CB

U.S. SECURITIES AND EXCHANGE COMMISSIONS

WASHINGTON, D.C. 20549

FORM CB

TENDER OFFER/RIGHTS OFFERING NOTIFICATION FORM
AND UNDERTAKING

     Please place an X in the box(es) to designate the appropriate rule provision(s) relied upon to file this Form:

Securities Act Rule 801 (Rights Offering	o
Securities Act Rule 802 (Exchange Offer)	x
Securities Act Rule 13e-4(h)(8) (Issuer Tender Offer)	o
Exchange Act Rule 14d-1(c) (Third Party Tender Offer)	x
Exchange Act Rule 14e-2(d) (Subject Company Response)	o
Filed or submitted in paper if permitted by Regulation S-T Rule 101(b)(8)	o

     Note: Regulation S-T Rule 101(b)(8) only permits the filing or submission of a Form CB in paper by a party that is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act.

HAWKER RESOURCES INC.

(Name of Subject Company)

N/A

(Translation of Subject Company’s Name into English (if applicable))

Canada

(Jurisdiction of Subject Company’s Incorporation or Organization)

Hawker Resources Inc.

(Name of Person(s) Furnishing Form)

Common Shares

(Title and Class of Subject Securities)

420126

(CUSIP Number of Class of Securities (if applicable))

700 Scotia Centre, 700-2nd Street S.W., Calgary, Alberta, T2P 2W1, (403) 261-6883

(Name, address (including zip code) and Telephone Number (including area code) of Person(s) Authorized to Receive Notices and Communications on Behalf of Subject Company)

February 10, 2004

(Date Tender Offer/Rights Offering Commenced)

TABLE OF CONTENTS

PART I - INFORMATION SENT TO SECURITY HOLDERS
	Item 1. Home Jurisdiction Documents
	Item 2. Information Legends
PART II - INFORMATION NOT REQUIRED TO BE SENT TO SECURITY HOLDERS
PART III - CONSENT TO SERVICE OF PROCESS
SIGNATURES
INDEX TO EXHIBITS
Annual Information Form dated May 20, 2003
Comparative Financial Statements
Management's Discussion and Analysis 12/31/2002
Unaudited Interim Consolidated Financial Statement
Management's Discussion and Analysis 9/30/2003
Management Proxy Circular dated 3/7/2003
Material Change Report dated 3/17/2003
Material Change Report dated 4/14/2003
Material Change Report dated 5/23/2003
Material Change Report dated 6/20/2003
Material Change Report dated 12/5/2003
Material Change Report dated 12/10/2003
Portions of the Final Short Form Prospectus
Material Change Report dated 1/18/2004
Unaudited Interim Consolidated Financial Statement
Consolidated Financial Statements for Zorin Exp.

PART I - INFORMATION SENT TO SECURITY HOLDERS

Item 1. Home Jurisdiction Documents

Document 1:	Offer to Purchase dated February 10, 2004
Document 2:	Letter of Transmittal and Election Form
Document 3:	Notice of Guaranteed Delivery

Item 2. Information Legends

See the cover page in the Offer to Purchase

2

PART II - INFORMATION NOT REQUIRED TO BE SENT TO SECURITY HOLDERS

	Description
Exhibit 1*:	Pre-Acquisition Agreement between the Registrant and Zorin Exploration Ltd. dated January 18, 2004.
Exhibit 2*:	Form of Pre-Tender Agreement between the Registrant and certain selling shareholders.
Exhibit 3:	The annual information form for the Registrant dated May 20, 2003 (the “AIF”).
Exhibit 4:	The comparative financial statements, together with the accompanying report of the auditors, for the Registrant, for the fiscal year ended December 31, 2002, addressed to the shareholders of SYNSORB Biotech, Inc. (now Hawker Resources, Inc.).
Exhibit 5:	Management’s discussion and analysis of financial condition and results of operations for the Registrant for the fiscal year ended December 31, 2002.
Exhibit 6:	The comparative unaudited interim consolidated financial statements for the Registrant for the three and nine month periods ended September 30, 2003.
Exhibit 7:	Management’s discussion and analysis of financial condition and results of operations for the Registrant for the three and nine month periods ended September 30, 2003.
Exhibit 8:	The management proxy circular dated March 7, 2003 for the Registrant, except the sections entitled “Composition of Compensation Committee”, “Report on Executive Compensation”, “Performance Graph” and “Corporate Governance Practices”.
Exhibit 9:	The material change report dated March 17, 2003 for the Registrant relating to the proposed conversion of the Registrant from a pharmaceutical research company into an oil and natural gas enterprise.
Exhibit 10:	The material change report dated April 14, 2003 for the Registrant relating to: the approval by the shareholders of the Registrant of the conversion of the Registrant from a pharmaceutical research company into an oil and natural gas enterprise, a financing in connection with such conversion, the change of the name of the Registrant to Hawker Resources, Inc. and a new board of directors; the acquisition by the Registrant of 1022971 Alberta Ltd. (“1022971”) and an option to acquire certain assets of Southward Energy Ltd. (“Southward”) and the completion of a $3.6 million equity financing.
Exhibit 11:	The material change report dated May 23, 2003 for the Registrant relating to the completion of an arrangement involving 1022971 and Southward.
Exhibit 12:	The material change report dated June 20, 2003 for the Registrant relating to the completion of a $15,225,000 equity financing.
Exhibit 13:	The material change report dated December 5, 2003 for the Registrant relating to the completion of a $45 million equity financing.
Exhibit 14:	The material change report dated December 10, 2003 for the Registrant relating to the definitive Agreement to acquire all of the shares of Pointwest and the Prospectus Offering.
Exhibit 15:	Those portions of the final short form prospectus (the “Prospectus”) for the Registrant dated December 19, 2003 relating to the offering of $45,360,000 of Hawker Shares (the “Prospectus Offering”) contained under the headings “Recent Developments – Proposed Acquisition of Pointwest Energy Inc.” and “Information Concerning the Pointwest Properties” as well as the consolidated financial statements of Pointwest Energy Inc. and the auditor’s report relating thereto, at page F-12 to F-22 inclusive, of the Prospectus and the statements of revenues and operating expenses relating to the Southward Properties and the auditors’ report relating thereto, at pages F-23 to F-25, inclusive, of the Prospectus.
Exhibit 16:	The material change report dated effective January 18, 2004 for the Registrant relating to the Offer.
Exhibit 17:	The comparative unaudited interim consolidated financial statements for Zorin Exploration Ltd. as at and for the three and nine month periods ended September 30, 2003.
Exhibit 18:	The comparative consolidated financial statements for Zorin Exploration Ltd. together with the accompanying report of the auditors, as at and for the fiscal year ended December 31, 2002.

* Incorporated by reference as filed with the Securities and Exchange Commission on January 30, 2004

PART III - CONSENT TO SERVICE OF PROCESS

3

The persons furnishing this Form CB are also filing an irrevocable consent and power of attorney on Form F-X with the Securities and Exchange Commission on the date hereof.

4

SIGNATURES

     After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

HAWKER RESOURCES, INC.
By:	/s/ Barry R. Herring
Name:	Barry R. Herring
Title:	Vice-President, Finance and
	Chief Financial Officer

Date: February 10, 2004

5

INDEX TO EXHIBITS

	Description
Exhibit 1*:	Pre-Acquisition Agreement between the Registrant and Zorin Exploration Ltd. dated January 18, 2004.
Exhibit 2*:	Form of Pre-Tender Agreement between the Registrant and certain selling shareholders.
Exhibit 3:	The annual information form for the Registrant dated May 20, 2003 (the “AIF”).
Exhibit 4:	The comparative financial statements, together with the accompanying report of the auditors, for the Registrant, for the fiscal year ended December 31, 2002, addressed to the shareholders of SYNSORB Biotech, Inc. (now Hawker Resources, Inc.).
Exhibit 5:	Management’s discussion and analysis of financial condition and results of operations for the Registrant for the fiscal year ended December 31, 2002.
Exhibit 6:	The comparative unaudited interim consolidated financial statements for the Registrant for the three and nine month periods ended September 30, 2003.
Exhibit 7:	Management’s discussion and analysis of financial condition and results of operations for the Registrant for the three and nine month periods ended September 30, 2003.
Exhibit 8:	The management proxy circular dated March 7, 2003 for the Registrant, except the sections entitled “Composition of Compensation Committee”, “Report on Executive Compensation”, “Performance Graph” and “Corporate Governance Practices”.
Exhibit 9:	The material change report dated March 17, 2003 for the Registrant relating to the proposed conversion of the Registrant from a pharmaceutical research company into an oil and natural gas enterprise.
Exhibit 10:	The material change report dated April 14, 2003 for the Registrant relating to: the approval by the shareholders of the Registrant of the conversion of the Registrant from a pharmaceutical research company into an oil and natural gas enterprise, a financing in connection with such conversion, the change of the name of the Registrant to Hawker Resources, Inc. and a new board of directors; the acquisition by the Registrant of 1022971 Alberta Ltd. (“1022971”) and an option to acquire certain assets of Southward Energy Ltd. (“Southward”) and the completion of a $3.6 million equity financing.
Exhibit 11:	The material change report dated May 23, 2003 for the Registrant relating to the completion of an arrangement involving 1022971 and Southward.
Exhibit 12:	The material change report dated June 20, 2003 for the Registrant relating to the completion of a $15,225,000 equity financing.
Exhibit 13:	The material change report dated December 5, 2003 for the Registrant relating to the completion of a $45 million equity financing.
Exhibit 14:	The material change report dated December 10, 2003 for the Registrant relating to the definitive Agreement to acquire all of the shares of Pointwest and the Prospectus Offering.
Exhibit 15:	Those portions of the final short form prospectus (the “Prospectus”) for the Registrant dated December 19, 2003 relating to the offering of $45,360,000 of Hawker Shares (the “Prospectus Offering”) contained under the headings “Recent Developments – Proposed Acquisition of Pointwest Energy Inc.” and “Information Concerning the Pointwest Properties” as well as the consolidated financial statements of Pointwest Energy Inc. and the auditor’s report relating thereto, at page F-12 to F-22 inclusive, of the Prospectus and the statements of revenues and operating expenses relating to the Southward Properties and the auditors’ report relating thereto, at pages F-23 to F-25, inclusive, of the Prospectus.
Exhibit 16:	The material change report dated effective January 18, 2004 for the Registrant relating to the Offer.
Exhibit 17:	The comparative unaudited interim consolidated financial statements for Zorin Exploration Ltd. as at and for the three and nine month periods ended September 30, 2003.
Exhibit 18:	The comparative consolidated financial statements for Zorin Exploration Ltd. together with the accompanying report of the auditors, as at and for the fiscal year ended December 31, 2002.

* Incorporated by reference as filed with the Securities and Exchange Commission on January 30, 2004

This document is important and requires your immediate attention. If you are in doubt as to how to deal with it, you should consult your financial, legal or other professional advisor. No securities regulatory authority in Canada or the United States has expressed an opinion about the securities offered hereunder and it is an offence to claim otherwise.

February 10, 2004

RESOURCES INC.

OFFER TO PURCHASE
all of the outstanding common shares of

EXPLORATION LTD.

     in exchange for, at the election of each Shareholder tendering to the Offer:

(i)	Cdn. $0.40 in cash for each ZORIN Share (the “Cash Alternative”); or
(ii)	that fraction of one Hawker Share for each ZORIN Share as is equal to the Exchange Ratio (as defined herein) (the “Share Alternative”),

in each case subject to the limits on the Cash Alternative and the Share Alternative and proration as described herein

     This offer (the “Offer”) by Hawker Resources Inc. (“Hawker” or the “Offeror”) to purchase all of the issued and outstanding common shares (the “ZORIN Shares”) of ZORIN Exploration Ltd. (“ZORIN”), including any ZORIN Shares which may become outstanding pursuant to the exercise of ZORIN Options or ZORIN Warrants, will be open for acceptance until 4:00 p.m. (Calgary time) on March 17, 2004, unless withdrawn or extended (the “Expiry Time”). The Offer is conditional upon, among other things, at least 66 2/3% of the outstanding ZORIN Shares (calculated on a “diluted basis”, as defined herein), excluding ZORIN Shares owned at the date of the Offer by the Offeror or its associates or affiliates, being validly deposited under the Offer and not withdrawn prior to the Expiry Time and the time the Offeror first takes up and pays for ZORIN Shares under the Offer. All conditions of the Offer are described under Section 4 of the Offer, “Conditions of the Offer”.

     THE ZORIN BOARD HAS UNANIMOUSLY DETERMINED THAT THE OFFER IS FAIR, FROM A FINANCIAL POINT OF VIEW, TO THE ZORIN SHAREHOLDERS, IS IN THE BEST INTERESTS OF ZORIN AND THE ZORIN SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT ZORIN SHAREHOLDERS ACCEPT THE OFFER.

     Subject to proration as provided herein, each holder of ZORIN Shares (a “Shareholder” or “ZORIN Shareholder”) may elect to receive either the Cash Alternative or the Share Alternative for all of the Shareholder’s ZORIN Shares deposited under the Offer. Cash or common shares of Hawker (the “Hawker Shares”) to be paid or issued to a Shareholder may be pro-rated in accordance with the terms of the Offer if the consideration elected by all Shareholders pursuant to the Cash Alternative exceeds $1,484,640 or if the consideration elected by all Shareholders pursuant to the Share Alternative exceeds 80% of the total consideration to be paid pursuant to the Offer. Each Shareholder who otherwise validly accepts the Offer but fails in the Letter of Acceptance and Transmittal (the “Letter of Acceptance”) to make such election, or to properly make such election, in respect of his ZORIN Shares, shall be deemed to have elected the Share Alternative in respect of 80% of the ZORIN Shares deposited under the Offer by such Shareholder and the Cash Alternative in respect of the remaining 20% of the ZORIN Shares deposited under the Offer by such Shareholder, subject to proration in accordance with the Offer. See Section 1 of the Offer, “The Offer”. The aggregate consideration required to purchase all of the ZORIN Shares pursuant to the Offer will be comprised as to 20% in cash and as to 80% through the issuance of Hawker Shares.

     Shareholders who wish to accept the Offer must deposit their ZORIN Share certificates, together with the enclosed Letter of Acceptance, properly completed and executed in accordance with the instructions in the Letter of Acceptance, at any of the offices of Computershare Trust Company of Canada (the “Depositary”) listed in the Letter of Acceptance. Alternatively, Shareholders may follow the procedure for guaranteed delivery set forth under Section 3 of the Offer, “Manner of Acceptance – Procedure for Guaranteed Delivery”. Persons whose ZORIN Shares are registered in the name of a nominee should contact their broker, investment dealer, bank, trust company or other nominee for assistance in depositing their ZORIN Shares.

(This cover page continued on the next page)

     The ZORIN Shares are listed and posted for trading on the TSX Venture Exchange (the “TSXV”). On January 16, 2004, the last trading day prior to the public announcement by the Offeror of the Offer, the closing trading price of the ZORIN Shares on the TSXV was $0.30. On February 9, 2004, the closing trading price of the ZORIN Shares on the TSXV was $0.385. The Hawker Shares are listed and posted for trading on the Toronto Stock Exchange (the “TSX”). On January 16, 2004, the last trading day prior to the public announcement by the Offeror of the Offer, the closing trading price of the Hawker Shares on the TSX was $5.62. On February 9, 2004, the closing trading price of the Hawker Shares on the TSX was $5.15. The TSX has conditionally approved the listing of the Hawker Shares to be issued pursuant to the Offer. Listing is subject to Hawker fulfilling all of the requirements of the TSX on or before the second business day following the Take-Up Date.

     Hawker has entered into agreements (the “Pre-Tender Agreements”) with each of the directors and officers of ZORIN (the “ZORIN Tendering Shareholders”) pursuant to which the ZORIN Tendering Shareholders have agreed to deposit an aggregate of 11,393,500 ZORIN Shares, representing approximately 61.4% of the current issued and outstanding ZORIN Shares (calculated on a non-diluted basis), to the Offer and not to withdraw such ZORIN Shares except in certain limited circumstances. In addition, such ZORIN Tendering Shareholders have also agreed that they will not exercise any ZORIN Options held by them (being 950,000 ZORIN Options in aggregate and representing approximately 67.8% of the current issued and outstanding ZORIN Options) or any ZORIN Warrants held by them (being 498,000 ZORIN Warrants in aggregate and representing approximately 54.3% of the current issued and outstanding ZORIN Warrants) and that they agree to elect, in lieu of exercising their ZORIN Options, to receive the positive difference, if any, that results from subtracting from the ascribed purchase price for the ZORIN Shares under the Offer the exercise price of their ZORIN Options, immediately after the Take-Up Date in exchange for the termination of their ZORIN Options and ZORIN Warrants immediately prior to the Take-Up Date. See “Pre-Acquisition Agreement – Pre-Tender Agreements” in the Circular.

     Questions and requests for assistance may be directed to Peters & Co. Limited (the “Soliciting Dealer”) or to the Depositary, and additional copies of this Offer and Circular, the Letter of Acceptance and the Notice of Guaranteed Delivery are available from the Soliciting Dealer or the Depositary at any of their respective offices set forth on the last page of this Offer and Circular and in the Letter of Acceptance.

     Shareholders should be aware that the Offeror or its affiliates, directly or indirectly, may bid for or make purchases of ZORIN Shares during the Offer Period, as permitted by applicable securities laws or regulations of Canada or its provinces and territories.

     This transaction has not been approved or disapproved by any securities regulatory authority in Canada or the United States nor has any securities regulatory authority in Canada or the United States passed upon the fairness or merits of such transaction or upon the accuracy or adequacy of the information contained in this document. Any representation to the contrary is unlawful.

NOTICE TO SHAREHOLDERS IN THE UNITED STATES

     THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) NOR ANY STATE REGULATOR. NEITHER THE SEC NOR ANY STATE SECURITIES REGULATOR HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THE OFFER AND CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.

     This Offer is being made by a foreign company. The offer is subject to disclosure requirements of a foreign country that are different from those of the United States. Financial statements included or incorporated by reference in the Offer and Circular, if any, have been prepared in accordance with Canadian generally accepted accounting principles and may not be comparable to the financial statements of U.S. companies.

     It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. securities laws, since the Offeror is located in a foreign country, and some or all of its officers and directors, and some of the experts named in this Offer and Circular, may be residents of a foreign country. You may not be able to sue a foreign company or its officers or directors or experts in a foreign court for violations of the U.S. securities laws. It may be difficult to compel a foreign company and its affiliates to subject themselves to a U.S. court’s judgment.

     You should be aware that the Offeror may purchase securities otherwise than under this Offer, such as in open market or privately negotiated purchases, as permitted by applicable Canadian laws or provincial laws or regulations.

     Shareholders should be aware that the tender of the securities described herein may have tax consequences both in the United States and in Canada. See “Certain Canadian Federal Income Tax Considerations” in the Circular.

     This document does not constitute an offer or a solicitation to any person in any jurisdiction in which such offer or solicitation is unlawful. The Offer is not being made to, nor will deposits be accepted from or on behalf of ZORIN Shareholders in any jurisdiction in which the making or acceptance thereof would not be in compliance with the laws of such jurisdiction; however, the Offeror may, in its sole discretion, take such action as it may deem necessary to extend the Offer to ZORIN Shareholders in any such jurisdiction.

FORWARD-LOOKING STATEMENTS

     Certain statements contained in this Offer and Circular, and in certain documents incorporated by reference into this Offer and Circular, constitute forward-looking statements. These statements relate to future events or the Offeror’s future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Offeror believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in, or incorporated by reference into, this Offer and Circular should not be unduly relied upon. These statements speak only as of the date of this Offer and Circular or as of the date specified in the documents incorporated by reference into this Offer and Circular, as the case may be. The Offeror does not intend, and does not assume any obligation, to update these forward-looking statements. See “Forward-Looking Statements” in the Circular.

THE SOLICITING DEALER FOR THE OFFER IS:

TABLE OF CONTENTS

			Page
DEFINITIONS				1
ABBREVIATIONS				5
CONVERSION				6
SUMMARY				7
OFFER				15
	1.The Offer			15
	2.Time for Acceptance			17
	3.Manner of Acceptance			17
		Letter of Acceptance		17
		Procedure for Guaranteed Delivery		18
		General		18
	4.Conditions of the Offer			19
	5.Extension and Variation of the Offer			21
	6.Payment for Deposited Securities			22
	7.Shareholders who are U.S. Persons			23
	8.Withdrawal of Deposited Securities			23
	9.Return of Deposited Securities			24
	10.Changes in Consolidated Capitalization, Distributions and Liens			24
	11.Mail Service Interruption			24
	12.Notice and Delivery			25
	13.Market Purchases and Sales of ZORIN Shares			25
	14.Acquisition of Securities Not Deposited			25
	15.Other Terms of the Offer			26
CIRCULAR				27
FORWARD-LOOKING STATEMENTS				27
DOCUMENTS INCORPORATED BY REFERENCE				28
NOTE RESPECTING RESERVES DISCLOSURE				29
BACKGROUND TO AND BENEFITS OF THE OFFER				29
PURPOSE OF THE OFFER AND THE OFFEROR’S PLANS FOR ZORIN				30
RECOMMENDATION OF THE ZORIN BOARD				30
PRE-ACQUISITION AGREEMENT				30
INFORMATION CONCERNING HAWKER RESOURCES INC				34
DESCRIPTION OF SHARE CAPITAL				36
CONSOLIDATED CAPITALIZATION				36
SOURCE OF FUNDS				37
AUDITORS, TRANSFER AGENT AND REGISTRAR				37
INFORMATION CONCERNING ZORIN EXPLORATION LTD				37
INFORMATION CONCERNING THE OFFEROR AND ZORIN				38
MATERIAL CHANGES IN THE AFFAIRS OF ZORIN AND OTHER INFORMATION				40
ACQUISITION OF SECURITIES NOT DEPOSITED				40
RISK FACTORS				43
DEPOSITARY				47
SOLICITING DEALER				47
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS				47
ACCEPTANCE OF OFFER				50
EXPENSES OF THE OFFER				51
LEGAL MATTERS				51
INTERESTS OF EXPERTS				51
STATUTORY RIGHTS				51
CONSENT OF SOLICITORS				52
CONSENTS OF AUDITORS				52
CONSENTS OF INDEPENDENT PETROLEUM ENGINEERS				53
APPROVAL AND CERTIFICATE				55
SCHEDULE “A” PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS				F-1

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DEFINITIONS

     In the Offer, the Circular, the Letter of Acceptance and the Notice of Guaranteed Delivery, the capitalized terms set forth below have the following meanings:

“ABCA” means the Business Corporations Act (Alberta) and the regulations thereto, as the same has been and may be amended from time to time.

“affiliate” has the meaning ascribed thereto in the ABCA, except as otherwise provided herein.

“AIF” means the annual information form of the Offeror dated May 20, 2003.

“AMF” means the Autorité des marchés financiers.

“associate” has the meaning ascribed thereto in the ABCA, except as otherwise provided herein.

“Business Day” means any day excepting a Saturday, Sunday or statutory holiday in Calgary, Alberta.

“Cash Alternative” means, for each ZORIN Share, $0.40 cash, subject to the Maximum Cash Consideration and to proration.

“Circular” means the take-over bid circular that accompanies and forms part of the Offer and which is attached hereto.

“Compensation Fee” has the meaning ascribed thereto under “Pre-Acquisition Agreement – Compensation Fee” in the Circular.

“Compulsory Acquisition” has the meaning ascribed to that term in the Circular under the heading “Acquisition of Securities Not Deposited – Compulsory Acquisition”.

“Confidentiality Agreement” has the meaning ascribed thereto under “Pre-Acquisition Agreement – The Offer” in the Circular.

“CRA” means the Canada Revenue Agency.

“Depositary” means Computershare Trust Company of Canada at the offices specified in the Letter of Acceptance.

“diluted basis” means, with respect to the number of outstanding ZORIN Shares at any time, such number of outstanding ZORIN Shares calculated assuming that all outstanding ZORIN Options, ZORIN Warrants and other rights to acquire ZORIN Shares are exercised.

“Dissenting Offeree” has the meaning ascribed thereto under “Acquisition of Securities not Deposited – Compulsory Acquisition” in the Circular.

“Effective Date” has the meaning ascribed thereto under “Manner of Acceptance – General” in the Offer.

“Effective Time” means the time that Hawker shall have acquired ownership of and paid for at least the Minimum Required Shares pursuant to the terms of the Offer.

“Eligible Institution” means a Canadian schedule 1 chartered bank, a major trust company in Canada, a member of the Securities Transfer Agent Medallion Program (STAMP), a member of the Stock Exchanges Medallion Program (SEMP) or a member of the New York Stock Exchange Inc. Medallion Signature Program (MSP). Members of these programs are usually members of a recognized stock exchange in Canada or the United States, members of the Investment Dealers Association of Canada, members of the National Association of Securities Dealers or banks and trust companies in the United States.

- 1 -

“Exchange Ratio” means, subject to adjustment in certain circumstances as described in Section 1 of the Offer, “The Offer”, the number, calculated to four decimal places, equal to the ascribed Offer price of $0.40 per ZORIN Share divided by the Hawker Average Price.

“Expiry Date” means the date on which the Expiry Time occurs.

“Expiry Time” means the Initial Expiry Time unless the Offer has been or is required to be extended, in which case it means the expiry time of the Offer as extended, or required to be extended, from time to time.

“GLJ” means Gilbert Laustsen Jung Associates Ltd., independent oil and natural gas reservoir engineers of Calgary, Alberta.

“GLJ Report” means the engineering report prepared by GLJ evaluating the oil, natural gas and NGLs reserves of the Pointwest Properties, effective September 30, 2003.

“Hawker Average Price” means the weighted average trading price of the Hawker Shares (calculated to four decimal places) on the TSX for the ten Trading Days prior to (and excluding) the date of the Initial Expiry Time.

“Hawker Board” means the Board of Directors of Hawker as constituted from time to time.

“Hawker Shareholder” means a holder of Hawker Shares.

“Hawker Shares” means the common shares in the capital of the Offeror as constituted on the date hereof.

“Initial Expiry Time” means 4:00 p.m. (Calgary time) on March 17, 2004.

“Letter of Acceptance” means the letter of acceptance and transmittal for use in connection with the Offer in the form enclosed herewith which accompanies the Offer.

“material” means, where used in relation to ZORIN and its subsidiaries, a fact, asset, liability, transaction or circumstance concerning the business, assets, rights, liabilities, capitalization, operations, prospects or financial condition of ZORIN and its subsidiaries, taken as a whole, that: (i) would be reasonably likely to have a significant effect on the market price or value of the ZORIN Shares; or (ii) that would prevent or materially delay completion of the Offer in accordance with the Pre-Acquisition Agreement, or any Compulsory Acquisition or Subsequent Acquisition Transaction.

“Material Adverse Change” means any change (or any condition, event or development involving a prospective change) in the business, operations, results of operations, assets, capitalization, financial condition, licenses, permits, leases, concessions, rights, liabilities, prospects or privileges, whether contractual or otherwise, of Hawker or ZORIN or any of its subsidiaries which is, or could reasonably be expected to be, materially adverse to the business of such party and its subsidiaries considered as a whole or the value of the Hawker Shares or ZORIN Shares, as applicable, other than a change: (i) which has, in the case of ZORIN, prior to January 18, 2004 been disclosed to Hawker in the data room or pursuant to presentations to Hawker personnel or which has, in the case of Hawker, been disclosed to ZORIN; (ii) resulting from conditions affecting the oil and gas industry as a whole; (iii) resulting from general economic, financial, currency exchange, securities or commodity market conditions in Canada or elsewhere; (iv) resulting from changes in the market price of crude oil or natural gas; or (v) resulting from any drilling, completion or testing after January 18, 2004 of any wells establishing that any such well or prospect is not commercially viable or is less successful than anticipated by ZORIN or Hawker.

“Maximum Cash Consideration” means $1,484,640.

“Maximum Share Consideration” means the maximum number of Hawker Shares issuable pursuant to the Offer, based on the Exchange Ratio and assuming that the Maximum Cash Consideration is payable pursuant to the Offer, subject to an aggregate maximum of 80% of the total consideration to be paid pursuant to the Offer in the form of Hawker Shares.

- 2 -

“Maximum Take-Up Date Cash Consideration” means, for any date on which Hawker takes up any ZORIN Shares, the cash amount that is equal to the Maximum Cash Consideration multiplied by the aggregate number of ZORIN Shares being taken up by Hawker on such date, divided by 18,558,000.

“Maximum Take-Up Date Share Consideration” means, for any date on which Hawker takes up any ZORIN Shares, the number of Hawker Shares that is equal to $5,938,560 divided by the Hawker Average Price with such result first multiplied by the aggregate number of ZORIN Shares being taken up by Hawker on such date and then divided by 18,558,000.

“McDaniel” means McDaniel and Associates Consultants Ltd., independent oil and natural gas reservoir engineers of Calgary, Alberta.

“McDaniel Report” means the engineering report prepared by McDaniel evaluating the crude oil, natural gas liquids and natural gas reserves attributable to a 50% undivided interest in Hawker’s properties other than the Pointwest Properties effective as of May 1, 2003 based upon detailed engineering evaluations made by McDaniel effective as of January 1, 2003, adjusted to take into account actual and estimated production from January 1, 2003 to May 1, 2003 and based on an engineering evaluation of wells drilled from January 1, 2003 to May 1, 2003, and which was prepared on the basis of both constant and escalating price and cost assumptions as detailed in the notes to the McDaniel Report as contained in the AIF.

“Minimum Condition” has the meaning ascribed thereto in Subsection (a) of Section 4 of the Offer, “Conditions of the Offer”.

