources, which explains in detail, among other things, the voting process in respect of the Plan and the transactions and compromises to be affected under the Plan. A copy of the Information Circular will be attached as Schedule A to the Meeting Order. Creditor Classes for Affected Unsecured Creditors 5.3 For the purpose of voting on the Plan, a single class of all Affected Unsecured Claims of each of the five Lone Pine Resources entities will be formed. 5.4 Each class of Affected Unsecured Creditors will vote on the approval of the Plan for each respective Company. Plan approval for each Company will require that a majority in number (greater than 50%) and two thirds in value of each class of Affected Unsecured Creditors votes, or is deemed to vote, in favour of the Plan. 5.5 The following table outlines the five Affected Unsecured Claim classes: Affected Unsecured Creditors Class Affected Unsecured Claims LPRC Class................................................... Affected Unsecured Claims against LPRC LPR Holdings Class...................................... Affected Unsecured Claims against LPR Holdings LPRI Class.................................................... Affected Unsecured Claims against LPRI Wiser Oil Class............................................. Affected Unsecured Claims against Wiser Oil Wiser Delaware Class................................... Affected Unsecured Claims against Wiser Delaware 6 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 5.6 The Affected Unsecured Claims under the Plan include all Affected Claims, as determined through the Claims Procedure, including the Claims of Noteholders in respect of the Senior Notes. 5.7 Noteholders shall be permitted to vote in respect of all five Affected Unsecured Creditor Classes, as the Senior Notes were either issued or guaranteed by each of the Companies, but each Affected Unsecured Creditor will receive only a single distribution under the Plan. 5.8 Pursuant to the CCAA, Equity Claimants shall not be entitled to vote on the Plan or receive any distributions thereunder. Unaffected Creditors 5.9 The Plan does not affect or compromise the claims and rights of Unaffected Creditors, as Unaffected Creditors are expected to be paid in the normal course. As a result, Unaffected Creditors will not receive any consideration or distributions under the Plan and shall not be entitled to vote on the Plan at the Meetings in respect of their Unaffected Claims. The Unaffected Claims include, among other things, the following: 5.9.1 Claims secured by the CCAA Charges (including Claims of Critical Suppliers); 5.9.2 Any part of a Claim arising from a cause of action for which the Company is covered by insurance, but only to the extent of such coverage; 5.9.3 Post-Filing Trade Payables; 5.9.4 Claims of Joint Venture Partners; 5.9.5 Claims of the Syndicate; and 5.9.6 Claims in respect of an Employee Amount (other than in respect of Options). Treatment of Affected Unsecured Claims 5.10 The Plan contemplates that, in consideration for the distributions set out below, all Affected Unsecured Claims shall be fully, finally, irrevocably and forever compromised, settled, released, discharged, extinguished, cancelled and barred. 7 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 5.11 The Plan provides that Affected Unsecured Creditors holding an Affected Unsecured Claims equal to or less than $10,000 shall be considered Cash Pool Creditors (the “Cash Pool Creditors”) for purposes of distributions under the Plan. 5.12 Affected Unsecured Creditors holding an Affected Unsecured Claim in excess of $10,000 may elect to reduce their Affected Unsecured Claim to $10,000 by making a Cash Election with the Monitor in accordance with the Meeting Order, in which case they shall receive the same distribution (pro-rated, as described below) under the Plan as Cash Pool Creditors. 5.13 Affected Unsecured Creditors with claims in excess of $10,000 who do not make a Cash Election shall receive newly issued shares in LPRC and LPRI. Consideration to be distributed to Affected Unsecured Claims 5.14 The Plan provides the following consideration to be distributed to the Affected Unsecured Creditors in full and final satisfaction of all Affected Unsecured Claims: For Cash Pool Creditors: 5.14.1 Each Cash Pool Creditor will receive an amount from the Cash Pool equivalent to its pro-rata Share of the Cash Pool up to the value of its Allowed Affected Claim; and 5.14.2 The total amount payable to all Cash Pool Creditors is not to exceed $700,000. For Affected Unsecured Creditors (other than Cash Pool Creditors): 5.14.3 Each other Affected Unsecured Creditor (other than Cash Pool Creditors) with an Allowed Affected Unsecured Claim will receive: 5.14.3.1 Its pro-rata share of newly issued LPRC Class A Voting Common Shares; 5.14.3.2 One newly issued LPRI Class A Voting Common Share for each LPRC Class A Voting Common Share; and 8 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 5.14.3.3 If such Affected Unsecured Creditor is a Backstopper 1, its Backstopper’s Pro-Rata Share of approximately $4 million (calculated as 4% of the New Investment Amount). New Investment 5.15 Each Qualifying Unsecured Creditor shall have the right, but not the obligation, to purchase for cash, up to such Affected Unsecured Creditor’s Pro-Rata Share, of a new investment in LPRC Preferred Shares in the aggregate amount of between $100 million to $110 million and corresponding LPRI Multiple Voting Shares (the “New Investment”). 5.16 For each LPRC Preferred Share purchased pursuant to the New Investment, a subscribing creditor will also acquire one LPRI Multiple Voting Common Share as part of the New Investment. The subscription price for the LPRI Multiple Voting Common Shares will be nominal (between $100 and $110 in the aggregate, depending on the final New Investment Amount for the LPRC Preferred Shares). 5.17 A Qualifying Unsecured Creditor means an Affected Unsecured Creditor that is not a Cash Pool Creditor and is an accredited investor as defined and contemplated by Rule 501 of Regulation D under the U.S. Securities Act. The U.S. Securities and Exchange Commission’s definition of an accredited investor is attached as Appendix A. 5.18 In accordance with the proposed Meeting Order, each Affected Unsecured Creditor will receive a New Investment Subscription Form. In order to participate in the New Investment, a Qualifying Unsecured Creditor must return a duly executed New Investment Subscription Form to the Companies, the Monitor and Goodmans LLP, in accordance with the Plan and the Meeting Order by January 13, 2014. If the Plan is accepted, payment for the New Investment will be required five business days prior to the Anticipated Implementation Date, being January 31, 2014. 5.19 In addition, in order to become a Backstopper under the Backstop Agreement, any Qualifying Unsecured Creditor must return a duly executed Backstop Joinder to the Companies, the Monitor and Goodmans LLP, in accordance with the Plan and the Meeting Order by January 13, 2014. Each Backstopper agrees to invest additional 1 Per the Plan, "Backstoppers" means those Qualifying Unsecured Creditors that are Consenting Creditors and are parties to the Backstop Agreement (and any of their permitted assignees or designees), either by having executed the original Backstop Agreement as at September 24, 2013 or a Backstop Joinder on or before the Backstop Deadline, and "Backstopper" means any one of them. 9 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 amounts (on a pro-rata basis) in the event that less than 100% of Affected Unsecured Creditors participate in the New Investment. 5.20 Submission of a New Investment Subscription Form in accordance with the Plan and the Meeting Order shall constitute a subscription and commitment to participate in the New Investment by purchasing LPRC Preferred Shares and LPRI Multiple Voting Common Shares under the New Investment. 5.21 It is anticipated that on a fully diluted or “as converted” basis, the LPRC Preferred Shares will represent approximately 75% of the equity of LPRC on Plan implementation, depending on the quantum of the New Investment. 5.22 As a result of the LPRC Preferred Shares issued as part of the New Investment, it is anticipated that the LPRC Class A Voting Common Shares distributed to Affected Unsecured Creditors will be diluted down to represent approximately 25% of the equity of LPRC on Plan implementation. 5.23 The redemption price of LPRC Preferred Shares and the number of votes attached to each LPRI Multiple Voting Common Shares will increase at a rate of 10% per year (the “Accretion Rate”); which, if redeemed after Plan Implementation, will increase the fully diluted percentage of equity relative to the LPRC Class A Voting Common Shares issued on Plan implementation above 75%. 5.24 Similarly, due to the Accretion Rate on the LPRC Preferred Shares (and the LPRI Multiple Voting Common Shares), holders of LPRC Class A Voting Common Shares issued on Plan implementation will see their respective position diluted with the passage of time due to the increase in the redemption price of the LPRC Preferred Shares by 10% per year, which will lower the effective equity interest of the LPRC Class A Voting Shares by approximately 1% to 2% per year on a fully diluted basis. 5.25 The Monitor notes that the newly issued LPRC Preferred Shares, LPRI Multi Voting Shares and LPRC Class A Voting Common Shares will not be publicly listed on a securities exchange. As such, there can be no certainty that Affected Unsecured Creditors who receive these shares will be able to trade them. 10 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 Existing shareholders and Equity Claimants 5.26 The Plan contemplates that on the Plan Implementation Date, all existing Equity Interests, including all existing shares of common stock of LPRI, shall be cancelled and extinguished and all Equity Claims shall be fully, finally, irrevocably and forever compromised, settled, released, discharged extinguished, cancelled and barred. 5.27 The Plan contemplates that Equity Claimants will not receive any consideration or distributions under the Plan. Releases 5.28 The Plan also provides for the release of the Released Parties from all claims relating to, among other things, the business and affairs of the Companies whenever or however conducted, the Recapitalization, the Plan, and the CCAA Proceedings. The Released Parties include the Companies, the Directors, the Officers, the Monitor and its Canadian and US legal advisors, the Note Indenture Trustee, the Consenting Creditors, the Backstoppers, the Agent, the Syndicate, the Company Advisors, and the Noteholder Advisors. The Companies will not be released or discharged from any Unaffected Claim or Claim that is not permitted to be released pursuant to the CCAA. Directors and Officers will not be released from any Claim that is not permitted to be released pursuant to the CCAA. Other key Plan terms 5.29 The Plan includes a range of conditions precedent to implementation, which include, but are not limited to, the following: 5.29.1 The Court will have granted the CCAA Sanction order prior to January 17, 2014, and the Sanction Recognition Order in the US Chapter 15 will have been granted prior to January 31, 2014; 5.29.2 All conditions set out in the Support Agreement and Backstop Agreement shall have been satisfied or waived, and the Support Agreement and Backstop Agreement shall not have been terminated; 5.29.3 The Plan Implementation Date shall occur no later than February 15, 2014; 11 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 5.29.4 The Companies shall have made arrangements for the payment in full of all amounts owing in respect of the existing Facility; 5.29.5 The New Investment Funds shall have been deposited with the Monitor; and 5.29.6 LPR Canada shall have obtained a new credit facility on terms acceptable to the Companies and the Majority Initial Consenting Noteholders. 6. ALTERNATIVES TO THE PLAN 6.1 If the Plan is not implemented by January 31, 2014, the Syndicate has advised that it will seek to require the Companies to commence a liquidation of the assets of Lone Pine Resources, as it wants to effect a recovery of its secured loans as soon as possible. The Monitor notes that if the Plan is not approved or implemented, neither the New Investment Amount nor the proceeds of the new ABL Loan will be received by the Companies, which will result in Lone Pine Resources having insufficient liquidity to continue operations and fund its winter drilling program. 6.2 As a result, continuation of the Companies “as is” is not feasible. Accordingly, in the event that the Plan is not approved or implemented, the two most probable alternatives available to the Companies are: 6.3 6.2.1 A run-out or ‘Blow-down’ of the Companies’ existing producing assets; or 6.2.2 An orderly liquidation of all of the assets of the Companies. In order to assist stakeholders in understanding the values that might be obtained under these two alternatives, the Monitor provides below: 6.3.1 An overview of the Companies’ oil and gas properties; 6.3.2 A summary of the recent Sales Process (as hereinafter defined) that was undertaken for the Companies’ Core Assets (as hereinafter defined), as the results from this process are indicative of the current market values of the Core Assets (as hereinafter defined); 6.3.3 The Monitor’s views on the current recoverable value of the Non-Core Assets (as hereinafter defined); and 12 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 6.3.4 6.4 7. The Monitor’s views on the impact of the Spin-Off Restrictions (as hereinafter defined) on the Sales Process (as hereinafter defined). Additionally, in Section 12 of this report, the Monitor provides an analysis of the potential recoveries that would be available under a “Blow-down” Scenario (as hereinafter defined) and in Section 13 of this report the Monitor provides an analysis of the recoveries that would be available under an orderly liquidation of the Companies’ assets. OVERVIEW OF THE OIL AND GAS PROPERTIES Core Assets 7.1 LPRC has two principal oil and gas producing properties, being the properties located in the Evi field (the “Evi Properties”) and the properties located in the Narraway/Ojay fields (the “Narraway/Ojay Properties”) (collectively, the “Core Assets”). These properties are detailed in the first Granger Affidavit and summarized below: 7.1.1 The Evi Properties, located in the Peace River Arch area of northern Alberta, primarily target light oil production. As at December 31, 2012, estimated proved reserves for the Evi Properties were approximately 18.2 million barrels of oil equivalent (“boe”), as determined in accordance with the requirements of the U.S. Securities and Exchange Commission (“SEC”), with 35% classified as proved developed reserves. Lone Pine Resources currently has 148 net productive wells on the Evi Properties. Average daily net sales volumes from the Evi Properties for the three months ended September 30, 2013, were approximately 1,943 boe per day at an average realized equivalent selling price of $97.81 per boe. 7.1.2 The Narraway/Ojay Properties, located in Alberta and British Columbia, primarily target natural gas with minimal natural gas liquids content. As at December 31, 2012 (the effective date of the most recently updated reserve report), estimated proved reserves for the Narraway/Ojay Properties were approximately 62.2 billion cubic feet equivalent (“Bcfe”) as determined in accordance with SEC requirements, with 100% classified as proved developed reserves. Lone Pine Resources currently has 40.7 net productive wells on the Narraway/Ojay Properties. Average daily net sales volumes from the Narraway/Ojay Properties for the three months ended September 30, 2013, were approximately 24.7 million cubic feet equivalent (“MMcfe”) per day at an 13 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 average realized equivalent selling price of $2.64 per thousand cubic feet equivalent (“Mcfe”). Non-Core Assets 7.2 LPRC also holds a number of other non-core assets, which include undeveloped shale gas properties in Quebec and the Northwest Territories with unconventional gas potential and smaller operated and non-operated producing properties in Alberta and British Columbia (the Non-Core Assets”). 