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Oil and Gas, Texas, USA

In July 2011, Canuc acquired MidTex Oil & Gas Corporation, a private Ontario corporation whose assets included a producing gas well and 320 acres of undeveloped acreage (Coody Morales Lease) located in Stephens County, Texas, approximately 120 kilometers west of Dallas Fort Worth. Subsequent to the Mid-Tex acquisition, Canuc became associated with Marjac Oil and Gas of Breckenridge, Texas. This step has proven to be highly beneficial to the Company. Through Marjac’s management, the Company acquired a 20% working-interest (16% net revenue interest) in a gas lease in Stephens County, Texas. To date, 6 producing wells have been completed on this property, and there is ample opportunity to drill several more wells.

In August 2011, the Company expanded its activities in Texas by acquiring a 20% working interest (equivalent to a 16% net revenue interest) in the 600 acre Thompson Lease located in Stephens County, Texas. In September 2011, the first well (Thompson 40) was completed to a depth of 4,120 feet intersecting a 10 foot section of the Iona Hickey horizon, a gas bearing structure comprised of a loosely consolidated cherty conglomerate. The drilling pattern completed on this lease so far indicates that we are in a basin environment, thereby providing ample opportunity to add several more wells in this field which will materially increase the Company’s cash flow. Production testing was successful, and the Thompson 40 well has been producing steadily since January 2012.

Subsequent to drilling the Thompson 40, an additional 1,320 acres have been added to the lease, and 5 more wells have been drilled and completed. All 6 wells on the Thompson acreage are producing natural gas thereby providing Canuc with a stable monthly cash flow. Due to currently low prices for natural gas, the manager of this project has decided not to drill any more wells until commodity prices improve.

Along with the Iona Hickey Formation, the wells intersected two other zones known to be productive, for both gas and oil in this area. These horizons are at the 2,900 and 3,100 foot depths. As the lower Iona Hickey is depleted, these zones will be tested; if considered to be commercially productive they will be brought on stream. The existence of additional zones indicates that the Thompson lease will have a long life.

In August 2012, the Company acquired a 15% working interest (equivalent to a 12% net revenue interest) in the 3,000 acre Walker Buckler Lease located in Shackleford County, Texas. In September 2012, the first well was spudded and drilled to a total depth of 4,582 feet intersecting 3 prospective gas bearing zones. The well is presently producing gas from the Caddo Limestone. In November 2012, a second well was drilled and completed as a marginal oil well. With the drilling of these 2 wells the Company has earned a 15% working interest in an additional 11,754 acres giving a total exposure to 14,754 acres in this field. The output from these 2 wells is not of sufficient quantity to justify any further development.

All leases benefit from the presence of low pressure gas pipelines which makes the gas immediately saleable without excessive transportation charges. Condensates within the gas also allow Canuc to sell the gas at a premium to the market.