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PETRO-VICTORY ENERGY CORP.

MANAGEMENT DISCUSSION AND ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014

INTRODUCTION

This report is Management’s Discussion and Analysis (“MD&A”) of the operational and financial performance, and the future prospects of Petro-Victory Energy Corp. (the “Company”) and is dated December 1, 2014. The MD&A,

which has been prepared as of September 30, 2014, should be read in conjunction with the Company’s Unaudited

Consolidated Financial Statements and accompanying notes as of September 30, 2014, copies of which are available

for review on SEDAR at www.sedar.com under the Company’s profile.

The unaudited interim consolidated financial statements were prepared in accordance with IFRS. The Company’s

business is conducted principally in South America and the Company’s revenue and expenses are principally

denominated, earned and incurred in United States dollars. In this MD&A, unless otherwise indicated, all “dollar”

amounts or references to “U.S.$” or “$” refer to United States dollars. References to “CDN$” are to Canadian

dollars. A glossary of other terms is included at the end of this report.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this MD&A constitute forward-looking statements and forward-looking information as defined by Canadian securities legislation. Such forward-looking statements and information relate to possible

events, conditions or financial performance of the Company based on future economic conditions and courses of

action. All statements other than statements of historical fact are forward-looking statements. The use of any words

or phrases such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”,

“potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, “will likely result”, “are expected to”, “will

continue”, “is anticipated”, “believes”, “estimated”, “intends”, “plans”, “projection”, “outlook” and similar

expressions are intended to identify forward-looking information. These statements involve known and unknown

risks, assumptions, uncertainties and other factors that may cause actual results or events to differ materially from

those anticipated in such forward-looking statements. The Company believes there is a reasonable basis for the

expectations reflected in the forward-looking information however, no assurance can be given that these

expectations will prove to be correct and the forward-looking information included in this MD&A should not be unduly relied upon by investors. The forward-looking information and forward-looking statements speak only as of

the date of this MD&A and are expressly qualified, in their entirety, by this cautionary statement. The Company does

not undertake any obligation to publicly update or revise any forward-looking statements except as required by

applicable securities laws. Readers should read this entire MD&A and consult their own professional advisors to

assess the income tax, legal, risk factors and other aspects of their investment in the Company. Additional

information regarding the risks of forward-looking statements is included at the end of this report.

RISK FACTORS

The Company's business consists of the exploration for, and the acquisition and development of, oil and natural gas

resources in South America. There are a number of inherent risks associated with the exploration for, and the

acquisition and development of, oil and natural gas resources. Many of these risks are beyond the control of the

Company. These risk factors are described in the Company’s prospectus dated July 11, 2014 and available for review on SEDAR at www.sedar.com under the Company’s profile.

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DESCRIPTION OF BUSINESS

Petro-Victory Energy Corp. was incorporated under the BVI Business Companies Act, 2004 (British Virgin Islands)

on May 20, 2014. The British Virgin Islands were selected for the Company’s domicile based on favorable

business laws, tax laws, and relationships with Canada, the United States and most Latin American countries. The

Company, through its subsidiaries, is engaged in the exploration for, and the acquisition and development of, oil and

natural gas resources in South America, primarily in Paraguay and, if the Asset Acquisitions are successfully

completed as expected, will also be engaged in such activities in Brazil and Guyana.

The Company holds a 36 percent working interest in the Pirity Concession, which is approximately two million

acres in size and located in western Paraguay’s underexplored Pirity Sub-basin, near the Argentinian-Paraguayan

border. The Pirity Sub-basin is a contiguous extension of Argentina’s prolific Olmedo Sub-basin, which has

demonstrated production, and is structurally positioned similar to the nearby Palmar Largo fields with reported reserves. The Pirity Concession is one of only eight exploration concessions granted under the laws of Paraguay, with

another sixteen exploratory concessions in various stages of the approval process.

On September 11, 2012, the Company entered into the Pirity Farm-Out with President Energy plc (“President

Energy”), an AIM-listed British energy company focused on South America. The International Finance Corporation

(“IFC”), part of the World Bank Group, holds approximately 13.17 percent of the share capital of President Energy.

Pursuant to the Farm-Out, President Energy agreed to act as the operator and was granted the right to earn up to a

59 percent working interest in the Pirity Concession on an incremental basis, to a maximum expenditure of $50

million. President has earned their entire 59 percent, and in June of 2014 acquired the remaining 5 percent from a

Paraguayan company that held a carried working interest in the Pirity Concession. Such 5 percent working interest is

carried by the Company for the cost corresponding to the first 100 km of 2D seismic, as well as the cost corresponding

to the first 15,000 meters of exploratory wells.

Assuming the completion of the Asset Acquisitions, the Company’s other assets will include Block REC-T-170 in Brazil and the Takutu PPL in Guyana.

Block REC-T-170 is a 6,909 acre (gross) exploration block located in Brazil’s Recôncavo basin in which the

Company will have a 50 percent working interest in the shallow formations and a 10 percent working interest in the

deep formations. The Company will be fully carried on the first commitment well, which is anticipated to cost $5-6

million to drill, log and case. A third party has a five percent gross overriding royalty interest in Block REC-T-170.

The Takutu PPL is an exploration license over an area of 1,540,000 acres (gross) of State lands located in the

Takutu Basin, onshore Guyana, adjacent to Guyana’s border with Brazil. The Company will have a 100 percent working interest on the property and the resources subject to a 10 percent third party carried working interest

regarding the first well.

The Company’s strategy is to develop its existing portfolio of assets and to potentially pursue further exploration

opportunities in areas with proven hydrocarbon systems that the Company considers to be cost-effective and of low

to moderate risk.

OVERALL PERFORMANCE

This section provides an overview of the Company’s performance for the period since inception May 20, 2014. The

section is comprised of Operational Activities and Corporate Activities, which includes financing.

The Company became a reporting issuer in Canada through an IPO that was completed July 22, 2014. The IPO

occurred simultaneously with a Reorganization whereby the Company “acquired” Petro-Victory, LLC (the “LLC”), in many practical ways the predecessor to the Company. The significant activities of the LLC are discussed in the

Paraguay section of this document. The financial activity of Petro-Victory, LLC through March 31, 2014 was

disclosed in financial statements included in the prospectus. The LLC had no significant activity between March

31, 2014 and July 22, 2014. The working capital deficit of the LLC as of March 31, 2014 was $1,149,613. As

of July 22, 2014, the working capital deficit had been narrowed to approximately $957,000.

This reduction in the deficit of nearly $200,000 was the result of cash received by the LLC through the sale of

additional member units. Further, Petro-Victory, LLC never prepared any quarterly financial statements other than

those included in the prospectus. Accordingly, as provided for in National Instrument 51-102, further comparative

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interim financial information is impracticable to present.

The sequence of significant events was as follows:

Years 2006 through July, 2014 – Petro-Victory, LLC obtains and adds value to the Pirity Concession

September 11, 2012 – Signed Pirity Farm Out with President Energy

May 20, 2014 – Incorporation of the Company in anticipation of IPO and Reorganization

July 22, 2014 – IPO and Reorganization occur, the Company becomes a “reporting issuer”

August 13, 2014 – Company announced that their first Paraguay well had been successfully drilled

October 20, 2014 – Company announced that hydrocarbons were encountered on the second well

November 17, 2014 – Company announced that the second well is in an extended drilling period

Operational Activities

In order to meet the incremental targets under the Pirity Farm-Out, President Energy has entered into an agreement

with the Schlumberger team for project management and integrated drilling services. President Energy has also

entered into an agreement for the 2014 drilling campaign with Queiroz Galvão Óleo e Gás, one of the largest drilling

contractors and production services providers in Brazil.

The first exploration well on the Pirity Concession (“Jacaranda”) was spud on June 14, 2014 and had an initial target

depth of 4,200 meters. On August 13, 2014, the Company announced that the Jacaranda well was successfully drilled to 4,500 meters and has confirmed the prolific Devonian petroleum system of SE Bolivia and NW

Argentina extends into the Pirity Basin of Paraguay. Further, the Company announced that the Jacaranda well has

proven the first live source rock to be discovered in the Pirity Basin, and significantly de-risks the next well in the

drilling campaign.

Highlights of first well

First well of the 2014 program encountered over 800 meters of live Devonian source rock in oil and natural

gas-condensate window

Inflows of natural gas into the wellbore, with background natural gas of 5%, trip natural gas of 50% recorded,

hydrocarbon shows C1 (methane) to C5 (pentane) indicating liquid generation

No seal at primary target at this location, high quality (20% porosity) reservoir sands encountered above source

rock

No conventional “pay” was discovered and the well was plugged and operations suspended (not abandoned)

First time the Paleozoic play system has ever been proven to exist in Pirity Basin, Paraguay

Source rock de-risks the next well and multiple targets across the Pirity Concession

Potential natural gas-condensate reservoir identified below target depth

Well drilled ahead of schedule and under budget

Jacaranda results support Lapacho (including the “Lapacho” well) and Tapir prospects

Based on positive results in the Devonian Formation, Lapacho was selected as the next exploration well in sequence.

