DORIN LAND AND OILFIELD MANAGEMENT INC Ave, Edmonton Alberta, Canada T6E 0C5 Telephone (780) Fax (780)

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1 May 1, 015 Penn West Petroleum Ltd. c/o Bennett Jones LLP Suite 00 Penn West Plaza Calgary, Alberta, TP 1K VIA DORIN LAND AND OILFIELD MANAGEMENT INC Ave, Edmonton Alberta, Canada T6E 0C5 Telephone (780) Fax (780) Attention: Mr. Blake Williams, Bennett Jones LLP CC: The Alberta Energy Regulator St. Albert Field Office and Calgary Head Office Dear Sir or Madame: Re: Armisie Field Issues: Demand to Cease Un-licenced Operations and Cure Trespass FACTS: The facts related to current issues at Armisie Field requiring immediate action are: A. There are currently two oil wells listed below (and a water disposal well) operating: 1. The original Armisie No. 1 well, Licence No. 715, at W5M H S content in solution gas: Licence:.1% As per ERP:.81%. The oil well, which appears to be the well at surface WM, Licence No. 89. H S content in solution gas: Licence: 1.10% As per ERP: 0.75% B. All Armisie Field oil wells, including the wells listed in Item A above, produce through six oil effluent pipelines, all licenced for.5% maximum H S content, to the Armisie multiwell proration Battery, Licence No. F05. The location of such battery is WM (the north portion of the battery is on Crown land, south portion on our clients land we manage). The battery inlet oil effluent pipelines are those listed below: well to 6- battery: Licence (formerly ). Max. H S:.5%. 7- wells to 6- battery: Licence (formerly ). Max. H S:.5%. - wells to 6- battery: Licence Max. H S:.5%. - wells to 6- battery: Licence Max. H S:.5% wells to 6- battery: Licence Max. H S:.5% wells to 6- battery: Licence Max. H S:.5% C. The Armisie Battery is licenced for maximum inlet H S concentration of 6.60 mol/kmol or 0.66% H S content in inlet solution gases. Clearly the facts are: 1. The H S content in solution gas produced by both wells currently on line (Item A) exceeds licenced battery inlet maximum H S content considerably.. The Licenced maximum H S for all battery inlet lines (.5%) exceeds the battery licenced maximum inlet H S concentration (0.66%).

2 Armisiee Field Regulatory Non-Compliance Facts Demands and Notice Related Thereto May 1, 015 D. A Telus Mobility cellular phone tower, with a metal building containing electrical equipment not rated for a hazardous area, is installed adjacentt to and east of the south east boundary of the Armisie Battery, in close proximity to the battery emergency incinerator stack. In such respects: 1. The distance between said incinerator stack and said cellular phone building is approximately 5 8 metres.. The minimum distance to be maintained between a source of ignitable vapours (the incinerator stack) and a source of ignition (electrical equipment in the cellular phone building) is 50 metres, pursuant to Section 8.090() of the Oil and Gas Conservation Rules, AR 151/1971 (the OGCR ).. All operators and licensees are to enforce thee provisions of all subsections of Section of the OGCR pursuant to subsectionn 8.090(10), where oil tanks and other sources of ignitable vapours are present (thee Armisie Battery is patently an oil well tank battery with tanks and sources of ignitable vapours the incinerator stack).. Section 8.080()(b) of the OGCR prescribes a minimum setback to, or separation distance between, a flare and a surface improvement of 100 metres. 5. The foregoing is also set out in Directive 056, Section , Subsection 5(c).

