Celtic/Kelt/Exxonmobil

Overview

It is contemplated that under an Alberta Plan of Arrangment, Celtic 5% convertible unsecured debentures will be converted into around 8.8M Celtic shares, based on the computation of a make-whole premium and the holders of the Celtic shares will receive $24.50 in cash and 1/2 Kelt share for each Celtic share. The cash consideration alone represents a 35% premium. Kelt will be a TSX-listed junior oil and gas exploration and production company. A private placement fo Kelt shares is expected to close immediately after the Plan of Arrangement.

MI 61-101

In light of the absence of collateral benefits, the Arrangment is not considered a business combination under MI 61-101 and the minority approval requirements of MI 61-101 do not apply.

Plan of Arrangement

Under the Plan of Arrangment:

• Each common share and debenture of a dissenting securityholder is deemed to be transferred to Celtic for its fair value
• (after a deemed vesting of Celtic options and provisions for their exercise) any unexercised Celtic options are cancelled
• the debentures are converted into Celtic common shares, with a cash payment of 32-days' interest
• Celtic transfers assets to Kelt in consideration for Kelt shares equal to ½ of the outstanding number of Celtic common shares
• each outstanding common share of Celtic is deemed to be transferred to the Purchaser for the cash consideration ($24.50) and the right to receive ½ of a Kelt share
• the Purchaser acquires the Kelt shares from Celtic in consideration for a promissory note and transfers the Kelt shares to the former Celtic shareholders

Break fee

$90M potentially payable by Celtic.

Canadian tax consequences

. Debenture conversion occurs on a rollover basis/share disposition on a taxable basis.