“Minimum Required Shares” means at least that number of the outstanding ZORIN Shares required pursuant to the Minimum Condition, unless Hawker shall have waived the Minimum Condition in which case “Minimum Required Shares” means that number of the outstanding ZORIN Shares which Hawker takes up on the Take-Up Date, provided that such number of ZORIN Shares shall not be less than 50% of the issued and outstanding ZORIN Shares on a diluted basis.

“Notice of Guaranteed Delivery” means the notice of guaranteed delivery for use in connection with the Offer in the form enclosed herewith which accompanies the Offer.

“OBCA” means the Business Corporations Act (Ontario).

“Offer” means the offer to purchase the ZORIN Shares made hereby to the ZORIN Shareholders.

“Offer Period” means the period commencing on February 10, 2004 and ending at the Expiry Time.

“Offeror” or “Hawker” means Hawker Resources Inc., a corporation incorporated under the ABCA.

“Offeror’s Notice” has the meaning ascribed thereto under “Acquisition of Securities not Deposited – Compulsory Acquisition” in the Circular.

“OSC” means the Ontario Securities Commission.

“Other Securities” has the meaning ascribed thereto under “Manner of Acceptance – General” in the Offer.

“Pointwest” means Pointwest Energy Inc., a corporation formed under the ABCA.

“Pointwest Acquisition” means the acquisition of Pointwest by Hawker as described under “Information Concerning Hawker Resources Inc. – Recent Developments – Acquisition of Pointwest Energy Inc.”

“Pointwest Properties” means the properties of Pointwest acquired by Hawker pursuant to the Pointwest Acquisition.

“Policy Q-27” means Policy Q-27 of the AMF.

“Pre-Acquisition Agreement” means the agreement between the Offeror and ZORIN dated as of January 18, 2004, as the same may be amended from time to time.

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“Pre-Tender Agreements” means agreements dated as of January 18, 2004 between the Offeror and each of the ZORIN Tendering Shareholders as described in the Circular under the heading “Pre-Acquisition Agreement – Pre-Tender Agreements”.

“Prospectus” has the meaning ascribed thereto under “Documents Incorporated by Reference” in the Circular.

“Purchased Securities” has the meaning ascribed thereto under “Manner of Acceptance – General” in the Offer.

“Regulations” has the meaning ascribed thereto under “Acquisition of Securities Not Deposited – Subsequent Acquisition Transactions” in the Circular.

“Representatives” means the officers, directors, employees, financial advisors, representatives and agents of ZORIN and its subsidiaries.

“Rule 61-501” means OSC Rule 61-501.

“SEC” means the United States Securities and Exchange Commission.

“Share Alternative” means, for each ZORIN Share, that fraction of one Hawker Share for each ZORIN Share as is equal to the Exchange Ratio, subject to the Maximum Share Consideration and to proration.

“Soliciting Dealer” means Peters & Co. Limited.

“Subsequent Acquisition Transaction” has the meaning ascribed thereto in the Circular under “Acquisition of Securities Not Deposited – Subsequent Acquisition Transactions”.

“subsidiary” has the meaning set forth in the Securities Act (Alberta) and, in respect of ZORIN, includes Mar Oil Company.

“Superior Proposal” means a bona fide written Take-over Proposal that is financially superior to the Offer (as determined in good faith in each case by the ZORIN Board after receiving the advice of its financial advisors).

“Take-over Proposal” means a proposal or offer (other than by Hawker or one of its subsidiaries), whether or not subject to a due diligence condition, whether or not in writing, to acquire in any manner, directly or indirectly, beneficial ownership of all or a material portion of the assets of ZORIN or any subsidiary of ZORIN or to acquire in any manner, directly or indirectly, beneficial ownership or control or direction over more than 20% of the outstanding ZORIN Shares or to effect any merger, amalgamation, arrangement or similar transaction, directly or indirectly, with respect to ZORIN whether by an arrangement, amalgamation, merger, consolidation or other business combination, by means of a sale of shares of capital stock, sale of assets, tender offer or exchange offer or similar transaction involving ZORIN or any subsidiary of ZORIN including, without limitation, any single or multi-step transaction or series of related transactions which is structured to permit such third party to acquire beneficial ownership of all or a material portion of the assets of ZORIN or any subsidiary of ZORIN or to acquire in any manner, directly or indirectly, more than 20% of the outstanding ZORIN Shares or to merge or amalgamate or effect an arrangement with respect to ZORIN (other than the transactions contemplated by the Pre-Acquisition Agreement).

“Take-Up Date” means the date that the Offeror first takes up ZORIN Shares pursuant to the Offer.

“Tax Act” means the Income Tax Act (Canada), as amended.

“Tax Proposals” means all specific proposals to amend the Tax Act and the Tax Regulations publicly announced by the Minister of Finance of Canada prior to the date hereof.

“Tax Regulations” means the regulations under the Tax Act.

“Trading Day” means a day on which at least one board lot of Hawker Shares is traded on the TSX.

“TSX” means the Toronto Stock Exchange.

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“TSXV” means the TSX Venture Exchange.

“United States” or “U.S.” mean the United States of America, its territories and possessions, any State of the United States and the District of Columbia.

“U.S. Person ” has the meaning ascribed to that term in Regulation S to the U.S. Securities Act.

“U.S. Securities Act ” means the United States Securities Act of 1933, as amended.

“W4M Properties” has the same meaning as “Optioned Properties” as such latter term is defined and used in the AIF.

“ZORIN” means ZORIN Exploration Ltd., a corporation incorporated under the ABCA.

“ZORIN Board” means the Board of Directors of ZORIN, as constituted from time to time.

“ZORIN Options” means the issued and outstanding options of ZORIN, each of which entitles the holder thereof to acquire one ZORIN Share.

“ZORIN Shareholder” or “Shareholder” means a holder of ZORIN Shares.

“ZORIN Shares” means the common shares of ZORIN as constituted on the date hereof.

“ZORIN Tendering Shareholders” means those ZORIN Shareholders who executed and delivered Pre-Tender Agreements.

“ZORIN Warrants” means the issued and outstanding warrants of ZORIN, each of which entitles the holder thereof to acquire one ZORIN Share.

ABBREVIATIONS

Crude Oil and Natural Gas Liquids		Natural Gas
bbls	barrels	mcf	thousand cubic feet
bbls/d	barrels per day	mmcf	million cubic feet
mbbls	thousand barrels	bcf	billion cubic feet
boe	barrels of oil equivalent of natural gas	mcf/d	thousand cubic feet per day
	and crude oil on the basis of 1 bbl of	mmcf/d	million cubic feet per day
	crude oil for 6 mcf of natural gas	GJ	gigajoules
boe/d	barrels of oil equivalent per day	GJ/d	gigajoules per day
mboe	thousand boe
NGLs	natural gas liquids
mmbtu	million British thermal units
stb	standard stock tank barrel

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CONVERSION

The following table sets forth certain standard conversions from Standard Imperial units to the International System of Units (or metric units).

To Convert From	To	Multiply By
mcf	Thousand cubic metres (“103m3”)		0.0282
Thousand cubic metres	mcf		35.494
bbls	Cubic metres (“m3”)		0.159
Cubic metres	bbls		6.290
Feet	Metres		0.305
Metres	Feet		3.281
Miles	Kilometres		1.609
Kilometres	Miles		0.621
Acres	Hectares		0.405
Hectares	Acres		2.471

In this Offer, the Circular, the Letter of Acceptance and the Notice of Guaranteed Delivery, references to “dollars” and “$” are to the currency of Canada and words importing the singular number only shall include the plural and vice versa and words importing the masculine gender shall include the feminine gender and vice versa.

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SUMMARY

     The following is intended as a summary only and reference is made to the more detailed disclosure contained in the attached Offer and Circular, the Letter of Acceptance and the Notice of Guaranteed Delivery, and is qualified in its entirety by the more detailed disclosure contained in those documents. Shareholders are urged to read the Offer and Circular, the Letter of Acceptance and the Notice of Guaranteed Delivery in their entirety.

The Offer

     Hawker Resources Inc. is offering to purchase, on and subject to the terms and conditions set forth in the Offer, all of the issued and outstanding ZORIN Shares, including any ZORIN Shares which may become outstanding pursuant to the exercise of ZORIN Options or ZORIN Warrants. See Section 1 of the Offer, “The Offer”.

     The Offer is made only for the ZORIN Shares and is not made for any ZORIN Options, ZORIN Warrants or other rights to acquire ZORIN Shares.

     The obligation of the Offeror to take up and pay for ZORIN Shares pursuant to the Offer is subject to certain conditions. See Section 4 of the Offer, “Conditions of the Offer”.

     THE ZORIN BOARD HAS UNANIMOUSLY DETERMINED THAT THE OFFER IS FAIR, FROM A FINANCIAL POINT OF VIEW, TO THE ZORIN SHAREHOLDERS, IS IN THE BEST INTERESTS OF ZORIN AND THE ZORIN SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT ZORIN SHAREHOLDERS ACCEPT THE OFFER.

Basis of the Offer

     The basis of the Offer is an ascribed price of $0.40 per ZORIN Share to be comprised of, at the election of each Shareholder tendering to the Offer:

(i)	Cdn. $0.40 in cash for each ZORIN Share (the “Cash Alternative”); or
(ii)	that fraction of one Hawker Share for each ZORIN Share as is equal to the Exchange Ratio (the “Share Alternative”),

provided that cash or Hawker Shares to be paid or issued to Shareholders may be pro-rated in accordance with the terms of the Offer if the consideration elected by Shareholders in aggregate exceeds either the Maximum Cash Consideration or the Maximum Share Consideration. The aggregate consideration required to purchase all of the outstanding ZORIN Shares pursuant to the Offer will be comprised as to 20% in cash and as to 80% through the issuance of Hawker Shares. The ascribed purchase price of $0.40 per ZORIN Share pursuant to the Offer is based on there being a total of 18,558,000 ZORIN Shares outstanding at the Expiry Time and, to the extent the actual number of ZORIN Shares outstanding at such time exceeds 18,558,000, the ascribed Offer price of $0.40 per ZORIN Share shall be reduced proportionately.

     Where, under the terms of the Offer, the consideration payable to any particular Shareholder in exchange for ZORIN Shares is a combination of cash and Hawker Shares, the Offer is made on the basis that a fraction of each ZORIN Share held by that Shareholder will be exchanged exclusively for cash and the remainder of each such ZORIN Share will be exchanged exclusively for a fraction of a Hawker Share. In that circumstance, the fraction of each ZORIN Share disposed of exclusively for a fraction of a Hawker Share will be equal to the fraction obtained by dividing the total fair market value of all of the Hawker Shares received by the Shareholder by the sum of the total fair market value of such Hawker Shares and the total amount of cash received by the Shareholder. The balance of each such ZORIN Share will be disposed of for cash.

     Shareholders wishing to accept the Offer may elect the Cash Alternative or the Share Alternative. The actual consideration to be received by a Shareholder for ZORIN Shares deposited under the Offer will be determined in accordance with the following:

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(a)	the aggregate amount of cash that Hawker will be required to pay for ZORIN Shares acquired pursuant to the Offer on any date when Hawker takes up ZORIN Shares shall not exceed the Maximum Take-Up Date Cash Consideration for such date;
(b)	the aggregate number of Hawker Shares that Hawker will be required to issue for ZORIN Shares acquired pursuant to the Offer on any date when Hawker takes up ZORIN Shares shall not exceed the Maximum Take-Up Date Share Consideration for such date;
(c)	if at any date on which Hawker takes up ZORIN Shares, the aggregate amount of cash that would otherwise be payable, on the basis of $0.40 for each ZORIN Share, to Shareholders who elected the Cash Alternative in respect of their ZORIN Shares to be taken up on such date:

(i)

exceeds the Maximum Take-Up Date Cash Consideration for such date, then the amount of the purchase consideration that will be paid in cash to each such Shareholder who has elected the Cash Alternative shall be pro-rated according to the proportion of ZORIN Shares that have been deposited by such Shareholder relative to the total number of ZORIN Shares that have been tendered to the Cash Alternative and are being taken up on such date so that, in the aggregate, the purchase consideration that will be paid in cash to all such Shareholders who elected the Cash Alternative shall be equal to such Maximum Take-Up Date Cash Consideration, and each such Shareholder who elected the Cash Alternative shall be deemed, for all purposes, to have elected to receive the balance of any purchase consideration payable to such Shareholder (being, per ZORIN Share, $0.40 less the pro-rata amount of cash per ZORIN Share paid to such Shareholder) pursuant to the Offer in Hawker Shares on the basis of that fraction of one Hawker Share for each ZORIN Share calculated as $0.40 less the pro-rata amount of cash per ZORIN Share paid to such Shareholder with such result first divided by $0.40 then multiplied by the Exchange Ratio; or

(ii)

is less than or equal to the Maximum Take-Up Date Cash Consideration for such date, then the entire amount of the purchase consideration that will be paid to each such Shareholder who has elected the Cash Alternative will be paid in cash on the basis of $0.40 for each ZORIN Share; and

(d) if at any date on which Hawker takes up ZORIN Shares, the aggregate number of Hawker Shares that would otherwise be issuable, on the basis of that fraction of one Hawker Share for each ZORIN Share as is equal to the Exchange Ratio, to Shareholders who elected the Share Alternative in respect of their ZORIN Shares to be taken up on such date:

(i)

exceeds the Maximum Take-Up Date Share Consideration for such date, then the amount of the purchase consideration that will be paid in Hawker Shares to each such Shareholder who has elected the Share Alternative shall be pro-rated according to the proportion of ZORIN Shares that have been deposited by such Shareholder relative to the total number of ZORIN Shares that have been tendered to the Share Alternative and are being taken up on such date so that, in the aggregate, the purchase consideration that will be paid in Hawker Shares to all such Shareholders who elected the Share Alternative shall be equal to such Maximum Take-Up Date Share Consideration, and each such Shareholder who elected the Share Alternative shall be deemed, for all purposes, to have elected to receive the balance of any purchase consideration payable to such Shareholder pursuant to the Offer (being, per ZORIN Share, $0.40 less the product obtained by multiplying the pro-rated fraction of one Hawker Share per ZORIN Share by the Hawker Average Price) in cash on the basis of $0.40 for each ZORIN Share less the product obtained by multiplying the pro-rated fraction of one Hawker Share per ZORIN Share paid to such Shareholder by the Hawker Average Price; or

(ii)

is less than or equal to the Maximum Take-Up Date Share Consideration for such date, then the entire amount of the purchase consideration that will be paid to each such Shareholder who has elected the Share Alternative will be paid by the issuance of Hawker Shares on the basis of that fraction of one Hawker Share for each ZORIN Share as is equal to the Exchange Ratio.

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     See Section 1 of the Offer, “The Offer”.

Hawker Resources Inc.

     The Offeror is a corporation organized under the ABCA. Hawker is a publicly-traded oil and natural gas company based in Calgary, Alberta which is engaged in the business of exploring for and developing oil and natural gas reserves in western Canada and acquiring oil and natural gas properties.

     The head office of the Offeror is located at 700, 700 — 2nd Street S.W., Calgary, Alberta, T2P 2W1, and the registered office is located at 4500, 855 - 2nd Street S.W., Calgary, Alberta, T2P 4K7. The Hawker Shares are listed and posted for trading on the TSX under the trading symbol “HKR”. See “Information Concerning Hawker Resources Inc. – General” in the Circular.

ZORIN Exploration Ltd.

     ZORIN Exploration Ltd. is a corporation organized under the ABCA. ZORIN is a publicly-traded oil and natural gas exploration company based in Calgary, Alberta. ZORIN is active in Alberta, Saskatchewan, Ontario and Ohio. ZORIN’s principal and registered office is located at 2350, 801 – 6th Avenue S.W., Calgary, Alberta T2P 3W2. The ZORIN Shares are listed and posted for trading on the TSXV under the trading symbol “ZEL”. See “Information Concerning ZORIN Exploration Ltd. – General” in the Circular.

Purpose of the Offer

     The purpose of the Offer is to enable the Offeror to acquire all of the ZORIN Shares, including any ZORIN Shares which may become outstanding pursuant to the exercise of ZORIN Options or ZORIN Warrants. See “Purpose of the Offer and the Offeror’s Plans for ZORIN” in the Circular.

Benefits of the Offer

     The Offeror believes that the benefits to ZORIN Shareholders resulting from the combination of the respective businesses of the Offeror and ZORIN include:

(a)	a stronger combined entity with a drill-ready inventory of prospects which represent significant upside potential;
(b)	a stronger entity with a larger production, reserve and undeveloped land base and the financial capacity to compete more effectively in the oil and natural gas industry in western Canada; and
(c)	enhanced exploitation opportunities through further development of ZORIN’s undeveloped land base in the core areas where the Offeror has experienced success.

     See “Background to and Benefits of the Offer” in the Circular.

Time for Acceptance

     The Offer is open for acceptance until 4:00 p.m. (Calgary time) on March 17, 2004, unless extended or withdrawn by the Offeror. See Section 2 of the Offer, “Time for Acceptance”.

Manner of Acceptance

     Shareholders wishing to accept the Offer must properly complete and duly execute the Letter of Acceptance or a manually signed facsimile thereof and deposit it (together with certificates representing their ZORIN Shares and all other documents required by the Letter of Acceptance) prior to the Expiry Time, at any of the offices of the Depositary specified in the Letter of Acceptance. Shareholders whose ZORIN Shares are registered in the name of a broker, dealer, bank, trust company or other nominee must contact their nominee to deposit their ZORIN Shares. See Section 3 of the Offer, “Manner of Acceptance – Letter of Acceptance” and the Letter of Acceptance.

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Procedure for Guaranteed Delivery

     If a Shareholder wishes to deposit ZORIN Shares pursuant to the Offer and the certificates representing such ZORIN Shares are not immediately available or such Shareholder cannot deliver the certificates and all other required documents to the Depositary prior to the Expiry Time, such ZORIN Shares may nevertheless be deposited pursuant to the Offer in compliance with procedures for guaranteed delivery. See Section 3 of the Offer, “Manner of Acceptance – Procedure for Guaranteed Delivery” and the Notice of Guaranteed Delivery.

Conditions of the Offer

     The Offeror reserves the right to withdraw or terminate the Offer and not take up and pay for, or extend the Expiry Time and postpone taking up and paying for, any ZORIN Shares tendered to the Offer unless the conditions described in Section 4 of the Offer, “Conditions of the Offer”, are satisfied or waived by the Offeror prior to the Expiry Time. Such conditions include, among other things, at least 66 2/3% of the outstanding ZORIN Shares (calculated on a diluted basis), excluding ZORIN Shares owned at the date of the Offer by the Offeror or its associates or affiliates, being validly deposited under the Offer and not withdrawn prior to the Expiry Time and the time the Offeror first takes up and pays for ZORIN Shares under the Offer.

     In addition, the Offeror has the right to withdraw or terminate the Offer and not take up and pay for any ZORIN Shares tendered to the Offer in the event the Hawker Average Price is less than $4.7500. If the Offeror exercises this right it has agreed to pay ZORIN a fee of $375,000.

     For a complete description of the conditions of the Offer, see Section 4 of the Offer, “Conditions of the Offer”.

Pre-Acquisition Agreement

     The Offeror and ZORIN entered into a pre-acquisition agreement dated as of January 18, 2004 (the “Pre-Acquisition Agreement”) pursuant to which the Offeror agreed to make the Offer. Under the Pre-Acquisition Agreement, ZORIN has represented that the ZORIN Board has unanimously approved the Offer and the entering into of the Pre-Acquisition Agreement, has determined that the Offer is fair, from a financial point of view, to the ZORIN Shareholders and has unanimously resolved to recommend acceptance of the Offer by the ZORIN Shareholders.

     The Offeror and ZORIN have agreed that, among other things, neither ZORIN, nor its subsidiaries, nor any of their Representatives shall, directly or indirectly: (a) release any third party from any confidentiality or standstill agreement to which ZORIN and such third party is a party; or (b) solicit, initiate or encourage (including by way of furnishing information) or participate in or take any other action to facilitate any inquiries or the making of any proposal which constitutes or may reasonably be expected to lead to a Take-over Proposal from any person, or engage in any discussion, negotiations or inquiries relating thereto or accept any Take-over Proposal. The foregoing are subject to certain limited exceptions if certain conditions are met including the receipt by ZORIN of a Superior Proposal. ZORIN has agreed to not enter into any agreement regarding a Superior Proposal in the event Hawker proposes to amend the Pre-Acquisition Agreement and the Offer to provide substantially equivalent or superior value to that provided under the Superior Proposal within 48 hours of ZORIN notifying Hawker of any decision of the ZORIN Board to accept, recommend, approve or implement a Superior Proposal.

     The Offeror is permitted, under the Pre-Acquisition Agreement, in its sole discretion to: (i) waive, in whole or part, any term or condition of the Offer for its benefit at any time and from time to time provided that if Hawker takes up and pays for any ZORIN Shares it shall acquire not less than the Minimum Required Shares; and (ii) amend any term or condition of the Offer, provided that Hawker shall not decrease the aggregate value of the consideration to be paid for each ZORIN Share, subject to certain exceptions, or modify or impose additional conditions to the Offer in a manner that is materially adverse to the holders of ZORIN Shares provided that, after Hawker reduces the Minimum Condition, Hawker extends the Offer by a 10 day period.

     In certain circumstances, ZORIN and Hawker have agreed to pay each other a fee of $375,000.

     See “Pre-Acquisition Agreement” in the Circular.

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Pre-Tender Agreements

     Hawker has entered into agreements (the “Pre-Tender Agreements”) with each of the directors and officers of ZORIN (the “ZORIN Tendering Shareholders”) pursuant to which the ZORIN Tendering Shareholders have agreed to deposit an aggregate of 11,393,500 ZORIN Shares, representing approximately 61.4% of the current issued and outstanding ZORIN Shares (calculated on a non-diluted basis), to the Offer and not to withdraw such ZORIN Shares except in certain limited circumstances. In addition, such ZORIN Tendering Shareholders have also agreed that they will not exercise any ZORIN Options held by them (being 950,000 ZORIN Options in aggregate and representing approximately 67.8% of the current issued and outstanding ZORIN Options) or any ZORIN Warrants held by them (being 498,000 ZORIN Warrants in aggregate and representing approximately 54.3% of the current issued and outstanding ZORIN Warrants) and that they agree to elect, in lieu of exercising their ZORIN Options, to receive the positive difference, if any, that results from subtracting from the ascribed purchase price of $0.40 for the ZORIN Shares under the Offer the exercise price of their ZORIN Options, immediately after the Take-Up Date in exchange for the termination of their ZORIN Options and ZORIN Warrants immediately prior to the Take-Up Date. ZORIN has advised the Offeror that there are 27,000 outstanding ZORIN Options with exercise prices of less than $0.40 and that the aggregate difference between $0.40 and the exercise price of such ZORIN Options is $3,550. In addition, each ZORIN Tendering Shareholder has also agreed that all loans made by ZORIN to such ZORIN Tendering Shareholder shall be repaid in full on the Take-Up Date and that all outstanding amounts shall be netted against any amounts due from Hawker under the Offer to such ZORIN Tendering Shareholder. See “Pre-Acquisition Agreement – Pre-Tender Agreements” in the Circular.

Payment for Deposited ZORIN Shares

     If all conditions referred to in Section 4 of the Offer, “Conditions of the Offer” have been satisfied or waived by the Offeror at the time, the Offeror may, following the expiration of 35 days from the date of the Offer, commence taking up and paying for ZORIN Shares properly deposited under the Offer and not withdrawn. Any ZORIN Shares that may be taken up by the Offeror prior to the Expiry Time shall be paid for by the Offeror as soon as possible, and in any event not more than three Business Days after the taking up of the ZORIN Shares. If the Offeror has not taken up any ZORIN Shares prior to the Expiry Time, and provided the conditions of the Offer referred to above have been fulfilled or waived at that time, the Offeror will (unless the Offeror shall have withdrawn or terminated the Offer) take up and pay for ZORIN Shares validly deposited under the Offer and not withdrawn not later than 10 days from the Expiry Date. Any ZORIN Shares deposited pursuant to the Offer subsequent to a date on which the Offeror has previously taken up ZORIN Shares deposited under the Offer shall be taken up and paid for within 10 days from the time such ZORIN Shares were deposited. See Section 6 of the Offer, “Payment for Deposited Securities”.

Acquisition of ZORIN Shares Not Deposited

     If the Offeror takes up and pays for ZORIN Shares validly deposited under the Offer and acquires not less than 90% of the issued and outstanding ZORIN Shares (other than ZORIN Shares held at the date hereof by or on behalf of the Offeror or its affiliates or associates), the Offeror intends, to the extent possible, to acquire the remaining ZORIN Shares pursuant to a Compulsory Acquisition. If the Offeror takes up and pays for ZORIN Shares validly deposited under the Offer and acquires less than such number thereof or a Compulsory Acquisition is otherwise unavailable or if the Offeror elects not to proceed by way of a Compulsory Acquisition, the Offeror intends to consider other means of acquiring, directly or indirectly, all of the equity interest in ZORIN available in accordance with applicable law, including a Subsequent Acquisition Transaction. If the Minimum Condition is satisfied, the Offeror will own sufficient ZORIN Shares to effect such Subsequent Acquisition Transaction. See Section 14 of the Offer, “Acquisition of Securities Not Deposited” and “Acquisition of Securities Not Deposited” in the Circular.

Shareholders who are U.S. Persons

     The Hawker Shares issuable pursuant to the Offer are not being registered or qualified for distribution under the laws of any foreign jurisdiction, including under the U.S. Securities Act or any securities laws of any state of the United States. Accordingly, all Hawker Shares delivered pursuant to the Offer to any person who is a U.S. Person will be offered and sold pursuant to an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws. Residents of the United States who receive Hawker Shares pursuant to the Offer are cautioned that those securities may be subject to resale restrictions under federal and states securities laws in the United States. Residents of the United States should contact their lawyer or other professional advisor to ensure that they

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comply with those restrictions. Residents of the United States should also carefully read and consider the “Notice to Shareholders in the United States” provided on the face page of the Offer and Circular. See Section 7 of the Offer, “Shareholders who are U.S. Persons”.

Certain Canadian Federal Income Tax Considerations

     A Shareholder that is resident in Canada for tax purposes will realize a capital gain, or capital loss, in respect of each ZORIN Share (or fraction thereof) that is disposed of for cash to the extent that the amount of cash received for each such ZORIN Share (or fraction thereof) exceeds, or is exceeded by, the sum of the adjusted cost base of such ZORIN Share (or fraction thereof) to the Shareholder and any reasonable costs of disposition. Each ZORIN Share (or fraction thereof) that is disposed of for a fraction of a Hawker Share generally will qualify for a tax deferred “rollover” under the Tax Act unless the Shareholder includes any portion of the capital gain or loss otherwise determined in respect of such ZORIN Shares in computing the Shareholder’s income for the taxation year in which the disposition occurs. Where, under the terms of the Offer, a Shareholder receives a combination of cash and Hawker Shares as consideration for ZORIN Shares, that Shareholder will dispose of a fraction of each ZORIN Share exclusively for cash and the remaining fraction of each ZORIN Share exclusively for a fraction of a Hawker Share.

     Shareholders that are not resident in Canada for income tax purposes and tender their ZORIN Shares to the Offer generally will not be subject to tax in Canada in respect of the sale of their ZORIN Shares.

     Shareholders are urged to seek independent tax advice in respect of the consequences to them of the Offer. See “Certain Canadian Federal Income Tax Considerations” in the Circular.

Rights to Withdraw

     All deposits of ZORIN Shares pursuant to the Offer are irrevocable except as provided in Section 8 of the Offer, “Withdrawal of Deposited Securities”.

Stock Exchange Listings

     The ZORIN Shares are listed and posted for trading on the TSXV under the symbol “ZEL”. On January 16, 2004, the last trading day prior to the public announcement by the Offeror of the Offer, the closing trading price of the ZORIN Shares on the TSXV was $0.30. On February 9, 2004, the closing trading price of the ZORIN Shares on the TSXV was $0.385.

     The Hawker Shares are listed and posted for trading on the TSX under the symbol “HKR”. On January 16, 2004, the last trading day prior to the public announcement by the Offeror of the Offer, the closing trading price of the Hawker Shares on the TSX was $5.62. On February 9, 2004, the closing trading price of the Hawker Shares on the TSX was $5.15.

     The TSX has conditionally approved the listing of the Hawker Shares to be issued pursuant to the Offer. Listing is subject to Hawker fulfilling all of the requirements of the TSX on or before the second business day following the Take-Up Date.

Selected Pro forma Financial Information

     The following table sets out certain financial information for Hawker and pro forma consolidated financial information for Hawker after giving effect to the acquisition of the W4M Properties, the Pointwest Acquisition, the proposed acquisition of all of the ZORIN Shares pursuant to the Offer and certain other adjustments. The information concerning ZORIN has been taken from, or based upon, public sources. The following information should be read in conjunction with the pro forma consolidated financial statements of Hawker set forth herein and the financial statements of Hawker incorporated by reference in the Circular, including the notes thereto. The information presented below assumes that all of the ZORIN Shares are acquired under the Offer.

