Bonavista 2011 Oil & Gas Royalty Divestment	Bids Due: November 25, 2011	PDF IM 13 Pgs, 3 MB Confidentiality Agreement	Contact: Tom Caldwell 403-299-8453
Introduction Letter | Sale Timeline and Process | Disclaimer | Overview British Columbia Montney Package | Alberta Deep Basin Package | Diversified Royalty Package

 

INTRODUCTION LETTER

November 2, 2011

Dear Sirs / Mesdames:

RE: BONAVISTA ENERGY CORPORATION – 2011 OIL & GAS ROYALTY DIVESTMENT

Bonavista Energy Corporation (“the “Company”) has retained RBC Rundle as the exclusive agent for the sale of a large portfolio of oil and gas gross overriding royalties (the “Royalty Interests” or “Royalties”) located in the provinces of British Columbia, Alberta and Saskatchewan. The royalty interest lands and production have largely been accumulated over Bonavista’s 14 year history, post the 1997 re-organization.

The royalty interests have been grouped into three packages for disposition: British Columbia (“BC”) Montney, Alberta (“AB”) Deep Basin and Diversified. The BC Montney Royalty package is characterized by long life gas production from horizontal well development in the Montney Formation and significant future potential. The AB Deep Basin Royalty package is also characterized by future growth potential from liquids rich, multiple zone gas development that utilizes both vertical and horizontal wells. The Diversified Royalty package, with the largest number of wells and greatest variety of producing formations and play types, is characterized by a low risk, established and consistent production history. The three royalty interest packages may be purchased separately or collectively. This letter outlines the sale process.

Access to Confidential Information

Interested parties may access confidential data for the Royalties by executing two original Confidentiality Agreements (“CA”) in the form provided and attached hereto. The CA is also available for download on the RBC Rundle website. Executed CA’s can be emailed or faxed, but must also be forwarded in original form.

After receipt of the executed CA, RBC Rundle will issue a user name and password for access to a secure Virtual Data Room (“VDR”) that hosts key data and data updates. Key data on the VDR will include among other things an engineering evaluation, land schedules and accounting reports. Please note that CA’s executed on behalf of unidentified parties will not be accepted.

CA’s should be addressed to:

Bonavista Energy Corporation
c/o RBC Rundle
Suite 3900 Bankers Hall West
888 – 3rd Street SW
Calgary, Alberta T2P 5C5
Attention: Mr. Tom Caldwell

Timing of Offers

The Company has allowed approximately four weeks for the evaluation of the Royalties. Offers for the Royalties shall be submitted no later than 12:00 noon, MST, November 25, 2011. The effective date of the sale is December 1, 2011. A minimum of three weeks should be available to the Company before expiry of the Offer to allow the Company reasonable time to respond to the Offer.

Nature and Form of Offer

The Company will only entertain cash proposals for each of the Royalty packages in their entirety with a preference to those parties interested in purchasing all three Royalty packages. The Company will not entertain Offers for specific wells or leases within the Royalty packages.

No bid form is supplied nor required. The Offer shall be non-binding. Notwithstanding other relevant issues, the Offer shall contain the following information:

1) Offer price
2) Effective date of December 1, 2011
3) Source of financing, financing conditions and timing, if applicable
4) Environmental conditions
5) Requirements for approval of Management, Board of Directors, or other parties
6) Expected timing to remove Offer conditions, execute Purchase and Sale Agreement, and closing

Offer Selection Process

Offers for consideration are selected at the discretion of the Company. If required, and at the discretion of the Company, bidders may be asked to provide clarifications or additional information to support their Offer. Furthermore, bidders may be asked to participate in an additional round of bidding.

Other Issues

This sale process carries no implicit promise to accept the highest Offer, or any Offer at all. The Company and RBC Rundle do not make, and expressly disclaim, any representation or warranty (written or oral) as to the accuracy, or completeness of the information herein (or subsequently provided) and none shall be implied. Only those representations and warranties made in a fully executed Purchase and Sale Agreement shall be binding on the Company. All bidders are to incorporate in their bid level the assumption of any and all abandonment and reclamation obligations. Each potential purchaser must rely on their own investigation in order to satisfy themselves as to all matters, except to the extent expressly agreed to in the Purchase and Sale Agreement to be entered into between the Company and the successful purchaser. All costs incurred by the potential purchaser in this investigation and evaluation shall be for their own account.

The Company reserves the right to amend or modify these procedures, terms and conditions at any time.

Inquiries and Correspondence

The Company personnel are not to be contacted directly. All correspondence and inquiries should be directed to RBC Rundle.

Primary Contact:	Secondary Contact(s):
Tom Caldwell Managing Director 403.299.8453 tom.r.caldwell@rbccm.com	Warren Orban Associate 403.299.8456 warren.orban@rbccm.com	Rosemarie Gerspacher Vice President 403.299.8450 rosemarie.gerspacher@rbccm.com

We look forward to pursuing this opportunity with you.

Yours truly,

RBC RUNDLE

Tom Caldwell
Managing Director