SAN JOAQUIN OPPORTUNITY

Zodiac Exploration Inc. ("Zodiac") and Bayswater Exploration & Production, LLC ("Bayswater") have initiated a process to attract a partner to accelerate development of their light oil resource plays in the San Joaquin basin of California and have retained Scotia Waterous Inc. as their exclusive financial advisor.

This process represents a rare first-mover advantage in developing light oil resource plays. Zodiac and Bayswater possess a sizeable land position in Kings and Kern Counties, California with vast resource potential across multiple horizons including Whepley, Vaqueros, Kreyenhagen and Monterey.

OPPORTUNITY SUMMARY

Highlights Seeking a partner for joint-venture / farm-in arrangement Early stage tight oil resource plays – analogous to Alberta Bakken in 2010 and Eagle Ford Shale in 2008 Conventional drilling locations to complement and de-risk development of new play Concentrated acreage position (Zodiac: ~86,000 acres, Bayswater: ~17,000 acres) Results available from initial 2-well test program drilled to depths of ~15,000 feet Third party(1) OOIP estimate of over 4 billion gross barrels targeting only a portion of plays over a portion of acreage Pay thickness of reservoirs sandwiched between source rock Infrastructure in place (1) Sproule U.S. Limited

COMPARISON TO NORTH AMERICAN LIGHT OIL RESOURCE PLAYS

The Jaquar prospect compares favourably with other top plays. The Vaqueros formation is thick, over-pressured, fractured and has good porosity and permeability.

PROCESS

Zodiac and/or Bayswater will consider all proposals for the San Joaquin Opportunity and reserve the right to select the proposal which maximizes shareholder value.

A detailed information package will be available to all interested parties. The information package provides further detail on the process, the San Joaquin assets including test well results and corporate information.

Interested Parties should execute and deliver two copies of the Confidentiality Agreement to Scotia Waterous. When the copies have been received, confidential information will be made available in the online Virtual Data Room and the Physical Data Room.

CONTACTS

If you have any questions related to San Joaquin Opportunity, please contact one of the individuals listed below or visit www.scotiawaterous.com.  For questions regarding the Confidentiality Agreement, please contact Hasan Haq at hasan.haq@scotiabank.com.