Lapacho was spud on September 3, 2014 and the approved budget provided for drilling to an initial target depth of

4,450 meters. On October 20, the Company announced that hydrocarbons had been encountered in the Icla Formation

at a depth of 3,926 meters, and that drilling would be resumed to the primary target, the Santa Rosa Formation. The

Operator set casing at 4,128 meters and drilling has continued.

On November17, 2014, the Company announced that drilling would continue for an extended time. The expected timeframe for completion of drilling and testing is now early December. Also, as indicated in the November 17 press

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release, drilling operations have provided evidence and encouraging data including constant background gas ranging

from 3% to over 12% in the circulated drilling mud to surface throughout the drilling of the hole.

Corporate Activities- Pre-IPO

On June 26, 2014, Petro-Victory Energy Corp. issued the 2014 Debenture, in the aggregate principal amount of $5

million, to Canacol Energy Ltd., a TSX-traded exploration and production company focused in Colombia. The 2014

Debenture bears interest at a rate of eight percent per annum, compounded daily and payable on the maturity date

thereof. The 2014 Debenture matures six months from the date of issue and is convertible, at the option of the holder,

into Common Shares at a price of CDN $0.40. However, subject to certain conditions, the 2014 Debenture will not be

convertible or exercisable by the holder if after giving effect to, and as a result of, such conversion or exercise, the

holder, together with any person acting jointly, or in concert with the holder within the meaning of the Securities Act (Alberta) would beneficially own or exercise control or direction over Common Shares in excess of 9.99% of the

issued and outstanding Common Shares.

On June 26, 2014, the Company also borrowed $200,000 through the issuance of the June Cash Call Note to Harvison

Capital Management, LLC a principal security holder of the Company.

Proceeds from both the 2014 Debenture and the June Cash Call Note were loaned to Petro-Victory, LLC to meet the

June 30 deadline for payment of the $5,200,000 May and June Cash Calls. These loans were necessary since the

Company had not yet completed the IPO and therefore not yet established banking relationships sufficient to effectuate

international wires.

Corporate Activities- Post IPO

On July 22, 2014, the Company completed its IPO on the TSX Venture Exchange. The Petro-Victory IPO raised CDN

$25,000,000 through the sale of 62,500,000 units (“Units”) at CDN $0.40 each, with each Unit consisting of one Class

A common share and one-half of one warrant. Each whole warrant entitles the holder to purchase one common share

at a price of CDN $0.50 for a period of two years from the closing of the offering.

Gross proceeds from the offering totaled CDN $23,180,000 after deducting agent commissions and their legal

expenses of CDN $1,820,000. The funds were converted to US dollars and, after payment of additional offering expenses of approximately US $1,600,000, provided US $20 million to be used for operations, debt retirement and

general and administrative expenses.

Subsequent to the IPO, the Company retired outstanding debt totaling nearly US $4.6 million, including approximately

$300,000 interest and fees. A substantial portion of that debt had been incurred to make June and July payments

towards the 2014 drilling program.

In connection with the offering, the Company completed the Reorganization. In connection with the

Reorganization, the Company issued a total of 128,800,000 shares to the former LLC members - 78,265,000 common shares and 50,535,000 Restricted Voting Shares. The Restricted Voting Shares are immediately convertible

on a 1:1 ratio into common shares at the holder’s option. The restricted voting shares were issued so that upon

completion of the offering less than 50% of the common shares are held by US residents and therefore the Company

qualifies as a Foreign Private Issuer in the United States. To retain that status, the Company must maintain less

than 50% US ownership of common shares and must test and report on the actual percentage annually.

The largest holder of LLC units received a total of nearly 58 million shares, or about 26% of the issued and

outstanding securities of the Company. The second largest holder received a total of just over 48.5 million shares,

or about 22% of the Company’s securities. These two large shareholders each agreed to receive approximately 47%

of their stock in the form of Restricted Voting Shares.

The Company also issued 31,200,000 shares of common stock in connection with two Purchase and Sale Agreements with respect to the acquisition of certain assets in Brazil and Guyana. These shares are held in escrow pending

successful completion of the two acquisitions.

In connection with the IPO, the Company has also granted stock options to purchase 13,654,205 common shares of

the Company to directors, officers and one other key employee for ten years at an exercise price of CDN $0.40 per

share. The vesting schedule for the options consists of one-third at date of grant, one-third 12 months after date of

grant, and the final one-third 24 months after the date of grant.

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In connection with the 2012 Pirity Farm-Out agreement between President and the Company’s predecessor, President

Energy was required to pay $10 million of back costs and the first $40 million of exploration costs (primarily seismic

and drilling) on the Pirity Concession. President Energy reached that threshold in May of 2014, and therefore the

Company was required to pay 41% of the remaining cost of the Jacaranda well (the Company’s 36% plus an additional

5% related to a carried portion owned by a Paraguayan company, LCH). The May and June Cash Calls were paid June

30 as previously discussed. A July cash call of $765,000 was paid on July 9, 2014, with proceeds from an advance for that amount from Harvison Capital Management, LLC, a substantial shareholder of the Company. These funds were

used to remit $5,965,000 of cash calls to President in June and July. One-half of the debenture ($2,500,000) and the

shareholder advances ($965,000) were repaid subsequent to the IPO. Since that time, the Company paid additional cash

calls of $4,300,000 in August and $3,400,000 in September. The total cash calls of $13,665,000 paid to date by the

Company have substantially paid the Company’s entire share of the drilling cost of the Jacaranda well, much of the

cost of the Lapacho well, and have prepaid nearly $3 million of costs related to future wells.

DISCUSSION OF OPERATIONS

Paraguay

As previously discussed the Company holds a 36 percent working interest in the Pirity Concession and has Purchase and Sale Agreements with respect to concessions in Brazil and Guyana. In the event the Company does not complete

the Asset Acquisitions related to Brazil and Guyana, the Company’s only asset will be its 36 percent working

interest in the Pirity Concession.

Paraguay is relatively unknown in the business world, and has no oil and gas industry. Questions frequently arise as

to the special considerations and risks regarding doing business in Paraguay. Management has been active since

2006 in Paraguay, and believes that certain events and measures taken since that time ameliorate the operating

environment and mitigate the risks. First, as explained further in the chronology below, the Company’s rights to the

Pirity Concession were challenged in the Paraguayan courts. In 2012, the Company and its predecessor won and/or

settled all litigation and obtained favorable Executive Branch decrees securing the concession. Secondly, working together with President Energy, our farm-in partner, the Company was able to obtain an equity investment for

President Energy from the IFC, a member of the World Bank group. Such direct involvement of the IFC elevates

the project and has alerted the world that Paraguay is a developing country worthy of investment and functioning in

a democratic manner. Just as importantly, IFC support sends a signal to the country’s leaders that this oil and gas

project is a focus of their attention and lessens the likelihood of interference. Lastly, the overall business climate in

Paraguay is improving every year, as witnessed by their recent ability to float a one billion dollar sovereign bond

issue following a Moody’s upgrade from Ba3 to Ba2.

The Pirity Concession History

In 2003, the MOPC, pursuant to Resolution No. 433/03, granted two Paraguayan citizens a permit for the 2,331,600

hectare prospecting and superficial recognition of hydrocarbons (the “Prospecting Permit”) in an area within what later became the Pirity Concession. The Prospecting Permit was extended in 2004 by MOPC Resolution No. 447/04.

On August 12, 2004, one of those citizens, together with another shareholder, organized PHSRL. On November 4,

2005, MOPC issued Resolution 793/05, approving an assignment agreement whereby the two holders of the

Prospecting Permit assigned all of the rights under the Prospecting Permit to PHSRL. On December 30, 2005,

pursuant to Resolution 1073/05, MOPC adjudicated to PHSRL an exploration lot of 40,000 hectares within the area

of the Prospecting Permit.

In 2007, the Government of Paraguay and PHSRL entered into a concession agreement relating to the concession of rights for the exploration of hydrocarbons in the Pirity Concession (the “Concession Agreement”) in respect of a

800,000 hectare area (1,976,840 acres). The effectiveness of the Concession Agreement was subject to approval by

Paraguay’s legislature, as required by Paraguay’s constitution.

On April 18, 2008, the Paraguayan Senate approved the bill, or project of law, submitted to it by the Paraguayan

Chamber of Deputies, pursuant to which the Pirity Concession would be granted.

The aforementioned Paraguayan Senate approval was a condition to the closing of the purchase of the shares of

PHSRL by Petro-Victory, LLC and Richard F. Gonzalez, pursuant to the terms of a purchase agreement (the

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“Purchase Agreement”) dated April 18, 2008. Accordingly, Petro-Victory, LLC (indirectly through PHSRL) and

Mr. Gonzalez obtained all of the rights under the Concession Agreement thereby.

