Westernzagros Resources F-7 Registration of securities, offered for cash upon the exercise of rights granted to existing security holders

Exhibit 2.11

WESTERNZAGROS RESOURCES LTD.

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TAKE NOTICE that a special meeting (the “Meeting”) of the holders (the “Shareholders”) of common shares (“Common Shares”) of WesternZagros Resources Ltd. (the “Company”) will be held in Meeting Room No. 3, Plus Fifteen Level, at the Ernst & Young Tower located at 440 2nd Avenue S.W., Calgary, Alberta, T2P 5E9 at 10:00 a.m. (Calgary time) on October 1, 2014 (the “Meeting”) for the following purposes:

1. To consider, and if thought fit, pass an ordinary resolution approving an equity backstop and private placement of non-voting, series 1, class A preferred shares of the Company to Crest Energy International LLC (“Crest”), pursuant to the terms and subject to the conditions of the equity backstop agreement dated August 14, 2014 between the Company and Crest, all as more particularly set out in the accompanying management information circular of the Company dated September 1, 2014;

2. To consider, and if thought fit, pass a special resolution approving an amendment to the articles of the Company to increase the maximum number of directors from 9 to 10; and

3. To transact any such other business as may properly be brought before the Meeting or any adjournment thereof.

If you are aregistered Shareholderof the Company and are unable to attend the Meeting or any adjournment thereof in person, please complete, sign and mail the enclosed form of proxy to Computershare Trust Company of Canada, 9^th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1, not later than 48 hours (excluding Saturdays, Sundays and statutory holidays) prior to the time of the Meeting or any adjournment thereof.

If you are anunregistered Shareholderof the Company and receive these materials through your broker or through another intermediary, please complete and return the form of proxy in accordance with the instructions provided therein.

Onlyregistered Shareholders as at September 1, 2014 and their duly appointed proxyholders will be entitled to vote at the Meeting.

BY ORDER OF THE BOARD OF DIRECTORS

(signed) “Fred Dyment”

Fred Dyment

Chairman

Exhibit 2.11

WESTERNZAGROS RESOURCES LTD.

INFORMATION CIRCULAR

April 15, 2013

THIS INFORMATION CIRCULAR IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES BY THE MANAGEMENT OF WESTERNZAGROS RESOURCES LTD. (the “Corporation” or “WesternZagros”) for use at the annual and special meeting (the “Meeting”) of the holders (“Shareholders”) of common shares (“Common Shares”) of the Corporation to be held on June 6, 2013 at 3:30 p.m. (Calgary time) at the place and for the purposes set out in the accompanying Notice of Meeting. As a Shareholder you are cordially invited to be present at the Meeting. To ensure that you will be represented at the Meeting in the event that you are aregistered Shareholder and unable to attend personally, you are requested to date, complete and sign the accompanying form of proxy enclosed herewith and return the same to Computershare Trust Company of Canada, 9^th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1. If you are anunregistered Shareholder and receive these materials through your broker or through another intermediary, please complete and return the form of proxy in accordance with the instructions provided therein.

The solicitation of proxies is intended to be primarily by mail but may also be made by telephone, facsimile transmission or other electronic means of communication or in person by the directors, officers and employees of the Corporation. The cost of such solicitation will be borne by the Corporation.

Except where otherwise stated, the information contained herein is given as of April 15, 2013.

GENERAL

Appointment and Revocation of Proxies

The individuals named in the accompanying form of proxy are officers and/or directors of the Corporation.A Shareholder wishing to appoint some other person (who need not be a Shareholder) to represent such Shareholder at the Meeting has the right to do so, either by inserting such person’s name in the blank space provided in the form of proxy or by completing another form of proxy.Such a Shareholder should notify the nominee of the appointment, obtain the nominee’s consent to act as proxy and instruct the nominee on how such holder’s Common Shares are to be voted. In any case, the form of proxy should be dated and executed by the Shareholder or the Shareholder’s attorney authorized in writing, or if the Shareholder is a corporation, under its corporate seal, or by an officer or attorney thereof duly authorized.

A proxy will not be valid for the Meeting or any adjournment thereof unless the completed form of proxy is delivered to Computershare Trust Company of Canada, 9^th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1, not later than 48 hours (excluding Saturdays, Sundays and statutory holidays) prior to the commencement of the Meeting or any adjournment thereof.

In addition to revocation in any other manner permitted by law, a Shareholder who has given a proxy may revoke it at any time before it is exercised, by instrument in writing executed by the Shareholder or by the Shareholder’s attorney authorized in writing and deposited either at the registered office of the Corporation at any time up to and including the last business day preceding the day of the Meeting, or any adjournment thereof, at which the proxy is to be used, or with the Chairman of the Meeting on the day of the Meeting or any adjournment thereof.

Voting of Proxies

The persons named in the enclosed form of proxy have indicated their willingness to represent, as proxyholders, the Shareholders who appoint them. Each Shareholder may instruct its proxyholder how to vote such holder’s Common Shares by completing the blanks in the form of proxy.

Common Shares represented by properly executed proxies in favour of the persons designated in the enclosed form of proxy will be voted or withheld from voting on any poll in accordance with the instructions made on the form of proxy and, if a Shareholder specifies a choice as to any matters to be acted on, such holder’s Common Shares shall be voted accordingly.In the absence of such instructions, such Common Shares will be voted in favour of all matters identified in the Notice of Meeting accompanying this Information Circular.

The enclosed form of proxy confers discretionary authority upon the persons named therein with respect to amendments and variations to matters identified in the Notice of Meeting and with respect to any other matters which may properly come before the Meeting. At the time of printing this Information Circular, the management of the Corporation knew of no such amendments, variations or other matters to come before the Meeting.

Advice to Beneficial Holders of Common Shares

The information set forth in this section is of significant importance to many Shareholders, as a substantial number of Shareholders do not own Common Shares in their own name. Shareholders who do not hold their Common Shares in their own name (referred to in this Information Circular as “Beneficial Shareholders”) should note that only proxies deposited by Shareholders whose names appear on the records of the Corporation as the registered Shareholders can be recognized and acted upon at the Meeting. If Common Shares are listed in an account statement provided to a Shareholder by a broker, then in almost all cases those Common Shares will not be registered in the Shareholder’s name on the records of the Corporation. Such Common Shares will more likely be registered under the name of the Shareholder’s broker or an agent of that broker. In Canada, the vast majority of such shares are registered under the name of CDS & Co. (the registration name for The Canadian Depository for Securities Inc., which acts as nominee for many Canadian brokerage firms). Common Shares held by brokers or their agents or nominees can only be voted (for or against resolutions) upon the instructions of the Beneficial Shareholder. Without specific instructions, brokers and their agents and nominees are prohibited from voting the Common Shares for the broker’s clients.Therefore, Beneficial Shareholders should ensure that instructions respecting the voting of their Common Shares are communicated to the appropriate person.

Applicable regulatory policy requires intermediaries/brokers to seek voting instructions from Beneficial Shareholders in advance of Shareholder meetings. Every intermediary/broker has its own mailing procedures and provides its own return instructions to clients, which should be carefully followed by Beneficial Shareholders in order to ensure that their Common Shares are voted at the Meeting. The form of proxy supplied to a Beneficial Shareholder by its broker (or the agent of that broker) is similar to the form of proxy provided to registered Shareholders by the Corporation. However, its purpose is limited to instructing the registered Shareholder (the broker or agent of the broker) on how to vote on behalf of the Beneficial Shareholder. The majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Financial Services, Inc. (“Broadridge”). Broadridge typically mails a scanable voting instruction form in lieu of the form of proxy. The Beneficial Shareholder is requested to complete and return the voting instruction form to them by mail or facsimile. Alternatively, the Beneficial Shareholder can call a toll-free telephone number or visit www.proxyvote.com to vote the Common Shares held by the Beneficial Shareholder. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of Common Shares to be represented at the Meeting.A Beneficial Shareholder receiving a voting instruction form cannot use that voting instruction form to vote Common Shares directly at the Meeting as the voting instruction form must be returned as directed by Broadridge well in advance of the Meeting in order to have the Common Shares voted.

Although a Beneficial Shareholder may not be recognized directly at the Meeting for the purposes of voting Common Shares registered in the name of his or her broker (or agent of the broker), a Beneficial Shareholder may attend at the Meeting as proxyholder for the registered Shareholder and vote the Common Shares in that capacity. Beneficial Shareholders who wish to attend at the Meeting and indirectly vote their Common Shares as proxyholder for the registered Shareholder should enter their own name in the blank space on the form of proxy provided to them and return the same to their broker (or the broker’s agent) in accordance with the instructions provided by such broker (or agent), well in advance of the Meeting.

Voting Shares and Principal Holders Thereof

The Board of Directors of the Corporation (the “Board”) has set the close of business on May 2, 2013 as the record date for the Meeting. Shareholders at the close of business on May 2, 2013 are entitled to receive notice of the Meeting and to vote thereat or at any adjournments thereof on the basis of one vote for each Common Share held, except to the extent

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that: (i) the Shareholder has transferred the ownership of any of the holder’s Common Shares after that date; and (ii) the transferee of those Common Shares produces properly endorsed share certificates, or otherwise establishes that such transferee owns the Common Shares, and demands at any time before the Meeting that the transferee’s name be included in the list of persons entitled to vote at the Meeting, in which case the transferee will be entitled to vote such Common Shares at the Meeting or any adjournment thereof.

As of April 15, 2013, a total of 474,789,580 Common Shares were issued and outstanding as fully paid and non-assessable.

To the knowledge of the directors and executive officers of the Corporation, no person, firm or company beneficially owns, directly or indirectly, or controls or directs, Common Shares carrying 10 percent or more of the voting rights attached to all of the Common Shares, except as set forth below:

Name	Voting Securities Held	Percentage of Voting Securities Held
Crest Energy International LLC	93,998,437 Common Shares	19.8%
Jasmine Capital Investments Pte. Limited(1)	71,817,271 Common Shares	15.1%
Paulson & Co. Inc.(2)	53,189,500 Common Shares	11.2%

Notes:

(1) An indirect wholly-owned subsidiary of Richard Chandler Holdings. Information as to these holdings has been taken from an early warning report filed pursuant to National Instrument 62-103—The Early Warning System (“NI 62-103”).

(2) The beneficial ownership of these Common Shares is not known by the Corporation. Information as to these holdings has been taken from alternative monthly reports filed pursuant to NI 62-103.

ANNUAL AND SPECIAL BUSINESS OF THE MEETING

Receipt of the Financial Statements and Auditors’ Report

The financial statements of the Corporation for the year ended December 31, 2012 and the auditors’ report thereon will be placed before the Shareholders at the Meeting.

Under National Instrument 51-102—Continuous Disclosure Obligations, a person or corporation who in the future wishes to receive interim financial statements from the Corporation must deliver a written request for such material to the Corporation, together with a signed statement that the person or corporation is the owner of securities (other than debt instruments) of the Corporation. Shareholders who wish to receive interim financial statements are encouraged to send the enclosed return card, together with the completed form of proxy to Computershare Trust Company of Canada, 9^th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1.

Copies of the Corporation’s annual and interim financial statements are also available on SEDAR at www.sedar.com.

Election of Directors

The Board presently consists of nine directors and it is proposed that nine directors be elected at the Meeting. All directors elected at the Meeting will hold office until the close of the next annual meeting of Shareholders following their election, until a successor is elected or appointed, or until the director vacates the office of director.

Except where authority to vote on the election of directors is withheld, the persons named in the enclosed form of proxy, if named, intend to vote FOR the election of the nine nominees whose names are set forth below. If, due to circumstances not at present foreseen, any of the persons named below should not be available for election, it is intended that the persons named in the enclosed form of proxy will vote FOR such other person or persons as the Board may recommend.

The following table sets forth, for all persons proposed to be nominated for election as directors, all positions and offices with the Corporation now held by them, their present principal occupations or employment and, in the case of Mr. Stoerr and Mr. Howland, their respective principal occupations for the past five years, and the number of Common Shares and stock options (“Options”) to purchase Common Shares pursuant to the Corporation’s stock option plan (the

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“Option Plan”) beneficially owned, directly or indirectly, by each of them, or over which they exercise control or direction, as of April 15, 2013.

Nominee for Election as Director	Office Held with WesternZagros	Director Since	Common Shares Owned(1)			Options Owned		Principal Occupation
David J. Boone(2)(3) Alberta, Canada	Director	2007		80,000			1,096,000	President and Chief Executive Officer of Barrick Energy Inc. (“Barrick Energy”), a wholly owned oil and gas subsidiary of Barrick Gold Corporation, a public gold and precious metals company.
Fred J. Dyment(2)(5) Alberta, Canada	Director and Chairman	2007		392,987			1,644,000	Independent businessman.
John Frangos(3)(5) Alberta, Canada	Director	2007		10,842,185			1,346,000	Independent businessman.
M. Simon Hatfield Alberta, Canada	Director and Chief Executive Officer	2007		661,455			3,980,000	Chief Executive Officer of WesternZagros.
James C. Houck(3)(4) Alberta, Canada	Director	2007		372,962			1,096,000	Independent businessman.
Randall Oliphant(2)(4) Ontario, Canada	Director	2007		420,526			1,110,000	Executive Chairman of New Gold Inc. (“New Gold”), a public mining company.
Eric Stoerr Texas, United States	Director	2012		Nil	(6)		143,000	Executive officer of Crest Energy International LLC (“Crest”) since February 2012; prior thereto, Managing Director at The Royal Bank of Scotland, North American Energy Finance Group.
John M. Howland Texas, United States	Director	2013		Nil	(6)		Nil	President of Crest Investment Company, an affiliate of Crest.
William Wallace(4)(5) Colorado, United States	Director	2008		55,000			1,096,000	Independent businessman.

Notes:

(1) Includes all Common Shares held by the spouse and children of such individuals or corporations controlled by them.

(2) Member of the Audit Committee.

(3) Member of the Compensation Committee.

(4) Member of the Governance Committee.

(5) Member of the Health, Safety, Environment and Security Committee.

(6) Mr. Stoerr and Mr. Howland are executive officers of Crest which owns 93,998,437 Common Shares of the Corporation. Messrs. Howland and Stoerr have been nominated for election as directors of the Corporation pursuant to the terms of an Investment Agreement entered into as of March 10, 2013, between the Corporation and Crest.

Cease Trade Orders and Bankruptcies

To the knowledge of management of WesternZagros, none of the proposed directors is, as of the date of this Information Circular, or has been, within 10 years before the date of this Information Circular: (a) a director, chief executive officer or chief financial officer of any company (including WesternZagros) that (i) was subject to a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days (an “order”) that was issued while the proposed director was acting in the capacity as director, chief executive officer or chief financial officer, or (ii) was subject to an order that was issued after

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the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer; or (b) a director or executive officer of any company (including WesternZagros) that, while the proposed director was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to its own bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

Personal Bankruptcies

To the knowledge of management of WesternZagros, none of the proposed directors has, within 10 years before the date of this Information Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director.

Penalties or Sanctions

To the knowledge of management of WesternZagros, none of the proposed directors has been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable Shareholder in deciding whether to vote for a proposed director.

Appointment of Auditors

At the Meeting, Shareholders will be asked to pass a resolution appointing PricewaterhouseCoopers LLP, Chartered Accountants, as auditors of the Corporation until the next annual meeting of Shareholders, at such remuneration as may be approved by the Audit Committee. PricewaterhouseCoopers LLP has been the auditors of the Corporation since its incorporation in August 2007.

The following summarizes the total fees billed by PricewaterhouseCoopers LLP for the years ended December 31, 2012 and 2011:

	2012 (Cdn$)		2011 (Cdn$)
Audit fees	$	120,000	$	101,000
Audit-related fees	$	61,020	$	48,500
Tax fees		—		—
All other fees	$	435,000	$	1,754
Total	$	616,020	$	151,254

Audit fees were paid for professional services rendered by the auditors for the audit of the Corporation’s annual financial statements and services provided in connection with statutory and regulatory filings. Audit-related fees were paid for professional services rendered by the auditors for review of the Corporation’s interim financial statements and a site visit to the Kurdistan Region of Iraq. All other fees paid to the auditors during 2012 related to services provided in connection with the Corporation pursuing admittance to the Official List of the London Stock Exchange. All other fees paid to the auditors during 2011 related to an assessment of the Corporation’s information technology environment, including internal controls for its email servers.

