Concord Sample Business Plan - Oil & Gas

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Business Plan General Oil & Gas Inc.

Concord Business Plans

Business Plan

NOTICE – GENERAL OIL AND GAS The information presented in this document is highly sensitive and confidential and is to be used by authorized parties for the purpose of determining a preliminary indication of interest in General Oil and Gas (“the Company”). The recipient of the Business Plan agrees by its receipt not to reproduce, duplicate, or reveal, in whole or in part, information presented herein without the written permission of the Company.

The Company and other sources provided the information contained in the Business Plan. It has been reviewed, approved, and released by the Company, which assumes responsibility for its contents. Estimates and projections contained herein have been prepared by the management of the Company and involve significant elements of subjective judgment and analysis and are based on certain assumptions. Actual results may vary from estimates and projections, and these variations may be material.

No representation or warranty, expressed or implied, is made as to the accuracy or completeness of the information contained in this overview, and nothing contained herein is, or shall be relied upon as, a promise or representation, whether as to the past or the future. The Business Plan does not purport to contain all of the information that may be required to fully evaluate the Company for a potential business relationship, and any recipient thereof should conduct their own independent analysis and due diligence process.

THIS PRESENTATION IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY ANY SECURITY.

For additional information, contact:

Concord Business Plans 900 Burrard Street Suite 900 Vancouver, BC V7X 1M8 Canada Tel: (604) 689-2556 Fax: (604) 689-7758 Website: www.concordbusiness.com Email: info@concordbusiness.com

Business Plan

General Oil and Gas Highlights Name General Oil and Gas Inc. Industry Financial, Venture Capital, Equity Financing Sector Oil & Gas Description General Oil and Gas will identify, target and acquire proven oil and gas properties in Alberta, Canada.

Purpose To complete a Qualifying Transaction for a public listing on the TSXV To identify and acquire oil & gas assets of low risk and high potential in Alberta, Canada Competitive Advantages

A strategic acquisition target with proven oil & gas reserves 1 valued at $60 million and proven + probable reserves valued at $133 million by AJM Deloitte (based on the Net Present value before tax, discounted at 10%). Initial production can begin within 3 months for immediate cash flow results.

An in-house evaluation completed in 2011 shows an estimated value of proven and probable reserves to be $245 million.

Capital Requirements Use of Proceeds

$ 60,000,000 Completion of strategic acquisition – ‘Qualifying Transaction’ General Oil and Gas will utilize funds to complete target acquisition and commence drilling on 5 target properties.

Chart 1: Financial Highlights

Gross Revenue Summary 70

Millions

60

Lavoie Resources

50

Falcon Dell

40

Fern Gully

30

Gleghorn

20

Sandhurst Lake

10

Gross Revenues

0 2012

1

2013

AJM Deloitte report released 2013.

2014

2015

Business Plan

TABLE OF CONTENTS 1 Executive Summary ........................................................................................... 1 1.1 Business of the Company ............................................................................................................................1 1.2 Company Strategy .......................................................................................................................................1 1.3 Primary Objectives ......................................................................................................................................1 1.4 Investment Criteria ......................................................................................................................................2 1.5 Target Acquisition .......................................................................................................................................2 1.6 Canadian Oil & Gas Sector .........................................................................................................................3 1.7 Production and Exports ...............................................................................................................................3 1.8 Conventional Oil Development ..................................................................................................................4 CERI Production Projection by Province and Well Vintage .................................................................................... 5 Royalties paid to the Alberta Government for Conventional Oil Developments ($ millions) ................................. 5

1.9 Capital Requirements ..................................................................................................................................6 1.10 Use of Proceeds .........................................................................................................................................6 1.11 Revenue Summary ....................................................................................................................................7 1.12 Public Company Operation Phases ...........................................................................................................7 1.13 Future Plans ...............................................................................................................................................7 1.14 Project Features .........................................................................................................................................8 1.15 The Opportunity ........................................................................................................................................8

2 Target Acquisition – General Oil and Gas Energy Inc. ........................................10 2.1 General Oil and Gas Purpose ....................................................................................................................10 2.2 Corporate Data ..........................................................................................................................................10 2.3 Asset Value ...............................................................................................................................................10 2.4 Ownership .................................................................................................................................................10 2.5 Anticipated Production Levels ..................................................................................................................11 2.6 General Oil and Gas Business Model .......................................................................................................11 2.7 Proprietary Software .................................................................................................................................11 2.8 General Oil and Gas Properties .................................................................................................................12 2.9 Property 1 – Falcon Resources .................................................................................................................13 2.10 Property 2 – Fern Gully Resources .........................................................................................................13 2.11 Property 3 – Gleghorn Park ....................................................................................................................13 2.12 Property 4 – Lavoie Resources ...............................................................................................................13 2.13 Property 5 – Sandhurst Lake ...................................................................................................................13

3 EOR – Enhanced Oil Recovery...........................................................................14 3.1 Enhanced Oil Recovery Methods .............................................................................................................14 3.2 The easy oil is disappearing and new oil fields are expensive .................................................................14

4 Oil Acquisitions 2013 ........................................................................................15 4.1 M & A Activity in the Energy Sector .......................................................................................................15

5 Board of Directors ............................................................................................17 5.1 Joseph Smithson, President & CEO, Director, P. Eng. ............................................................................17 5.2 Evan J. Smith, Vice President and CFO ...................................................................................................18

Business Plan 5.3 Kerry Madison, COO ................................................................................................................................18

6 Company Operations Strategy ..........................................................................20 6.1 Phase One ..................................................................................................................................................20 6.2 Phase Two .................................................................................................................................................20 6.3 Phase Three ...............................................................................................................................................20 6.4 Phase Four .................................................................................................................................................20

7 Financial Projections ........................................................................................21 7.1 Properties and Production Projections ......................................................................................................21 7.2 Assumptions ..............................................................................................................................................22 7.3 Funds Sought & Use of Proceeds .............................................................................................................22 7.4 Revenue .....................................................................................................................................................23 7.5 Income Statement ......................................................................................................................................24 7.6 Cashflow ....................................................................................................................................................25 7.7 Balance Sheet ............................................................................................................................................26 7.8 Investment Information .............................................................................................................................26

8 Bibliography .....................................................................................................27 8.1 Sources of Information ..............................................................................................................................27

Business Plan

1 EXECUTIVE SUMMARY 1.1 Business of the Company The General Oil and Gas Company (“General Oil and Gas” or the “Company”) will be a reporting company listed on the TSXV exchange that remains to be identified. General Oil and Gas will identify and target potential acquisitions in the oil and gas sector. General Oil and Gas has identified a target company, General Oil and Gas Energy Inc., (“General Oil and Gas”) that has significant proven and probable oil reserves in the province of Alberta. This company can be acquired as a whole or in part as a ‘qualifying transaction’ and offers General Oil and Gas significant revenue potential.