Law No. 3,479 (the “Concession Law”) was promulgated on May 13, 2008, following due approval by the

Paraguayan Congress of the Concession Agreement. The Concession Law granted the Pirity Concession to PHSRL

and made the Concession Agreement effective. The Concession Law incorporates the Concession Agreement in its

entirety, without any modification.

In May 2009, the MOPC annulled (the “MOPC Annulment”) resolution 583/08 (which resets PHSRL’s exploratory

stage from December 30, 2005, to begin on May 13, 2008) which resulted in PHSRL’s exploration rights being set

back to such earlier date. In addition, and as a consequence of the MOPC Annulment, on September 15, 2009, the

Executive Branch of Paraguay declared via decree (the “Executive Decree”) the Concession Agreement to have

lapsed. PHSRL challenged the MOPC Annulment and the Executive Decree in front of the Administrative Tribunal

of Paraguay (“Tribunal de Cuentas”) and the Constitutional Chamber of the Paraguayan Supreme Court.

While the case was being adjudicated, the MOPC issued a one year prospecting permit to the Pirity Concession to

LCH. Additionally, the Paraguayan Executive Branch, via decree, granted LCH a concession contract for LCH.

On March 25, 2011, the Administrative Tribunal revoked the MOPC Annulment and the Executive Decree against

PHSRL and reinstated PHSRL’s four-year exploratory period together with the option to renew for an extra two

years. The Administrative Tribunal also held that such four year exploratory period was to begin on the date that the

Supreme Court of Paraguay had declared the Administrative Tribunal’s decision as final and not appealable.

The MOPC and LCH each filed a final appeal before the Administrative Chamber of the Supreme Court. While this

appeal was in progress, the MOPC, LCH, and PHSRL entered into an out of court settlement agreement whereby the

MOPC and LCH agreed to abandon their respective appeals and release PHSRL of any further claims, and whereby

PHSRL assigned a five percent carried working interest in the Pirity Concession to LCH. Such five percent working

interest is carried by the Company for the cost corresponding to the first 100 km of 2D seismic, as well as the cost

corresponding to the first 15,000 meters of exploratory wells.

On August 10, 2012, the Administrative Chamber of the Supreme Court, due to the inactivity of the appellees,

declared the decision of the Administrative Tribunal to be final and not appealable, in favor of PHSRL.

On October 4, 2012, the Executive Branch of Paraguay, consistent with the foregoing judicial decisions, declared

that the exploration period under concession Law 3,479/08 for PHSRL was to be computed as beginning on

September 12, 2012. No further challenges, by the government or otherwise, have been made alleging that PHSRL does not own the Pirity Concession or that it has failed to satisfy the required work program.

In 2012, Petro-Victory, LLC entered into a farm-out agreement with President Energy as more fully described under

“The Pirity Farm-Out”. On June 10, 2014, President Energy announced that it had purchased the entire issued share

capital of LCH and that as a result of such acquisition, President Energy holds a 64% working interest in the Pirity

Concession. The Company will continue to carry the five percent working interest that was previously held by LCH

and that is now held by President Energy.

Gross Overriding Royalty Agreement

Concurrently and in connection with the Purchase Agreement, PHSRL entered into the GORA with the PHSRL

Founders, as representatives of the sellers of the equity shares of PHSRL. The PHSRL Founders, together with their

respective spouses, were the only shareholders of PHSRL prior to the sale of the shares pursuant to the Purchase

Agreement. Under the GORA, PHSRL granted the PHSRL Founders a royalty equal to five percent of all of the

gross proceeds received by PHSRL from the sale of oil, natural gas and associated hydrocarbons from the Pirity Concession, net of those deductions specified in the GORA. The GORA is governed by the laws of Paraguay.

The Concession Obligations

The Concession Agreement establishes the following minimum activities to be performed by the Company within

the time table established in the Concession Agreement during the four year exploration phase (the “Concession

Obligations”):

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acquisition of digital copies of all relevant technical data;

reprocessing and interpretation of all the existing 2D information, and of the electrical profiles of existing

exploratory wells;

preparation and approval of the environmental impact study required by Law No. 294/93;

acquisition, processing and interpretation (in 2D and/or 3D) of at least 100 kilometers of new seismic lines

(that may be done before or after exploratory drilling); and

drilling of at least 15,000 meters of exploratory wells, including testing samples, evaluation and production

well testing as applicable or required in accordance with international standards.

In the event the Company requests a two-year extension of the exploration phase, an additional well must be drilled in each of such years, to a depth of not less than 5,000 meters. The Concession Agreement establishes the following

timetable for the principal activities of the exploration phase: (i) the environmental impact study must be conducted

during the first year; (ii) exploration work (the acquisition of 100km of seismic data) must commence within the

first year and (iii) at least 15,000 meters of exploratory wells must be completed during the four-year period. The

Concession Obligations are minimum obligations necessary to maintain the Pirity Concession.

Acquisition of Digital Copies - The Company has completed the required acquisition of digital copies of all relevant

technical data for the Pirity Concession.

Reprocessing and Interpretation - Through Schlumberger, the Company and President Energy have completed the

required reprocessing and interpretation of all the existing 2D information and of the electrical profiles of the

existing exploratory wells for the Pirity Concession. In addition, Schlumberger and their divisions completed

geological and geophysical studies in the Pirity Concession using extensive 2D seismic data, existing well data and

regional trend information. Extensive evaluation of the Pirity Concession’s prospects and leads including state-of- the-art basin analysis and migration studies were completed as well.

Environmental Impact Study - To maintain good standing under the Pirity Concession, Article 62 of the Paraguayan

Law No. 779/95 (the “Hydrocarbons Law”) requires the Company to complete an environmental impact study. In

addition, the Company must file quarterly reports with MOPC containing all technical and economic information

obtained in the performance of the Concession Agreement, and, in January of each year, an annual report regarding

the work performed during the previous year, which includes maps, photographs and statistics. The environmental

impact study was completed for the Pirity Concession and the environmental permit was awarded on June 2, 2008 by

Paraguay’s Environmental Authority (Secretaría del Medio Ambiente). The Company has timely filed all

quarterly and annual reports since the effectiveness of the Pirity Concession.

Commencing Exploration Work - Under Article 27 of the Hydrocarbons Law, exploration work in a concession

must commence within the first year of the four-year exploration phase. The exploration phase for the Pirity Concession began initially on May 13, 2008 with the enactment of the Concession Agreement into Law 3,479/08. In

2012, the terms of the Concession Agreement were amended as a result of a settlement agreement with the MOPC

and the issuance of Decree 9,845/12 by the Executive Branch of Paraguay, to reset the four-year exploration period to

begin as of September 12, 2012. President Energy and the Company anticipate fulfilling the exploration elements of

the Concession Obligations under the terms of the Pirity Farm-Out.

Under Article 27 of Hydrocarbons Law, a concessionaire must start the exploration work within a year following the

date of the decree granting the concession for it to qualify as having “commenced exploration”. Otherwise, the

concession will lapse. The Company has been advised that acquiring new seismic data on the field within the first

year of exploration constitutes commencing exploration work. Since the new exploration period began in September

12, 2012, the Company acquired well in excess of the 100 km required per the Concession Agreement. President

Energy and the Company anticipate fulfilling the remaining requirements of the Concession Obligations under the

terms of the Pirity Farm-Out.

The Pirity Farm-Out

In 2012, the terms of the Pirity Concession were amended so that the exploration period was extended to September

2016. On September 11, 2012, Petro-Victory, LLC and PHSRL entered into a farm-out agreement (the “Pirity Farm-

Out”) with President Energy, pursuant to which President Energy would act as the operator and was granted the

right to earn up to a 59 percent working interest in the Pirity Concession on an incremental basis, to a maximum

expenditure of $50 million. In connection therewith, President Energy Paraguay S.A. and PHSRL entered into the

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JOA. The JOA defines the rights and obligations of each party and generally governs the operations, authority, work

programs, funding and insurance related to the Pirity Concession. President Energy earned the full 59 percent

working interest in the Pirity Concession through making payments under the Pirity Farm-Out in excess of $50 million

by May of 2014. As of September 30, project payments have included:

President Energy Expenditures

Gross Capital

Expenditure (as at Sept. 2014)

Back Costs Incurred by the Company regarding the Pirity

Concession $10,000,000

Direct Overhead Costs $7,128,232

Line Clearing $2,575,257

Civil Works $3,517,108

3D and 2D Seismic $8,446,610

Jacaranda 1 Well $22,729,225

Lapacho 1 Well (thru Sept.) $9,124,024

Deposits, inventory and other prepayments $10,198,072

$73,718,528

Operations in Paraguay are heavily front-loaded (due to Schlumberger pre-payment and procuring lead time items)

and, as a result, the Company is required to pay a certain amount of the costs over and above the carried amount

prior to the spudding of each well. On May 8, 2014, President Energy made the May Cash Call in the amount of $4,700,000 in respect of the first exploration well on the Pirity Concession. The May Cash call was initially due to

President Energy by May 23, 2014 as a result of the Company’s 36 percent working interest in the Pirity Farm-Out, as

well as its obligations to carry the five percent working interest in the Pirity Concession that was previously held by

LCH. Pursuant to the Letter Agreement, President Energy agreed to extend the due date for the May Cash Call until

June 30, 2014 and agreed to credit approximately $1.6 million to PHRSL. Accordingly, the Company owed

$3,100,000 by June 30, 2014 pursuant to the May Cash Call. The May Cash Call was paid by the Company on June

27, 2014 with the proceeds from the 2014 Debenture.

