Report of operations as of June the 30th 2010:

Lyster permits

Following the interpretation of seismic data acquired in 2008, three drilling locations were identified in the Lotbinière region. Surface access agreements were concluded for well sites in the sectors of Villeroy, Val-Alain and Saint-Louis-de-Blandford, all of which are municipalities which overlie the Lyster Permit Block.
After the necessary permits were obtained, the first drilling location was constructed in May and the well Junex Villeroy No. 1 spudded on June 15, 2010. The first stage of the operations was to drill and install the surface casing down to a depth of 250 meters. The drilling of the main hole, with an forecast depth of 1,700 meters, will resume during the third quarter of 2010. Drilling operations on a second exploration well should also begin towards the end of summer 2010.
Exploration operations will target the Shale sequences and Ordovician carbonates. Rock units in this area are overthrusted, which contributes to the development of networks of natural fractures, thus improving the area’s gas potential. The Lyster permits are located in the same geological and structural trend of the St-Flavien Field and are near the Talisman Saint-Édouard No. 1H horizontal well.

Appalachian Region

The Appalaches region permits cover an area of 720,175 hectares (1.78 million acres). Until Junex’s foray into exploring this area, this vast sedimentary basin was never the subject of oil and gas exploration. Junex based itself on the presence of an Ordovician-aged source rock which extends over the entire basin, thus becoming the first company to invest in the gas potential evaluation of this area. The results of geochemical analyses from the sampling of more than 300 Devonian and Ordovician shale outcrops show that the region’s shales would be positive elements for the exploration of shale gas deposits. By the end of 2010, Junex will have completed three stratigraphic wells and acquired three new seismic profiles. All this data’s evaluation should better define this new exploration area’s gas potential.
Operations at the stratigraphic well Junex Wotton No.1 were completed in April 2010. The stratigraphic test’s objective was to complete the first evaluation of gas potential in this Ordovician sedimentary sequence. More than a hundred samples of shales and gas were taken and analysed by different laboratories. Data will be available by the end of the summer of 2010.
A second stratigraphic well spudded at the beginning of June 2010. The objective of Junex Saint-Gédéon No.1 well is to evaluate the Devonian sedimentary sequence’s potential located in the eastern part of the Appalachian Permit Block. This is a well that will be entirely cored, allowing a continuous rock sampling on an expected length of 700 meters. Shale and gas samples will be analysed the same way as those from the Wotton well. The third stratigraphic well expected in this project should commence in the third quarter of 2010.

Galt Project

The data acquired by Junex in the Galt project in Gaspésie was analysed in order to carry out a study on the oil potential of unconventional resources in the Forillon formation. Junex completed the analysis of the new seismic data and many wells drilled on the Galt structure for the last thirty years. This analysis demonstrated the existence of a gas resource play in the Devonian limestones, more specifically in the Forillon formation.
The exploration model’s data was appraised by the independent firm Netherland, Sewell & Associates, Inc (‘NSAI’) during the second quarter of 2010. This experienced Texas firm established its best estimate of Original Oil in place at 183 million barrels on one part of the Galt permit. According to NSAI’s expectations, the effective recovery rate’s ‘best estimate’ would be close to 15%, leading its best estimate of Junex’s net share of the oil recoverable resources’s volume to 13.75 million of oil barrels.
Following the agreement that was concluded between Junex and Petrolia during the month of June, Galt’s area increased from 15,000 hectares to 21,640 hectares in the adjacent region. Presently, well and seismic data cover approximately 25% of these lands, permitting a rigorous evaluation of the areas’s potential. Future operations to be completed on the new portions of the property new sectors will increase the area to be evaluated.