A recent AJM Deloitte Detailed Reserves and Net Present Value report effective on January 31, 2012, shows a value of $133 million at a discount factor of 10% before income tax for the proven and probable reserves currently in General Oil and Gas Energy Inc. In house evaluation completed in 2013 shows an estimated value of proven and probable reserves to be $245 million. General Oil and Gas will benefit from the option to purchase General Oil and Gas in whole or in part as one of its portfolio of investments.

1.2 Company Strategy General Oil and Gas’s strategy is to acquire small and mid-sized low-risk E&P2 energy companies in Alberta, Canada. Key focus areas for its energy investments are domestic upstream businesses that are engaged in the exploration, acquisition, development and production of oil and natural gas reserves in Alberta, Canada.

General Oil and Gas will primarily focus its efforts on acquiring oil and gas properties with proven developed and undeveloped reserves that are economically attractive with strong upside potential. Through its investments, General Oil and Gas plans to generate both current income and capital appreciation for its shareholders.

By investing in General Oil and Gas, stockholders will be able to participate in the company’s portfolio while holding a publicly traded stock. General Oil and Gas is unique in that it will be a public company that focuses on making investments in good value assets.

1.3 Primary Objectives The primary objectives of the Company are to:  Complete a “Qualifying Transaction”.  Acquire already discovered oil and gas properties in Alberta, Canada with development opportunities and achieve a high rate of return from low risk near-toproduction projects.

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E&P signifies ‘exploration and production” in oil & gas companies.

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Business Plan 1.4 Investment Criteria Management will consider many factors in assessing its participations and acquisitions including: the ratio of risk to reward; the length of the payback period; the anticipated rate of return; the presence of multi-zone potential; near term market access; the amount of infrastructure in place; the amount of proved reserves anticipated; and the life of the reserves.

General Oil and Gas’s investment criteria include the following: 

General Oil and Gas seeks to make engineering based, development oriented investments in the energy industry that are low risk and near the production stage.



General Oil and Gas will structure transactions to generate an appropriate total return for the risk undertaken



The NPV (Net Present Value) for General Oil and Gas Energy as of January 31, 2012 was calculated by AJM Deloitte to be $133 Million at a discount of 10% for the Proved and Probable Reserves.

Through the combination of assets, security, diligence, structure, and appropriate pricing, General Oil and Gas will endeavor to provide a good risk/reward for its investors.

1.5 Target Acquisition A target acquisition has been identified, General Oil and Gas Energy Inc.3, with proven and probable oil reserves with a net present value of $133 million. Initial production can begin in 3 to 4 months post financing for immediate cash flow. Management constantly examines current and old oil properties in Alberta, Canada with potential to return to oil recovery and production. To date, they have identified five high value properties with a value that has been supported in a report issued on January 31, 2012 by AJM Deloitte4.

3 4

See Chapter 2 – Target Acquisition – General Oil and Gas Energy and resource advisory practice that is fully integrated with Deloitte’s existing professional services.

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Business Plan 1.6 Canadian Oil & Gas Sector The biggest energy story in North America is currently Alberta, Canada. Alberta holds most of the oil and gas which extends from the Rocky Mountains to the Canadian Shield, and which contains one of the world's largest reserves of petroleum and natural gas.

Oil reserves in Canada were estimated at 179 billion barrels and over 95% of this oil is in the province of Alberta. Alberta contains nearly all of Canada's oil sands and 39% of Canada's remaining conventional oil reserves.

Canada produced 15.3 million cubic metres of crude oil and equivalent hydrocarbons in October 2013 up 3.3% from September and 8.4% from a year ago 5. Over the year, in 2013, crude oil exports increased 17.8%, with approximately 74% of total production being exported to other markets.

1.7 Production and Exports Canada has the second largest oil reserves in the world, with over 175 billion barrels of oil within its borders. Canada sends more than 95 percent of its oil exports to the United States, the bulk of which goes to Midwestern refineries for refining and processing.

Rank

World's Top 3 Oil Reserves by Country Country Proved reserves Proved Reserves (billion barrels),Jan 1, 2010 (billion barrels), Jan 1, 2011

1 2 3

Saudi Arabia*

260.1

Venezuela Canada

Share of Total 01-Jan-11

259.9

17.70%

211.2

99.4

14.40%

175.2

175.2

11.90%

The U.S. and Canada already enjoy the largest trading partnership in the world. Sourcing more of our energy from a friendly, trusted and nearby neighbor will help reduce U.S. reliance on energy resources from elsewhere. While the U.S. should expand the use of its own domestic energy resources, imported oil will continue to play a key role in meeting energy demand and oil from Canada can help meet those supply and demand challenges.

Buoyed by strong crude prices, drilling for oil and gas in Western Canada have hit a five-year high in December 2012 as producers put in motion their winter action plans6.

The number of rigs in the ground in the second week in January reached an 83 per cent utilization rate, a level for the beginning of January not seen since the heady days of 2006 when service companies were frantically trying to capture high natural gas and oil prices.

5 6

Statcan, Thursday, January 12, 2013. http://www.calgaryherald.com/business/drilling+reaches+five+year+high 3

Business Plan To date, in 2012, the price of crude oil is hovering around $100 per barrel which presents substantial margins for oil companies.

