EXECUTIVE SUMMARY
MESSAGE FROM THE PRESIDENT

This last year was a defining one for Pennant Energy, which embarked upon an aggressive strategy of targeting expedited growth via the drill bit. This is typically the most industrious and cost-efficient way for an oil & gas junior to make a name for itself and to significantly enhance shareholder value. To this end, your investment dollars are being spent in an enterprising, yet shrewd manner.

By way of explanation, your Company participated in its inaugural high-impact drill project after having carefully considered a number of prospectively high-reward drilling opportunities.

This initial high-stakes drill program in central Alberta involved the investigation of a large-proportioned, three-dimensional seismic target. It presented itself in a well-established, prolific hydrocarbon-rich region – the Kaybob Field. This is where a number of “company maker” wells have come on-stream in recent years, involving multiple pay zones per well.

Unfortunately, the absence of hydrocarbons in commercial quantities led to the abandonment of this technically challenging $3-million-plus well. However, most of Pennant’s financial risk was mitigated by the fact that a 50% interest in the project had been farmed-out to another junior exploration company, Austin Developments Corp., which paid 100% of the costs of the drilling in return for a right to participate in this venture.

By adhering to a finely balanced risk/reward formula, we have therefore managed to keep our treasury of over $1,500,000 relatively intact, while also generating steady cash flow from our interests in eight producing oil wells in Manitoba’s Daly Field.

We are also proud to proclaim that we remain virtually debt-free and we still boast a very tight share structure with only 16.1 million shares outstanding. Such a scenario, matching with positive news flow, promises to act as potent value driver for Pennant’s currently compressed share price.

We are therefore well positioned to continue to participate in other high-impact drilling programs. Hence, we are soon to embark upon our next adventure

Furthermore, we have acquired a large enough land base that Pennant is primed to benefit from the opportunity to commercialize up to four more offset wells in the eventuality that the drilling of the high-impact Bronson Well #1 proves successful.

We are further encouraged by the fact that our bold exploration efforts are being spearheaded by Pennant director Mr. Jim Britton, P. Geo. Notably; he has been instrumental in a number of major discoveries as a result of his involvement in various other high-impact drill projects during his illustrious 45-year-plus career.

With a success rate of 86% for oil discoveries, Mr. Britton’s credits also include the building of his last company from 25 barrels of oil equivalent a day (boepd) to over 5,000 boepd. This is truly an extraordinary achievement. And one that Mr. Britton hopes to emulate with Pennant Energy.

Management is therefore committed to pursuing the goal of increasing shareholder wealth by targeting leveraged opportunities that offer the promise of accelerated oil production with a fast payback on invested capital. At the same time, your board of directors aims to continue to expand upon Pennant’s participation in low-risk developmental drilling projects that provide enough cash flow to mitigate the need to seriously dilute the Company’s much-envied share structure.

Investors are therefore still able to participate in a ground-floor opportunity to own a piece of a well-managed and highly ambitious oil & gas junior. Pennant benefits from all the right structural dynamics for its share price to become a strong performer over the next 12 months and beyond. Similarly, we look forward to your continued support as Pennant continues to work hard to establish itself as an exciting success story in the making.