On June 13, 2014, President Energy presented the June Cash Call in the net amount of $2,100,000 in respect of the

first exploration well on the Pirity Concession, which was paid to President Energy pursuant to the terms of the

Pirity Farm-Out on June 27, 2014. The June Cash Call was not subject to the provisions of the Letter Agreement.

The Company funded the $200,000 shortfall between the proceeds of the 2014 Debenture (being $5,000,000) and

the aggregate of the May Cash Call and June Cash Call (being $5,200,000), through the issuance of the June Cash Call Note to one of the Company’s principal security-holders, Harvison Capital Management, LLC. The Company

used the proceeds from the IPO to repay the June Cash Call Note.

The subsequent July, August and September cash calls totaling $8,465,000 were paid as due. Under the terms of the

JOA, if the Company defaults on a payment, President Energy has the right to sell the Company’s working interest in

the Pirity Concession if the Company does not cure such default. After 60 days, President Energy has the right to

purchase the Company’s working interest in the Pirity Concession.

President Energy

President Energy is an international oil and natural gas exploration and production company listed on the AIM

market of the London Stock Exchange. Under the Pirity Farm-Out, President Energy agreed to act as the operator

under the Pirity Concession and was granted the right to earn up to a 59 percent working interest in the Pirity

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Concession on an incremental basis.

On February 6, 2014, President Energy raised $50.8 million to assist with the development of its assets in Paraguay.

The IFC, a member of the World Bank group, has invested $24.04 million in President Energy to date (and holds

approximately 13.17 percent of President Energy’s share capital), approximately $9 million of which was invested in

President Energy’s February 6, 2014 raise.

The IFC, a member of the World Bank group, is the largest global development institution focused exclusively on the private sector. The IFC assists developing countries to achieve sustainable growth by financing investment for

companies operating in emerging markets, providing advisory services to business and governments, and mobilizing

capital in the international financial markets.

On June 10, 2014, President Energy acquired a five percent working interest from LCH. Such five percent working

interest is carried by the Company for the cost corresponding to the first 100 km of 2D seismic, as well as the cost

corresponding to the first 15,000 meters of exploratory wells.

2014 Pirity Concession Drilling Program

In order to meet the incremental targets under the Pirity Farm-Out, President Energy has entered into an agreement

with the Schlumberger team for project management and integrated drilling services. President Energy has also

entered into an agreement with Queiroz Galvão Óleo e Gás for the 2014 drilling campaign, one of the largest drilling

contractors and production services providers in Brazil. The results of the first two wells have been discussed under the caption “Operational Activities.”

Proposed Well 3 – Tapir

President Energy, as operator, has said that the timing of the third exploration well would be contingent on the success

and costs associated with wells 1 and 2. The third exploration well was originally designed to target the Tapir prospect

in the Jurumi Complex, and when drilled will test the Cretaceous petroleum system. This well was originally

scheduled to spud in December of 2014 with a target depth of 3,700 m. The likelihood now is that the spudding of

this well will be pushed to sometime in 2015, but this decision will not be finalized until December.

Mapping of the 3D seismic indicates that there is adequate accommodation space to have Devonian, Santa Rosa sands and Los Monos source rock equivalents to be preserved. The Jurumi complex is located to the southeast of the

Jacaranda and Lapacho prospects. Five Jurumi prospects have been identified based on 3D seismic interpretation

with economic modeling.

The Tapir, Pecari and Jurumi Prospects are all NE-SW trending and largely consist of four-way dip closures draped

over highs each bounded on the south flank by a high angle-south dipping normal fault.

The NE-SW trending Tapir Prospect is a 4-way dip closure draped over highs bounded on the south flank by a high angle-south dipping normal fault. Regarding the Tapir-Lecho complex, there is an element of a subtle 4-way dip

mapped but the larger mapped potential areas depend on fault seal to disconnect the Prospect from the up-dip

Carmen-1 well, a well drilled in the 1980’s and used as a point of reference.

After sunk costs of $2 million, Well 3 is anticipated to cost approximately $9 million more (net to the Company) to

drill and complete under the assumption that completion is warranted, including a 15 percent Schlumberger

contingency, and including an additional ten percent contingency on third party costs and a ten percent contingency on

drilling days. The funding of well number 3 was not included in the IPO and it was clearly stated that funds for this

well would have to be raised separately.

Proposed Asset Acquisition

Upon successful completion of the Asset Acquisitions, which are subject to several conditions precedent (as set out below), the Company will acquire the exploration rights to the Takutu PPL and Block REC-T-170.

The Company has entered into Purchase and Sale Agreements with respect to the Brazil Acquisition and the Guyana

Acquisition pursuant to which it will issue 15,600,000 Performance Shares in respect of each such Asset Acquisition

for a total issuance of 31,200,000 Performance Shares. All of such Performance Shares are held in escrow following

issuance, pending the successful completion of the Asset Acquisitions. The Purchase and Sale Agreements contain

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certain conditions precedent required to be satisfied in order to complete the Asset Acquisitions. It is possible that

the Company could complete either, neither or both of the Asset Acquisitions. If the conditions precedent for either of

the Asset Acquisitions are not completed by May 22, 2015, the Purchase and Sale Agreement with respect to such Asset

Acquisitions will automatically terminate and the Performance Shares will be cancelled and returned to the

Company’s treasury. The conditions precedent, which generally apply to both of the Asset Acquisitions, unless

noted otherwise, are the following:

Obtaining all necessary third party consents to the transfer of the relevant assets, the waiver of all pre-

emption or preferential rights by such third parties and the execution of assignment documents by such

third parties;

Receiving the approval by relevant governmental authorities for the transfer of the operatorship of the relevant

assets, including, in the case of the Brazil Acquisition, the approval of the ANP, which approval may require

the Company to demonstrate that it has the financial capability to fund the next exploration phase of the

concession;

Receiving the renewal of the concessions in Brazil and Guyana for a period of not less than two years;

Receiving the confirmation from the relevant government agencies that any outstanding work program has been

completed in the respective concession;

In the case of Brazil, the drilling, at the cost and risk of the seller of such assets, of a well targeting the Fazenda Buril multi-zone Prospect with certain defined objectives;

The completion, to the Company’s satisfaction, of due diligence of the relevant assets;

The written agreement of the Company that the documentation at closing includes all appropriate documents

necessary for the Company to enjoy all rights to the relevant assets.

Brazil

Block REC-T-170 is a 6,909 acre (gross) exploration block located in Brazil’s Recôncavo basin in which the

Company will have a 50 percent working interest in the shallow formations and a ten percent working interest in the

deep formations if the Brazil Acquisition is completed. The Company will also be fully carried on the first

commitment well, which is anticipated to cost $5-6 million to drill, log and case.

Block REC-T-170 is located five kilometers from infrastructure at the Miranga Field. Two other fields are located

on opposite flanks of the same shale diapir and validate the trapping mechanism.

History of Block REC-T-170

In July 2011, Canacol Energy Ltd. received the final approval from Brazil’s National Petroleum Agency, Agência

Nacional do Petróleo, Gás Natural e Biocombustíveis (“ANP”), to acquire a 75 percent working interest and

operatorship of Block REC-T-170. PetroVista held the remaining 25 percent working interest, which they later

assigned to Canacol Energy Ltd. in exchange for a five percent gross overriding royalty. In 2013, Canacol Energy Ltd. entered into a farm-out of Block REC-T-170, whereby the farmee agreed to pay 100 percent of the costs of

commitment well in exchange for providing Canacol Energy Ltd. a 50 percent/ten percent working interest in the

shallow/deep zones, respectively.

Commitment Well

If the Brazil Acquisition closes, the Company anticipates that a commitment well will be drilled targeting the

Fazenda Buril multi-zone Prospect (main and shallow zones). It is anticipated that the commitment well will cost

approximately $5.6 million (civil works, drill, log and case); however, the Company will be fully carried in this

commitment well. The primary objective is the stacked Cretaceous syn-rift deltaic and turbidite sandstones of

Santiago, Pojuca, Catu and Caruacu formations. The secondary objective is the shallow natural gas sands of the

Pojuca formation.