1.8 Conventional Oil Development The Company believes that a significant investment opportunity exists in the oil and gas sector in Alberta. In the opinion of the Company, there is a wealth of high quality oil and gas projects that are underdeveloped and have been divested, making them available to observant acquisition parties.

While tar sands have been all the news in Alberta, the past year has seen a return to drilling of conventional oil resources due to advances in technology, especially in horizontal drilling methods or EOR7. By re-assessing vintage properties in relation with new technical applications, production of these properties can resume profitably.

2010 can now be viewed as a restart year for the conventional oil industry not just based on the resurgence in the number of wells drilled, driven by oil price, but more importantly based on the number of horizontal wells drilled driven by the success stories in shale gas developments. The industry is returning to old, thought to be depleted, reservoirs equipped with horizontal well drilling techniques to recover more of the resource that remains in the ground.

The number of horizontal wells grew from 24 percent of oil wells drilled in 2006 to 62 percent of oil direct wells in 2013 and the future looks like the trend will continue. This report examines the growth potential in drilling activity, the effect of change towards horizontal drilling, and the increased production potential from conventional oil within the Western Canada region.

Over the 2010-2035 period the estimated investments, reinvestments, and revenues from operation of the existing and future conventional oil developments in western Canada are $1,059 billion8.    

Total Canadian GDP impact as a result of the investment is estimated at close to $1,056 billion over the 25-year period.

Canadian employee compensation will be almost $259 billion over this time period.

Employment in Canada (direct, indirect, and induced) is expected to grow from 152,000 jobs to a peak of 227,000 jobs in 2020.

Alberta royalties are expected to grow from $0.75 billion in 2010 to a peak of $4.7 billion in 2027.

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EOR – Enhanced Oil Recovery – refers to new advanced oil recovery technology.

CERI, Canadian Energy Research Institute, “Economic Impacts of Drilling, Completing and Operating Conventional Oil Wells in Western Canada (2010 to 2035)”.

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4

Business Plan CERI9 projects that new wells will be drilled in the traditional method in resurging numbers, especially in Alberta, as displayed in the graph below.

CERI Production Projection by Province and Well Vintage

The figure below displays the anticipated growth in royalties from conventional oil developments paid to the province of Alberta starting at $0.7 billion in 2010 and growing to $4.7 billion in 2027. These royalty payments include both existing and new wells as defined by the drilling forecast and utilizing the provincial royalty formulas as of January 2013.

Royalties paid to the Alberta Government for Conventional Oil Developments ($ millions)

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CERI, the Canadian Energies Research Institute.

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Business Plan 1.9 Capital Requirements In order to complete the acquisition of 100% of General Oil and Gas Energy, commence drilling, oil extraction operations, and undertake future acquisitions and exploration, the Company requires an investment of $60 million.

1.10 Use of Proceeds General Oil and Gas will use the proceeds raised in the following distribution:

Pre-Operative Expenses Financing and Use of Proceeds Phase 1 Financing

$60,000,000

Use of Proceeds Target Acquisition (Cash Portion) Drill Wells - currently planned Yrs. 1&2 Future Acquisition & Exploration

Total $ $ $

15,000,000 16,628,600 28,371,400

Total Pre-Operative Expenses

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$ $ $

15,000,000 16,628,600 28,371,400

$

60,000,000

Business Plan 1.11 Revenue Summary The Company projects that gross revenues will total $188,006,744 over 4 years according to the forecast based on figures from the AJM Deloitte economic valuation.

4 Year Revenue Summary 2012

2013

2014

2015

$ 7,906,000 $ 1,808,881 $16,584,000 $ $ 4,113,000 $30,411,881

$13,799,000 $ 1,803,965 $26,883,000 $ 853,062 $ 7,800,000 $51,139,027

$14,112,000 $ 894,609 $30,744,000 $ 862,563 $10,876,000 $57,489,172

$13,876,000 $ 443,414 $25,413,000 $ 642,250 $ 8,592,000 $48,966,664

$18,001,581

$26,431,827

$34,118,772

$26,300,864

(CDN$)

Revenues: Lavoie Resources Falcon Resources Fern Gully Gleghorn Sandhurst Lake Gross Revenues EBITDA: Total

1.12 Public Company Operation Phases Phase 1: 

Complete the ‘Qualifying Transaction’ by acquiring the target oil company.



Initiate and launch the operations, set-up the administration, commence legal and accounting procedures, file papers to take the company public, and develop marketing materials. The Company will continue to raise capital on the public market for acquisitions and investments.

Phase 2: General Oil and Gas has identified one acquisition, General Oil and Gas Energy Inc., which has five properties with low risk identified drilling targets with high potential in Alberta. The Company will invest in and develop these properties employing senior oil and gas expertise from its consortium of strategic relationships in the industry resulting in cash flow within 3 months.

1.13 Future Plans The funds garnered from the Company’s entry into the public markets will be used for the further identification and acquisition of strategic oil properties, continued exploration, development and drilling operations The company intends to increase its holdings through the purchase of additional low risk high yield oil and gas properties in Alberta. Some of these properties may be purchased from the divestiture programs of larger oil and gas corporations.

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Business Plan 1.14 Project Features 

All locations are in existing reefs that are not fully depleted.



Easy access. All the properties in the target acquisition are in Alberta in the corridor Northeast of Red Deer to Northwest of Edmonton.



Located in existing fields with good infrastructure that may be utilized otherwise a simple facility structure can be applied.



2nd event wells to be drilled not far from the original location that has proved to produce significant volumes from the un-swept parts of the pool above the Oil / Water contact.



Threshold for positive economics is extremely low.



5% Royalty applies to the first year to a maximum of 50,000 Barrels.



Isolated one LSD in size.



Minimal risk (limited to drilling/Completion/Equipment).



Target is bypassed oil combined with land expiry and high oil prices that lead to very good economics. Low risk and high return are principal characteristics for the opportunity.



Target fields are strong candidates for CO2 miscible floods; which could increase the oil recovery by 10-15%.



Joseph Smithson has 30 years’ experience with very strong technical background.

