R. Jason Konzuk, C.A., CFA rjkonzuk@gmpsecurities.

com 403-543-3587 February 27, 2013

Associate: Karan Bagai kbagai@gmpsecurities.com 403-543-3035

BlackPearl Resources Inc. (PXX-T)

Last: $2.63
What's Changed Rating Target Production 2013E (boe/d) 6:1 Production 2014E (boe/d) 6:1 CFPS 2013E (f.d.) CFPS 2014E (f.d.) Share Data Shares o/s (mm, basic/f.d.) 52-week high/low Market Capitalization (mm) Enterprise value (mm) NetDebt Projected Return Dividend Yield Financial Data Oil and NGLs (b/d) Natural Gas (mmcf/d) Total (mboe/d) 6:1 Equivalent growth WTI (US$/b) WCS(US$/b) HHUB (US$/mmbtu) FX rate (USD/CAD) EPS (f.d.) CFPS (f.d.) Net debt (mm) Net Debt/CF Valuation P/CF EV/DACF EV/boe/d EV/2P reserves P/(2P) NAV P/Risked Upside NAV
$5.00 $4.50

BUY Target: $4.00

New NC NC NC NC NC NC

Old BUY $4.00 9,540 10,817 $0.18 $0.27 295.8/313.1 $4.67-$2.63 $824 $831 $8 52% N/A

Fourth quarter results in line; guidance lowered for 2013

Event
PXX released Q412 financial and operating results and updated guidance for 2013. With Q412 volumes already pre-announced on February 13, 2013, fourth quarter results contained no surprises relative to our outlook. Cash flow of $17.7 Mm matched our $17.9 Mm forecast. Revised 2013 guidance was released featuring an average production forecast of 9,00010,000 boe/d (GMP9,540; Consensus10,100) and cash flow of $50$60 Mm (GMP$55 MM; Consensus$77 Mm). Original guidance was for production to average 10,50011,000 boe/d with cash flow of $7585 Mm; however, with the February 13 announcement of lower Q412 production and reduced capital expenditures it was obvious that this target was no longer relevant.

7,563.0

2012(A) 9,301 0.4 9,363 24% $94.10 $72.67 $2.76 $1.00 $0.00 $0.27 $7.8 0.0x 13.7x 14.2x $126,251

2013(E) 9,540 0.0 9,540 2% $90.00 $64.41 $3.87 $1.00 ($0.07) $0.18 $87.5 0.4x 14.9x 16.2x $95,499

2014(E) 10,817 0.0 10,817 13% $90.00 $72.02 $4.00 $1.00 ($0.02) $0.27 $368.5 1.1x 9.9x 12.9x $110,212 $24.95 1.9x 0.5x
8.0 6.4 4.8 3.2 1.6 .0

Impact
With results and guidance in line, we have not made any changes to our forecast. As for a potential impact on the stock, we expect to see another round of negative estimate revisions by the Street which could trigger further quantitative related selling. Given that recent declines have brought the stock deeper into value territory, we do not expect further share price declines to be significant.

What to do with the stock? Buy it.

We recommend taking advantage of recent weakness and buying the stock. With the revision to guidance, we expect that Street estimates will be reduced to an achievable level going forward. Our 2P Risked NAV for PXX is $5.03/share (see NAV Breakdown on page 2). At PXXs current share price, we would argue that most of the value for the Blackrod and Onion Lake SAGD projects have been priced out of the stock. While there is still a little matter of securing $565$615 Mm of additional financing to undertake the first 20,000 bbl/d phase of Blackrod, investors should not lose sight that this project could cash flow ~$265 Mm annually once up and running. We believe that much of the funding gap can be bridged by debt, leaving potentially a smaller equity wedge than the Street anticipates. BlackPearl anticipates providing shareholders with an update to its financing strategy within the next three to four months.

PXX-T

$4.00 $3.50 $3.00 $2.50

Mar-12 May -12 Jul-12

Sep-12 Nov -12 Jan-13

Prepared by GMP Securities L.P. See important disclosures on the last page of this report

Volume (Millions)

Close Price

R. Jason Konzuk, C.A., CFA rjkonzuk@gmpsecurities.com 403-543-3587 February 27, 2013

Associate: Karan Bagai kbagai@gmpsecurities.com 403-543-3035

NAV BREAKDOWN
BlackPearl Risked NAV 2012 YE (GMP Price Deck)
2012 YE Assigned Reserves Proven Probable 2P Reserves Other Assets/Liabilities Land Value (208,309 @ $150 per acre) Net Debt Option Proceeds & Other Total 2012YE 2P Net Asset Value Contingent Resource Value Mooney ASP Flood Onion Lake SAGD Blackrod SAGD Total 2P NAV + Resource Value
Source: GMP, company reports

Reserves BT PV@10% (mmboe) ($mm) 15.9 $236.9 17.4 $176.9 33.3 $413.8 Value ($mm) $24.6 ($7.8) ($1.2) $15.6 $429.4 BT PV@10% ($mm) $270.2 $305.1 $569.3 $1,144.6 $1,574.0

$NAV/ Share $0.76 $0.56 $1.32 $NAV/ Share $0.08 ($0.02) ($0.00) $0.05 $1.37 $NAV/ Share $0.86 $0.97 $1.82 $3.66 $5.03

Target calculation methodology

Our target is calculated based on 50/50 weighting between a target based on a multiple of 10.0x 2014 EV/DACF (implied $2.54/share) and our Risked NAV of $5.03/share.

R. Jason Konzuk, C.A., CFA rjkonzuk@gmpsecurities.com 403-543-3587 February 27, 2013

Associate: Karan Bagai kbagai@gmpsecurities.com 403-543-3035

1 GMP

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