3 Armisiee Field Regulatory Non-Compliance Facts Demands and Notice Related Thereto May 1, 015 E. The licensee of the following pipelines is trespassing in that the licensee has never obtained a surface right of entry in respect of the areas described and illustrated below, which areas were taken by the Licenseee outside thee provisions of the Surface Rights Act: 1. Pipeline Licence No , 6- well sitee to Armisie Battery.. Pipeline Licence No , 7- well sitee to Armisie Battery. The following Pipeline Licences in a common area between the - well site and the Armisie Battery: a) Pipelines 177, lines 01 and 0 (oil effluent) b) Pipeline (salt water) c) Pipeline (natural gas). The area 0, from within LSD WM containing abandoned oil effluent line the former abandoned Armisie No. well to the Armisie Battery. F. The Sales Gas Line leaving the Armisie Battery, Licence No also illustrated above, is licenced as a sweet gas pipeline, for a maximum H S content of 0.99%. With only the two wells listed in Item A above on line, and based on Licensee well test data, there is no question whatsoever that the content of hydrogen sulphide in such Sales Gas Line is currently in excess of the licenced maximumm H S content. The line is sour. G. The current, disputed, position of Penn West Petroleum Inc. ( Penn West ) is that company leases the area outlined in blue in the illustration above. such H. The pipeline area listed and illustrated as Area above, between the - Multi Well Site and the Armisie Battery, was severely contaminated by a 00 leak of oil effluent pipeline No Penn West provided an environmental report in such respects to the writer on December 19, 01. The spill areaa and relatedd 00 surface activity can be seen in the 00 satellite image provided below.

4 Surface Area Impacted by 00 Break of Oil Effluentt Line No Armisiee Field Regulatory Non-Compliance Facts Demands and Notice Related Thereto May 1, 015 DEMANDS 1. The Licensee of the following pipelines shall cure its trespasses in respect of Areas 1, and describedd and illustrated above no later than May 1, 015, pursuant to the legislated requirements of the Surface Rights Act. Pipelinee Licence Pipelinee Licence Pipelinee Licence 171 Pipelinee Licence Pipelinee Licence The Licensee of oil wells W5M, Licence No. 715, and W5M, Licence No. 89 (or any other well with surface at W5M currently producing) and Armisie Battery Licence No. F05, shall shut in both of such wells and the Armisie Battery, today, May 1, 015, including all wellhead valves, and leave such wells and all other Armisie Field oil wells, and thee Armisie Battery, shut in until such time as:

5 Armisie Field Regulatory Non-Compliance Facts Demands and Notice Related Thereto May 1, 015 a) the Armisie Battery Licence No. F05 has been amended to increase the licenced inlet maximum H S content to a value higher than the content of any oil well solution gas; b) Sales Gas Pipeline Licence No and related Licence (connected downstream segment) have been amended, whereby the maximum licenced H S content of Line 596 is higher than the highest concentration of H S in any oil well solution gas related to any active well (not listed as suspended by the Alberta Energy Regulator) within the Armisie Field pursuant to recent, analyzed, gas samples; c) the Telus Mobility Cellular Phone tower has been removed or relocated, or the Armisie Battery Licensee has obtained written approval, recorded in Battery Licence F05 application file, that relaxations of the applicable regulated setback distances have been obtained; and, d) the Licensee of the Armisie Battery No. F05 has obtained the written approval of Alberta Infrastructure and the Alberta Energy Regulator to operate the Armisie Battery within a distance less than 800 metres from the overpass on Anthony Henday Drive and 18 Street/Cameron Heights Drive (Fact: such distance no less than 750 metres, see the attached illustration).. The Licensee of Sales Gas Pipeline Licence 596 shall de-pressure such line (to the emergency incinerator stack if necessary) by no later than 5:00 PM on Saturday May, 015 for safety of those living in and travelling through the area of such pipeline.. The Licensee of the pipelines bulleted in Demand #1 above, by no later than May 1, 015, either: a) shall have obtained a legal right of entry pursuant to a private agreement with all surface owners and occupants or pursuant to an order of the Surface Rights Board; or, b) shall displace all of such pipelines to fresh water and apply to have all of such pipelines listed as abandoned by the Alberta Energy Regulator no later than May 1, After May 1, 015, Penn West shall no longer use the road south of the well site at WM with Licence No. 078 (leading to the site at W5M) unless Penn West has obtained a legal right of entry pursuant to the provisions of the Surface Rights Act. 6. By no later than May 1, 015, Penn West shall have obtained a legal right of entry to the entire spill and work area caused by the 00 leak of the pipeline with Licence No (the Spill Area ) for conservation, reclamation, and/or remediation of such surface area pursuant to Section 1.1(1)(b) of the Surface Rights Act. 5