Worked with large companies that had ownership in similar reefs (i.e. Petro-Canada, BP Canada, Amerada Hess, Union Pacific Resources / Anadarko Canada), as well as evaluated Oil & Gas properties with McDaniel & Associates and directly worked with Mr. Rod McDaniel from 1984 to 1987. Also started a successful venture that has a parallel business model to General Oil and Gas's business model, in December 2004 and sold the company to ARC Resources in December 2006.



General Oil and Gas uses a unique software analysis tool that would analyze data from every well in Western Canada, then identifies and sorts profitable high quality opportunities. Currently General Oil and Gas is targeting oil.



Additional opportunities have been identified and we are positioned to post, bid, and acquire.

1.15 The Opportunity 

General Oil and Gas offers an opportunity to obtain a position in a fairly valued, well run oil and gas capital company in Alberta, Canada.



The experience of its management team and its ability to determine the significance of oil properties is key to the success of the company.



Management has a previous record of sourcing and selling oil properties for profit.

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Business Plan 

General Oil and Gas will utilize the $60 million in funds raised to complete the target acquisition and commence drilling on 5 target properties as well as undertake future acquisitions and exploration.



General Oil and Gas has a current valuation of $133m from AJM Deloitte. The cost to acquire General Oil and Gas Energy Inc. is $15m plus stock, which will offer great leverage for growth.



Expenses on drilling wells for 2 years estimated at $16,628,600.



Total EBITDA is projected to be $104,853,044 in four years.



An investment of $28,371,400 is being sought for new additional acquisitions and exploration purposes.



The income statement does not include revenues from the new additional acquisitions and exploration opportunities.



Once income is incorporated from additional exploration and acquisition opportunities, the net income and valuation of the company will improve substantially.

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Business Plan

2 TARGET ACQUISITION – GENERAL OIL AND GAS ENERGY INC. 2.1 General Oil and Gas Purpose General Oil and Gas will acquire and develop petroleum and natural gas properties. The company has predetermined one acquisition with five properties and 18 potential wells that it considers significant: General Oil and Gas Energy Inc. General Oil and Gas is a tightly held private E & P company that owns 100% of strategic locations in five prolific light and medium oil reefs and two Gas fields in Alberta, Canada. General Oil and Gas’s lands offer significant development upside and revenue from production.

A feature of the five General Oil and Gas Energy properties is that they are older wells formerly drilled by major oil producers that have been abandoned or sold. The properties show significant remaining oil reserves that can now be returned to production.

2.2 Corporate Data General Oil and Gas Energy Inc. Name Address

General Oil and Gas Energy Inc. Calgary, Alberta T7F 3K4

Tel

(855) 689-2556

Fax

(855) 689-7758

2.3 Asset Value In a report issued to General Oil and Gas on January 31, 2013, AJM Deloitte estimated the Net Present Value before income tax to be $133 million discounted at 10% for proven and probable reserves.

An in-house evaluation completed in April 2013, estimates a Net Present Value of $245 million for proven and probable reserves before income tax and discounted at 10%.

2.4 Ownership General Oil and Gas acquired 3,472 Hectares with high potential, low risk Oil and Gas reserves, mostly in well-known Lavoie and Norco reef structures through Land Sales by the Alberta government (NO Environmental Liabilities). The oil drilling spacing unit is 16 hectares per well. There are 18 drilling opportunities.

The lands are strategically located close to Alberta’s Industrial Heartland Development Area (potential CO2 sources) where major operators are evaluating enhanced oil recovery schemes via CO2 flood, where recovery factor can be increased by 5 to 15%; a modest 10

Business Plan increase in recovery of the original oil in place translates to a material impact on reserves and production.

2.5 Anticipated Production Levels General Oil and Gas is strategically set to take advantage of excellent high return drilling opportunities to produce upwards of 1,600 Barrels per day.

2.6 General Oil and Gas Business Model Low risk and high return are the principal characteristics of General Oil and Gas’s property selection and business model. The concept was to identify drilling spacing units that previously produced oil and watered out due to coning. A new well to be drilled a short distance away would be able to produce significant volume of reserves that would otherwise be missed.

General Oil and Gas’s Business Model parallels a previous successful venture Grand Carlyle Energy Inc. (GKEI). GKEI was incorporated in 2004 and sold in 2006. GKEI acquired a land base in the Greenwater field in the prolific Lavoie reef in Central Alberta.

2.7 Proprietary Software General Oil and Gas uses a proprietary software analysis tool that analyzes Oil and Gas data from every well available in western Canada, then identifies and sorts profitable high quality opportunities.

Aside from what General Oil and Gas has already acquired, other opportunities have been identified and the Company plans continue to source and evaluate properties. The Company is well positioned to post, bid, and acquire properties at any time, or compete to buy them if identified and posted by other companies.

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Business Plan 2.8 General Oil and Gas Properties General Oil and Gas Energy Property Values # 1 2 3 4 5

Field Falcon Resources Fern Gully D2A Fern Gully D3A & F Gleghorn Park D3A Lavoie Resources D3F Sandhurst Lake D3 Total

Proved Developed (000's $)

13,606.1 $13,606.1

Total Proved (000's $) 0 23,475.2 4,699.5 0 22,220 10,017.6 $60,412.3

Total Proved + Probable @ 10% Disc (000's $) 2,660.6 58,562.0 10,122.4 1,239.5 39,464.1 21,297.0 $133,345.6

General Oil and Gas Oil & Gas Properties in Alberta, Canada

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Business Plan 2.9 Property 1 – Falcon Resources   

There is one drilling opportunity in the Falcon Resources Field, as identified in the NI 51-101 report, by AJM Deloitte.

The pool designation is Lavoie D3A. The asset Value for Falcon Resources is estimated as equivalent to the Net Present Value at 10% discount which calculates the future cash flow as of January 31, 2012 at $2,660,600.

2.10 Property 2 – Fern Gully Resources     

There are eight potential drilling opportunities in the Fern Gully Resources Field.

Six locations from the Nisku D2A pool.