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Guyana

The Takutu PPL is an exploration licence over an area of 1,540,000 acres (gross) of State lands located in the Takutu Basin, onshore Guyana, adjacent to Guyana’s border with Brazil. If the Guyana Acquisition is completed,

the Company will have a 100 percent working interest on the property and the resources, subject to a ten percent

private carried working interest relating to the first well, which is held by Takutu Oil and Gas Inc. To date, two

conventional prospects, Rewa and Pirara, have been identified.

History of Block Takutu PPL

The Takutu PPL was in Phase 1 of the licence, which expired on May 21, 2014. Phase 1 required the completion of a minimum of one commitment well. This commitment well was not drilled on, or before, May 21, 2014. Phase 2

consisted of negotiable commitments and had a one-year term. The Company is currently negotiating a multi-year

renewal of the Takutu PPL.

Action Plan Prior to Drilling the Commitment Well

The Company anticipates that a two-year renewal of the expired Takutu PPL will be granted (prospecting phase). It is a condition precedent to the completion of the Guyana Acquisition that the Vendor shall have obtained such an

extension. During this two-year renewal, it is expected that new data will be acquired regarding the Takutu PPL

consisting of 2D and probably 3D seismic acquisition programs and magnetic survey programs. Other field data

from neighboring selected zones pertaining to the Takutu Basin is also expected to be collected and compiled. All

the compiled data will be examined and processed in order to perform a new geological and geophysical evaluation

and interpretation (computer modeling) of the concession area with the objective to identify new leads and prospects

and define the most suitable location and depth of the commitment well.

The Company further anticipates that, after the geological and geophysical evaluation and interpretation and target

location of the commitment well are completed and its location and depth are clearly defined as per the geological

and geophysical evaluation and interpretation report, a three-year extension of the existing concession will be solicited and granted to the concessionaires in order to start the drilling program (exploration phase) of the

commitment well.

Commitment Well

If the Guyana Acquisition closes, the Company anticipates drilling the commitment well sometime in 2018. It is

estimated that the commitment well will cost approximately $6.75 million (civil works, drill, log and case). The

primary and secondary objectives of the drilling program will be defined as per the results of the geological and geophysical evaluation and interpretation report. The Takutu PPL is accessible and relatively close to oilfield

services in Brazil and Trinidad.

Use of IPO Proceeds

The following table indicates the Company’s originally anticipated expenditures and use of proceeds from the IPO,

as compared with the actual expenditures to date and estimated in the near term.

Original Anticipated Expenditures ($)

Revised Anticipated Expenditures ($)

Total Gross Proceeds (CDN$) 25,000,000 25,000,000

Agents’ Fee (CDN$) 1,500,000 1,350,000

Net Proceeds (CDN$) 23,500,000 23,650,000

Net Proceeds (U.S.$) 21,759,259 22,010,000

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Proceeds of 2014 Debenture 5,000,000 5,000,000

Proceeds of June Cash Call Note 200,000 200,000

Total Available Funds 26,959,259 27,210,000

Total Cost Wells 1 & 2 & prepaids 16,252,367 13,665,000

Estimated Additional Cost for Well 2 - 5,575,000

Petro-Victory, LLC Working Capital Deficit 650,000 957,000

12-Month General and Administrative Expenses 2,255,000 2,255,000

Repayment of 2014 Debenture (with interest) 5,200,000 5,200,000

Repayment of June Cash Call Note (with interest) 202,500 202,250

Repayment of Notes (with interest) 360,000 353,570

IPO Expenses 1,000,000 2,000,000

Total Anticipated Use of Proceeds 25,919,867 30,207,820

Unallocated Working Capital 1,039,392 (2,997,820)

The Company raised the CDN$25,000,000 minimum in the IPO. Agents’ fees were CDN$1,350,000, or CDN$150,000 less than anticipated because the agents did not charge a commission on one corporate investor’s

stock purchase of $2,500,000.

There have been circumstances where, for sound business reasons, a reallocation of the net proceeds has been

necessary. Due to the nature of the oil and natural gas industry, budgets are regularly reviewed with respect to

the success of the expenditures and other opportunities which become available to the Company. The Company’s

actual expenditures may vary depending on a variety of factors, including the availability of equipment and personnel, the assessment of seismic data, unexpected expenses, delays in the receipt of necessary regulatory approvals, permits

and licenses and the success of the Company’s business development activities. While it is currently intended by

Management that the net proceeds will be expended as set forth above, actual expenditures may in fact differ from

these amounts and allocations.

The proceeds have been expended faster than originally budgeted for a variety of reasons. Primarily, although well #1 (Jacaranda) was drilled within budget, the expected well costs for well #2 (Lapacho) may be in excess of the original

budget. The costs have increased due to the reasons indicated in the November 17, 2014 press release. In addition,

certain other costs (estimated to be $3 million) have been prepaid on the drilling project, some of which will reduce the

December 2014 expenditures (prepaid rig costs) and others with expected realization in 2015 (pad sites, supplies,

engineering costs, etc).

Other uses of proceeds in excess of the original estimates include the larger working capital deficit that came forward from the Reorganization ($307,000) due to higher G&A costs and interest expense incurred at the Petro-Victory, LLC

level and IPO expenses (legal fees) in excess of the anticipated amounts. The deficit in “Unallocated Working Capital”

indicates that the Company will not have sufficient funds to operate into 2015 and make anticipated debt repayments

without raising further cash. See further discussion in the Liquidity section of this document.

SUMMARY OF QUARTERLY RESULTS

Petro-Victory, LLC was incorporated on December 27, 2006, and, for practical purposes, was the predecessor to the

Company. The historical operations of the LLC are not similar to those of the Company and may be of limited

value in understanding current operations. The LLC has not prepared quarterly financial statements other than those

included in the prospectus.

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Quarterly results for the Company are summarized below:

As at and for the 3 Months Ended

June 30,2014

($) Sept. 30,2014

($)

Total Revenue - -

Loss from Operations (5,972) (1,263,622)

Loss Per Share, basic and fully diluted (-) (.01)

Total Assets 6,341,000 67,166,397

Total Liabilities (All Current) 6,345,972 2,850,071

Dividend Nil Nil

The June 30 column reflects the minimal activity since incorporation in May. The September quarterly loss reflects

general and administrative costs to maintain the concessions, and interest expense on notes payable. The Company’s

first full quarter of operations for the three months ended September 30, 2014, reflects what is expected to be a more

“normal” level of G&A costs. The largest component of G&A is compensation expense ($775,663), which includes

approximately $347,000 of regular cash compensation and related benefits and $546,000 of noncash stock-based

compensation calculated on outstanding stock options using a Black Sholes methodology. Other major items include

interest and financing expense ($197,778) and professional fees ($113,618).

Assets and liabilities were up substantially as of September 30, 2014, reflecting the IPO, the effect of purchase

accounting, payments made for drilling expenditures, and the first full quarter of operations.

LIQUIDITY

As discussed above, the Company was required to borrow funds to finance cash calls prior to completion of the

Reorganization and funding of the IPO. Borrowings occurred as follows:

On June 26, 2014, the Company obtained a US $5 million loan in the form of a Convertible Debenture with Canacol Energy, an independent oil and natural gas exploration and production company traded on the

TSX. Terms of the debenture generally provide for a six-month term, an annual interest rate of 8%,

conversion privileges at the option of Canacol at the IPO price of CDN 0.40, and provisions for penalties

upon early payment. On July 25, 2014, the Company repaid $2,500,000 of the loan along with interest and

fees of $100,000.

On June 26, 2014, the Company borrowed $200,000 from Harvison Capital Management, LLC, a related

party and significant shareholder, in order to have sufficient funds to pay the June Cash Call to President.

Terms of the loan provided for payment upon demand but with a final due date of December 31, 2014 and

an annual interest rate of 15%. This loan was repaid with proceeds from the IPO totaling $202,250

including interest.

On July 9, 2014, the Company borrowed $765,000 from Harvison Capital Management, LLC, a related party and significant shareholder, in order to fund the July cash call due to President Energy. Terms of the

advance provided for loan repayment and the payment of an accommodation fee of $80,000 upon successful

completion of the IPO, repayment of which was completed on July 23, 2014.

As previously noted, the IPO provided funds of approximately US $20 million after payment of commissions and

expenses of the offering. After repayment of a portion of the convertible debenture to Canacol ($2.6 million),

repayment of the Harvison Capital Management, LLC borrowings ($1,047,250), payment of the August and September

cash calls to President ($7.7 million), and after payment of operating expenses, the Company’s September balance sheet reflects cash in excess of $7.2 million to fund future operations.

The Company expects the management team to travel extensively in South America to monitor results, oversee

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operations, negotiate terms of potential deals, and to finalize the Purchase and Sale Agreements for the Brazil and

Guyana assets. In connection therewith, management desired to obtain credit cards for use by the team, but in lieu of

no credit history, the Company deposited $100,000 in a pledged certificate of deposit with their primary bank.