7.3 The Companies have publicly disclosed that the two shale properties in Quebec and the Northwest Territories could, with development, potentially provide commercial quantities of natural gas. The shale gas properties have been held for a significant amount of time, as the Companies’ ownership pre-dates the Forest Spin-Off (as hereinafter defined). The Non-Core Assets can be summarized as follows: 7.3.1 LPRC holds approximately 240,320 net acres in Quebec (the “Quebec Properties”) that are prospective for the Utica shale. There is currently no production from the Quebec Properties and, as discussed in further detail in the NAFTA claims section of the Confidential Supplement, no reserves are attributed to the Quebec Properties as the project remains exploratory in nature. Development of the Quebec Properties has halted due to a moratorium on shale gas activity imposed by the Government of Quebec. Currently, there do not appear to be any plans announced by the Government of Quebec to modify or discontinue the moratorium. 7.3.2 In the Northwest Territories at Pointed Mountain, LPRC holds approximately 53,000 net acres of undeveloped properties in the Liard Basin (the “Liard Properties”) that are prospective for shale gas from the Muskwa and Exshaw horizons. 7.3.3 LPRC also has undeveloped land in other areas, the most significant of which is prospective land in a potential light oil rich area called Hutch (the “Hutch Properties”), in Northern Alberta. The Hutch Properties were purchased after the Forest Spin-Off (as hereinafter defined) for approximately $7.5 million. 7.3.4 Other non-core producing assets in Alberta, consist of the Hayter property in Eastern Alberta (the “Hayter Property”) which currently produces 14 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 approximately 250 boe per day of heavy oil, and a number of non-operated properties (the “Non-Operated Properties”) currently producing approximately 5 MMcfe per day of natural gas. 7.4 In summary, as set out in the table below, the Core Assets (consisting of the Evi Properties and the Narraway/Ojay Properties), represent the majority of the Companies’ Oil & Gas Properties, as they comprise approximately 85% of current daily production and approximately 88% of proved reserves with the other non-core properties making up the remainder. Daily Production Rates % Evi 1,943 27% 2,730 29% 17,181,333 55% Narraway/Ojay 4,117 58% 5,017 53% 10,372,152 33% Total Core Assets 6,060 7,747 81% 27,553,485 19% % 85% Q4 2012 Boe/d SEC RR 2012 Proved Reserves Boe % Property Q3 2013 Boe/d Non-Core Assets 1,050 15% 1,783 Total 7,110 9,530 88% 3,863,681 12% 31,417,167 Notes: - Mcfe/d converted to boe/d at a rate of 6:1. - Proved Reserves based on SEC reserve reporting requirements. 8. SALES PROCESS FOR CORE ASSETS 8.1 The following section of the report summarizes the recent process undertaken by the Companies to market the Core Assets, as the results of this process are indicative of the current market value of the Core Assets which the Monitor has used in its Liquidation Analysis (as hereinafter defined). 8.2 In August 2012, Lone Pine Resources engaged RBC Dominion Securities Inc., a member company of RBC Capital Markets (the “Financial Advisor”) to assist the Companies in considering alternatives to maximize the value of Lone Pine Resources Core Asset portfolio (the “Sales Process”), namely the Evi Properties and the Narraway/Ojay Properties. 15 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 EVI Marketing Process 8.3 The Financial Advisor initiated the marketing process for the Evi Properties (the “Evi Marketing Process”) on September 17, 2012, after the Financial Advisor, in consultation with the Companies, developed a list of 135 potential purchasers. The potential purchaser list included both strategic and financial buyers located in Canada, the USA and internationally, and included various foreign and state owned oil companies and numerous financial or private equity parties. 8.4 The Evi Marketing Process was structured to identify parties who were interested in: 8.4.1 A joint venture with the Evi Properties; 8.4.2 A ‘farm-in2’ transaction with the Evi Properties; or 8.4.3 An alternative transaction such as an outright acquisition. 8.5 The Financial Advisor has advised the Monitor that, while the Evi Marketing Process initially focused on a number of different transaction types including a joint-venture partnership, all potential purchasers were informed that the Companies would be open to an outright acquisition of the Evi Properties and would consider any proposals received. 8.6 An introductory “teaser” letter was prepared by the Financial Advisor and Lone Pine Resources and sent to the 135 identified potential purchasers. A copy of the teaser is attached as Appendix B. Of the 135 parties contacted, 20 parties signed confidentiality agreements. 8.7 A confidential virtual data room was developed by the Financial Advisor and Lone Pine Resources. The virtual data room contained various detailed financial, operational, geological and legal documentation. The virtual data room was opened on October 4, 2012 to allow parties who had signed confidentiality agreements to access certain confidential data to assist with their due diligence in analyzing the Evi Properties. 8.8 Lone Pine Resources and the Financial Advisor also developed a management presentation which contained more detail about the Evi Properties. Through October and 2 Farm-ins are an oil and gas term for deals where a company, not at present a licensee on a particular licensed area, can acquire an interest from one of the existing licensees. The transfers of interest are generally made in return for exploration or other commitments, for exchanges of licence interests, or for cash 16 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 November, 2012, 14 parties requested and attended management presentations with respect to the Evi Properties. 8.9 The Financial Advisor set a date of December 12, 2012 for the first round of proposals for the Evi Properties, approximately 3 months after the start of the Evi Marketing Process. Three proposals were received by this bid deadline date. An additional proposal was received on December 19, 2012. All four proposals were reviewed in detail by the Companies and the Financial Advisor. The proposals received indicated that the interested parties would be interested in joint ventures or outright purchases of the Evi Properties. 8.10 On January 9, 2013, the Companies elected not to pursue two of the four proposals (due to issues with the proposed structure and low price offered) and requested that revised proposals be submitted by the other two interested parties. In February 2013, the Companies received a fifth proposal which, after review, was not pursued by the Companies due to the inadequate price offered. 8.11 On March 7, 2013, the Companies signed a letter of intent with respect to a joint venture on the Evi Properties with one of the two remaining participants in the process (the "JV Counterparty"). The Monitor notes that the remaining participant in the process subsequently retracted its offer to purchase 100% of the Evi Properties, as the party subsequently determined that it was unable to finance the proposed transaction. The Financial Advisor continued negotiations with the JV Counterparty through June 2013, at which time negotiations were terminated as Lone Pine Resources and the JV Counterparty could not come to mutually acceptable terms of a transaction. 8.12 In August 2013, the Financial Advisor re-approached parties that had previously expressed an interest in the Evi Properties, to re-solicit bids with respect to the Evi Properties. As a result of this, in or around the beginning of September 2013, two parties submitted acquisition proposals or expressions of interest for a 100% interest in the Evi Properties. The offers ranged between $125 million and $150 million and contemplated purchasing a 100% interest in the Evi Properties. 8.13 The Financial Advisor has advised the Monitor that during 2013, the market’s view of the desirability of properties in the Evi field deteriorated significantly, as a result of companies operating in the Evi field reporting higher than expected operating costs, lower than expected well performance, and high capital costs related to drilling and maintaining production levels. As a result, the Financial Advisor has advised the Monitor 17 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 that the price that interested parties were willing to pay for the Evi Properties declined significantly during 2013, once interested parties conducted their technical due diligence of the Evi Properties and became aware of general market conditions and the capital intensity of developing the Evi field. 8.14 In summary, the Financial Advisor contacted 135 parties in respect of the Evi Marketing Process. The Evi Marketing Process was run for a period of approximately 12 months, during which 20 parties signed confidentiality agreements and five parties submitted proposals. After lengthy negotiations, in September, 2013, two expressions of interest to acquire a 100% interest in the Evi Properties were received for $125 million and $150 million (the “Evi Offers”). 8.15 The Monitor has benchmarked the Evi Offers using the following two metrics: 8.15.1 Price per flowing boe of production; and 8.15.2 Pricing of proved and probable reserves, based on NI 51-101 standards. 8.16 Based on the Companies average daily production as at September 2013 (of 1,940 boe per day), the Evi Offers equate to an approximate value range of $64,400 to $77,300 per flowing boe. An analysis by the Monitor of the publically available data for comparable 2013 sales transactions involving oil weighted producing assets in Western Canada (proved plus probable oil reserves of 50% or greater) (the “2013 Oil Transactions”) indicates that the average selling price per flowing boe was approximately $67,400. A summary of the 2013 Oil Transactions is attached as Appendix C. 8.17 Therefore, the Monitor concludes that, with respect to the producing Evi Properties, the Evi Offers provide value consistent with that of the current market. 8.18 The Monitor also performed a detailed comparable transaction analysis of values for proved and probable reserves. 8.19 Based on Lone Pine Resources’ NI 51-101 reserves, the Evi Offers equate to an approximate value range of $8.84 to $10.61 per boe for proved reserves (“1P”) and $4.73 to $5.67 per boe for proved plus probable reserves (“2P”). The average pricing per the 2013 Oil Transactions was significantly higher at $23.30 per boe for 1P and $16.50 for 2P. The primary reasons for this difference include: 18 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 8.19.1 The Evi Properties are a unique play that involves tight oil reserves that are difficult to access. These reserves require expensive and high risk extraction techniques, such as horizontal wells with multistage fracture stimulation completions and complex waterflood secondary recovery techniques. As such, the market value attributed to non-producing Evi reserves (both proven and probable) is significantly discounted to reflect these increased costs and risks as the lower capital efficiencies of the Evi field; and 8.19.2 The average pricing for the 2013 Oil Transactions is skewed higher due to four transactions with dollar per boe values that were significantly higher than market (with 3 of the 4 transactions being for assets located in Saskatchewan): 8.19.2.1 Surge Energy acquisition ($42.03 per boe for 1P and $22.46 for 2P) – medium gravity oil reserves in southwest Saskatchewan with key infrastructure in place and large inventory of unbooked oil locations on the acquired lands; 8.19.2.2 Toscana Energy acquisition ($36.11 per boe for 1P and $26.60 for 2P) diversified portfolio of oil and gas royalties from producing properties throughout western Canada; 8.19.2.3 TORC acquisition ($31.78 per boe for 1P and $22.97 for 2P) – low decline high netback light-oil reserves in southeast Saskatchewan with a large inventory of 3D seismic and undeveloped land; and 8.19.2.4 Whitecap Resources acquisition ($30.18 per boe for 1P and $24.49 for 2P) – long reserve life, low decline high netback light-oil reserves located in west central Saskatchewan. 8.20 The current market for the Evi Properties is also affected by the large amount of Western Canadian asset inventory currently on offer. 8.20.1 At present, approximately 106,700 boe/d of oil weighted production is on the market, indicating that there are a large number of other oil and gas companies trying to divest of similar assets. 8.20.2 The Monitor and the Financial Advisor note that available for sale production in Western Canada is currently at the highest level in the past five years. 19 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 8.21 Based on the above analysis, the results of the Evi Marketing Process appear to be reflective of the current market for oil weighted properties in Western Canada. Narraway/Ojay Marketing Process 8.22 The Financial Advisor initiated the marketing process for the Narraway/Ojay Properties (the “Narraway/Ojay Marketing Process”) in October 2012 after it, in consultation with the Companies, developed a list of potential purchasers. The Financial Advisor contacted 43 parties starting in October 2012. The potential purchaser list included both strategic and financial buyers located in Canada, the USA and internationally, and included various foreign and state owned oil and gas companies and numerous potential financial/private equity purchasers. 8.23 The Monitor notes that the Narraway/Ojay Properties primarily target dry natural gas production and, due to the continuing depressed market prices of natural gas along with the high well/drilling costs in the area, there is a smaller number of potential purchasers for the Narraway/Ojay Properties as compared to the Evi Properties, which primarily targets light oil production. 8.24 The Narraway/Ojay Marketing Process was structured to identify parties who were interested in an outright purchase of the Narraway/Ojay Properties; however, the marketing materials indicated that the Company would also be open to an alternative structure such as a joint venture. 8.25 An introductory “teaser” letter was prepared by the Financial Advisor and Lone Pine Resources and sent to prospective purchasers. A copy of the teaser is attached as Appendix D. Of the 43 parties contacted, seven parties signed confidentiality agreements. 8.26 A confidential virtual data room was developed by the Financial Advisor and Lone Pine Resources. The virtual data room contained various detailed financial, operational, human resources, geological and legal documentation. The virtual data room was made available to allow parties who had signed confidentiality access to certain confidential data to assist with their due diligence in analyzing the Narraway/Ojay Properties. 8.27 Lone Pine Resources and the Financial Advisor also developed a management presentation which contained significantly more detail about the Narraway/Ojay Properties. By the end of November, 2012, four parties requested and attended management presentations with respect to the Narraway/Ojay Marketing Process. 