Item 4. Information on the Company

A. History and Development of Strata Oil & Gas Inc.

Strata Oil & Gas Inc. is a company principally engaged in the acquisition and exploration of oil and gas properties. We were incorporated under the laws of the State of Nevada on November 18, 1998 and commenced operations in January 1999. We completed our initial public offering in February 2000. The Company operates in the oil and gas industry with a focus on Canada’s carbonate-hosted bitumen deposits.  The Company has interests in a total of 18 oil sands leases located in Northern Alberta, Canada.

Continuance to Canada

We are presently incorporated under the Canada Business Corporations Act. On April 22, 2003, the Company filed a registration statement to effect a continuation of our corporate jurisdiction from the State of Nevada to Canada on Form S-4 with the United States Securities and Exchange Commission (SEC). The Form S-4 was declared effective on or about July 7, 2004. On September 13, 2004, Strata filed a Form 8-A with the SEC registering its class of common shares under Section 12(g) of the Exchange Act.

Discontinued Operations

Until the end of June 2005, the Company had developed software that was designed to allow users to interface with and manage databases and customer relationships. On June 29, 2005 a majority of the Company’s shareholders approved a change in the business of the Company from software development to oil and gas exploration.

B. Business Overview

Refer to Item 4.A “History and Development of Strata Oil & Gas Inc." for information regarding the Company’s history and business activities.

BUSINESS DESCRIPTION

The Company currently has interests in oil sands properties located in the Peace River and Wabiskaw areas of Northern Alberta, Canada.

The Company is currently engaged in the acquisition exploration and if warranted and feasible development of oil and gas properties. The Company’s oil sands interests are unproven and there is no assurance that a commercially viable oil or gas deposit exists on any of its properties. Further evaluation will be required on each property before a final evaluation as to the economics and legal feasibility of the property is determined.

The Company originally had an interest in 43 oil sands leases in northern Alberta, Canada.  In December 2010, the Company sold 25 of its oil sands leases to an Alberta company.  As of December 31, 2014 the Company currently has interests in oil sands properties located in the Peace River and Wabiskaw areas of Northern Alberta, Canada including 17 leases in the Peace River oil sands area and one lease in the Athabasca oil sands area.

MATERIAL EFFECTS OF GOVERNMENT REGULATION

Development, production and sale of natural gas and oil in Canada are subject to extensive laws and regulations, including environmental laws and regulations. The oil and gas leases currently held by the Company are owned by the Province of Alberta and are managed by the Department of Energy. We may be required to make large expenditures to comply with environmental and other governmental regulations.  Matters subject to regulation include:

Under these laws and regulations, we could be liable for personal injuries, property damage, oil spills, discharge of hazardous materials, remediation and clean-up costs and other environmental damages.  Failure to comply with these laws and regulations may also result in the suspension or termination of our operations and subject us to administrative, civil and criminal penalties.  Moreover, these laws and regulations could change in ways that substantially increase our costs.  Accordingly, any of these liabilities, penalties, suspensions, terminations or regulatory changes could have a material adverse affect on our financial condition and results of operations which could potentially force us to cease our business operations.

SEASONALITY, DEPENDENCY UPON PATENTS, LICENSES, CONTRACTS, PROCESSES, SOURCES AND AVAILABILITY OF RAW MATERIALS

Certain of the Company’s properties are in remote locations and subject to significant temperature variations and changes in working conditions.  It may not be possible to actively explore the Company’s properties in Alberta throughout the year due to seasonal changes in the weather.  If exploration is pursued at the wrong time of year, the Company may incur additional costs to address issues relating to the weather.

Shortages or an increase in cost of drilling rigs, equipment, supplies or personnel could delay or interrupt our operations, which could impact our financial condition and results of operations.  Drilling activity in the geographic areas in which we conduct drilling activities may increase, which would lead to increases in associated costs, including those related to drilling rigs, equipment, supplies and personnel and the services and products of other vendors to the industry.  Increased drilling activity in these areas may also decrease the availability of rigs.  We do not have any contracts with providers of drilling rigs and consequently we may not be able to obtain drilling rigs when we need them.  Therefore, our drilling and other costs may increase further and necessary equipment and services may not be available to us at economical prices.

COMPETITION

The natural gas and oil exploration industry is intensely competitive, highly fragmented and subject to rapid change. We may be unable to compete successfully with our existing competitors or with any new competitors. We compete with many exploration companies that have significantly greater personnel, financial, managerial, and technical resources. This competition from other companies with greater resources and reputations may result in our failure to maintain or expand our business.

C. Organizational Structure

The Company is not part of a group and has no subsidiaries.

D. Property, Plant and Equipment

CORPORATE OFFICES

We do not own any real property.  Our corporate offices are located at 10010 - 98 Street, PO Box 7770, Peace River, Alberta T8S 1T3.  We believe that the facilities will be adequate for the foreseeable future.  

OIL SANDS LEASES

The Company currently has an interest in 18 oil sands leases in northern Alberta, Canada of which 17 of the leases are located in the Peace River oil sands area and 1 lease is located in the Athabasca oil sands area.