The Company is in the exploration and development phase of operations and has no revenue to date and does not

expect revenue in the near future. Negative cash flow is expected to continue as the Company expects to receive

further monthly cash calls regarding the Pirity Farm-Out and intends to use a portion of the remaining funds to satisfy these obligations. The Company also expects to incur monthly general and administrative cash expenses

slightly in excess of $200,000 per month.

SUBSEQUENT EVENT

The results of the impending exploration activities, drilling cost variations from approved budgets, and the potential

need to spend additional amounts on the Lapacho well all affect the amount of cash needed during the fourth quarter

and next year. As previously shown in the Use of IPO Proceeds table, the revised anticipated expenditures for the first

twelve months of operations exceed the total available funds. As stated in the Notes to the September 30, 2014 financial

statements, the ability of the Company to continue as a going concern and meet its commitments as they become due is

dependent on the Company’s ability to obtain the necessary financing. Management is actively pursuing additional

funding and is optimistic based on the results of the first two wells. However, if the Company is unable to secure adequate financing to continue with operations as needed, the Company may elect to suspend all or part of its

exploration operations. The circumstances that could affect the Company’s ability to secure equity and/or debt

financing that are reasonably likely to occur are, without limitation, as follows: (i) the state of capital markets

generally; (ii) the results of the Company’s ongoing exploration program; and (iii) changes in oil prices, laws,

regulations, political conditions and currency fluctuations.

CAPITAL RESOURCES

The Company has limited capital resources and has to rely upon the sale of its equity and/or debt securities for cash

required for acquisition, exploration and development purposes of oil and natural gas exploration properties. Since

the Company does not expect to generate any revenues in the near future, it must continue to rely upon the sale of its

equity and/or debt securities to raise capital. There can be no assurance that financing, whether debt or equity, will be available to the Company in the amount required at any particular time or for any period or, if available, it can be

obtained on terms satisfactory to the Company.

The use of proceeds reflected below is for the Jacaranda and Lapacho drilling programs on the Pirity Concession.

Substantially all of the net proceeds were or soon will be used by the Company as more particularly described in the

table below:

Well 1 – Jacaranda ($)

Well 2 – Lapacho

and Prepaids ($)

Anticipated Monthly Pirity Farm Out Cash Requirements:

(May Cash Call) May 2014 3,100,000 -

(June Cash Call) June 2014 2,100,000 -

July 2014 - 765,000

August 2014 - 4,300,000

September 2014 - 3,400,000

October 2014 - 1,700,000

November 2014 - 2,575,000

December 2014 (based on initial cash call) - 1,300,000

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Total Cost per Well 5,200,000 14,040,000

Following the Jacaranda and Lapacho drilling programs, the Company will need to raise further capital in order to participate in the Tapir drilling program, obtain additional seismic, or to fund other operations. Proceeds from the IPO

may not be sufficient to completely fund the Jacaranda and Lapacho drilling programs, much less retire all debt and

fund the Tapir drilling program. The ability of the Company to raise additional capital will depend, in part, upon

the success of the Jacaranda and Lapacho drilling programs and conditions in the capital markets at the time.

Failure to raise additional required capital could result in delays in the Company's development of its exploration

program or could cause the Company to forfeit part of its working interest in the Pirity Concession.

OFF-BALANCE SHEET ARRANGEMENTS

As at the date hereof, there are no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial conditions of the Company including, without

limitation, such considerations as liquidity and capital resources.

TRANSACTIONS WITH RELATED PARTIES

Summarized below are the related party transactions during the period:

On June 26, 2014, the Company executed the $5 million 2014 Debenture with Canacol Energy Ltd.

Canacol Energy Ltd. is a shareholder of the vendors of the assets to be acquired pursuant to Brazil and

Guyana Acquisitions. On July 25, 2014, the Company repaid $2.5 million of the 2014 Debenture along

with interest and fees of $100,000. As of September 30, 2014, the Company has accrued interest payable

of $37,778.

On June 26, 2014, the Company executed the June Cash Call Note with Harvison Capital Management,

LLC, a significant shareholder, borrowing $200,000 to repay a portion of the June Cash Call to President

Energy. As of June 30, 2014, the Company had accrued interest payable of $417. The June Cash Call Note

was paid with $2,250 interest on July 23, 2014.

Proceeds from both of the June 26 borrowings above ($5.2 million) were in-turn loaned to Petro-Victory, LLC, to meet the June 30 deadline for payment of the May and June Cash Calls. The Company had not yet

completed the IPO and was not able to effectuate international wires.

On July 9, 2014, the Company executed an agreement with Harvison Capital Management, LLC, to receive

advanced funds of $765,000 in order to cover the July cash call. Petro-Victory, LLC paid a $60,000

accommodation fee prior to receiving the advanced funds. The underlying note was repaid on July 23, 2014,

along with a $20,000 accommodation fee to the related party.

The Company also assumed, from the LLC, loans with two members of the Company totaling approximately

$320,000 and one note to a company owned by two of the LLC’s members totaling approximately $637,000.

The Company paid these loans in full during the period ended September 30, 2014.

The Company has signed Shared Services Agreements with companies owned by related parties to provide for

office space and administrative, support, and communication services in three locations. The Company pays a total of $7,500 per month for such services in Fort Worth and Dallas, Texas and in Bogota, Colombia.

PROPOSED TRANSACTIONS

Other than as set out in the Company’s prospectus dated July 11, 2014, available for review on SEDAR at

www.sedar.com under the Company’s profile, the Company does not have any proposed asset or business acquisition

or disposition as at the date hereof.

CRITICAL ACCOUNTING ESTIMATES

The consolidated financial statements have been prepared using the accrual basis of accounting, and in accordance

16

with IFRS. The Company has only been and intends to stay involved in one business segment, that being the

exploration for oil and natural gas reserves and the related production thereof. The Company may expand into more

than one geographical segment. As such, the most critical accounting estimates necessary to properly record

transactions deal with exploration and evaluation (“E&E”) expenditures and with the accounting for property and

equipment.

E&E and Property and Equipment

Pre-license expenditures, including geographical and geophysical exploration cost, are expensed in the period in which they are incurred. All costs directly associated with the exploration and evaluation of crude oil and natural gas

resources are initially capitalized as an intangible asset on a Prospect-by-Prospect basis. E&E costs are those

expenditures for a Prospect where technical feasibility and commercial viability has not yet been determined. All

carried costs are subject to technical, commercial and Management review at least once a year to confirm the

continued intent to develop or otherwise extract value from the discovery.

In the future, when a Prospect is determined to be technically feasible and commercially viable, the accumulated

costs will be assessed for impairment and then transferred to property and equipment. When a field is determined not

to be technically feasible and commercially viable or when the Company decides not to continue with its activity,

the unrecoverable costs will be charged to net income as E&E expense. If sold, proceeds from conveyances of E&E

assets representing unproven oil and natural gas properties will be applied against the Company’s basis in the E&E

assets and a gain will only be recognized when the proceeds received exceed the Company’s basis in the E&E assets conveyed.

All costs directly associated with the development of crude oil and natural gas reserves will be capitalized on a field-

by-field basis. The resulting asset will include expenditures for areas where technical feasibility and commercial

viability have been determined. These costs could include proved property acquisitions, development drilling, well

completion costs, gathering and infrastructure, asset retirement costs and transfers from E&E assets. The costs so

accumulated will be depleted using the unit-of-production method based on proved plus probable reserves and using

estimated future prices and costs. Costs of major development projects will be excluded from the costs subject to

depletion until they are available for use. For divestitures of property, a gain or loss will be recognized in net

income.

As the Company’s activities progress they may give rise to dismantling, decommissioning and site disturbance re-

mediation activities. Provision will be made for the estimated cost of site restoration and capitalized in the relevant

asset category. Such obligations will be measured annually at Management’s best estimate of the expenditures required to settle the present obligation at the date of each consolidated statement of financial position. Each year the

estimated obligation will be adjusted to reflect the passage of time and for changes in the estimated future cash flows

underlying the obligation.

The foregoing procedures require Management to carefully review types and classifications of expenditures, and to

make estimates of commercial viability, resources, and remediation costs. Third party reserve engineers will be

relied upon to assist in the determination of resources. Should such estimates be incorrect, amounts carried on the

books could be either over or understated, and the resulting recorded results of operations likewise over or

understated. With the minimal activity to date, Management does not believe that any changes to historical financial

results would be appropriate based on changes in estimates made.

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

The Company’s financial instruments and liabilities consist of cash, accounts receivable, accounts payable and

accrued liabilities and due to related parties. Unless otherwise noted, it is Management’s opinion that the Company is

not exposed to significant interest or credit risks arising from these financial instruments. The fair value of these

instruments approximates their carrying value due to the short term nature of their maturity.