Annual Approval of Stock Option Plan

Background

Pursuant to the TSX Venture Exchange (“TSXV”) Policy 4.4 (the “TSXV Policy”) of the TSXV Corporate Finance Manual, the Corporation is permitted to maintain a rolling stock option plan reserving a percentage of the issued and outstanding Common Shares for issuance pursuant to Options. In accordance with the TSXV Policy, rolling option stock plans must receive Shareholder approval yearly at an annual meeting. The Option Plan was previously approved by Shareholders at the 2012 annual meeting of Shareholders. The Corporation is not proposing any changes to the

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existing Option Plan. Shareholder approval is being sought only to comply with the TSXV Policy. For a description of the Option Plan, see “Equity Plan Compensation”. A copy of the Option Plan was filed on October 30, 2007 and is available for review on SEDAR at www.sedar.com. A copy of the Option Plan may also be obtained upon request by contacting the Corporation at Suite 600, Ernst & Young Tower, 440 Second Avenue S.W., Calgary, Alberta, T2P 5E9, telephone: (403) 693-7001.

As of April 15, 2013, a total of 26,851,583 Options to purchase Common Shares pursuant to the Option Plan are outstanding.

Approval Required

At the Meeting, Shareholders will be asked to consider and, if deemed advisable, approve the following ordinary resolution to approve the Option Plan:

“BE IT RESOLVED THAT:

1. The Corporation’s existing stock option plan is hereby approved; and

2. Any one officer or director of the Corporation is hereby authorized to execute and deliver all such documents and to do all such acts and things as may be deemed advisable in such individual’s discretion for the purpose of giving effect to this resolution.”

In order for the foregoing resolution to be passed, it must be approved by a simple majority of the votes cast at the Meeting by Shareholders who vote in person or by proxy at the Meeting. The persons named in the enclosed form of proxy, if named, intend to vote FOR the approval of the Option Plan.

Extension of Shareholders Rights Plan

Background

The adoption of the Corporation’s shareholder rights plan (the “Shareholder Rights Plan”) was approved on October 16, 2007 and was reconfirmed by the Shareholders at the annual meeting in 2010. The Shareholder Rights Plan has the terms set out in the shareholder rights plan agreement between the Corporation and Valiant Trust Company, as rights agent, dated October 18, 2007 (the “Original Rights Plan Agreement”), as amended by a successor rights plan agreement dated February 1, 2013 to appoint Computershare Trust Company of Canada as the successor rights agent.

Pursuant to the terms of the Original Rights Plan Agreement, the Shareholder Rights Plan will expire upon termination of the Meeting unless the Original Rights Plan Agreement is amended to extend its expiry time. The Board has determined that it is appropriate and in the best interests of the Corporation that the Original Rights Plan Agreement be amended to continue the Shareholder Rights Plan for another three-year term and to effect certain other minor amendments, and that the Original Rights Plan Agreement as amended be restated (the “Amended and Restated Rights Plan Agreement”) effective immediately prior to the termination of the Meeting (the “Amendment Time”). Accordingly, Shareholders will be asked at the Meeting to consider and, if thought appropriate, to pass an ordinary resolution to approve the continuation of the Shareholder Rights Plan and the entering into by the Corporation of the Amended and Restated Rights Plan Agreement (the “Shareholder Rights Plan Resolution”).

Purpose of the Shareholder Rights Plan

The objective of the Shareholder Rights Plan is to ensure, to the extent possible, that all Shareholders are treated equally and fairly in connection with any takeover bid or similar offer for all or a portion of the outstanding Common Shares. Takeover bids may be structured to be coercive or may be initiated at a time when the Board will have a difficult time preparing an adequate response to the offer. Accordingly, such offers do not always result in Shareholders receiving equal or fair treatment or full or maximum value for their investment. Under applicable securities legislation, a takeover bid is required to remain open for 35 days, a period of time which the Board believes may be insufficient for the directors to: (a) evaluate a takeover bid (particularly if it includes share consideration); (b) explore, develop and pursue alternatives which are superior to the takeover bid and which could maximize Shareholder value; and (c) make reasoned recommendations to the Shareholders.

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The Shareholder Rights Plan discourages discriminatory, coercive or unfair takeovers of WesternZagros and gives the Board time if, in the circumstances, the Board determines it is appropriate to take such time, to pursue alternatives to maximize Shareholder value in the event an unsolicited takeover bid is made for all or a portion of the outstanding Common Shares. As well, the Shareholder Rights Plan discourages coercive hostile takeover bids by creating the potential that any Common Shares which may be acquired or held by such a bidder will be significantly diluted. The potential for significant dilution to the holdings of such a bidder can occur as the Shareholder Rights Plan provides that all holders of Common Shares who are not related to the bidder will be entitled to exercise rights (“Rights”) issued to them under the Shareholder Rights Plan and to acquire Common Shares at a substantial discount to prevailing market prices. The bidder or the persons related to the bidder will not be entitled to exercise any Rights under the Shareholder Rights Plan. Accordingly, the Shareholder Rights Plan will encourage potential bidders to make takeover bids by means of a Permitted Bid (as defined below) or to approach the Board to negotiate a mutually acceptable transaction. The Permitted Bid provisions of the Shareholder Rights Plan are designed to ensure that, in any takeover bid for outstanding Common Shares, all Shareholders are treated equally and are given adequate time to properly assess such takeover bid on a fully-informed basis.

Continuation of the Shareholder Rights Plan is not being proposed in response to, or in anticipation of, any pending, threatened or proposed acquisition or takeover bid. The Shareholder Rights Plan is not intended as a means to prevent a takeover of WesternZagros, to secure the continuance of management or the directors in their respective offices or to deter fair offers for the Common Shares.

The Shareholder Rights Plan does not reduce the duty of the Board to act honestly, in good faith and in the best interests of the Corporation, and to act on that basis if any offer is made.

Proposed Amendments to the Shareholder Rights Plan

The following is a summary of the proposed amendments to the Shareholder Rights Plan which will be contained in the Amended and Restated Rights Plan Agreement and take effect at the Amendment Time if approved by Shareholders:

• The expiration time of the Shareholder Rights Plan will be changed from the termination of the annual meeting of the shareholders of the Corporation in 2013 to the termination of the annual meeting of shareholders of the Corporation in 2016;

• The definition of “Exempt Acquisition” will be amended to include (a) a share acquisition made as an intermediate step in a series of related transactions in connection with an acquisition by the Corporation or its subsidiaries of another entity or its assets provided that the entity who acquires such Common Shares distributes or is deemed to distribute such Common Shares to its security holders within 10 business days of the completion of such acquisition, and following such distribution no person has become the Beneficial Owner (as defined in the Shareholder Rights Plan) of 20% or more of the Common Shares, and (b) a share acquisition pursuant to an amalgamation, merger, arrangement, business combination or other similar transaction (statutory or otherwise, but for greater certainty not including a takeover bid) that is conditional upon the approval of the Shareholders to be obtained prior to such person acquiring such securities;

• On a redemption of the Rights, the Corporation will not be obligated to make a payment of the redemption price to any holder of Rights unless the holder is entitled to receive at least $1.00 in respect of all Rights held by such holder; and

• Certain other minor amendments to reflect the replacement of Valiant Trust Company with Computershare Trust Company of Canada as rights agent and amendments necessary to reflect the restatement of the Original Rights Plan Agreement.

A copy of the Original Rights Plan Agreement was filed on October 20, 2007 and is available for review on SEDAR at www.sedar.com. In addition, a Shareholder or other interested party may obtain a copy of the Original Rights Plan Agreement and/or the proposed Amended and Restated Rights Plan Agreement by contacting the Corporation at Suite 600, Ernst & Young Tower, 440 Second Avenue S.W., Calgary, Alberta, T2P 5E9, telephone: (403) 693-7001.

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Summary of the Shareholder Rights Plan

The following is a summary of the Shareholder Rights Plan as proposed to be set forth in the Amended and Restated Rights Plan Agreement.

Term

If the Shareholder Rights Plan Resolution approving the continuance of the Shareholder Rights Plan and the entering into of the Amended and Restated Rights Plan Agreement is approved by the Shareholders at the Meeting, the Shareholder Rights Plan will continue until the termination of the annual meeting of the Shareholders in 2016, unless extended beyond such date by resolution of the Shareholders at such meeting in accordance with the Amended and Restated Rights Plan Agreement or unless earlier terminated in accordance with its provisions. If the Shareholder Rights Plan Resolution is not approved at the Meeting, the Amended and Restated Rights Plan Agreement will not take effect and as a result the Shareholder Rights Plan and the outstanding Rights will terminate upon termination of the Meeting.

Issue of Rights

One Right was issued by WesternZagros pursuant to the Original Rights Plan Agreement in respect of each Common Share outstanding at the close of business on October 18, 2007 (the “Record Time”). One Right also has been and will be issued for each additional Common Share issued after the Record Time and prior to the earlier of (a) the Separation Time (as defined below) or (b) the termination of the Amended and Restated Rights Plan Agreement (or the right to exercise Rights) in accordance with the terms thereof.

Rights Exercise Privilege

The Rights will separate from the Common Shares to which they are attached and become exercisable at the time (the “Separation Time”) which is 10 trading days following the date a person becomes an Acquiring Person (as defined below) or announces an intention to make a takeover bid that is not an acquisition pursuant to a takeover bid permitted by the Shareholder Rights Plan (a “Permitted Bid”).

Any transaction or event in which a person (an “Acquiring Person”), including associates and affiliates and others acting in concert, acquires (other than pursuant to an exemption available under the Shareholder Rights Plan or a Permitted Bid) Beneficial Ownership (as defined in the Shareholder Rights Plan) of 20 percent or more of the Common Shares is referred to as a “Flip-in Event”. Any Rights held by an Acquiring Person on or after the earlier of the Separation Time or the first date of public announcement by WesternZagros or an Acquiring Person that an Acquiring Person has become such, will become void and the Rights (other than those held by the Acquiring Person) will permit holders to purchase Common Shares at a substantial discount to their prevailing market price at the time.

The issuance of the Rights is not dilutive and will not affect reported earnings or cash flow per share until the Rights separate from the underlying Common Shares and become exercisable or until the exercise of the Rights. The issuance of the Rights will not change the manner in which Shareholders trade their Common Shares.

Permitted Lock-Up Agreement

A person will not become an Acquiring Person by virtue of having entered into an agreement (a “Permitted Lock-Up Agreement”) with a Shareholder whereby the Shareholder agrees to deposit or tender Common Shares to a takeover bid made by such person, provided that the Permitted Lock-Up Agreement meets certain requirements including:

(a) the terms of the Permitted Lock-Up Agreement are publicly disclosed and a copy of the Permitted Lock-Up Agreement is publicly available;

(b) the Shareholder who has agreed to tender Common Shares to the takeover bid (the “Lock-Up Bid”) made by the other party to the Permitted Lock-Up Agreement is permitted to terminate its obligation under the Permitted Lock-Up Agreement in order to tender Common Shares to another takeover bid or transaction where: (i) the offer price or value of the consideration payable under the other takeover bid or transaction is greater than the price or value of the consideration per share at which the Shareholder has agreed to deposit or tender Common Shares to the Lock-Up Bid or is equal to or greater than a specified minimum which is not more than 7 percent higher than the offer price under the Lock-Up Bid; and (ii) if the number of Common

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Shares offered to be purchased under the Lock-Up Bid is less than all of the Common Shares held by Shareholders (excluding shares held by the offeror), the number of Common Shares offered to be purchased under the other takeover bid or transaction (at an offer price not lower than in the Lock-Up Bid) is greater than the number of Common Shares offered to be purchased under the Lock-Up Bid or is equal to or greater than a specified number which is not more than seven percent higher than the number of Common Shares offered to be purchased under the Lock-Up Bid; and

(c) no break-up fees or other penalties that exceed in the aggregate the greater of 2.5 percent of the price or value of the consideration payable under the Lock-Up Bid and 50 percent of the increase in consideration resulting from another takeover bid or transaction shall be payable by the Shareholder if the Shareholder fails to deposit or tender Common Shares to the Lock-Up Bid.

Certificates and Transferability

Prior to the Separation Time, the Rights will be evidenced by a legend imprinted on certificates for Common Shares. Prior to the Separation Time, Rights will trade together with the Common Shares and will not be exercisable or transferable separately from the Common Shares. From and after the Separation Time, the Rights will become exercisable, will be evidenced by Rights Certificates and will be transferable separately from the Common Shares.

Independent Shareholders

For purposes of the Shareholder Rights Plan, “Independent Shareholders” are generally holders of Common Shares, other than: (a) any Acquiring Person; (b) a person who has announced a current intention to make or who is making a takeover bid; (c) any affiliate or associate of, or person acting jointly or in concert with, any of the foregoing; or (d) any employee benefit plan, deferred profit sharing plan, stock participation plan and any other similar plan or trust for the benefit of employees of the Corporation or a subsidiary of the Corporation, unless the beneficiaries of the plan or trust direct the manner in which the Common Shares are to be voted or direct whether the Common Shares are to be tendered to a takeover bid.

Permitted Bid Requirements

The requirements of a “Permitted Bid” include the following:

(a) the takeover bid must be made by means of a takeover bid circular;

(b) the takeover bid is made to all holders of Common Shares as registered on the books of WesternZagros, other than the offeror;

(c) the takeover bid contains, and the take-up and payment for securities tendered or deposited is subject to, an irrevocable and unqualified provision that no Common Shares will be taken up or paid for pursuant to the takeover bid prior to the close of business on the date which is not less than 60 days following the date of the takeover bid and only if at such date more than 50 percent of the Common Shares held by Independent Shareholders shall have been deposited or tendered pursuant to the takeover bid and not withdrawn;

(d) the takeover bid contains an irrevocable and unqualified provision that unless the takeover bid is withdrawn, Common Shares may be deposited pursuant to such takeover bid at any time during the period of time between the date of the takeover bid and the date on which Common Shares may be taken up and paid for and that any Common Shares deposited pursuant to the takeover bid may be withdrawn until taken up and paid for; and

(e) the takeover bid contains an irrevocable and unqualified provision that if, on the date on which Common Shares may be taken up and paid for, more than 50 percent of the Common Shares held by Independent Shareholders shall have been deposited pursuant to the takeover bid and not withdrawn, the offeror will make a public announcement of that fact and the takeover bid will remain open for deposits and tenders of Common Shares for not less than 10 business days from the date of such public announcement.

The Shareholder Rights Plan allows for a competing Permitted Bid (a “Competing Permitted Bid”) to be made while a Permitted Bid is in existence. A Competing Permitted Bid must satisfy all of the requirements of a Permitted Bid

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except that it may expire on the same date as the Permitted Bid, subject to the requirement that it be outstanding for a minimum period of 35 days.

Waiver and Redemption

If a potential offeror does not desire to make a Permitted Bid, it can negotiate with, and obtain the prior approval of, the Board to make a takeover bid by way of a takeover bid circular sent to all holders of Common Shares on terms which the Board considers fair to all Shareholders. In such circumstances, the Board may waive the application of the Shareholder Rights Plan thereby allowing such bid to proceed without dilution to the offeror. Any waiver of the application of the Shareholder Rights Plan in respect of a particular takeover bid shall also constitute a waiver of any other takeover bid which is made by means of a takeover bid circular to all holders of Common Shares while the initial takeover bid is outstanding. The Board may also waive the application of the Shareholder Rights Plan in respect of a particular Flip-in Event that has occurred through inadvertence, provided that the Acquiring Person that inadvertently triggered such Flip-in Event reduces its beneficial holdings to less than 20 percent of the outstanding Common Shares within 14 days or such earlier or later date as may be specified by the Board. With the prior consent of the holders of Common Shares, the Board may, prior to the occurrence of a Flip-in Event that would occur by reason of an acquisition of Common Shares otherwise than pursuant to the foregoing, waive the application of the Shareholder Rights Plan to such Flip-in Event.

The Board may, with the prior consent of the holders of Common Shares, at any time prior to the occurrence of a Flip-in Event, elect to redeem all but not less than all of the then outstanding Rights at a redemption price of $0.000001 per Right. Rights are deemed to be redeemed following completion of a Permitted Bid, a Competing Permitted Bid or a takeover bid in respect of which the Board has waived the application of the Shareholder Rights Plan. The Corporation will not be obligated to make a payment of the redemption price to any holder of Rights unless the holder is entitled to receive at least $1.00 in respect of all Rights held by such holder.