Two locations from the Lavoie D3A and D3F pools.

All are at approximate depths of 1,650 m.

The asset Value for Fern Gully Resources is estimated as equivalent to the Net Present Value at 10% discount which calculates the future cash flow discounted back as of January 31, 2012 at $68,684,400.

2.11 Property 3 – Gleghorn Park   

There is one drilling opportunity in the Gleghorn Park Field.

The pool designation is Lavoie D3A. The asset Value for Gleghorn Park is estimated as equivalent to the Net Present Value at 10% discount which calculates the future cash flow discounted back as of January 31, 2012 at $1,239,500.

2.12 Property 4 – Lavoie Resources 

 

The Lavoie D3F pool is estimated to have 1.5 Million Barrels of oil remaining to be recovered. In-house estimate is about 1.5 Million Barrels. General Oil and Gas drilled three wells. Additionally, General Oil and Gas owns 100% of a 3.2 Km Oil pipeline that ties into NEP facilities. General Oil and Gas has approval to drill 2 producers per LSD, in LSD's 6 & 7 of 14-50-26W4.

General Oil and Gas encountered 25 meters of oil leg above the oil/water contact in the subject reef in D3F pool.

The asset Value for Lavoie Resources is estimated as equivalent to the Net Present Value at 10% discount which calculates the future cash flow discounted as of January 31, 2012 at $39,464,100.

2.13 Property 5 – Sandhurst Lake   

There are five drilling opportunities in the Sandhurst Lake Field.

The pool designation is Leduc D3.

The asset Value for Sandhurst Lake is estimated as equivalent to the Net Present Value at 10% discount which calculates the future cash flow discounted back to June 1, 2013 at $21,297,000.

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Business Plan

3 EOR – ENHANCED OIL RECOVERY 3.1 Enhanced Oil Recovery Methods A range of enhanced oil recovery (EOR) techniques are breathing new life into the world’s abandoned oil fields. Despite only recovering around 20 per cent of the oil in certain fields, the oil field’s operator, (Shell or Exxonmobil or others), ceased production from various sites in the ‘90’s when the high cost of extracting the remaining highly viscous oil simply could not be justified given the market price.

But now with oil prices above $100 and advanced technologies that pump steam via horizontal wells hundreds of metres beneath the surface, oil can begin to flow once again and operators now hope to extract a further millions barrels over the next few years.

3.2 The easy oil is disappearing and new oil fields are expensive The oil field’s rebirth is part of a wider trend in the fossil-fuel industry. Much of the planet’s untapped reserves are either deep beneath the sea or in environmentally sensitive areas.

This has triggered a revaluation of previously abandoned oil fields and given momentum to a suite of enhanced oil recovery (EOR) techniques that will bring it to the surface.

Diederik Boersma, Shell’s R&D team leader for EOR states that all the new oil fields that are found today are in the Arctic or in the water. As this new oil is expensive, returning to existing oil fields and using EOR becomes very attractive. One of the uncertainties in oil-field development is finding the oil; that uncertainty is not there if existing oil fields are re-opened with advanced equipment.’

Traditionally, oil fields have largely been exploited through natural depletion: engineers drill a hole and the pressure in the reservoir forces out the oil. This typically leaves around 80 per cent of the oil in the ground, so energy companies then inject water or gas into the reservoir to force out more of the oil, boosting the recovery factor to approximately 30 per cent. But this is only successful up to a point. Water will follow the path of least resistance, leaving some areas of a reservoir untouched. And differences in viscosity and the effect of microscopic interactions between water and oil can also hamper recovery. EOR — a range of technologies that typically use chemicals, miscible gas or heat to alter the properties of the reservoir fluids — could, some claim, boost the recovery factor to as much as 70 per cent.

With oil prices rising and concerns over future energy supply mounting, the technology has some momentum behind it and many projects which use a form of thermal EOR can begin to recover more oil from abandoned wells, a compelling illustration of the technology’s benefits. Current estimates for the percentage of oil that can be recovered using EOR vary between 50 and 70 per cent compared with the average 20 per cent achieved using natural depletion.

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Business Plan

4 OIL ACQUISITIONS 2013 General Oil and Gas will invest in and develop oil & gas properties in Alberta, Canada that may become attractive targets for major oil companies. Below is a list of the value of some of the acquisitions and divestitures in the Canadian oil industry in 2013.

4.1 M & A Activity in the Energy Sector Silver Birch Energy Corporation -acquisition by Teck Resources Limited valued at C$435million.

Daylight Energy Ltd. -C$2.2-billion acquisition by China Petrochemical Corporation, known as Sinopec Group.

PTT Exploration and Production Public Company Limited - US$2.28-billion acquisition of a 40 per cent partnership interest in Statoil Canada Partnership, whose main asset is the Kai Kos Dehseh oil sands project in Canada.

Cliffs Natural Resources Inc. - US$107-million acquisition of Spider Resources Inc. UTS Energy Corporation - C$1.5-billion plan of arrangement with Total E&P Canada Ltd. whereby Total will acquire UTS Energy.

Sinopec International Petroleum Exploration and Production Corporation - C$4.65-billion purchase of ConocoPhillips' interest in the Syncrude joint venture. The Syncrude joint venture is the largest oil sands venture in the world that includes surface mining, extraction and upgrading, and has been in production for over 30 years.

Cliffs Natural Resources Inc. - C$240-million acquisition of Freewest Resources Canada Inc., which was supported by Freewest as superior to an unsolicited take-over bid by Noront Resources Ltd. TriStar Oil & Gas Ltd. - C$2.8-billion acquisition by Petrobank Energy and Resources Ltd, thereby creating a new publicly-listed company named PetroBakken Energy Ltd. Premier Oil Plc -US$505-million acquisition of Oilexco North Sea Ltd. from Oilexco Inc., in administration.

Dana Petroleum Plc - C$218-million acquisition of Bow Valley Energy Ltd. Nexen Inc. - C$735-million acquisition of an additional 15% interest in the Long Lake oil sands joint venture project and the joint venture lands from OPTI Canada Ltd. Gran Tierra Energy, Inc. - US$675-million acquisition of Solana Resources Ltd.