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		For the nine months ended September 30, 2003
		(unaudited)
					W4M
		Hawker			Properties			Pointwest			ZORIN			Pro forma
(All amounts in thousands of Canadian dollars except per share amounts)		$			$			$			$			$
Revenue
Oil and natural gas sales			8,786			21,248			40,070			3,216			73,320
Royalties, net			(2,389	)		(5,757	)		(9,708	)		(444	)		(18,298	)
Interest income			68			—			—			—			68
Other			382			—			—			417			799
			6,847			15,491			30,362			3,189			55,889
Expenses
Production			838			1,795			4,092			985			7,710
General and administrative			2,329			—			770			379			3,478
Interest			267			—			213			112			1,917
Depletion and depreciation			4,196			—			11,475			722			26,838
Site restoration			146			—			404			26			576
			7,776			1,795			16,954			2,224			40,519
Earnings (loss) before the following:			(929	)		13,696			13,408			965			15,370
	Lease abandonment expense		(322	)		—			—			—			(322	)
	Operating costs and write-downs associated with assets held for sale		(179	)		—			—			—			(179	)
	Alberta Heritage Foundation grant settlement		368			—			—			—			368
Earnings (loss) before income taxes			(1,062	)		13,696			13,408			965			15,237
Income tax expense (recovery)			106			—			5,526			419			239
Net earnings (loss)			(1,168	)		13,696			7,882			546			14,998
Earnings per share															0.36

Plans for ZORIN

     If the Offeror succeeds in acquiring all of the ZORIN Shares pursuant to the Offer and under a Compulsory Acquisition or pursuant to a Subsequent Acquisition Transaction, the former ZORIN Shareholders will no longer hold ZORIN Shares, ZORIN will become wholly-owned by the Offeror, the ZORIN Shares will be delisted from the TSXV and ZORIN will, subject to regulatory approval, cease to be a “reporting issuer” for the purposes of Canadian securities legislation.

     The Offeror intends to continue the business carried on by ZORIN and to vigorously exploit and develop ZORIN’s properties.

Risk Factors

     The Hawker Shares should be considered a highly speculative investment due to the nature of Hawker’s business and its present stage of development. Hawker competes with other entities which may have greater technical and financial resources. Owners of Hawker Shares must be prepared to rely solely upon the ability, expertise, judgement, discretion, integrity and good faith of management of Hawker. The energy industry is highly competitive and is subject to many other risk factors. For these and other reasons, an investment in Hawker Shares is suitable only to those knowledgeable and sophisticated investors who are willing to risk a loss of their entire investment. Shareholders should carefully consider these and other risk factors set out in “Risk Factors” in the Circular.

Depositary

     Computershare Trust Company of Canada is acting as the depositary for the receipt of certificates from Shareholders in respect of ZORIN Shares and Letters of Acceptance deposited under the Offer at the offices of the Depositary specified in the Letter of Acceptance. The Depositary will receive Notices of Guaranteed Delivery at the Toronto office specified therein. The Depositary will be responsible for giving certain notices, if required, and for making payment for all ZORIN Shares purchased by the Offeror under the Offer. See “Depositary” in the Circular.

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Soliciting Dealer

     Peters & Co. Limited has been retained to act as soliciting dealer to assist the Offeror with the Offer and to solicit acceptances of the Offer. See “Soliciting Dealer” in the Circular.

     No brokerage fees or commissions will be payable by any Shareholder who accepts the Offer by depositing their ZORIN Shares directly with the Depositary or who uses the services of the Soliciting Dealer to accept the Offer.

     Shareholders should contact the Soliciting Dealer, the Depositary or their broker or dealer for assistance in accepting the Offer and in depositing ZORIN Shares with the Depositary.

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OFFER

February 10, 2004

     TO: THE SHAREHOLDERS OF ZORIN EXPLORATION LTD.

1. The Offer

     The Offeror hereby offers to purchase, on and subject to the terms and conditions hereinafter specified, all of the issued and outstanding ZORIN Shares, including any ZORIN Shares which may become outstanding pursuant to the exercise of ZORIN Options or ZORIN Warrants.

     The Offer is made only for the ZORIN Shares and is not made for any ZORIN Options, ZORIN Warrants or other rights to purchase ZORIN Shares.

     The basis of the Offer is an ascribed price of $0.40 per ZORIN Share to be comprised of, at the election of each Shareholder tendering to the Offer:

(i)	Cdn. $0.40 in cash for each ZORIN Share (the “Cash Alternative”); or
(ii)	that fraction of one Hawker Share for each ZORIN Share as is equal to the Exchange Ratio (the “Share Alternative”),

provided that cash or Hawker Shares to be paid or issued to Shareholders may be pro-rated in accordance with the terms of the Offer if the consideration elected by Shareholders in aggregate exceeds either the Maximum Cash Consideration or the Maximum Share Consideration. The aggregate consideration required to purchase all of the outstanding ZORIN Shares pursuant to the Offer will be comprised as to 20% in cash and as to 80% through the issuance of Hawker Shares. The ascribed purchase price of $0.40 per ZORIN Share pursuant to the Offer is based on there being a total of 18,558,000 ZORIN Shares outstanding at the Expiry Time and, to the extent the actual number of ZORIN Shares outstanding at such time exceeds 18,558,000, the ascribed Offer price of $0.40 per ZORIN Share shall be reduced proportionately.

     Shareholders wishing to accept the Offer may elect the Cash Alternative or the Share Alternative. The actual consideration to be received by a Shareholder for ZORIN Shares deposited under the Offer will be determined in accordance with the following:

(a)	the aggregate amount of cash that Hawker will be required to pay for ZORIN Shares acquired pursuant to the Offer on any date when Hawker takes up ZORIN Shares shall not exceed the Maximum Take-Up Date Cash Consideration for such date;
(b)	the aggregate number of Hawker Shares that Hawker will be required to issue for ZORIN Shares acquired pursuant to the Offer on any date when Hawker takes up ZORIN Shares shall not exceed the Maximum Take-Up Date Share Consideration for such date;
(c)	if at any date on which Hawker takes up ZORIN Shares, the aggregate amount of cash that would otherwise be payable, on the basis of $0.40 for each ZORIN Share, to Shareholders who elected the Cash Alternative in respect of their ZORIN Shares to be taken up on such date:

(i) exceeds the Maximum Take-Up Date Cash Consideration for such date, then the amount of the purchase consideration that will be paid in cash to each such Shareholder who has elected the Cash Alternative shall be pro-rated according to the proportion of ZORIN Shares that have been deposited by such Shareholder relative to the total number of ZORIN Shares that have been tendered to the Cash Alternative and are being taken up on such date so that, in the aggregate, the purchase consideration that will be paid in cash to all such Shareholders who elected the Cash Alternative shall be equal to such Maximum Take-Up Date Cash Consideration, and each such Shareholder who elected the Cash Alternative shall be deemed, for all purposes, to have elected to receive the balance of any purchase consideration payable

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to such Shareholder (being, per ZORIN Share, $0.40 less the pro-rata amount of cash per ZORIN Share paid to such Shareholder) pursuant to the Offer in Hawker Shares on the basis of that fraction of one Hawker Share for each ZORIN Share calculated as $0.40 less the pro-rata amount of cash per ZORIN Share paid to such Shareholder with such result first divided by $0.40 then multiplied by the Exchange Ratio; or

(ii)

is less than or equal to the Maximum Take-Up Date Cash Consideration for such date, then the entire amount of the purchase consideration that will be paid to each such Shareholder who has elected the Cash Alternative will be paid in cash on the basis of $0.40 for each ZORIN Share; and

(d) if at any date on which Hawker takes up ZORIN Shares, the aggregate number of Hawker Shares that would otherwise be issuable, on the basis of that fraction of one Hawker Share for each ZORIN Share as is equal to the Exchange Ratio, to Shareholders who elected the Share Alternative in respect of their ZORIN Shares to be taken up on such date:

(i)

exceeds the Maximum Take-Up Date Share Consideration for such date, then the amount of the purchase consideration that will be paid in Hawker Shares to each such Shareholder who has elected the Share Alternative shall be pro-rated according to the proportion of ZORIN Shares that have been deposited by such Shareholder relative to the total number of ZORIN Shares that have been tendered to the Share Alternative and are being taken up on such date so that, in the aggregate, the purchase consideration that will be paid in Hawker Shares to all such Shareholders who elected the Share Alternative shall be equal to such Maximum Take-Up Date Share Consideration, and each such Shareholder who elected the Share Alternative shall be deemed, for all purposes, to have elected to receive the balance of any purchase consideration payable to such Shareholder pursuant to the Offer (being, per ZORIN Share, $0.40 less the product obtained by multiplying the pro-rated fraction of one Hawker Share per ZORIN Share by the Hawker Average Price) in cash on the basis of $0.40 for each ZORIN Share less the product obtained by multiplying the pro-rated fraction of one Hawker Share per ZORIN Share paid to such Shareholder by the Hawker Average Price; or

(ii)

is less than or equal to the Maximum Take-Up Date Share Consideration for such date, then the entire amount of the purchase consideration that will be paid to each such Shareholder who has elected the Share Alternative will be paid by the issuance of Hawker Shares on the basis of that fraction of one Hawker Share for each ZORIN Share as is equal to the Exchange Ratio.

     Each Shareholder who otherwise validly accepts the Offer but fails in the Letter of Acceptance to make such election, or to properly make such election, in respect of his ZORIN Shares, shall be deemed to have elected the Share Alternative in respect of 80% of the ZORIN Shares deposited under the Offer by such Shareholder and the Cash Alternative in respect of the remaining 20% of the ZORIN Shares deposited under the Offer by such Shareholder, subject to proration in accordance with the Offer.

     The Exchange Ratio shall be proportionately adjusted to reflect fully the effect of: (a) any stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into Hawker Shares), reorganization, recapitalization or other like change with respect to Hawker Shares; and (b) any extraordinary dividend or distribution with respect to Hawker Shares (other than a dividend or distribution referenced in (a)); provided that the foregoing adjustments shall only be made if the record date for the stock split, reverse split, stock dividend, reorganization, recapitalization, other like change or extraordinary dividend or distribution referred to in (a) and (b) occurs after January 18, 2004 and prior to the Effective Time.

     Promptly after determining the number of ZORIN Shares taken up on any particular day and, after giving effect to the proration provided herein in respect of such ZORIN Shares, the proportion of total consideration paid in cash and the proportion of total consideration paid in Hawker Shares for such ZORIN Shares, Hawker will issue a press release setting forth such information.

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     No fractional Hawker Shares will be issued. Any Shareholder who would otherwise be entitled to receive a fractional Hawker Share will be entitled to receive a cash amount obtained by multiplying such fraction by $0.40. If a Shareholder deposits more than one certificate for ZORIN Shares that are taken up and paid for by Hawker, the number of Hawker Shares issuable to such Shareholder will be computed on the basis of the aggregate number of ZORIN Shares of the Shareholder so deposited.

     Where, under the terms of the Offer, the consideration payable to any particular Shareholder in exchange for ZORIN Shares is a combination of cash and Hawker Shares, the Offer is made on the basis that a fraction of each ZORIN Share held by that Shareholder will be exchanged exclusively for cash and the remainder of each such ZORIN Share will be exchanged exclusively for a fraction of a Hawker Share. In that circumstance, the fraction of each ZORIN Share disposed of exclusively for a fraction of a Hawker Share will be equal to the fraction obtained by dividing the total fair market value of all of the Hawker Shares received by the Shareholder by the sum of the total fair market value of such Hawker Shares and the total amount of cash received by the Shareholder. The balance of each such ZORIN Share will be disposed of for cash. This basis is intended to accommodate a partial tax deferred rollover to such Shareholders. See “Certain Canadian Federal Income Tax Considerations” in the Circular.

     This document does not constitute an offer or a solicitation to any person in any jurisdiction in which such offer or solicitation is unlawful. The Offer is not being made to, nor will deposits be accepted from or on behalf of, holders of ZORIN Shares in any jurisdiction in which the making or acceptance thereof would not be in compliance with the laws of such jurisdiction; however, the Offeror may, in its sole discretion, take such action as it may deem necessary to extend the Offer to holders of ZORIN Shares in any such jurisdiction.

     The accompanying Circular, Letter of Acceptance and Notice of Guaranteed Delivery are incorporated into and form part of the Offer and contain important information which should be read carefully before making a decision with respect to the Offer.

2. Time for Acceptance

     The Offer is open for acceptance until 4:00 p.m. (Calgary time) on March 17, 2004 (or such later time and date or times and dates as may be fixed by the Offeror from time to time pursuant to Section 5 of the Offer, “Extension and Variation of the Offer”), unless withdrawn or terminated by the Offeror.

3. Manner of Acceptance

     Letter of Acceptance

     The Offer may be accepted by delivering to the Depositary at any of the offices of the Depositary listed in the Letter of Acceptance so as to arrive there no later than the Expiry Time:

(a)	the certificate or certificates representing the ZORIN Shares in respect of which the Offer is being accepted;
(b)	a Letter of Acceptance, or a manually executed facsimile thereof, properly completed and duly executed as required by the instructions to the Letter of Acceptance; and
(c)	any other documents required by the instructions to the Letter of Acceptance.

     Except as otherwise provided in the instructions to the Letter of Acceptance, all signatures on the Letter of Acceptance must be guaranteed by an Eligible Institution. If a Letter of Acceptance is executed by a person other than the registered holder(s) of the ZORIN Shares deposited therewith, and in certain other circumstances described in the Letter of Acceptance, then certificate(s) must be endorsed or be accompanied by an appropriate securities transfer power of attorney duly and properly completed by the registered holder(s), with the signature(s) on the endorsement panel or securities transfer power of attorney guaranteed by an Eligible Institution.

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     Procedure for Guaranteed Delivery

     If a Shareholder wishes to deposit ZORIN Shares pursuant to the Offer and the certificates representing such ZORIN Shares are not immediately available or such holder cannot deliver the certificates and all other required documents to the Depositary prior to the Expiry Time, such ZORIN Shares may nevertheless be deposited pursuant to the Offer provided that all of the following conditions are met:

(a)	such deposit is made by or through an Eligible Institution;
(b)	a properly completed and duly executed Notice of Guaranteed Delivery, in the form enclosed with this document or a manually signed facsimile thereof, is received by the Depositary prior to the Expiry Time at its Toronto office as listed in the Notice of Guaranteed Delivery; and
(c)	the certificates representing deposited ZORIN Shares, in proper form for transfer, together with a properly completed and duly executed Letter of Acceptance or a manually signed facsimile thereof covering such ZORIN Shares and any other documents required by such Letter of Acceptance, are received at the Toronto office of the Depositary, prior to 4:30 p.m. (Toronto time) on the third trading day on the TSXV after the Expiry Time.

     The Notice of Guaranteed Delivery must be delivered by hand or transmitted by facsimile transmission or mailed to the Depositary at the Toronto office listed in the Notice of Guaranteed Delivery and must include a signature guaranteed by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery.

     General

     In all cases, payment for ZORIN Shares deposited and taken up by the Offeror pursuant to the Offer will be made only after timely receipt by the Depositary of: (i) certificates representing the ZORIN Shares; (ii) a Letter of Acceptance or a manually executed facsimile thereof, properly completed and duly executed, covering such ZORIN Shares with the signatures guaranteed in accordance with the instructions to the Letter of Acceptance; and (iii) any other documents required by the Letter of Acceptance.

     The method of delivery of certificates representing the ZORIN Shares, the Letter of Acceptance and all other required documents is at the option and risk of the depositing Shareholder. The Offeror recommends that such certificates and documents be delivered by hand to the Depositary and a receipt be obtained. If such certificates or documents are mailed, the Offeror recommends that registered mail be used and that proper insurance be obtained.

     Holders of ZORIN Shares registered in the name of a broker, investment dealer, bank, trust company or other nominee should contact the nominee for assistance in depositing their ZORIN Shares.

     The execution by a ZORIN Shareholder of a Letter of Acceptance irrevocably appoints the Offeror and certain officers of the Offeror, and each of them, and any other person designated by the Offeror in writing, as the true and lawful agent, attorney and attorney-in-fact and proxy of such Shareholder with respect to the ZORIN Shares deposited therewith and purchased by the Offeror (the “Purchased Securities”) and with respect to any and all dividends, stock dividends, securities, rights, warrants, payments, assets or other interests or distributions (collectively, the “Other Securities”) declared, paid, accrued, issued, transferred, made or distributed on or in respect of the Purchased Securities on or after January 18, 2004, effective on and after the date that the Offeror takes up and pays for the Purchased Securities (the “Effective Date”), with full power of substitution, in the name and on behalf of such Shareholder (such power of attorney being deemed to be an irrevocable power coupled with an interest), to register or record, transfer and enter the transfer of, Purchased Securities and any Other Securities on the appropriate registers of ZORIN Shareholders and to exercise any and all of the rights of such Shareholder in respect of the Purchased Securities and any Other Securities including, without limitation, the right to vote, execute and deliver any and all instruments of proxy, authorizations or consents in respect of any or all of the Purchased Securities and Other Securities, revoke any such instruments, authorizations or consents given on or prior to or after the Effective Date and designate in any such instruments of proxy any person or persons as the proxy or the proxy nominee or nominees of the holder thereof, all as set forth in the Letter of Acceptance, in respect of such Purchased Securities and such Other Securities for all purposes including, without limitation, in connection with any meeting (whether annual, special or otherwise and any

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adjournments thereof) of holders of securities of ZORIN and execute, endorse and negotiate, for, and in the name of and on behalf of, the registered holder of Purchased Securities and Other Securities, any and all cheques or other instruments respecting any distribution payable to or to the order of such registered holder in respect of such Purchased Securities or Other Securities. Further, a Shareholder who executes the Letter of Acceptance, unless otherwise agreed to by the Offeror, agrees, among other things, from and after the Effective Date: (i) not to vote any of the Purchased Securities or Other Securities at any meeting (whether annual, special or otherwise and any adjournments thereof) of holders of Purchased Securities or Other Securities; (ii) not to exercise any other rights or privileges attached to any Purchased Securities or Other Securities; and (iii) to execute and deliver to the Offeror any and all instruments of proxy, authorizations or consents in respect of any or all of the Purchased Securities or Other Securities and to designate in any such instruments of proxy the person or persons specified by the Offeror as the proxy or proxy nominee or nominees of the holder thereof.

     Upon such appointment, all prior proxies given by the holder of such Purchased Securities or Other Securities with respect thereto shall be revoked and no subsequent proxies may be given by such holder with respect thereto. A Shareholder who executes a Letter of Acceptance covenants to execute, upon request, any additional documents, transfers or other assurances necessary or desirable to complete the sale, assignment and transfer of the Purchased Securities and any Other Securities to the Offeror and acknowledges that all authority therein conferred or agreed to be conferred shall survive the death or incapacity, bankruptcy or insolvency of the Shareholder and all obligations of the Shareholder therein shall be binding upon the heirs, personal representatives, successors and assigns of the Shareholder.

     The deposit of ZORIN Shares pursuant to the procedures set out in the Letter of Acceptance will constitute a binding agreement between the depositing Shareholder and the Offeror upon the terms and subject to the conditions of the Offer including the depositing Shareholder’s representation and warranty that: (i) such person has full power and authority to deposit, sell, assign and transfer the Purchased Securities and any Other Securities being deposited and has not sold, assigned or transferred or agreed to sell, assign or transfer any of such Purchased Securities or Other Securities to any other person; (ii) such Shareholder owns the Purchased Securities and any Other Securities within the meaning of applicable laws; (iii) the deposit of such Purchased Securities and any Other Securities complies with applicable securities laws; and (iv) when such Purchased Securities and any Other Securities are taken up and paid for by the Offeror, the Offeror will acquire good title thereto free and clear of all liens, restrictions, charges, encumbrances, claims and equities whatsoever.

     All questions as to the validity, form, eligibility (including time of receipt) and acceptance of ZORIN Shares deposited pursuant to the Offer will be determined by the Offeror in its sole discretion and depositing Shareholders agree that such determination shall be final and binding. The Offeror reserves the absolute right to reject any and all deposits which it determines not to be in a proper form or which may be unlawful to accept under the laws of any applicable jurisdiction. The Offeror reserves the right to waive any defect or irregularity in the deposit of any ZORIN Shares. The Offeror’s interpretation of the terms and conditions of the Offer (including the Circular, the Letter of Acceptance and the Notice of Guaranteed Delivery) will be final and binding.

     There shall be no obligation on the Offeror, the Soliciting Dealer or the Depositary to give notice of any defects or irregularities in any deposit and no liability shall be incurred by any of them for failure to give any such notice.

     The Offeror reserves the right to permit the Offer to be accepted in a manner other than that set out above.

4. Conditions of the Offer

     Notwithstanding any other provision of the Offer, but subject to the provisions of the Pre-Acquisition Agreement, the Offeror reserves the right to withdraw or terminate the Offer and not take up and pay for, or to extend the period of time during which the Offer is open and postpone taking up and paying for, any ZORIN Shares deposited under the Offer unless all of the following conditions are satisfied or waived by the Offeror:

(a) at the Expiry Time, and at the time the Offeror first takes up and pays for ZORIN Shares under the Offer, there shall have been validly deposited under the Offer and not withdrawn at least 66 2/3% of the outstanding ZORIN Shares (calculated on a diluted basis and excluding ZORIN Shares owned at the date of the Offer by the Offeror or its associates or affiliates) (the “Minimum Condition”);

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(b)

all requisite regulatory approvals and consents of any stock exchanges or other securities or regulatory authorities shall have been obtained or occurred on terms and conditions satisfactory to the Offeror, acting reasonably, and all applicable statutory or regulatory waiting periods shall have expired or been terminated;

(c)

(i) no act, action, suit, proceeding, objection or opposition shall have been threatened or taken before or by any domestic or foreign court or tribunal or governmental agency or other regulatory authority or administrative agency or commission by any elected or appointed public official or by any person in Canada or elsewhere, whether or not having the force of law; and (ii) no law, regulation or policy (including applicable tax laws and regulations in those jurisdictions in which ZORIN or any of its subsidiaries carries on business) shall have been proposed, enacted, promulgated, amended or applied, which in either case, in the sole judgment of the Offeror acting reasonably, in either case:

(A)	has the effect or may have the effect to cease trade, enjoin, prohibit or impose material limitations, damages or conditions on the purchase by, or the sale to, the Offeror of the ZORIN Shares or the right of the Offeror to own or exercise full rights of ownership of the ZORIN Shares;
(B)	has had, or if the Offer was consummated could reasonably be expected to result in, a Material Adverse Change or, in the case of (ii) above, could reasonably be expected to have a material adverse effect on the Offeror or is its ability to complete the Offer; or
(C)	has a material adverse effect on the completion of any Compulsory Acquisition or Subsequent Acquisition Transaction;

(d)	the Offeror shall be satisfied, acting reasonably, that there shall not exist any prohibition at law against the Offeror making the Offer or taking up and paying for all of the ZORIN Shares under the Offer or completing any Compulsory Acquisition or Subsequent Acquisition Transaction in respect of any ZORIN Shares not acquired under the Offer;
(e)	in the sole judgment of the Offeror, acting reasonably: (i) ZORIN shall not have breached, or failed to comply with, in any material respect, any of its covenants or other obligations under the Pre-Acquisition Agreement; and (ii) all representations and warranties of ZORIN contained in the Pre-Acquisition Agreement shall have been true and correct in all material respects as of the date of the Pre-Acquisition Agreement and shall not have ceased to be true and correct in any material respect thereafter provided that ZORIN has been given notice of and two Business Days to cure any misrepresentation, breach or non-performance and has failed to cure any such misrepresentation, breach or non-performance;
(f)	the Pre-Acquisition Agreement shall not have been terminated pursuant to its terms;
(g)	the Offeror shall have determined in its reasonable discretion that ZORIN’s long-term debt did not exceed $nil and its working capital deficiency (including current debt) did not exceed $4 million as at December 31, 2003;
(h)	the Offeror shall, in its sole judgment, acting reasonably, be satisfied that all outstanding ZORIN Options, ZORIN Warrants and all other rights to acquire any ZORIN Shares shall have been terminated or may be terminated or otherwise dealt with on a basis acceptable to the Offeror in its sole judgment, acting reasonably, prior to Offeror taking up any ZORIN Shares pursuant to the Offer and shall have received an officers’ certificate confirming such matters;
(i)	during the time the Offer is outstanding, the Offeror shall have determined that there shall not have occurred: (i) a Material Adverse Change; or (ii) any event, action or financial occurrence of national or international consequence has occurred which in the opinion of the Offeror materially adversely affects the financial markets in Canada or the United States generally or the financial condition, business, operations, assets or prospects of ZORIN and its subsidiaries taken as a whole; and

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(j) immediately prior to the Expiry Time, Hawker shall have received from ZORIN an officers’ certificate certifying that:

(i)	all of the representations and warranties of ZORIN contained in the Pre-Acquisition Agreement are true and correct in all material respects;
(ii)	ZORIN has complied in all material respects with each of its covenants set out in the Pre-Acquisition Agreement; and
(iii)	a Material Adverse Change has not occurred in respect of ZORIN.

     The conditions described above are for the exclusive benefit of the Offeror and Hawker may, in its sole discretion: (i) waive, in whole or part, any term or condition of the Offer for its benefit at any time and from time to time provided that if Hawker takes up and pays for any ZORIN Shares it shall acquire not less than the Minimum Required Shares; and (ii) amend any term or condition of the Offer, provided that Hawker shall not decrease the aggregate value of the consideration to be paid for each ZORIN Share or modify or impose additional conditions to the Offer in a manner that is materially adverse to the ZORIN Shareholders; provided that, after Hawker reduces the Minimum Condition, Hawker extends the Offer by a ten day period.

     In addition, the Offeror has the right to withdraw or terminate the Offer and not take up and pay for any ZORIN Shares tendered to the Offer in the event the Hawker Average Price is less than $4.7500. If the Offeror exercises this right it has agreed to pay ZORIN a fee of $375,000.

     Any waiver of a condition or the withdrawal of the Offer shall be effective on the day on which written notice or other communication confirmed in writing by the Offeror to that effect is given to the Depositary at its principal office in Calgary. The Offeror, forthwith after giving any such notice, shall make a public announcement of such waiver or withdrawal, shall cause the Depositary, if required by law, as soon as practicable thereafter to notify the Shareholders in the manner set forth in Section 12 of the Offer, “Notice and Delivery”, and shall provide a copy of the aforementioned notice to the TSX. If the Offer is withdrawn, the Offeror shall not be obligated to take up or pay for any ZORIN Shares deposited under the Offer and the Depositary will, at the Offeror’s expense, promptly return all certificates for deposited ZORIN Shares, Letters of Acceptance, Notices of Guaranteed Delivery and related documents to the parties by whom they were deposited.

5. Extension and Variation of the Offer

     The Offer is open for acceptance until, but not after, the Expiry Time.

     The Offeror reserves the right, in its sole discretion, at any time and from time to time during the Offer Period (or otherwise as permitted by applicable law), to extend the Expiry Time or to vary the Offer by giving written notice or other communication confirmed in writing of such extension or variation to the Depositary at its principal office in Calgary, and by causing the Depositary to provide as soon as practicable thereafter a copy of such notice in the manner set forth in Section 12 of the Offer, “Notice and Delivery”, to all ZORIN Shareholders whose ZORIN Shares have not been taken up prior to the extension or variation. The Offeror shall, as soon as practicable after giving notice of an extension or variation to the Depositary, make a public announcement of the extension or variation and provide a copy of the notice thereof to the TSX. Any notice of extension or variation will be deemed to have been given and to be effective on the day on which it is delivered or otherwise first communicated in writing to the Depositary at its principal office in Calgary.

     Notwithstanding the foregoing, the Offer may not be extended by the Offeror if all of the terms and conditions of the Offer, except those waived by the Offeror, have been satisfied or complied with unless the Offeror first takes up all ZORIN Shares deposited under the Offer and not withdrawn.

     Where the terms of the Offer are varied, the Offer shall not expire before ten days after the notice of variation in respect of such variation has been given to Shareholders unless otherwise permitted by applicable law and subject to abridgement or elimination of that period pursuant to such orders as may be granted by Canadian courts or securities regulatory authorities.

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     During any such extension or in the event of any variation, all ZORIN Shares previously deposited and not taken up or withdrawn will remain subject to the Offer and may be accepted for purchase by the Offeror in accordance with the terms hereof, subject to Section 6 of the Offer, “Payment for Deposited Securities”, and to Section 8 of the Offer, “Withdrawal of Deposited Securities”. An extension of the Expiry Time or a variation of the Offer does not constitute a waiver by the Offeror of its rights under Section 4 of the Offer, “Conditions of the Offer”. If the consideration being offered for the ZORIN Shares under the Offer is increased, the increased consideration will be paid to all depositing Shareholders whose ZORIN Shares are taken up under the Offer.

6. Payment for Deposited Securities

     If all the conditions referred to in Section 4 of the Offer, “Conditions of the Offer” have been satisfied or waived by the Offeror at the time, the Offeror may, following the expiration of 35 days from the date of the Offer, commence taking up and paying for ZORIN Shares properly deposited under the Offer and not withdrawn. Any ZORIN Shares that may be taken up by the Offeror prior to the Expiry Date shall be paid for by the Offeror as soon as possible, and in any event not more than three business days after the taking up of the ZORIN Shares. If the Offeror has not taken up any ZORIN Shares prior to the Expiry Time, and provided the conditions of the Offer referred to above have been fulfilled or waived at that time, the Offeror will (unless the Offeror shall have withdrawn or terminated the Offer) take up and pay for ZORIN Shares validly deposited under the Offer and not withdrawn not later than 10 days from the Expiry Date. Any ZORIN Shares deposited pursuant to the Offer subsequent to a date on which the Offeror has previously taken up ZORIN Shares deposited under the Offer shall be taken up and paid for within 10 days from the time such ZORIN Shares were deposited.