Exemptions for Investment Advisors

Investment advisors (for client accounts), trust companies (acting in their capacity as trustees or administrators), statutory bodies whose business includes the management of funds (for employee benefit plans, pension plans, or insurance plans of various public bodies) and administrators or trustees of registered pension plans or funds acquiring greater than 20 percent of the Common Shares are exempted from triggering a Flip-in Event, provided they are not making, either alone or jointly or in concert with any other person, a takeover bid.

Board of Directors

The Shareholder Rights Plan does not in any way lessen or affect the duty of the Board to act honestly and in good faith with a view to the best interests of WesternZagros. The Board, when a takeover bid or similar offer is made, will continue to have the duty and power to take such actions and make such recommendations to Shareholders as are considered appropriate.

Amendment

WesternZagros may, with the prior approval of Shareholders (or the holders of Rights if the Separation Time has occurred), supplement, amend, vary or delete any of the provisions of the Amended and Restated Rights Plan Agreement. WesternZagros may make amendments to the Amended and Restated Rights Plan Agreement at any time to correct any clerical or typographical error or make amendments which are required to maintain the validity of the Amended and Restated Rights Plan Agreement due to changes in any applicable legislation, regulations or rules.

Approval Required

If the Shareholder Rights Plan Resolution is approved at the Meeting, the Corporation will enter into the Amended and Restated Rights Plan Agreement effective as of the Amendment Time. If the Shareholder Rights Plan Resolution is not approved at the Meeting, the Shareholder Rights Plan and the outstanding rights will terminate. The Board reserves the right not to proceed with the continuation of the Shareholder Rights Plan at any time prior to the Meeting in the event that the Board determines, in light of subsequent developments, that to do so is in the best interests of the Corporation and its Shareholders.

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At the Meeting, Shareholders will be asked to consider and, if deemed advisable, approve the following ordinary resolution to approve the continuation of the Shareholder Rights Plan:

“BE IT RESOLVED THAT:

1. The continuation of the shareholder rights plan of the Corporation is hereby approved, and the Corporation is authorized to enter into an Amended and Restated Rights Plan Agreement to be dated as of June 6, 2013 between the Corporation and Computershare Trust Company of Canada, as rights agent, which amends and restates the shareholder rights plan agreement dated as of October 18, 2007 between the Corporation and Valiant Trust Company, as rights agent, substantially as described in the Information Circular of the Corporation dated April 15, 2013, and which confirms the issuance of Rights to holders of Common Shares that are outstanding, and continues the issuance of the Rights to holders of newly issued Common Shares until the termination or expiration of such shareholder rights plan.

2. The directors may revoke this resolution before it is acted upon without further approval of the Shareholders of the Corporation.

3. Any one officer or director of the Corporation is hereby authorized to execute and deliver all such documents, including the Amended and Restated Rights Plan Agreement, and to do all such acts as may be deemed advisable in such individual’s discretion for the purpose of giving effect to this foregoing resolution.”

In order for the foregoing resolution to be passed, it must be approved by a simple majority of the votes cast at the Meeting by Independent Shareholders who vote in person or by proxy at the Meeting. The Corporation is not aware of any Shareholder who is not an Independent Shareholder. The persons named in the enclosed form of proxy, if named as proxy, intend to vote FOR the approval of the continuation of the Shareholder Rights Plan.

Confirmation of Adoption of By-Law No. 2

In order to provide Shareholders, the Board and management of the Corporation with guidance on the nomination of directors, the Board has determined that it is in the best interests of the Corporation to adopt a new by-law (“By-Law No. 2”) to require advance notice to the Corporation in circumstances where nominations of persons for election to the Board are made by Shareholders of the Corporation. Consequently, on April 15, 2013, the Board approved the adoption of By-Law No. 2 of the Corporation, attached hereto as Schedule “A” to this Information Circular. By-Law No. 2 is in effect until it is confirmed, confirmed as amended or rejected by Shareholders at the Meeting, and if confirmed or confirmed as amended, By-Law No. 2 will continue in effect in the form in which it is so confirmed. If Shareholders reject the confirmation of By-Law No. 2, it will cease to have effect as of the date of the Meeting (and not retroactively). For greater certainty, the Corporation’s existing By-Law No. 1 is not impacted by By-Law No. 2 and will continue in effect, unamended.

The provisions of By-Law No. 2 require advance notice to the Corporation in circumstances where nominations of persons for election to the Board are made by Shareholders of the Corporation other than pursuant to (i) a requisition of a meeting made pursuant to the provisions of theBusiness Corporations Act (Alberta) (the “ABCA”), or (ii) a Shareholder proposal made pursuant to the provisions of the ABCA.

The provisions of By-Law No. 2 facilitate an orderly and efficient director nomination process and ensure that all Shareholders, including those participating in a meeting by proxy, receive adequate notice of director nominations with sufficient information with respect to all nominees so that the proposed nominees’ qualifications and suitability as directors can be evaluated and an informed vote can be cast for the election of directors.

By-Law No. 2 fixes a deadline by which holders of record of Common Shares of the Corporation must submit director nominations to the Corporation prior to any annual or special meeting of Shareholders where directors are to be elected and sets forth the information that a Shareholder must include in the notice to the Corporation for the notice to be valid. In the case of an annual meeting of Shareholders, the deadline for notice of a Shareholder’s director nomination is not less than 30 days and not more than 65 days prior to the meeting; provided, however, if notice of an annual Shareholders’ meeting is given less than 50 days prior to the meeting date, Shareholders must provide notice of their director nominations by close of business on the 10^th day following first public announcement of the meeting. In the case of a special meeting (which is not also an annual meeting) called for the purpose of electing directors, Shareholders must provide notice of their director nominations by close of business on the 15^th day following first public

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announcement of the special Shareholders’ meeting. The deadlines in By-Law No. 2 are supported by Institutional Shareholder Services Inc.

Shareholders are urged to review By-Law No. 2 in its entirety, attached hereto as Schedule “A” to this Information Circular.

At the Meeting, Shareholders will be asked to consider and, if deemed advisable, approve the following ordinary resolution to approve and confirm By-Law No. 2.

“BE IT RESOLVED THAT:

1. By-Law No. 2 of the Corporation, in substantially the form set out in Schedule “A” to the Corporation’s Information Circular dated April 15, 2013 is hereby approved and confirmed as a by-law of the Corporation; and

2. Any one officer or director of the Corporation is hereby authorized to execute and deliver all such documents and to do all such acts as may be deemed advisable in such individual’s discretion for the purpose of giving effect to this foregoing resolution.”

In order for the foregoing resolution to be passed, it must be approved by a simple majority of the votes cast at the Meeting by Shareholders who vote in person or by proxy at the Meeting. The persons named in the enclosed form of proxy, if named as proxy, intend to vote FOR the approval and confirmation of By-Law No. 2.

Other Business

Management is not aware of any matter to come before the Meeting other than the matters referred to in the Notice of the Meeting. However, if any other matter properly comes before the Meeting, the accompanying form of proxy confers discretionary authority to vote with respect to amendments or variations to matters identified in the Notice of the Meeting and with respect to other matters that properly may come before the Meeting.

EXECUTIVE COMPENSATION AND REMUNERATION OF DIRECTORS

Compensation Discussion and Analysis

Introduction

The purpose of this Compensation Discussion and Analysis is to provide information about the Corporation’s philosophy, objectives and processes regarding compensation for the executive officers of the Corporation. To assist the Board in fulfilling its oversight responsibilities with respect to human resource and compensation matters and development and succession planning for officer and other senior management positions, the Board has established a compensation committee comprised of three independent directors (the “Compensation Committee”) to (a) make recommendations to the Board with respect to the salary and other remuneration to be awarded to the Chief Executive Officer, (b) in consultation with the Chief Executive Officer, review the appointment of and approve the compensation and other remuneration for officers and other senior management, (c) review succession plans for key management positions and review the performance and development of the Chief Executive Officer and other officers and senior management, (d) in consultation with the Chief Executive Officer, make recommendations to the Board in respect of all other compensation principles or policy matters including the annual budget for base salaries, long-term incentives such as stock option plans and other benefits, with responsibility for developing these programs and (e) conduct periodic reviews of the amount and form of the directors’ compensation and make recommendations in respect thereof to the Board. For most matters, the determinations of the Compensation Committee are subject to the review and approval of the Board. It is also part of the Compensation Committee’s mandate to review and recommend to the Board for approval this statement of executive compensation.

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For the year ending December 31, 2012, the Corporation had the following five executive officers (the “Named Executive Officers”) and no other executive officers or individuals acting in a similar capacity:

M. Simon Hatfield	Chief Executive Officer (“CEO”)
Gregory C. Stevenson	Chief Financial Officer (“CFO”)
Michael Mossman	Senior Vice President, Engineering and Operations (“Senior VP Operations”)
Ian McIntosh	Vice President, Kurdistan Business Unit (“VP Kurdistan”)
George Pinckney	Vice President, Exploration and Reservoir Development (“VP Exploration”)

Mr. Mossman was hired as Vice President, Operations in June 2012 and became an executive officer when he was promoted to Senior VP Operations on November 20, 2012. Mr. Pinckney ceased to be an executive officer when he retired from the position of VP Exploration on April 2, 2012 and assumed the part-time position of Executive Advisor, Corporate Projects. Mr. McIntosh ceased to be an executive officer when he retired from the Corporation in January 2013.

Compensation Philosophy and Objectives of Compensation Programs

WesternZagros’s compensation philosophy is aligned with its business strategy and objectives as a junior international oil and gas exploration corporation in the early stages of developing production. Salaries and benefits are intended to provide a base of secure compensation and be competitive with other exploration and production companies in the markets in which WesternZagros competes for employees while short-term and long-term incentive compensation is provided to reward performance that contributes to the achievement of the Corporation’s strategy on a short term (annual) and long term basis, respectively, and the creation of Shareholder value. The Corporation strives to maintain compensation programs that attract and retain committed, highly qualified personnel by providing competitive salaries and benefits as well as incentives that align the interests of officers and other employees with those of the Shareholders.

The Corporation’s regular compensation program is comprised of four elements:

• Base salary;

• Short-term incentive compensation through cash bonuses;

• Long-term equity-based compensation through Options awarded under the Option Plan; and

• Benefits.

The Corporation pays base salary in order to provide officers with sufficient income that reflects their executive position and level of responsibility while also reflecting salary norms in the sector and the general marketplace. The Corporation’s view is that a competitive base salary is a necessary element for retaining qualified executive officers, as it creates a meaningful incentive for individuals to remain at WesternZagros and not be unreasonably susceptible to recruiting efforts by the Corporation’s competitors. The Compensation Committee believes that the Corporation’s base salaries achieve a balance between being competitive enough to attract and retain employees without being excessive or out-of-step with market realities.

The Corporation also has a short-term incentive compensation element for all employees through the payment of discretionary cash bonuses. This element was added in 2011 following the Corporation’s first sales of test oil production in 2011 and is intended to reward all employees for achieving key corporate objectives on an annual basis, as well as providing an additional pay-at-risk component. Long-term equity-based compensation is an element of the Corporation’s compensation program because it also provides a pay-at-risk component to compensation, rewards long-term performance by allowing officers to participate in the market appreciation of the Common Shares over an extended period and encourages executive retention through time-based vesting of awards. Both short-term incentive compensation and long-term equity-based compensation are also required in order for the Corporation to be competitive from a total remuneration standpoint.

The Corporation provides a traditional employee benefits plan consisting of health and dental care and various forms of life and disability insurances. The Named Executive Officers participate in the same benefits as are offered to all full-time employees. As with the other elements of the compensation program, the Corporation provides benefits to attract, motivate and retain individuals in a competitive environment.

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Determining Compensation

As indicated above, the Compensation Committee assists the Board in fulfilling its oversight responsibilities with respect to compensation matters. The Compensation Committee operates under a written mandate adopted by the Board. The Compensation Committee is comprised of the following directors: Messrs. Boone (Chair), Frangos and Houck. Each member of the Compensation Committee is an independent director as such term is defined by National Instrument 58-101—Disclosure of Corporate Governance Practices (“NI 58-101”) and all members of the Compensation Committee have direct experience in compensation and other human resource areas in the oil and gas industry and the Calgary marketplace that is relevant to their responsibilities as members of the Compensation Committee through their tenure in executive roles in the energy sector, as well as other sectors. The following is a brief description of such experience for each Compensation Committee member:

David J. Boone (Chair)

Mr. Boone has broad Canadian and international energy experience in the upstream industry. He has been the President and Chief Executive Officer of Barrick Energy since 2008 and his other prior positions include President of Escavar Energy, a private oil and gas company, President, Offshore and International Operations for EnCana Corporation and Executive Vice-President and Chief Operating Officer of PanCanadian Energy.

John Frangos

Mr. Frangos has over 50 years of experience in the resources industry with a variety of executive positions, as well as being a member of the board of directors of three different companies. Most recently, Mr. Frangos was a co-founder of Western Oil Sands Inc., a public oil and gas company, and served as its Executive Vice President and Chief Operating Officer. Prior to forming Western, he was employed with BHP Billiton and predecessor corporations for 28 years and was Vice-President, International Business Development for BHP Billiton’s Minerals Business Unit.

James C. Houck

Mr. Houck served as the President and Chief Executive Officer of The Churchill Corporation, a public diversified construction company, from January 2009 to July 2012. He has also served as President and Chief Executive Officer of Western Oil Sands Inc., a public oil and gas company, President of Texaco Development Corporation and President of Worldwide Power and Gasification Inc. (both part of ChevronTexaco Inc.), in addition to other senior level positions in global gas and power, business development, production operations, research and development and strategic planning. Mr. Houck also sits on the board of directors of ARC Resources Ltd., a public oil and gas company.

Compensation for the Corporation’s executive officers is recommended by the CEO and then reviewed by the Compensation Committee. Recommendations are then made by the Compensation Committee to the Board for the Board’s ultimate approval. In making recommendations, the CEO reviews compensation data in the oil and gas sector compiled by third party providers, as well as other more subjective factors such as overall corporate performance, individual level of responsibility, importance to the Corporation and the degree to which an officer’s contribution will be critical to the Corporation’s success in the near and long term. The Compensation Committee then reviews and discusses these recommendations, including review of any comparative data provided, and determines what recommendations to make to the Board. Although discussions between the CEO and members of the Compensation Committee are customary during this process, certain deliberations of the Compensation Committee and all final determinations by both the Compensation Committee and the Board regarding executive compensation are conducted during in camera sessions in the absence of any members of management. The Board also approves compensation for the directors of the Corporation in the form of fees and long term equity incentives based upon recommendations made by the Compensation Committee.

Use of Compensation Consultants

From time to time, the Compensation Committee utilizes compensation data from independent compensation consultants in the form of industry compensation surveys and consults with independent compensation consultants on both a formal and informal basis. For the two most recently completed financial years, a compensation consultant has not been formally engaged to assist the Compensation Committee or the Board in determining compensation for any of the Corporation’s directors or executive officers but industry surveys have been purchased from Mercer LLC (“Mercer”). In February 2012, the Compensation Committee also consulted with Mercer in order to obtain information,

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analyses and recommendations with respect to the appropriate peer group to be used in determining total direct compensation for the Corporation’s employees, including the Named Executive Officers.

The following summarizes the total fees billed by Mercer for the years ended December 31, 2012 and 2011:

	2012 (Cdn$)		2011 (Cdn$)
Executive compensation related fees(1)	$	24,080	$	6,240
All other fees		Nil		Nil
Total	$	24,080	$	6,240

Note:

(1) Executive compensation related fees were paid for receipt of industry compensation surveys and consulting services provided to the Compensation Committee with respect to peer group selection.

Neither the Board nor the Compensation Committee is required to pre-approve other services that are provided by Mercer to the Corporation at the request of management. No services have been provided by Mercer to the Corporation or members of management other than the compensation services described above. No services have been provided by Mercer to the directors of the Corporation other than the services described above or services provided to them in their capacity as directors or officers of other issuers.