20 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 8.28 The Financial Advisor had set a date of December 12, 2013 for the first round of proposals for the Narraway/Ojay Propertie. However, no proposals were submitted by the bid deadline of December 12, 2012. 8.29 As a result of this, the Financial Advisor continued the Narraway/Ojay Marketing Process through the first half of 2013, which resulted in the Company receiving two non-binding proposals, one in May 2013 and one in June 2013. However, both proposals were conditional on extensive due diligence and certain other approvals, including financing, and pricing was deemed inadequate. As a result, both of these proposals were rejected. 8.30 In August 2013, the Financial Advisor re-approached parties that had previously expressed an interest in the Narraway/Ojay Properites, to re-solicit bids with respect to the Narraway/Ojay Properites. As a result of this, in or around the beginning of September 2013, two parties who had previously submitted the non-binding proposals reaffirmed their expressions of interest in the Narraway/Ojay Properties. The offers ranged between $70 million and $75 million and contemplated purchasing a 100% interest in the Narraway/Ojay Properties, and were still subject to due diligence and various conditions. 8.31 In summary, the Financial Advisor contacted 43 parties in respect of the Narraway/Ojay Marketing Process. The Narraway/Ojay Marketing Process was run for a period of approximately 10.5 months during which seven parties signed confidentiality agreements and two parties submitted proposals. 8.32 In September, 2013, the two parties interested in purchasing the Narraway/Ojay Properties reaffirmed their respective expressions of interest to acquire a 100% interest in the Narraway/Ojay Properties for $70 million and $75 million, respectively (the “Narraway/Ojay Offers”). 8.33 The Monitor has benchmarked the Narraway/Ojay Offers using the following two metrics: 8.33.1 Price per flowing boe of production; and 8.33.2 Pricing of proved and probable reserves, based on NI 51-101 standards. 8.34 Based on the average daily production (primarily dry natural gas) as at September 2013 (of 4,120 boe per day), the Narraway/Ojay Offers equate to an approximate value range of 21 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 $17,000 to $18,200 per flowing boe. An analysis of the publicly available data for 2013 sales transactions involving gas weighted (gas reserves of 50% or greater) producing assets in Western Canada (the “2013 Gas Transactions”) indicates that the average selling price per flowing boe was approximately $21,900. A summary of the 2013 Gas Transactions is attached as Appendix E 8.35 The Narraway/Ojay Offers reflect value that is lower than the market average, which is attributed to: 8.35.1 The majority of the 2013 Gas Transactions occurred in Q1 and Q2 of 2013 when natural gas prices were higher; and 8.35.2 Although weighted toward gas, the 2013 Gas Transactions reflect packages of assets that have differing weightings of dry gas, natural gas liquids and oil. The transactions with higher percentages of natural gas liquids and oil attract higher market prices due to the relatively higher value of these commodities. The Narraway/Ojay assets produce almost 100% dry gas and therefore attract a lower market price. 8.36 Based on Lone Pine Resources’ NI 51-101 reserves, the Narraway/Ojay Offers equate to an approximate value range of $3.91 to $4.19 per boe for 1P reserves and $1.27 to $1.36 per boe for 2P reserves. The average pricing for the 2013 Gas Transactions was significantly higher at $7.30 per boe for 1P and $6.40 for 2P. 8.37 The primary reasons for this difference relates to the fact that, although weighted toward gas, the 2013 Gas Transactions reflect packages of assets that have differing weightings of dry gas, natural gas liquids and oil. The transactions with higher percentages of natural gas liquids and oil attract higher market prices due to the relatively higher value of these commodities. The Narraway/Ojay assets produce almost 100% dry gas and therefore attract a lower market price. 8.38 Additionally, the Monitor notes that a number of leases for the Narraway/Ojay Properties are expected to expire in the near future due to various reasons, including, but not limited to, lack of drilling activity on the Narraway/Ojay Properties. Due to capital constraints faced by Lone Pine Resources, and the continuing depressed prices of natural gas, the Companies have not recently engaged in an active drilling program in Narraway/Ojay and LPRC’s current capital and drilling program does not contemplate significant development of the Narraway/Ojay Properties. Accordingly, Lone Pine Resources 22 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 expects that leases for certain lands that form part of the Narraway/Ojay Properties will expire in the coming 12 month period and may not be renewed. 8.39 The current market for the Narraway/Ojay Properties is also affected by the large amount of Western Canadian asset inventory currently on offer. 8.39.1 At present, approximately 43,100 boe/d of gas weighted production is on the market, indicating that there are a large number of other oil and gas companies trying to divest of similar assets. 8.39.2 The Monitor and the Financial Advisor note that available for sale production in Western Canada is currently at the highest level in the past five years. 8.40 Based on the above analysis, the results of the Narraway/Ojay Marketing Process appear to be reflective of the current market for dry natural gas properties in Western Canada. En Bloc Marketing Process 8.41 In or around February 2013, the Financial Advisor also initiated a marketing process soliciting interest for a corporate acquisition of Lone Pine Resources or an en bloc purchase of all or substantially all of the Companies’ assets (the “En Bloc Marketing Process”). 8.42 In consultation with the Companies, the Financial Advisor developed a list of potential en bloc purchasers and contacted 21 parties over a two week period. None of the parties contacted expressed any interest in a corporate acquisition of Lone Pine Resources or an en bloc purchase for the Companies’ assets. The Financial Advisor has advised that it received strong indications from the parties contacted that there was no interest in an en bloc transaction for Lone Pine Resources’ assets. Some counterparties indicated that they would only be interested in purchasing certain oil or gas assets, (i.e. not all of the Companies’ assets), and that they would prefer to buy assets individually rather than assume the Companies’ liabilities as part of an en bloc sales process. 8.43 On March 1, 2013, the Financial Advisor confirmed to the Company that there was no corporate or en bloc acquisition interest amongst the contacted organizations and accordingly, the En Bloc Marketing Process was terminated. 23 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 9. ESTIMATED VALUE OF NON-CORE ASSETS Quebec Properties 9.1 Currently, there is no production from the Quebec Properties and, due to the moratorium on shale gas activities and development imposed by the Government of Quebec, there is no path to develop production from the Quebec Properties at the present time. The Monitor is not aware of any near or medium term solution that would see any development permitted. 9.2 No reserves are currently attributed to the Quebec Properties as the inventory of exploration wells drilled has not proven to be economically viable. 9.3 The Financial Advisor has confirmed that they do not expect that any value would be realized from marketing the Quebec Properties due to the current regulatory environment, the moratorium of shale gas activities and development, and the potential for environmental liabilities associated with cleanup of the Quebec Properties. Accordingly, the Monitor expects that little or no value would be realized from a sale of these properties, especially in a liquidation scenario. The Monitor believes that finding a purchaser for the Quebec Properties at any significant price would be highly unlikely and the Quebec Properties have only future exploration value. The Companies’ most likely realization from these properties relates to the NAFTA claim which is discussed in the NAFTA claim section of this report. 9.4 The Monitor notes that the current book value of the Quebec Properties is quite high at approximately $35 million. This is because, historically, costs incurred with respect to the Quebec Properties were capitalized as “unproven property and equipment” on the Companies’ financial statements, in accordance with the full cost method of accounting used by the Companies. Liard Properties 9.5 The Liard Properties are located in a remote area of the Northwest Territories, and are a prospective shale gas play in the Liard Basin. The Liard Basin is generally an undeveloped and relatively unexplored region that straddles the Yukon Territory, the Northwest Territories and the province of British Columbia. Various industry players, including Lone Pine Resources, have publicly stated that the play has significant development potential for dry natural gas. Lone Pine Resources believes that the shale gas play in the 24 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 Liard Basin has significant potential and that the prospective resource, while undefined, is quite large. Competitors operating in the Liard Basin confirm Lone Pine Resources’ belief that the Liard Basin is a significant prospective shale gas resource. 9.6 However, due to the remote location and the geology of the Liard Properties, drilling and capital costs are extremely high and estimated at between $15 million to $25 million per horizontal well as compared to $5 million to $10 million at other locations in Alberta. To date, the Companies’ development activities on the Liard Properties have been limited to re-entering and recompleting an existing non-producing vertical test well in order to increase the Companies’ understanding of the asset. Engineering estimates from the reentered test well were positive and confirmed the Companies’ expectation that the Liard Properties may be a significant resource. 9.7 Lone Pine Resources advises the Monitor that LPRC’s development activity of its Liard Properties has been limited due to the limited capital budget available to the Companies and the continuing depressed price of natural gas. Based on the Companies’ engineering estimates, it would not be economical to develop the Liard Properties with the current market price of natural gas. Lone Pine Resources estimates that to break even on developing the Liard Properties natural gas would have to be in the range of $5.50 per Mcfe, which represents a premium of approximately 160% over the market price for natural gas in Alberta (the AECO-C spot price) at the date of this report. 9.8 The Monitor has reviewed publically available information from competitors of Lone Pine Resources operating in the Liard Basin. The Monitor notes that Lone Pine Resources’ competitors confirm that the prospective resources in the Liard Basin are currently not economical to develop. Competitors have publically stated that North American natural gas prices will limit immediate development of the Liard Basin and that significantly higher natural gas prices are required to make the development of the Liard Basin commercially viable. Competitors are at various stages of exploring the Liard Basin, but the current market consensus is that projects in the Laird Basin are uneconomical given the current low price of natural gas. 9.9 Certain competitors are taking part in liquefied natural gas (“LNG”) projects on the west coast of British Columbia, which may enhance the economic viability of developing the Liard Basin; however, these LNG projects are still a number of years away from being developed. Furthermore, it is anticipated that many of these prospective LNG projects will secure supply from the Montney and Horn River gas fields that are currently being developed before the Liard Basin. Both the Montney and Horn River gas fields have 25 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 lower cost structures and are closer to the proposed West Coast LNG terminals, making them more economical to develop. 9.10 Additionally, there is currently a concern with respect to LPRC’s land rights to the Liard Properties. Lone Pine Resources has been aware for a number of years that the Companies’ land rights would contractually expire in February 2013 if action was not taken to extend those rights. Accordingly, LPRC had to take steps to extend those rights, which it commenced in 2012. In May 2013, Lone Pine Resources disclosed that the National Energy Board of Canada had granted Lone Pine Resources a commercial discovery declaration for mineral and surface rights, which was the first necessary step toward extending LPRC’s land rights. Subsequently, LPRC requested a 21 year lease extension from Aboriginal Affairs and Northern Development Canada (“AANDC”). The Companies require the sign off and approval of AANDC before continuing any further development of the Liard Properties. Management is hopeful that they will receive a positive decision with respect to the land rights in early 2014. In the event that the AANDC application is denied, the Liard Properties could represent a liability to the Company due to cleanup costs associated with test well drilling on the Liard Properties. 9.11 Assuming LPRC’s lease extension is granted by AANDC, the Companies would be in a position to develop the Liard Properties, seek joint venture partners, or sell the asset. However, due to the issues discussed above, the depressed market prices for natural gas, and the high cost structure of wells, the Liard Properties are not economical to develop in the current market without, among other things, a significant increase in natural gas prices. 9.12 The Financial Advisor has confirmed to the Monitor that there are a very limited number of potential investors looking for prospective shale gas assets either from an outright purchase perspective or with respect to a joint-venture partnership. The Financial Advisor indicated that the area around the Liard Properties has gained some investor attention over the past year and that some competitors of Lone Pine Resources have large positions in the area and have spoken encouragingly about their own assets. 9.13 The Financial Advisor confirmed that as part of the Sales Process, the Financial Advisor reached out to at least two competitors with assets in the Liard Basin to market the Liard Properties. Both competitors confirmed that they were not interested in purchasing the Liard Properties. 26 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 9.14 Due to the limited development in the Liard Basin, there are very few reasonable comparable transactions to assist in valuing the Liard Properties. The Financial Advisor has suggested that some transactions in the Horn River Basin may provide some comparable transactions, however the Financial Advisor expects that any assets in the Liard Basin would likely see a very significant discount to Horn River Basin opportunities, as very little is known about the Liard Basin at this time as there is minimal production history or demonstration of long term productivity and forecasted development costs are very high. The Monitor also understands that there have been no Liard Basin land sales in the past two years. 