FORWARD-LOOKING STATEMENTS

Certain information set forth on this website, including (among other things): PetroShale’s proposed development opportunities, business plans and intentions, expectations for realizing certain benefits from higher well density spacing within its DSUs (including as described below under “Drilling Locations”), the Company’s belief that more development opportunities exist within its core focus areas, expectations from near-term drilling activity, timing of drilling and well completion activity, expected results from wells following a ‘type curve’, and the Company’s investment summary, including the potential set forth therein, may constitute forward-looking statements under applicable securities laws and necessarily involve substantial known and unknown risks and uncertainties. In addition, statements relating to “reserves” are deemed to be forward-looking as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and can be profitably produced in the future.  These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond PetroShale’s control, including without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, volatility in production rates, environmental risks, inability to obtain drilling rigs or other services, capital expenditure costs, including drilling, completion and facility costs, unexpected decline rates in wells, wells not performing as expected, delays resulting from or inability to obtain required third party and regulatory approvals, ability to access sufficient capital from internal and external sources, inability to access gas transportation and processing infrastructure, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, and the uncertainty of estimates and projections of production, costs and expenses. 

With respect to forward-looking statements contained on this website, PetroShale has made a number of assumptions. The key assumptions underlying the aforementioned forward-looking statements include assumptions regarding (among other things): that increased well density within a drilling spacing unit will provide additional economic drilling locations (as set forth herein); the impact of increasing competition; the general stability of the economic and political environment in which the Company operates; the timely receipt of any required third party and regulatory approvals; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; that the net proceeds of the Offered Shares will remain consistent with those stated in the Company’s short form prospectus; the timing of drilling plans and completion operations; the ability of the operator of the projects in which the Company has an interest in operating the field in a safe, efficient and effective manner; the ability of the Company to obtain financing on acceptable terms; field production rates, decline rates and ultimate resource recovery from wells; the ability to replace and expand oil and natural gas reserves through acquisition, development and exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Company to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Company operates; and the ability of the Company to successfully market its oil and natural gas production.  Certain or all of the forgoing assumptions may prove to be untrue.

PetroShale’s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Company will derive therefrom. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.  Additional information on these and other factors that could affect PetroShale’s operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking information and statements contained on this website speak only as of the date of their posting and PetroShale does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

ANALOGOUS INFORMATION: On this website, PetroShale has provided certain information on the production rate of a well on properties adjacent to the Company’s acreage which is “analogous information” as defined by applicable securities laws. This analogous information is derived from publicly available information sources which the Company believes are predominantly independent in nature. Some of this data may not have been prepared by qualified reserves evaluators or auditors and the preparation of any estimates may not be in strict accordance with Canadian Oil & Gas Evaluation Handbook. Regardless, estimates by engineering and geotechnical practitioners may vary and the differences may be significant. PetroShale believes that the provision of this analogous information is relevant to PetroShale’s activities and forecasting, given its property ownership in the area; however, readers are cautioned that there is no certainty that the forecasts provided herein based on analogous information will be accurate.

INITIAL PRODUCTION RATES: Any references on this website to well-flow test results and/or initial production rates are useful in confirming the presence of hydrocarbons, however, such test results and rates are not determinative of the rates at which such wells will continue production and decline thereafter. While encouraging, readers are cautioned not to place reliance on such test results and rates in calculating the aggregate production for the Company. Well-flow test results and initial production rates may be estimated based on other third party estimates or limited data available at the time. Well-flow test result data should be considered to be preliminary until a pressure transient analysis and/or well-test interpretation has been carried out. In all cases on this website, well-flow test results and initial production results are not necessarily indicative of long-term performance of the relevant well or fields or of ultimate recovery of hydrocarbons.

DRILLING LOCATIONS: This website discloses drilling locations in two categories: (i) proved and probable locations; and (ii) un-booked locations.  Proved plus probable drilling locations set forth herein are based on the Company’s most recent independent reserves evaluation as prepared by Netherland, Sewell & Associates Inc.(“NSAI“) as of December 31, 2016, updated for the acquisition of additional working interests in existing drilling spacing units (“DSUs“) where drilling locations have been booked as proved and probable locations. Unbooked locations are internal estimates based on the Company’s prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review. Unbooked locations do not have attributed reserves or resources. Of the 449 gross (59.2 net) drilling locations identified herein on 880’ spacing, 232 gross (33.6 net) are proved plus probable locations, and 217 gross (25.6 net) are unbooked locations. Of the 644 gross (80.6 net) drilling locations identified herein on 660’ spacing, 232 gross (33.6 net) are proved plus probable locations, and 412 gross (47.0 net) are unbooked locations. Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves information. There is no certainty that the Company will drill any unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves, resources or production. The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results, additional reservoir information that is obtained and other factors. While certain of the unbooked drilling locations may have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations, management has less certainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves, resources or production.

