Corporate Profile

Overview and Update

Chinook Energy Inc.(CKE) is a TSX listed oil and gas exploration and production company with current operations focused in North Africa and Western Canada. The company has offices in Calgary and Tunis.

Our people are experienced, qualified and motivated to deliver value in direct alignment with our shareholders.

We will deliver value to our shareholders through our ability to develop and deliver cost effective solutions in our core project areas where our focused expertise will allow us to develop a sustainable competitive advantage and support repeatable profitable growth.

We are committed to the safe and environmentally responsible development of our assets. Safety of the public, our personnel and our contractors is the primary consideration in all operations.

We are committed to fair and open business practices in contracting, commercial negotiations with partners, contractors, local interests and host governments.

We are committed to sharing the benefits of resource development in the local communities that are impacted by our operations to the degree possible, and will strive to minimise the scope and impact of our developments.

We recognise these commitments as core to our business and in the best interests of our shareholders.

The Company began in June 2003 with a mandate to identify and secure a balanced portfolio of exploration and exploitation opportunities in proven international hydrocarbon provinces that are characterized by competitive fiscal terms, low political risk and an abundance of opportunities. Technology applications developed in the relatively mature basins in North America, a lower cost structure with greater focus, and historically high commodity prices supporting a lower economic limit, all contribute to framing the opportunity we are trying to exploit in both domestic and international operations.

On December 23, 2009, CKE announced the acquisition of 5000boed of liquids rich natural gas assets focused in West Central Alberta.  This producing property acquisition provided a strong platform for re-establishing a Canadian gas focus to our business which improved our cash flow, debt capacity access to capital and the near term visibility of our future growth.

The acquired assets have excellent exploitation potential and facility exposure providing a platform to expand our business in Western Canada.

Over the first half of 2010 the company has materially advanced our business through the acquisition of Iteration Energy Inc. and a producing property at Gilby, Alberta to the point where second half production should approximate 17,000 boed.

Corporate Capabilities

Experience

The Company is led by a team of professionals who have demonstrated a successful track record of corporate and project initiation, growth and value crystallization in Western Canada over the last 25 years. Specifically, the group has been materially involved in the founding, building and sale of companies with combined production of over 70,000 Boed through Pinnacle Resources, Storm Energy Ltd., Storm Energy Inc., and Renaissance Energy Inc. over the period 1986 – 2004. This domestic experience has been augmented with partners possessing strong “hands on” production, project management and business development skills that have been focused on international oil operations in North Africa, and the North Sea. Recognizing what we don’t know well is equally important. The Company will align itself with local or joint venture partners who will be the catalysts to a successful operation or are capable of effectively providing strategic technical skills we lack on a specific project.

Biographies of the key management and directors are available at the Key Personnel location on the website.

Technology

Challenging opportunities require innovative strategies that often include the application of fit for purpose technologies or development strategies. New oilfield technologies are usually available globally very quickly but the expertise associated with the successful application of new technologies in tough applications is not as wide spread. The industry in North America has been more aggressive than most other parts of the world at applying new technologies to help economically exploit increasingly more marginal accumulations by reducing costs, increasing rates and improving ultimate recoveries. CKE has experience in successfully applying modern geophysical, drilling, and completion technologies in tight gas, sour gas, heavy oil and conventional applications. As important as our experience, is our understanding and commitment to using fit for purpose technology applications to provide the innovation required to commercialize an opportunity.

Capital

Canadian private and public equity markets have always had a very strong resource bias and have shown mixed support of international resource plays. CKE management has had a successful track record of dealing with a large number of capital providers, both equity and debt, in the Canadian or US energy marketplace over the last 20 years. We would intend to access capital in this market as required to grow the Company.

Bank Facilities

A syndicate of Canadian banks (Société Générale Canada Branch, The Toronto-Dominion Bank, Royal Bank of Canada, CIBC, Alberta Treasury Branches and HSBC Bank Canada) has committed to fund a $240MM facility to finance our Canadian business and our future operations. Currently the company does not have a facility in support of its Tunisian operations specifically.

Expanding Offshore Expertise

Chinook is actively exploring offshore in the Tunisian portion of the Mediterranean Sea and has experience as an exploration and production operator in the UK sector of the North Sea. We are quickly gaining experience operating in some of the most challenging operating conditions and stringent regulatory environments in the world.  We are also investing in purpose built technologies that will make us a profitable developer of marginal fields which will allow us to access both brownfield and new exploratory opportunities.