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Business Plan Saxon Energy Services Inc. - C$677-million acquisition by Sword Canada Acquisition Company (indirectly jointly owned by Schlumberger Limited and First Reserve Corporation).

Enerplus Resources Fund - sale of its interest in the Joslyn Oil Sands Project to Occidental Petroleum Corporation for US$500-million Gentry Resources Ltd. - US$268-million acquisition by Crew Energy Inc. Penn West Energy Trust - US$162-milion acquisition of Endev Energy Inc. Burmis Energy Inc. - US$222-million acquisition by Baytex Energy Trust.

Enerplus Resources Fund - C$7.6-billion strategic merger with Focus Energy Trust.

Canetic Resources Trust - C$15-billion strategic business combination with Penn West Energy Trust.

Canadian Natural Resources on the acquisition of certain WCSB oil and gas properties. $180 million.

Hunt Oil Company of Canada on the divestiture of its Canadian oil and gas assets. $525 million.

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Business Plan

5 BOARD OF DIRECTORS General Oil & Gas has an experienced management team assembled from the top tier of the oil & gas industry in Alberta, Canada. The team has made significant contributions to the future of the Company by identifying high potential oil & gas properties for acquisition.

The principals of the Company bring over 150 years of collective experience in the international oil industry and relationships with scores of exploration and development companies, consulting companies, service companies, and the financial and brokerage community relative to oil & gas. Management’s expertise will provide an advantage in the identification of high yield properties and the economical supervision of their production and drilling activities.

General Oil and Gas’s Board of Directors experience in all facets of oil and gas exploration and development includes:    

The development of exploration prospects for drilling; The drilling of exploration and development prospects; The production of oil prospects and the design and construction of all production facilities; The founding, financing, and the development of public oil and gas companies including all aspects of regulatory responsibility.

5.1 Joseph Smithson, President & CEO, Director, P. Eng. Mr. Joseph Smithson has over 30 years oil and gas technical experience and previously served as President and CEO of two private Oil & Gas companies for 6 years.

In December 2004, Mr. Smithson founded Grand Carlyle Energy and acquired a lucrative land base in the Greenwater Lavoie Oil Field, which was then sold in December 2006, for $18.5 Million. The majority shareholders launched General Oil and Gas Energy in 2008.

Mr. Smithson’s petroleum engineering experience encompasses Reservoir, Evaluations, Acquisitions & Divestitures, Reserves Management, and Reservoir Engineering Management.

This includes 5 years of key management positions with Union Pacific Resources and Anadarko Canada as Manager of Acquisitions & Divestitures, Manager of Reservoir Evaluations, Manager of Reserves, and Manager of Reservoir Engineering.

Mr. Smithson has consulted to numerous oil & gas clients in Alberta such as Petro-Canada, McDaniel & Associates, BP Canada, and Amerada Hess through a consulting firm, Smithson & Associates. During the three years with McDaniel & Associates Engineering Evaluations, Joe was involved in assisting and working directly with Mr. Rod McDaniel.

Joseph Smithson graduated with a BSc in Electrical Engineering 1981 from the University of Calgary.

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Business Plan 5.2 Evan J. Smith, Vice President and CFO Mr. Smith brings over twenty years of experience in oil & gas to General and has an extensive network of industry contacts. He has held several positions in junior oil & gas exploration firms and is a key strategist with a history of successful mergers and acquisitions.

Evan Smith worked for over 17 years for Husky Energy, a multi-billion dollar publicly traded company whose principal shareholder is Mr. Li-Ka Shing from Hong Kong. He held various senior managerial roles in land and rose to the position of General Manager of Land (199198), a key part of Husky’s Executive Team. Evan was responsible for all negotiations, divestitures, and acquisitions. At the request of Mr. Li-Ka Shing, he developed and executed the strategy for Husky’s oil sands exploration and development. The minimum economical entry into oil sands is approximately $325 million.

Highlights of his accomplishments at Husky were: negotiated and disposed of $100 million of non-strategic assets; negotiated over 300 significant asset deals; negotiated several significant high impact Canada East Coast offshore deals totaling over $1 billion; lead the industry task force for shaping the Canadian Resources Petroleum Act; coordinated the merger of Camerica ($3 billion asset value) with Husky; and lead an engineering task force on establishing a heavy oil field data capture system that has been widely used by the several other energy companies. Evan Smith has a passion for maximizing shareholder value and has a keen eye for cost control. The groups he managed were consistently in the top-industry quartile for the lowest overhead costs per barrel of oil equivalent produced.

Prior to working for Husky, Evan Smith held a senior negotiator position at Cross Canada ($15 billion in assets). He primarily negotiated land deals in the United States and internationally.

Cross Canada recently merged with Alberta Energy Company to form In Canada, a $30 billion market cap company, the largest fully integrated oil & gas company in the country.

Evan has an extensive volunteer background spanning over twenty years. He currently sits on several boards, including the Senate and Board of Governors for the University of Alberta.

Evan Smith has been recognized with several community awards, including a Distinguished Citizenship Award. He is very well known in the energy industry and the community.

Brian is a Certified Management Accountant (CMA), and Bachelor of Commerce degree from the University of Alberta.

5.3 Kerry Madison, COO Mr. Madison is a geologist with 22 years’ experience in exploration in Western Canada. His discoveries to date have produced 1.65 million barrels of oil and 26.6B cubic feet of gas. As Senior Exploration Geologist with Mobil Oil Canada, he was responsible for 2 major discoveries in Northern Alberta at Rutledge Pass with established recoverable reserves of 12 million barrels of oil equivalent.

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Business Plan In addition in Central Alberta he was responsible for adding 30 million cubic feet per day of gas production and 30B cubic feet of recoverable gas reserves in a 2 year period.

After leaving Mobil Oil Canada he has held Senior Exploration positions in a number of intermediate and junior oil companies establishing new core producing areas for Vanier Resources with the discovery of 750 barrels oil per day in West Central Alberta, and was instrumental in increasing Bingham Canada’s production from 4000 barrels oil per day to 6300 barrels oil per day in an 8 month period.