Base Salaries

The policy of the Compensation Committee is to review base salaries for all employees, including the Named Executive Officers, on an annual basis. Base salary is intended to reflect an employee’s position within the corporate structure, his or her years of experience and level of responsibility and salary norms in the sector and the general marketplace. It is intended to compensate the Named Executive Officers for core competencies in the executive role relative to skills, experience and contribution to the Corporation. As such, decisions with respect to base salary levels for executive officers are not based on objective identifiable performance measures but for the most part are determined by reference to competitive market information for similar roles and levels of responsibility, as well as more subjective factors such as leadership, accountability, industry experience and contribution. The Compensation Committee targets the base salary for all employees, including executives, at approximately the 50th percentile level of peer group salaries comparable to his or her position, having regard to these other more subjective factors which may result in any particular employee’s salary being higher or lower than the 50th percentile level. The Compensation Committee believes that while salaries should be competitive, they are only one component of a broader approach to providing motivation for sustained performance.

In December 2011, the Compensation Committee completed a review of the base salaries of the Named Executive Officers (other than Mr. Mossman who had not yet been hired) and, as a result thereof, recommended to the Board for its approval an increase in base salary for 2012 of 4.5% for the VP Kurdistan and the VP Exploration and increases of 11.6% and 11.5% for the CEO and the CFO, respectively, which were approved by the Board. In recommending the 2012 base salaries for the Named Executive Officers for approval to the Board, the Compensation Committee considered recommendations made to the Compensation Committee by the CEO and the average percentage increases to base salaries expected in the Calgary marketplace in 2012 of approximately 4 to 5% based on generally available third party information and informal consultation with independent compensation consultants. In addition, the Compensation Committee noted that the base salaries of the CEO and the CFO had historically been below the targeted 50th percentile of past industry compensation surveys for their positions due to the fact that their total direct compensation had historically been more heavily weighted towards long-term incentives. Consequently, the Compensation Committee recommended that the base salaries of the CEO and the CFO be further increased to bring them closer in line with the 50th percentile for their current positions.

Subsequent to this, in February 2012, the Compensation Committee consulted with Mercer in order to obtain recommendations with respect to the appropriate peer group to be to be utilized for establishing compensation targets for the Corporation’s employees, including the Named Executive Officers. The Committee reviewed management’s analysis of the Mercer survey data for all exploration and production companies, the survey data for a Mercer recommended peer group (generally determined based on production volumes; with a mean of 14,000 barrels of oil equivalent per day) (the “Mercer Recommended Peer Group”) and the survey data for a management recommended international peer group (the “International Peer Group”). The International Peer Group was compiled by management

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for greater representation of international exploration and production companies than that provided in the Mercer Recommend Peer Group and was selected based upon production levels (less than 15,000 barrels per day) and market capitalization (approximately $100 million to less than $700 million). As a result of this review, the Compensation Committee determined to use the International Peer Group for targeting the compensation for the CEO and CFO and the broader Mercer Recommended Peer Group for targeting the compensation for other senior management, including the other Named Executive Officers. While the 2012 base salaries had already been set for the Named Executive Officers, other than the Senior VP Operations, the Compensation Committee did review the base salaries again against the applicable peer group and found them to be in line with the 50th percentile level target. The International Peer Group and Mercer Recommended Peer Group are set forth in Schedule “C” to this Information Circular.

Mr. Mossman was hired in June 2012 as the Vice President, Operations at a base salary targeting the 50th percentile of the Mercer Recommended Peer Group and commensurate with his role and responsibilities. As Mr. Mossman was not an executive officer at the time he was hired, his total compensation was determined by the CEO in consultation with the Board. In November 2012, Mr. Mossman was promoted to Senior VP Operations. At this time, the Compensation Committee reviewed his base salary again in comparison to the Mercer Recommended Peer Group for this position and recommended to the Board for its approval a 5% increase in his base salary from $265,000 to $278,250, which was approved by the Board.

Short Term Incentives

In 2011, the Board, on recommendation from the Compensation Committee, approved the addition of a short-term incentive compensation element for all employees through the payment of discretionary cash bonuses. A key factor in the Compensation Committee recommending the addition of discretionary cash bonuses to the compensation program was the Corporation’s evolution towards an exploration and production company, achieving first sales of test oil during 2011.

In recommending to the Board the level of discretionary cash bonus to be paid to each of the Named Executive Officers for corporate performance in 2012, the Compensation Committee used the 50th percentile level of peer group short term incentive compensation taken from the applicable International Peer Group or Mercer Recommended Peer Group, being 60% of base salary for the CEO, 45% of base salary for the CFO and Senior VP Operations and 40% of base salary for the other Named Executive Officers, as the target percentage of base salary for the payment of bonuses. The actual level of bonus payments recommended to be paid to the Named Executive Officers in respect of these targets was in turn based upon the Compensation Committee’s assessment of corporate performance. For the 2012 discretionary cash bonus program, the Compensation Committee and management implemented a set of corporate performance objectives to provide a general context for this assessment of corporate performance. The corporate performance objectives were a mix of quantitative and qualitative goals and included target and stretch objectives approved by the Compensation Committee and the Board which were given priority weightings based upon their relative importance to the Corporation and their linkage to the Corporation’s overall business plan. Each of the four performance objective categories was rated at the end of the year based on the actual results achieved to provide an overall score from 0% to 150% which was then considered in determining the actual bonus levels for the executive officers. The Compensation Committee believes that the scorecard process which has been implemented and the diversified mix of performance metrics adds a quantitative process for fairness and consistency while still enabling the Compensation Committee to apply a final qualitative review in its assessment of corporate performance in order to ensure that the leadership and professional development of the Named Executive Officers and other employees of the Corporation embodies the core values of the Corporation and is linked to the Corporation’s overall business plan and permits the Compensation Committee to recognize any unanticipated challenges the Corporation faces in a given year. The overall corporate score recommended by the Compensation Committee and approved by the Board for 2012 was 130% as detailed below.

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2012 Performance Objectives	2012 Score	Comments
	(overall/ weighted)
Health Safety, Environment & Security (20% weighting): Performance was measured against an industry typical set of indicators including lost time injury frequency, total recordable injury frequency, environmental incidents and vehicle accident rate. In addition, continuous improvement of the Corporation’s security team was a qualitative objective.	125%/25%	The Corporation continued its strong HSE&S record exceeding all of its stretch goals other than environmental incidents where it failed to meet its target goal of 5 or fewer incidents with 6 incidents in 2012. Notably, in 2012, the Corporation achieved the significant milestone of 2,000,000 man hours without a lost time incident (LTI) and incurred no LTIs for the whole of the year. In addition, the Corporation continued to provide the necessary training to all security staff and improve capabilities in assessing both local and geopolitical risks.
Exploration, Appraisal and Operations (40% weighting): Quantitative objectives included contingent resource additions, prospective resource additions, Mil Qasim aggregate testing and Kurdamir aggregate testing while project execution was a qualitative objective	125%/50%	The Corporation added an estimated 545 million barrels of oil (mean estimate) of gross contingent resources and an estimated one billion barrels of oil (mean estimate) of gross prospective resources with the successful test at Kurdamir-2, significantly exceeding the stretch goal for both of 200 million barrels of oil equivalent. While the aggregate test rate at Mil Qasim of 800 barrels of oil per day (bbl/d) failed to meet the target goal of 1,000 bbl/d, the aggregate test rate at Kurdamir-2 of approximately 6,500 bbl/d (plus additional volumes for associated gas) exceeded the target goal of 4,000 bbl/d but was under the stretch goal of 8,000 bbl/d. The Corporation’s project execution in 2012 was impacted by the delayed assignment of the third party participant interest in the Garmian PSC (“Garmian TPPI”) resulting in the decision to delay the execution of certain projects and the entering into of key contracts for services and materials. However, the Corporation maintained flexibility as it managed the delay and kept operational capabilities such that it is was in a position at the beginning of 2013 to move forward quickly with the 2013 exploration program.
Leadership, People and Organization (20% weighting): These objectives were mainly qualitative in nature and related to maintaining and building the necessary foundation services to support the Corporation’s business plan, development of the Corporation’s staffing plan and recruitment of high quality staff as per such plan.	125%/25%	In 2012, the Corporation was successful in recruiting the Senior VP Operations and a new General Manager Kurdistan to replace the VP Kurdistan who retired from this position at the beginning of 2013 and has effectively restructured this role to bring all operational reporting under the Senior VP Operations. The Corporation’s exploration and operations team also refined their staffing and added key resources during 2012 and other areas of the Corporation added or refined capabilities as needed, resulting in all key positions being filled by the end of 2012.
Shareholder Relations (20% weighting): Quantitative objectives included share performance, successful financing(s) and increasing analyst coverage while qualitative measures included positive effective shareholder relations and positive effective joint venture and government relations.	150%/30%	The Corporation met its stretch share performance goal by placing in the top quartile of its peer group for total shareholder return. In August 2012, the Corporation completed a $57 million strategic financing with Crest Energy International LLC at a premium to market price, exceeding the target financing goal of $50 million. In addition, the Corporation worked diligently to assist the Kurdistan Regional Government (“KRG”) to award the Garmian TPPI and conclude a joint operating agreement with Gazprom Neft in short order. This resulted in the Corporation receiving a net amount of $56 million from the Garmian TPPI assignment after reconciliation of prior test oil sales. The Corporation also added three new analysts, exceeding its target goal but not quite reaching its stretch goal of four new analysts. However, the Corporation also conducted two investor/analyst site visits to Kurdistan in 2012. Relationships with the other parties under the Corporation’s PSCs (including the KRG) and the Management Committees under the PSCs remained strong and the Corporation has been able to maintain its position as operator under the Garmian PSC until the end of the exploration period in 2014.

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As a result thereof, the Compensation Committee recommended to the Board for its approval the following discretionary cash bonuses to the Named Executive Officers equal to 130% of their targeted bonus amounts to be paid as to 50% on December 31, 2012 and as to 50% on March 29, 2013, which bonuses were approved for payment by the Board.

	Discretionary Bonus Amount (Cdn$)		Percentage of 2012 Base Salary
CEO		253,500		78	%
CFO		131,700		56	%
Senior VP Operations		95,000		56	%
VP Kurdistan		113,000		52	%
VP Exploration		99,600		52	%

Long-Term Incentives

The Corporation believes that long-term performance and increases in Shareholder value are achieved through an ownership culture that encourages performance by all employees, including executives, through the use of stock option grants as long-term incentives. Accordingly, the Corporation has established the Option Plan to provide employees, including the Named Executive Officers, with incentives to help align those employees’ interests with the performance of the Corporation as reflected in its Common Share price. For a description of the Option Plan, see “Equity Plan Compensation”.

The general aim of the Corporation is to provide a grant of Options to all employees, including executives, on an annual basis that together with an employee’s annual base salary and annual short-term incentive compensation targets an employee’s total direct compensation at approximately the 50th percentile level of peer group total direct compensation comparable to his or her position. For the Named Executive Officers this is based on the International Peer Group or the Mercer Recommended Peer Group as described above. Despite this general aim it should be noted that the Compensation Committee and the Board may use their informed judgment and discretion to increase any compensation awards they deem appropriate in order to recognize extraordinary individual performance which could result in the 50th percentile target being exceeded. Likewise, the Compensation Committee and the Board may use their informed judgment and discretion to decrease any compensation awards if unexpected circumstances arise during the year which would make the targeted compensation inappropriate in such circumstances.

A general grant of options was made to all employees in February 2012. In accordance with the foregoing compensation philosophy, the number of Options recommended by the Compensation Committee to be granted to each of the Named Executive Officers (other than Mr. Mossman who had not yet been hired) in 2012 was determined by taking the Named Executive Officer’s targeted total direct compensation for 2011 and deducting his 2011 base salary and targeted bonus as detailed below.

	2011 Targeted Total Direct Compensation (Cdn$)			2011 Base Salary + Targeted Bonus (Cdn$)		Value of Options Granted (Cdn$)		Number of Options Granted
CEO		750,920			465,920		285,000		950,000
CFO		425,020			282,520		142,500		475,000
VP Kurdistan		375,200	(1)		291,200		84,000		280,000
VP Exploration		404,460			320,460		84,000		280,000

(1) Targeted total direct compensation does not include the cash premium that relates to the VP Kurdistan’s foreign assignment or the rotation allowance that is intended to cover living, transportation and incidental expenses outside of Kurdistan.

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For purposes of valuing the Options granted to employees and assessing his or her total direct compensation a Black-Scholes model is utilized. The key assumptions of this valuation include current market price of the stock, exercise price of the option, option term, risk-free interest rate, dividend yield of stock and volatility of stock return. This methodology is consistent with the accounting fair value used by the Corporation in its financial statements except that, beginning in 2012, the Corporation has determined to cap the volatility assumption used at 50% for compensation purposes whereas no such cap is used in determining the accounting fair value used by the Corporation in its financial statements. The use of the capped volatility assumption results in a lower value being given to the Options and, consequently, a higher number of Options being granted than if the accounting fair value was used. However, the Corporation believes that use of the capped volatility assumption results in a value which more accurately reflects the intrinsic value of the Options granted.

Mr. Mossman was hired in June 2012 as the Vice President, Operations and was granted 550,000 Options by the Board on his start date.

Benefits

WesternZagros’s benefits program consists of health and dental care and various forms of life and disability insurances consistent with industry norms. The Corporation does not have a pension plan or other retirement plan. The benefits are reviewed periodically to determine if they are appropriate and no material changes were made to the program in 2012.

Severance and Change of Control Agreements

The Corporation has entered into executive employment agreements with each of Messrs. Hatfield, Mossman and Stevenson. In addition, Mr. McIntosh had specific provisions regarding severance in his written terms of employment prior to his retirement from the Corporation in January 2013. The Corporation believes that these agreements allow it to be competitive with other companies within the oil and gas industry in attracting and retaining executive officers. A summary of the material terms of these agreements, including the description of triggers that activate the payout upon a change of control event, are included in the section “Termination and Change of Control Benefits”. The Corporation has not entered into an executive employment agreement with Mr. Pinckney.

Risk Assessment

The Board, as a whole, with the assistance from individual committees, is responsible for consideration of the principal risks inherent in the Corporation’s business and activities and how such risks are being managed. To date, neither the Compensation Committee nor the Board as a whole, has completed a formal review of the risks associated with the Corporation’s compensation policies and practices. However, the Compensation Committee has discussed the implications of the Corporation’s compensation policies and practices and has not identified any risks arising from such policies and practices which are likely to have a material adverse effect on the Corporation and does not believe that such policies and practices encourage the Named Executive Officers or other employees to take inappropriate or excessive risks based on the following:

• the Corporation encourages and supports through its policies, practices and management systems a strong culture of integrity, ethical decision making, teamwork and risk management which is designed to align the interests of employees with those of the Corporation and its Shareholders and is embodied by the Corporation’s Code of Ethics and Business Conduct (see “Corporate Governance—Ethical Business Conduct”); employees are aware that their behaviours will be factored into discretionary incentive award recommendations;

• the Corporation’s compensation policies and practices are structured the same throughout the organization for all employees, including the Named Executive Officers;

• the Corporation’s long term incentive component uses Option awards which vest over several years thereby mitigating short-term risk taking potential;

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• although the short-term discretionary cash bonus program rewards the achievement of performance over only one year, awards to Named Executive Officers under this program are determined based upon the Compensation Committee’s assessment of the Corporation’s overall performance for the relevant year which enables the Compensation Committee to include in its assessment a diversified mix of performance metrics, including the Corporation’s health, safety and environmental record and other risk mitigating metrics, which balances the risk of relying on any one performance metric;

• elements of qualitative assessment which exist in the Corporation’s compensation policies and practices and the ability of the Compensation Committee and the Board to apply discretion in the determination of any compensation awards, enables them to deal with any unexpected circumstances which may arise during a given year which would make the targeted compensation inappropriate in such circumstances and prevents any one quantitative metric from undermining the overall objectives of the compensation program;

• the overall compensation program remains balanced as between short-term incentive compensation and long-term-incentive compensation; and

• awards under the short-term incentive program are capped based on a percentage of base salary and maximum thresholds.

While the Corporation does not have in place any specific restrictions on the purchase of financial instruments that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held by the directors or the Named Executive Officers, the Board believes that currently it is unlikely that any such financial instruments would be available for purchase with respect to the Corporation’s securities.

Option Based and Share Based Awards

The Compensation Committee in consultation with management makes recommendations to the Board with respect to the development of and any amendments to the Option Plan. The Corporation does not have in place any other option-based awards programs or any share-based award programs. All determinations of the Compensation Committee in this regard are subject to the review and approval of the Board. Options are awarded under the Option Plan by the Board based upon recommendations by the Compensation Committee except that the Compensation Committee may award Options for new hires or promotions below the vice-president level without further Board approval. The Compensation Committee makes its recommendation or award decisions for employees based upon recommendations from the CEO, taking into account all relevant circumstances, assessment of total direct compensation as compared to its peer group and, when making determinations with respect to general Option awards to all employees, the overall number of Options that are outstanding relative to the number of outstanding Common Shares.