     Subject to applicable law, the Offeror expressly reserves the right in its sole discretion to delay taking up or paying for any ZORIN Shares or to terminate the Offer and not take up or pay for any ZORIN Shares if any condition specified in Section 4 of the Offer, “Conditions of the Offer”, is not satisfied or waived by the Offeror, in whole or in part, by giving written notice thereof or other communication confirmed in writing to the Depositary at its principal office in Calgary. The Offeror also expressly reserves the right, in its sole discretion and notwithstanding any other condition of the Offer, to delay taking up and paying for ZORIN Shares in order to comply, in whole or in part, with any applicable law, including, without limitation, such period of time as may be necessary to obtain any necessary regulatory approval. The Offeror will be deemed to have taken up and accepted for payment ZORIN Shares validly deposited and not withdrawn pursuant to the Offer if, as and when the Offeror gives written notice or other communication confirmed in writing to the Depositary at its principal office in Calgary of its acceptance for payment of such ZORIN Shares pursuant to the Offer.

     The Offeror will pay for ZORIN Shares validly deposited pursuant to the Offer and not withdrawn by issuing Hawker Shares and/or making a cash payment to or on behalf of the holders of deposited ZORIN Shares who are entitled to Hawker Shares and/or cash and providing the Depositary with certificates representing such Hawker Shares and sufficient funds (by wire transfer or other means satisfactory to the Depositary) for delivery to such holders.

     No fractional Hawker Shares will be issued. Any Shareholder who would otherwise be entitled to receive a fractional Hawker Share will be entitled to receive a cash amount obtained by multiplying such fraction by $0.40. If a Shareholder deposits more than one certificate for ZORIN Shares that are taken up and paid for by Hawker, the number of Hawker Shares issuable to such Shareholder will be computed on the basis of the aggregate number of ZORIN Shares of the Shareholder so deposited.

     Under no circumstances will interest accrue or be paid by the Offeror or the Depositary to persons depositing ZORIN Shares on the purchase price of ZORIN Shares purchased by the Offeror regardless of any delay in making such payment.

     The Depositary will act as the agent of persons who have deposited ZORIN Shares in acceptance of the Offer for the purposes of receiving payment under the Offer from the Offeror and transmitting payment to such persons, and receipt of payment by the Depositary will be deemed to constitute receipt of payment by persons depositing ZORIN Shares.

     Settlement will be made by the Depositary forwarding the certificate representing the Hawker Shares and/or a cheque payable in Canadian funds in the amount to which a person depositing ZORIN Shares is entitled (including payment, if any, in lieu of fractional Hawker Shares) provided that the person is a resident of a province of Canada or

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another jurisdiction in which the Hawker Shares may be lawfully delivered without further action by the Offeror. Subject to the foregoing and unless otherwise directed by the Letter of Acceptance, the certificate representing the Hawker Shares and/or cheque will be issued in the name of the registered holder of the ZORIN Shares deposited. Unless the person depositing the ZORIN Shares instructs the Depositary to hold the certificate representing the Hawker Shares and/or cheque for pick-up by checking the appropriate box in the Letter of Acceptance, certificates and cheques will be forwarded by first class insured mail to such persons at the address specified in the Letter of Acceptance. If no address is specified, certificates and cheques will be forwarded to the address of the Shareholder as shown on the registers maintained by ZORIN.

     Depositing Shareholders will not be obligated to pay brokerage fees or commissions if they accept the Offer by depositing their ZORIN Shares directly with the Depositary or if they use the services of the Soliciting Dealer to accept the Offer. Transfer taxes, if any, on the purchase of ZORIN Shares will be paid by the Offeror.

7. Shareholders who are U.S. Persons

     The Hawker Shares issuable pursuant to the Offer are not being registered or qualified for distribution under the laws of any foreign jurisdiction, including under the U.S. Securities Act or any securities laws of any state of the United States. Accordingly, all Hawker Shares delivered pursuant to the Offer to any person who is a U.S. Person will be offered and sold pursuant to an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws. Shareholders will be required to certify in the Letter of Acceptance whether or not they are U.S. Persons and, if a U.S. Person, as to certain other matters in order to determine eligibility for exemptions from registration under the U.S. Securities Laws and applicable state securities laws.

8. Withdrawal of Deposited Securities

     All deposits of ZORIN Shares pursuant to the Offer are irrevocable, provided that any ZORIN Shares deposited in acceptance of the Offer may be withdrawn by or on behalf of the depositing Shareholder (unless otherwise required or permitted by applicable law):

(a)	at any time where the ZORIN Shares have not been taken up by the Offeror under the Offer;
(b)	at any time before the expiration of ten days from the date of a notice of variation or change required by applicable securities laws to be given to Shareholders whose ZORIN Shares have not been taken up by the Offeror; and
(c)	at any time after three business days from the date the Offeror takes up ZORIN Shares, if such ZORIN Shares have not been paid for by the Offeror.

     In order for any withdrawal to be effective hereunder, notice of the withdrawal must be in writing (which includes a telegraphic communication or notice by electronic means that produces a printed copy), and must be actually received by the Depositary at the place of deposit of the applicable ZORIN Shares (or Notice of Guaranteed Delivery in respect thereof) within the period permitted for withdrawal. Any such notice of withdrawal must be: (i) signed by or on behalf of the person who signed the Letter of Acceptance that accompanied the ZORIN Shares to be withdrawn (or Notice of Guaranteed Delivery in respect thereof); (ii) specify such person’s name, the number of ZORIN Shares to be withdrawn, the name of the registered holder and the certificate number shown on each certificate representing the ZORIN Shares to be withdrawn; and (iii) must be addressed to the Offeror and to the Depositary. Any signature on a notice of withdrawal must be guaranteed by an Eligible Institution in the same manner as in the Letter of Acceptance (as described in the instructions set out in such letter), except in the case of ZORIN Shares deposited for the account of an Eligible Institution. The withdrawal shall take effect upon receipt of the properly completed and executed written notice by the required office of the Depository listed in the Letter of Acceptance.

     All questions as to the validity (including timely receipt) and form of notices of withdrawal shall be determined by the Offeror, in its sole discretion, and such determination shall be final and binding. There shall be no duty or obligation on the Offeror, the Depositary, the Soliciting Dealer, or any other person to give notice of any defect or irregularity in any notice of withdrawal and no liability shall be incurred by any of them for failure to give any such notice.

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     If the Offeror extends the Offer, is delayed in taking up or paying for ZORIN Shares or is unable to take up or pay for ZORIN Shares for any reason, then, without prejudice to the Offeror’s other rights, ZORIN Shares deposited under the Offer may be retained by the Depositary on behalf of the Offeror except to the extent that depositing holders thereof are entitled to withdrawal rights as set forth in this Section 8 or pursuant to applicable law.

     ZORIN Shares withdrawn will be deemed not validly deposited for the purposes of the Offer, but may be redeposited at any subsequent time on or prior to the Expiry Time by following any of the applicable procedures described in Section 3 of the Offer, “Manner of Acceptance”.

     In addition to the foregoing rights of withdrawal, Shareholders in certain provinces of Canada are entitled to statutory rights of rescission in certain circumstances. See “Statutory Rights” in the Circular.

9. Return of Deposited Securities

     If any deposited ZORIN Shares are not taken up and paid for by the Offeror for any reason, or if certificates are submitted for more ZORIN Shares than are deposited, certificates for ZORIN Shares not taken up or paid for or for ZORIN Shares not deposited will be returned at the Offeror’s expense by either sending new certificates representing ZORIN Shares not purchased or returning the deposited certificates (and other relevant documents). The certificates (and other relevant documents) will be forwarded by first class mail in the name of and to the address specified by the Shareholder in the Letter of Acceptance or, if such name or address is not so specified, in such name and to such address as shown on the registers maintained by ZORIN as soon as practicable following the Expiry Time or withdrawal or termination of the Offer.

10. Changes in Consolidated Capitalization, Distributions and Liens

     If, on or after January 18, 2004, ZORIN should subdivide, consolidate or otherwise change any of the ZORIN Shares or its capitalization or make any distribution of securities on such ZORIN Shares, or shall disclose that it has taken or intends to take any such action, then the Offeror may, in its sole discretion and without prejudice to its rights under Section 4, “Conditions of the Offer”, make such adjustments as it considers appropriate to the purchase price and other terms of the Offer (including, without limitation, the type of securities offered to be purchased and the amounts payable therefore) to reflect such subdivision, consolidation or other change or distribution. The ascribed purchase price of $0.40 per ZORIN Share pursuant to the Offer is based on there being a total of 18,558,000 ZORIN Shares outstanding at the Expiry Time and, to the extent the actual number of ZORIN Shares outstanding at such time exceeds 18,558,000, the ascribed Offer price of $0.40 per ZORIN Share shall be reduced proportionately.

     ZORIN Shares acquired pursuant to the Offer shall be transferred by the Shareholder and acquired by the Offeror free and clear of all liens, restrictions, charges, encumbrances, claims and equities whatsoever and together with all rights and benefits arising therefrom including the right to any and all distributions, securities, rights, warrants, payments, assets or other interests which may be declared, paid, issued, distributed, made or transferred on or in respect of the ZORIN Shares on or after January 18, 2004. If ZORIN should declare or pay any distribution or declare, make or pay any other amount in respect of, or declare, allot, reserve or issue any securities, rights or other interests with respect to, any ZORIN Share that is payable or distributable to Shareholders of record on a record date that is prior to the date of transfer into the name of the Offeror or its nominee or transferee on the register of Shareholders maintained by ZORIN or its agent of such ZORIN Shares following acceptance thereof for purchase pursuant to the Offer, then the whole of any such distribution, payment, right or other interest will be received and held by the depositing Shareholder for the account of the Offeror until the Offeror pays for such ZORIN Share, and the depositing Shareholder will be required to promptly remit and transfer to the Depositary for the account of the Offeror any such distribution, payment, right or other interest, together with appropriate documentation of transfer. Pending such remittance, the Offeror will be entitled to all rights and privileges as the owner of any such distribution, payment, right or other interest and may withhold the entire purchase price payable by the Offeror pursuant to the Offer or deduct from the consideration payable by the Offeror pursuant to the Offer the amount or value thereof, as determined by the Offeror in its sole discretion.

11. Mail Service Interruption

     Notwithstanding the provisions of the Offer or the Letter of Acceptance or the Notice of Guaranteed Delivery, certificates, notices and other relevant documentation from the Offeror or the Depositary to Shareholders will not be mailed if the Offeror determines that delivery by mail may be delayed, until such time as the Offeror has determined

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that delivery by mail will no longer be delayed. Persons entitled to certificates for Hawker Shares and/or cheques which are not mailed for the foregoing reason may take delivery thereof at the office of the Depositary at which the ZORIN Shares, in respect of which the certificates and/or cheques are being issued, were deposited. Notwithstanding Section 6 of this Offer, share certificates, cheques or documents not mailed for the foregoing reason will be conclusively deemed to have been delivered on the first day upon which they are available for delivery to the depositing Shareholders at the appropriate office of the Depositary. Notice of any determination regarding mail service delay or interruption made by the Offeror shall be given in accordance with Section 12 of this Offer, “Notice and Delivery”.

12. Notice and Delivery

     Without limiting any other lawful means of giving notice, any notice which the Offeror or the Depositary may give or cause to be given under the Offer will be deemed to have been properly given to ZORIN Shareholders if: (i) it is mailed by first class mail postage prepaid to the registered holders of ZORIN Shares at their respective addresses appearing in the registers for such ZORIN Shares maintained by ZORIN and will be deemed to have been received on the first business day following mailing; or (ii) it is given in such other manner as may be permitted by applicable law.

     These provisions apply notwithstanding any accidental omission to give notice to any one or more ZORIN Shareholders and notwithstanding any interruption of mail service following mailing. In the event of any interruption of mail service following mailing, the Offeror intends to make reasonable efforts to disseminate the notice by other means such as publication. In the event that post offices in Canada or the United States are not open for the deposit of mail or there is reason to believe there is or could be a disruption in all or part of the postal service, any notice which the Offeror or the Depositary may give or cause to be given under this Offer, except as otherwise provided, will be deemed to have been properly given and to have been received by the Shareholders, as the case may be, if: (i) it is given to the TSXV for dissemination through its facilities; (ii) if it is published once in the nationally circulated edition of The National Post, provided that if the national edition of The National Post is not being generally circulated, publication thereof shall be made in The Globe and Mail or any other daily newspaper of general circulation in the cities of Calgary and Toronto; or (iii) it is given to the Dow Jones News Service.

     Wherever the Offer calls for documents to be delivered to the Depositary, such documents will not be considered delivered unless and until they have been physically received by the Depositary at one of the addresses noted for the Depositary as set forth in the Letter of Acceptance or Notice of Guaranteed Delivery, as applicable. Wherever the Offer calls for documents to be delivered to a particular office of the Depositary, such documents will not be considered delivered unless and until they have been physically received by the Depositary at one of the addresses listed in the Letter of Acceptance or Notice of Guaranteed Delivery, as applicable.

13. Market Purchases and Sales of ZORIN Shares

     The Offeror reserves the right to, and may, acquire (or cause an affiliate to acquire) ZORIN Shares by making purchases through the facilities of the TSXV, subject to applicable law, at any time and from time to time during the Offer Period. The Offeror will not make any purchases of ZORIN Shares through the facilities of the TSXV until the third business day following the date of the Offer. The aggregate number of ZORIN Shares so acquired by the Offeror through the facilities of the TSXV during the Offer Period shall not exceed 5% of the outstanding ZORIN Shares as of the date of the Offer. If the Offeror should purchase ZORIN Shares in the market, the ZORIN Shares so purchased shall be counted in determining whether the Minimum Condition has been fulfilled.

     Although the Offeror has no present intention to sell the ZORIN Shares acquired under the Offer, it reserves the right to make or enter into any arrangement, commitment or understanding at or prior to the Expiry Time to sell the ZORIN Shares taken up under the Offer after the Expiry Time.

14. Acquisition of Securities Not Deposited

     If the Offeror takes up and pays for ZORIN Shares validly deposited under the Offer and acquires not less than 90% of the issued and outstanding ZORIN Shares (other than ZORIN Shares held at the date hereof by or on behalf of the Offeror or its affiliates or associates), the Offeror intends, to the extent possible, to acquire the remaining ZORIN Shares pursuant to a Compulsory Acquisition. If the Offeror takes up and pays for ZORIN Shares validly deposited under the Offer and acquires less than such number thereof or a Compulsory Acquisition is otherwise unavailable or if the Offeror elects not to proceed by way of a Compulsory Acquisition, the Offeror intends to consider other means of

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acquiring, directly or indirectly, all of the equity interest in ZORIN available in accordance with applicable law, including a Subsequent Acquisition Transaction. If the Minimum Condition is satisfied, the Offeror will own sufficient ZORIN Shares to effect such Subsequent Acquisition Transaction. See “Acquisition of Securities Not Deposited” in the Circular.

15. Other Terms of the Offer

     The provisions of the Circular, Letter of Acceptance and the Notice of Guaranteed Delivery accompanying the Offer, including the instructions contained therein, as applicable, form part of the terms and conditions of the Offer and should be read carefully before making a decision with respect to the Offer.

     The Offer and all contracts resulting from the acceptance of the Offer shall be governed by and construed in accordance with the laws of the Province of Alberta and the federal laws of Canada applicable therein. Each party to any agreement resulting from the acceptance of this Offer unconditionally and irrevocably attorns to the jurisdiction of the courts of the Province of Alberta and the courts of appeal therefrom.

     No broker, dealer or other person has been authorized to give any information or to make any representation on behalf of the Offeror other than as contained in the Offer or in the Circular, and, if any such information or representation is given or made, it must not be relied upon as having been authorized. No broker, dealer or other person shall be deemed to be the agent of the Offeror, the Soliciting Dealer or the Depositary for the purposes of the Offer. In any jurisdiction in which this Offer is required to be made by a licensed broker or dealer, this Offer shall be made on behalf of the Offeror by brokers or dealers licensed under the laws of such jurisdiction.

     The Offeror shall, in its sole discretion, be entitled to make a final and binding determination on all questions relating to the interpretation of the Offer, the Circular, the Letter of Acceptance and the Notice of Guaranteed Delivery and the validity of any acceptance of the Offer and any withdrawals of ZORIN Shares, including, without limitation, the satisfaction or non-satisfaction of any condition, the validity, time and effect of any deposit of ZORIN Shares or notice of withdrawal of ZORIN Shares, and the due completion and execution of the Letters of Acceptance and Notices of Guaranteed Delivery. The Offeror reserves the right to waive any defect in acceptance with respect to any particular ZORIN Shares or any particular Shareholder. There shall be no obligation on the Offeror, the Soliciting Dealer or the Depositary to give notice of any defects or irregularities in acceptance and no liability shall be incurred by any of them for failure to give any such notification.

     The Offer is not being made to, nor will deposits be accepted from or on behalf of, ZORIN Shareholders in any jurisdiction in which the making or acceptance thereof would not be in compliance with the laws of such jurisdiction. However the Offeror may, in its sole discretion, take such action as it may deem necessary to extend the Offer to ZORIN Shareholders in any such jurisdiction.

     The Offer and accompanying Circular and other documents referred to above constitute the take-over bid circular required under applicable Canadian provincial securities legislation with respect to the Offer.

     Dated at Calgary, Alberta, this 10^th day of February, 2004.

HAWKER RESOURCES INC.
By:	(signed) “David A. Tuer” President and Chief Executive Officer

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CIRCULAR

     The following information is provided in connection with the accompanying Offer dated February 10, 2004 by the Offeror to purchase all of the issued and outstanding ZORIN Shares, including any ZORIN Shares which may become outstanding pursuant to the exercise of ZORIN Options or ZORIN Warrants.

     The terms, conditions and provisions of the accompanying Offer, the Letter of Acceptance and the Notice of Guaranteed Delivery are incorporated into and form part of the Circular. Terms that are defined in the Offer shall, where used in this Circular, have the meanings so defined.

     Except as specifically disclosed herein, the information concerning ZORIN contained in the Circular has been supplied by ZORIN or has been taken from or based upon publicly available documents and records on file with Canadian securities regulatory authorities and other public sources. Although the Offeror has no knowledge that would indicate that any statements contained herein based on information contained in such documents and records are inaccurate or incomplete, the Offeror does not assume any responsibility for the accuracy or completeness of the information contained in such documents and records, or for any failure by ZORIN to disclose publicly events or facts that may have occurred or may affect the significance or accuracy of any such information but which are unknown to the Offeror.

FORWARD-LOOKING STATEMENTS

     Certain statements contained in this Offer and Circular, and in certain documents incorporated by reference into this Offer and Circular, constitute forward-looking statements. These statements relate to future events or the Offeror’s future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Offeror believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in, or incorporated by reference into, this Offer and Circular should not be unduly relied upon. These statements speak only as of the date of this Offer and Circular or as of the date specified in the documents incorporated by reference into this Offer and Circular, as the case may be. The Offeror does not intend, and does not assume any obligation, to update these forward-looking statements.

     In particular, this Offer and Circular and the documents incorporated by reference herein contain forward-looking statements pertaining to the following:

!	the quantity of reserves;
!	oil and natural gas production levels;
!	capital expenditure programs;
!	projections of market prices and costs;
!	supply and demand for oil and natural gas;
!	expectations regarding the Offeror’s ability to raise capital and to continually add to reserves through acquisitions and development;
!	treatment under governmental regulatory and taxation regimes; and
!	plans regarding ZORIN and its properties and assets following completion of the Offer.

     The Offeror’s actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and elsewhere in this Offer and Circular:

!	volatility in market prices for oil and natural gas;
!	changes in foreign currency exchange rates;
!	liabilities and risks inherent in oil and natural gas operations;
!	uncertainties associated with estimating reserves;
!	competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel;

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!	incorrect assessments of the value of acquisitions; and
!	geological, technical, drilling and processing problems.

DOCUMENTS INCORPORATED BY REFERENCE

     Information has been incorporated by reference in this Offer and Circular from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference which pertain to the Offeror may be obtained on request without charge from the Assistant Corporate Secretary of Hawker at 700, 700 — 2nd Street S.W., Calgary, Alberta T2P 2W1 (telephone: (403) 261-6883). Copies of the documents incorporated herein by reference which pertain to ZORIN may be obtained on request without charge from the Corporate Secretary of ZORIN at 2350, 801 — 6th Avenue S.W., Calgary, Alberta T2P 3W2 (telephone: (403) 266-4445). For the purpose of the Province of Quebec, this Offer and Circular contains information to be completed by consulting the permanent information record. A copy of the permanent information record may be obtained from the Assistant Corporate Secretary of Hawker or the Corporate Secretary of ZORIN, as applicable, at the above-mentioned addresses and telephone numbers.

     The following documents of the Offeror are specifically incorporated by reference in this Offer and Circular:

(a)	the annual information form dated May 20, 2003 (the “AIF”);
(b)	the comparative financial statements, together with the accompanying report of the auditors, for the fiscal year ended December 31, 2002 addressed to the shareholders of SYNSORB Biotech Inc. (now Hawker Resources Inc.);
(c)	management’s discussion and analysis of financial condition and results of operations for the fiscal year ended December 31, 2002;
(d)	the comparative unaudited interim consolidated financial statements for the three and nine month periods ended September 30, 2003;
(e)	management’s discussion and analysis of financial condition and results of operations for the three and nine month periods ended September 30, 2003;
(f)	the management proxy circular dated March 7, 2003, except the sections entitled “Composition of Compensation Committee”, “Report on Executive Compensation”, “Performance Graph” and “Corporate Governance Practices”;
(g)	the material change report dated March 17, 2003 relating to the proposed conversion of the Offeror from a pharmaceutical research company into an oil and natural gas enterprise;
(h)	the material change report dated April 14, 2003 relating to: the approval by the shareholders of the Offeror of the conversion of the Offeror from a pharmaceutical research company into an oil and natural gas enterprise, a financing in connection with such conversion, the change of the name of the Offeror to Hawker Resources Inc. and a new board of directors; the acquisition by the Offeror of 1022971 Alberta Ltd. (“1022971”) and an option to acquire certain assets of Southward Energy Ltd. (“Southward”); and the completion of a $3.6 million equity financing;
(i)	the material change report dated May 23, 2003 relating to the completion of an arrangement involving 1022971 and Southward;
(j)	the material change report dated June 20, 2003 relating to the completion of a $45,000,000 equity financing;
(k)	the material change report dated December 5, 2003 relating to the completion of a $15,225,000 equity financing;

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(l)

the material change report dated December 10, 2003 relating to the definitive agreement to acquire all of the shares of Pointwest and the Prospectus Offering; and

(m)

those portions of the final short form prospectus (the “Prospectus”) of the Offeror dated December 19, 2003 relating to the offering of 11,200,000 Hawker Shares for gross proceeds of $45,360,000 (the “Prospectus Offering”) contained under the headings “Recent Developments — Proposed Acquisition of Pointwest Energy Inc.” and “Information Concerning the Pointwest Properties” as well as the consolidated financial statements of Pointwest Energy Inc. and the auditors’ report relating thereto, at pages F-12 to F-22, inclusive, of the Prospectus and the statements of revenues and operating expenses relating to the Southward Properties and the auditors’ report relating thereto, at pages F-23 to F-25, inclusive, of the Prospectus.

     The following documents of ZORIN are specifically incorporated by reference in this Offer and Circular:

(a)	the comparative unaudited interim consolidated financial statements as at and for the three and nine month periods ended September 30, 2003; and
(b)	the comparative consolidated financial statements, together with the accompanying report of the auditors, as at and for the fiscal year ended December 31, 2002.

     Any material change reports (except confidential material change reports), financial statements and information circulars filed by the Offeror after the date of this Offer and Circular and before the Expiry Date are deemed to be incorporated by reference in this Offer and Circular.

     Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this Offer and Circular to the extent that a statement contained herein, or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein, modifies or supersedes that statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made.

     Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Offer and Circular.

NOTE RESPECTING RESERVES DISCLOSURE

     The Offeror is subject to National Instrument 51-101 (“NI 51-101”) which was implemented in September, 2003 and will apply to the Offeror on the earlier of: (i) the date by which it is required to file its audited annual financial statements for the year ended December 31, 2003; and (ii) the first date on which the Offeror files with the securities regulatory authorities a report on Form 51-101F1. NI 51-101 requires public filings which apply new standards and which contain information as at the end of the Offeror’s financial year of December 31, 2003. NI 51-101 prescribes standards for the preparation and disclosure of oil and gas reserves and related estimates, requires the annual public filing of certain of those estimates and other information pertaining to oil and gas activities, and specifies responsibilities of corporate directors. In particular, the definitions of proved reserves and probable reserves contain specific quantifications of levels of certainty of 90% for proved reserves and of 50% for proved plus probable reserves. Additionally, evaluators have been made accountable to standards contained in NI 51-101. The McDaniel Report and the GLJ Report were not prepared in accordance with NI 51-101, but have been prepared in accordance with National Policy 2-B.

BACKGROUND TO AND BENEFITS OF THE OFFER

     In November 2003, ZORIN’s financial advisor contacted Hawker regarding a possible acquisition of, or transaction involving, ZORIN. On November 19, 2003, Hawker signed a confidentiality agreement and initiated its review of information regarding ZORIN and began negotiations regarding the acquisition of ZORIN. Following

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discussions among ZORIN, its financial advisor and Hawker, the parties reached agreement on the terms on which the Offeror would offer to acquire all of the ZORIN Shares and the Pre-Acquisition Agreement was signed on January 18, 2004. The execution of the Pre-Acquisition Agreement and the intention of the Offeror to make the Offer was publicly announced by the Offeror on January 18, 2004.

     The Offeror believes that the benefits to ZORIN Shareholders resulting from the combination of the respective businesses of the Offeror and ZORIN include:

(a)	a stronger combined entity with a drill-ready inventory of prospects which represent significant upside potential;
(b)	a stronger entity with a larger production, reserve and undeveloped land base and the financial capacity to compete more effectively in the oil and natural gas industry in western Canada; and
(c)	enhanced exploitation opportunities through further development of ZORIN’s undeveloped land base in the core areas where the Offeror has experienced success.

PURPOSE OF THE OFFER AND THE OFFEROR’S PLANS FOR ZORIN

Purpose of the Offer

     The purpose of the Offer is to enable the Offeror to acquire all of the ZORIN Shares.

Plans for ZORIN

     Pursuant to the Pre-Acquisition Agreement, immediately following the acquisition by Hawker of more than 50% of the outstanding ZORIN Shares pursuant to the Offer, ZORIN has agreed to assist Hawker to secure the resignations of all ZORIN directors in order to reconstitute the ZORIN Board with Hawker nominees.

     If Hawker takes up and pays for ZORIN Shares pursuant to the terms of the Offer, and thereby acquires at least the Minimum Required Shares, Hawker agrees to use all commercially reasonable efforts to acquire, and ZORIN agrees to use all commercially reasonable efforts to assist Hawker in acquiring, the balance of the ZORIN Shares by way of a Compulsory Acquisition or a Subsequent Acquisition Transaction.

     The Offeror currently intends that, after the completion of the Offer, it will continue the business carried on by ZORIN and vigorously exploit and develop ZORIN’s properties. Hawker may, however, determine to sell all or any portion of the assets of ZORIN at any time following the Effective Time and may also choose to operate and exploit the assets and properties of ZORIN in a manner different from that of ZORIN prior to the date of the Offer.

RECOMMENDATION OF THE ZORIN BOARD

     The ZORIN Board has unanimously determined that the Offer is fair, from a financial point of view, to the ZORIN Shareholders, is in the best interests of ZORIN and the ZORIN Shareholders and unanimously recommends that ZORIN Shareholders accept the Offer.

PRE-ACQUISITION AGREEMENT

The Offer

     The Offeror and ZORIN entered into the Pre-Acquisition Agreement pursuant to which the Offeror agreed to make the Offer. Under the Pre-Acquisition Agreement, ZORIN consented to the Offer and represented and warranted that the ZORIN Board: (a) has unanimously approved the Offer and the entering into of the Pre-Acquisition Agreement; (b) has determined that the Offer is fair, from a financial point of view, to the ZORIN Shareholders; and (c) has unanimously resolved to recommend acceptance of the Offer by the ZORIN Shareholders. The ZORIN Board may only withdraw, modify or change any recommendation with respect to the Offer in the circumstances referred to below and under “Pre-Acquisition Agreement — Termination Provisions”.