9.15 The Financial Advisor’s analysis of the Liard Properties indicates that property values per acre may range between $0 per acre to $565 per acre based on other gas plays. This would indicate that the Liard Properties may be worth between $0 million to $30 million if a purchaser can be located. However, as noted previously, there are no recent direct comparables for the Liard Basin and there have been no land sales which could also be used as a basis for comparison. The Monitor has reviewed comparable sales in surrounding gas plays and agrees with the assessment by the Financial Advisor. The Monitor’s analysis of comparable transactions indicates that transactions in the Horn River Basin have historically been in the range of $1,000 per acre, but these projects are more economically developable as compared to the Liard Basin. Accordingly, the Monitor would expect a potential purchaser to pay substantially less than $1,000 per acre for properties in the Liard Basin. Hutch Properties 9.16 In early 2012, the Companies spent approximately $7.5 million acquiring the Hutch Properties, which consist of approximately 100,000 net acres. This asset has not yet been drilled or developed and Lone Pine Resources has been actively seeking ‘farm-in’ partners over the past year with no success. Given the fact that Lone Pine Resources has not spent any money developing the Hutch Properties, the Monitor expects that the Companies would receive a maximum value of approximately $7.5 million if Lone Pine Resources attempted to sell these properties. Other Miscellaneous Properties 9.17 Lone Pine Resources has informed the Monitor that there are certain other miscellaneous properties, which include the Hayter Property which currently produces approximately 250 boe/d of heavy oil and certain other Non-Operated Properties collectively currently 27 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 producing approximately 833 boe/d of natural gas. These properties have not been marketed since the IPO (as hereinafter defined) due a mix of poor economics and certain legal issues associated with the Hayter Property. 10. 9.18 The Monitor’s analysis of comparable transactions indicates that the closest comparable transaction for the Hayter Property is the recent acquisition of Black Shire Energy by Twin Butte Energy in October 2013. The comparable transaction equates to an approximate value of $50,000 per flowing boe. Applying this value to the Hayter Property production would result in an approximate value of the Hayter Property of $12.5 million, assuming that an interested buyer could be found for the Hayter Property. 9.19 Applying the mid-point of the value range for the Narraway/Ojay Properties (which are also gas producing properties) of $17,600 per flowing boe/d, would result in an approximate value of the Non-Operating Properties of $14.7 million assuming that an interested buyer could be found for the Non-Operating Properties. 9.20 The Monitor believes that the values calculated above for the Hayter Property and NonOperated Properties would represent the high end of values that may be realized in a going-concern sale of these properties due to the abundance of similar properties for sale, and limited market interest is gas assets for the Non-Operating Properties. Actual values received in a liquidation scenario may be substantially less. FOREST OIL SPIN-OFF RESTRICTIONS 10.1 The Monitor is aware of various restrictions (the “Spin-Off Restrictions”) imposed on the Companies under and pursuant to the provisions of the tax sharing arrangement between LPRI and Forest Oil Corporation (“Forest Oil”) in connection with the IPO (as hereinafter defined) of LPRI that was completed on June 1, 2011 and subsequent Spin-Off (as hereinafter defined) by way of stock dividend by Forest Oil to its shareholders of its remaining shares of common stock of LPRI that was completed on September 30, 2011. Certain stakeholders have raised a concern that the Spin-Off Restrictions may have negatively impacted the Sales Process and questioned whether the provisions of the CCAA would allow the Company to better market its assets without the Spin-Off Restrictions. The Monitor’s views and analysis of the Spin-Off Restrictions in the context of the Sales Process are detailed below. 10.2 The Relevant Spin-Off Restrictions can be summarized as follows: 28 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 10.2.1 The Spin-Off of Lone Pine Resources would have been taxable to Forest Oil if it were treated as part of a “plan” under the US tax code. For the Spin-Off to be treated as a plan, one or more persons would have to acquire 50% or more of the stock of Lone Pine Resources within two years before or after the Spin-Off date. 10.2.2 The tax sharing agreement entered into between LPRI and Forest Oil in connection with the IPO restricts certain actions that may be taken by Lone Pine Resources in order to preserve the tax free nature of the Spin-Off. 10.2.3 An exception to the 50% acquisition rule exists such that if an acquisition of Lone Pine Resources took place after the Spin-Off, the Spin-Off and the acquisition would not be considered part of a plan unless Forest Oil has entered into an agreement, understanding, or arrangement or had engaged in substantial negotiations with the acquirer at some time during the two year period prior to the Spin-Off date. 10.2.4 The tax sharing agreement also, among other things and with certain exceptions, restricts Lone Pine Resources’ ability to divest of assets outside of the ordinary course of business and to sell or issue common stock for a two year period after the Spin-Off Date. 10.3 At the start of the Sales Process, Lone Pine Resources and Forest identified two potential parties with whom Forest or Lone Pine Resources had negotiations during the two year period prior to the Spin-Off. In the context of the Sales Process, the Spin-Off Restrictions would potentially apply to Lone Pine Resources entering into certain transactions with the two parties identified. Notwithstanding the fact that Lone Pine Resources believed there was no evidence of substantial negotiations with these two parties, Lone Pine Resources internally flagged these parties as requiring additional scrutiny in the event that either party submitted an offer to acquire 50% of more of the stock of Lone Pine Resources as part of the Sales Process. 10.4 During the Sales Process the Financial Advisor contacted and marketed one of the two parties that may be subject to the Spin-Off Restrictions. The party did not have sufficient interest to submit an offer or pursue a transaction of any type. As a result, no further analysis was completed with respect to the effect the Spin-Off Restrictions may have had on any transaction with this party. 29 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 10.5 The second party that may be subject to the Spin-Off Restrictions was not contacted during the Sales Process. The Monitor has reviewed the asset portfolio of the second party and notes that the second party has no oil or gas portfolio in Canada and the assets of Lone Pine Resources are of a different focus than other global oil and gas assets owned by the second party. 10.6 The Monitor has discussed the Spin-Off Restrictions with the Financial Advisor to gain an understanding of what impact, if any, these restrictions had on the Sales Processes for the Companies’ assets. The Monitor met with the Financial Advisor on multiple occasions, including an independent meeting and numerous calls with the Financial Advisor where management of Lone Pine Resources was not present. 10.7 During the Monitor’s independent meeting and numerous calls with the Financial Advisor, the Financial Advisor confirmed the following key points regarding the Spin-Off Restrictions: 10.7.1 The Financial Advisor was not intimately aware of the details of the Spin-Off Restrictions; 10.7.2 The Financial Advisor was not aware of the two parties that Lone Pine Resources had internally identified as requiring additional scrutiny in the event that either party submitted an offer; 10.7.3 The Spin-Off Restrictions did not affect the Financial Advisor’s mandate; 10.7.4 Details of the Spin-Off Restrictions were not included in any marketing materials and were not discussed with any of the interested parties; 10.7.5 Not a single interested party raised a question about the existence of the Spin-Off Restrictions or flagged the Spin-Off Restrictions as a reason not to engage in a transaction with Lone Pine Resources; 10.7.6 Not a single interested party raised any concern related to Lone Pine Resources ability to transact; and 10.7.7 10.8 The Financial Advisor is confident that the Spin-Off Restrictions had no impact on the offers received or the Sales Process. Additionally, the Monitor has reviewed the Sales Process documents, the marketing materials, and the Financial Advisor’s engagement letters and confirmed that no information regarding the Spin-Off Restrictions is contained within the respective materials. 30 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 10.9 11. The Monitor’s investigation leads it to conclude that, to the best of its knowledge, the Spin-Off Restrictions did not negatively impact the Sales Process. Lone Pine Resources’ internal analysis identified only two parties to which the Spin-Off Restrictions may have applied and neither party submitted an offer to purchase the assets of Lone Pine Resources during the Sales Process. The Monitor concludes that there does not appear to be any benefit from re-marketing the assets without the Spin-Off Restrictions in place. MONITORS VIEW ON THE SALES PROCESS 11.1 The Financial Advisor has advised the Monitor that the Sales Process was broad and farreaching with respect to parties contacted and the time frame during which the assets were marketed. 11.2 The Financial Advisor broadly canvassed the market and included both strategic and financial counterparties. The Financial Advisor advises that there are approximately 35 companies in Calgary with a sufficient market capitalization and strategic orientation to consider a purchase of the Evi Properties, and fewer potential purchasers of the Narraway/Ojay Properties. Accordingly, the Financial Advisor marketed the assets locally, nationally and internationally to both strategic and financial purchasers, with parties as diverse as private equity funds and state owned oil companies. 11.3 The Financial Advisor has advised the Monitor that the market has been fully canvassed and that the Evi Marketing Process, the Narraway/Ojay Marketing Process and the En Bloc Marketing Process resulted in the highest and best offers available to the Company at that time for the Companies’ assets. 11.4 Additionally, the Financial Advisor has advised the Monitor that it is unlikely that an extension to the En Bloc Marketing Process in the current market would result in an offer being received that is materially better than the offers received from the Evi Marketing Process and the Narraway/Ojay Marketing Process. 11.5 Based on the foregoing, it is the opinion of the Monitor that a full and complete sales process was completed by the Financial Advisor prior to the CCAA proceedings, and that it is highly improbable that another post-filing sales process would yield offers for the Core Assets materially in excess of the values forming part of the various expressions of interest detailed above. The Monitor’s conclusion in this regard is informed by, among other things, the advice of the Financial Advisor, the nature of Lone Pine Resources’ assets, the market conditions that existed during the Sales Process and the CCAA process, 31 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 the Monitor’s understanding of the current depressed condition of the market, and the underlying value of the core assets. 12. 11.6 The Monitor’s independent analysis of the market and comparable transactions indicates the proposed values in the expressions of interest and letters of intent obtained by the Financial Advisor as a result of the Sales Process represent fair value for the assets in today’s market. 11.7 The Monitor notes that available data of publicly declared asset divestitures in the Western Canadian Basin indicate that there is currently approximately 150,000 boe per day of assets in the market, which the Monitor and Financial Advisor view as a significantly greater than the average of the past few years. This excess supply of producing assets on the market has also contributed to the depressed prices of both producing and non-producing assets. In addition, the Monitor understands that many large senior oil and gas players are looking for strategic partners or asset divestitures that are not publicly disclosed, which would further depress the market. BLOW-DOWN SCENARIO AND RESERVE ANALYSIS 12.1 As discussed in the first Granger Affidavit, due to capital constraints, the Companies do not have access to the necessary liquidity that would enable completion of planned capital programs. In the event that the Companies cannot implement the Plan and no additional investment was received (meaning the Companies would not be able to conduct any further drilling), and assuming the Syndicate did not enforce its security, Lone Pine Resources would only be able to realize on Proved Developed Producing (“PDP”) reserves values through operating and producing from its existing wells (a “Blow-down”). The Monitor has performed a Blow-down analysis, based on the following reserve data, to assess the realizable value of the Oil & Gas Properties under this scenario. Reserves 12.2 The table below summarizes the Companies’ December 31, 2012 reserve values, as calculated by the Companies’ independent reservoir engineers, DeGolyer & MacNaughton, which are the basis of the book value of the Companies’ assets. Appendix F provides more details on the book values of the Companies’ oil and gas properties and the accounting methods employed by Lone Pine Resources. The table presents reserves values in accordance with both the Canadian and SEC reserve reporting requirements: 32 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 12.2.1 Canadian reserves reporting is in accordance with the reserves estimation standards and definitions of Canadian National Instrument 51 – 101 (“NI 51 – 101”), Standards of Disclosure for Oil and Gas Activities, and pursuant thereto the Canadian Oil and Gas Evaluation Handbook. 12.2.2 SEC reserve reporting is in accordance with the reserves estimation standards and definitions of Rules 4-10(a) (1)-(32) of Regulation S-X of the SEC. NPV @ 10% December 31, 2012 Reserve Report NI 51 - 101 SEC Future Capital Expenditures Required NI 51 - 101 SEC In CAD $000's Proved Developed Producing (PDP) Proved Developed Non-producing (PNP) Proved Undeveloped (PUD) Total Proved Probable Total Proved + Probable 422,344 6,227 154,512 583,083 258,700 1,550 113,348 373,598 8,200 4,800 370,900 383,900 8,100 1,900 380,000 390,000 483,510 1,066,593 373,598 691,500 1,075,400 390,000 The actual realized reserves value is dependent on: 1. Access to significant capital resources so that the required capital programs as contemplated in the reserve report are completed; 2. Actual prices following a forward looking price curve (NI 51 – 101) or flat price (SEC); and 3. Actual production rates unfolding as expected per the reserve report. 