Oil Sands Background

“Oil Sands” refers to unconsolidated, bitumen-saturated sands containing varying amounts of clay and rock material.  The bitumen content refers to a heavy, viscous crude oil that generally does not flow under natural reservoir conditions.  As a result, it cannot be recovered from a conventional well the way lighter oil is most often produced. The oil sands are contained in three major areas beneath an approximate 140,800 square kilometers (54,363 square miles) of north-eastern Alberta - an area larger than the state of Florida.  As of December 2002, according to the Alberta Department of Energy, these three areas, Athabasca/Wabiskaw, Peace River, and Cold Lake, contained 1.6 trillion barrels of bitumen in-place, of which 174 billion barrels are proven reserves that can be recovered using current technology.

These deposits contain a significant amount of oil but until recently the cost of extraction has created a barrier to economic development. Extraction of oil from oil sands requires technologically intensive activity and the input of significant amounts of energy to exploit the oil sands deposits. There are two main types of oil sands production methods: mining and in-situ.  Oilsands mining is accomplished using an open pit operation whereby the oil sands are dug up and trucked to a processing facility.  For oil sands reservoirs too deep to support economic surface mining, some form of in-situ recovery is required to produce bitumen.  In-situ production is similar to that of conventional oil production where oil is recovered through a well. The Alberta Energy and Utilities Board estimates that 80 percent of the total bitumen ultimately recovered will be with in-situ techniques. Numerous in-situ technologies have been developed that apply thermal energy to heat the bitumen and allow it to flow to the well bore.

There are some oil sands reservoirs where primary or “cold” production is possible.  The lighter bitumen in these areas can flow towards a well and bitumen production can be enhanced by the co-production of sand, thereby creating a down hole cavity around the well bore which facilitates the flow of oil towards the well. This type of production technology is commonly referred to as “Cold Heavy Oil Production with Sand” (“CHOPS”).  While this type of bitumen is marginally lighter and less viscous than the conventional bitumen found in mineable and other in-situ reserves, it is also slightly heavier than the conventional “Heavy Oil” reservoirs produced in the “heavy oil belt” region, located around the central Alberta - Saskatchewan border.  Another production technology, which may be suitable for some of the lighter oil sands reservoirs, is the use of horizontal well bores.  Horizontal production wells, which have been drilled up to more than 2 kilometers away from their surface locations, have been successfully applied to cold in-situ bitumen production, where it is suitable.  In general, open pit oil sands mines are found in central Athabasca deposits, while in-situ bitumen production technology is used in the Cold Lake, south Athabasca, and Peace River deposits, where the overburden thickness exceeds 50 meters.

Oil in oil sands is found mainly in high porosity quartz arenites to arkosic sands that cover large areas and lie up-dip from the purported source rocks to the southwest.  There are also vast amounts of heavy oil as well in fractured carbonate rocks of 10-14% porosity underlying a large triangular region of north central Alberta.  In addition, there is a large amount of heavy oil in a series of thinner blanket sands and channel sands extending all the way from Suffield, Alberta to zones overlying the Cold Lake Oil Sands near Bonnyville, and extending well into Saskatchewan. The latter deposits called the ‘heavy oil belt” are the sites of the most development attention because the oil is less viscous and it can be produced using either CHOPS or horizontal well technology.

The source rocks for the oil sands are from the Cretaceous and Jurassic shales in the Alberta Syncline.  Rapid sedimentation of organic rich argillaceous material caused large flow volumes to be generated as the result of compaction.  Deep burial of the kerogeneous source rocks allowed organic diagenesis to occur resulting in the generation of oil and gas from the kerogen.  The oil sands are 98% un-cemented (unconsolidated sandstones). The ingress of bitumen has essentially stopped diagenetic processes and the sands do show strong evidence of the early effects of pressure solution and re-crystallization but true cementation is quite rare as are significant calcite cemented zones.

Carboniferous Oil Sands

Strata has focused its efforts on carbonate-hosted bitumen sands.  The carbonates are the next challenge in the Alberta oil sands industry. Like oil sands two decades ago, carbonates represent an enormous and relatively untapped petroleum resource. The means for producing bitumen from carbonates is still being studied.  The nature of the carbonate triangle in Alberta tends to vary and there is unlikely to be a single one-size -fits-all strategy for production.  Cold production may be possible in some areas although in most cases production requires an in-situ treatment. Various technologies have been tested and others considered, including similar technologies to those employed in oil sands (cyclic steam, SAGD, etc.). Bitumen carbonates are still being studied, and as yet there are several techniques which may prove to be effective.  We are in the process of determining the most efficient means of producing the bitumen from our Peace River project.

Carbonate oil sands are an unconventional resource that remains almost untapped.  While much of the world now knows about Alberta’s vast oil sands resource, many people are unaware that a bitumen resource of similar magnitude is locked in carbonate rock.  According to a report by Petroleum Technology Alliance Canada (PTAC), 26% of Alberta’s bitumen resources are contained in carbonate rather than sand formations.  One northern Alberta carbonate formation alone — the Devonian-age Grosmont complex — has bitumen volumes in place comparable to the huge Athabasca oil sands deposit. This comparison is made in the 176-page official history of the Alberta Oil Sands Technology and Research Authority (AOSTRA), the long-since disbanded provincial agency set up in 1974 to promote bitumen recovery technologies.  The history devotes four well-illustrated pages to bitumen carbonates.  The resource received serious attention during the AOSTRA years with a series of pilot tests running in the Grosmont formation between 1975 and 1987.  However, oil prices fell and funding was cut.  The remotely located and little known bitumen carbonates were largely forgotten until Royal Dutch Shell plc paid nearly $500 million for leases in 2006.