Executive Compensation

The following table sets forth information concerning compensation awarded to the Named Executive Officers for the years ended December 31, 2012, 2011 and 2010.

Summary Compensation Table

Name and Principal Position

Year

Salary (Cdn$)

Option- Based Awards(1) (Cdn$)

Non-equity Incentive Plan Compensation (Annual Incentive Plans)(2) (Cdn$)

All Other Compensation(3) (Cdn$)

Total Compensation (Cdn$)

M. Simon Hatfield Chief Executive Officer

2012 2011 2010

325,000 291,200 280,000

285,000 Nil 414,253

253,500 311,400 Nil

Nil Nil Nil

863,500 602,600 694,253

Gregory C. Stevenson Chief Financial Officer

2012 2011 2010

225,000 201,800 194,000

142,500 Nil 207,126

131,700 178,600 Nil

Nil Nil Nil

499,200 380,400 401,126

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Name and Principal Position	Year		Salary (Cdn$)		Option- Based Awards(1) (Cdn$)		Non-equity Incentive Plan Compensation (Annual Incentive Plans)(2) (Cdn$)		All Other Compensation(3) (Cdn$)		Total Compensation (Cdn$)
Michael Mossman Senior Vice President Engineering and Operations(4)		2012 2011 2010		157,344 —   —		209,000 —   —		95,000 —   —		Nil —   —		461,344 —   —
Ian McIntosh Vice President Kurdistan Business Unit		2012 2011 2010		217,400 208,000 194,870		84,000 Nil 207,126		113,000 168,400 Nil		198,806 196,484 194,607		613,806 572,884 596,603
George Pinckney Executive Advisor, Corporate Projects(5)		2012 2011 2010		191,440 228,900 220,000		84,000 Nil 144,988		99,600 195,700 Nil		Nil Nil Nil		375,040 424,600 364,988

Notes:

(1) Values shown for Option-Based Awards reflect the number of Options awarded multiplied by the grant date fair value price determined as set forth below. These values do not represent gains realized. An actual gain from Option-Based Awards may never be realized.

In 2010, the fair value price of the award on the grant date was determined in accordance with Section 3870 of theHandbook of the Canadian Institute of Chartered Accountants utilizing a Black-Scholes model. This methodology was chosen in order to be consistent with the accounting fair value used by the Corporation in its financial statements at the time of such grant and since Black-Scholes is a commonly used methodology for valuing options which provides an objective and reasonable estimate of fair value. In 2012, the Corporation continued to use Black-Scholes for determining the fair value price of Options, however, unlike in determining the accounting fair value, capped the volatility assumption used at 50% as it believes that use of this capped volatility assumption results in a value which more accurately reflects the intrinsic value of the Options granted. A summary of the grant date fair value prices calculated using the Black-Scholes methodology and key assumptions under this methodology as well as the accounting fair values and the variance between the values created by the capped volatility assumption is provided below. No options were granted to the Named Executive Officers in 2011.

Year	Grant Date Fair Value		Dividend Yield		Volatility			Term	Expected Life	Risk-Free Rate			Accounting Fair Value		Variance to Grant Date Fair Value
2012(a)	$	0.30		Nil		50	%	5 years	4 years		1.3	%	$	0.43	$	(0.13	)
2012(b)	$	0.38		Nil		50	%	5 years	3 years		1.03	%	$	0.49	$	(0.11	)
2011	$	0.30		Nil		121	%	5 years	2 years		1.62	%	$	0.30		nil

(a) February 21, 2012; for all Named Executive Officers other than Mr. Mossman

(b) June 12, 2012; for Mr. Mossman

(2) For 2011, includes retention bonuses and other discretionary bonuses in addition to awards under the short-term discretionary cash bonus program. The Corporation did not have any non-equity incentive plan compensation related to a period longer than one year. 2012 cash bonuses under the short-term discretionary cash bonus program were paid as to 50% in December 2012 and 50% on March 29, 2013 but are shown in full on the table for 2012. 2011 cash bonuses under the short-term discretionary cash bonus program were paid as to 50% in December 2011 and 50% on March 31, 2012 but are shown in full on the table for 2011. 2011 retention bonuses and other discretionary bonuses were all paid in 2011.

(3) Nil indicates perquisites and other personal benefits did not exceed Cdn$50,000 or 10 percent of the total salary of the Named Executive Officer for the financial year. Mr. McIntosh’s “Other Compensation” includes a cash premium that relates to his foreign assignment and a rotation allowance that is intended to cover living, transportation and incidental expenses outside of Kurdistan, as well as certain travel costs for Mr. McIntosh’s spouse that are paid for by the Corporation.

(4) Mr. Mossman was hired as Vice President, Operations in June 2012 and was promoted to Senior VP Operations on November 20, 2012.

(5) Mr. Pinckney retired from the position of VP Exploration on April 2, 2012 and assumed the part-time position of Executive Advisor, Corporate Projects.

Outstanding Option-Based Awards

The following table sets forth information with respect to the outstanding Options granted under the Option Plan to the Named Executive Officers as of December 31, 2012.

Name	Number of Securities Underlying Unexercised Options (#)		Option Exercise Price (Cdn$)		Option Expiration Date	Value of Unexercised In-the-Money Options(1) (Cdn$)
M. Simon Hatfield		950,000 1,380,000 250,000 600,000 1,200,000		0.73 0.49 0.56 0.56 2.15	February 21, 2017 December 21, 2015 March 25, 2014 December 17, 2013 February 5, 2013		342,000 828,000 132,500 318,000 Nil

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Name	Number of Securities Underlying Unexercised Options (#)		Option Exercise Price (Cdn$)		Option Expiration Date	Value of Unexercised In-the-Money Options(1) (Cdn$)
Gregory C. Stevenson		475,000 690,000 200,000 400,000		0.73 0.49 0.56 2.15	February 21, 2017 December 21, 2015 December 17, 2013 February 5, 2013		171,000 414,000 106,000 Nil
Ian McIntosh		280,000 690,000 250,000		0.73 0.49 0.75	February 21, 2017 December 21, 2015 December 17, 2014		100,800 414,000 85,000
Michael Mossman		550,000		0.91	June 12, 2017		99,000
George Pinckney		280,000 483,000 200,000 400,000		0.73 0.49 0.56 2.15	February 21, 2017 December 21, 2015 December 17, 2013 February 5, 2013		100,800 289,800 106,000 Nil

Note:

(1) The value shown is the product of the number of Common Shares underlying the Option multiplied by the difference between the Common Share TSXV closing price on December 31, 2012, the last trading day of 2012, of Cdn$1.09 and the Canadian dollar exercise price.

Incentive Plan Awards—Value Vested or Earned During the Year

The following table sets forth information with respect to the value of Options granted under the Option Plan to the Named Executive Officers that vested during the year ended December 31, 2012, as well as the value of non-equity incentive plan compensation which was earned during the year.

Name	Option-Based Awards Value Vested During Year (Cdn$)(1)		Non-equity Incentive Plan Compensation— Value Earned During Year (Cdn$)
M. Simon Hatfield		409,600		253,500
Gregory C. Stevenson		197,300		131,700
Ian McIntosh		206,400		113,000
Michael Mossman		23,375		95,000
George Pinckney		131,810		99,600

Note:

(1) The value shown is the product of the number of Common Shares underlying the Option that vested multiplied by the difference between the Common Share TSXV closing price on the date the Options vested and the Canadian dollar exercise price of the Options that vested.

Termination and Change of Control Benefits

WesternZagros has entered into executive employment agreements with each of Messrs. Hatfield, Stevenson and Mossman and written terms of employment with Mr. McIntosh. These provide that if: (a) in the case of the CEO, CFO or Senior VP Operations, there is a change of control of WesternZagros and such officer’s employment is terminated by WesternZagros or by the officer (provided that in the case of the CFO or Senior VP Operations, employment is terminated by the officer as a result of a materially detrimental change in the terms of employment); or (b) the services of such officer are terminated by WesternZagros without cause or by the officer as a result of a materially detrimental change in the terms of employment, the officer will receive:

• in the case of the CEO, a severance payment equal to 18 months annual salary plus an additional 22.5 percent of annual salary for loss of benefits and perquisites plus an additional amount equal to 18 months of discretionary cash bonus based on the officer’s target percentage of annual salary under the bonus program (less applicable withholdings);

• in the case of the CFO, a severance payment equal to 12 months annual salary plus an additional 15 percent of annual salary for loss of benefits and perquisites plus an additional amount equal to 12 months of discretionary cash bonus based on the officer’s target percentage of annual salary under the bonus program (less applicable withholdings);

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• in the case of the Senior VP Operations, a severance payment equal to 12 months annual salary plus an additional 15 percent of annual salary for loss of benefits and perquisites plus an additional amount equal to the average amount of the bonus payments made to the Senior VP Operations in respect of the two calendar years prior to the date of termination or, if he hasn’t received payments for two calendar years, the amount of the bonus payment in the last calendar year (less applicable withholdings); and

• in the case of the VP Kurdistan, a severance payment equal to one month’s salary per each year of completed service to a maximum of six month’s salary. The minimum severance shall be three months annual salary (less applicable withholdings).

The following table sets forth information with respect to the estimated aggregate dollar amount that each Named Executive Officer discussed above would have been entitled to pursuant to the foregoing agreements if the event resulting in termination of employment occurred on December 31, 2012.

Name	Termination without “Just Cause” (Cdn$)		Termination upon “Change of Control” (Cdn$)		Termination for “Just Cause” (Cdn$)(1)
M. Simon Hatfield		853,125		853,125		Nil
Gregory C. Stevenson		360,000		360,000		Nil
Michael Mossman		415,000		415,000		Nil
Ian McIntosh		54,350		Nil		Nil
George Pinckney		N/A		N/A		N/A

Notes:

(1) In the event of a termination for “just cause”, the Corporation shall have no further obligation to the Named Executive Officer, other than the payment of annual base salary accrued and unpaid through the date of termination, outstanding expense reimbursements and any statutory vacation pay.

In addition, in the event of a change of control transaction, the Board has the discretion to permit the exercise of otherwise unvested Options prior to the completion of any such transaction. See “Outstanding Option-Based Awards” above for the value of these Options as of December 31, 2012.

Director Compensation

Directors are remunerated in a manner so as to recognize their expertise, increasing responsibilities, time commitment and accountability to the Corporation. In 2012, directors received a set retainer of Cdn$50,000 per year, except for the Chairman who received a set retainer of Cdn$85,000. No additional fees were paid for Committee service or meeting attendance. Directors are also eligible to receive Options pursuant to the Option Plan. The Directors were awarded Options as part of the general Option grant in February 2012. The Compensation Committee recommends the compensation levels and any Option awards for directors for approval by the Board.

As part of its mandate, the Compensation Committee conducts periodic reviews of the amount and form of directors’ fees and benefits for Board and committee service in relation to time commitment, responsibilities and risks and current norms, and recommends any adjustments thereto to the Board for its consideration and approval. The annual retainer for the directors has been reviewed by the Compensation Committee annually with no increases being recommended since the incorporation of the Corporation in 2007 due to the start-up nature of the Corporation’s activities. With the evolution of the Corporation towards an exploration and production company, the Compensation Committee undertook a review of the compensation structure in December 2011 to ensure that the directors’ remuneration is in line with current market practices for similarly situated companies and would continue to enable the Corporation to attract and retain highly qualified Board members. After informal consultation with independent compensation consultants, the Compensation Committee recommended to the Board for its approval retaining a fee structure for directors comprised of a set annual retainer and no additional fees for Committee service or meeting attendance but recommended increasing the retainer for the 2012 year to Cdn$50,000 and Cdn$85,000 for the Chairman. The Compensation Committee believes that this fee level is more in line with current market practices. In recommending the Options to be awarded to directors in 2012, the Compensation Committee considered the ratio of Options granted to directors as compared to Options granted to senior management in prior years and made a recommendation consistent with past practice.

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Compensation Table

The following table sets forth information concerning compensation paid to the directors for the year ended December 31, 2012.

Name	Fees Earned (Cdn$)		Option-Based Awards (Cdn$)(3)		Total (Cdn$)
David J. Boone		50,000		102,000		152,000
David B. Cook(1)		Nil		102,000		102,000
Fred Dyment		85,000		120,000		205,000
John Frangos		50,000		102,000		152,000
James C. Houck		50,000		102,000		152,000
Randall Oliphant		50,000		102,000		152,000
Eric Stoerr(2)		20,000		Nil		20,000
William Wallace		50,000		102,000		152,000

Notes:

(1) Mr. Cook resigned as a director of the Corporation in September 2012, the options previously granted were then forfeited.

(2) Mr. Stoerr did not become a director of the Corporation until August 2012. Fees earned by Mr. Stoerr in 2012 were paid in 2013.

(3) Values shown for Option-Based Awards reflect the number of Options awarded multiplied by the grant date fair value price determined as set forth below. These values do not represent gains realized. An actual gain from Option-Based Awards may never be realized.

Historically, the fair value price of the award on the grant date was determined in accordance with Section 3870 of theHandbook of the Canadian Institute of Chartered Accountants utilizing a Black-Scholes model. This methodology was chosen in order to be consistent with the accounting fair value used by the Corporation in its financial statements at the time of such grant and since Black-Scholes is a commonly used methodology for valuing options which provides an objective and reasonable estimate of fair value. In 2012, the Corporation continued to use Black-Scholes for determining the fair value price of Options, however, unlike in determining the accounting fair value, capped the volatility assumption used at 50% as it believes that use of this capped volatility assumption results in a value which more accurately reflects the intrinsic value of the Options granted. A summary of the grant date fair value prices calculated using the Black-Scholes methodology and key assumptions under this methodology as well as the accounting fair values and the variance between the values created by the capped volatility assumption is provided below.

Grant Date Fair Value	Dividend Yield		Volatility			Term	Expected Life	Risk-Free Rate			Accounting Fair Value		Variance to Grant Date Fair Value
$0.30		nil		50	%	5 years	4 years		1.3	%	$	0.43	$	(0.13	)

(4) Mr. Hatfield is also a director of the Corporation. See “Executive Compensation” for details of his compensation in 2012.

(5) Mr. Howland was not a member of the Board in 2012.

Outstanding Option-Based Awards

The following table sets forth information with respect to the outstanding Options granted under the Option Plan to the directors as of December 31, 2012, which remain unexercised.

Name	Number of Securities Underlying Unexercised Options (#)		Option Exercise Price (Cdn$)		Option Expiration Date	Value of Unexercised In-the-Money Options(1) (Cdn$)
David J. Boone		340,000 345,000 125,000 250,000		0.73 0.49 0.56 2.15	February 21, 2017 December 21, 2015 December 17, 2013 February 5, 2013		122,400 207,000 66,250 Nil
David B. Cook		Nil		N/A	N/A		N/A

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Name	Number of Securities Underlying Unexercised Options (#)		Option Exercise Price (Cdn$)		Option Expiration Date	Value of Unexercised In-the-Money Options(1) (Cdn$)
Fred Dyment		400,000 483,000 150,000 275,000 550,000		0.73 0.49 0.56 0.56 2.15	February 21, 2017 December 21, 2015 March 25, 2014 December 17, 2013 February 5, 2013		144,000 289,800 79,500 145,750 Nil
John Frangos		340,000 345,000 375,000 750,000		0.73 0.49 0.56 2.15	February 21, 2017 December 21, 2015 December 17, 2013 February 5, 2013		122,400 207,000 198,750 Nil
James C. Houck		340,000 345,000 125,000 250,000		0.73 0.49 0.56 2.15	February 21, 2017 December 21, 2015 December 17, 2013 February 5, 2013		122,400 207,000 66,250 Nil
Randall Oliphant		340,000 345,000 125,000 250,000		0.73 0.49 0.56 2.15	February 21, 2017 December 21, 2015 December 17, 2013 February 5, 2013		122,400 207,000 66,250 Nil
Eric Stoerr		Nil		N/A	N/A		N/A
William Wallace		340,000 345,000 125,000 250,000		0.73 0.49 0.56 2.15	February 21, 2017 December 21, 2015 December 17, 2013 February 5, 2013		122,400 207,000 66,250 Nil

Note:

(1) The value shown is the product of the number of Common Shares underlying the Option multiplied by the difference between the Common Share TSXV closing price on December 31, 2012, the last trading day of 2012, of Cdn$1.09 and the Canadian dollar exercise price.

