Cub Energy Due Diligence Report (Based on 2018 Year End Results – Released March 2019) Financials + MD&A – All Information Found On Sedar Stock Symbols: KUB – Canada & TPNEF - USA Price: $0.05 Common Shares: 314,215,355 Insider/Institutional Holdings: 172,466,105 or 55% of common shares Options: 15.3 million Recent Fact Sheet: http://www.cubenergyinc.com/_resources/factsheet/factsheet.pdf?v=1 Recent Company Presentation: http://www.cubenergyinc.com/_resources/corporate-presentation.pdf?v=1 Financials – All Numbers Are Expressed In US Dollars. ASSETS Cash & Equivalents: $7,236,000 Prepaid Expenses & Inventory: $1,607,000 Trade & Receivables: $771,000 Equity Investments: $7,967,000 Property & Equipment: $3,588,000 Non-Current Receivables: $919,000 TOTAL ASSETS: $22,088,000 (2017 - $19,827,000) LIABILTIIES Trade Payables: $5,318,000 Shareholder Loans(Portion): $498,000 Loan from KUB-gas: $3,591,000 Shareholder Loans: $2,000,000 Provisions: $458,000 TOTAL LIABILITIES: $11,865,000 (2017 - $14,036,000) Asset/Debt Ratio: 1.86 Q1 2019 results will be released end of April. Below are results from 2017 and 2018 sales. 2017 – All USD Gas Sales: $24,000 Gas Trading: $13,099,000 Royalty Expense: ($7,000) Income From Equity Investment: $6,767,000 Operating Expenses (Total): $34,218,000 - $16 million one time impairment included Loss: $14,869,000 – Should have been a profit with one time expense removed 2018 – All USD Gas Sales: $142,000 Gas Trading: $20,428,000 Royalty Expense: ($38,000) Income From Equity Investment: $6,121,000 Operating Expenses (Total): $23,573,000 Income Tax Expense: $2,000 Foreign Currency Gain: $52,000 Income: $ 3,130,000 Earnings Per Share In 2018: $3,130,000 USD X 1.3344 CDN (Exchange Rate March 31 2019) = $4,176,672 **Canadian Company, Therefore earnings must be converted to reflect true share value** $4,176,672 / 314,215,355(common shares) = $0.0133 EPS MD&A Highlights From 2018 Results The Company is a publicly-traded, international energy company engaged in exploration and development of onshore oil and gas properties in Ukraine. Key to success in this region is the Company’s strong local relationships, key operating partnerships and a history of management experience operating in-country. Current production is driven by a 35% interest in KUB-Gas LLC (“KUB-Gas”) in eastern Ukraine and the Company’s 100% operated interest in western Ukraine in Tysagaz LLC (“Tysagaz”). The Company also holds a 50% interest in CNG Holdings Netherland B.V. (“CNG Holdings”) which in turn owns CNG LLC (“CNG LLC”) to jointly explore a production licence in western Ukraine. As at December 31, 2018, the Company had an effective 35% ownership interest in KUB-Gas, a Ukrainian company which owns assets representing a substantial portion of the Company’s core operating properties, income and cashflow. The Company also owns 100% ownership of Tysagaz, whose producing assets are in western Ukraine but have been suspended since April 1, 2016 other than minor production from RK-1. In addition, the Company has an effective 50% ownership interest in CNG LLC, a Ukrainian company with a production licence in western Ukraine that has no current production but the Company expects to drill exploratory wells in 2019. Highlights • Kub-Gas successfully recompleted the Olgovskoye-3 (“O-3”) well to a “behind pipe pay” zone designated as the Bashkirian-1b (“B1b”). The well initially tested at higher rates and put into production at a stabilized rate at 1.4 million cubic feet per day (“MMcf/d”) in the fourth quarter of 2018. • Kub-Gas also recompleted the Olgovskoye-9 (“O-9”) well to the zone designated as the Bashkirian-3 (“B3”). During a standard multi-rate test, the zone was tested up to 2.5 million cubic feet per day (“MMcf/d”) and was put into production at a stable rate of 1.7 MMcf/d during the second half of 2018. • The Company reported income from equity investment of $6,121,000 during the year ended December 31, 2018 as compared to income of $6,767,000 in 2017. • The Company reported net income of $3,078,000 or $0.01 per share during the year ended December 31, 2018 as compared to a net loss of $14,342,000 or $0.05 per share during 2017 when the Company recorded one-time impairment charges. • During the year ended December 31, 2018, the Company received $5,676,000 in dividends from KUB Holdings as compared to $4,134,000 in dividends in 2017. • The Company made a loan repayment of $1,067,000 to KUB-Gas during 2018 in conjunction with its maturity. In addition, the Company received $300,000 from Kub Holdings in conjunction with a longterm loan repayment. • Production averaged 836 boe/d (97% weighted to natural gas and the remaining to condensate) for the year ended December 31, 2018 as compared to 977 boe/d for 2017. • Netbacks of $29.33/boe or $4.88/Mcfe for the year ended December 31, 2018 as compared to netback of $25.19/Boe or $4.20/Mcfe for 2017. • Achieved average natural gas price of $7.94/Mcf and condensate price of $70.47/bbl during the year ended December 31, 2018 as compared to $6.50/Mcf and $69.56/bbl for 2017. • On January 1, 2018, the royalties on new wells drilled in Ukraine after January 1, 2018 were reduced to 12% from 29% for a minimum period of five years. • On March 1, 2018, a new law was passed in Ukraine intended to simplify regulatory procedures for the oil and gas sector which should increase the speed and efficiency of approvals. • The new Nitrogen Rejection Unit (“NRU”) is nearing completion and is planned to be operational in 2019. However, due to continued construction delays, on November 19, 2018, the Company filed a claim with American Arbitration Association (“AAA”), seeking $300,000 (plus interest and attorney fees) from the NRU manufacturer in contractual delay damages. • The Company and its partner plan to start a three well exploration program at Uzhgorod in mid 2019, dependent on timing of permitting and weather conditions in the field. The well costs are expected to be incurred 100% by our partner.