Contained in a roughly triangular 70,000 square-kilometer area of northern Alberta called the Carbonate Triangle, the deposits may be the most technically challenging of the province’s bitumen resources. The basic difference between oil sands and bitumen carbonates is the former is bitumen mixed with unconsolidated sand, which can be either mined or produced from wells. The latter, as the name implies, is bitumen in carbonate rock — both dense limestone and heavily karsted rock. Grosmont bitumen is even heavier than the Athabasca bitumen and the reservoir is extremely variable, meaning that a single recovery method is unlikely to work throughout the formation. The lack of understanding of the heterogeneous nature of the reservoir is the main hurdle for developing successful bitumen recovery schemes. The bitumen is contained in a dual porosity system — both in the vugs (cavities or fractures) and in the rock matrix itself.  The vugs could potentially be good news in that they could conceivably improve permeability once the viscosity of the bitumen is raised by heat or other means, but bad news if they serve as channels for steam to escape from the area of interest.  In the karsted areas, these irregular cavities and tunnels are often the diameter of a man’s arm, and sometimes much larger.  According to the PTAC review of the pilot results, challenges of drilling through this karsted rock include the potential for loss of drilling fluids into the formation, and problems with the placement of cement to maintain a strong well-to-formation bond.

DROWNED AREA OIL SANDS LEASE

Acquisition of Interest

On September 7, 2005 the Company acquired a 100% interest in Alberta Oil Sands Lease #7400100011 (the “Drowned Property’).  The rights to the Drowned Property were acquired for a payment of CDN $25,000 (USD $20,635) as well as other closing costs of CDN$9,874 (USD $8,150). The Drowned Property covers 512 hectares of land in the Drowned Area of the Wabiskaw oil sands in the West Athabasca area of Northern Alberta.  The lease gives the Company the right to explore the Drowned Property covered by the lease.

Strata's acquisition of the Drowned Property lease includes an overriding 4% royalty agreement with the vendor. The royalty is to be paid on a well-to-well basis and is payable on all petroleum substances produced by any well on the Property. In addition, the Company must pay the Province of Alberta CDN $1,792 (USD $1,798) per year to maintain its right to the lease. The lease is subject to a royalty payable to the Government of Alberta.

Alberta's project-based generic oil sands royalty regime operates on the principle of revenue minus cost. Royalty is paid at one of two rates, depending on the project’s financial status.  The deciding factor is the project’s payout date . A project has “reached payout” once its cumulative revenues have exceeded its cumulative costs.  Before the payout date, the applicable royalty is 1% of the project’s gross revenue. This low rate recognizes the high costs, long lead times and high risks associated with oil sands investment. It prevents undue strain on the developer’s financial resources during the most critical, start-up stages of the project.  After the payout date, the applicable royalty is the greater of 1% of the project’s gross revenue or 25% of the net revenue for the period .

Location

The Drowned Property lies near the southern edge of the Wabiskaw Heavy Oil/Oil sands field in west Athabasca approximately 45km south of the town of Wabiskaw or 60km Northeast of Slave Lake.

Regional Geology

Regionally, the Wabiskaw Reservoir consists of three overlapping en-echelon sand bodies interpreted as shoreface sand which coarsen upwards from shale to fine sand.  The three bodies are informally referred to as Wabiskaw “A” Sand, Wabiskaw “B” Sand, and Wabiskaw “C” Sand.  The three bodies are separated from each other by shales and each has proven to be correlatable and mappable over a wide area.  All three bodies contain bitumen, but only the bitumen sand of the Wabiskaw “A” is being cold produced at the present time.  The “B” and “C” are generally thinner and contain smaller bitumen accumulations.

Gas and water are also significant components of the reservoir fluids in the Wabiskaw sands.  Several associated gas fields are currently in production.  There may be a distinct basal water leg below the bitumen.  This is especially true in the southwestern part of the Wabiskaw reservoirs.

The deposit lies above the western part of the Athabasca oil sands and extends westward somewhat beyond the McMurray Formation edge.  In many regions, the Wabiskaw is oil rich and it overlies the McMurray forming two stacked reservoirs.  Detrital matter arrived mainly from the west but mixed with a small component of sediments from the shield.  The bitumen is highly viscous and is at a depth of 100 to 700 meters.  The Wabiskaw is classified as the lowest Member of the Clearwater Formation and therefore overlies the McMurray Formation.  The reservoir and the thickness of oil-saturated material vary from 0 to 10 meters.

Property Geology

Several pre-existing bore holes indicate that neither the Wabiskaw “A” sand nor the Wabiskaw “B” sand is present on the Company’s Drowned Property, although it appears that 0 to 4 meters of a thin bitumen-bearing Wabiskaw “C” sand may be present.  In addition, the McMurray Formation is present beneath the Wabiskaw and fills a local north-south oriented valley system incised into the older limestone basement.  These McMurray valley filled sediments appear to be complex, consisting mainly of water-bearing silts and clays, and hold only minor, discontinuous, bitumen-bearing sands of an unknown quality.  The Wabiskaw and McMurray sands lie at a depth of 550 to 600 meters and the Grand Rapids reservoir lies at a depth of 425 to 500 meters.

Previous Work

Historically, the Drowned Project has had four wells drilled on it by companies owning the gas exploration rights. The geophysical well logs demonstrate the presence of bitumen in all four wells, one of which shows the presence of oil sands.