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     The Offeror and ZORIN have agreed that ZORIN and its subsidiaries:

(a)	shall immediately cease and cause to be terminated any existing solicitation, initiation, encouragement, activity, discussion, negotiation or proceeding with any parties conducted prior to January 18, 2004 by their Representatives with respect to a Take-over Proposal, whether or not initiated by ZORIN;
(b)	shall not release any third party from any confidentiality or standstill agreement to which ZORIN and such third party is a party or amend any of the foregoing and shall exercise all rights to require the return of information regarding ZORIN; and
(c)	will not, and will not authorize or permit any of their Representatives to, directly or indirectly, solicit, initiate or encourage (including by way of furnishing information) or participate in or take any other action to facilitate any inquiries or the making of any proposal which constitutes or may reasonably be expected to lead to a Take-over Proposal from any person, or engage in any discussion, negotiations or inquiries relating thereto or accept any Take-over Proposal,

provided, however, that ZORIN may:

(a) engage in discussions or negotiations with a third party who (without any solicitation, initiation or encouragement, directly or indirectly, by ZORIN, any of its subsidiaries or the Representatives after January 18, 2004) seeks to initiate such discussions or negotiations and may furnish such third party information concerning ZORIN and its business, properties and assets which has previously been provided to Hawker if, and only to the extent that:

(i)	the third party has first made a Superior Proposal and the ZORIN Board has concluded in good faith, after considering applicable law and receiving the advice of outside counsel that such action is required by the ZORIN Board to comply with fiduciary duties under applicable law;
(ii)	prior to furnishing such information to or entering into discussions or negotiations with such person or entity, ZORIN receives from such person or entity an executed confidentiality agreement having confidentiality and standstill terms substantially similar to those contained in the confidentiality agreement with ZORIN dated November 19, 2003 and executed by Hawker (the “Confidentiality Agreement”); and
(iii)	ZORIN immediately provides to Hawker any information provided to any such person or entity if not previously provided to Hawker;

(b)

comply with applicable securities laws relating to the provision of directors’ circulars, and make appropriate disclosure with respect thereto to the ZORIN Shareholders; and

(c)

accept, recommend, approve or implement a Superior Proposal as contemplated above, but only if prior to such acceptance, recommendation, approval or implementation, the ZORIN Board shall have concluded in good faith, after considering provisions of applicable law and after giving effect to all proposals to adjust the terms and conditions of the Pre-Acquisition Agreement and the Offer which may be offered by Hawker during the 48 hour notice period set forth below, that such action is required by the ZORIN Board to comply with fiduciary duties under applicable law and ZORIN terminates the Pre-Acquisition Agreement and concurrently therewith has paid the fees payable thereunder.

     ZORIN shall give Hawker orally and in writing at least 48 hours’ advance notice of any decision by the ZORIN Board to accept, recommend, approve or implement a Superior Proposal. Such notice shall include the principal business terms and conditions of the Superior Proposal and the general attributes of any non-cash consideration including the identity of the party making the Superior Proposal. In addition ZORIN shall, and shall cause its respective financial and legal advisors to, negotiate in good faith with Hawker to make such adjustments in the terms and conditions of the Pre-Acquisition Agreement and the Offer as would enable ZORIN to proceed with the Offer, as

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amended, rather than the Superior Proposal. In the event Hawker proposes to amend the Pre-Acquisition Agreement and the Offer to provide substantially equivalent or superior value to that provided under the Superior Proposal within such 48 hour period, then ZORIN shall not enter into any agreement regarding the Superior Proposal.

     The Offeror is permitted, under the Pre-Acquisition Agreement, in its sole discretion to: (i) waive, in whole or part, any term or condition of the Offer for its benefit at any time and from time to time provided that if Hawker takes up and pays for any ZORIN Shares it shall acquire not less than the Minimum Required Shares; and (ii) amend any term or condition of the Offer, provided that Hawker shall not decrease the aggregate value of the consideration to be paid for each ZORIN Share, subject to certain exceptions, or modify or impose additional conditions to the Offer in a manner that is materially adverse to the holders of ZORIN Shares provided that, after Hawker reduces the Minimum Condition, Hawker extends the Offer by a 10 day period.

     ZORIN has agreed that, until the Pre-Acquisition Agreement has terminated in accordance with its terms, the business of ZORIN will be conducted in the usual and ordinary course of business.

Compensation Fee

     The Offeror and ZORIN have agreed that, if at any time after the execution of the Pre-Acquisition Agreement (and provided there is no material breach or non-performance by Hawker of a material provision of the Pre-Acquisition Agreement in any respect):

(a)	the ZORIN Board has withdrawn or, in any manner adverse to Hawker, redefined, modified or changed any of its recommendations referred to under “Pre-Acquisition Agreement — The Offer”, or shall have resolved to do so;
(b)	any bona fide Take-over Proposal for the ZORIN Shares is publicly announced or commenced, and the ZORIN Board shall have failed to publicly reaffirm and maintain its recommendation of the Offer to the ZORIN Shareholders within 2 days after the public announcement or commencement of any such Take-over Proposal;
(c)	the ZORIN Board shall have recommended that the ZORIN Shareholders deposit their ZORIN Shares under, vote in favour of, or otherwise accept, a Take-over Proposal;
(d)	ZORIN shall have entered into any agreement with any person with respect to a Take-over Proposal prior to the Expiry Time of the Offer, excluding a confidentiality agreement entered into in compliance the Pre-Acquisition Agreement; or
(e)	another Take-over Proposal is publicly announced, proposed, offered or made to the ZORIN Shareholders or to ZORIN prior to the Expiry Time of the Offer, the Offer shall have expired and not been consummated by reason of the Minimum Condition not being satisfied, and such Take-over Proposal has been completed within 365 days of expiry of the Offer,

ZORIN shall, upon the occurrence of any such event, and in any event within one Business Day, pay to Hawker the amount of $375,000 (the “Compensation Fee”). Such payment shall be made in immediately available funds to an account designated by Hawker.

     Any payment of the Compensation Fee shall be without prejudice to the rights or remedies available to Hawker upon the breach of any provision of the Pre-Acquisition Agreement by ZORIN.

Pre-Tender Agreements

     ZORIN Tendering Shareholders holding 11,393,500 ZORIN Shares in aggregate, representing approximately 61.4% of the current issued and outstanding ZORIN Shares (calculated on a non-diluted basis) have entered into Pre-Tender Agreements dated January 18, 2004. Pursuant to the Pre-Tender Agreements, the ZORIN Tendering Shareholders have agreed, subject to the terms thereof, to accept the Offer by depositing under the Offer all ZORIN Shares beneficially owned, directly or indirectly, by them and not to withdraw the same except in certain limited circumstances as set out in the Pre-Tender Agreements.

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     In addition, such ZORIN Tendering Shareholders have also agreed that they will not exercise any ZORIN Options held by them (being 950,000 ZORIN Options in aggregate and representing approximately 67.8% of the current issued and outstanding ZORIN Options) or any ZORIN Warrants held by them (being 498,000 ZORIN Warrants in aggregate and representing approximately 54.3% of the current issued and outstanding ZORIN Warrants) and that they agree to elect, in lieu of exercising their ZORIN Options, to receive the positive difference, if any, that results from subtracting from the ascribed purchase price of $0.40 for the ZORIN Shares under the Offer the exercise price of their ZORIN Options, immediately after the Take-Up Date in exchange for the termination of their ZORIN Options and ZORIN Warrants immediately prior to the Take-Up Date. ZORIN has advised the Offeror that there are 27,000 outstanding ZORIN Options with exercise prices of less than $0.40 and that the aggregate difference between $0.40 and the exercise price of such ZORIN Options is $3,550.

     In addition, the ZORIN Tendering Shareholders have also agreed that all loans made by ZORIN to each ZORIN Tendering Shareholder shall be repaid in full on the Take-Up Date and that all outstanding amounts shall be netted against any amounts due from Hawker under the Offer to the ZORIN Tendering Shareholders.

     The Pre-Tender Agreements may be terminated by the ZORIN Tendering Shareholders: (a) in the event that Hawker does not take up and pay for the ZORIN Shares on or before the date which is 90 days, or if a Take-over Proposal is publicly announced, proposed, offered or made to the ZORIN Shareholders, 180 days, following the day of mailing of this Offer and Circular; (b) if Hawker decreases the consideration offered pursuant to the Offer or otherwise modifies or amends the Offer in a manner materially adverse to holders of ZORIN Shares, provided that an extension of the Offer shall not constitute an adverse modification or amendment to the Offer; or (c) in the event that the Pre-Acquisition Agreement is terminated in accordance with certain of its provisions.

Reconstitution of ZORIN Board

     Pursuant to the Pre-Acquisition Agreement, immediately following the acquisition by Hawker of more than 50% of the outstanding ZORIN Shares pursuant to the Offer, ZORIN has agreed to assist Hawker to secure the resignations of all ZORIN directors in order to reconstitute the ZORIN Board with Hawker nominees.

     If Hawker takes up and pays for ZORIN Shares pursuant to the terms of the Offer, and thereby acquires at least the Minimum Required Shares, Hawker agrees to use all commercially reasonable efforts to acquire, and ZORIN agrees to use all commercially reasonable efforts to assist Hawker in acquiring, the balance of the ZORIN Shares by way of a Compulsory Acquisition or a Subsequent Acquisition Transaction.

Termination Provisions

     The Pre-Acquisition Agreement may be terminated by written notice from one party to the other, at any time prior to the time Hawker first takes up and pays for ZORIN Shares under the Offer:

(a)	by mutual agreement of Hawker and ZORIN;
(b)	by Hawker, if the conditions to the Offer have not been satisfied or waived by Hawker on or before the Expiry Time (after having extended the Offer as required pursuant to the Pre-Acquisition Agreement);
(c)	by either Hawker or ZORIN, if Hawker has not taken up and paid for the ZORIN Shares deposited under the Offer on or before the date which is 90 days, or if a Take-over Proposal is publicly announced, proposed, offered or made to the ZORIN Shareholders, 180 days, following the day of mailing of this Offer and Circular;
(d)	by either Hawker or ZORIN, if the Offer terminates or expires at the Expiry Time without Hawker taking up and paying for any of the ZORIN Shares as a result of the failure of any condition to the Offer to be satisfied or waived unless the failure of such condition shall be due to the failure of the party seeking to terminate the Pre-Acquisition Agreement to perform the obligations required to be performed by it under the Pre-Acquisition Agreement;

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(e)	by either Hawker or ZORIN, if the Compensation Fee becomes payable and payment is made to Hawker;
(f)	by either Hawker or ZORIN, if there has been a misrepresentation, breach or non-performance by the other party of any representation, warranty (without reference to any qualification as to materiality in such representation and warranty) or covenant contained in the Pre-Acquisition Agreement which would have or would reasonably be expected to have a material adverse effect on the party seeking to terminate, provided the breaching party has been given notice of and 2 Business Days to cure any such misrepresentation, breach or non-performance; or
(h)	by Hawker, if the Hawker Average Price is less than $4.7500 and provided that Hawker shall, upon the exercise of this termination right, pay to ZORIN the amount of $375,000. Such payment shall be made in immediately available funds to an account designated by ZORIN and any such payment by Hawker shall be without prejudice to the rights or remedies available to ZORIN upon the breach of any provision of this Agreement by Hawker.

ZORIN Options and ZORIN Warrants

     In accordance with the Pre-Acquisition Agreement, ZORIN has represented that the ZORIN Board has been advised that the directors and officers of ZORIN intend to tender their ZORIN Shares under the Offer and have agreed that, in lieu of exercising their ZORIN Options and ZORIN Warrants, they will receive the positive difference, if any, that results from subtracting from the ascribed purchase price for the ZORIN Shares under the Offer the exercise price of their ZORIN Options, immediately after the Take-Up Date in exchange for the termination of their ZORIN Options and ZORIN Warrants effective immediately prior to the Take-Up Date provided that such director or officer agrees to surrender all ZORIN Options and ZORIN Warrants to ZORIN for cancellation for no further consideration effective immediately prior to the Take-Up Date. ZORIN has advised the Offeror that there are 27,000 outstanding ZORIN Options with exercise prices of less than $0.40 and that the aggregate difference between $0.40 and the exercise price of such ZORIN Options is $3,550.

     ZORIN has agreed to use its reasonable commercial efforts and has represented that the directors on the ZORIN Board have unanimously determined to use their respective reasonable commercial efforts to encourage and facilitate all persons holding ZORIN Options and ZORIN Warrants to agree with ZORIN to an arrangement as described above prior to the Expiry Time of the Offer.

Employment Agreements

     Pursuant to the Pre-Acquisition Agreement, Hawker shall honour certain employment agreements, severance agreements and other arrangements of ZORIN if it acquires any ZORIN Shares pursuant to the Offer.

INFORMATION CONCERNING HAWKER RESOURCES INC.

General

     The Offeror was incorporated as 599386 Alberta Ltd. under the Business Corporations Act (Alberta) on February 14, 1994 and changed its name to SYNSORB Biotech Inc. on March 31, 1994. Effective May 8, 2002: (i) each former holder of common shares of the Offeror received one new common share for each eight cancelled common shares previously held by such holder; (ii) the stated capital of the Offeror was reduced in respect of the common shares of the Offeror by $59,896,000; and (iii) 4,000,235 common shares of Oncolytics Biotech Inc. held by the Offeror were distributed to its shareholders. On April 3, 2003, the name of the Offeror was changed to “Hawker Resources Inc.” and a new class of non-voting equity shares was created.

     The head office of Hawker is located at 700, 700 — 2nd Street S.W., Calgary, Alberta, T2P 2W1, and the registered office is located at 4500, 855 - 2nd Street S.W., Calgary, Alberta, T2P 4K7.

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Business of the Offeror

     Hawker is an Alberta-based corporation engaged in the business of exploring for and developing oil and natural gas reserves in western Canada and acquiring oil and natural gas properties. The Offeror owns approximately 173,000 net acres of undeveloped land focused in six core areas in Alberta and British Columbia, and presently has approximately 5,800 — 6,000 boe/d of natural gas production.

Recent Developments

     Acquisition of W4M Properties

     On June 30, 2003, Hawker completed the acquisition of the W4M Properties. For further information concerning the W4M Properties see the AIF and the material change report of Hawker dated June 20, 2003, which are, in each case, incorporated by reference herein, and the statements of revenues and operating expenses relating to the Southward Properties (as the W4M Properties are also referred to) and the auditors’ report relating thereto, at pages F-23 to F-25, inclusive, of the Prospectus, which is incorporated by reference herein.

     Acquisition of Pointwest Energy Inc.

     On December 30, 2003, Hawker acquired all of the issued and outstanding common shares of Pointwest Energy Inc. (“Pointwest”). Prior to such acquisition, Pointwest was an oil and natural gas exploration company based in Calgary, Alberta with an asset base within a target area running through northeastern British Columbia and Alberta. For further information concerning Pointwest and the Pointwest Acquisition see those portions of the Prospectus incorporated by reference herein including the information set forth in the Prospectus under the headings “Recent Developments — Proposed Acquisition of Pointwest Energy Inc.” and “Information Concerning the Pointwest Properties” as well as the consolidated financial statements of Pointwest Energy Inc. and the auditors’ report relating thereto, at pages F-12 to F-22, inclusive, of the Prospectus, which is incorporated by reference herein.

     Prospectus Offering

     On December 30, 2003, in connection with the acquisition of Pointwest, the Offeror completed a prospectus offering of 11,200,000 Hawker Shares for gross proceeds of $45,360,000.

     Historical Synsorb Financial Statements

     Hawker has concluded discussions with the Staff of the Alberta Securities Commission (the “Staff”) regarding the accounting treatment in Hawker’s audited financial statements for the year ended December 31, 2002 (the “2002 Financial Statements”) of the May 2002 distribution to shareholders by Synsorb Biotech Inc. (as Hawker was named before its transformation into an oil and gas enterprise) of certain shares of Oncolytics Biotech Inc. (“Oncolytics”). The 2002 Financial Statements recognized a gain of $8,325,000 on the distribution, based on a fair value of the distributed shares equal to the TSX trading price of the shares. Hawker has concluded that recognition of a gain was appropriate but that Synsorb should have ceased equity accounting for its investment in Oncolytics at the end of the first quarter of 2002 as Synsorb no longer exerted significant influence over Oncolytics beyond that time. Accordingly, Hawker intends to restate the 2002 Financial Statements at the time it prepares its 2003 comparative statements to reflect the discontinuation of the equity accounting for Oncolytics beyond the first quarter of 2002. The restatement will decrease the share of loss from equity investment in Oncolytics and, as a result, decrease the gain on the subsequent sale and distribution of Oncolytics shares by $157,000, resulting in no change to reported net earnings for the year, and will have no impact on the balance sheet or cash flows for 2002. Staff have agreed with the nature and timing of the planned restatement.

     The accounting treatment in question was recorded prior to Mr. David Tuer becoming involved with Hawker in January 2003. Hawker believes that the changes to the 2002 Financial Statements arising from the restatement described above are not material to Hawker or the Offer.

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DESCRIPTION OF SHARE CAPITAL

Authorized Capital

     The Offeror is authorized to issue an unlimited number of Hawker Shares, an unlimited number of class A shares and an unlimited number of preferred shares issuable in series.

     Hawker Shares

     The holders of Hawker Shares are entitled to receive notice of, and to one vote per share at, every meeting of shareholders of the Offeror, to receive such dividends as the Hawker Board declares and to share equally in the assets of the Offeror remaining upon the liquidation of the Offeror after the creditors of the Offeror have been satisfied, subject to the prior rights of the preferred shares.

     Class A Shares

     The class A shares have all of the rights and privileges associated with Hawker Shares, excluding the right to vote.

     Preferred Shares

     The preferred shares are issuable in series, with each series consisting of such number of shares and having such rights, privileges, restrictions and conditions as may be determined by the Hawker Board prior to the issuance thereof. With respect to the payment of dividends and the distribution of assets in the event of liquidation, dissolution or winding-up of the Offeror, whether voluntary of involuntary, the preferred shares are entitled to preference over the Hawker Shares and any other shares ranking junior to the preferred shares and may also be given such other preferences over the Hawker Shares and any other shares ranking junior to the preferred shares as may be determined at the time of creation of each series. There are no preferred shares issued and outstanding.

CONSOLIDATED CAPITALIZATION

The following table sets forth the consolidated capitalization of the Offeror as at December 31, 2002, as at September 30, 2003 and as at January 15, 2004, both before and after giving effect to the Offer.

								Outstanding as at		Outstanding as at
								January 15, 2004		January 15, 2004 after
				Outstanding as at		Outstanding as at		before giving effect to		giving effect to the
	Authorized			December 31, 2002		September 30, 2003		the Offer(2)		Offer(2) (3)
Long-term debt		(1	)	nil		$	23,119,000	$	55,697,000	$	58,182,000
Hawker Shares	unlimited			$	12,741,000	$	55,980,000	$	112,696,000	$	118,634,800	(4)
					(4,959,937		(21,897,200		(35,997,200		(37,247,423
				Hawker Shares)		Hawker Shares)		Hawker Shares)		Hawker Shares)
Class A Shares	unlimited			nil		$	2,343,000	$	2,343,000	$	2,343,000
						(3,874,437 shares)		(3,874,437 shares)		(3,874,437 shares)

Notes:

(1)

On December 30, 2003, the Offeror entered into credit facilities, replacing the facility in existence at September 30, 2003, with a Canadian chartered bank (the “Credit Facilities”) including a $54 million extendible revolving term credit facility (the “Revolving Facility”) and a $10 million non-revolving bridge facility (the “Bridge Facility”). The Bridge Facility is repayable in full on September 30, 2004. The Revolving Facility is available for the period ending June 30, 2004, and the Offeror may request 364 day extensions prior to the expiry of each extendible term, which extensions are solely at the discretion of the bank, and if not procured in any instance will result in the Revolving Facility becoming a one year non-revolving facility. The Revolving Facility bears interest at varying rates for borrowing options including Canadian prime or U.S. base rate plus 75 basis points, LIBOR rate plus 175 basis points and 175 basis points for bankers’ acceptances, each increasing by 100 basis points per annum during the one year non-revolving term, if applicable. The Bridge Facility bears interest at varying rates for borrowing options of Canadian prime plus 250 basis points and 350 basis points for bankers’ acceptances. If any amount remains outstanding under the Bridge Facility on May 1, 2004, being the first of a number of interest rate step-up dates, all of the foregoing rates of interest under both the Revolving Facility and the Bridge Facility will increase by 25 basis points. The Credit Facilities are secured by a first floating charge debenture over all of the present and after-acquired property of the Offeror and a guarantee from each material subsidiary of the Offeror secured by a first floating charge debenture over all of the present and after-acquired property of that material subsidiary.

(2)

On December 5, 2003, the Offeror completed a private placement of 2,900,000 flow-through Hawker Shares for gross proceeds of $15,225,000. On December 30, 2003, the Offeror completed a prospectus offering of 11,200,000 Hawker Shares for gross proceeds of $45,360,000. See “Information Concerning Hawker Resources Inc. — Recent Developments - Prospectus Offering.” in this Circular.

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(3)

The aggregate number of Hawker Shares issuable pursuant to the Offer is assumed to be 1,250,223 which is based on a Hawker Average Price of $4.7500. Hawker has the right, pursuant to the Pre-Acquisition Agreement, to terminate the Offer in the event that the Hawker Average Price is less than $4.7500. To the extent the Hawker Average Price is greater than $4.7500 the number of Hawker Shares to be issued in connection with the Offer will decrease.

(4)

Irrespective of the number of Hawker Shares issuable pursuant to the Offer, the stated dollar amount of the Hawker Shares will remain unchanged.

SOURCE OF FUNDS

     The total cash obligation of Hawker pursuant to the Offer will be $1,484,640, exclusive of expenses of the Offer. All such funds will be provided from the Offeror’s cash on hand or borrowings under the Credit Facilities. See “Information Concerning Hawker Resources Inc. — Consolidated Capitalization” in this Circular.

AUDITORS, TRANSFER AGENT AND REGISTRAR

     The auditors of Hawker are Ernst & Young LLP, Chartered Accountants, 1000, 400 — 2 Avenue S.W., Calgary, Alberta T2P 5E9. The partners of Ernst & Young LLP, as a group, beneficially own, directly or indirectly, no securities of the Offeror.

     Computershare Trust Company of Canada is the registrar and transfer agent for the common shares of Hawker.

INFORMATION CONCERNING ZORIN EXPLORATION LTD.

General

     ZORIN Exploration Ltd. is a corporation organized under the ABCA. ZORIN is a publicly-traded oil and natural gas exploration company based in Calgary, Alberta. ZORIN is active in Alberta, Saskatchewan, Ontario and Ohio. ZORIN’s principal and registered office is located at 2350, 801 — 6th Avenue S.W., Calgary, Alberta T2P 3W2. The ZORIN Shares are listed and posted for trading on the TSXV under the trading symbol “ZEL”.

Price Range and Trading Volume of ZORIN Shares

     The ZORIN Shares are currently listed for trading on the TSXV under the symbol “ZEL”. The following table sets forth the high and low prices and trading volumes for the periods indicated as reported by the TSXV.

		Price Range ($)
Period		High		Low		Trading Volume
2003
	July		0.40		0.25		97,500
	August		0.38		0.30		85,500
	September		0.39		0.30		160,000
	October		0.36		0.31		94,000
	November		0.38		0.30		89,500
	December		0.38		0.26		178,000
2004
	January		0.40		0.30		1,846,250
	February (2 to 9)		0.39		0.39		31,000

Effect of the Offer on Market and Listing

     The purchase of ZORIN Shares by the Offeror pursuant to the Offer will reduce the number of ZORIN Shares that might otherwise trade publicly, will reduce the number of holders of ZORIN Shares and could adversely affect the liquidity and market value of the remaining ZORIN Shares held by the public. If the number and distribution of publicly-held ZORIN Shares no longer meets with the criteria for continued listing on the TSXV, it is anticipated that an application will be made by the Offeror to delist the ZORIN Shares. If the ZORIN Shares are delisted it is possible that such ZORIN Shares would be traded in the over-the-counter market. The extent of the public market for the ZORIN Shares and the availability of such quotations would, however, depend upon the number of Shareholders remaining at such time, the interest in maintaining a market in such ZORIN Shares on the part of brokerage houses and other factors.

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     After the purchase of the ZORIN Shares under the Offer, ZORIN may cease to be subject to the public reporting and proxy solicitation requirements of the securities laws of certain provinces of Canada. Furthermore, it may be possible for ZORIN to request the elimination of the public reporting requirements in any province having an insignificant number of resident ZORIN Shareholders.

     If the Offeror succeeds in acquiring all of the ZORIN Shares pursuant to the Offer and under a Compulsory Acquisition or pursuant to a Subsequent Acquisition Transaction, as referred to in the Offer, ZORIN will become wholly-owned by the Offeror, the ZORIN Shares will be delisted and ZORIN will, subject to regulatory approval, cease to be a “reporting issuer” for the purposes of Canadian securities legislation.

INFORMATION CONCERNING THE OFFEROR AND ZORIN

Existing Business Relationship Between the Offeror and ZORIN

     There are no existing business relationships between the Offeror, its associates or affiliates and ZORIN and its subsidiaries.

Ownership of ZORIN Shares

     None of the Offeror nor any director or senior officer of the Offeror, beneficially owns, directly or indirectly, or controls or exercises direction over, or has the right to acquire, any securities of ZORIN, other than pursuant to the Pre-Tender Agreements. To the knowledge of the directors and senior officers of the Offeror, after reasonable inquiry, no securities of ZORIN are owned (directly or indirectly) by, nor is control or direction over any securities of ZORIN exercised by, any associate of any director or senior officer of the Offeror or any person or company who beneficially owns (directly or indirectly) more than 10% of any class of equity securities of the Offeror or any person or company acting jointly or in concert with the Offeror.

Trading in ZORIN Shares

     Since January 1, 2003, no securities of ZORIN have been traded by the Offeror or any director or senior officer of the Offeror or, to the knowledge of the directors and senior officers of the Offeror, after reasonable inquiry, by any associate of any director or senior officer of the Offeror, by any person or company who beneficially owns (directly or indirectly) more than 10% of any class of equity securities of the Offeror or by any person or company acting jointly or in concert with the Offeror.

Commitments to Acquire Securities of ZORIN

     No securities of ZORIN are the subject of any commitments made by the Offeror, or the directors or senior officers of the Offeror and, to the knowledge of the directors and senior officers of the Offeror, after reasonable inquiry, no securities of ZORIN are the subject of any commitments made by, any associate of any director or senior officer of the Offeror, by any person or company who beneficially owns, directly or indirectly, more than 10% of any class of equity securities of the Offeror or by any person or company acting jointly or in concert with the Offeror, to acquire any equity securities of ZORIN, except for the commitments to acquire the ZORIN Shares pursuant to the Offer and the commitments contained in the Pre-Acquisition Agreement and the Pre-Tender Agreements. See “Pre-Acquisition Agreement” in this Circular.

Arrangements Between the Offeror and the Directors and Officers of ZORIN

     Other than pursuant to the Pre-Tender Agreements and other than as set out in this Circular under “Pre-Acquisition Agreement — Reconstitution of ZORIN Board”, “Pre-Acquisition Agreement — Employment Agreements” and “Pre-Acquisition Agreement — ZORIN Options and ZORIN Warrants”, there are no arrangements or agreements made or proposed to be made between the Offeror and any of the directors or senior officers of ZORIN or ZORIN’s subsidiaries and no payments or other benefits are proposed to be made or given by the Offeror by way of compensation in respect of loss of office or in respect of such directors or senior officers remaining in or retiring from office if the Offer is successful.

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Arrangements Between the Offeror and ZORIN Shareholders

     Other than as referred to under “Arrangements Between the Offeror and the Directors and Officers of ZORIN”, “Pre-Acquisition Agreement — Reconstitution of ZORIN Board”, “Pre-Acquisition Agreement — Employment Agreements” and “Pre-Acquisition Agreement — ZORIN Options and ZORIN Warrants” in this Circular and other than pursuant to the Pre-Tender Agreements, there are no contracts, arrangements or understandings, formal or informal, between the Offeror and any securityholder of ZORIN with respect to the Offer or between the Offeror and any person or company with respect to any securities of ZORIN.

Benefits From Offer

     Other than as referred to in this Circular under “Arrangements Between the Offeror and the Directors and Officers of ZORIN”, there are no direct or indirect benefits of accepting or refusing to accept the Offer to any director or senior officer of ZORIN or, to the knowledge of the directors and senior officers of the Offeror, after reasonable inquiry, to any associate of any director or senior officer of ZORIN or to any person or company who beneficially owns, directly or indirectly, more than 10% of any class of equity securities of ZORIN or to any person acting jointly or in concert with the Offeror.

Selected Pro Forma Financial Information

     The following table sets out certain financial information for Hawker and pro forma consolidated financial information for Hawker after giving effect to the acquisition of the W4M Properties, the Pointwest Acquisition, the proposed acquisition of all of the ZORIN Shares pursuant to the Offer and certain other adjustments. The information concerning ZORIN has been taken from, or based upon, public sources. The following information should be read in conjunction with the pro forma consolidated financial statements of Hawker and the financial statements of Hawker incorporated by reference in this Circular, including the notes thereto. The information presented below assumes that all of the ZORIN Shares are acquired under the Offer.

