Anderson Energy Ltd.
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Properties Overview

2011 Activity

Repositioning for oil production growth continues to be Anderson Energy's primary focus in light of the current and projected weakness in natural gas pricing. Production from the Cardium horizontal oil drilling program initiated in the summer of 2010 started to come on-stream in the fourth quarter of 2010. From inception of the play in 2010, to the end of 2011, the Company estimates it will have drilled 73 gross (54.5 net revenue) Cardium oil wells and have 54.5 net Cardium oil wells on production. We are making progress in our efforts to acquire additional Cardium acreage and implement drilling and completion initiatives to lower costs and improve well productivity and reserves. The 2011 capital budget is $145 million (net of dispositions) and will be spent almost exclusively on the Cardium horizontal oil drilling program and related infrastructure.

Cardium Base Map

Cardium Horizontal Oil Inventory

Anderson Energy has significant exposure to the Cardium multi-stage frac horizontal light oil play in its core area of Central Alberta. The Company drilled its first 22 gross (16.3 net capital) wells in 2010 and an additional 41 gross (34.2 net capital) wells in the first nine months of 2011. Its Cardium prospective land base has increased to 124.5 gross (74.0 net) sections. Based on a drilling density of three wells per section, the drilling inventory is potentially 222 net locations. The Company has advanced 204 gross (129.8 net) specific drilling locations (including wells drilled to date) in the Garrington, Pembina, Willesden Green and Ferrier areas that have or will be drilled over the next few years.

Central Alberta

Anderson Energy has only one core area: Central Alberta. The focus of Central Alberta operations runs from the Sylvan Lake area centered approximately 110 kilometres north of Calgary, Alberta to the Pembina area less than 100 kilometres southwest of Edmonton, Alberta. This area is a combination of several subsidiary operated fields including West Pembina, Buck Lake, Willesden Green, Leedale, Wilson Creek, Garrington, and Ferrier. The Central Alberta area consists of 65,968 gross (34,582 net) acres of undeveloped land.

The majority of Anderson's oil production in the area is from new horizontal multi-staged fractured wells in the Cardium formation. The majority of Anderson's natural gas production in the area originates from multiple Edmonton Sands pools at depths of less than 1,000 metres. Other hydrocarbon producing zones include Horseshoe Canyon Coal Bed Methane, Belly River, Viking, Mannville, Pekisko and Leduc. Anderson has an interest in 1,006 gross (583.1 net) natural gas wells and 154 gross (60.5 net) oil wells in the Central Alberta area.

Working interest positions of 100% are held in oil batteries at 15-34-035-03 W5, 01-06-037-03 W5 and 08-10-039-02 W5 as well as associated satellite facilities. A 45% working interest is held in an oil battery at 01-27-040-06 W5 as well as a 44% interest is in an oil battery at 15-16-039-28W4 and a 20.9% working interest in the 16-14-039-01W5 oil battery. Varying working interests up to 100% are held in single well and two well oil batteries in Buck Lake, Pembina West, Willesden Green and Garrington. Anderson has ownership in gas plants at 04-18-032-22 W4, 05-10-033-26 W4, 14-32-037-03 W5, 11-35-037-09 W5, 01-21-038-02 W5, 06-16-038-04 W5, 05-14-039-05 W5 and 10-05-046-06 W5. Natural gas produced in the Central Alberta area is also processed in third party facilities and the most significant ones are located at 15-22-040-03 W5, 10-07-051-09 W5 and 11-22-049-12 W5. Anderson has working interests up to 100% in numerous well site and intermediate field booster compression facilities in Central Alberta from 60 to 1,000 horsepower. This includes a 75% and 100% working interest in fit for purpose shallow gas batteries at 05-26-043-05 W5 and 08-20-041-04 W5 respectively.

Anderson's production in 2010 from the Central Alberta area was 7,177 BOED or 95% of total production. Central Alberta is the Company's primary production growth area. In 2011, Anderson estimates it will drill 51 gross (44.3 net capital, 39.1 net revenue) Cardium horizontal oil wells in the Central Alberta area targeting light, sweet crude oil. The Edmonton Sands farm-in commitment will be completed in the first quarter of 2013. Various deep, liquids rich natural gas drilling projects such as multi zone development drilling in West Pembina and the Lower Mannville in Bigoray may resume when natural gas prices recover.