Planned Work by the Company for 2015

The Company plans to continue focusing its exploration resources on its Peace River Property. The Drowned Property lease which is due to expire in October 2015 will be reviewed prior to its expiration.  

PEACE RIVER OIL SANDS LEASES

The following are two maps showing the location of the Company’s 17 oil sands leases in the Peace River region of northern Alberta, Canada.

Acquisition of Interest

The Company has entered into a series of leases in multiple transactions with the Province of Alberta in the Peace River area of Alberta, Canada (the “Peace River Property”).  All of the leases were acquired through a public auction process that requires the Company to submit sealed bids for land packages being auctioned by the provincial government.  Upon being notified that it has submitted the highest bid for a specific land parcel the Company immediately pays the Government the bid price and enters into a formal lease with the government.  The bid price includes the first year’s minimum annual lease payments.  The specific transactions entered into by the Company are as noted below.

The Peace River Property consists of a total of 20,992 hectares of land in a region of northern Alberta known as Peace River.  The leases are subject to royalties payable to the Government of Alberta.  Alberta's project-based generic oil sands royalty regime operates on the principle of revenue minus cost.  Royalty is paid at one of two rates, depending on the project’s financial status.  The deciding factor is the project’s payout date .   A project has “reached payout” once its cumulative revenues have exceeded its cumulative costs.  Before the payout date, the applicable royalty is 1% of the project’s gross revenue.  This low rate recognizes the high costs, long lead times and high risks associated with oil sands investment.  It prevents undue strain on the developer’s financial resources during the most critical, start-up stages of the project.  After the payout date, the applicable royalty is the greater of 1% of the project’s gross revenue or 25% of the net revenue for the period .

Location

The Peace River Property lies in the Peace River oil sands field in Alberta approximately 40 to 50 kilometers northeast of the town of Peace River. These holdings are situated near Cadotte Lake.

Peace River Project Lease Information

The Peace River Property interest (hereinafter referred to as “Cadotte West”, “Cadotte Central”, “Cadotte East” or collectively the “Cadotte Leases” is comprised of 17 leases with the Government of the Province of Alberta, Canada.  All of the leases are for a 15-year term, require minimum annual lease payments, and grant the Company the right to explore for potential oil sands opportunities on the respective lease.

Regional Geology

The Peace River Cretaceous clastic reservoir consists of a complex stratigraphy similar in nature to the Athabasca Deposit to the east.  These are thought to comprise fossil estuarine systems where the best reservoirs are contained in tidal inlet and barrier sands.  Secondary reservoir targets may be tidal delta, bayhead delta, tidal channel, and tidal flat sands.  The Peace River Carboniferous reservoir consists of platform sediments with relatively few reef building organisms. Structurally, the Peace River strata dip to the southwest and the elevation of the bitumen-bearing interval lies between 50 and 100 meters below sea level or at a depth of between 680 to 790 meters below the surface.

Property Geology (Cadotte Leases)

Strata has focused its efforts on the bitumen resources contained in the Debolt/Elkton carbonate Carboniferous Formation and the Bluesky/Gething clastic Cretaceous Formation in the Cadotte area.  In particular, our exploration programs to date have focused on 50 sections in the Cadotte area located in Townships 86 and 87, Ranges 18, 19 and 20. (the “Target Area”).

The nature of the geology of the carbonate sequence in the Target Area has a significant influence on the distribution of the bitumen resource. The principal reference source for this section is the Alberta Research Council’s publication, “Geological Atlas of the Western Canada Sedimentary Basin”. The sequence that hosts the bitumen deposits is the Rundle Group of Lower Carboniferous age.  The Rundle Group in this area includes three stratigraphic units which, in ascending order, are the Pekisko, Shunda and Debolt Formations.  From place-to-place the Debolt Formation may also include another distinct unit, the Elkton Member.  In the Cadotte Lease area, the Elkton Member is usually present, as long as the overlying unconformity with the Cretaceous sequence has not eroded the entire Debolt Formation sequence.  Although there are many intervals that are bitumen enriched in the Rundle sequence in the Cadotte Lease area, the principal enrichment zones occur in the Elkton Member, the upper half of the Debolt but usually not right at the top of the formation and, to a lesser extent, in the Shunda Formation.  The high grade zones of enrichment are those that occur in the Elkton Member and the Debolt Formation.

A Cretaceous clastic sequence that includes the Gething and Bluesky Formations at the base, unconformably overlies the Carboniferous rocks in this area.  All the beds dip gently to the west with those lying below the unconformity having a somewhat greater dip than those above it.  This causes the sequence below the unconformity to be eroded to a greater degree to the east and to be less complete, compared with the west.  These westerly dips are the result of post-depositional tectonic events and do not reflect the original orientation of the accumulation of sediment.  The Carboniferous sequence of the Rundle assemblage accumulated as a result of a series of prograding events that developed in a southerly to southwesterly direction.

The Carboniferous sequence mainly includes platform sediments that show generally shallower-water characteristics up-section.  In a basinward direction the depositional facies proceed from beach and lagoonal environments through shoals of the shelf margin to marine basin muds.  The lithologies that result include high energy siliciclastics of the beach environment, through various types of carbonates on the platform and its slope to shale in the deep marine environment. There even appear to be beds present that have the character of unconsolidated coarse sediments.  Several transgressive events therefore resulted in the accumulation of clastic sediments interbedded with carbonate units.