BOE. Where amounts are expressed on a barrel of oil equivalent (“Boe“) basis, natural gas volumes have been converted to Boe using a ratio of 6,000 cubic feet of natural gas to one barrel of oil (6 Mcf: 1 Bbl).  This Boe conversion ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 Mcf: 1 Bbl, utilizing a conversion ratio at 6 Mcf: 1 Bbl may be misleading as an indication of value.  On this website, mboe refers to thousands of barrels of oil equivalent. 

COMPANY INTERESTS. Company interest means, in relation to the Company’s interest in production and reserves, the Company’s working interest (operating and non-operating) before the deduction of royalties payable and including such entity’s royalty interest in production and reserves.  Where volumes of reserves have been presented, they have been presented as company working interest, gross of royalties unless otherwise indicated. Where volumes of production have been presented, they have been presented as company working interest, gross of royalties, except where otherwise noted. Company net revenue interests is the share of production to the Company after all burdens, such as royalties and overriding royalties, have been deducted from the Company’s working interest.   Relative price deck used by NSAI in their reserves evaluation has been disclosed within our 2016 Annual Information Form as well as in Note 7 of our year end 2016 audited annual financial statements, both of which are available on our SEDAR profile.  There is no assurance that the forecast prices and cost assumption will be attained and variances could be material  The recovery and reserve estimates of our tight oil and shale gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual tight oil and shale gas reserves may be greater than or less than the estimates provided herein. It should not be assumed that the discounted future revenue estimated by NSAI represents the fair market value of the reserves.

RESERVES DISCLOSURES. Estimates pertaining to the Company’s reserves and the net present value of future net revenue attributable thereto are based upon the independent engineering evaluation of the crude oil, natural gas liquids and natural gas reserves of the Company prepared by NSAI, the Company’s independent reserves evaluator, as at December 31, 2016 dated April 19, 2017, which is prepared in accordance NI 51-101 and the COGE Handbook. The estimates pertaining to reserves provided on this website are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves and the estimated number of potential undeveloped drilling locations to which reserves have been attributed, may be greater than or less than the estimates provided on this website and the differences may be material. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation. Estimates of net present value of future net revenue attributable to the Company’s reserves do not represent fair market value and there is uncertainty that the net present value of future net revenue will be realized. There is no assurance that the forecast price and cost assumptions applied by NSAI in evaluating PetroShale’s reserves will be attained and variances could be material. The reserves information contained on this website should be reviewed in conjunction with the annual information form of the Company dated April 28, 2017 for the year ended December 31, 2016 which is available on SEDAR and contains important additional information regarding the independent reserve evaluation that was conducted by NSAI and a description of, and important information about, the reserves terms used on this website.

NOTICE TO U.S. READERS. The Company’s reserves information contained on this website has generally been prepared in accordance with Canadian disclosure standards, which are not comparable  in all respects to United States disclosure standards.   Reserves categories such as “proved reserves” and “probable reserves” may be defined differently under Canadian requirements than the definitions contained in the United States Securities and Exchange Commission (“SEC”) rules.   In addition, under Canadian disclosure requirements and industry practice, reserves and production are reported using gross volumes, which are volumes prior to deduction of royalty and similar payments.   The practice in the United States is to report reserves and production using net volumes, after deduction of applicable royalties and similar payments.   Canadian disclosure requirements require that forecasted commodity prices be used for reserves evaluations, while the SEC mandates the use of an average of first day of the month price for the 12 months prior to the end of the reporting period.

SELECTED DEFINITIONS

COGE Handbook” means the Canadian Oil and Gas Evaluation Handbook maintained by the Society of Petroleum Evaluation Engineers (Calgary Chapter), as amended from time to time.

NI 51-101” means National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.

reserves” are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on: (i) analysis of drilling, geological, geophysical and engineering data; (ii) the use of established technology; and (iii) specified economic conditions, which are generally accepted as being reasonable. Reserves are classified according to the degree of certainty associated with the estimates.

proved reserves” or (“1P reserves“) are those reserves 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.

probable reserves” or (“2P reserves“) are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves or (“P+P reserves”).

CERTAIN ABBREVIATIONS

bbl  means barrel

boe/d  means barrel of oil equivalent per day

EUR  means estimated ultimate recovery

MMboe           means million barrels of oil equivalent

MM                 means millions

IP30                means 30 day average initial production rate