12.3 Under both NI 51 – 101 and SEC reserve reporting, in order for the Companies to realize PDP value, approximately $8 million of future capital expenditures are required. As the PDP reserves are already producing, the nature of the required capital expenditures is less significant as compared to development capital. In order to realize the PUD value, approximately $370 million to $380 million would have to be invested in capital programs. These capital programs would be substantial and consist of drilling programs, major work-overs and other significant investments. Blow-down Analysis 12.4 The Monitor has completed an analysis of a Blow-down of the Companies’ currently producing reserves (the “Blow-down Scenario”) assuming an October 1, 2013 start date and production as forecast in the reserve reports through until 2027. The Blow33 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 down Scenario assumes that no further capital can be invested, and existing wells are allowed to run out their forecast production. The Blow-down Scenario analysis is summarized below using both NI 51 – 101 and SEC reserves reporting requirements and is detailed in appendix G. Per Dec'12 Reserve Report - (000's) Proved Developed Producing NPV @ 10% Est. 2013 reserve value produced to Sept 30 Estimated PDP NPV as at Sep 30, 2013 NI 51 - 101 422,344 (59,100) 363,244 SEC 258,700 (47,400) 211,300 Estimated required G&A to operate (NPV @ 10%) (97,729) (97,729) Blowdown Estimated Value (net of G&A) 265,515 113,571 (196,335) (196,335) 69,180 (82,764) Interest Blowdown Estimated Value (net of G&A + Interest) available for repayment of secured debt Note: Over the estimated life of the reserves, the actual realized cash flows would be subject to price and production curve risk. 12.5 The December 2012 reserve NPV figures have been adjusted for the estimated nine months of production through September 30, 2013. The Monitor notes that the reserve report does not account for the G&A costs required to run production for the estimated 15 year life of the reserves. Accordingly, an estimate of G&A costs is deducted from the estimated remaining PDP value as at September 30, 2013. 12.6 Ignoring interest costs, in the Blow-down Scenario, the estimated net present value of cash flows is estimated to be between $114 million to $265 million under the SEC and NI 51 51-101 assumptions respectively. A blow-down of the Company’s PDP reserves would take approximately 15 years and the estimated net present value of the future cash flows would not be sufficient repay the Company’s total liabilities of approximately $400 million. 12.7 The Monitor notes that in a Blow-down Scenario, debt service payments would still be required as it is highly unlikely that the Syndicate would agree to defer interest during a Blow-down Scenario. Assuming annual interest payments on the Company’s current debt positions of approximately $27.5 million, the estimated net present value of cash flows 34 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 based on the NI 51 - 101 estimates, after accounting for interest, are $69 million. Under SEC assumptions, cash flows turn negative by 2016. 12.8 13. Estimated recoveries under the Blow-down Scenario are significantly less than the Companies’ outstanding liabilities. Accounting for interest payments, recoveries under the Blow-down Scenario would not fully replay the secured amounts owing under the Facility. Accordingly, the Monitor concludes that a Blow-down Scenario is not a viable recovery method for the Companies’ producing reserves. LIQUIDATION ANALYSIS 13.1 As the Blow-down Scenario is not a viable alternative to the Plan, we set out below the Monitor’s views on the recoveries available to these creditors under an orderly liquidation, which is the only other alternative to the Plan. 13.2 The Monitor has prepared a liquidation analysis (the “Liquidation Analysis”) which estimates the recoveries assuming an orderly liquidation of all of the assets of the Companies, which is summarized below. Liquidation Analysis As At January 10, 2014 $ 000's Asset Liquidation Value High Low Note Core Assets Evi Properties Narraway/Ojay Properties 150,000 75,000 125,000 70,000 1 1 Non-Core Assets Quebec Properties Liard Properties Hutch Properties Hayter Property and Non-Operated Properties Total Estimated Realizations 5,000 30,000 7,500 27,000 294,500 5,000 20,000 220,000 2 3 4 5 Estimated Costs of Realization (10,000) (15,000) 6 Liabilities Estimated DIP Loan (net of cash balance) at Jan 10, 2014 (9,339) (9,339) Secured Amounts Owing to Syndicate (188,362) (188,362) Amount available for distribution to unsecured creditors 86,799 7,299 Unsecured Creditors Surplus (Deficiency) Recovery percentage for Affected Unsecured Creditors 35 (220,000) (220,000) (133,201) (212,701) 39% 3% 7 8 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 Note: The Liquidation Analysis has been prepared on the basis of an orderly liquidation of the Companies’ assets over a period of approximately six months. Asset values are based on recent offers received for the Core Assets and estimates of value for the NonCore Assets based on comparable transactions (as described previously in this report). The Liquidation Analysis assumes that the operating costs run are funded by accounts receivable collections through the orderly liquidation and offset at a break-even level. The Liquidation Analysis excludes any potential recoveries from potential contingent litigation claims which are discussed later in this report. Note 1: High and low realization value equal to the highest and second highest offers received in the respective marketing processes for the Evi Properties and the Narraway/Ojay Properties. Note 2: Estimate of potential value of Quebec Properties. Note 3: Estimate based on selling 53,000 acres at between $0 and $565 per acre. Note 4: As no development has occurred on the Hutch Properties, the high estimate is equal to the 2012 acquisition cost of the Hutch Properties. The low estimate assumes a discount of approximately 33% to the 2012 acquisition cost. Note 5: Estimate based on comparable per flowing barrel transactions pricing. Low scenario assumes a 25% discount to high value. Note 6: Costs of realization include estimates of operating and holding costs incurred during the liquidation, as well as professional fees and sales commissions. Note 7: Estimated $10 million draw on DIP Loan, net of closing cash balance, as at January 10, 2014, per the November 23 Cash Flow Forecast filed with the Court. Note 8: Estimated unsecured claims of $220 million are based on the anticipated accepted claims. In the event of a liquidation, there would be additional claims of employees, critical suppliers and joint venture partners and other trade creditors who have continued to support the Companies during the CCAA proceedings. 13.3 The total estimated realizable value of Lone Pine Resources’ assets in the Liquidation Analysis outlined above is between $220 million and $295 million in the low and high scenario respectively. This amount is significantly less than the Companies’ secured and unsecured liabilities of approximately $418 million. The Liquidation Analysis indicates that a realization of between 3 cents on the dollar to 39 cents on the dollar may be realized by unsecured creditors in an orderly liquidation. 13.4 It is important to note that the low scenario does not necessarily represent a ‘worst case’ scenario and there is the potential for additional downside to the Monitor’s Liquidation Analysis. Furthermore, the Liquidation Analysis assumes that the Companies will be able to sell all of their assets. In the event that the Companies are unable to sell all of their 36 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 assets, the Companies may be forced to expend what could be significant costs in performing the abandonment and environmental cleanup of certain properties. 14. 13.5 The Monitor notes that at the time of writing this Sixth Report, the spot price of natural gas has recently increased. The Monitor does not consider this increase to be an event that would materially impact the value of the Core Assets, as potential purchasers of the Narraway/Ojay Properties would not have priced their offers based on spot prices for natural gas, but instead based their offers on a forward price curve of future prices for the underlying commodity. Day-to-day and seasonal swings in natural gas prices are normal and would be built into a forward price curve as well as being part of the expectation of any potential purchaser of the Core Assets. 13.6 Additionally, the Monitor notes that the offers received in the Sales Process, which have been used in the Liquidation Analysis, are non-binding proposals or verbal expressions of interest. As a result, there is significant risk that Lone Pine Resources would not be able to close on the offers, or that the purchase price may be reduced during further negotiations with the counter-parties. The Monitor notes that the Companies’ production levels have declined since the conclusion of the Sales Process, which would further decrease values, and the Monitor is aware of a number of recent asset sales which have attracted little or no interest due to the excess supply in the market. These factors may result in a materially lower realization for the Core Assets than the values indicated in the Liquidation Analysis. 13.7 Given the current market conditions and uncertainty associated with realizing upon the Companies’ assets, and the factors discussed above, the Monitor would expect that a liquidation of the Companies’ assets would likely result in a realization that would trend toward the lower end of the Liquidation Analysis value recovery range. MONITOR’S COMMENTARY ON THE PLAN Affected Unsecured Creditors – Cash Pool Creditors 14.1 The Plan provides that Creditors with Affected Unsecured Claims of up to $10,000 will receive their pro-rata share of the Cash Pool of $700,000. Additionally, it is expected that certain Affected Unsecured Creditors holding Affected Unsecured Claims greater than $10,000 may make a Cash Election to reduce their claim to the $10,000 Cash Pool Cap, in which case they shall also receive their pro-rata share of the Cash Pool under the Plan. The maximum distributable amount from the Cash Pool is $700,000. 37 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 14.2 Assuming trade creditors with Affected Unsecured Claims of less than $20,000 make a Cash Election, the Monitor estimates that Cash Pool Creditors, which will represent approximately 85% of trade creditors, will receive a far higher return from the Cash Pool Creditor's Pro-Rata Share of the Cash Pool pursuant to the Plan than they would receive in a liquidation. However, Affected Unsecured Creditors with balances greater than $20,000 who make the Cash Election may recover less than they would receive in a liquidation, if recoveries are at the higher end of the liquidation range. 14.3 The Monitor does not view this as an issue with respect to the fairness of the Plan, as these Affected Unsecured Creditors are knowingly electing into the Cash Pool based on their individual analysis of the Plan and their own liquidity preferences/requirements. Affected Unsecured Creditors (other than Cash Pool Creditors) 14.4 In summary, as detailed in section 5 of this report, the Plan provides that each Affected Unsecured Creditor (other than Cash Pool Creditors) with an Allowed Affected Unsecured Claim will receive their pro-rata share of newly issued LPRC Class A Voting Common Shares and LPRI Class A Voting Common Shares (the “New Shares”). In the Monitor’s view, the key relevant matters of note with respect to the New Shares are: 14.4.1 While the final number of New Shares to be issued to Affected Unsecured Creditors has not been determined, a sufficient number of New Shares will be issued such that all Affected Unsecured Creditors will receive an appropriate allocation based on their respective pro-rata allocation of the New Shares; 14.4.2 Due to the $100 million to $110 million of LPRC Preferred Shares being issued as a part of the New Investment, it is expected that, on a fully diluted basis, the LPRC Class A Voting Common Shares distributed to Affected Unsecured Creditors will be diluted down to an effective interest of approximately 25% of the equity of LPRC after Plan implementation; 14.4.3 Due to the Accretion Rate of 10% per year on the LPRC Preferred Shares, on a fully diluted basis, the LPRC Class A Voting Common Shares distributed to Affected Unsecured Creditors will be further diluted with the passage of time until the LPRC Preferred Shares are redeemed or converted; 14.4.4 Under the Plan, Affected Unsecured Creditors who are Qualified Unsecured Creditors and want to avoid being diluted, are being given an equal opportunity 38 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 to participate in their pro-rata share of the New Investment, as well as participate as a Backstopper under the Plan to share in their pro-rata share of the Backstopper Payment Amount of approximately $4 million; 14.4.5 As detailed in the Companies’ Information Circular, the New Shares will not be publicly listed on a securities exchange and there is no guarantee that an active trading market will develop for the New Shares. Accordingly, Affected Unsecured Creditors receiving New Shares may not be able to resell their New Shares; and. 14.4.6 A valuation has not been performed on the pro-forma restructured Companies. The value, if any, of the Companies post-CCAA emergence is unknown at this time. The Company has advised the Monitor that it will provided Affected Unsecured Creditors, upon their execution of a non-disclosure agreement, the financial and capital plans of the recapitalized Companies with which they can form their views on the Companies’ future prospects. 14.5 In assessing whether the New Share consideration to be distributed to Affected Unsecured Creditors under the Plan is superior to the value that may be received in a liquidation, the Monitor highlights the following: 14.5.1 With respect to the distribution of New Shares (and with the exception of the Cash Pool Creditors who will not receive New Shares), Affected Unsecured Creditors of the Companies are all treated equally, as the Plan distributes the New Shares to all Affected Unsecured Creditors on a pro-rata basis; 14.5.2 The implied value of the New Shares, following the dilution resulting from the New Investment, is approximately $33 million, on the basis that the participants in the New Investment will receive 75% of the equity of the Companies for their $100 million investment. With an implied value $33 million, the Affected Unsecured Creditors will receive consideration in New Shares that is greater than the low range of the liquidation values, which the Monitor assesses as a more likely representation of liquidation value given the current market conditions; 14.5.3 Every Affected Unsecured Creditor that is a Qualifying Unsecured Creditor, is being given an equal opportunity to participate in their pro-rata share of the New Investment, as well as participate as a Backstopper under the Plan, which allows any such electing Affected Unsecured Creditor to prevent itself from being diluted by the New Investment and the Accretion Rate on the LPRC Preferred Shares; 39 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 14.5.4 The New Investment will allow the Companies to further develop the Core Assets, which may further increase the value of the Companies. The Monitor can confirm that the 2014 drilling program commenced in November 2013 in anticipation of a successful CCAA restructuring and recapitalization; and 14.5.5 14.6 The restructured Companies may be able to generate additional capital to develop non-core undeveloped assets such as the Liard Properties and the Hutch Properties in the medium to longer term, which may further increase the longer term value of the Companies. The Initial Consenting Noteholders and other Affected Unsecured Creditors that are party to the Support Agreement (the “Consenting Creditors”) represent approximately 70% of the value of the Affected Unsecured Claims, are providing the majority of the New Investment, and are backstopping the full New Investment amount. The Monitor considers these Consenting Creditors to be a group of sophisticated investors that consider the Plan, combined with the New Investment, will provide a return that is superior to the return from an orderly liquidation. Summary Distribution Table 14.7 The table below summarizes the proposed distributions under the Plan: Estim ated claim s Affected Unsecured Creditors Senior Notes: $213.7 million Pro-rata share of newly issued: 1) LPRC Class A Voting Common Other Affected Unsecured Shares; Creditors: $6 million 2) LPRI Class A Voting Common Shares; and 3) If a Backstopper, pro-Rata Share of the approximately $4,000,000 Backstop Amount (4% of the New Investment Amount) 100% of new LPRC and LPRI Class A Voting Common Shares representing approximately 25% of equity of Companies on fully diluted basis after New Investment. Approximately $300K of Cash Pro-Rata share of Cash Pool Pool Claimants with claims less than $10K. $700,000 Cash Pool Creditors Proposed Plan Distribu tion Value of Proposed Plan Distribu tion Class Unknown number of Cash Elections. 