The expertise we will develop in exploiting conventional reservoirs in Western Canada will be useful in developing our international projects, particularly our large light oil discovery in Tunisia.

Update Q1 2010

The first quarter of 2010 saw the completion of four previously announced transactions. Together, these allowed us to establish a platform for growth in Canada, strengthen our oil project focus and production in Tunisia, and restructure our North Sea investment to provide liquidity and better access to capital to support future growth. A short summary of these transactions follows:

• On March 1, 2010, we completed the acquisition of 5,000 barrels of oil equivalent per day of production in west central Alberta from Provident Energy for $190 million. We financed this with a new $55 million credit facility and the issuance of 42.9 million shares to a new large institutional shareholder, Alberta Investment Management Corporation (“AIMCo”), at $3.50 per share.
• On March 11, 2010, we completed the acquisition of Talisman Resources (Tunisia) Limited, the holder of block interests in our area of focus in Tunisia. We paid USD $18 million for the Company which included approximately 700 barrels of oil equivalent per day and financed the purchase from existing working capital.
• On March 15, 2010 we used existing working capital to complete the USD $4 million acquisition of a 15 percent partner interest in our Sud Remada block and discovery.
• On March 26, 2010, we completed the merger of Silverstone Energy Ltd. (a 100% owned subsidiary of CKE) with Bridge Energy Norge AS to form Bridge Energy ASA with the company listed for trading on the Oslo Axess marketplace of Oslo Børs (Oslo stock exchange) on May 21, 2010. In parallel with the merger and Initial Public Offering, Bridge Energy raised USD $55 million of new capital. CKE received unanimous shareholder consent to the distribution of its Bridge Energy shares to shareholders of record as of April 20, 2010, resulting in a reduction and return of capital of approximately $0.78 per share, based on the issue price for Bridge Energy shares and prevailing Norwegian Krone to Canadian dollar exchange rate.

 

Update Q2 2010

• The acquisition of Iteration closed on June 29, 2010. This $555 million  corporate transaction was financed through the issuance of approximately 52 million shares to Iteration shareholders, AIMCo and other existing CKE shareholders at $3.25 per share, assumption of Iteration bank debt and a sale of 25 percent of the Iteration assets into a limited  partnership owned by AIMCo and Chinook Energy Ltd. , to be managed by Chinook Energy Ltd
• The finance plan and regulatory process was completed on June 30, 2010. Following the completion, Chinook Energy Inc. will have production expected to average approximately 17,000 barrels of oil per day (35 percent liquids) over the balance of 2010, a healthy balance sheet and a large inventory of repeatable growth opportunities focused on liquids rich gas in western Alberta and oil in Tunisia. The company’s shares commenced trading on July 6th, 2010 under the symbol CKE on the TSX.
• The Gilby assets were purchased for $46.25 million and include production of 1,250 barrels of oil equivalent. This transaction closed on June 30 2010 and was financed with bank debt and asset sales of non-core properties from CKE.
• Offshore Tunisia on our Hammamett Permit, the Ensco #105 jack up drilling rig commenced the Fushia-1 exploration well on May 19, 2010 and was rig release on June 25 , 2010 . The well encountered a 16M gas column in the target formation but was abandoned as a non commercial discovery.
• Onshore Tunisia at our Jenein permit, the AOS Discoverer #4 rig spud the JC1 exploration well on May 27, 2010.  This Jenein exploration well (65 percent interest) which reached total depth of 4,334 meters and was rig released on August 8, 2010, has been cased as a potential Acacus oil discovery.  We encountered over 150 feet of reservoir quality sands that we interpret as hydrocarbon bearing from open hole log evaluation and modular dynamic test results and we will begin a completion operation in early September that we hope will provide well test results by October 1, 2010. 
• On August 12, 2010 CKE issued its first public company reports.

We plan and expect the transaction pace to slow considerably over the second half of 2010.

As you will see in reviewing our financial statements, we are transitioning through a series of transactions from a historic international focus to a new structure as a publicly listed company in Canada. This will take several quarters to be more clearly reflected in our operating and financial statements.

Over the balance of 2010, we also expect to consolidate these transactions and focus on gaining a better understanding of the opportunity base now controlled by the Company while taking forward priority projects in Canada and Tunisia.

Shareholders can access a powerpoint presentation that outlines the prospects for Chinook Energy Inc. on our website at www.chinookenergyinc.com.