		For the nine months ended September 30, 2003
		(unaudited)
		Hawker			W4M Properties			Pointwest			ZORIN			Pro forma
(All amounts in thousands of Canadian dollars except per share amounts)		$			$			$			$			$
Revenue
Oil and natural gas sales			8,786			21,248			40,070			3,216			73,320
Royalties, net			(2,389	)		(5,757	)		(9,708	)		(444	)		(18,298	)
Interest income			68			—			—			—			68
Other			382			—			—			417			799
			6,847			15,491			30,362			3,189			55,889
Expenses
Production			838			1,795			4,092			985			7,710
General and administrative			2,329			—			770			379			3,478
Interest			267			—			213			112			1,917
Depletion and depreciation			4,196			—			11,475			722			26,838
Site restoration			146			—			404			26			576
			7,776			1,795			16,954			2,224			40,519
Earnings (loss) before the following:			(929	)		13,696			13,408			965			15,370
	Lease abandonment expense		(322	)		—			—			—			(322	)
	Operating costs and write-downs associated with assets held for sale		(179	)		—			—			—			(179	)
	Alberta Heritage Foundation grant settlement		368			—			—			—			368
Earnings (loss) before income taxes			(1,062	)		13,696			13,408			965			15,237
Income tax expense (recovery)			106			—			5,526			419			239
Net earnings (loss)			(1,168	)		13,696			7,882			546			14,998
Earnings per share															0.36

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Previous Distributions of ZORIN Shares

     Based on publicly available information and information provided to the Offeror by ZORIN, the Offeror believes that no ZORIN Shares have been distributed during the five years preceding the date of the Offer, except for the following:

Date of Issue	Number of ZORIN Shares			Issue Price per ZORIN Share ($)		Aggregate Proceeds to ZORIN ($)
October 6, 1999		125,000	(1)	$	0.10	$	12,500
October 22, 1999		50,000	(1)		0.20		10,000
March 21, 2000		50,000	(1)		0.10		5,000
March 27, 2000		50,000	(1)		0.10		5,000
May 22, 2001		50,000	(1)		0.10		5,000
May 29, 2001		400,000	(1)		0.21		82,500
May 29, 2001		50,000	(1)		0.30		15,000
June 1, 2001		50,000	(1)		0.20		10,000
June 27, 2001		750,000			1.00		750,000
June 27, 2001		20,000	(1)		0.25		5,000
August 1, 2001		250,000			1.00		250,000
November 6, 2001		40,000	(1)		0.30		12,000
December 3, 2001		13,000	(1)		0.25		3,250
December 6, 2001		50,000	(1)		0.25		12,500
December 7, 2001		553,000			0.56		309,680
December 12, 2001		50,000	(1)		0.20		10,000
December 13, 2001		50,000			0.56		28,000
April 1, 2002		170,000			0.90		153,000
April 1, 2002		550,000			1.00		550,000
May 7, 2002		50,000	(1)		0.25		12,500
May 7, 2002		50,000	(1)		0.25		12,500
May 7, 2002		50,000	(1)		0.25		12,500
September 30, 2002		297,000			0.50		148,500
October 7, 2002		40,000			0.50		20,000
March 30, 2003		50,000	(1)		0.20		10,000
March 30, 2003		50,000	(1)		0.25		12,500
August 31, 2003		50,000	(1)		0.20		10,000

Note:

(1) Issued on exercise of ZORIN Options.

MATERIAL CHANGES IN THE AFFAIRS OF ZORIN AND OTHER INFORMATION

     Except for the Offer and as set out below and otherwise set forth herein, the Offeror has no information, as of the date hereof, which indicates that any material change has occurred in the affairs, financial position or prospects of ZORIN since September 30, 2003, the date of ZORIN’s last published financial statements.

     The Offeror has no knowledge of any other matter that has not previously been generally disclosed but which would reasonably be expected to affect a decision of a ZORIN Shareholder to accept or reject the Offer.

ACQUISITION OF SECURITIES NOT DEPOSITED

Compulsory Acquisition

     The purpose of the Offer is for the Offeror to acquire all of the outstanding ZORIN Shares. If within the time limit for the acceptance of the Offer or within 120 days after the date of the Offer, whichever period is shorter, the Offer has been accepted by holders of not less than 90% of the ZORIN Shares, other than ZORIN Shares held on the date of the Offer by or on behalf of the Offeror or its affiliates and associates, and the Offeror has taken up and paid for such ZORIN Shares, the Offeror currently intends to acquire, pursuant to the compulsory acquisition provisions of Part 16 of the ABCA, the remainder of the ZORIN Shares on the same terms, including price, on which the Offeror acquired ZORIN Shares pursuant to the Offer (a “Compulsory Acquisition”). The Offeror may, in its discretion, allocate the aggregate purchase price payable to all holders of the remainder of the ZORIN Shares acquired pursuant to a Compulsory Acquisition pro rata amongst all such holders so that each such holder receives Hawker Shares in respect of 80% of the purchase price payable for the ZORIN Shares acquired from each such holder and cash in respect of 20% of the purchase price payable for the ZORIN Shares acquired from each such holder.

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     To exercise such statutory right, the Offeror must give notice (the “Offeror’s Notice”) to each registered holder of ZORIN Shares who did not accept the Offer (and to each person who subsequently acquires any such ZORIN Shares) (in each case, a “Dissenting Offeree”) of such proposed acquisition by registered mail within 60 days from the Expiry Date and in any event within 180 days from the date of the Offer. Within 20 days after giving the Offeror’s Notice, the Offeror must pay or transfer to ZORIN the consideration the Offeror would have had to pay or transfer to the Dissenting Offerees if they had elected to accept the Offer, to be held in trust by ZORIN for the Dissenting Offerees. Within 20 days after receipt of the Offeror’s Notice, each Dissenting Offeree must send the certificates representing the ZORIN Shares held by such Dissenting Offeree to ZORIN, and each Dissenting Offeree must elect within 60 days after the date of the sending of the Offeror’s Notice to transfer his or her ZORIN Shares to the Offeror on the terms of the Offer or to demand payment of the fair value of the ZORIN Shares held by such Dissenting Offeree by so notifying the Offeror and by applying to the Court of Queen’s Bench of Alberta to fix the fair value of such ZORIN Shares. If a Dissenting Offeree has elected to demand payment of the fair value of that Dissenting Offeree’s ZORIN Shares, the Offeror may apply to the Court of Queen’s Bench of Alberta to fix the fair value of the ZORIN Shares of that Dissenting Offeree. If the Dissenting Offeree does not notify the Offeror and apply to a court within the applicable 60 day period, the Dissenting Offeree will be deemed to have elected to transfer such ZORIN Shares to the Offeror on the terms of the Offer. Any judicial determination of the fair value of the ZORIN Shares could be more or less than the amount paid pursuant to the Offer.

     The foregoing is a summary only. The summary is not intended to be complete and is qualified in its entirety by the provisions of Part 16 of the ABCA. Reference should be made to Part 16 of the ABCA for a complete description of the provisions regarding Compulsory Acquisitions. The provisions of Part 16 of the ABCA are complex and may require strict adherence to notice and timing provisions, failing which such rights may be lost or altered. Shareholders who wish to be better informed about these provisions should consult their legal advisors.

     In the decision of the Ontario Court (General Division) of Shoom v. Great-West Life, Inc. (1998), 40 O.R. (3d) 772, aff’d (1998), 42 O.R. (3d) 732 (C.A.) (“Shoom”), the Court considered the rights of a shareholder who did not tender his shares to a take-over bid under which shareholders were offered a choice of consideration consisting of cash or securities, subject to proration in the event that shareholders in the aggregate elected more than the maximum number of securities offered. The proration provisions used under the take-over bid resulted in all of the securities available for issuance under the bid being issued to shareholders on the first take-up date under the bid with no securities remaining available for issuance to dissenting shareholders under a statutory compulsory acquisition procedure. The Court held that a dissenting shareholder was entitled to receive no less favourable treatment than any other shareholders who had tendered to the bid, notwithstanding that the maximum number of securities issuable under the bid had already been issued by the offeror to shareholders who had tendered under the bid. Hawker believes that the prorating provisions of the Offer (which differ from those considered in the Shoom case) would apply in a manner consistent with the principles adopted by the court in Shoom.

     See “Certain Canadian Federal Income Tax Considerations” for a discussion of the tax consequences to ZORIN Shareholders in the event of a Compulsory Acquisition.

Subsequent Acquisition Transactions

     If the Offeror takes up and pays for ZORIN Shares validly deposited to the Offer and the right of Compulsory Acquisition described above is not available or the Offeror elects not to pursue such right, the Offeror currently intends to cause a special meeting of Shareholders to be called to consider an amalgamation, statutory arrangement or other transaction involving the Offeror and/or an affiliate of the Offeror and ZORIN and/or the holders of ZORIN Shares for the purposes of ZORIN becoming, directly or indirectly, a wholly-owned subsidiary of the Offeror or affecting an amalgamation or merger of ZORIN’s business and assets with or into the Offeror and/or an affiliate of the Offeror (a “Subsequent Acquisition Transaction”). The timing and details of any such transaction will necessarily depend on a variety of factors, including the number of ZORIN Shares acquired pursuant to the Offer. In the event of a Subsequent Acquisition Transaction, Shareholders, other than the Offeror and its affiliates, could receive cash, preferred shares (which may be immediately redeemable for cash), debt or any combination thereof. While the Offeror currently intends that the consideration offered under any Subsequent Acquisition Transaction would be the same price as the price offered under the Offer, the consideration offered to holders of ZORIN Shares in a Subsequent Acquisition Transaction could have a higher or lower value than the value of the consideration offered for the ZORIN Shares pursuant to the Offer. The Offeror may, in its discretion, allocate the aggregate purchase price payable to all holders of the remainder of

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the ZORIN Shares acquired pursuant to a Subsequent Acquisition Transaction pro rata amongst all such holders so that each such holder receives Hawker Shares in respect of 80% of the purchase price payable for the ZORIN Shares acquired from each such holder and cash in respect of 20% of the purchase price payable for the ZORIN Shares acquired from each such holder.

     Any such Subsequent Acquisition Transaction may also result in Shareholders having the right to dissent in respect thereof and demand payment of the fair value of their ZORIN Shares. The exercise of such right of dissent, if certain procedures are complied with by the Shareholder, could lead to a judicial determination of fair value required to be paid to such dissenting Shareholder for its ZORIN Shares. The fair value so determined could be more or less than, or equal to, the value of the consideration paid per ZORIN Share pursuant to the Subsequent Acquisition Transaction or pursuant to the Offer.

     Each type of Subsequent Acquisition Transaction described above would constitute a “going private transaction” within the meaning of certain applicable Canadian securities legislation and regulations (collectively, the “Regulations”), Rule 61-501 and Policy Q-27. In certain circumstances, the provisions of Rule 61-501 and Policy Q-27 may also deem certain types of Subsequent Acquisition Transactions to be “related party transactions”. However, if the Subsequent Acquisition Transaction is a “going private transaction” carried out in accordance with Rule 61-501 or an exemption therefrom and Policy Q-27 or an exemption therefrom, the “related party transaction” provisions of Rule 61-501 and Policy Q-27 will not apply to such transaction. The Offeror intends to carry out any such going private transaction in accordance with Rule 61-501 and Policy Q-27 or exemptions therefrom such that the related party transaction provisions of Rule 61-501 and Policy Q-27 will not apply to the going private transaction.

     The Regulations, Rule 61-501 and Policy Q-27 provide that, unless exempted, a corporation proposing to carry out a going private transaction is required to prepare a valuation of the ZORIN Shares (and, subject to certain exceptions, any non-cash consideration being offered therefor) and to provide to the holders of the ZORIN Shares a summary of such valuation. The Offeror expects that any Subsequent Acquisition Transaction will be effected in a manner that exempts the Offeror from the foregoing valuation requirements.

     The provisions of the ABCA will require the approval of at least 66 #% of the votes cast by holders of the outstanding ZORIN Shares at a meeting duly called and held for the purpose of approving a Subsequent Acquisition Transaction. Rule 61-501 and Policy Q-27 would in effect also require that, in addition to any other required security holder approval, in order to complete a going private transaction, the approval of a simple majority of the votes cast by “minority” holders of the ZORIN Shares must be obtained unless an exemption is available or discretionary relief is granted by the OSC and AMF.

     In relation to any Subsequent Acquisition Transaction, the “minority” holders will be all Shareholders other than the Offeror, its directors and senior officers or any associate or affiliate of the Offeror or its directors or senior officers or any person or company acting jointly or in concert with the Offeror or any of its directors or senior officers. However, Rule 61-501 and Policy Q-27 also provide that the Offeror may treat ZORIN Shares acquired pursuant to the Offer as “minority”                     shares and to vote them, or to consider them voted, in favour of a Subsequent Acquisition Transaction that is a going private transaction if, among other things, the consideration for each security in the Subsequent Acquisition Transaction is at least equal in value to and in the same form as the consideration paid pursuant to the Offer and is completed within 120 days of the date of the Offer. The Offeror currently intends that the consideration offered under any Subsequent Acquisition Transaction proposed by it would be the same as the price offered under the Offer and the Offeror intends to cause ZORIN Shares acquired pursuant to the Offer to be voted in favour of such transaction. If the Offeror takes up and pays for ZORIN Shares validly deposited to the Offer and the right of Compulsory Acquisition is not available, the Offeror intends to implement a Subsequent Acquisition Transaction that is a going private transaction and thereby acquire all of the remaining ZORIN Shares.

     In addition, under Rule 61-501 and Policy Q-27, if, following the Offer, the Offeror and its affiliates are the registered holders of 90% or more of the ZORIN Shares at the time the Subsequent Acquisition Transaction is initiated, the requirement for minority approval would not apply to the transaction if an enforceable right to dissent and seek fair value or a substantially equivalent right is made available to the minority shareholders.

     See the section of the Circular entitled “Certain Canadian Federal Income Tax Considerations” for a discussion of the tax consequences to Shareholders in the event of a Subsequent Acquisition Transaction.

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     The details of any such Subsequent Acquisition Transaction, including the timing of its implementation and the consideration to be received by the minority Shareholders, would necessarily be subject to a number of considerations, including the number of ZORIN Shares acquired pursuant to the Offer. There can be no assurance that any such transaction will be proposed or, if proposed, effected. Shareholders should consult their own legal advisors for a determination of their legal rights with respect to a Subsequent Acquisition Transaction if and when proposed.

Other Alternatives

     If the Offeror decides not to effect the Compulsory Acquisition or to propose a Subsequent Acquisition Transaction, or proposes a Subsequent Acquisition Transaction but cannot promptly obtain any required approval, the Offeror will evaluate its other alternatives. Such alternatives could include, to the extent permitted by applicable law, purchasing additional ZORIN Shares in privately-negotiated transactions or in another take-over bid or taking no further action to acquire additional ZORIN Shares. Any additional purchases of ZORIN Shares could be at a price greater than, equal to, or less than, the price to be paid for ZORIN Shares under the Offer and could be for cash or other consideration. Alternatively, the Offeror may sell or otherwise dispose of any or all ZORIN Shares acquired pursuant to the Offer or otherwise. Such transactions may be effected on terms and at prices then determined by the Offeror, which may vary from the price paid for ZORIN Shares under the Offer.

Judicial Developments

     Prior to the adoption of Rule 61-501 and Policy Q-27, Canadian courts had, in a few instances, granted preliminary injunctions to prohibit transactions involving going private transactions. The Offeror has been advised that based upon more recent legislative enactments, going private transactions may proceed subject to compliance with requirements intended to ensure procedural and substantive fairness to the minority shareholders.

RISK FACTORS

     The securities offered hereby should be considered highly speculative due to the Offeror’s recent change of business and the nature of such business as well as the Offeror’s present stage of development. A prospective investor should consider carefully the risk factors set out below. In addition, prospective investors should carefully review and consider all other information contained and incorporated by reference in this Offer and Circular before making an investment decision.

Exploration, Development and Production Risks

     An investment in the Hawker Shares is speculative due to the nature of the Offeror’s involvement in the exploration, development and production of oil and natural gas and its present stage of development. Oil and natural gas operations involve many risks which even a combination of experience and knowledge and careful evaluation may not be able to overcome. The long-term commercial success of the Offeror depends on its ability to find, acquire, develop and commercially produce oil and natural gas reserves. Without the continual addition of new reserves, any existing reserves the Offeror may have at any particular time and the production therefrom will decline over time as such reserves are exploited. A future increase in the Offeror’s reserves will depend not only upon the Offeror’s ability to explore and develop any properties it may have, but also on its ability to select and acquire suitable producing properties. No assurance can be given that the Offeror will be able to continue to locate satisfactory properties for acquisition or to participate in other ventures or be able to identify and reach agreement with suitable partners. Moreover, if such acquisitions or partners are identified, the Offeror may determine that current markets, terms of acquisition and participation or pricing conditions make any such opportunities uneconomic. There is no assurance that commercial quantities of oil and natural gas will be discovered or acquired by the Offeror.

     Future oil and natural gas exploration may involve unprofitable efforts, not only from dry wells, but from wells that are productive but do not produce sufficient net revenues to return a profit after drilling, operating and other costs. Completion of a well does not assure a profit on the investment or recovery of drilling, completion and operating costs. In addition, drilling hazards or environmental damage could greatly increase the cost of operations, and various field operating conditions may adversely affect the production from successful wells. These conditions include delays in obtaining governmental approvals or consents, shut-ins of connected wells resulting from extreme weather conditions, insufficient storage or transportation capacity or other geological and mechanical conditions. While close well supervision and effective maintenance operations can contribute to maximizing production rates over time, production

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delays and declines from normal field operating conditions cannot be eliminated and can be expected to adversely affect revenue and cash flow levels to varying degrees.

     In addition, oil and natural gas operations are subject to the risks of exploration, development and production of oil and natural gas properties, including encountering unexpected formations or pressures, premature declines of reservoirs, blow-outs, cratering, sour gas releases, fires and spills. Losses resulting from the occurrence of any of these risks could have a materially adverse effect on future results of operations, liquidity and financial condition.

Insurance

     The Offeror’s involvement in the exploration for and development of oil and natural gas properties may result in the Offeror becoming subject to liability for pollution, blow-outs, property damage, personal injury or other hazards. Although the Offeror maintains insurance in accordance with industry standards to address such risks, such insurance has limitations on liability that may not be sufficient to cover the full extent of such liabilities. In addition, such risks may not in all circumstances be insurable or, in certain circumstances, the Offeror may in the future elect not to obtain insurance to deal with specific risks due to the high premiums associated with such insurance or other reasons. The payment of any such uninsured liabilities would reduce the funds available to the Offeror. The occurrence of a significant event that the Offeror is not fully insured against, or the insolvency of the insurer of such an event, could have a material adverse effect on the Offeror’s financial position, results of operations or prospects.

Prices, Markets and Marketing of Crude Oil and Natural Gas

     Oil and natural gas are commodities whose prices are determined based on world demand, supply and other factors, all of which are beyond the control of the Offeror. World prices for oil and natural gas have fluctuated widely in recent years. Any material decline in prices could result in a reduction of net production revenue. Certain wells or other projects may become uneconomic as a result of a decline in world oil prices and natural gas prices, leading to a reduction in the volume of the Offeror’s oil and natural gas reserves. The Offeror might also elect not to produce from certain wells at lower commodity prices. All of these factors could result in a material decrease in the Offeror’s future net production revenue, causing a reduction in its oil and natural gas acquisition and development activities. In addition, bank borrowings available to the Offeror are in part determined by the borrowing base of the Offeror. A sustained material decline in prices from historical average prices could limit or reduce the Offeror’s borrowing base, thereby reducing the debt financing available to the Offeror, and could require that a portion of any existing debt financing of the Offeror be repaid.

     The marketability and price of oil and natural gas which may be acquired or discovered by the Offeror will be affected by numerous factors beyond its control. The Offeror may be affected by the differential between the price paid by refiners for light quality oil and the grades of oil produced by the Offeror. The ability of the Offeror to market its natural gas may depend upon its ability to acquire space on pipelines which deliver natural gas to commercial markets. The Offeror may also be affected by deliverability uncertainties related to the proximity of its reserves to pipelines and processing facilities and related to operational problems with such pipelines and facilities and extensive government regulation relating to price, taxes, royalties, land tenure, allowable production, the export of oil and natural gas and many other aspects of the oil and natural gas business.

Substantial Capital Requirements; Liquidity

     The Offeror anticipates that it will make substantial capital expenditures for the acquisition, exploration, development and production of oil and natural gas reserves in the future. There can be no assurance that debt or equity financing or cash generated by operations will be available or sufficient to meet these requirements or for other corporate purposes or, if debt or equity financing is available, that it will be on terms acceptable to the Offeror. Moreover, future activities may require the Offeror to alter its capitalization significantly. The inability of the Offeror to access sufficient capital for its operations could have a material adverse effect on the Offeror’s financial condition, results of operations or prospects.

Competition

     The Offeror competes for reserve acquisitions, exploration leases, licences and concessions and skilled industry personnel with a substantial number of other oil and natural gas companies, many of which have significantly

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greater financial resources than the Offeror. The Offeror’s competitors include major integrated oil and natural gas companies and numerous other independent oil and natural gas companies and individual producers and operators. The Offeror’s ability to increase reserves in the future will depend not only on its ability to explore and develop its properties, but also on its ability to select and acquire suitable producing properties or prospects for exploratory drilling. Competitive factors in the distribution and marketing of oil and natural gas include price and methods and reliability of delivery.

     The oil and natural gas industry is highly competitive. The Offeror’s competitors for the acquisition, exploration, production and development of oil and natural gas properties, and for capital to finance such activities, include entities that have greater financial and personnel resources available to them than the Offeror.

     The Offeror’s ability to successfully bid on and acquire additional property rights, to discover reserves, to participate in drilling opportunities and to identify and enter into commercial arrangements with customers will be dependent upon developing and maintaining close working relationships with its future industry partners and joint operators and its ability to select and evaluate suitable properties and to consummate transactions in a highly competitive environment.

Environmental Risks

     All phases of the oil and natural gas business present environmental risks and hazards and are subject to environmental regulation pursuant to a variety of international conventions and state and municipal laws and regulations. Environmental legislation provides for, among other things, restrictions and prohibitions on spills, releases or emissions of various substances produced in association with oil and natural gas operations. The legislation also requires that wells and facility sites be operated, maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities. Compliance with such legislation can require significant expenditures and a breach may result in the imposition of fines and penalties, some of which may be material. Environmental legislation is evolving in a manner expected to result in stricter standards and enforcement, larger fines and liability and potentially increased capital expenditures and operating costs. The discharge of oil, natural gas or other pollutants into the air, soil or water may give rise to liabilities to governments and third parties and may require the Offeror to incur costs to remedy such discharge. No assurance can be given that environmental laws will not result in a curtailment of production or a material increase in the costs of production, development or exploration activities or otherwise adversely affect the Offeror’s financial condition, results of operations or prospects.

Reserves Replacement

     The Offeror’s future oil and natural gas reserves, production, and cash flows to be derived therefrom are highly dependent on the Offeror successfully acquiring or discovering new reserves. Without the continual addition of new reserves, any existing reserves the Offeror may have at any particular time and the production therefrom will decline over time as such existing reserves are exploited. There can be no assurance that the Offeror’s future exploration and development efforts will result in the discovery and development of additional commercial accumulations of oil and natural gas.

Reliance on Operators and Key Employees

     To the extent the Offeror is not the operator of its oil and natural gas properties, the Offeror will be dependent on such operators for the timing of activities related to such properties and will largely be unable to direct or control the activities of the operators. In addition, the success of the Offeror will be largely dependent upon the performance of its management and key employees. The Offeror does not have any key man insurance policies, and therefore there is a risk that the death or departure of any member of management or any key employee could have a material adverse effect on the Offeror. In assessing the risk of an investment in the Hawker Shares, potential investors are relying on the ability and integrity of the management of Hawker.

Corporate Matters

     To date, the Offeror has not paid any dividends on its outstanding Hawker Shares and does not anticipate the payment of any dividends on its Hawker Shares in the near future.

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     Certain of the directors and officers of the Offeror are also directors and officers of other oil and natural gas companies involved in natural resource exploration and development, and conflicts of interest may arise between their duties as officers and directors of the Offeror and as officers and directors of such other companies. Such conflicts must be disclosed in accordance with, and are subject to such other procedures and remedies as apply under, the ABCA.

Permits and Licenses

     The operations of the Offeror may require licenses and permits from various governmental authorities. There can be no assurance that the Offeror will be able to obtain all necessary licenses and permits that may be required to carry out exploration and development of its projects.

Additional Funding Requirements

     The Offeror’s cash flow may not be sufficient to fund its ongoing activities and implement its business plan. From time to time, the Offeror may require additional financing in order to carry out its oil and natural gas acquisition, exploration and development activities. Failure to obtain such financing on a timely basis could cause the Offeror to forfeit its interest in certain properties, miss certain acquisition opportunities and reduce or terminate its operations. If the Offeror’s future revenues from its future reserves decrease as a result of lower oil and natural gas prices or otherwise, it will affect the Offeror’s ability to expend the necessary capital to replace its reserves or to maintain its production. If the Offeror’s cash flow from operations is not sufficient to satisfy its capital expenditure requirements, there can be no assurance that additional debt or equity financing will be available to meet these requirements or be available on favourable terms.

Issuance of Debt

     The Offeror’s activities may be financed partially or wholly with debt, which may increase the Offeror’s debt levels above industry standards. Neither the Offeror’s articles nor its by-laws limit the amount of indebtedness that the Offeror may incur. The level of the Offeror’s indebtedness from time to time could impair the Offeror’s ability to obtain additional financing in the future on a timely basis to take advantage of business opportunities that may arise.

Availability of Drilling Equipment and Access Restrictions

     Oil and natural gas exploration and development activities are dependent on the availability of drilling and related equipment in the particular areas where such activities will be conducted. Demand for such equipment or access restrictions may affect the availability of such equipment to the Offeror and may delay exploration and development activities.

Title Defects

     Although title reviews will generally be conducted prior to the purchase of most oil and natural gas producing properties or the commencement of drilling wells, such reviews may not discover unforeseen title defects that could adversely affect Hawker’s title to the property or entitlement to revenue from the property. No title review was conducted in respect of the Pointwest Acquisition or ZORIN.

Uncertainty of Reserve Information

     There are numerous uncertainties inherent in estimating quantities of reserves and cash flows to be derived from exploration and production activities, including many factors that are beyond the control of the Offeror. The reserve and cash flow information in or incorporated by reference into this Offer and Circular represents estimates only. The reserves and estimated future net cash flow from Hawker’s properties (other than the Pointwest Properties) have been independently evaluated effective May 1, 2003 by McDaniel and the Pointwest Properties have been independently evaluated effective September 30, 2003 by GLJ. These evaluations include a number of assumptions relating to factors such as initial production rates, production decline rates, ultimate recovery of reserves, timing and amount of capital expenditures, marketability of production, future prices of oil and natural gas, operating costs and royalties and other government levies that may be imposed over the producing life of the reserves. These assumptions were based on price forecasts in use at the date the relevant evaluations were prepared and many of these assumptions are subject to change and are beyond the control of the Offeror. Actual production and cash flows derived therefrom

- 46 -

will vary from these evaluations, and such variations could be material. The foregoing evaluations are based in part on the assumed success of activities intended to be undertaken in future years. The reserves and estimated cash flows to be derived therefrom contained in such evaluations will be reduced to the extent that such activities do not achieve the level of success assumed in the evaluations.

Kyoto Protocol

     Canada is a signatory to the United Nations Framework Convention on Climate Change and has ratified the Kyoto Protocol established thereunder to set legally binding targets to reduce nation-wide emissions of carbon dioxide, methane, nitrous oxide and other so-called “greenhouse gases”. Hawker’s exploration and production facilities and other operations and activities will emit greenhouse gases which may subject Hawker to legislation regulating emissions of greenhouse gases. The Government of Canada has put forward a Climate Change Plan for Canada which suggests further legislation will set greenhouse gases emission reduction requirements for various industrial activities, including oil and natural gas exploration and production. Future federal legislation, together with provincial emission reduction requirements, such as those proposed in Alberta’s Bill 37: Climate Change and Emissions Management Act, may require the reduction of emissions or emissions intensity from the Offeror’s operations and facilities. The direct or indirect costs of these regulations may adversely affect the business of the Offeror.

Government Regulation and Taxation

     Oil and natural gas operations are subject to extensive Canadian federal, provincial and local laws and regulations governing exploration, development, transportation, production, exports, labour standards, occupational health, waste disposal, protection and reclamation of the environment, mine safety, hazardous materials, toxic substances, taxation and other matters. The Offeror believes that it is in substantial compliance with all applicable laws and regulations. Amendments to current laws and regulations governing oil and natural gas operations and the more stringent implementation thereof are actively considered from time to time and the implementation thereof could have a material adverse impact on the Offeror. In addition, taxation laws and regulations as well as the current administrative practices of both the federal and provincial tax authorities may be amended or construed in such a way that is detrimental to the Offeror or its activities.

DEPOSITARY

     The Offeror has retained Computershare Trust Company of Canada to act as a depositary for the receipt of certificates in respect of ZORIN Shares and related Letters of Acceptance and Notices of Guaranteed Delivery deposited under the Offer and for the payment for ZORIN Shares purchased by the Offeror pursuant to the Offer. The Depositary will receive compensation from the Offeror for its services in connection with the Offer, will be reimbursed for certain out-of-pocket expenses and will be indemnified against certain liabilities, including liabilities under securities laws, and expenses in connection therewith.

     No brokerage fees or commissions will be payable by any Shareholder who accepts the Offer by depositing their ZORIN Shares directly with the Depositary. ZORIN Shareholders should contact the Depositary or their broker or dealer for assistance in accepting the Offer and in depositing the ZORIN Shares with the Depositary.

SOLICITING DEALER

     Peters & Co. Limited has been retained to act as soliciting dealer in connection with the Offer and to solicit acceptances of the Offer. The Offeror has agreed to pay the Soliciting Dealer its reasonable out-of-pocket expenses. In addition, the Offeror has agreed to indemnify the Soliciting Dealer and others against certain liabilities and expenses.

     No brokerage fees or commissions will be payable by any Shareholder who accepts the Offer by depositing their ZORIN Shares directly with the Depositary or who uses the services of the Soliciting Dealer to accept the Offer.

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

     In the opinion of Blake, Cassels & Graydon LLP, counsel to the Offeror, the following is, as of the date hereof, a summary of the principal income tax considerations under the Tax Act generally applicable to certain ZORIN

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Shareholders who dispose of their ZORIN Shares pursuant to the Offer or pursuant to transactions described in this Circular under the heading “Acquisition of Securities Not Deposited”.

     This summary is based on the current provisions of the Tax Act and the Tax Regulations in force as of the date hereof, all Tax Proposals and counsel’s understanding of the current published administrative policies of the CRA. This opinion is not exhaustive of all possible Canadian federal income tax consequences and, except for the Tax Proposals, does not take into account or anticipate any changes in law, whether by legislative, governmental or judicial decision or action, and does not take into account provincial, territorial or foreign tax consequences which may differ significantly from those discussed herein. With respect to the Tax Proposals, no assurance can be given that the Tax Proposals will be enacted in the form currently proposed or at all.