The Company incurs certain of its expenditures related to its exploration properties in U.S. dollars and local

currency, as applicable, and as such, is exposed to currency risk due to fluctuations in exchange rates. The Company

does not undertake significant hedging activities to reduce its exposure to this risk.

DISCLOSURE OF OUTSTANDING SECURITY DATA

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As at December 1, 2014, the Company had the following voting or equity securities outstanding (or that are convertible

into such securities).

Number or Principal Amount Outstanding

Class A Shares (including Performance Shares) 171,965,000

Restricted Voting Shares (Class B Shares) 50,535,000

Warrants 31,250,000

Options 13,904,205

2014 Debenture $2,500,000

ADDITIONAL DISCLOSURE FOR VENTURE ISSUERS WITHOUT SIGNIFICANT REVENUE

Below is a breakdown of the capitalized oil and gas expenditures during the periods indicated:

3 Months Ended

June 30, 2014 September 30, 2014

Exploration and Evaluation Assets or Expenditures $5,200,000 $54,537,502

Expensed Research and Development Costs Nil Nil

Intangible Assets Arising from Development Nil Nil

General and Administrative Expenditures $1,065,844

Any other Material Costs, whether expensed or Recognized as Assets Nil Nil

FORWARD-LOOKING STATEMENTS

This MD&A contains forward-looking statements pertaining to the following:

the performance characteristics of the Company’s oil and natural gas properties;

the estimated size of the Company’s oil and natural gas resources;

the ability to secure an extension of the Takutu PPL;

projections of market prices for oil and natural gas and exploration, development and production costs;

supply and demand for oil and natural gas;

drilling plans and the timing and location thereof;

plans for, and results of, exploration and development activities;

plans for seismic acquisition programs and surveys;

the timing of commencement of certain of the Company’s operations;

sale, farming in, farming out or development of certain exploration properties using third party resources;

relationship with local and regional stakeholders;

the Company’s intention to participate in future bid rounds in Paraguay, Brazil and Guyana to acquire additional

exploration acreage;

the Company’s ability to raise capital;

the Company’s expected capital and exploration expenditures;

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the Company’s treatment under regulatory regimes and tax laws; and

expected levels of royalty rates, operating costs, general administrative costs, costs of services and other costs

and expenses.

With respect to forward-looking statements and forward-looking information contained in this MD&A, the Company has made assumptions regarding, among other things:

the completion of the Asset Acquisitions, including the ability of the Vendors to satisfy the conditions precedent

to the completion of the Asset Acquisitions;

future oil and natural gas prices;

the recoverability of the Company’s oil and natural gas resources;

the applicability of technologies for recovery and production of the Company’s oil and natural gas resources;

the Company’s ability to obtain and retain qualified staff and equipment in a timely and cost-effective manner;

future capital and exploration expenditures to be made by the Company and the Company’s operating partner in the Pirity Concession;

the legislative and regulatory environment governing royalties, taxes and environmental matters in Paraguay,

Brazil and Guyana and any other jurisdictions in which the Company may conduct its business in the future;

geological and engineering estimates in respect of the Company’s oil and natural gas resources;

the geography of the areas in which exploration and development activities have been conducted;

the ability to obtain additional financing on satisfactory terms; and

the Company’s future debt levels.

The Company’s actual results could differ materially from those anticipated in the forward-looking statements and

forward-looking information as a result of the risk factors set forth below and elsewhere in this MD&A:

general economic, political, market and business conditions;

volatility in market prices for crude oil and natural gas and hedging activities related thereto;

risks related to the exploration, development and production of oil and natural gas;

risks inherent in the Company’s international operations, including political, security and legal risks in

Paraguay, Brazil and Guyana;

risks related to the timing of completion of the Company’s projects;

competition for, among other things, capital, the acquisition of resources and skilled personnel;

actions by governmental authorities, including changes in government regulation and taxation;

environmental risks and hazards;

risks inherent in the exploration, development and production of oil and natural gas which may create liabilities

to the Company in excess of the Company’s insurance coverage, if any;

failure to accurately estimate and to establish adequate cash reserves for abandonment and decommissioning costs;

failure of third parties’ reviews, reports and projections to be accurate;

changes in tax laws and incentive programs relating to the oil and natural gas industry;

unpredictable weather conditions;

changes in the royalties applicable to the Company;

risks associated with foreign operations and the use of foreign subsidiaries;

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fluctuations in foreign currency and exchange rates;

the availability of capital on acceptable terms;

political risks;

the failure of the Company or the holder of certain licences or leases to meet specific requirements of such

licences or leases and the failure to obtain an extension of the Takutu PPL;

adverse claims made in respect of the Company’s properties or assets;

failure to engage or retain key personnel;

potential losses which would stem from any disruptions in production, including work stoppages or other labor

difficulties, or disruptions in the transportation network on which the Company is reliant;

uncertainties inherent in estimating quantities of oil and natural gas reserves and resources;

failure to acquire or develop oil and natural gas resources and reserves;

geological, technical, drilling and processing problems, including the availability of equipment and access to

properties;

failure by counterparties to make payments or perform their operational or other obligations to the Company in

compliance with the terms of contractual arrangements between the Company and such counterparties,

particularly as regards the Pirity Concession, the Company’s primary asset, which is operated by a third party;

current global financial conditions, including fluctuations in interest rates, foreign exchange rates and stock

market volatility;

discretion in the use of proceeds of the Company’s initial public offering; and

the other factors referred to under the heading “Risk Factors” in the Company’s prospectus dated July 11, 2014,

and available for review on SEDAR at www.sedar.com under the Company’s profile.

In addition, information and statements in this MD&A relating to “resources” are deemed to be forward-looking

information and statements, as they involve the implied assessment, based on certain estimates and assumptions, that

the resources described exist in the quantities predicted or estimated, and that the resources described can be

profitably produced in the future. Readers are cautioned that the foregoing list of risk factors should not be construed as

exhaustive.

GLOSSARY

In this MD&A, unless otherwise indicated or the context otherwise requires, the following terms shall have the

indicated meanings. Certain other terms used in this MD&A but not defined herein are defined in NI 51-101 and,

unless the context otherwise requires, shall have the same meanings herein as in NI 51-101. Words importing the

singular include the plural and vice versa and words importing a gender include any genders. A reference to an

agreement means the agreement as it may be amended, supplemented or restated from time to time.

“2014 Debenture” means the unsecured senior convertible debenture issued on June 26, 2014 by Petro-

Victory Energy Corp. to Canacol Energy Ltd. in the principal amount of $5 million;

“2014 Note” means the promissory note issued on December 31, 2013 by the Company in favor of Harvison

Capital Management, LLC in the original principal amount of $116,000, and increased to $220,000 on March 31, 2014, with interest at the rate of fifteen percent per annum, and which is due December 31, 2014 unless

earlier demanded;

“2016 Note” means the promissory note issued on December 31, 2013 by the Company in favor of

Richard F. Gonzalez in the amount of $100,000 with interest at the rate of fifteen percent per annum,

and which is due December 31, 2016 unless earlier demanded;

“2D” means two dimensional geophysical data; “3D” means three dimensional geophysical data;

“ANP” means Agência Nacional do Petróleo, Gás Natural e Biocombustíveis, Brazil’s National Petroleum

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Agency;

“Asset Acquisitions” means the Brazil Acquisition and the Guyana Acquisition;

“Block REC-T-170” means the 6,909 acre (gross) exploration block located in Brazil’s Recôncavo Basin in

which the Company will acquire a 50 percent working interest in the shallow formations and a ten percent

working interest in the deep formations upon the successful completion of the Brazil Acquisition;

“Board” means the board of directors of the Company;

“Brazil Acquisition” means the acquisition contemplated by the Company of the exploration rights to Block

REC-T-170 in exchange for the issuance to the Vendors of 15,600,000 Performance Shares of the Company;

“BVI” means the British Virgin Islands;

“Closing” means the consummation of the IPO and the sale of the Units in connection therewith; “Closing

Date” means the closing date of the IPO, July 22, 2014;

“Company” means Petro-Victory Energy Corp., a company incorporated pursuant to the laws of the

BVI, and where the context so requires, includes the Company’s direct and indirect subsidiaries,

PHSRL, Petro Victory Energy Service Company, Petro-Victory, LLC and any subsidiaries holding the

assets acquired in the Asset Acquisitions;

“Concession Agreement” means the concession agreement enacted on May 13, 2008 between PHSRL

and the Government of Paraguay relating to the Pirity Concession, as amended per Presidential Decree No. 9,845/12, dated October 4, 2012;

“Contribution Agreement” means the agreement dated May 20, 2014, by and among Petro-Victory Energy

Corp., Petro-Victory, LLC and the Existing Unitholders, pursuant to which Petro-Victory, LLC became

a wholly-owned subsidiary of the Company, and the Existing Unitholders received an aggregate of

128,800,000 common shares and Restricted Voting Shares in exchange for their units of Petro-Victory,