40 Implied value of approximately $33 million LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 Existing Shareholders 14.8 As noted above, the Plan proposes cancelling all of the existing shares of LPRI for no consideration. Therefore, the Plan does not contemplate any recovery for existing shareholders of LPRI. Furthermore the Plan proposes that only Affected Unsecured Creditors are eligible to vote on the Plan and therefore Existing Shareholders will not vote on the Plan or attend the Meetings. Other Considerations 15. 14.9 The Plan meets the criteria outlined in Section 6 of the CCAA, namely in respect of the treatment of certain priority payments. 14.10 The Plan is conditional upon the Sanction Order being granted. The Sanction Order is to exclude the applicability of Section 36.1 of the CCAA and Sections 95 to 101 of the Bankruptcy and Insolvency Act (the “BIA”) and any other provincial or federal law relating to preferences, fraudulent conveyances, or transfers at undervalue to the Plan or to any payments, distributions, transfers, allocations or transactions made or contemplated in connection with the Recapitalization, whether before or after the Filing Date, including, without limitation, to any and all of the payments, distributions, transfers, allocations or transactions contemplated by and to be implemented pursuant to the Plan. The Monitor is unaware of any reason why such a provision in the Sanction Order would not be appropriate under the circumstances. MONITOR’S CONCLUSION ON FAIRNESS AND REASONABLENESS OF THE PLAN 15.1 The Monitor has developed its conclusion on the fairness and reasonableness of the Plan taking into account the interests of numerous stakeholders having various interests in the Companies and the Plan and the current economic realities, including the demands of the Syndicate. The Monitor and its counsel have expended a significant amount of time and effort in thoroughly analyzing the values of each Core Asset and Non-Core Asset of the Companies, as well as certain other potential recoveries from potential contingent litigation claims. 15.2 In summary, the Companies require new capital to fund their drilling programs and restructure their balance sheet. The Plan has been developed after 15 months of extensive work by management and its financial advisors to explore all strategic options. 41 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 15.3 The Plan represents a compromise in which Affected Unsecured Creditors will recapitalize the Companies through the conversion of their claims to New Shares and each Affected Unsecured Creditor is being given an equal opportunity to participate in their pro-rata share of the New Investment. 15.4 In the Monitor’s view: 15.4.1 The Plan provides for payments to Cash Pool Creditors which will exceed the payment that the Cash Pool Creditors would likely receive in a liquidation; 15.4.2 Pursuant to the Plan, all non-Cash Pool Affected Unsecured Creditors are being treated equally: 15.4.2.1 The Plan provides that Affected Unsecured Creditors will each receive their pro-rata interest in all of the assets of the Companies post Plan implementation through their pro-rata ownership of the New Shares; 15.4.2.2 Every Affected Unsecured Creditor that is a Qualifying Unsecured Creditor, is given an equal opportunity to participate in their pro-rata share of the New Investment, as well as participate as a Backstopper under the Plan; and 15.4.2.3 The New Shares will have an implied value of approximately $33 million which is greater than the low range of the potential recoveries for unsecured creditors under a liquidation. However, the Monitor reiterates that fact that there is no certainty that Affected Unsecured Creditors who receive these shares will be able to trade them unless a liquidity event such as a public offering or a secondary market develops in the future; 15.4.3 The implementation of the Plan is beneficial as it will result in the preservation of the business as a going concern, thereby providing additional benefit to employees, suppliers and joint venture partners; and 15.4.4 Based on the Liquidation Analysis and the Monitor’s analysis and conclusion relative to the recoveries for the contingent litigation claims, the Existing Shareholders have no economic interest in the Companies. 15.5 Accordingly, it is the Monitor’s view that the Plan is fair and reasonable including the fact that the Plan provides no recovery for Equity Claimants. 42 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 16. OTHER POTENTIAL RECOVERIES 16.1 The Monitor has performed an analysis of the potential recoveries that might arise as a result of the prosecution of the NAFTA claim described below (the “NAFTA Claim”) in addition to causes of action identified by certain shareholders that might be asserted by LPRI as against Forest Oil relating to the IPO and spin-off of Lone Pine in 2011 (the “Spin-Off Claims”). An overview of these claims is set out below. 16.2 As part of this analysis, the Monitor and its Canadian and US counsel have had access to certain confidential internal Lone Pine Resources and Forest Oil documents as well as Lone Pine Resources documents that are privileged. The Monitor is in the process of preparing a Confidential Supplemental Report to the Sixth Monitor’s Report which will provide a comprehensive and detailed analysis of the Monitor’s findings, analysis and conclusion with respect to the NAFTA Claim and the Spin-Off Claims, which will be filed at a later date with the Court under seal and only available to certain parties. NAFTA Claim 16.3 LPRI, and its predecessors expended approximately $13 million to obtain permits and approvals from the Government of Quebec to mine for oil and gas beneath the St. Lawrence River. On May 12, 2011, the Government of Quebec introduced new legislation that revoked one of the five permits pertaining to drilling for oil and gas resources beneath the St. Lawrence River. The legislation was passed on June 10, 2011 and received Royal Assent three days later 16.4 As a result of the Government of Quebec revoking the permit to develop certain properties beneath the St. Lawrence River, LPRI launched a NAFTA Chapter 11 Arbitration Claim (the “Arbitration Claim”) against the Government of Canada on behalf of LPRC. The Arbitration Claim relates to the Government of Quebec’s action, which LPRI alleges violated Canada’s obligations under NAFTA Chapter 11 in relation to the business of LPRI’s Canadian subsidiary LPRC. The Arbitration Claim seeks damages in an amount to be proven in the arbitration proceedings. LPRI indicated in the Arbitration Claim that its estimate of damages as at September 6, 2013 is in excess of $250 million. 43 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 SPIN-OFF CLAIMS 16.5 On May 26, 2011, Forest Oil caused LPRI to commence an initial public offering whereby LPRI offered and sold 15 million shares to the public at a price of US$13.00 per share, and listed its common stock on the New York Stock Exchange and the Toronto Stock Exchange (the “IPO”). The IPO closed on June 1, 2011. 15 million shares were sold and net proceeds in the amount of approximately $178 million were received. 16.6 In order to facilitate the IPO, Forest Oil contributed, immediately prior to the IPO, all of the shares it directly held in LPRC (as well as its interests in Wiser Oil and Wiser Delaware, though which Forest Oil indirectly held all remaining shares of LPR Canada) to LPRI in exchange for 69,999,999 shares of common stock of LPRI and cash consideration of US$29 million. LPRI used the proceeds from the IPO, together with borrowings under a third party credit facility, to repay intercompany obligations previously owing to Forest Oil. As a result of the IPO transactions, Forest Oil owned more than 80% of the then outstanding share capital of LPRI immediately after the IPO. Pursuant to a Separation and Distribution Agreement dated May 25, 2011 between LPRI and Forest Oil the framework was established relating to the subsequent stock dividend by Forest Oil to its shareholders of its remaining 70,000,000 shares of common stock of LPRI (the “SpinOff”). 16.7 The Monitor through its US and Canadian Counsel has undertaken an extensive review of potential causes of action that certain stakeholders have alleged may have arisen in connection with the IPO and Spin-Off. The potential causes of action that the Monitor has analyzed under Delaware law are as follows: 1. Intentional fraudulent transfer against Forest Oil; 2. Constructive fraudulent transfer against Forest Oil; 3. Recharacterization against Forest Oil; 4. Breach of fiduciary duty against the directors and officers of LPRI; 5. Breach of fiduciary duty against the directors and officers of Forest Oil; 6. Aiding and abetting a breach of fiduciary duty against Forest Oil; 7. Breach of fiduciary duty as a promoter against Forest Oil; 8. Liability against the directors of each of LPRI and Forest Oil for unlawful payment of dividends; and 9. Unjust enrichment against Forest Oil. 44 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 16.8 The Monitor has also considered potential avoidance actions that certain stakeholders have alleged may be commenced under Canadian law (transfers at undervalue or preferences) in respect of the Spinoff and in respect of any and all asset dispositions consummated in the applicable periods prior to commencement of the CCAA proceedings in addition to oppression claims against Forest Oil under the Business Corporations Act, RSA 2000, c B-9 (the “ABCA”), having regard to the fact that Forest Oil was an affiliate of both LPRI and LPRC prior to the Spin-Off. Conclusion 16.9 As will be detailed in the Confidential Supplement, the Monitor’s US and Canadian Counsel have provided an extensive analysis of the viability of the NAFTA Claim and Spin-Off Claims together with their view of possible damages recoverable by LPRI. The Monitor has considered such analysis and concluded that the quantum of the potential recoveries to Lone Pine Resources in connection with the NAFTA Claim and the Spin-Off Claims is not sufficient to alter its conclusion that the Plan is fair and reasonable including, without limitation, the fact that the Plan provides no recovery for Equity Claimants. This report is respectfully submitted this 10 th day of December, 2013. PricewaterhouseCoopers Inc. Court Appointed Monitor of Lone Pine Resources Inc. et al Paul Darby Senior Vice President Jamie Cartwright Vice President 45 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 APPENDIX A SEC definition of Accredited Investor 46 Accredited Investors Page 1 of 2 Home | Previous Page Accredited Investors Under the Securities Act of 1933, a company that offers or sells its securities must register the securities with the SEC or find an exemption from the registration requirements. The Act provides companies with a number of exemptions. For some of the exemptions, such as rules 505 and 506 of Regulation D, a company may sell its securities to what are known as "accredited investors." The federal securities laws define the term accredited investor in Rule 501 of Regulation D as: 1. a bank, insurance company, registered investment company, business development company, or small business investment company; 2. an employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million; 3. a charitable organization, corporation, or partnership with assets exceeding $5 million; 4. a director, executive officer, or general partner of the company selling the securities; 5. a business in which all the equity owners are accredited investors; 6. a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person; 7. a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or 8. a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes. For more information about the SEC’s registration requirements and common exemptions, read our brochure, Q&A: Small Business & the SEC. http://www.sec.gov/answers/accred.htm http://www.sec.gov/answers/accred.htm 12/5/2013 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 APPENDIX B Evi Properties Teaser 47 September 2012 Slave Point Light Oil Opportunity Strictly Private and Confidential Lone Pine has been the leading developer of the Slave Point since drilling its first multi-frac horizontal well into the play in 2005 Lone Pine is a ~$580(5) million enterprise value, independent exploration, production and development company with a 10 year track record of successful growth in Canada; the Company trades on both the Toronto (TSX) and New York (NYSE) stock exchanges Company Overview Company lands are largely 100% working interest and 95% operated allowing for controlled pace of development and capital investment Company controlled pace of development: locations providing attractive on stream costs of ~$20,000(4) per flowing barrel and rates of return of ~ 50(4)% before tax, on a per well basis Development economics: Low capital development locations at Dec. 31, 2011 and 300+(3) other identified drilling locations (both infill and step-out) supported by geological mapping from over 2,500 Slave Point penetrations in the region Significant drilling inventory: 237 P+P net drilling infrastructure with Q2 net production of 3,689 bbl/d (39°API) light sweet oil from 94(2) horizontal and 53(2) vertical gross locations Established high netback production: Developed ongoing Evi Slave Point development, with estimated OOIP of 635 to 1,270(1) MMbbls on Company lands Light oil resource play: 81,535 net acres in the core of Opportunity Highlights (3) Other identified drilling locations as based on geological mapping and internal estimates of hydrocarbon resource potential (4) RBC illustrative Evi area 105 Mbbl EUR short horizontal Slave Point well and flat US$100/bbl WTI (5) As at Sept. 21, 2012 1 (1) Estimated Original Oil In Place based on 127 net sections and resource of 5-10 MMbls/section per industry estimates / (2) As at August 2012 Lone Pine Resources Inc. (“Lone Pine” or the “Company”) has retained RBC Capital Markets (“RBC”) as its exclusive agent to coordinate a process to solicit and evaluate proposals to accelerate value realization from its interest in the Slave Point light oil resource play located in the greater Evi area of Alberta, Canada. Transaction alternatives may include a joint venture, farm-in, or other arrangement Slave Point Light Oil Opportunity 2 (1) Source: Geoscout as at Sept. 2012 (2) As per industry estimates Regional Depositional Environment Shallow depths (1,200 to 1,500 m) resulting in attractive drilling and completion costs Industry