The carbonate units included relatively few reef building organisms and thus there was little tendency for irregular geological bodies such as reefs to form in this sequence in this area.  From one well to the next the regular nature of the deposition that took place at this time is apparent and it is relatively easy to show the correlation that exists between the same units in adjacent wells in the target area.  This feature of regular bed continuity is in strong contrast to the variability of the clastic units of the overlying Cretaceous sequence as seen in the Athabasca region.

It is also most noteworthy that the bitumen enrichment is strongly influenced by the bedded nature and continuity of the sediments.  It is readily possible in many cases to show the same details of the enriched sequence in adjacent wells even when they are spaced a kilometer or more apart.  This has a very strong impact on the selection of data separation distances for the classification of resources; in this sequence an equivalent assurance of existence is achieved with much wider spacing of wells than that used in the classification of bitumen resources for the Cretaceous surface mineable oil sand deposits presently being explored and developed near Fort McMurray.

Previous Work

During the winter drill season of 2006 – 2007, Strata drilled four wells on the Cadotte leases.  Three of these wells were within the Cadotte Central Target Area and one was in the Cadotte East leases.  All of the wells were drilled and cored.  Three wells were drilled with cores in the Cadotte Central Target Area, two of which were cased allowing for production testing with the ability to re-enter these wells for future testing.  The other well was abandoned due to drilling fluid losses during drilling which did not allow the well to be cased for testing in the future.  The fourth well drilled in the Cadotte East location was cored and cased.  Due to natural gas flowing from the well, to which the Company did not have the rights to, additional borehole tests were not conducted.  The cores of all of these wells were tested and examined in a laboratory in Calgary.  The results of these tests were that cold production was not viable.  However, the results indicated that the bitumen would flow at approximately 85°C.  These results will allow the Company to explore different means of extraction in addition to steam.

Former leaseholders have drilled wells on and around the Company’s Target Area.  Geophysical well logs are of variable quality but generally consist of a full suite of tools to evaluate the potential reservoirs.  With respect to available drilling data, the leases of the Target Area are drilled at an average spacing of one well per section.  However, not all of these existing wells were drilled to investigate the sequence located on the Company’s Cadotte leases. The effective average spacing with wells that have penetrated the Carboniferous sequence is approximately 0.8 wells per section.  This spacing is from twenty-three wells on or immediately adjacent to the leases.  There are an additional two hundred nineteen wells in the surrounding area, the data from which has also been referenced and inspected by the Company to assist with its evaluation of the Cadotte leases.

However, the quality of the data from the wells of different vintage is quite variable.  Several of the wells were drilled in the 1950’s.  The drilling records and logs for these wells are sometimes poor or absent or they may be less complete than those of more recently drilled wells.  A database search was done to identify higher quality data which was restricted to wells drilled since 1970 and this, plus the new Strata wells was used as the primary reference data.  A total of eighteen wells of this vintage are located on or immediately adjacent to the lease blocks.  The well log data from these wells is the primary source of information on the leases available for the present evaluation but this was supplemented by high quality data from a further thirty-nine more distant wells in the area.

In the United States, registrants, including foreign private issuers like us, are required to disclose proved reserves using the standards contained in Rule 4-10(a) of the United States Securities and Exchange Commission’s (“SEC”) Regulation S-X. The Company has no proved reserves at this time.

Cadotte Central – Contingent Bitumen Resource

The Company completed the drilling of its first four wells in the winter drilling season of 2006 – 2007.  Strata had engaged Norwest Corporation (”Norwest”) of Calgary, Alberta, Canada to assist Strata with the planning and undertaking of its exploration of the Cadotte Central leases.  On August 16, 2007 Norwest completed a technical report titled Evaluation of In-Place Bitumen Resources – Cadotte Central Leases and on February 29, 2008 Norwest Questa Engineering Corporation  (“Norwest Questa”) of Golden, Colorado completed a report titled Preliminary Feasibility Study of the Cadotte Central Leases,  Alberta, Canada.  On April 28, 2010 Norwest completed a follow up report titled Cadotte Project – Resource Reclassification 2013 Norwest Report.  All of these reports are available to the public on the www.sec.gov web site.  All discussion in this section is qualified by reference to the three reports above and readers are advised to read the three technical reports in their entirety.

In the United States, registrants, including foreign private issuers like us, are required to disclose proved reserves using the standards contained in Rule 4-10(a) of the United States Securities and Exchange Commission’s (“SEC”) Regulation S-X. The Company has no proved reserves at this time.

Evaluation of In-Place Bitumen Resources – Cadotte Central Leases – August 16, 2007

The study was designed to comply with the requirements of National Instrument 51-101 and the resource classification scheme and criteria elaborated in Volume 1, of the Canadian Oil and Gas Evaluation Handbook.  Recoverable bitumen volumes were not addressed in this report because no estimate of the recovery factor was available at the time.  Mr. Geoff Jordan, P. Geol., former Senior Vice President of Norwest Corporation and a qualified person as defined by National Instrument 51-101 was responsible for the preparation of the technical information in the report.