(2) Mr. Howland was not a member of the Board in 2012.

Incentive Plan Awards—Value Vested or Earned During the Year

The following table sets forth information with respect to the value of Options granted under the Option Plan to the directors that vested during the year ended December 31, 2012.

Name	Option-Based Awards Value Vested During Year (Cdn$)
David J. Boone		110,950
David B. Cook		Nil
Fred Dyment		155,210
John Frangos		110,950
James C. Houck		110,950
Randall Oliphant		110,950
Eric Stoerr		Nil
William Wallace		110,950

Note:

(1) The value shown is the product of the number of Common Shares underlying the Option that vested multiplied by the difference between the Common Share TSXV closing price on the date the Options vested and the Canadian dollar exercise price of the Options that vested.

(2) Mr. Howland was not a member of the Board in 2012.

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EQUITY PLAN COMPENSATION

The only equity compensation plan adopted by the Corporation is the Option Plan which authorizes the Board to issue Options to directors, officers, employees or other service providers (collectively, the “Service Providers”) of WesternZagros and its subsidiaries.

The purpose of the Option Plan is: (a) to provide Service Providers an incentive to achieve the longer-term objectives of WesternZagros; (b) to give suitable recognition to the ability and industry of such persons who contribute materially to the success of WesternZagros; (c) and to attract and retain in the employ of WesternZagros or any of its subsidiaries, persons of experience and ability by providing them with the opportunity to acquire an increased proprietary interest in the Corporation.

Eligibility

Pursuant to the Option Plan, the Board may at any time and from time to time grant Options to any Service Provider. Persons who are eligible to receive Options are referred to as Optionees. No Option shall be granted to any Optionee except upon recommendation of the Board, or as may be delegated to the Compensation Committee. A person who has been granted an Option may, if such person is otherwise eligible and if permitted by the TSXV Policy, be granted additional Options if the Board or Compensation Committee, as applicable, shall so determine.

Maximum Percentage of Common Shares Reserved

The number of authorized but unissued Common Shares that may be issued upon the exercise of Options granted under the Option Plan at any time plus the number of Common Shares reserved for issuance under outstanding Options otherwise granted by WesternZagros shall not exceed 10 percent of the issued and outstanding Common Shares on a non-diluted basis at any time, and such aggregate number of Common Shares shall automatically increase or decrease as the number of issued and outstanding Common Shares changes. The Options granted under the Option Plan together with all of WesternZagros’s other previously established stock option plans or grants, shall not result at any time in:

(a) the number of Common Shares reserved for issuance pursuant to Options granted to insiders exceeding 10 percent of the issued and outstanding Common Shares;

(b) the grant to insiders within a 12 month period of a number of Options exceeding 10 percent of the outstanding Common Shares; or

(c) the grant to any one Optionee within a 12 month period, of a number of Options exceeding five percent of the issued and outstanding Common Shares.

Subject to the TSXV Policy, the aggregate number of Common Shares reserved for issuance to any one Optionee under Options granted in any 12 month period shall not exceed five percent of the issued and outstanding Common Shares determined at the date of grant (or 2 percent of the issued and outstanding Common Shares in the case of an Optionee who is an Employee conducting Investor Relations Activities or who is a Consultant (as such terms are defined in the TSXV Policy)).

Exercise Price and Expiry

The exercise price of each Option is determined by the Board or Compensation Committee, as applicable, at the time of the granting of the Option, provided that the exercise price cannot be lower than the most recent closing price of the Common Shares on the TSXV on the last trading day preceding the date of grant of the Options, less any applicable discount permitted by the TSXV.

The Board has the discretion to determine the term of the Option, which shall not exceed 10 years (five years during any period during which WesternZagros is a Tier 2 issuer on the TSXV), and vesting provisions of the Options at the time of granting the Options.

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Early Expiration

In the event that an Optionee under the Option Plan ceases to be a Service Provider for any reason other than death, the Optionee may, but only within 90 days after the Optionee ceasing to be a director, officer, employee or consultant (or 30 days in the case of an Optionee engaged in Investor Relations Activities) or prior to its expiry date, whichever is earlier, exercise any Option held by the Optionee, but only to the extent that the Optionee was entitled to exercise the Option at the date of such cessation.

In the event of the death of the Optionee, the Option previously granted shall be exercisable until the earlier of: (a) one year following the date of the death of the Optionee; and (b) the expiry date.

Transferability

The Options are not assignable or transferable by an Optionee, except for a limited right of assignment in the event of the death of the Optionee or a transfer in accordance with the requirements of the TSXV.

Voluntary Black-Out Periods

WesternZagros has adopted a policy on trading in the securities of WesternZagros which results in the imposition of self-imposed black-out periods from time to time, preventing officers, directors, employees and consultants from exercising Options. For example, these black-out periods would be imposed prior to the release of financial statements and when WesternZagros is considering various possible transactions or is completing material operations or negotiations that could, if consummated or successfully completed, have a significant effect on the trading price or value of WesternZagros’s securities. This policy has been adopted as part of WesternZagros’s approach to responsible governance. However, the imposition of voluntary black-out periods can penalize WesternZagros and its insiders and employees where their Options have not been exercised prior to the voluntary black-out period and such Options would expire during such period.

Pursuant to the Option Plan, the expiration of the term of any Options that would fall during a voluntary black-out period or within 10 business days following the termination of a voluntary black-out period will be extended for a period of 10 business days following the expiry of such black-out period such that all Optionees will always have a maximum of 10 business days following a voluntary black-out period to exercise Options. This provision applies to all Optionees.

Amendments to Options

The Board has the right to amend or suspend, terminate or discontinue the terms and conditions of the Option Plan and to approve amendments relating to any Options granted pursuant thereto, subject to the prior consent of any applicable regulatory bodies, including the TSXV. Except as otherwise provided in the Option Plan, amendments will take effect only with respect to Options issued thereafter, provided that they may apply to any Options previously issued with the mutual consent of WesternZagros and the holders of Options.

The Board is permitted to make certain amendments under the Option Plan, without Shareholder approval including, without limitation:

(a) an amendment which is necessary to conform the Option Plan or Options with applicable law or regulation or the requirements of any stock exchange on which the Common Shares are listed, whether or not such amendment would affect any accrued rights;

(b) any amendment for the purpose of curing any ambiguity, error or omission in the Option Plan or to correct or supplement any provision of the Option Plan that is inconsistent with any other provision of the Option Plan;

(c) amendments relating to administration and eligibility for participation under the Option Plan;

(d) amendments to change the terms and conditions on which Options have been granted pursuant to the Option Plan, including the re-pricing of such Options;

(e) amendments to alter, extend or accelerate the terms of vesting applicable to any Option;

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(f) amendments which amend or modify the mechanics for exercising Options, including the addition of a cashless exercise feature; and

(g) amendments of a “housekeeping nature”;

provided that the alteration, amendment or variance does not:

(a) amend the number of Common Shares issuable under the Option Plan;

(b) increase the term of an Option beyond the maximum period permitted by the stock exchange on which the Common Shares are listed, other than any permitted extension thereto due to a black-out period;

(c) add any form of financial assistance by WesternZagros for the exercise of any Option;

(d) result in a material or unreasonable dilution in the number of outstanding Common Shares or any material benefit to an Optionee; or

(e) change the class of Optionees which would have the potential of broadening or increasing participation by insiders of WesternZagros.

Without limiting the generality of the foregoing, if the Board proposes to increase the number of Common Shares issuable under the Option Plan, reduce the exercise price for Options granted to insiders or extend the term of Options granted to insiders of WesternZagros pursuant to the Option Plan (unless the extension is pursuant to any voluntary black-out extension that may be in effect or pursuant to an extension applicable in the case of death), such amendments will require Shareholder approval. Extensions of the term of Options granted to holders of Options (other than insiders) may be subject to approval of any regulatory authority or stock exchange but shall not require Shareholder approval.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table sets forth the number of Common Shares issuable under the Option Plan, the weighted average exercise price of such outstanding Options and the number of Common Shares remaining available for future issuance under the Option Plan as of December 31, 2012.

Plan Category	Number of securities to be issued upon exercise of outstanding Options (a)		Weighted exercise price of outstanding Options (Cdn$) (b)		Number of securities available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)(1)
Equity compensation plans approved by security holders		26,188,250		0.91		15,021,832
Equity compensation plans not approved by security holders		Nil		N/A		Nil
Total:		26,188,250		0.91		15,021,832

Note:

(1) The number of securities available for future issuance under the Option Plan is equal to 10 percent of the issued and outstanding Common Shares at any time less the number of securities to be issued upon exercise of Options which are outstanding at such time. As at April 15, 2013, there were 474,789,580 Common Shares issued and outstanding and 26,851,583 Options outstanding. Accordingly, 20,627,375 Common Shares remain available for future issuances under the Option Plan as at April 15, 2013.

INDEBTEDNESS OF DIRECTORS AND OFFICERS

No director, proposed director, executive officer, nor any of their respective associates or affiliates, is or has been indebted to the Corporation or its subsidiaries since the beginning of the Corporation’s most recently completed financial year other than for “routine indebtedness” (as defined under National Instrument 51-102).

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INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

Management of the Corporation is not aware of any material interest, direct or indirect, of any director (including any proposed director) or executive officer of the Corporation, any person or company beneficially owning, directly or indirectly, or exercising control or direction over, or a combination of both, more than 10 percent of the Common Shares, or any associate or affiliate of such person in any transaction since commencement of the last financial year or in any proposed transaction which in either case has materially affected or will materially affect the Corporation or its subsidiaries, except as set forth below.

On August 10, 2012, Crest purchased from the Corporation 40,714,286 Common Shares at a price of $1.40 per share for gross proceeds of $57 million. Crest then held approximately 9.9 percent of the Corporation’s issued and outstanding Common Shares.

On March 18, 2013, Crest purchased from the Corporation 51,000,000 Common Shares at a price of $1.25 per share for gross proceeds of $63.75 million resulting in Crest holding approximately 19.8 percent of the Corporation’s issued and outstanding Common Shares. At the same time, Crest also advanced to the Corporation US$57.5 million pursuant to a restated and amended senior secured loan agreement dated March 13, 2013. Interest on the loan accrues at 6 percent per annum. The loan, together with all accrued interest, is to be repaid in full on September 30, 2014, subject to certain prepayment terms, including but not limited to certain repayment obligations in the event of future equity offerings by the Corporation.

On April 4, 2013, Crest purchased from the Corporation 2,284,151 Common Shares and Jasmine Capital Investments Pte. Limited purchased from the Corporation 9,147,271 Common Shares at a price of $1.25 per share for gross proceeds of approximately $14.3 million. The net proceeds were used to repay a portion of the debt owing to Crest.

CORPORATE GOVERNANCE

The Board is committed to a high standard of corporate governance practices. The Board believes that this commitment is not only in the best interest of the Shareholders but that it also promotes effective decision making at the Board level.

Board of Directors

Independence

The Board currently consists of nine directors, of which the only management director is Mr. Hatfield. The other eight directors are independent directors as such term is defined by NI 58-101. Each of the independent directors has no direct or indirect material relationship with the Corporation, including any business or other relationship with the Corporation, which could reasonably be expected to interfere with the director’s independent judgement. While Messrs. Howland and Stoerr have been nominated as directors of the Corporation by Crest, which owns 19.8% of the outstanding Common Shares and is party to an Investment Agreement with the Corporation, the Board is of the view that Crest does not control the Corporation within the meaning of securities legislation, and therefore, Messrs. Howland and Stoerr are independent within the meaning of NI 58-101.

The members of the Board have diverse backgrounds and expertise, and were selected in the belief that WesternZagros benefits significantly from a broad range of experience and talent. The Board is committed to reviewing the number of directors regularly and currently considers the current complement of directors to be appropriate for the Corporation’s size and a number that facilitates effective decision-making, as well as an appropriate mix of backgrounds and skills for the stewardship of the Corporation.

Other Directorships

The following directors currently serve on the board of directors of the reporting issuers (or equivalent) listed below, each of which are reporting issuers in one or more Canadian (or foreign) jurisdictions:

Name	Name of Reporting Issuer
David J. Boone	—
Eric Stoerr	—

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Name	Name of Reporting Issuer
Fred J. Dyment	ARC Resources Ltd. Major Drilling Group International Inc. Tesco Corporation Transglobe Energy Corporation
John Frangos	—
M. Simon Hatfield	—
James C. Houck	ARC Resources Ltd.
John Howland	—
Randall Oliphant	New Gold Inc. Silver Bear Resources Inc. Franco-Nevada Corporation
William Wallace	Energy Partners Oil & Gas Inc.

Interlocking Directorships

Messrs. Dyment and Houck each serve as a member of the board of directors of ARC Resources Ltd. as well as two of the same committees of such board, however, the Board is of the view that this does not adversely impact the effectiveness of these directors.

Board Meetings

The Board holds a minimum of four regular meetings each year, as well as additional meetings as required. The Board has determined that anin camera session of the directors will be held at each regularly scheduled Board meeting so that non-management members of the Board, will have an opportunity to meet without the presence of management members of the Board.

The non-management members of the Board are authorized to retain independent financial, legal and other experts as required at the expense of the Corporation whenever, in their opinion, matters come before the Board which require an independent analysis by the non-management members of the Board.

Meeting Attendance

Name	Board Meetings Attended in 2012		Committee Meetings Attended in 2012(1)
	No.	%	No.	%
Boone	11/11	100	12/12	100
Dyment	11/11	100	1/1	100
Frangos	11/11	100	7/7	100
Hatfield	10/11	91	13/15	87
Houck	11/11	100	9/9	100
Oliphant	11/11	100	8/8	100
Stoerr	3/3(2)	100	N/A	N/A
Wallace	11/11	100	4/4	100

Note:

(1) Directors have a standing invitation to attend all Committee meetings, regardless of membership. However, attendance is indicated only for those Committees of which a Director was a member at the time of the relevant Committee meeting other than for Mr. Hatfield . Although he is not a member of any of the Committees, Mr. Hatfield, as CEO, is expected to attend each Committee meeting. A portion of each Committee meeting is held without any management present.

(2) Mr. Stoerr joined the Board in August 2012; three meetings were held in 2012 subsequent to his appointment.

(3) Mr. Howland was not a member of the Board in 2012.

Mandate of the Board

Pursuant to applicable corporate legislation, the Board has responsibility for the stewardship of the Corporation. In carrying out this mandate, the Board meets regularly and a broad range of matters are discussed and reviewed for approval. The Board participates with management in the development and approval of the Corporation’s strategic plan,

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which takes into account the Corporation’s opportunities and risks associated with its business. The Board also approves all overall plans and strategies, budgets, internal controls and management information systems and risk management programs as well as annual financial and operating results. At regularly scheduled meetings, members of the Board and management discuss a broad range of issues relevant to the Corporation’s strategy. The Board’s participation in the strategic planning process involves consideration of the principal risks inherent in the Corporation’s business. The Audit Committee addresses specific risks and risk management in its review of the Corporation’s financial statements. The Board, as a whole, with the assistance of the Health, Safety, Environment and Security Committee, as necessary, addresses specific risks and risk management related to the Corporation’s health, safety, environmental and security activities, compliance with applicable rules and regulations, and risk management and risk philosophies relating to the Corporation’s activities, including financial and marketing matters. The Board is also responsible for the approval of all major transactions, including equity issuances as well as for the Corporation’s debt and borrowing policies. The Board strives to ensure that actions taken by the Corporation correspond closely with the objectives of the Shareholders. The Board meets at least once annually to review in depth the Corporation’s strategic plan and it reviews the Corporation’s resources which are required to carry out the Corporation’s strategy and to achieve its objectives.

Orientation and Continuing Education

New directors are provided with an orientation and education program which includes written information about the duties and obligations of directors, the role of the Board and its Committees, the expected contributions of individual directors and the business and operations of WesternZagros, as well as copies of all key policies of the Corporation. New directors are also provided the opportunity to participate in meetings and discussions with senior management and other directors. The details of the orientation of each new director are tailored to that director’s individual needs, familiarity with the Corporation and areas of expertise.