Mr. Madison has a strong technical background in exploration, all aspects of project development and a proven ability to find hydrocarbons.

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Business Plan

6 COMPANY OPERATIONS STRATEGY 6.1 Phase One Identification of Drillable Opportunities The identification of drillable opportunities is driven by the divestiture by the larger oil companies, the proprietary software of General Oil & Gas and the experience of the management team. With their expertise and aggressive employment of technology General has located oil & gas opportunities overlooked or ignored by other players and that have received affirmation by Deloitte that the value of these holding is $133 million.

6.2 Phase Two Acquisition of Properties Management has negotiated property rights that minimize capital outlays while offering substantial opportunity to shareholders. These properties have been assessed and their value confirmed by engineering reports and reputable industry analysts.

6.3 Phase Three Production and Development Upstream development will be managed by industry veterans with considerable engineering and technical expertise. New technology will be employed that offers low cost production modules while extracting maximum yield. General Oil & Gas will employ unconventional and enhanced oil recovery methods on its proven reserves. Robust environmental procedures will be put in place that exceed industry standards.

6.4 Phase Four Commencement of Cash Flow Success ratios will be measured after royalties are paid to determine the ongoing best course of action for profitability and future operations.

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Business Plan

7 FINANCIAL PROJECTIONS 7.1 Properties and Production Projections Year

2012 2013 2014 2015

Wells Per Location Lavoie 3 3 3 3

Falcon Dell 1 1 1 1

Glen Park 0 1 1 1

Fenn 6 8 8 8

Sturgeon Lake 2 5 5 5

Lavoie Resources Year 2012 2013 2014 2015

Pool Rates (bbl/d) 240 375 375 361

WI Volume Bbls 80250 136875 136875 131743

Price ($ bbl) 96 98 100 102

Falcon Dell Accord Year 2012 2013 2014 2015

Pool Rates (bbl/day) 65 58 28 14

WI Volume bbl 21794 21223 10283 7982

Price ($/bbl) 83 85 87 89

Fern Gulley Year 2012 2013 2014 2015

Pool Rates (bbl/d) 516 752 842 682

Year 2012 2013 2014 2015

Pool Rates (bbl/d) 0 24 24 17

Year 2012 2013 2014 2015

Pool Rates (bbl/d) 128 218 298 231

WI Volume bbl 172750 274356 307452 249189

Price ($/bbl) 96 98 100 102

Gleghorn WI Volume bbl 0 8705 8625 6297

Price ($/bbl) 0 98 100 102

Sandhurst Lake WI Volume bbl 42840 79590 108759 84236

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Price ($/bbl) 96 98 100 102

Business Plan 7.2 Assumptions

Assumptions 2012 Revenue Lavoie Resources Falcon Dell Fern Gully Gleghorn Sandhurst Lake Total Sales Cost Drilling of Wells Crown Royalty Operating Costs

2013

2014

2015

$7,906,000 $1,808,881 $16,584,000

$13,799,000 $1,803,965 $26,883,000

$14,112,000 $894,609 $30,744,000

$13,876,000 $443,414 $25,413,000

$0 $4,113,000 $30,411,881

$853,062 $7,800,000 $51,139,027

$862,563 $10,876,000 $57,489,172

$642,250 $8,592,000 $48,966,664

$9,050,000 $1,520,600 $1,329,700

$7,578,600 $13,713,000 $2,275,600

$0 $19,611,000 $2,619,400

$0 $19,115,500 $2,410,300

7.3 Funds Sought & Use of Proceeds General Oil and Gas seeks investment of $60,000,000. Proceeds will be used for the following:

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Business Plan 7.4 Revenue

4 Year Revenue Summary 2012

2013

2014

2015

$ 7,906,000 $ 1,808,881 $16,584,000 $ $ 4,113,000 $30,411,881

$13,799,000 $ 1,803,965 $26,883,000 $ 853,062 $ 7,800,000 $51,139,027

$14,112,000 $ 894,609 $30,744,000 $ 862,563 $10,876,000 $57,489,172

$13,876,000 $ 443,414 $25,413,000 $ 642,250 $ 8,592,000 $48,966,664

$26,431,827

$34,118,772

$26,300,864

(CDN$) Revenues: Leduc Woodbend Field Fairy Del Bon Accord Fenn Big Valley Glen Park Sturgeon Lake Gross Revenues EBITDA: Total

$18,001,581

General Oil & Gas Gross Revenue Summary 70 60

$ Millions

50

Lavoie Resources

40

Falcon Resources

30

Fern Gully Gleghorn

20

Sandhurst Lake

10

Gross Revenues

0 2012

2013

2014

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2015

Business Plan 7.5 Income Statement

Income Statement 2012

2013

2014

2015

$7,906,000 $1,808,881 $16,584,000 $0 $4,113,000 $0 $30,411,881

$13,799,000 $1,803,965 $26,883,000 $853,062 $7,800,000 $0 $51,139,027

$14,112,000 $894,609 $30,744,000 $862,563 $10,876,000 $0 $57,489,172

$13,876,000 $443,414 $25,413,000 $642,250 $8,592,000 $0 $48,966,664

Operating Costs & Royalties Marketing & Distribution

$2,850,300 $0

$15,988,600 $0

$22,230,400 $0

$21,525,800 $0

Operating Costs & Royalties

$2,850,300

$15,988,600

$22,230,400

$21,525,800

$200,000 $300,000 $10,000 $510,000

$200,000 $900,000 $40,000 $1,140,000

$200,000 $900,000 $40,000 $1,140,000

$200,000 $900,000 $40,000 $1,140,000

Operating Income

$27,051,581

$34,010,427

$34,118,772

$26,300,864

Drilling Cost EBITDA

$9,050,000 $18,001,581

$7,578,600 $26,431,827

$0 $34,118,772

$0 $26,300,864

Income before Tax Provision for Income Tax

$18,001,581 $5,400,474

$26,431,827 $7,929,548

$34,118,772 $10,235,632

$26,300,864 $7,890,259

$12,601,107

$18,502,279

$23,883,140

$18,410,605

Revenues Lavoie Resources Falcon Dell Fern Gully Gleghorn Sandhurst Lake Gross Revenues Cost of Goods Sold