The amount of exploration drilling and testing on the Cadotte Target Area was sufficient for that part of the Peace River Oil Sand deposit to be classified as a Discovered Resource (the classification system was subsequently changed such that the Discovered Resource would now be called Discovered Petroleum Initially In-Place (PIIP)).  The classification of the Discovered Resource into Low, Best ("Most Likely") and High categories was based on the following criteria:

The results of the different estimates for the Original Bitumen In Place (“OBIP”) are presented on the following table:

Effective OBIP for the Cadotte Area by Target Zone in millions of Stock Tank Barrels (MMSTB), (Using 8% wt Cut-off.)

In the Bluesky/Gething Formations the results indicate that there are some areas where grades above the threshold of 8 wt% occur but these are somewhat scattered and there are no areas where especially high grade results were found.  At the same time, the ore thickness is generally relatively low.

It is important to note that the resource estimates presented in this report are made for quantities on an in-place basis.  This is not an estimate of quantities that may be recovered.  Such an estimate could not be made at the time because there was no reliable value available for the bitumen recovery factor that should be applied.  Such a factor is determined as a result of the completion of various engineering tests and analyses.

The accuracy of resource estimates is, in part, a function of the quality and quantity of available data and of engineering and geological interpretation and judgment.  Given the data available at the time this report was prepared, the estimates presented herein are considered reasonable.  However, they should be accepted with the understanding that additional data and analysis available subsequent to the date of the estimates may necessitate revision.  These revisions may be material.  There is no guarantee that all or any part of the estimated resources of bitumen will be recoverable.

Neither Strata nor Norwest make any express or implied warranties or guarantees of any kind concerning this report; including without limitation any implied warranty of merchantability or fitness for a particular purpose.  Specifically, neither Strata nor Norwest make any warranties or guarantees that any property identified in this report will produce oil and/or gas in any quantity, or that any property identified in this report will produce or receive any economic, commercial, or other benefit.

Readers of this 20-F are advised to read the August 16, 2007 report titled Evaluation of In-Place Bitumen Resources - Cadotte Leases, that is publicly available on the www.sec.gov web site and was filed by the Company on September 27, 2007 under cover of 6-K.

Preliminary Feasibility Study of the Cadotte Leases, Alberta, Canada – February 29, 2008

The preliminary feasibility report was prepared in compliance with Canadian National Instrument 51-101 guidelines for disclosure concerning oil and gas resources in Canada.  NI 51-101 requires that the procedures and criteria of the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook) be used for resource classification and these standards and criteria have been used in this report.  In this case it has been found that the estimate of potentially recoverable bitumen in the Cadotte Target Area at the time of the report could not be classified as a Contingent Resource.  The major factor was that there is no pilot project at the time that applied in-situ recovery methods to bitumen in a hardrock carbonate host that could be used as a demonstration of recoverability.  This meant that existing pilot projects in clastic hosts, which have different physical characteristics from carbonates, had to be used for performance prediction.  This additional risk prevented the “Contingent Resource” classification being made.  The additional factors that also prevented classification as a Contingent Resource include:

The Norwest August 16, 2007 report resource estimate is classified as “Discovered Resources”, in accordance with the criteria and former classification scheme of the COGE Handbook.  The current version of the COGE Handbook has re-titled “Discovered Resources” as “Discovered Petroleum Initially In Place” (“Discovered PIIP”).  The Pre-Feasibility estimate prepared by Norwest Questa is compliant with the requirements of National Instrument 51-101 with respect to classifying the resource as Discovered PIIP.  Dr. John D. Wright, Ph.D., P.E., who was President and Chief Engineer, of Norwest Questa Engineering Corporation at the time of the preparation of the Preliminary Feasibility, is a qualified person as defined by National Instrument 51-101.  Dr. Wright supervised the preparation of the technical information in this report.

The analogy method was utilized to develop recovery factors that were applied to the OBIP estimates to obtain a low, most likely, and high estimate for potentially recoverable bitumen.  Several projects using technology similar to that expected to be implemented on the Cadotte leases were used as analogies for a bitumen recovery method and a resultant range of recovery factors.  Shell’s Carmon Project (“Carmon Creek”) was one of the primary analogies utilized by Norwest for the recovery factor estimates.  Norwest reviewed the Carmon Creek Project and concluded that some bitumen bearing stratigraphy on Strata’s land correlates with the same stratigraphy at Carmon Creek.  Over the last 25 years, Shell has tested numerous recovery methods at Peace River and has recently concluded that Horizontal Cyclic Steam (“HCS”) is the optimal recovery method for Carmon Creek.  The Preliminary Feasibility Study for Cadotte is based on the application of that method of extraction, as well as the Shell Carmon Project well layout and designs which were obtained from various public disclosure reports.

A production schedule was developed for the Cadotte leases over the key Target Area of twenty nine sections.  Each section, which has an area of one square mile, is about the same size as the Carmon Project pad and development block design.  Each pad and development block includes 20 wells of 1,400 m length, each of which is about 600 m in the vertical direction and 800 m horizontally.  In the design the pads are “brought on stream” over a four year build-up period.  The development block sequence is implemented such that the highest grade and thickest ore blocks are addressed first as long as the local infrastructure is able to service those areas.  During the main period of development, the daily production rate for the leases is about 56,000 barrels.  The production life for this schedule exceeds 20 years.  Cost estimates for this preliminary feasibility study were obtained from a review of public literature.