Directors are kept informed as to matters impacting, or which may impact, the Corporation’s operations through regular reports from the CEO and management presentations at the Board meetings as well as Committee meetings. Non-management directors are encouraged to, and often, attend Committee meetings of which they are not members. In addition, all of the directors have made visits to Kurdistan to review the Corporation’s operations.

Ethical Business Conduct

The Board has adopted a written Code of Ethics and Business Conduct (the “Code”) for directors, officers, employees and independent contractors of the Corporation and its subsidiaries. A copy of the Code is available for review on SEDAR at www.sedar.com or, upon request, Shareholders may obtain a copy of the Code from the Corporation by contacting the Corporation at Suite 600, Ernst & Young Tower, 440 - 2nd Avenue S.W., Calgary, Alberta, T2P 5E9, telephone: (403) 693-7001.

The Code demonstrates the Corporation’s commitment to conducting business ethically, legally and in a fiscally, environmentally and socially responsible manner. It sets forth best practices to which each employee, director, officer and contractor is expected to adhere and acknowledge; this acknowledgement is an annual requirement.

The Code provides that directors, officers, employees and independent contractors must, among other things: (a) at all times abide by all applicable laws and respect their intent; (b) always act in the best interest of the Corporation; (c) avoid situations that may result in a conflict or perceived conflict between individual or private interests and those of the Corporation; (d) ensure that all transactions with which they are involved are authorized and executed in accordance with the Corporation’s policies and procedures; (e) provide full disclosure of any actual or potential conflicts of interest in accordance with applicable legislation and the procedures of the Code; (f) maintain the confidentiality of all non-public information relating to the Corporation; (g) protect the property of the Corporation and use such property only for legitimate business purposes; (h) deal fairly with the Corporation’s customers, suppliers, competitors and others with which the Corporation does business; (i) not participate, directly or indirectly, in any bribes, kickbacks, improper profit sharing arrangements, illegal gratuities or improper inducements or payments to any public official or any private sector party; (j) not request, agree to receive or accept any bribes or other payments designed to influence or compromise their conduct; and (k) conduct operations with the aim of preventing adverse effects on the environment and safeguarding life and health.

Compliance with the Code is monitored by the Board. Where a director or officer has any interest in or a perceived conflict involving a contract or business relationship with the Corporation, that director or officer is excluded from all

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discussions and deliberations regarding the contract or relationship and such director abstains from voting in respect thereof. Members of the Board and executive officers have disclosed to the Corporation all directorships held by such member and the existence and nature of any interests that could result in a conflict situation with the Corporation. To the knowledge of the Board, there have been no departures from the Code during the year ended December 31, 2012 that would require the filing of a material change report.

The Board has also adopted a policy relating to the reporting of inappropriate activity to encourage and promote a culture of ethical business conduct. This policy is intended to encourage and facilitate the reporting of: (a) questionable accounting, internal accounting controls and/or auditing matters; (b) the reporting of fraudulent financial information to Shareholders, regulatory authorities and the financial markets; and (c) conduct which results in a violation of law by the Corporation or in substantial mismanagement of the Corporation’s resources that, if proven, would constitute a criminal offence or reasonable grounds for dismissal of the person engaging in this conduct, without the fear of recrimination, retaliation or harassment.

Nomination of Directors

The Governance Committee has responsibility for assessing and making recommendations to the Board as to the size, composition, operation and effectiveness of the Board. As part of this mandate, the Governance Committee determines the criteria for identifying potential nominees and seeks guidance from the CEO and other Board members in identifying and assessing potential candidates to be nominated and the competencies, skills and personal qualities that the Board should seek in new members to add value to the Corporation. The Board as a whole is then responsible for nominating new directors.

Board Committees

The Board has four Committees, being the Compensation Committee, Audit Committee, Governance Committee and Health, Safety, Environment and Security Committee. All of the Committees have been constituted with independent directors.

In addition, the Board has established a Disclosure Committee to assist the Board in discharging its oversight responsibilities with respect to the Corporation’s disclosure controls, policies and procedures. The Disclosure Committee is comprised of the CEO; CFO; Senior Vice President, Engineering and Operations; Vice President Exploration and Reservoir Development; Vice President Business Development; Executive Advisor, Corporate Projects; General Manager, Kurdistan; and Manager of Investor Relations. This Committee is subject to the supervision and oversight of the Governance Committee.

Compensation Committee

The Compensation Committee is comprised of Messrs. Boone (Chair), Houck and Frangos.

The Compensation Committee is responsible for reviewing and making recommendations to the Board with respect to the salary and other remuneration to be awarded to senior officers, including the CEO, and the directors of WesternZagros. For further discussion of the Compensation Committee, its mandate and the process for determining compensation, see “Executive Compensation and Remuneration of Directors.”

The Compensation Committee met five times during 2012. At each meeting of the Compensation Committee a portion is held without management present and any director can request additional time for this purpose.

Audit Committee

The Audit Committee is comprised of Messrs. Oliphant (Chair), Boone and Dyment. All are independent directors and are financially literate as defined by National Instrument 52-110,Audit Committees(“NI 52-110”). As the Corporation was a “venture issuer” at the end of its most recently completed financial year, WesternZagros is entitled to rely upon the exemption in Section 6.1 of NI 52-110 which exempts venture issuers from the composition requirements of and certain reporting requirements contained in NI 52-110.

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The following is a brief description of the education and experience of each Audit Committee member:

Randall Oliphant, Chair

Mr. Oliphant is the Executive Chairman of New Gold. Mr. Oliphant is on the Advisory Board of Metalmark Capital LLC (formerly Morgan Stanley Capital Partners) and serves on the board of directors of a number of public and private companies and not-for-profit organizations. Until 2003, Mr. Oliphant was the President and Chief Executive Officer of Barrick Gold Corporation, and served in senior financial positions since joining the company in 1987 prior to being appointed Chief Executive Officer in 1999. Mr. Oliphant holds a Bachelor of Commerce degree from the University of Toronto and is a Chartered Accountant.

David J. Boone

Mr. Boone has over 35 years of broad Canadian and international energy experience in the upstream industry and he is currently President and Chief Executive Officer of Barrick Energy. Mr. Boone’s previous positions include President, Offshore and International Operations for EnCana; Executive Vice-President and Chief Operating Officer of PanCanadian Energy and co-founder, President, and a director of Escavar Energy, a private oil and gas company. Mr. Boone holds a Civil Engineering degree from Queen’s University and a Masters of Business Administration degree from the University of Virginia. Mr. Boone is a member of the Association of Professional Engineers, Geologists and Geophysicists of Alberta and is Past Chairman of the Canadian Association of the World Petroleum Council.

Fred J. Dyment

Mr. Dyment has spent the majority of his 38-year oil and gas career at Ranger Oil Limited, holding the positions of Controller, Vice President Finance, Chief Financial Officer and, finally, Chief Executive Officer. After Ranger Oil was sold to Canadian Natural Resources in 2000, he served as Chief Executive Officer of Maxx Petroleum Company from 2000 to 2001. Mr. Dyment served as Governor of the Canadian Association of Petroleum Producers from 1995 to 1997. He serves on the Board of Directors of Tesco Corporation, Major Drilling Group International Inc., ARC Resources Ltd. and Transglobe Energy Corporation. Mr. Dyment is a Chartered Accountant.

The following is a summary of the key roles and responsibilities of the Audit Committee. Full particulars are set out in the Audit Committee Terms of Reference which is attached as Schedule “B” hereto. The Audit Committee reviews and approves WesternZagros’s interim unaudited consolidated financial statements and reviews the annual audited consolidated financial statements and certain corporate disclosure documents including the annual information form, management’s discussion and analysis, annual and interim earnings press releases, offering documents including all prospectuses and other offering memoranda before they are approved by the Board. The Audit Committee reviews and makes a recommendation to the Board in respect of the appointment of and reviews and approves the compensation of the external auditor and it monitors accounting, financial reporting, control and audit functions. The Audit Committee meets to discuss and review the audit plans of the external auditor and it is directly responsible for overseeing the work of the external auditor with respect to the preparing or issuing of the auditor’s report or the performance of other audit, review or attest services, including the resolution of disagreements between management and the external auditor regarding financial reporting. The Audit Committee questions the external auditor independently of management and reviews a written statement of its independence based on the criteria found in the recommendations of the Canadian Institute of Chartered Accountants. The Audit Committee must be satisfied that adequate procedures are in place for the review of the Corporation’s public disclosure of financial information extracted or derived from its financial statements and it periodically assesses the adequacy of those procedures. The Audit Committee must approve or pre-approve, as applicable, any non-audit services to be provided to the Corporation by the external auditor. It also reviews the internal control systems to determine their adequacy and effectiveness particularly relating to financial reporting matters. The Audit Committee has established procedures for dealing with complaints or confidential submissions which come to its attention with respect to accounting, internal accounting controls or auditing matters. The Audit Committee also assists the Board in fulfilling its oversight responsibilities generally with respect to the Corporation’s oil and natural gas resources evaluation process and public disclosure of resources data and related information in connection with the Corporation’s oil and gas activities.

The Audit Committee met six times in 2012.

Governance Committee

The Governance Committee is comprised of Messrs. Houck (Chair), Oliphant and Wallace.

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The Governance Committee annually assesses the effectiveness of the Board as a whole, the various other Committees as well as individual directors, with particular focus on the Chairman and the Chairs of the various Committees, all in accordance with the standards established by the Board. Such assessments consist of a confidential peer-review survey and performance evaluations. In addition, as described above under “Nomination of Directors”, the Governance Committee has responsibility for assessing and making recommendations to the Board as to the size and composition of the Board. The Governance Committee also assesses the Corporation’s approach to corporate governance and monitors the relationship between management and the Board, as well as undertaking those initiatives as are necessary to maintain a high standard of corporate governance practices and ensure ongoing compliance with the rules and policies of applicable regulatory authorities with respect to corporate governance.

The Governance Committee is also responsible for overseeing the Disclosure Committee which is comprised of management representatives. The Disclosure Committee’s mandate is to: (a) determine when events, developments, changes or other facts constitute material information or a material change in the affairs of the Corporation; (b) review and, as necessary, assist in the development of disclosure controls and procedures; (c) monitor and evaluate the effectiveness of the Corporation’s disclosure controls and procedures; and (d) review and approve of certain specified public disclosures. As the Disclosure Committee is a management-based committee, it meets as required to evaluate disclosure obligations and review proposed public disclosures.

The Governance Committee met twice in 2012.

Health, Safety, Environment and Security Committee

The Health, Safety, Environment and Security Committee is comprised of Messrs. Frangos (Chair), Dyment and Wallace.

The Health, Safety, Environment and Security Committee is responsible for monitoring the health, safety, environmental and security policies, corporate social responsibility policies and related management systems, practices and procedures of the Corporation and its subsidiaries for compliance with applicable legislation, conformity with industry standards and prevention or mitigation of losses. It reviews, reports and, when appropriate, makes recommendations to the Board on the Corporation’s policies, practices and procedures related to health, safety, the environment and security. As an integral part of their mandate to monitor such policies, practices and procedures, members of the Health, Safety, Environment and Security Committee make regular visits to Kurdistan to review the Corporation’s operations.

The Health, Safety, Environment and Security Committee met twice in 2012.

Assessments

The Governance Committee manages assessments of the Board as a whole, the Committees, the Chairman and the other individual directors on an ongoing basis. Individual director evaluations regarding the effectiveness and contribution of the directors are completed by each director on an annual basis and the results analyzed with the appropriate follow-up action taken where required.

The corporate objectives for which the CEO is responsible are established by the Board, which, with the oversight of the Chairman and the Compensation Committee Chair, assesses the CEO against such objectives.

ADDITIONAL INFORMATION

Additional information relating to the Corporation is available on SEDAR at www.sedar.com. Financial information is contained in the Corporation’s consolidated financial statements and management’s discussion and analysis for the year ended December 31, 2012. In addition, a Shareholder may obtain copies of the Corporation’s consolidated financial statements and management’s discussion and analysis, by contacting the Corporation at Suite 600, Ernst & Young Tower, 440 - 2nd Avenue S.W., Calgary, Alberta, T2P 5E9, telephone: (403) 693-7001.

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SCHEDULE “A”

BY-LAW NO. 2

WESTERNZAGROS RESOURCES LTD.

(the “Corporation”)

INTRODUCTION

The Corporation is committed to: (i) facilitating an orderly and efficient annual or, where the need arises, special meeting, process; (ii) ensuring that all shareholders receive adequate notice of director nominations and sufficient information with respect to all nominees; (iii) allowing the Corporation and shareholders to evaluate all nominees’ qualifications and suitability as a director of the Corporation; and (iv) allowing shareholders to cast an informed vote.

The purpose of this By-Law No. 2 (the “By-law”) is to provide shareholders, directors and management of the Corporation with guidance on the nomination of directors. This By-law is the framework by which the Corporation seeks to fix a deadline by which holders of record of common shares of the Corporation must submit director nominations to the Corporation prior to any annual or special meeting of shareholders and sets forth the information that a shareholder must include in the notice to the Corporation for the notice to be in proper written form.

It is the position of the Corporation that this By-law is beneficial to shareholders and other stakeholders. This By-law will be subject to an annual review, and will reflect changes as required by securities regulatory agencies or stock exchanges, or so as to meet industry standards.

NOMINATIONS OF DIRECTORS

1. Nomination procedures—Subject only to theBusiness Corporations Act(Alberta) (the “Act”) and the articles of the Corporation (the “Articles”), only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the board of directors of the Corporation (the “Board”) may be made at any annual meeting of shareholders, or at any special meeting of shareholders if one of the purposes for which the special meeting was called is the election of directors:

a. by or at the direction of the Board, including pursuant to a notice of meeting;

b. by or at the direction or request of one or more shareholders pursuant to a proposal made in accordance with the provisions of the Act, or a requisition of the shareholders made in accordance with the provisions of the Act; or

c. by any person (a “Nominating Shareholder”): (A) who, at the close of business on the date of the giving of the notice provided for below in this By-law and on the record date for notice of such meeting, is entered in the securities register as a holder of one or more shares carrying the right to vote at such meeting or who beneficially owns shares that are entitled to be voted at such meeting; and (B) who complies with the notice procedures set forth below in this By-law.

2. Timely notice—In addition to any other applicable requirements, for a nomination to be made by a Nominating Shareholder, the Nominating Shareholder must have given timely notice thereof in proper written form to the Corporate Secretary of the Corporation at the principal executive offices of the Corporation.

3. Manner of timely notice—To be timely, a Nominating Shareholder’s notice to the Corporate Secretary of the Corporation must be made:

a. in the case of an annual meeting of shareholders, not less than 30 nor more than 65 days prior to the date of the annual meeting of shareholders; provided, however, that in the event that the annual meeting of shareholders is to be held on a date that is less than 50 days after the date (the “Notice Date”) on which the first public announcement of the date of the annual meeting was made, notice by the Nominating Shareholder may be made not later than the close of business on the tenth (10th) day following the Notice Date; and

b. in the case of a special meeting (which is not also an annual meeting) of shareholders called for the purpose of electing directors (whether or not called for other purposes), not later than the close of business on the fifteenth (15th) day following the day on which the first public announcement of the date of the special meeting of shareholders was made. In no event shall any adjournment or postponement of a meeting of shareholders or the announcement thereof commence a new time period for the giving of a Nominating Shareholder’s notice as described above.

4. Proper form of timely notice—To be in proper written form, a Nominating Shareholder’s notice to the Corporate Secretary of the Corporation must set forth:

a. as to each person whom the Nominating Shareholder proposes to nominate for election as a director: (A) the name, age, business address and residential address of the person; (B) the principal occupation or employment of the person; (C) the class or series and number of shares in the capital of the Corporation which are controlled or which are owned beneficially or of record by the person as of the record date for the meeting of shareholders (if such date shall then have been made publicly available and shall have occurred) and as of the date of such notice; and (D) any other information relating to the person that would be required to be disclosed in a dissident’s proxy circular in connection with solicitations of proxies for election of directors pursuant to the Act and Applicable Securities Laws (as defined below); and

b. as to the Nominating Shareholder giving the notice, any proxy, contract, arrangement, understanding or relationship pursuant to which such Nominating Shareholder has a right to vote any shares of the Corporation and any other information relating to such Nominating Shareholder that would be required to be made in a dissident’s proxy circular in connection with solicitations of proxies for election of directors pursuant to the Act and Applicable Securities Laws (as defined below).