Overhead Administration, L & A Salary Insurance Total Overhead Expenses

Net Income

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Business Plan 7.6 Cashflow Cash Flow Statement Pre-Opening

2012

2013

2014

2015

Operating Activities Net Income

$12,601,107

$18,502,279

$23,883,140

$18,410,605

Net Cash Operating Activities

$12,601,107

$18,502,279

$23,883,140

$18,410,605

$41,000,000

$12,601,107 $41,000,000

$18,502,279 $53,601,107

$23,883,140 $72,103,386

$18,410,605 $95,986,526

$41,000,000

$53,601,107

$72,103,386

$95,986,526

$114,397,131

Financing Activities Financing Fees Cash Flows from Financing Activities

$60,000,000 ($4,000,000) $56,000,000

Investing Activities Target Acquisition

($15,000,000)

Total Investing activities

($15,000,000)

Net change in cash and equivalents Cash and equivalents beginning of year Cash and equivalents at end of year

Notes to Reader: The total investment required is estimated at $60m and will be invested as follows: 

The General Oil and Gas will utilize the $60 million in funds raised to complete the target acquisition and commence drilling on 5 target properties as well as undertake future acquisitions and exploration.



The cost to acquire General Oil and Gas Energy Inc. is $15m plus stock. General Oil and Gas has a current valuation of $133m from AJM Deloitte.



Expenses on drilling wells for 2 years estimated at $16,628,600.



A portion of the investment or $28,371,400 will be utilized for new additional acquisitions and exploration purposes.



Total EBITDA is projected to be $104,853,044 in four years without the additional revenues from new drilling opportunities.



The income statement does not include revenues from the new additional acquisitions and exploration opportunities.



Once income is incorporated from additional exploration and acquisition opportunities, the net income and valuation of the company will improve substantially.

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Business Plan 7.7 Balance Sheet Balance Sheet 2012

2013

2013

2014

$62,601,107 $0

$76,103,386 $0

$99,986,526 $0

$118,397,131 $0

$62,601,107

$76,103,386

$99,986,526

$118,397,132

Other Assets/Investments

$10,000,000

$15,000,000

$15,000,000

$15,000,000

Total Assets

$72,601,108

$91,103,387

$114,986,527

$133,397,132

$0 $0 $0

$0 $0 $0

$0 $0 $0

$0 $0 $0

Common Stock Preferred Stock Retained Earnings Shareholder Equity Total Shareholder Equity

$1 $0 $12,601,107 $60,000,000 $72,601,108

$1 $0 $31,103,386 $60,000,000 $91,103,387

$1 $0 $54,986,526 $60,000,000 $114,986,527

$1 $0 $73,397,131 $60,000,000 $133,397,132

Total Liabilities & Equity

$72,601,108

$91,103,387

$114,986,527

$133,397,132

Assets Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets

Liabilities Current Liabilities Bank Indebtedness Accounts Payable Total Current Liabilities Total Liabilities Shareholder's Equity

7.8 Investment Information The following information and other investment information is available in the Prospectus of the Company:      

Description of Offering Available Share Classes Plan of Distribution Description of Warrants Description of Dividends Risk Factors

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Business Plan

8 BIBLIOGRAPHY 8.1 Sources of Information Deloitte, AJM; General Oil and Gas – Lavoie Resources Final Report General Oil and Gas AB Dept of Energy General Oil and Gas Energy Inc. PowerPoint http://www.bloomberg.com/quote/0334341Z:CN http://www.deloitte.com/view/en_CA/ca/services/financialadvisory/valuationservices/ene rgy-resource-advisory/ http://www.linkedin.com/pub/yousef-joe-Smithson/32/b2b/a0 https://www.ic.gc.ca/app/scr/cc/CorporationsCanada/fdrlCrpDtls.html?corpId=7873344 http://www.list-company.com/companyinfo/4028809a13dd74c80113ddc47c423fb8/Grand-Kasya-Energy-Inc-Oil-Gas-AlbertaCanada.shtml http://ipo.investcom.com/cgi-bin/ipoprofile1.cgi?ID=1&string=General Oil and Gas+Capital+Corp&exact=yes&com=yes http://www.capital-cventures.com/?pageID=1 http://www.ngpcrc.com/ http://www.32degrees.ca/portfolio.html http://www.solaraexploration.com/ http://www.energy.gov.ab.ca/ http://www.kgs.ku.edu/Publications/PIC/pic27.html http://www.ogfj.com/mergers-acquisitions.html http://www.reuters.com/article/2011/11/15/opti-cnooc-idUSN1E7AE1SU20111115 http://www.rigzone.com/news/type.asp?t_id=5 http://theinvestmentblog.net/2011/01/17/2011-mergers-and-acquisitions-outlook-2010year-end-summary-review/ http://www.oilvoice.com/open/ http://www.oil-blog.com/ http://www.ceri.ca/ http://www.chron.com/business/article/China-invests-billions-in-oil-sands-2176114.php http://www.wikinvest.com/stock/Exxon_Mobil_(XOM) http://www.energybridge.ca/ http://www.calgaryherald.com/business/drilling+reaches+five+year+high/5996473/story.h tml?cid=megadrop_story http://www.api.org/aboutoilgas/oilsands/ http://www.scotiawaterous.com/completed-ma-transactions/year-ma-current.htm http://blakes.com/english/practiceareas/areas.asp?Search=Description&Area=Mergers+%2 6+Acquisitions&loc= http://seekingalpha.com/article/317128-5-canadian-oil-and-gas-takeover-targets-for-2012 https://mninews.deutsche-boerse.com/index.php/statcan-production-oct-crude-oil-natgas-picks?q=content/statcan-production-oct-crude-oil-nat-gas-picks http://petroleuminsights.blogspot.com/2011/02/top-22-proven-oil-reserves-holdersjan.html

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