Based on the analogy method with an adjustment for difference between gross and effective OBIP calculations, Norwest Questa estimated the following recovery factors for application to the effective OBIP deterministic cases:

Norwest Questa then applied the estimated recovery factors shown above to the effective OBIP estimates from the August 16, 2007 report, which is the in-place Best estimate at an 8 wt% grade cut-off, to obtain the Low, Most Likely, and High Resource estimates for the Cadotte Area.

On April 28, 2010 Norwest issued a report upgrading the resource classification to “Contingent Resource” from “Discovered Resource”, in accordance with the criteria and former classification scheme of the COGE Handbook.  The Resource Reclassification report prepared by Norwest is compliant with the requirements of National Instrument 51-101 with respect to classifying the resource as “Contingent”.  Geoff Jordan, P. Geol., Senior Geologist at Norwest Corporation prepared the Resource Reclassification report, is a qualified person as defined by National Instrument 51-101.

With the Cadotte Recoverable bitumen quantity classified as a Contingent Resource, it is a requirement for reporting to identify and list the contingencies.  These are as follows:

The 2010 Norwest Corporation report modified the classification of the resources, and not the quantities, to reflect the following recoverable portion of the effective OBIP estimates:

Contingent Resource for the Cadotte Area by Target Zone in millions of Stock Tank Barrels (MMSTB)

In 2008 Norwest Questa conducted an initial economic evaluation of the Cadotte area, at a level of study consistent with that of a Preliminary Feasibility Study, based on the Most Likely potentially recoverable Discovered PIIP estimate of 517 MMSTB.  Based on a forecast price of $65 per barrel and constant costs, this Preliminary Feasibility economic analysis indicated that the development of the Cadotte area was economically viable with a net present value (discounted at 10%) of cash flows before income taxes of about $1.2 billion.

In 2010 Norwest Corporation completed a revised sensitivity analysis based on three different oil prices.  The assumptions utilized in the 2010 economic evaluation were based on a review of published public data for similar projects.  The analogy method was originally utilized to develop recovery factors that were applied to the original bitumen-in-place estimates to obtain a low, most likely, and high estimate for potentially recoverable bitumen.  Several projects using technology similar to that expected to be implemented on Strata's Cadotte Project were used as analogies for a bitumen recovery method and a resultant range of recovery factors.  See the table below for the 2010 revised sensitivity analysis:

Based on forecast prices and costs, this revised economic analysis indicates that the development of the Cadotte area is economically viable with a return on capital investment of 28% and Net Present Value (“NPV”) discounted at 10% of $1.3 billion.  At a WTI crude oil price of $85 per barrel, the impact of the planned royalty change is only about a 1% reduction of return on capital investment.  At a constant $75 per barrel WTI price, the return on capital investment is just over 20%.  Based on the favorable results of the pre-feasibility and revised economic analysis, the Cadotte area warrants further evaluation including a pilot well test program and feasibility level project design and cost estimates.

This report is limited in scope to document only the potentially recoverable portion of the Contingent Resource, formerly referred to as Discovered Petroleum Initially In Place (Discovered PIIP), within the Target Area of the Cadotte properties.  This report does not attempt to place a Fair Market Value on that resource portion.

Norwest Corporation reserves the right to revise its opinions of all estimates of resources if new information is deemed sufficiently credible to do so.

The accuracy of any estimate is a function of available time, data, geological engineering, commercial interpretation, and judgment.  While the resource estimates presented herein are believed to be reasonable, they should be viewed with an understanding that additional analysis of new data may justify their revision and Norwest Corporation reserves the right to make such revisions.

Readers of this 20-F Annual Report are advised to read the February 29, 2008 report titled Preliminary Feasibility Study of the Cadotte Leases, Alberta, Canada, and the April 28, 2010 report titled Cadotte Project - Resource Reclassification that were filed under cover of Form 6-K on March 6, 2008 and December 23, 2010, respectively, and are publicly available on the www.sec.gov web site.

Cadotte West – Bitumen Resource

Strata's Cadotte West project is located on 22 sections northwest of Shell's Carmon Creek Project and is contiguous to the company's Cadotte Central property holdings in Peace River. Data from prior years drill logs in the area indicate the Bluesky/Gething, Debolt and Elkton ore zones are present on the lease. This same data reports bitumen in these ore zones.

Historical information obtained from logs in the area indicates the Net Thickness of the Bluesky/Gething ore zone in this region appears to range from about 10 m to 25 m. There are actually two ore zones in the Bluesky/Gething in this area and these appear to individually thicken and come together to the south. Additionally, the logs include confirmation of hydrocarbons in the cuttings samples and are noted to have fluorescence response for hydrocarbons. This does not show the grade but it shows that bitumen is present in the ore zone. The resistivity responses for hydrocarbons in the elastic interval are strong and this indicates that there is a good chance that the zone contains bitumen at ore grade concentrations.

The same logs indicate that the ore zone of the Debolt can be expected to be present throughout the Cadotte West Area. This zone appears to be 25 m to 30 m thick. The logs consistently record that the interval of the Debolt ore zone has "vuggy porosity". This is the same as the Debolt reported under Cadotte Central Target area. The records consistently record strong hydrocarbon fluorescence in this interval, and note "oil saturation" or "strong oil saturation" in the cuttings from well to well over this interval. This suggests that the bitumen ore potential of the zone in this area is much the same as that found in the Cadotte Central Target Area.