     This discussion is not intended to be, nor should it be construed to be, legal or tax advice to any particular Shareholder. Accordingly, Shareholders should consult with their own tax advisors for advice with respect to the tax consequences to them of disposing of their ZORIN Shares having regard to their own particular circumstances.

     This summary generally is applicable to Shareholders that dispose of their ZORIN Shares pursuant to the Offer or pursuant to certain transactions described under “Acquisition of Securities Not Deposited” in this Circular and, for purposes of the Tax Act and at all relevant times: (i) deal at arm’s length with and are not affiliated with ZORIN or Hawker; (ii) hold their ZORIN Shares as capital property; (iii) following the completion of the Offer will not, either alone or together with other persons with whom they do not deal at arm’s length, either control Hawker or beneficially own shares of Hawker which have a fair market value in excess of 50% of the fair market value of all outstanding shares of Hawker; and (iv) are not “specified financial institutions” or “financial institutions” (each as defined in the Tax Act) subject to the “mark-to-market” rules contained in the Tax Act.

     ZORIN Shares generally will constitute capital property of a Shareholder unless the ZORIN Shares are held in the course of carrying on a business of trading or dealing in securities or otherwise as part of a business of buying and selling securities, or were acquired in a transaction or transactions considered to be an adventure in the nature of trade. Certain Shareholders that are resident in Canada for the purpose of the Tax Act whose ZORIN Shares might not otherwise be considered to be capital property may be eligible to make an irrevocable election under the Tax Act to have every “Canadian security” owned by such Shareholder in the taxation year of the election and all subsequent years deemed to be capital property. Shareholders should consult their own tax advisors as to whether they hold their ZORIN Shares as capital property for purposes of the Tax Act.

Shareholders Resident in Canada

     The following portion of this summary is applicable only to Shareholders that are, at all relevant times, resident or deemed to be resident in Canada for purposes of the Tax Act and any applicable tax treaty.

     Sale Pursuant to the Offer

     As a result of the operation of various terms of the Offer, Shareholders may receive a combination of cash and Hawker Shares as consideration for their ZORIN Shares. In such circumstances, Shareholders are deemed to dispose of a fraction of each of their ZORIN Shares exclusively for cash and the remaining fraction of each of such ZORIN Shares exclusively for a fraction of a Hawker Share. The fraction of each ZORIN Share disposed of exclusively for a fraction of a Hawker Share will be equal to the fraction obtained by dividing the total fair market value of all of the Hawker Shares received by a Shareholder by the sum of the fair market value of such Hawker Shares and the total amount of cash received by that Shareholder. The balance of each such ZORIN Share, if any, will be disposed of for cash. Each disposition of a fraction of a ZORIN Share for a fraction of a Hawker Share and disposition of a fraction of a ZORIN Share for cash will be regarded as separate transactions for the purposes of computing the Shareholder’s capital gain or capital loss.

     A Shareholder will realize a capital gain, or capital loss, in respect of each ZORIN Share (or fraction thereof) that is disposed of for cash to the extent that the amount of cash received for each such ZORIN Share (or fraction thereof) exceeds, or is exceeded by, the sum of the adjusted cost base of such ZORIN Share (or fraction thereof) to the Shareholder and any reasonable costs of disposition. Such capital gain or capital loss will be subject to the income tax treatment described below under “Taxation of Capital Gains and Capital Losses”. In respect of each ZORIN Share (or

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fraction thereof) that is disposed of for a fraction of a Hawker Share, unless the Shareholder includes any portion of the capital gain or capital loss otherwise determined in respect of such ZORIN Share (or fraction thereof) in computing the Shareholder’s income for the taxation year in which the disposition occurs, the Shareholder will be deemed under the Tax Act to have disposed of it for proceeds of disposition equal to the Shareholder’s adjusted cost base in respect of such ZORIN Share (or fraction thereof) immediately before the disposition, and to have acquired the fraction of the Hawker Share received in exchange therefor at a cost equal to such proceeds of disposition.

     Taxation of Capital Gains and Capital Losses

     Generally, a ZORIN Shareholder will be required to include one-half of the amount of any capital gain (a “taxable capital gain”) in income and will be entitled to deduct one-half of the amount of any capital loss (an “allowable capital loss”) against taxable capital gains realized by the ZORIN Shareholder in the year of disposition. Any allowable capital losses in excess of such taxable capital gains may be carried back and deducted in any of the preceding three years, or carried forward in any following year, against taxable capital gains realized in such years, to the extent and under the circumstances specified in the Tax Act. In the case of a ZORIN Shareholder that is a corporation, trust or partnership, the amount of any capital loss otherwise determined resulting from the disposition of ZORIN Shares may be reduced by the amount of dividends previously received to the extent and under the circumstances prescribed in the Tax Act.

     A Shareholder that is throughout the relevant taxation year a “Canadian-controlled private corporation” (as defined in the Tax Act) may be liable to pay, in addition to the tax otherwise payable under the Tax Act, a refundable tax of 6 2/3% determined by reference to its aggregate investment income for the year, which is defined to include an amount in respect of taxable capital gains.

     Capital gains realized by individuals or trusts, other than certain trusts, may be subject to alternative minimum tax. The Tax Act provides that the tax payable by individuals and such trusts is the greater of the tax otherwise determined and an alternative minimum tax. Shareholders should consult their own tax advisors with respect to the alternative minimum tax provisions.

     Acquisition of ZORIN Shares Not Deposited

     As described under “Acquisition of Securities Not Deposited” in this Circular, the Offeror may acquire ZORIN Shares not deposited under the Offer pursuant to the statutory right of Compulsory Acquisition under Part 16 of the ABCA. A Shareholder whose ZORIN Shares are acquired pursuant to a Compulsory Acquisition generally will be subject to the respective tax treatments described above.

     As further described under “Acquisition of Securities Not Deposited” in this Circular, it is Hawker’s current intention to consider other means of acquiring, directly or indirectly, all of the equity in ZORIN in accordance with applicable law, including a Subsequent Acquisition Transaction. In the event the Offeror undertakes a Subsequent Acquisition Transaction involving ZORIN, the tax consequences to the Shareholders who do not tender their ZORIN Shares to the Offer would depend upon the nature of the particular transaction undertaken and may be substantially the same as, or materially different from, those described above, depending upon the exact manner in which the transaction is carried out.

     Shareholders should consult their own tax advisors for advice with respect to the potential income tax consequences to them of having their ZORIN Shares acquired pursuant to such transactions.

Shareholders Not Resident in Canada

     The following portion of this summary is applicable only to Shareholders that are neither resident, nor deemed to be resident, in Canada for the purposes of the Tax Act or any applicable income tax treaty (“Non-Resident Shareholders”), that do not use or hold, and are not deemed to use or hold, their ZORIN Shares in carrying on a business in Canada, or in the case of Non-Resident Shareholders that carry on an insurance business in Canada and elsewhere, establish that such property is not effectively connected with such insurance business carried on in Canada.

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     Sale Pursuant to the Offer

     A Non-Resident Holder of ZORIN Shares that are not “taxable Canadian property” (as defined in the Tax Act) to such holder will not be subject to income tax under the Tax Act on the disposition of such shares under the Offer.

     ZORIN Shares of a Non-Resident Shareholder generally will not constitute “taxable Canadian property” at any particular time unless: (a) the ZORIN Shares are not then listed on a prescribed stock exchange; (b) at any time within the five year period immediately preceding the disposition by such Shareholder of ZORIN Shares, such Shareholder, persons not dealing at arm’s length with such Shareholder, or any combination thereof owned (or had an interest in or an option in respect of) 25% or more of the issued shares of any class or series of the capital stock of ZORIN or a predecessor of ZORIN; (c) such Shareholder elected under the Tax Act to have the ZORIN Shares deemed to be “taxable Canadian property”; or (d) the ZORIN Shares were acquired in circumstances under which they are deemed to be “taxable Canadian property”. If the ZORIN Shares constitute, or are deemed to constitute, taxable Canadian property to a particular Non-Resident Holder, the tax consequences on the disposition or deemed disposition thereof under the Offer described above under “Residents of Canada” generally will apply (subject to the terms of any applicable income tax treaty) and, in certain circumstances, the notification and withholding provisions of section 116 of the Tax Act may apply to the Non-Resident Shareholder.

     Acquisition of ZORIN Shares Not Deposited

     As described in “Acquisition of Securities Not Deposited” in this Circular, the Offeror may, in certain circumstances, acquire ZORIN Shares pursuant to a Compulsory Acquisition under Part 16 of the ABCA. If the ZORIN Shares are not listed on a prescribed stock exchange at the time of disposition, they will be taxable Canadian property to a Non-Resident Holder. See “Effect of the Offer on Market and Listings” in this Circular. Where a Non-Resident Holder disposes of ZORIN Shares that are taxable Canadian property to the holder, the disposition may give rise to a capital gain. If such capital gain is not exempt from Canadian income tax under the terms of an applicable income tax treaty, the tax consequences as described above under “Taxation of Capital Gains and Capital Losses” generally will apply. In addition, if the ZORIN Shares are not listed on a prescribed stock exchange at the time of disposition, the notification and withholding provisions of section 116 of the Tax Act will apply to a Non-Resident Holder.

     In the event the Offeror undertakes a Subsequent Acquisition Transaction involving ZORIN, the tax consequences to Non-Resident Shareholders that do not tender their ZORIN Shares under the Offer would depend upon the exact manner that the particular transaction is undertaken. Such tax consequences may include a deemed dividend, a capital gain or loss, or both a deemed divided and a capital gain or loss.

     Any interest or dividends deemed received by Non-Resident Shareholders in connection with the disposition of their ZORIN Shares will be subject to non-resident withholding tax at a rate of 25% or such lower rate as may be provided for under the terms of an applicable income tax treaty.

     Non-Resident Shareholders should consult their own tax advisors for advice with respect to the potential income tax consequences to them of having their ZORIN Shares acquired pursuant to such transactions.

ACCEPTANCE OF OFFER

     Except for the following persons who have entered into Pre-Tender Agreements, the Offeror has no knowledge regarding whether any ZORIN Shareholders will accept the Offer.

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	Number of ZORIN		Number of ZORIN		Number of ZORIN
	Shares to be tendered to		Options to be		Warrants to be
ZORIN Shareholder	Offer		Cancelled (1)		Cancelled (1)
D. J. Andrews		897,000		50,000		50,000
Michael J. Hopkins		275,000		100,000	Nil
Denyce Lundeen		260,000		150,000		50,000
Brad D. Markel		137,000		50,000		10,000
A. Pochmursky		485,000		50,000		75,000
Robert R. Rooney		50,000		100,000		50,000
Wayne R. Toole		9,289,500		450,000		263,000

Note:

(1) See “Pre-Acquisition Agreement — ZORIN Options and ZORIN Warrants” in this Circular.

EXPENSES OF THE OFFER

     The Offeror estimates that if it acquires all of the ZORIN Shares pursuant to the Offer, the total amount required to pay the expenses of the Offeror and ZORIN will be approximately $1,000,000.

LEGAL MATTERS

     The legal opinion referred to under the section of the Circular entitled “Certain Canadian Federal Income Tax Considerations” has been provided by Blake, Cassels & Graydon LLP, counsel to the Offeror.

INTERESTS OF EXPERTS

     As at the date hereof, to the knowledge of the management of Hawker, the partners and associates of Blake, Cassels & Graydon LLP beneficially own, directly or indirectly, less than 1% of the outstanding Hawker Shares.

     As of the date hereof, to the knowledge of the management of Hawker, the partners of Ernst & Young LLP as a group do not own any of the outstanding Hawker Shares.

STATUTORY RIGHTS

     Securities legislation in certain of the provinces and territories of Canada provides holders of ZORIN Shares with, in addition to any other rights they may have at law, rights of rescission or to damages, or both, if there is a misrepresentation in a circular or notice that is required to be delivered to the holders of ZORIN Shares. However, such rights must be exercised within prescribed time limits. Shareholders should refer to the applicable provisions of the securities legislation of their province or territory for particulars of those rights or consult with a lawyer.

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CONSENTS

CONSENT OF SOLICITORS

To:     The Board of Directors of Hawker Resources Inc.

     We hereby consent to the reference to our opinion contained under the heading “Certain Canadian Federal Income Tax Considerations” in the Circular accompanying the Offer dated February 10, 2004 made by Hawker Resources Inc. to the holders of common shares of ZORIN Exploration Ltd.

Calgary, Alberta	(signed)	“Blake, Cassels & Graydon LLP”
February 10, 2004		Barristers and Solicitors

CONSENTS OF AUDITORS

To:      The Board of Directors of Hawker Resources Inc.

     We have read the Offer and the accompanying Circular made by Hawker Resources Inc. (the “Company”) dated February 10, 2004 to the holders of common shares of ZORIN Exploration Ltd. We have complied with Canadian generally accepted standards for an auditor’s involvement with offering documents.

     We consent to the use, through incorporation by reference, in the above mentioned Circular of our report dated February 5, 2003 (except for note 13(b) which is as of March 7, 2003) to the shareholders of SYNSORB Biotech Inc. (now Hawker Resources Inc.) on the balance sheets of the Company as at December 31, 2002 and 2001 and the statements of earnings and deficit and cash flows for the years then ended, and to the use in the above mentioned Circular of our compilation report dated February 10, 2004 on the unaudited pro forma consolidated balance sheet of the Company as at September 30, 2003 and the unaudited pro forma consolidated statements of earnings for the year ended December 31, 2002 and for the nine month period ended September 30, 2003.

Calgary, Alberta	(signed)	“Ernst & Young LLP”
February 10, 2004		Chartered Accountants

     We have read the Offer and the accompanying Circular made by Hawker Resources Inc. (the “Company”) dated February 10, 2004 to the holders of common shares of ZORIN Exploration Ltd. We have complied with Canadian generally accepted standards for an auditor’s involvement with offering documents.

     We consent to the use, through incorporation by reference, in the above-mentioned Circular of our report to the directors of the Company on the statements of revenues and operating expenses relating to the Southward Properties (as defined in the Prospectus) for each of the years in the three-year period ended December 31, 2002. Our report is dated April 21, 2003.

Calgary, Alberta	(signed)	“Deloitte & Touche LLP”
February 10, 2004		Chartered Accountants

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To:      The Board of Directors of Hawker Resources Inc.

     We have read the Offer and the accompanying Circular made by Hawker Resources Inc. (the “Company”) dated February 10, 2004 to the holders of common shares of ZORIN Exploration Ltd. We have complied with Canadian generally accepted standards for an auditor’s involvement with offering documents.

     We consent to the use, through incorporation by reference, in the above mentioned Circular of our report to the directors of Pointwest Energy Inc. (“Pointwest”) on the consolidated balance sheets of Pointwest as at December 31, 2002 and 2001 and the consolidated statements of operations and retained earnings (deficit) and cash flows for each of the years in the two year period ended December 31, 2002 and for the period from July 25, 2000 to December 31, 2000. Our report is dated April 12, 2003 (except for note 11 which is as of December 12, 2003).

Calgary, Alberta	(signed)	“KPMG LLP”
February 10, 2004		Chartered Accountants

To:      The Board of Directors of Hawker Resources Inc.

     We have read the Offer and the accompanying Circular made by Hawker Resources Inc. (the “Company”) dated February 10, 2004 to the holders of common shares of ZORIN Exploration Ltd. We have complied with the Canadian generally accepted standards for an auditor’s involvement with offering documents.

     We consent to the use, through incorporation by reference, in the above mentioned Circular of our report to the directors of ZORIN Exploration Ltd. (“ZORIN”) on the consolidated balance sheets of ZORIN as at December 31, 2002 and 2001 and the consolidated statements of operations and retained earnings and cash flows for each of the years in the two year period ended December 31, 2002. Our report is dated April 4, 2003.

Calgary, Alberta	(signed)	“Ramsay Dalton & Company”
February 10, 2004		Chartered Accountants

CONSENTS OF INDEPENDENT PETROLEUM ENGINEERS

To:      The Board of Directors of Hawker Resources Inc.

     Gilbert Laustsen Jung Associates Ltd. hereby consents to reference in the Circular accompanying the Offer dated February 10, 2004 made by Hawker Resources Inc. to the holders of common shares of ZORIN Exploration Ltd. of our reports dated September 30, 2003, evaluating the crude oil, natural gas and natural gas liquids reserves attributable to properties owned by Pointwest Energy Inc.

Calgary, Alberta	(signed)	“Gilbert Laustsen Jung Associates Ltd.”
February 10, 2004

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To:      The Board of Directors of Hawker Resources Inc.

     McDaniel & Associates Consultants Ltd. hereby consents to reference in the Circular accompanying the Offer dated February 10, 2004 made by Hawker Resources Inc. to the holders of common shares of ZORIN Exploration Ltd. of its reserve evaluation reports entitled “Hawker Resources Inc., Mechanical Update, Evaluation of Gas Reserves, Based on March Escalating Price Assumptions, As of May 1, 2003” and “Hawker Resources Inc., Mechanical Update, Evaluation of Gas Reserves, Based on March Constant Price Assumptions, As of May 1, 2003”, both dated April 22, 2003.

Calgary, Alberta	(signed)	“McDaniel & Associates Consultants Ltd.”
February 10, 2004

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APPROVAL AND CERTIFICATE

Dated: February 10, 2004

     The contents of the Offer and this Circular have been approved by, and the sending, communication or delivery thereof to the holders of common shares of ZORIN Exploration Ltd. has been authorized by, the board of directors of Hawker Resources Inc. The foregoing contains no untrue statement of material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made. The present Offer and Circular do not contain any misrepresentation likely to affect the value or market price of the securities subject to the Offer.

HAWKER RESOURCES INC.

(signed) “David A. Tuer”	(signed) “Barry R. Herring”
President and Chief Executive Officer	Chief Financial Officer

On behalf of the Board of Directors

(signed)	“Ronald P. Mathison”	(signed)	“Keith T. Smith”
	Director		Director

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SCHEDULE “A”

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

F-1

COMPILATION REPORT ON
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

To the Directors of Hawker Resources Inc.

We have read the accompanying unaudited pro forma consolidated balance sheet of Hawker Resources Inc. (the “Company”) as at September 30, 2003 and unaudited pro forma consolidated statement of earnings for the nine months then ended and for the year ended December 31, 2002, and have performed the following procedures:

1.	Compared the figures in the columns captioned “Hawker Resources Inc.” to the unaudited consolidated financial statements of the Company as at September 30, 2003 and for the nine months then ended, and the audited financial statements of the Company for the year ended December 31, 2002, respectively, and found them to be in agreement.
2.	Compared the figures in the columns captioned “W4M Properties” to the unaudited statement of revenues and operating expenses of Southward Energy Ltd. for the six months ended June 30, 2003 and the audited statement of revenues and operating expenses for the year ended December 31, 2002, respectively, and found them to be in agreement.
3.	Compared the figures in the columns captioned “Pointwest Energy Inc.” (“Pointwest”) to the unaudited consolidated financial statements of Pointwest as at September 30, 2003 and for the nine months then ended and the audited consolidated financial statements of Pointwest for the year ended December 31, 2002, respectively, and found them to be in agreement.
4.	Compared the figures in the columns captioned “ZORIN Exploration Ltd.” (“ZORIN”) to the unaudited consolidated financial statements of ZORIN as at September 30, 2003 and for the nine months then ended and the audited consolidated financial statements of ZORIN for the year ended December 31, 2002, respectively, and found them to be in agreement.
5.	Made enquiries of certain officials of the Company who have responsibility for financial and accounting matters about:

(a)	the basis for determination of the pro forma adjustments; and
(b)	whether the pro forma consolidated financial statements comply as to form in all material respects with applicable regulatory requirements.

The officials:

(c)	described to us the basis for determination of the pro forma adjustments, and
(d)	stated that the pro forma consolidated financial statements comply as to form in all material respects with applicable regulatory requirements.

6.

Read the notes to the unaudited pro forma consolidated financial statements, and found them to be consistent with the basis described to us for determination of the pro forma adjustments.

7.

Recalculated the application of the pro forma adjustments to the aggregate of the amounts in the columns captioned “Hawker Resources Inc.”, “Pointwest Energy Inc.”, “W4M Properties” and “ZORIN Exploration Ltd.” as at September 30, 2003 and for the nine months then ended, and for the year ended December 31, 2002, and found the amounts in the column captioned “Pro forma” to be arithmetically correct.

A pro forma financial statement is based on management assumptions and adjustments which are inherently subjective. The foregoing procedures are substantially less than either an audit or a review, the objective of which is the expression of assurance with respect to management’s assumptions, the pro forma adjustments, and the application of the adjustments to the historical financial information. Accordingly, we express no such assurance. The foregoing procedures would not necessarily reveal matters of significance to the pro forma consolidated financial statements, and we therefore make no representation about the sufficiency of the procedures for the purposes of a reader of such statements.

Calgary, Alberta	(Signed) “Ernst & Young LLP”
February 10, 2004	Chartered Accountants

F-2

Hawker Resources Inc.

PRO FORMA CONSOLIDATED BALANCE SHEET
As at September 30, 2003
(Unaudited)

	Hawker		Pointwest		ZORIN
	Resources		Energy		Exploration		Pro forma
	Inc.		Inc.		Ltd.		adjustments						Pro forma
[thousands of Canadian dollars]	$		$		$		$			Notes			$
ASSETS
Current
Cash		—		220		—		(74,473	)		2	(b)		—
								42,452			2	(c)
								21,801			2	(c)
								10,000			2	(c)
Accounts receivable		8,777		5,267		597								14,641
Deposits and prepaid expenses		1,030		317		124								1,471
		9,807		5,804		721		(220	)					16,112
Assets held for sale		2,190		—		—								2,190
Capital assets		69,684		56,492		10,475		30,800			2	(b)		169,604
								2,153			2	(d)
		81,681		62,296		11,196		32,733						187,906

See accompanying notes to unaudited pro forma consolidated financial statements

F-3

Hawker Resources Inc.

PRO FORMA CONSOLIDATED BALANCE SHEET
As at September 30, 2003
(Unaudited)

	Hawker			Pointwest		ZORIN
	Resources			Energy		Exploration		Pro forma
	Inc.			Inc.		Ltd.		adjustments						Pro forma
[thousands of Canadian dollars]	$			$		$		$			Notes			$
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
Accounts payable and accrued liabilities		10,314			12,599		1,476								24,389
Income tax payable		—			—		339								339
Bank loan		—			5,250		2,909								8,159
		10,314			17,849		4,724								32,887
									2,485			2	(d)
Bank loan		23,119			—		—		21,801			2	(c)		42,891
									10,000			2	(c)
									(14,514	)		2	(g)
Leasehold inducements		140			—										140
Future income taxes		—			10,729		1,234		(11,963	)		2(b,d)			—
												3
Future site restoration and abandonment costs		146			774		202								1,122
		33,719			29,352		6,160		7,809						77,040
Shareholders’ equity
Share capital		58,323			24,901		2,560		(24,901	)		2	(b)		121,227
									(2,560	)		2	(d)
									42,452			2	(c)
									14,514			2	(g)
									5,938			2	(d)
Retained earnings (deficit)		(10,361	)		8,043		2,476		(8,043	)		2	(b)		(10,361	)
									(2,476	)		2	(d)
		47,962			32,944		5,036		24,924						110,866
		81,681			62,296		11,196		32,733						187,906

See accompanying notes to unaudited pro forma consolidated financial statements

F-4

Hawker Resources Inc.

PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
For the nine months ended September 30, 2003
(Unaudited)

		Hawker						Pointwest			ZORIN
		Resources			W4M			Energy			Exploration			Pro forma						Pro
[thousands of Canadian dollars		Inc.			Properties			Inc.			Ltd.			adjustments						forma
except per share amounts]		$			$			$			$			$			Notes			$
Revenue
Oil and natural gas sales			8,786			21,248			40,070			3,216									73,320
Royalties, net			(2,389	)		(5,757	)		(9,708	)		(444	)								(18,298	)
Interest income			68			—			—			—									68
Other			382			—			—			417									799
			6,847			15,491			30,362			3,189									55,889
Expenses
Production			838			1,795			4,092			985									7,710
General and administrative			2,329			—			770			379									3,478
Interest			267			—			213			112			1,325			2(a,c,e,g	)		1,917
Depletion and depreciation			4,196			—			11,475			722			10,445			2(f	)		26,838
Site restoration			146			—			404			26									576
			7,776			1,795			16,954			2,224			11,770						40,519
Earnings (loss) before the following:			(929	)		13,696			13,408			965			(11,770	)					15,370
	Lease abandonment expense		(322	)		—			—			—									(322	)
	Operating costs and write-downs associated with assets held for sale		(179	)		—			—			—									(179	)
	Alberta Heritage Foundation grant settlement		368			—			—			—									368
Earnings (loss) before income taxes			(1,062	)		13,696			13,408			965			(11,770	)					15,237
Income tax expense (recovery)			106			—			5,526			419			(5,812	)		3			239
Net earnings (loss)			(1,168	)		13,696			7,882			546			(5,958	)					14,998
Earnings per share [note 4]																					0.36

See accompanying notes to unaudited pro forma consolidated financial statements

F-5

Hawker Resources Inc.

PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
For the year ended December 31, 2002
(Unaudited)

		Hawker						Pointwest			ZORIN
		Resources			W4M			Energy			Exploration			Pro forma						Pro
[thousands of Canadian dollars		Inc.			Properties			Inc.			Ltd			adjustments						forma
except per share amounts]		$			$			$			$			$			Notes			$
Revenue
Oil and natural gas sales			—			24,395			20,249			3,755									48,399
Royalties, net			—			(6,088	)		(4,701	)		(573	)								(11,362	)
Interest income			32			—			27			—									59
Other			107			—			—			523									630
			139			18,307			15,575			3,705									37,726
Expenses
Production			—			3,708			3,435			1,117									8,260
General and administrative			1,596			—			1,193			370									3,159
Interest			71			—			137			165			2,555			2(a,c,e,g	)		2,928
Maintenance of patents			243			—			—			—									243
Depletion, depreciation and asset write-downs			7,216			—			6,916			1,336			15,785			2(f	)		31,253
Site restoration			—			—			249			57									306
			9,126			3,708			11,930			3,045			18,340						46,149
Earnings (loss) before the following:			(8,987	)		14,599			3,645			660			(18,340	)					(8,423	)
	Gain on sale and distribution of Oncolytics shares		13,224			—			—			—									13,224
	Share of loss from equity investment in Oncolytics		(471	)		—			—			—									(471	)
Earnings (loss) before income taxes			3,766			14,599			3,645			660			(18,340	)					4,330
Income tax expense (recovery)			—			—			1,822			308			(1,818	)		3			312
Net earnings (loss)			3,766			14,599			1,823			352			(16,522	)					4,018
Earnings per share [note 4]																					0.10

See accompanying notes to unaudited pro forma consolidated financial statements

F-6

Hawker Resources Inc.

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
As at September 30, 2003 and for the Nine Months ended September 30, 2003 and Year Ended
December 31, 2002
(Unaudited)
(thousands of Cdn. Dollars, except share and per share amounts)

1. BASIS OF PRESENTATION

These unaudited pro forma consolidated financial statements have been prepared by Hawker management in accordance with Canadian generally accepted accounting principles for inclusion in the Offer to Purchase (“Offer”) all of the outstanding shares of ZORIN Exploration Ltd. (“ZORIN”) by Hawker Resources Inc. (“Hawker”) and Circular dated February 10, 2004 and in the opinion of management contain all adjustments necessary for fair presentation. These unaudited pro forma consolidated financial statements are based on the historical financial statements of Hawker, ZORIN and Pointwest Energy Inc. (“Pointwest”) and historical statements of revenues and operating expenses of the W4M Properties acquired from Southward Energy Ltd. (“Southward”), together with other information available to Hawker management.

The unaudited pro forma financial statements have been prepared to give effect to the following transactions:

(a)	the operating revenues and expenses for the period January 1, 2003 to June 30, 2003 and for the year ended December 31, 2002 of the 50% interest in certain oil and gas properties west of the fourth meridian (“W4M Properties”) acquired by Hawker on June 30, 2003 from Southward;
(b)	the acquisition of Pointwest on December 30, 2003 accounted for under the purchase method of accounting for cash consideration of $74,473, and the concurrent financing of such acquisition through: (i) the sale and issue of 11,200,000 common shares of Hawker for net proceeds of $42,452; and (ii) borrowings of $31,801 under bank loans;
(c)	the proposed acquisition of ZORIN accounted for under the purchase method of accounting for consideration of $8,423 consisting of cash and common shares of Hawker; and
(d)	the sale and issue of flow-through common shares by Hawker on December 5, 2003.

These unaudited pro forma consolidated financial statements are not necessarily indicative of the results that actually would have occurred if the transactions reflected herein had been in effect on the dates indicated or of the results which may be obtained in the future.

The unaudited pro forma consolidated financial statements should be read in conjunction with:

(a)	the December 31, 2002 audited financial statements of Hawker;
(b)	the December 31, 2002 audited consolidated financial statements of Pointwest;
(c)	the December 31, 2002 audited consolidated financial statements of ZORIN;
(d)	the unaudited consolidated financial statements of Hawker as at and for the nine months ended September 30, 2003;
(e)	the unaudited consolidated financial statements of Pointwest as at and for the nine months ended September 30, 2003;
(f)	the unaudited consolidated financial statements of ZORIN as at and for the nine months ended September 30, 2003;
(g)	the audited statement of revenues and operating expenses of the W4M Properties acquired from Southward for the year ended December 31, 2002; and

F-7

Hawker Resources Inc.

