Compensation of Analysts

The compensation of research analysts is intended to reflect the value of the services they provide to the clients of Peters & Co. Limited and its U.S. registered affiliate, Peters & Co. Equities Inc. As with most other employees, the compensation of research analysts is impacted by the overall profitability of the firm, which may include revenues from corporate finance activities of the firm's Corporate Finance department. Research analysts' compensation is not, however, directly related to any specific corporate finance transactions. All research analysts are employees of the parent company, Peters & Co. Limited.

Stock Ratings and Target Prices

Stock ratings and target prices are based on the analysts' assessment of the potential relative performance of a stock compared to its sector's index performance (namely, the S&P/TSX Energy Index). However, the firm publishes research on a wide range of companies and income trusts that are headquartered in Canada and operating in the oil and natural gas industry, but many of these stocks or units are not listed in the Energy Index. The most important investment criteria and risk factors in these equities are the outlooks for, and the volatility of prices of world crude oil and North American natural gas. Given the volatility of producers' energy prices, the risk factor in equity prices increases inversely with the volume of production and increases proportionately with the ratio of debt capitalization.

The stock ratings and target prices are not based on financial ratios that are the same across all sectors of the oil and gas industry. Integrated companies are evaluated primarily on earnings estimates (EPS) and expected P/E ratios. Large and intermediate capitalized companies are evaluated primarily on cash flow estimates (CF), expected P/CF ratios, and Peters & Co.'s net asset value estimates. Small capitalization companies are evaluated based on estimates of cash flow, P/CF, and net asset values but with a greater emphasis on our estimate of the potential to increase the net asset value. Oilfield Service companies are evaluated on estimates of earnings before interest, taxes, depreciation & amortization (EBITDA) and earnings, and expected price multiples of these values. Energy trusts are evaluated based on cash flow and distributable income. The distribution of stock ratings is intended to represent a statistical normal curve as indicated under Normal in the attached table.

Rating System & Distribution (as at September 28, 2009)

Rating	Ratings Distribution				Corporate Finance Services Provided*
	Normal	Actual
	Normal	Integrated and E&P	Oilfield Services	Infrastructure Trusts
Sector Outperform	30%	49%	40%	40%	40%
Sector Perform	40%	30%	48%	40%	19%
Sector Underperform	30%	16%	8%	20%	25%
Restricted/Under Review	---	5%	4%	0%	100%
Total	100%	100%	100%	100%	---
*Corporate Finance Services column shows the percentage of companies within each category from which the firm has received corporate finance revenues within the past twelve months or expects to receive in the next three months.

The statements contained herein are based upon information that we believe to be reliable, although we cannot guarantee their accuracy. Our firm or its directors or members of their families may at times have a long or short position in the securities mentioned herein and may make purchases or sales of these securities while this memorandum is in circulation. Peters & Co. Equities Inc., a member of the National Association of Securities Dealers, Inc. and the Securities Investor Protection Corporation, is a wholly-owned subsidiary of Peters & Co. Limited and operates as a broker-dealer in the United States.

Our firm's investment analysts are among the most widely recognized experts on energy matters in Canada

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