During 2014 the Company moved forward on planned initiatives as follows;

Utilizing existing well and seismic data the study focused on different physical properties and technical aspects related to the identification of pools and fields on our lands. The initial interpretation of the geological structure at Cadotte West resulted in the identification of cold production targets which were then validated by seismic data. The Company's technical team has subsequently identified multiple drilling locations in order to test the extent to which the Bluesky Formation at Cadotte West has the fluid properties which permit the use of primary production methods. In light of the findings the Company redirected the focus of its available resources from further development of the Cadotte Central property to the Cadotte West property. The Company remains committed to the Cadotte Central development opportunity; however, it is management’s view that the favorable economics of potential cold production methods on the Cadotte West property warrant further validation.

The Company engaged specialized third party service provider(s) to assist with the development of a drill program which includes the submission of an Oil Sands Exploration plan, the ("OSE") to the Crown. Elements of an OSE application include, but are not limited to, mapping and locating services, sensitive areas, wildlife zones, historical work in the area, site access, environmental services, exploration operations detail, stake holders and first nation consultation and project management services. The OSE program approval was received in February 2015 granting the Company two years from the date of issue to conduct its exploration program.

Planned Work by the Company for 2015

When adequate funding can be assembled Strata intends to proceed with its drill exploration program and identified targets to test for cold production. The Company expects the short and long term funding of our oil and gas operations to be financed as in the past through equity in the form of private placements and warrant exercises. In addition we continue to work with potential partners to discuss potential funding arrangements which could facilitate the furtherance of our drill program.

Evaluation of Bitumen Resources – Cadotte Central and West Leases Technical Report – May 10, 2013

In 2013, Strata successfully completed the 51-101 compliant Technical Resource Evaluation of its Cadotte West and Cadotte Central holdings located in the Peace River region. The evaluation added 1.4 billion barrels of Discovered Petroleum-Initially-In-Place (PIIP as per the COGE Handbook definition) to Strata’s present resource base bringing it to a total of 3.4 billion barrels in place. Recent significant investment activity by large companies, our neighbors in the carbonate triangle, demonstrate clearly that the process of committing billions to the production of bitumen and other key infrastructure such as pipelines, is now gaining momentum quickly.

The "Technical Report Evaluation of Bitumen Resources Cadotte Central and West Leases” was prepared by Norwest Corporation, Mr. Geoff Jordan, Professional Geologist.

This report is designed to comply with the requirements of National Instrument 51-101 and the resource classification scheme and criteria elaborated in the current edition, Volume 1, of the Canadian Oil and Gas Evaluation Handbook. Elsewhere in this report the latter is referred to as the COGE Handbook.

These leases are referred to as Cadotte Central which was formerly referred to as the “Cadotte Target Area”, Cadotte West and Cadotte East. The Cadotte Central and Cadotte West areas are contiguous lease blocks that adjoin each other. Cadotte East is a group of three lease areas that are not contiguous and that do not adjoin the Cadotte Central and West areas. The resource estimates in the present report only apply to the contiguous leases of the Cadotte Central plus Cadotte West area. No bitumen evaluation has been made for Cadotte East as part of the present work.

The amount of exploration drilling and testing in the Cadotte Central area is sufficient for that part of the Peace River Oil Sand deposit to be classified as a Discovered Resource or Discovered Petroleum Initially in Place (PIIP). As the Cadotte West leases are not drilled, an estimate of the in-place resource is technically in the COGE classification of “Undiscovered.” However, it is the author’s opinion that there is sufficient evidence from the wells drilled in the surrounding areas for the judgment to be made that the bitumen bearing formations, the Bluesky, the Debolt and the Elkton, are all expected to be present on the Cadotte West leases. Hence, in this report, the in place bitumen resource on Cadotte West is considered to be Discovered PIIP and is classified as such. The classification of the Discovered PIIP into Low, Best and High categories was based on the following criteria:

A summary of the results of the estimates are presented on Table 1.1. This table shows the estimated PIIP for the Cadotte Central plus West leases.

These estimates of Discovered PIIP were used to prepare estimates of potentially recoverable bitumen. The estimate for Cadotte Central is shown on Table 1.2.

The estimates for recoverable bitumen, shown on Table 1.2, for the Cadotte Central Area are classified as contingent.

The estimate for Cadotte West is shown on Table 1.3.

The estimates for Recoverable Bitumen, shown on Table 1.3, for the Cadotte West Area are classified as prospective. This classification for the recoverable bitumen is due to the lack of drill testing for this lease area.

The accuracy of resource estimates is, in part, a function of the quality and quantity of available data and of engineering and geological interpretation and judgment. Given the data available at the time this report was prepared, the estimates presented herein are considered reasonable. However, they should be accepted with the understanding that additional data and analysis available subsequent to the date of the estimates may necessitate revision. These revisions may be material. There is no guarantee that all or any part of the estimated resources of bitumen will be recoverable.

Neither Strata nor Norwest make any express or implied warranties or guarantees of any kind concerning this report; including without limitation any implied warranty of merchantability or fitness for a particular purpose. Specifically, Norwest makes no warranty or guarantee that any property identified in this report will produce oil and/or gas in any quantity, or that any property identified in this report will produce or receive any economic, commercial or other benefit.

Readers of this 20-F are advised to read the May 10, 2013 report titled Technical Report Evaluation Of Bitumen Resources Cadotte Central and West Leases - Cadotte Leases, that is publicly available at www.sec.gov web site and was filed by the Company on May 29, 2013 under cover of 6-K.