estimated primary recovery factor of 15 to 20%, with potential to increase recovery up to 30% via future water flooding Thick tight carbonate resource yielding on average 5-10(2) MMbbl of OOIP on a per section basis, supporting downspacing opportunities NI 51-101 P+P reserves of 35.8 MMbls at Dec. 31, 2011 Resource potential well defined with over 2,500 well penetrations (from historical deeper conventional development) Light sweet crude oil (39° API) from regionally extensive carbonate platform, delivering high productivity wells Proven Reservoir Performance and Predictable Geology Companies now focused on low risk infill and step out drilling with more than 380(1) wells licensed into the play Area players such as Penn West, Harvest, Pinecrest and others continue to actively develop the play, committing large capital budgets for 2012 Lone Pine acreage acquired early and situated in the heart of the resource fairway, surrounded by industry development Area Activity Source: Lone Pine, Geoscout, RBC Rundle Regional Development Activity Proven Resource Play, Highly Competitive Landscape Historical Slave Point Development Activity ~ 70% CAGR from May 2007 to May 2012 Illustrative Evi Area Short Horizontal Type Curve(3) Waterflood has potential to significantly increase recovery factor and realize unbooked future upside Lone Pine and industry are evaluating waterflood potential based on successful area analogues (Loon waterflood in operation since 1992) Future Upside – Infill Drilling and Waterflood 237 NI 51-101 P+P net drilling locations at Dec. 31, 2011 and 300+ other identified drilling locations Maximize capital efficiency by evaluating per section potential and highgrading downspacing opportunities Systematically pursuing low risk infill and step out locations 137 gross / 127 net Slave Point sections, 95% operated lands Lone Pine is a top tier, experienced operator with 94(2) horizontal wells completed in the Slave Point Formation since 2005 Industry Leading Results; Identified Development Plan 3 (1) Lone Pine Evi, Red Earth and Loon Slave Point historical working interest production as per Geoscout up to June 30th, 2012 (2) As at August 2012 (3) RBC illustrative Evi area 105 Mbbl EUR short horizontal Slave Point well Current vs. Regulatory Approved Drilling Density Monthly Oil Production, bbl/day Lone Pine Slave Point Production Growth(1) Experienced Operator, Significant Upside Inventory Slave Point Development Upside Oil Rate (bbl/d) 4 Management Presentations: Lone Pine representatives will provide technical presentations in Calgary to interested parties who have executed a Confidentiality Agreement Inquiries: All inquiries and requests shall be submitted or directed to the RBC individuals listed as contacts. Lone Pine, its subsidiaries and affiliates should not be contacted directly Submission of Proposals: Detailed instructions for submitting a Proposal will be distributed in advance of the deadline to those that execute a Confidentiality Agreement Confidential Information: Will be made available to participants via a virtual data room upon signing a Confidentiality Agreement Confidentiality Agreement: Please contact the RBC contacts listed to receive a Confidentiality Agreement Process Overview Next Steps and Key Contacts Jeff Meunier – Primary Contact Director 403-299-8461 [email protected] Jennifer Nugent Vice President 416-842-7707 [email protected] Greg Heath – Primary Contact Managing Director 403-299-6940 [email protected] Michael Povaschuk Associate 403-216-4851 [email protected] Corey Fraiberg Managing Director 416-842-5492 [email protected] 5 This Memorandum contains forward-looking statements and information within the meaning of applicable United States and Canadian securities legislation, including Section 27A of the United States Securities Act of 1933 and Section 21E of the United States Securities Exchange Act of 1934 ("forward-looking statements") with respect to Lone Pine and the Assets. This information is being provided solely in connection with a potential transaction involving any or all of the Assets, and not for any other purpose, including the purchase of any securities of Lone Pine. Any forward-looking statements or information regarding the Assets are provided subject to the disclaimers and obligations of confidentiality outlined above. The forward-looking statements in this Memorandum is based on management's current beliefs, expectations and assumptions, based on currently available information as to the outcome and timing of future events. Lone Pine cautions that its future oil, natural gas and natural gas liquids production, revenues, cash flows, liquidity, plans for future operations, expenses, outlook for oil and natural gas prices, timing and amount of future capital expenditures, and other forward-looking statements are subject to all of the risks and uncertainties normally incident to the exploration for and development and production and sale of oil and gas. Advisory on Forward-Looking Information For convenience, references in this document to "Lone Pine", the "Company", "we", "us" and "our" may, where applicable, refer to and include any relevant direct and indirect subsidiary corporations of Lone Pine Resources Inc., and the assets, activities and initiatives of such subsidiaries. This Memorandum is for informational purposes only and is not intended to be an offer that is capable of acceptance or create any binding obligation on Lone Pine or RBC Capital Markets, contractual or otherwise, to enter into any transaction with anyone receiving this Memorandum. Lone Pine and RBC Capital Markets also reserve their right at any time to and without prior notice and without assigning any reason therefore, (i) to terminate the further participation by a recipient or any other person or entity in the transaction process, (ii) to modify any of the rules or procedures relating to such process, (iii) to terminate entirely such process and (iv) to amend or supplement the information provided herein. No representation or warranty (whether express or implied) has been made by Lone Pine, RBC Capital Markets or any of their subsidiaries, affiliates or Representatives with respect to the transaction process or the manner in which the transaction process is conducted and any party receiving this Memorandum disclaims any such representation or warranty. Lone Pine, RBC Capital Markets and any of their subsidiaries, affiliates or Representatives are under no obligation to negotiate with or accept any offer or proposal by any person or entity regarding a transaction. None of Lone Pine Resources Inc. (“Lone Pine” or the “Company”), RBC Capital Markets or any of their respective subsidiaries or affiliates or any of their respective officers, directors, shareholders, employees, consultants, advisors, agents or representatives (collectively, "Representatives") make any representation or warranty, express or implied, in connection with any of the information made available pursuant to the transaction process described in this Memorandum, including, but not limited to the assets described herein (the “Assets”), or the past, present or future value of the anticipated production, reserve or resource potential, cash flows, income, costs, expenses, liabilities and profits, if any, to be derived from the Assets. Accordingly, any interested party receiving such information will rely solely upon its own independent examination and assessment of any such information in making a decision on whether and how to submit a proposal in respect of any or all of the Assets. Only such representations or warranties that are contained in a definitive agreement with respect to a transaction, if, as and when executed by the parties thereto, and subject to such conditions or limitations or restrictions as may therein be specified, shall have any legal effect. None of Lone Pine, RBC Capital Markets or any of their subsidiaries, affiliates or Representatives shall have any liability to any party receiving information pursuant to the transaction process described herein, nor to any affiliate, partner, member, officer, director, shareholder, employee, consultant, advisor, agent or representative of such party from the use of any such information in assessing whether and how to submit a bid in respect of any or all of the Assets. Cautionary Statements 6 In this Memorandum, Lone Pine also uses internal estimates of quantities of oil and gas using certain terms, such as “resource potential,” “original oil in place,” “EUR” or other descriptions of volumes of resources potentially recoverable through additional exploratory drilling or recovery techniques, which terms include quantities of oil and gas that may not meet either the SEC’s or NI 51-101 definitions of definitions of proved, probable and possible reserves, and which applicable SEC guidelines and NI 51-101 strictly prohibit Lone Pine from including in periodic filings. These estimates are by their nature more speculative than proved reserves determined under applicable SEC guidelines or NI 51-101, have not been risked by Lone Pine, and accordingly are subject to substantially greater risk of being recovered by Lone Pine. Lone Pine also describes internal estimates of identified drilling locations, which are not, and should not be taken to represent, proved undeveloped drilling locations. The estimates of our reserves disclosed in this Memorandum have been prepared in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (NI 51-101) of the Canadian Securities Administrators and are based on a report from DeGolyer and MacNaughton, an independent petroleum engineering firm, evaluating our reserves as of December 31, 2011. The standards of NI 51-101 differ from the standards of the SEC, and therefore, the reserves disclosure contained in this Memorandum will differ from the information contained in the most of the periodic reports Lone Pine files with the SEC and on SEDAR. Additional information regarding Lone Pine's reserves estimates and other oil and gas information prepared in accordance with NI 51-101 is contained in Lone Pine’s Statement of Reserves Data and Other Oil and Gas Information (Form 51-101F1) filed on SEDAR on March 22, 2012. Other oil and gas information for Lone Pine, including acreage position and estimates of drilling locations, were prepared by Lone Pine’s internal staff of engineers in accordance with the requirements of NI 51-101. Reserves Cautionary Statements LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 APPENDIX C Summary of 2013 Oil Transactions 48 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 APPENDIX D Narraway/Ojay Properties Teaser 49 October 2012 Narraway / Ojay Natural Gas Resource Opportunity Strictly Private and Confidential 1 Total Proved plus Probable reserves as per DeGolyer and MacNaughton December 31st, 2011 NI 51-101 Reserves Report Based on geological mapping, RBC estimates of hydrocarbon resource potential at four wells per section and 90% development efficiency As at October 23, 2012 (2) (3) Lone Pine has been a leading operator in the Narraway / Ojay Deep Basin area since entering the play in 1999 Lone Pine is a ~$556(3) million enterprise value, independent exploration, production and development company with a 10 year track record of successful growth in Canada; the Company trades on both the Toronto (TSX) and New York (NYSE) stock exchanges Company Overview Infrastructure Options and Accessibility: The Companys property has established infrastructure and gathering systems with delivery options to major midstream operators (TCPL, Alliance, Spectra) and potential to feed West Coast LNG projects Company Controlled Pace of Development: Company lands are 69% operated allowing for controlled pace of development and capital investment Significant Drilling Inventory: Potential to drill in excess of 850 gross vertical locations(2) in the stacked Cretaceous/Jurassic Deep Basin area. Locations (both infill and step-out) are supported by 2-D and 3-D seismic over the majority of Company lands Established Production Base: Working interest production of 34.3 MMcf/d of natural gas from 72 wells in August, 2012 Meaningful Resource Base in Proven Play: Approximately 118,000 net acres (68% WI) with 323 Bcf of Total Proved plus Probable reserves(1) plus additional recoverable resource potential of 3 Tcf(2) net sales gas within Company lands in the stacked Cretaceous/Jurassic Deep Basin play Opportunity Highlights (1) Lone Pine Resources Inc. (Lone Pine or the Company) has retained RBC Capital Markets (RBC) as its exclusive agent to coordinate a disposition, joint venture, or other arrangement for interest in the Companys position in the Narraway/Ojay natural gas assets located in the Deep Basin resource play of Northeast British Columbia and Northwest Alberta Narraway/Ojay Natural Gas Resource Opportunity 2 ~720 km2 of 3-D seismic data ~1,500 km of 2-D seismic data Extensive 2-D and 3-D seismic coverage which is critical for well planning and execution Basin centered gas play with 100% drilling success 14 stacked mappable Cretaceous and Jurassic marine and fluvial sand targets across seven formations Play has progressed over time from a structural Triassic play to a Deep Basin stacked Cretaceous/Jurassic sweet gas resource play Low Risk Tight Gas Resource Play with Proven Track Record Additional 2,500 net undeveloped acres (20% WI) in Bullmoose area northwest of Narraway/Ojay with primary term expiry in October, 2017 One well in 2013, four wells in 2014 and one well in 2015 required to continue all lands in Narraway/Ojay to 2019 Strong land tenure exists with minimal capital spend required to continue lands Majority of lands are controlled and operated by Lone Pine (69% operated) Additional 10,100 acres of royalty interest lands (2% - 10% GORR) Approximately 115,500 contiguous net acres (72% WI) in Narraway/Ojay of which 90,000 acres are undeveloped Consolidated Land Position Source: Lone Pine, Accumap, RBC Rundle Area Development Activity Proven Stacked Cretaceous/Jurassic Play, Basin Centered Sweet Gas Deposit Narraway/Ojay Deep Basin Position 3 Sales Gas Production (MMcf/d)_ Regional Infrastructure (3) Illustrative development profile may not reflect Companys internal development plans (2) Based on geological mapping, RBC estimates of hydrocarbon resource potential at four wells per section and 90% development efficiency (1) Total Proved plus Probable reserves as per DeGolyer and MacNaughton December 31st, 2011 NI 51-101 Reserves Report Illustrative Narraway / Ojay Development Profile(3) Additional upside potential through zone specific horizontal development and extensive recompletion opportunities Resource potential well defined with over 850 gross potential development locations(2) at four wells per section Large resource base allows for long term development programs (2P Reserves of 323 Bcf(1) and additional recoverable resource potential of ~3 Tcf(2)) Significant Development and Resource Potential Company controls NEB regulated cross border pipeline Access to Alberta and British Columbia markets provides marketing options and opportunity to supply West Coast LNG projects Uniquely situated with multiple delivery options to access TCPL, Alliance and Spectra systems Existing gathering systems allow for short rig release to tiein cycle times (65 days for 100/15-26-063-13W6) Infrastructure Considerations Strategically Situated, Large Resource Base Narraway/Ojay Resource Potential and Infrastructure Setting Cumulative Wells Drilled (#) 4 Management Presentations: Lone Pine representatives will provide technical presentations in Calgary to interested parties who have executed a Confidentiality Agreement Inquiries: All inquiries and requests shall be submitted or directed