The Corporation may require any proposed nominee to furnish such other information, including a written consent to act, as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable shareholder’s understanding of the independence, or lack thereof, of such proposed nominee.

5. Eligibility for nomination as a director—No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the provisions of this By-law; provided, however, that nothing in this By-law shall be deemed to preclude discussion by a shareholder (as distinct from the nomination of directors) at a meeting of shareholders of any matter in respect of which it would have been entitled to submit a proposal pursuant to the provisions of the Act. The Chairman of the meeting shall have the power and duty to determine whether a nomination was made in accordance with the procedures set forth in the foregoing provisions and, if any proposed nomination is not in compliance with such foregoing provisions, to declare that such defective nomination shall be disregarded.

6. Terms—For purposes of this By-law:

a. “public announcement” shall mean disclosure in a press release reported by a national news service in Canada, or in a document publicly filed by the Corporation under its profile on the System for Electronic Document Analysis and Retrieval at www.sedar.com; and

b. “Applicable Securities Laws” means the applicable securities legislation of each relevant province and territory of Canada, as amended from time to time, the rules, regulations and forms made or promulgated under any such statute and the published national instruments, multilateral instruments, policies, bulletins and notices of the securities commission and similar regulatory authority of each relevant province and territory of Canada.

7. Delivery of Notice—Notwithstanding any other provision of this By-law, notice given to the Corporate Secretary of the Corporation pursuant to this By-law may only be given by personal delivery, facsimile transmission or by email (at such email address as stipulated from time to time by the Corporate Secretary of the Corporation for purposes of this notice), and shall be deemed to have been given and made only at the time it is served by personal delivery, email (at the aforesaid address) or sent by facsimile transmission (provided that receipt of confirmation of such

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transmission has been received) to the Corporate Secretary at the address of the principal executive offices of the Corporation; provided that if such delivery or electronic communication is made on a day which is a not a business day or later than 5:00 p.m. (Calgary time) on a day which is a business day, then such delivery or electronic communication shall be deemed to have been made on the subsequent day that is a business day.

8. Board Discretion—Notwithstanding the foregoing, the Board may, in its sole discretion, waive any requirement in this By-law.

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SCHEDULE “B”

AUDIT COMMITTEE

TERMS OF REFERENCE

The Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of WesternZagros Resources Ltd. (the “Corporation”) shall have the oversight responsibility, authority and specific duties as described below.

Composition

The Committee shall consist of not less than three directors. No members of the Committee shall be an officer or employee of the Corporation or any of its subsidiaries or any affiliate thereof. Each Committee member shall satisfy the independence, experience and financial literacy requirements of applicable securities laws, and any applicable stock exchange requirements. Determinations as to whether a particular director satisfies the requirements for membership on the Committee shall be made by the full Board and shall be reviewed at least annually.

If a member of the Committee ceases to satisfy the necessary requirements for membership for reasons outside that member’s reasonable control, the member shall immediately notify the Chairman of the Board as to this fact and shall resign his or her position as a member of the Committee on the earliest of (i) the appointment of his or her successor; (ii) the next annual meeting of Shareholders of the Corporation; and (iii) the date that is six months from the occurrence of the event which caused the member to not satisfy the necessary requirements for membership.

Members of the Committee shall be appointed from time to time by the Board. Each member shall serve until his successor is appointed, unless he shall resign or be removed by the Board or he shall otherwise cease to be a director of the Corporation. Where a vacancy occurs at any time in the membership of the Committee, it may be filled by the Board. The Board shall fill any vacancy if the membership of the Committee is less than three members.

The Chair of the Committee may be designated by the Board or, if it does not do so, the members of the Committee may elect a Chair by vote of a majority of the full Committee membership.

Operation

The Committee shall have access to such officers and employees of the Corporation and to such information respecting the Corporation, as it considers to be necessary or advisable in order to perform its duties and responsibilities. The Committee has the authority to engage independent counsel and other advisors as it determines necessary to carry out its duties and to set and pay the compensation for any such counsel and advisors, such engagement to be for the Corporation’s sole account and expense.

Meetings of the Committee shall be conducted as follows:

1. The Committee shall meet at least four times per year at such times and at such locations as the Chair of the Committee shall determine, provided that meetings shall be scheduled so as to permit timely review of the quarterly and annual financial statements and reports. In addition, the Chair of the Committee may call a special meeting of the Committee at any time.

2. The Committee shall meet with the external auditors on a regular basis in the absence of management and, if so requested by a member of the Committee, the external auditor shall attend every meeting of the Committee held during the term of office of the external auditor. The Chair of the Committee, the Chairman of the Board, any two members of the Committee or the external auditors may call a meeting of the Committee. The external auditors shall be provided with notice of every meeting of the Committee and, at the expense of the Corporation, shall be entitled to attend and be heard thereat.

3. The Chair of the Committee shall hold an in camera portion, without management present, at every Committee meeting.

4. The quorum for meetings shall be a majority of the members of the Committee, present in person or by telephone or by other telecommunication device that permits all persons participating in the meeting to hear each other.

5. If the Chair of the Committee is not present at any meeting of the Committee, one of the other members of the Committee who is present at the meeting shall be chosen by the Committee to preside at the meeting.

6. The Chair shall, in consultation with management, establish the agenda for the meetings and instruct management to ensure that properly prepared agenda materials are circulated to the Committee with sufficient time for study prior to the meeting.

7. Every question at a Committee meeting shall be decided by a majority of the votes cast.

8. The Chief Executive Officer of the Corporation shall be available to advise the Committee, and may attend meetings at the invitation of the Chair of the Committee. Other management representatives and/or Board members may be invited to attend.

9. The Corporate Secretary shall act as secretary for the purposes of recording the minutes of each meeting. If no Corporate Secretary has been appointed or the Corporate Secretary is not present at the meeting, a Committee member, or any other person selected by the Committee, shall be appointed at each meeting to act as secretary for the purpose of recording the minutes of each meeting.

10. The Committee may delegate from time to time to any person or committee of persons any of the Committee’s responsibilities that lawfully may be delegated.

The Committee may contact directly any employee or consultant of the Corporation as it deems necessary and any employee may bring before the Committee any matter on a confidential basis involving matters within the purview of the Committee.

The Committee shall provide the Board with a summary of all meetings together with a copy of the minutes from such meetings. Where minutes have not yet been prepared, the Chair shall provide the Board with oral reports on the activities of the Committee. All information reviewed and discussed by the Committee at any meeting shall be retained and made available for examination by the Board upon request to the Chair.

Responsibilities

The Committee is part of the Board. Its primary function is to assist the Board in fulfilling its oversight responsibilities in relation to the review and approval of the financial statements and financial reporting of the Corporation and the assessment of internal control and management information systems of the Corporation and to assist the Board in fulfilling its oversight responsibilities generally and under National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities (as amended or replaced from time to time) with respect to the oil and natural gas reserves and/or resources evaluation process and public disclosure of reserves and/or resources data and related information in connection with oil and gas activities. The Committee shall also be directly responsible for overseeing all audit processes and the relationship of the external auditors with the Corporation and the external auditors shall report directly, and be accountable, to the Committee.

The role of the Committee is one of supervision, stewardship and oversight.

Management is responsible for preparing the financial statements and financial reporting of the Corporation and for maintaining internal control and management of information. The external auditors are responsible for the audit or review of the financial statements and other services they provide.

The Committee shall have access to the Corporation’s independent qualified reserves evaluator(s), and to such information respecting the Corporation, as it considers to be necessary or advisable in order to perform its duties and responsibilities. The Committee provides for a means of direct communication for the Board, with the independent qualified reserves evaluator(s). The Committee should have a clear understanding with the independent qualified reserves evaluator(s) that

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the independent qualified reserves evaluator(s) must maintain an open and transparent relationship with the Committee and the Board, and that the ultimate accountability of the evaluator is to the Committee and the Board.

Committee members will be provided training and exposure to knowledge and information required to fulfill their responsibilities, as determined by the Committee.

Specific Duties

1. Financial Statements and Financial Reporting

The Committee shall:

(a) review with management and the external auditors, and recommend to the Board for approval, the annual financial statements of the Corporation, the reports of the external auditors thereon and related financial reporting, including Management’s Discussion and Analysis and earnings press releases prior to the public disclosure of such information;

(b) review with management and the external auditors, and approve, the interim financial statements of the Corporation and related financial reporting, including Management’s Discussion and Analysis and earnings press releases prior to the public disclosure of such information;

(c) review with management and recommend to the Board for approval, the Corporation’s Annual Information Form;

(d) review with management and recommend to the Board for approval, any financial statements of the Corporation which have not previously been approved by the Board and which are to be included in a prospectus of the Corporation or any other document required to be filed or publicly disclosed pursuant to applicable legal and regulatory requirements;

(e) consider and be satisfied that adequate procedures are in place for the review of the Corporation’s public disclosure of financial information extracted or derived from the Corporation’s financial statements (other than disclosure referred to in clauses (a) and (b) above), and periodically assess the adequacy of such procedures;

(f) review with management, the external auditors and, if necessary, legal counsel, any litigation, claim or contingency, including tax assessments, that could have a material effect upon the financial position of the Corporation, and the manner in which these matters may be, or have been, disclosed in the financial statements;

(g) review the appropriateness of the accounting practices and policies of the Corporation and review any proposed changes thereto;

(h) review and discuss any new or pending developments in accounting and reporting standards that may affect the Corporation; and

(i) review accounting, tax and financial aspects of the operations of the Corporation as the Committee considers appropriate.

2. Relationship with External Auditors

The Committee shall:

(a) consider and make a recommendation to the Board as to the appointment or re-appointment of the external auditors, ensuring that such auditors are participants in good standing pursuant to applicable securities laws;

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(b) review and approve the compensation of the external auditors;

(c) review and approve the annual audit plan of the external auditors (including without limitation, engagement letters, objectives and scope of the external audit, procedures for quarterly review of financial statements, materiality limits, areas of audit risk, staffing, timetables and proposed fees);

(d) oversee the work of the external auditors in performing their audit or review services and oversee the resolution of any disagreements between management and the external auditors;

(e) review and discuss with the external auditors all significant relationships that the external auditors and their affiliates have with the Corporation and its affiliates in order to determine the external auditors’ independence, including, without limitation, (i) requesting, receiving and reviewing, on a periodic basis, a formal written statement from the external auditors delineating all relationships that may reasonably be thought to bear on the independence of the external auditors with respect to the Corporation, (ii) discussing with the external auditors any disclosed relationships or services that the external auditors believe may affect the objectivity and independence of the external auditors, and (iii) recommending that the Board take appropriate action in response to the external auditors’ report to satisfy itself of the external auditors’ independence;

(f) as may be required by applicable securities laws, rules and guidelines, either:

(i) pre-approve all non-audit services to be provided by the external auditors to the Corporation (or its subsidiaries, if any), or, in the case ofde minimus non-audit services, approve such non-audit services prior to the completion of the audit; or

(ii) adopt specific policies and procedures for the engagement of the external auditors for the purpose of the provision of non-audit services;

(g) be satisfied that the fees paid by the Corporation to the external auditors for audit and non-audit services are publicly disclosed; and

(h) review and approve the hiring policies of the Corporation regarding partners, former partners, employees and former employees of the present and former external auditors of the Corporation.

3. Internal Controls

The Committee shall:

(a) review with management and the external auditors, the adequacy and effectiveness of the internal control and management information systems and procedures of the Corporation (with particular attention given to accounting, financial statements and financial reporting matters and to being satisfied that such systems are reliable and that they operate effectively to produce accurate, appropriate and timely management and financial information) and determine whether the Corporation is in compliance with applicable legal and regulatory requirements and with the Corporation’s policies;

(b) review the external auditors’ recommendations regarding any matters, including internal control and management information systems and procedures, and management’s responses thereto;

(c) establish procedures for the receipt, retention and treatment of complaints, submissions and concerns regarding accounting, internal accounting controls or auditing matters on an anonymous and confidential basis;

(d) review policies and practices concerning the expenses and perquisites of the Chairman, including the use of the assets of the Corporation;

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(e) review with external auditors any corporate transactions in which directors or officers of the Corporation have a personal interest;

(f) review insurance coverage of significant business risks and uncertainties;

(g) review material litigation and its impact on financial reporting; and

(h) review policies and procedures for the review and approval of officers’ expenses and perquisites.

4. Reserves and Resources

The Committee shall:

(a) review at least annually, the Corporation’s procedures relating to disclosure of information with respect to the oil and gas activities of the Corporation, including its procedures for complying with the disclosure requirements and restrictions of National Instrument 51-101;

(b) review annually the qualifications and independence of the independent qualified reserves evaluator(s) to be appointed or re-appointed by the Board and in the case of any proposed change in the independent qualified reserves evaluator(s), determine the reasons for the proposed change and whether there have been any disputes between the appointed qualified reserves evaluator and management of the Corporation;

(c) review at least annually, the Corporation’s procedures for providing information to the independent qualified reserves evaluator(s) for the purposes of its report on reserves data of the Corporation under National Instrument 51-101, if any, or report on other resource data;

(d) before approving the filing of reserves or resources data of the Corporation and the report of the independent qualified reserves evaluator(s) thereon, if any, with the applicable regulatory authorities, meet with management and each of the independent qualified reserves evaluator(s) to:

(i) determine whether any restrictions affect the ability of the independent qualified reserves evaluator(s) to report on the reserves or resources data of the Corporation without reservation; and

(ii) review the reserves or resources data and the report of the independent qualified reserves evaluator(s) thereon;

(e) review the content and filing of (i) the Corporation’s Statement of Reserves Data and Other Information, (ii) any Report of Independent Qualified Reserves Evaluator(s), and (iii) the Report of Management and Directors as contemplated by National Instrument51-101 and make a recommendation to the Board as to whether to approve the content and filing of the information referenced in (i), (ii) and (iii) above;

(f) review any public disclosure or regulatory filings with respect to any reserves or resources evaluation and oil and gas activities and the compliance thereof with applicable regulatory requirements, and if appropriate make recommendations to the Board as to their approval for the release or filing thereof; and

(g) co-ordinate meetings with the Corporation’s senior reserve personnel, the independent qualified reserves evaluator(s) and the auditors as required to address matters of mutual interest or concern in respect of the Corporation’s evaluation of oil and natural gas reserves and resources.

5. At least annually, review and make recommendations to the Governance Committee with respect to these Terms of Reference.

6. Perform any other activities consistent with this mandate and, generally, governing laws as the Committee or the Board deems necessary or appropriate.

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SCHEDULE “C”

MERCER RECOMMENDED PEER GROUP COMPANIES

Advantage Oil & Gas Ltd.

Anderson Energy Ltd.

Bankers Petroleum Ltd.

Barrick Energy Inc.

Bellatrix Exploration Ltd.

Birchcliff Energy Ltd.

Canadian Forest Oil Ltd.

Chinook Energy Inc.

Compton Petroleum Corporation

Connacher Oil and Gas Limited

Crew Energy Inc.

Equal Energy Ltd.

Fairborne Energy Ltd.

Galleon Energy Inc.

Gran Tierra Energy Inc.

MEG Energy Corp.

Northern Blizzard Resources Inc.

NuVista Energy Ltd.

OMERS Administration Corporation—OMERS Services LP

Pace Oil & Gas Ltd.

Paramount Resources Ltd.

Perpetual Energy Inc.

Quicksilver Resources Canada Inc.

Rife Resources Ltd.

Signalta Resources Limited

Zargon Oil & Gas Ltd.

Sherritt International Corporation—Oil & Gas Division

Trident Exploration Corporation

Trilogy Energy Corp.

Tundra Oil & Gas Ltd.

INTERNATIONAL PEER GROUP COMPANIES

Africa Oil Corp.

Antrim Energy Inc.

Bankers Petroleum Ltd.

C&C Energia Ltd.

Calvalley Petroleum Inc.

Canacol Energy Ltd.

Energulf Resources Inc.

Falcon Oil & Gas Ltd.

Greenfields Petroleum Corporation

Pan Orient Energy Corp.

Parex Resources Inc.

PetroAmerica Oil Corp.

PetroDorado Energy Ltd.

PetroMagdalena Energy Corp.

PetroNova Inc.

ShaMaran Petroleum Corp.

Suroco Energy Inc.

TransGlobe Energy Corporation

XCITE Energy Limited