LLC;

“Existing Unitholders” means those Persons who were unitholders of Petro-Victory, LLC immediately prior

to the completion of the Reorganization and who, pursuant to the terms of the Contribution Agreement,

transferred all of their units of Petro-Victory, LLC to the Company in exchange for common shares and

Restricted Voting Shares;

“Foreign Private Issuer” means an issuer incorporated or organized outside of the United States except for an issuer meeting both of the following conditions as of the last business day of its most recently

completed second fiscal quarter: (i) more than 50 percent of the issuer’s outstanding voting securities are

directly or indirectly held of record by residents of the United States; and (ii) any one of the following: (A)

the majority of the executive officers or directors are United States citizens or residents, (B) more than 50

percent of the assets of the issuer are located in the United States or (C) the business of the issuer is

administered principally in the United States;

“GORA” means the gross overriding royalty agreement pursuant to which PHSRL granted the PHSRL

Founders a royalty equal to five percent of all of the gross proceeds received by PHSRL from the sale of

oil, natural gas and associated hydrocarbons from the Pirity Concession, net of those deductions specified

in the GORA;

“gross” means: (i) in relation to the Company’s interest in production or reserves, its working interest (operating or non-operating) share, if any, before deduction of royalties and without including any

royalty interests of the Company; (ii) in relation to wells, the total number of wells in which the

Company has an interest; and (iii) in relation to properties, the total area in which the Company has an

interest;

“Guyana Acquisition” means the contemplated acquisition by the Company of the exploration rights to the

Takutu PPL in exchange for the issuance to the Vendors of 15,600,000 Performance Shares;

“IFRS” means International Financial Reporting Standards as issued by the International Accounting

Standards Board, as adopted by the Canadian Accounting Standards Board;

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“IPO” means the Company’s initial public offering:

“JOA” means the Joint Operating Agreement entitled “International Operating Agreement” entered into

between President Energy Paraguay S.A. and PHSRL dated October 29, 2012, regarding the Pirity

Concession;

“June Cash Call” means the cash call made on June 13, 2014 by President Energy in the net amount of

$2,100,000 in respect of the first exploration well on the Pirity Concession, which was paid on June 27, 2014 to President Energy pursuant to the terms of the Pirity Farm-Out;

“June Cash Call Note” means the promissory in the amount of $200,000 issued by Petro-Victory Energy Corp.

on June 23, 2014 to Harvison Capital Management, LLC bearing interest at fifteen percent per annum, and

which was repaid July 23, 2014. The Company used the proceeds from the IPO to repay the June Cash Call

Note;

“LCH” means LCH S.A., a Paraguayan company that formerly held a minority participating partially

carried working interest in the Pirity Concession of five percent. Such working interest is carried by the

Company for the cost corresponding to the first 100 km of 2D seismic, as well as the cost corresponding

to the first 15,000 meters of exploratory wells. On June 10, 2014, President Energy announced that it

had purchased the entire issued share capital of LCH and that, as a result of such acquisition, President

Energy holds a 64% working interest in the Pirity Concession;

“Letter Agreement” means the agreement dated May 20, 2014 between President Energy and PHSRL

wherein President Energy agreed to extend the deadline of the May Cash Call to June 30, 2014. The

Letter Agreement provides that the Company will assign an additional one percent working interest

in the Pirity Concession to President Energy for every one million dollars not paid to President Energy

pursuant to the May Cash Call by June 30, 2014;

“Management” means, collectively, the executive officers of the Company;

“May Cash Call” means the cash call made on May 8, 2014 by President Energy in the net amount of

$3,100,000 in respect of the first exploration well on the Pirity Concession, which was due to President

Energy pursuant to the terms of the Pirity Farm-Out by May 23, 2014 and extended to June 30, 2014

pursuant to the Letter Agreement and which was paid to President Energy on June 27, 2014;

“MOPC” means Ministerio de Obras Públicas y Comunicaciones, the Ministry of Public Works and Communications, the oil and natural gas regulator of Paraguay;

“net” means: (i) in relation to the Company’s interest in production or reserves, its working interest

(operating or non-operating) share, if any, after deduction of royalty obligations, plus the Company’s

royalty interests in production or reserves; (ii) in relation to the Company’s interest in wells, the

number of wells obtained by aggregating the Company’s working interest in each of its gross wells; and

(iii) in relation to the Company’s interest in a property, the total area in which the Company has an interest

multiplied by the working interest owned by the Company;

“NI 51-101” means National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities

“Option” means an option to acquire a Common Share granted pursuant to the Option Plan;

“Option Plan” means the stock option plan of the Company;

“Paraguay” means the Republic of Paraguay;

“Performance Escrow” means the escrow arrangement governing the release of the Performance Shares.;

“Performance Shares” means the common shares, which will be issued to the Vendors and placed into

escrow upon Closing of the IPO and released to the Vendors if the conditions precedent set forth in the

Purchase and Sale Agreements are satisfied;

“Person” means any individual, partnership, association, body corporate, trust, trustee, executor,

administrator, legal representative, government, regulatory authority, or other entity;

“Petro-Victory, LLC” means the limited liability company that was organized under the laws of the State of

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Texas on December 27, 2006 and that holds the Company’s interests in PHSRL and which became

a wholly-owned subsidiary of Petro-Victory Energy Corp. pursuant to the Reorganization on July 22, 2014;

“PHSRL” means the indirectly-held subsidiary of the Company that was organized under the laws of

Paraguay on August 12, 2004 as “Pirity Hidrocarburos S.R.L.” and that holds the Company’s interests in the

Pirity Concession;

“PHSRL Founders” means the original promoters and sellers of shares of PHSRL, being Dr. Fernando Weins and Mr. Arnold Klassen;

“Pirity Concession” means the rights to the exploration and production of hydrocarbons in approximately

two million acres located in the north-west of Paraguay’s occidental region, the Pirity Sub-basin, near the

Argentinian-Paraguayan border;

“Pirity Farm-Out” means the farm-out agreement dated September 11, 2012 among Petro-Victory, LLC,

PHSRL and President Energy, pursuant to which President Energy agreed to act as the operator of the Pirity

Concession and has subsequently earned a 59 percent working interest in the Pirity Concession. In addition,

President Energy holds a five percent working interest that is carried by the Company that it purchased

through the acquisition of LCH. Such five percent working interest is carried by the Company for the cost

corresponding to the first 100 km of 2D seismic, as well as the cost corresponding to the first 15,000 meters

of exploratory wells;

“PPL” means petroleum prospecting license;

“President Energy” means President Energy PLC, an international oil and natural gas exploration and

production company that is listed on the AIM market of the London Stock Exchange with whom the

Company entered into the Pirity Farm-Out and which owns a Paraguayan subsidiary, “President Energy

Paraguay S.A.”;

“Prospect” means a geographic or stratigraphic area, in which the Company owns or intends to own one or

more oil and natural gas interests, which is geographically defined on the basis of geological data and

which is reasonably anticipated to contain at least one reservoir or part of a reservoir of oil and natural gas;

“Purchase and Sale Agreements” means the two Purchase and Sale Agreements entered into on May 23, 2014

by the Company setting out the terms and conditions of the Asset Acquisitions;

“Reorganization” means the series of transactions pursuant to the terms of the Contribution Agreement whereby Petro-Victory Energy Corp. acquired all of the issued and outstanding units of Petro-Victory, LLC

on July 22, 2014 in exchange for the issuance to the Existing Unitholders of Common Shares and

Restricted Voting Shares of the Company;

“Restricted Voting Shares” means the Class B common shares of the Company, issued to certain of the

Existing Unitholders in connection with the Reorganization. The Restricted Voting Shares cannot be

voted at meetings of shareholders of the Company for matters concerning the nomination and/or election

of directors. The Restricted Voting Shares are convertible at any time into Common Shares and, except

for the restriction on voting as set forth above, are otherwise identical to the Common Shares in respect of

preferences and privileges;

“Schlumberger” means the Schlumberger Integrated Project Management Group, a division of

Schlumberger Limited, or its affiliates;

“SEDAR” means the System for Electronic Document Analysis and Retrieval;

“Shareholder” means a holder of Common Shares;

“Takutu PPL” means the exploration licence over an area of 1,540,000 acres (gross) of State lands located

in the Takutu Basin, onshore Guyana, adjacent to Guyana’s border with Brazil. The Company may acquire

a 100 percent working interest on the property and the resources upon the successful completion of

the Guyana Acquisition, subject to the ten percent carried working interest on the first well held by a third

party;

“Trustee” means Equity Financial Trust Company; “TSX” means the Toronto Stock Exchange;

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“TSX-V” means the TSX Venture Exchange Inc.;

“Vendors” means those Persons from whom the Company intends to acquire the exploration rights to the

Takutu PPL and the exploration rights to Block REC-T-170 pursuant to the Asset Acquisitions.