to the RBC individuals listed as contacts. Lone Pine, its subsidiaries and affiliates should not be contacted directly Submission of Proposals: Proposals must be submitted by Wednesday, December 12th, 2012 at 12:00 noon, MST. Detailed instructions for submitting a Proposal will be distributed in advance of the deadline to those that execute a Confidentiality Agreement Confidential Information: Will be made available to participants via a virtual data room upon signing a Confidentiality Agreement Confidentiality Agreement: Please contact the RBC contacts listed to receive a Confidentiality Agreement Process Overview Next Steps and Key Contacts Scott Nieboer Associate 403-299-7365 [email protected] Jeff Meunier Primary Contact Director 403-299-8461 [email protected] Jennifer Nugent Vice President 416-842-7707 [email protected] Greg Heath Primary Contact Managing Director 403-299-6940 [email protected] Warren Orban Vice President 403-299-8456 [email protected] Corey Fraiberg Managing Director 416-842-5492 [email protected] 5 This Memorandum contains forward-looking statements and information within the meaning of applicable United States and Canadian securities legislation, including Section 27A of the United States Securities Act of 1933 and Section 21E of the United States Securities Exchange Act of 1934 ("forward-looking statements") with respect to Lone Pine and the Assets. This information is being provided solely in connection with a potential transaction involving any or all of the Assets, and not for any other purpose, including the purchase of any securities of Lone Pine. Any forward-looking statements or information regarding the Assets are provided subject to the disclaimers and obligations of confidentiality outlined above. The forward-looking statements in this Memorandum is based on management's current beliefs, expectations and assumptions, based on currently available information as to the outcome and timing of future events. Lone Pine cautions that its future oil, natural gas and natural gas liquids production, revenues, cash flows, liquidity, plans for future operations, expenses, outlook for oil and natural gas prices, timing and amount of future capital expenditures, and other forward-looking statements are subject to all of the risks and uncertainties normally incident to the exploration for and development and production and sale of oil and gas. Advisory on Forward-Looking Information For convenience, references in this document to "Lone Pine", the "Company", "we", "us" and "our" may, where applicable, refer to and include any relevant direct and indirect subsidiary corporations of Lone Pine Resources Inc., and the assets, activities and initiatives of such subsidiaries. This Memorandum is for informational purposes only and is not intended to be an offer that is capable of acceptance or create any binding obligation on Lone Pine or RBC Capital Markets, contractual or otherwise, to enter into any transaction with anyone receiving this Memorandum. Lone Pine and RBC Capital Markets also reserve their right at any time to and without prior notice and without assigning any reason therefore, (i) to terminate the further participation by a recipient or any other person or entity in the transaction process, (ii) to modify any of the rules or procedures relating to such process, (iii) to terminate entirely such process and (iv) to amend or supplement the information provided herein. No representation or warranty (whether express or implied) has been made by Lone Pine, RBC Capital Markets or any of their subsidiaries, affiliates or Representatives with respect to the transaction process or the manner in which the transaction process is conducted and any party receiving this Memorandum disclaims any such representation or warranty. Lone Pine, RBC Capital Markets and any of their subsidiaries, affiliates or Representatives are under no obligation to negotiate with or accept any offer or proposal by any person or entity regarding a transaction. None of Lone Pine Resources Inc. (Lone Pine or the Company), RBC Capital Markets or any of their respective subsidiaries or affiliates or any of their respective officers, directors, shareholders, employees, consultants, advisors, agents or representatives (collectively, "Representatives") make any representation or warranty, express or implied, in connection with any of the information made available pursuant to the transaction process described in this Memorandum, including, but not limited to the assets described herein (the Assets), or the past, present or future value of the anticipated production, reserve or resource potential, cash flows, income, costs, expenses, liabilities and profits, if any, to be derived from the Assets. Accordingly, any interested party receiving such information will rely solely upon its own independent examination and assessment of any such information in making a decision on whether and how to submit a proposal in respect of any or all of the Assets. Only such representations or warranties that are contained in a definitive agreement with respect to a transaction, if, as and when executed by the parties thereto, and subject to such conditions or limitations or restrictions as may therein be specified, shall have any legal effect. None of Lone Pine, RBC Capital Markets or any of their subsidiaries, affiliates or Representatives shall have any liability to any party receiving information pursuant to the transaction process described herein, nor to any affiliate, partner, member, officer, director, shareholder, employee, consultant, advisor, agent or representative of such party from the use of any such information in assessing whether and how to submit a bid in respect of any or all of the Assets. Cautionary Statements 6 In this Memorandum, Lone Pine also uses internal estimates of quantities of oil and gas using certain terms, such as resource potential, original oil in place, EUR or other descriptions of volumes of resources potentially recoverable through additional exploratory drilling or recovery techniques, which terms include quantities of oil and gas that may not meet either the SECs or NI 51-101 definitions of definitions of proved, probable and possible reserves, and which applicable SEC guidelines and NI 51-101 strictly prohibit Lone Pine from including in periodic filings. These estimates are by their nature more speculative than proved reserves determined under applicable SEC guidelines or NI 51-101, have not been risked by Lone Pine, and accordingly are subject to substantially greater risk of being recovered by Lone Pine. Lone Pine also describes internal estimates of identified drilling locations, which are not, and should not be taken to represent, proved undeveloped drilling locations. The estimates of our reserves disclosed in this Memorandum have been prepared in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (NI 51-101) of the Canadian Securities Administrators and are based on a report from DeGolyer and MacNaughton, an independent petroleum engineering firm, evaluating our reserves as of December 31, 2011. The standards of NI 51-101 differ from the standards of the SEC, and therefore, the reserves disclosure contained in this Memorandum will differ from the information contained in the most of the periodic reports Lone Pine files with the SEC and on SEDAR. Additional information regarding Lone Pine's reserves estimates and other oil and gas information prepared in accordance with NI 51-101 is contained in Lone Pines Statement of Reserves Data and Other Oil and Gas Information (Form 51-101F1) filed on SEDAR on March 22, 2012. Other oil and gas information for Lone Pine, including acreage position and estimates of drilling locations, were prepared by Lone Pines internal staff of engineers in accordance with the requirements of NI 51-101. Reserves Cautionary Statements LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 APPENDIX E Summary of 2013 Gas Transactions 50 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 APPENDIX F Analysis of Lone Pine Resources book values and accounting methods 51 1. PROPERTY AND EQUIPMENT BOOK VALUE SUMMARY 1.1 below. Annual and Quarterly Financial Statements Note Sep 30, 2013 Dec 31, 2012 In USD $000's Proved Unproved Net oil and gas properties 1 2 344,579 146,872 491,451 376,203 148,956 525,159 Other property and equipment 3 62,523 65,096 553,974 590,255 Net property and equipment Note 1: Proved reserves booked value is allocated according to SEC reserve reporting requirements Note 2: Unproved reserves book value is based on costs incurred relating to unproved reserve assets. Note 3: Other property and equipment consists of mid-stream assets ie: pipelines and other gas gathering equipment. This equipment is recorded at cost and amortized over the life of the asset. 2. ACCOUNTING METHODOLOGY 2.1 The Company uses the full cost method of accounting for oil and natural gas activities. The Company capitalizes all costs incurred in the acquisition, exploration and development of properties, and the fair value of restoration, dismantlement and abandonment activities. 2.2 Under the full cost method, the Company performs a ceiling test calculation each quarter using prices that are based on the average of the first day of the month prices during the 12 month period prior to the reporting. The full cost ceiling test is a limitation on capitalized costs prescribed by SEC Regulation S-X Rule 4-10. If the net capitalized costs for a cost center exceed the sum of the SEC-prescribed calculated components, a ceiling test write-down is recognize to the extent of the excess capitalized costs. SEC Reporting of Oil and Gas Assets 2.3 2.4 SEC reserve reporting is in accordance with the reserves and definitions of Rules 4-10(a) (1)-(32) of Regulation S-X of the SEC. The main reserve evaluation assumptions are: 2.3.1 Requires the allocation of value to proved oil and gas reserves only (disclosure of probable reserves optional); 2.3.2 Proved oil and gas reserves as quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations; and 2.3.3 The reserve evaluation uses flat pricing for the duration of the life of the reserves flat prices for oil, natural gas and NGLs are based on the historical 12-month average. Proved Reserves are further defined into separate categories: 2.4.1 2.4.1.1 Producing (PDP) 2.4.1.2 Non-producing (PNP) 2.4.2 2.5 Proved Developed Proved Undeveloped (PUD) Proved Developed Reserves consist of those reserves that are producing or non-producing and can be expected to be recovered: 2.5.1 Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and 2.5.2 Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well. 2.6 Proved Undeveloped Reserves are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. 2.7 Under the SEC regulations, Companies can capitalize certain costs incurred in relation to unproved reserves. These costs consist of acquisition, exploration, development and capitalized interest costs. NI 51-101 Reporting of Oil and Gas Assets 2.8 2.9 Canadian reserve reporting is in accordance with the reserves and definitions of Canadian National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities, and as presented in the Canadian Oil and Gas Evaluation Handbook. The main reserve evaluation assumptions are: 2.8.1 Allocates value to proved and probable oil and gas reserves; 2.8.2 Proved reserves as quantities of oil and gas that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves; 2.8.3 Probable reserves as those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities will be greater or less than the sum of the estimated proved + probable reserves. 2.8.4 To determine the net present value of the reserves, the evaluation uses an escalating price curve. Developed reserves are divided into further categories: 2.9.1 Developed producing (PDP) reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may currently be producing or if shut in, they must have previously been on production. 2.9.2 Developed non-producing (PNP) reserves are those reserves that either have not been on production, or have been on production but are shut in and the date of resumption of production is unknown. 2.9.3 Undeveloped reserves (PUD) are those reserves expected to be recovered from known accumulations where a significant expenditure is required to render them capable of production. Comparison of SEC and NI 51-101 Reserve Reporting 2.10 The table below presents the key differences between the SEC and NI 51 - 101 reserve evaluations. Assumption Reserves allocated value Commodity Prices 2.11 SEC Reserve Reporting Only Proved Reserves must be disclosed (Option to disclose Probable Reserves) Flat prices based on 12-month historical average NI 51-101 Reserve Reporting Proved and Probable Reserves must be disclosed Escalating price curve The NI 51 - 101 reserve evaluation renders a higher net present value (NPV) of reserves due to: 2.11.1 The escalating pricing assumption (see the difference in reserve life pricing in the chart below); and 2.11.2 The inclusion of probable reserves. NI 51-101 Escalating Price Curve vs. SEC Flat Pricing (Oil and Gas) NI 51-101 Forecast 2027 Light Oil Price: $128.59 bbl and AECO Price: $7.12 mcf 140.00 8.00 7.00 120.00 6.00 100.00 SEC Oil Price $87.90 bbl 5.00 80.00 4.00 60.00 3.00 SEC AECO Gas Price: $2.37 mcf 40.00 NI 51-101 Oil SEC Oil 20.00 NI 51-101 Gas 2.00 1.00 SEC Gas - 2013 2014 2015 2016 2017 2018 2019 2020 Year 2021 2022 2023 2024 2025 2026 2027 2.12 Due to the NI 51escalating price curve the farther out into the reserve life, the more significant the pricing differential. This is further outlined in the following table which illustrates the oil and gas prices used under NI 51 101 and the SEC case. Oil Year NI 51 - 101 ($/bbl) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 87.48 89.19 90.93 98.03 103.83 106.46 109.74 111.94 114.18 116.46 118.79 121.17 123.59 126.07 128.59 Natural Gas SEC Difference NI 51 - 101 SEC Difference ($/bbl) ($/bbl) ($/mcf) ($/mcf) ($/mcf) 87.90 87.90 87.90 87.90 87.90 87.90 87.90 87.90 87.90 87.90 87.90 87.90 87.90 87.90 87.90 (0.42) 1.29 3.03 10.13 15.93 18.56 21.84 24.04 26.28 28.56 30.89 33.27 35.69 38.17 40.69 3.71 4.13 4.64 5.24 5.85 5.96 6.08 6.20 6.33 6.45 6.58 6.71 6.84 6.98 7.12 2.37 2.37 2.37 2.37 2.37 2.37 2.37 2.37 2.37 2.37 2.37 2.37 2.37 2.37 2.37 1.34 1.76 2.27 2.87 3.48 3.59 3.71 3.83 3.96 4.08 4.21 4.34 4.47 4.61 4.75 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 APPENDIX G Blow-down Scenario Calculation 52 LONE PINE RESOURCES, ET AL MONITOR’S SIXTH REPORT TO COURT DECEMBER 10, 2013 Blow-down Scenario Calculation NPV of Cash Flows @ 10% in CAD $000's Year NI 51-101 CF 2013 19,544 2014 58,400 2015 47,000 2016 41,100 2017 35,400 2018 28,800 2019 23,700 2020 19,300 2021 16,100 2022 13,300 2023 11,100 2024 9,100 2025 7,600 2026 6,100 2027 5,100 Remaining 21,600 Total 363,244 SEC CF 15,700 42,300 31,500 24,400 18,800 15,300 12,100 9,900 7,900 6,400 5,300 4,300 3,500 2,800 2,200 8,900 211,300 Net of G&A G&A NI 51-101 CF SEC CF 3,136 16,408 12,564 11,405 46,995 30,895 10,368 36,632 21,132 9,425 31,675 14,975 8,569 26,831 10,231 7,790 21,010 7,510 7,081 16,619 5,019 6,438 12,862 3,462 5,852 10,248 2,048 5,320 7,980 1,080 4,837 6,263 463 4,397 4,703 (97) 3,997 3,603 (497) 3,634 2,466 (834) 3,304 1,796 (1,104) 2,176 19,424 6,724 97,729 265,515 113,571 53 Net of G&A + Interest Interest NI 51-101 CF SEC CF 6,248 10,160 6,316 22,720 24,276 8,176 20,654 15,978 478 18,776 12,898 (3,802) 17,070 9,762 (6,838) 15,518 5,493 (8,007) 14,107 2,512 (9,088) 12,825 38 (9,362) 11,659 (1,411) (9,611) 10,599 (2,619) (9,519) 9,635 (3,372) (9,172) 8,759 (4,056) (8,856) 7,963 (4,360) (8,460) 7,239 (4,773) (8,073) 6,581 (4,785) (7,685) 5,983 13,441 741 196,335 69,180 (82,764)