Canada

HANGINGSTONE PROPERTY

• Excelsior is the Operator with a 75% working interest
• 27 kilometers south of Fort McMurray
• 39 sections (24,960 acres, 18,720 net acres)
• Close proximity to utilities infrastructure; property straddles major highway and county roads, dilbit pipeline and gas pipelines

RESERVOIR GEOLOGY

• 165 km² have been acquired and processed
• 55 core wells have been drilled, fully cored with a complete suite of electric logs to delineate the bitumen reservoir
• Three project areas delineated over 10 sections; project areas are open to further delineation
• Excellent quality, channel reservoir sands in the McMurray Formation
• Sands were deposited in a fluvio-estuarine depositional environment
• Net continuous thickness average 21 m in project areas, up to 38 m.
• Average effective porosity is over 33%
• Average bitumen saturation is 70% (12% weight) with up to 85% (17% weight) in highest quality sand reservoir
• High horizontal and vertical permeabilities up to 7,000 millidarcies
• The McMurray Formation reservoir has been modelled in an earth model which characterizes reservoir facies and quality distribution by statistical analysis of core, seismic and well data. The geological model is the front end of reservoir engineering simulation modelling. Reservoir simulation has been completed in the experimental pilot area.

• Pilot application was submitted to Alberta Environment and Alberta Energy Resources Conservation Board June 30, 2009
• Pilot operations planned to commence in late 2010

BITUMEN RESOURCES

• McDaniel & Associates Consultants Ltd. (McDaniel & Associates”) is third party engineering evaluator. Resource values dated July 1, 2009.

Summary Tables

Summary of Discovered and Undiscovered
Petroleum Initially-in-Place
Hangingstone, Excelsior Working Interest Share Before Royalty
McDaniel & Associates – July 1, 2009
(Billions of barrels)

Summary of Contingent and Prospective Resources
Hangingstone, Excelsior Working Interest Share Before Royalty
McDaniel & Associates – July 1, 2009
(Millions of barrels)

WEST SURMONT PROPERTY

• Excelsior is the Operator with a 64.3% working interest
• Approximately 70 kilometers south of Fort McMurray
• 19 sections (12,160 acres, 7,819 net acres)
• Close proximity to industry infrastructure; close to major highway and county roads, dilbit pipeline and gas pipelines

RESERVOIR GEOLOGY

• 9 core wells have been drilled, fully cored with a complete suite of electric logs to appraise the bitumen reservoir
• Early stage appraisal and delineation
• Excellent quality, channel reservoir sands in the McMurray Formation;
• Sands were deposited in a fluvio-estuarine depositional environment with thicknesses up to 28 meters
• Average effective porosity is over 33%
• Average bitumen saturation is 70% (12% weight) with up to 85% (17% weight) in highest quality sand reservoir
• High horizontal and vertical permeabilities up to 7,000 millidarcies
• Further appraisal work has been postponed until more favourable investment conditions return
• Excelsior has the option to continue to earn up to 75% working interest

BITUMEN RESOURCES

• McDaniel & Associates Consultants Ltd. (McDaniel & Associates”) is third party engineering evaluator. Resource values dated December 31, 2008.
   

Summary Tables

• Excelsior believes that there are more sustainable models available for thermal oil sands development in Athabasca. In situ combustion is an example of a technology that can significantly reduce the volumes of water and fuel gas required for thermal exploitation. In situ combustion uses a portion of the bitumen in the reservoir as primary fuel and large volumes of water are not required to transfer heat to the subsurface in the form of steam. The reduction in steam requirement results in a large reduction in the quantity of fuel gas used in steam boilers. In situ combustion also has the potential for partial upgrading of bitumen by thermal cracking in the reservoir.
• Efficiencies captured by using fuel in the reservoir to melt and mobilize bitumen can also reduce green house gas emissions relative to a steam assisted gravity drainage process.
• Combustion Overhead Gravity Drainage (COGD) is a proprietary technology developed by Excelsior in consultation with advisors at the Schulich School of Engineering, University of Calgary, In Situ Combustion Research Group.
• COGD employs an array of vertical air injector ignition wells above a horizontal production well located at the base of the bitumen pay zone. A multi-step pre ignition heating cycle using steam prepares the cold bitumen for ignition and develops enhanced bitumen mobility in the reservoir. Upon ignition a combustion chamber develops above and along the length of the horizontal well with combustion gases segregated in the upper part of the reservoir and hot bitumen flowing by gravity into the horizontal production well. Combustion gases can be collected in vertical vent wells positioned on the flank of the exploitation pattern and returned to a central facility for treating.
• The pre-ignition heat cycle uses cyclic steam and steam flood techniques to predispose the viscous oil reservoir to form a combustion chamber similar in geometry to the steam chamber in steam assisted gravity drainage (SAGD).

Image of a COGD process showing surface facilities and a single well network:

Excelsior submitted an application to develop an experimental pilot project on its operated Hangingstone asset in June, 2009. The pilot project will produce up to 1,000 bopd using COGD technology.