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7 FIGURE 1A: Satellite Image, Armisie Field Area. September, 01 Section -5-5 WM, in Edmonton, Alberta. NOTE Permits and approvals are required for: Section -5-5 WM A sour oil tank battery within 800 metres of the intersection of two major highways (from Alberta Infrastructure); and, Oil and gas surface operations in environmentally sensitive areas, (from Alberta Environment). Penn West Petroleum Ltd. claims to lease the entire surface area the majority of LSD 5, 6, 7 and 8, of Section -5-5 W, a claim disputed by the surface owners said by Penn West to have granted such lease (pursuant an alleged surface lease amendment agreement effective February, 00). Section WM Metres ENVIIRONMENTAL RESERVE The issues are numerous and in dispute. Four issues illustrated by Figure 1A at right are: Did Penn West obtain the necessary approval from Alberta Infrastructure to modify the Armisie No. 1 battery circa 001? Did Penn West obtain the necessary approval from Alberta Environment to lease the surface area in LSD 7 and 8 designated environmental reserve, pursuant to its claims? Should environmental restrictions or protection orders be issued for the above and several other reasons? Section WM Why is EUB Decision No silent as to consideration of such issues (the decision was to grant Licence No for a well with surface at 7- in 005)?

8 FIGURE 1B: Satellite Image, the Sites of Armisie Field. South Half of -5-5 WM, and North Half of WM. September, 01 In Edmonton, Alberta. Armisie No. 1 Oil Tank Battery and Gas Compressor 6- Well Site 7- Multi-Well () Site ( active) Multi-Well (6) Site South 1/ Section -5-5 WM North 1/ Section WM 1- Multi-Well () Site

9 FIGURE 1C: The January 1, 196 Surface Leases of Armisie Field (Appendix D). INTERPRETATION SCENARIO 1. Caveat Nos MS (Dunn Holdings), 98UY (Armstrong), 75VA, (Braun et al) In Edmonton, Alberta. ALL ACREAGES STATED ARE PATENTLY ASSUMPTIONS, RELIED ON IN PAYMENT OF ANNUAL COMPENSATION AND TWO SURFACE RIGHTS BOARD DECISIONS The Original 196 Surface Leases Despite the facts that: five well sites, not certified as reclaimed and taken in 1951 existed as at January 1, 196; and, Surface Owner Dr. W.S.S. Armstrong BATTERY NORTH there were two owners of the surface rights; in respect of existing Armisie Field operations within the S 1/ of -5-5 WM, Armisie Oil Company Limited as Lessee entered into three surface lease agreements with the Lessor parties listed below as to three well sites, the Armisie No 1 Battery, and access roads, all in undescribed locations of unstated acreage: Surface Owner Dunn Holdings Ltd. 5 6 ARMISIE NO. BATTERY SOUTH ARMISIE NO Dr. W.S.S. Armstrong; Lessor as to an access road area and a battery: (Said to be.7 acres). Frank S. Lieber; Lessor as to Armisie No. 1 and Armisie No. oil wells, and a battery, roads: ARMISIE NO. 5 (Said to be 7.88 acres). Dunn Holdings Ltd.; as Lessor as to Armisie No. 5 oil well and a road from 6-: (Said to be.7 acres) South 1/ Section -5-5 WM The Problems: All three surface leases with effective dates of January 1, 196 rely on annexed plans marked A to set out the leased lands as defined in each agreement. However, the successor in interest to Armisie Oil Company Limited cannot produce copes of such plans marked A. As such there is currently no accurate means of ascertaining the surface area and location of any surface rights granted as at January 1, 196, by way of three surface leases clearly meant to cure a lack of formal surface rights granted circa 1951.