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
As at September 30, 2003 and for the Nine Months ended September 30, 2003 and Year Ended
December 31, 2002
(Unaudited)
(thousands of Cdn. Dollars, except share and per share amounts)

(h) the unaudited statement of revenues and operating expenses of the W4M Properties acquired from Southward for the six month period ended June 30, 2003.

2.     PRO FORMA ADJUSTMENTS AND ASSUMPTIONS

The pro forma consolidated balance sheet gives effect to the transactions as if they occurred on September 30, 2003 and the pro forma statements of earnings give effect to the transactions as if they occurred on January 1, 2002. The revenues and operating expenses of the W4M Properties for the period from the date of acquisition on June 30, 2003 to September 30, 2003 are included in the unaudited interim consolidated statement of earnings (loss) and deficit of Hawker for the nine months ended September 30, 2003. Accordingly, the pro forma adjustments with respect to the W4M Properties in the nine month pro forma consolidated statement of earnings are only for the six month period from January 1, 2003 to June 30, 2003.

The accounting policies used in the preparation of the pro forma consolidated financial statements are in accordance with those disclosed in Hawker’s audited financial statements for the year ended December 31, 2002 and unaudited financial statements for the nine months ended September 30, 2003.

These pro forma consolidated financial statements give effect to the following transactions, assumptions and adjustments:

Acquisition of 50% interest in W4M Properties

(a) interest at 5.25% on $26,085 in bank loans obtained to finance the acquisition of the W4M Properties amounting to $417 for the six months ended June 30, 2003 and $1,294 for the year ended December 31, 2002;

Acquisition of Pointwest

(b) the acquisition of Pointwest on December 30, 2003 using the purchase method of accounting and a preliminary allocation (which may be subject to additional adjustments) of the purchase price to the fair value of the assets and liabilities acquired for purposes of preparing these unaudited pro forma consolidated financial statements as follows:

	$
Cash		220
Accounts receivable		5,267
Prepaids		317
Oil and gas properties		87,292
Total assets		93,096
Accounts payable and accrued liabilities		(12,599	)
Bank loan		(5,250	)
Future site restoration and abandonment		(774	)
Net cash cost		74,473

F-8

Hawker Resources Inc.

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
As at September 30, 2003 and for the Nine Months ended September 30, 2003 and Year Ended
December 31, 2002
(Unaudited)
(thousands of Cdn. Dollars, except share and per share amounts)

The adjustments to the Pointwest consolidated financial statements to reflect the above purchase allocation are as follows:

	$
Capital assets		30,800
Elimination of share capital		24,901
Elimination of retained earnings		8,043
Future income taxes		10,729
Net cash cost		74,473

(c) the net cash cost of the Pointwest acquisition was financed with: (i) the net proceeds of $42,452 from the sale and issue of 11,200,000 common shares of Hawker on December 30, 2003; (ii) the proceeds of a bank loan for $21,801 with interest at 5.25% amounting to $856 for the nine month period ending September 30, 2003 and $1,193 for the year ended December 31, 2002; (iii) the proceeds of a bridge bank loan facility for $10,000 with interest at 7.00% amounting to $524 for the nine month period ending September 30, 2003 and $700 for the year ended December 31, 2002, and (iv) $220 in cash acquired.

Acquisition of ZORIN

(d) the proposed acquisition of ZORIN using the purchase method of accounting and a preliminary allocation (which may be subject to additional adjustments) of the purchase price to the fair value of the assets and liabilities acquired for purposes of preparing these unaudited pro forma consolidated financial statements as follows:

	$
Accounts receivable		597
Prepaids		124
Oil and gas properties		12,628
Total assets		13,349
Accounts payable and accrued liabilities		(1,476	)
Income tax payable		(339	)
Bank loan		(2,909	)
Future site restoration and abandonment		(202	)
Net cost		8,423

The aggregate consideration on the proposed purchase of 100% of the ZORIN shares is to a maximum of 20% in cash and 80% in Hawker common shares, at an ascribed purchase price of $0.40 per ZORIN share which, based on a total of 18,558,000 ZORIN shares outstanding, results in a total purchase price of $7,423 for the ZORIN shares. The actual number of Hawker common shares to be issued will be based on an exchange ratio determined at the time of closing using an average price of a Hawker common share at that time. For purposes of these pro forma statements, the average price of a Hawker common share is assumed to be $4.75, which is the minimum price under the Offer that would allow Hawker to withdraw its bid for the ZORIN shares.

Accordingly, the share consideration is assumed to be 80% of the ascribed purchase price of $7,423, or $5,938, resulting in the issue of 1,250,223 Hawker shares based on a $4.75 average price per Hawker common share. The remaining 20% of the ascribed purchase price of $1,485 would be in cash as a draw down on the Company’s credit facilities. Costs to be incurred by Hawker and ZORIN are estimated to be $1,000 and are assumed to be paid as a draw down on the credit facility.

F-9

Hawker Resources Inc.

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
As at September 30, 2003 and for the Nine Months ended September 30, 2003 and Year Ended
December 31, 2002
(Unaudited)
(thousands of Cdn. Dollars, except share and per share amounts)

A summary of the consideration assumed to be paid on the proposed acquisition of ZORIN is as follows:

	$
Hawker common shares (1,250,223 shares at $4.75 per share)		5,938
Cash consideration		1,485
		7,423
Acquisition costs		1,000
Net cost		8,423

The adjustments to the ZORIN financial statements to reflect the purchase allocation are as follows:

	$
Capital assets		2,153
Elimination of share capital		2,560
Elimination of retained earnings		2,476
Future income taxes		1,234
Net cash cost		8,423

(e) the cash component of the ZORIN purchase to be drawn on the bank loan for $2,485 with interest at 5.25% amounting to $98 for the nine month period ending September 30, 2003 and $130 for the year ended December 31, 2002;

Depletion and depreciation

(f) the provision of depletion and depreciation resulting from the oil and gas properties acquired in 2(a), 2(b) and 2(d) in the amount of $10,445 for the nine month period ending September 30, 2003 and $15,785 for the year ended December 31, 2002; and

Sale and issue of flow-through common shares

(g) the net proceeds of the December 5, 2003 private placement of 2,900,000 common shares on a flow-through basis of $14,514 reflected as a repayment on bank loans and the related interest expense reduction of $570 for the nine month period ending September 30, 2003 and $762 for the year ended December 31, 2002.

3.     INCOME TAXES

At September 30, 2003, Hawker had large non-capital losses and unclaimed expenditures for income tax purposes, the benefit of which has not been recorded in the financial statements. These unrecorded future income tax assets exceeded the total future tax liabilities arising from pro forma adjustments, including differences between the financial reporting and tax bases of assets recorded in the Pointwest and ZORIN acquisitions. Accordingly, it has been assumed that the benefit of these future tax assets would be recorded to offset any future income tax liabilities. The income tax expense recorded in the pro forma consolidated statements of earnings reflects the large corporations tax that would be incurred based on the unaudited pro forma consolidated financial statements.

4.     EARNINGS PER SHARE

The pro forma earnings per share is based on the number of Hawker common shares outstanding at September 30, 2003 (21,897,200 common shares and 3,874,437 class A shares) adjusted to account for the issue of 1,250,223 common shares on the proposed ZORIN acquisition, the issue of 11,200,000 common shares on December 30, 2003 and the issue of 2,900,000 flow-through common shares on December 5, 2003, as if all these shares had been issued January 1, 2002.

F-10

Office of the Depositary,
COMPUTERSHARE TRUST COMPANY OF CANADA

By Mail:

P.O. Box 7021
31 Adelaide Street E.
Toronto, Ontario
M5C 3H2
Attention: Corporate Actions

By Hand, by Courier or by Registered Mail:

Toronto	Calgary
100 University Avenue 9th Floor Toronto, Ontario M5J 2Y1 Attention: Corporate Actions	Watermark Tower Suite 600, 530-8th Avenue S.W. Calgary, Alberta T2P 3S8 Attention: Corporate Actions

Toll Free
(Canada and United States)
1-800-564-6253

E-mail:
caregistryinfo@computershare.com

Office of the Soliciting Dealer

3900 Bankers Hall West
888 Third Street S.W.
Calgary, Alberta
T2P 5C5

Tel: (403) 261-4850
Fax: (403) 261-7570

Any questions and requests for assistance may be directed by Shareholders to the Soliciting Dealer
or the Depositary at the telephone numbers and locations set out above.

The instructions accompanying this Letter of Acceptance and Transmittal should be read carefully before completing this Letter of Acceptance and Transmittal. The Depositary or the Soliciting Dealer (see the back page of this document for addresses and telephone numbers) or your broker or other financial advisor can assist you in completing this Letter of Acceptance and Transmittal.

LETTER OF ACCEPTANCE AND TRANSMITTAL
To accompany certificates for
Common Shares

of

EXPLORATION LTD.

To be deposited pursuant to the Offer dated February 10, 2004

of

RESOURCES INC.

THE OFFER WILL BE OPEN FOR ACCEPTANCE UNTIL 4:00 P.M. (CALGARY TIME)
ON MARCH 17, 2004 UNLESS THE OFFER IS WITHDRAWN OR EXTENDED.

     This Letter of Acceptance and Transmittal, properly completed and signed in accordance with the instructions and rules set out below, together with all other required documents, must accompany certificates for common shares (“ZORIN Shares”) of ZORIN Exploration Ltd. (“ZORIN”) deposited pursuant to the offer (the “Offer”) dated February 10, 2004 made by Hawker Resources Inc. (“Hawker”) to holders of ZORIN Shares. Shareholders whose certificates are not immediately available or who cannot deliver their certificates and all other required documents to the Depositary prior to the Expiry Time may deposit such ZORIN Shares according to the Procedure for Guaranteed Delivery set forth in Section 3 of the Offer, “Manner of Acceptance”.

     The terms and conditions of the Offer are incorporated by reference into this Letter of Acceptance and Transmittal. Capitalized terms used herein but not defined in this Letter of Acceptance and Transmittal have the meanings ascribed to them in the Offer and Circular dated February 10, 2004 accompanying this Letter of Acceptance and Transmittal.

TO:	HAWKER RESOURCES INC
AND TO:	COMPUTERSHARE TRUST COMPANY OF CANADA, AS DEPOSITARY

The undersigned delivers to you the enclosed certificate(s) for ZORIN Shares and, subject only to the provisions of the Offer regarding withdrawal, irrevocably accepts the Offer for such ZORIN Shares upon the terms and conditions contained in the Offer. The following are the details of the enclosed certificate(s):

1

DESCRIPTION OF ZORIN SHARES DEPOSITED

(if insufficient space, attach a list in the same form)

Name of Shareholder (please print) Certificate No. Number of ZORIN Shares*

* Unless otherwise indicated, the total number of ZORIN Shares evidenced by any certificate(s) delivered will be deemed to have been deposited pursuant to the Offer. See Instruction 6, “Partial Tenders”.

The undersigned Shareholder hereby:

1.	acknowledges receipt of the Offer and Circular dated February 10, 2004;
2.	delivers to you the enclosed certificate(s) representing ZORIN Shares and, subject only to the rights of withdrawal set out in the Offer, irrevocably accepts the Offer for and in respect of the ZORIN Shares represented by such certificate(s) that are deposited under the Offer (the “Purchased Securities”) and, on and subject to the terms and conditions of the Offer, deposits and sells, assigns and transfers to Hawker all right, title and interest in and to the Purchased Securities and in and to any and all dividends, distributions, payments, securities, rights, assets or other interests declared, paid, issued, distributed, made or transferred on or in respect of the Purchased Securities on and after January 18, 2004 (collectively, the “Other Securities”), effective on and after the date that Hawker takes up and pays for the Purchased Securities (the “Effective Date”);
3.	represents and warrants that:

(a)	the undersigned has full power and authority to deposit, sell, assign and transfer the Purchased Securities being deposited (and the Other Securities) and has not sold, assigned or transferred or agreed to sell, assign or transfer any of such Purchased Securities (or such Other Securities) to any other person;
(b)	the undersigned owns the Purchased Securities being deposited (and the Other Securities) within the meaning of applicable securities laws;
(c)	the deposit of such Purchased Securities (and such Other Securities) complies with applicable laws:
	and
(d)	when such Purchased Securities (and such Other Securities) are taken up and paid for by Hawker, Hawker will acquire good title thereto free and clear of all liens, restrictions, charges, encumbrances, claims and equities whatsoever;

4. in the case of Shareholders who are residents of Canada or residents of any country other than Canada in which ZORIN Shares may be lawfully delivered, directs Hawker and the Depositary, upon Hawker taking up the Purchased Securities:

(a)	to issue or cause to be issued certificate(s) for Hawker Shares and cheque(s), if any, to which the undersigned is entitled for the Purchased Securities under the Offer in the name indicated below and to send such certificate(s) and cheque(s), if any, by first class insured mail, postage prepaid, to the address, or to hold the same for pick-up, as indicated below; and
(b)	to return any certificates for ZORIN Shares not purchased to the address indicated below

2

and, in the case of both (a) and (b) above, if no name, address or delivery instructions are indicated, to the undersigned at the address of the undersigned as shown on the registers maintained by ZORIN;

5.

waives any right to receive notice of purchase of the Purchased Securities;

6.

irrevocably constitutes and appoints the Offeror and any officer of Hawker, and each of them, and any other person designated by Hawker in writing, as the true and lawful agent, attorney and attorney-in-fact and proxy of the undersigned with respect to the Purchased Securities deposited herewith which are taken up and paid for under the Offer and with respect to any and all Other Securities, effective on and after the Effective Date, with full power of substitution, in the name of and on behalf of the undersigned (such power of attorney being deemed to be an irrevocable power coupled with an interest):

(a)

to register or record, transfer and enter the transfer of Purchased Securities and/or Other Securities on the appropriate register of holders maintained by ZORIN; and

(b)

to exercise any and all of the rights of the holder of the Purchased Securities and/or Other Securities including, without limitation, to vote, execute and deliver any and all instruments of proxy, authorizations or consents in respect of all or any of the Purchased Securities and/or Other Securities, to revoke any such instrument, authorization or consent given prior to, on or after the Effective Date, to designate in any such instruments of proxy any person or persons as the proxy or the proxy nominee or nominees of the undersigned in respect of such Purchased Securities and/or Other Securities for all purposes including, without limitation, in connection with any meeting (whether annual, special or otherwise and any adjournments thereof) of holders of securities of ZORIN, and to execute, endorse and negotiate, for and in the name of and on behalf of the registered holder of Purchased Securities and/or Other Securities, any and all cheques or other instruments respecting any distribution payable to or to the order of such holder in respect of such Purchased Securities and/or Other Securities;

7.	agrees, effective on and after the Effective Date, not to vote any of the Purchased Securities and/or Other Securities at any meeting (whether annual, special or otherwise or any adjournment thereof) of holders of securities of ZORIN and not to exercise any or all of the other rights or privileges attached to the Purchased Securities, and agrees to execute and deliver to Hawker any and all instruments of proxy, authorizations or consents in respect of the Purchased Securities and to designate in any such instruments of proxy the person or persons specified by Hawker as the proxy or proxy nominee or nominees of the holder of the Purchased Securities in respect of the Purchased Securities and acknowledges that upon such appointment, all prior proxies given by the holder of such Purchased Securities and/or Other Securities with respect thereto shall be revoked and no subsequent proxies may be given by such person with respect thereto;
8.	agrees that if ZORIN should declare or pay any cash dividend, stock dividend or make any other distribution on or issue any rights with respect to any of the Purchased Securities which is or are payable or distributable to the Shareholders of record on a record date which is prior to the date of transfer into the name of Hawker or its nominees or transferees on the registers maintained by ZORIN of such Purchased Securities following acceptance thereof for purchase pursuant to the Offer, then the whole of such dividend, distribution or right will be received and held by the depositing Shareholder for the account of Hawker and shall be promptly remitted and transferred by the undersigned to the Depositary for the account of Hawker, accompanied by appropriate documentation of transfer. Pending such remittance, Hawker will be entitled to all rights and privileges as the owner of any such dividend, distribution or right, and may withhold the entire consideration payable by Hawker pursuant to the Offer or deduct from the consideration payable by Hawker pursuant to the Offer the amount or value thereof, as determined by Hawker in its sole discretion;
9.	covenants to execute, upon request, any additional documents, transfers and other assurances as may be necessary or desirable to complete the sale, assignment and transfer of the Purchased Securities and/or Other Securities to Hawker;
10.	acknowledges that all authority conferred or agreed to be conferred by the undersigned herein may be exercised during any subsequent legal incapacity of the undersigned and shall survive the death or

3

	incapacity, bankruptcy or insolvency of the undersigned and all obligations of the undersigned herein shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned;
11.	by virtue of the execution of this Letter of Acceptance and Transmittal, shall be deemed to have agreed that all questions as to validity, form, eligibility (including timely receipt) and acceptance of any ZORIN Shares deposited pursuant to the Offer will be determined by Hawker in its sole discretion and that such determination shall be final and binding and acknowledges that:

(a)	Hawker reserves the absolute right to reject any and all deposits that it determines not to be in a proper form or which, in the opinion of its counsel, may be unlawful to accept under the laws of any applicable jurisdiction;
(b)	Hawker reserves the absolute right to waive any defect or irregularity in the deposit of any ZORIN Shares; and
(c)	there shall be no duty or obligation on Hawker, the Soliciting Dealer, the Depositary, or any other person to give notice of any defect or irregularity in any deposit and no liability shall be incurred by any of them for failure to give such notice;

12.

by virtue of the execution of this Letter of Acceptance and Transmittal, shall be deemed to have agreed with Hawker and the Depositary that any contract contemplated by the Offer and this Letter of Acceptance and Transmittal as well as all documents relating thereto including, without limitation, the Notice of Guaranteed Delivery, be drawn up exclusively in the English language. En signant la présente lettre de transmission, convient avec Hawker et le dépositaire que tous les contrats découlant de l’offre et de Ia présente lettre de transmission et tous les documents y afférents incluant, sans limiter la généralité de ce qui précède, l’avis de livraison garantie soient rédigés exclusivement en anglais; and

13.

declares that the undersigned:

(a)	is not acting for the account or benefit of a person from any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction; and
(b)	is not in, or delivering this Letter of Acceptance and Transmittal from, any such jurisdiction.

Signature guaranteed by
(if required under Instruction 4): Dated:                , 2004.

Authorized Signature	Signature of Shareholder or Authorized
	Representative (See Instruction 3)
	[U.S. Shareholders – Please complete Substitute Form W-9]
Name of Guarantor (please print or type)	Name of Shareholder (please print or type)
Address (please print or type)	Name of Authorized Representative, if applicable (please print or type)

4

SHAREHOLDER ELECTION

     Under the Offer, the undersigned hereby elects to receive for each ZORIN Share deposited (please check one):

                CASH ALTERNATIVE: $0.40 cash, subject to the Maximum Cash Consideration and to proration in accordance with the provisions set forth in Section 1 of the Offer, “The Offer”.

OR

          SHARE ALTERNATIVE: that fraction of one Hawker Share for each ZORIN Share as is equal to the Exchange Ratio, subject to the Maximum Share Consideration and to proration in accordance with the provisions set forth in Section 1 of the Offer, “The Offer”.

     A Shareholder who does not properly indicate an election for the Cash Alternative or the Share Alternative will be deemed to have elected the Share Alternative in respect of 80% of the ZORIN Shares deposited under the Offer by such Shareholder and the Cash Alternative in respect of the remaining 20% of the ZORIN Shares deposited under the Offer by such Shareholder, subject to proration in accordance with the Offer.

     Where, under the terms of the Offer, the consideration payable to any particular Shareholder in exchange for ZORIN Shares is a combination of cash and Hawker Shares, a fraction of each ZORIN Share held by that Shareholder will be exchanged exclusively for cash and the remainder of each such ZORIN Share will be exchanged exclusively for a fraction of a Hawker Share. In that circumstance, the fraction of each ZORIN Share disposed of exclusively for a fraction of a Hawker Share will be equal to the fraction obtained by dividing the total fair market value of all of the Hawker Shares received by the Shareholder by the sum of the fair market value of such Hawker Shares and the total of the amount of cash received by the Shareholder. The balance of each such ZORIN Share will be disposed of for cash. See “Certain Canadian Federal Income Tax Considerations” in the Circular dated February 10, 2004 accompanying this Letter of Acceptance and Transmittal.

BOX A

ISSUE CHEQUE AND/OR CERTIFICATE(S) FOR HAWKER SHARES IN THE
NAME OF THE REGISTERED OWNER OF THE PURCHASED SECURITIES OR:

      as follows (please print or type):

(Name)

(Street Address and Number)

(City and Province or State)

(Country and Postal (Zip) Code)

(Telephone — Business Hours)

(Canadian Social Insurance Number or
U.S. Resident Taxpayer Identification Number)

BOX B

SEND CHEQUE AND/OR CERTIFICATE(S) FOR HAWKER SHARES TO THE
SAME ADDRESS IN BOX A OR:

      as follows (please print or type):

(Name)

(Street Address and Number)

(City and Province or State)

(Country and Postal (Zip) Code)

OR

      HOLD CHEQUE AN/OR CERTIFICATE FOR HAWKER SHARES FOR
PICK-UP AGAINST COUNTER RECEIPT

5

BOX C

CHECK HERE IF ZORIN SHARES ARE BEING DEPOSITED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE TORONTO OFFICE OF THE DEPOSITARY AND COMPLETE THE FOLLOWING (please print or type):

Name of Registered Holder:

Date of Execution of Notice of Guaranteed Delivery:

Name of Institution which Guaranteed Delivery:

BOX D

INVESTMENT DEALER OR BROKER SOLICITING ACCEPTANCE OF THE OFFER
(please print or type)

(Firm)	(Telephone Number)             (Fax Number)
(Registered Representative)	(Address)

      CHECK HERE IF LIST OF BENEFICIAL HOLDERS IS ATTACHED

BOX E

SUBSTITUTE FORM W-9

To be completed by U.S. Shareholders only (see Instruction 8)

Under penalties of perjury, I certify that:

1.	The social security or other taxpayer identification number stated below is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and
2.	1 am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the United States Internal Revenue Service (the “IRS”) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.

Certification Instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because of under reporting interest or dividends on your tax return.

(Signature of Shareholder)	(Date)
(Social Security Number or Taxpayer Identification Number)

NOTE: FAILURE TO COMPLETE THIS BOX E OR TO PROVIDE HAWKER WITH A SOCIAL SECURITY OR OTHER TAXPAYER IDENTIFICATION NUMBER MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENT TO YOU PURSUANT TO THE OFFER.

6

YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE “APPLIED FOR”
IN THE SPACE FOR THE “TAXPAYER IDENTIFICATION NUMBER” ON SUBSTITUTE FORM W-9

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a taxpayer identification number has not been issued to me and either: (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office; or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within 60 days, 31% of all reportable payments made to me thereafter will be withheld until I provide a number.

(Signature of Shareholder) (Date)

7

INSTRUCTIONS

1. Use of Letter of Acceptance and Transmittal

(a)

This Letter of Acceptance and Transmittal, or a manually signed facsimile copy hereof, properly completed and duly executed as required by the instructions set forth below together with accompanying certificates representing the ZORIN Shares, must be received by the Depositary at any of the offices specified on the back page of this Letter of Acceptance and Transmittal before the Expiry Time, unless the Offer is extended or unless the Procedure for Guaranteed Delivery set out in Instruction 2 below is employed.

(b)

The method of delivery of this Letter of Acceptance and Transmittal, certificates representing ZORIN Shares and all other required documents is at the option and risk of the person depositing the same, and delivery will be deemed effective only when such documents are actually received. Hawker recommends that such documents be delivered by hand to the Depositary and a receipt obtained. However, if such documents are mailed, Hawker recommends that registered mail be used and that proper insurance be obtained. Shareholders whose ZORIN Shares are registered in the name of a nominee should contact their stockbroker, investment dealer, bank, trust company or other nominee for assistance in depositing their ZORIN Shares.

2. Procedure for Guaranteed Delivery

     If a Shareholder wishes to deposit ZORIN Shares pursuant to the Offer and: (i) certificate(s) representing such ZORIN Shares are not immediately available; or (ii) such Shareholder cannot deliver the certificate(s) representing such ZORIN Shares and all other required documents to the Depositary prior to the Expiry Time, such ZORIN Shares may nevertheless be deposited pursuant to the Offer provided that all of the following conditions are met:

(a)	such deposit is made by or through an Eligible Institution;
(b)	a properly completed and duly executed Notice of Guaranteed Delivery in the form accompanying this Letter of Acceptance and Transmittal, or a manually signed facsimile thereof, is received by the Depositary at its office in Toronto listed below, prior to the Expiry Time; and
(c)	the certificate(s) representing the deposited ZORIN Shares, in proper form for transfer, together with a properly completed and duly executed copy of this Letter of Acceptance and Transmittal, or a manually signed facsimile hereof, covering such ZORIN Shares and all other documents required by this Letter of Acceptance and Transmittal, are received by the Depositary at its office in Toronto listed below on or before 4:30 p.m. (Toronto time) on the third trading day on the TSX Venture Exchange after the Expiry Date.

     The Notice of Guaranteed Delivery may be delivered by hand or courier, transmitted by facsimile transmission or delivered by mail to the Depositary so as to be received by the Depositary at its office in Toronto as set forth in the Notice of Guaranteed Delivery not later than the Expiry Time and must include a guarantee by an Eligible Institution, in the form set forth in the Notice of Guaranteed Delivery.

     An “Eligible Institution” means a Canadian schedule 1 chartered bank, a major trust company in Canada, a member of the Securities Transfer Agent Medallion Program (STAMP), a member of the Stock Exchanges Medallion Program (SEMP) or a member of the New York Stock Exchange Inc. Medallion Signature Program (MSP). Members of these programs are usually members of a recognized stock exchange in Canada or the United States, members of the Investment Dealers Association of Canada, members of the National Association of Securities Dealers or banks and trust companies in the United States.

8

3. Signatures

(a)	This Letter of Acceptance and Transmittal must be filled in and signed by the holder of ZORIN Shares accepting the Offer described above or by such holder’s duly authorized representative (in accordance with Instruction 5).
(b)	If this Letter of Acceptance and Transmittal is signed by the registered owner(s) of the accompanying certificate(s), such signature(s) on this Letter of Acceptance and Transmittal must correspond with the name(s) as registered or as written on the face of such certificate(s) without any change whatsoever, and the certificate(s) need not be endorsed. If such transmitted certificate(s) is held of record by two or more joint owners, all such owners must sign this Letter of Acceptance and Transmittal.
(c)	If this Letter of Acceptance and Transmittal is executed by a person other than the registered owner(s) of the ZORIN Shares or if certificate(s) representing Hawker Shares and a cheque are to be issued to a person other than the registered holder(s):

(i)	such deposited certificate(s) must be endorsed, or be accompanied by an appropriate share transfer power of attorney duly and properly completed by the registered owner(s); and
(ii)	the signature(s) on such endorsement or power of attorney must correspond exactly to the name(s) of the registered owner(s) as registered or as appearing on the certificate(s) and must be guaranteed as noted in Instruction 4 below.

4. Guarantee of Signatures

     If this Letter of Acceptance and Transmittal is executed by a person other than the registered owner(s) of the ZORIN Shares, if certificate(s) representing Hawker Shares and a cheque are to be issued to a person other than such registered owner(s) (see Box A) or sent to an address other than the address of the registered owner(s) (see Box B) as shown on the register of Shareholders maintained by ZORIN, such signature must be guaranteed by an Eligible Institution, or in some other manner satisfactory to the Depositary. No guarantee is required if the signature is that of an Eligible Institution.

5. Fiduciaries, Representatives and Authorizations

     Where this Letter of Acceptance and Transmittal or any certificate or share transfer or power of attorney is executed by a person on behalf of an executor, administrator, trustee, guardian, attorney-in-fact, agent, corporation, partnership or association, or is executed by any other person acting in a fiduciary or representative capacity, such person should so indicate when signing and this Letter of Acceptance and Transmittal must be accompanied by satisfactory evidence of the authority to act. Either of Hawker or the Depositary, at their discretion, may require additional evidence of authority or additional documentation.

6. Partial Tenders

     If less than the total number of ZORIN Shares evidenced by any certificate submitted is to be deposited under the Offer, fill in the number of ZORIN Shares to be deposited in the appropriate space on this Letter of Acceptance and Transmittal. In such case, new certificate(s) for the number of ZORIN Shares not deposited will be sent to the registered owner as soon as practicable following the Expiry Time, unless otherwise provided in the appropriate box on this Letter of Acceptance and Transmittal. The total number of ZORIN Shares evidenced by all certificates delivered will be deemed to have been deposited unless otherwise indicated.

7. Solicitation

     Identify the investment dealer or broker, if any, who solicited acceptance of the Offer by completing the appropriate box on this Letter of Acceptance and Transmittal and present a list of beneficial holders if applicable.

9

8. Substitute Form W-9

     Each U.S. Shareholder is required to provide the Depositary with a correct Taxpayer Identification Number (“TIN”) on the Substitute Form W-9 which is provided in Box E, and to certify whether such holder is subject to backup withholding of federal income tax. If a U.S. Shareholder has been notified by the Internal Revenue Service that such holder is subject to backup withholding, such holder must cross out item 2 of the Substitute Form W-9, unless such holder has since been notified by the Internal Revenue Service that such holder is no longer subject to backup withholding. Failure to provide the information in the Substitute Form W-9 may subject a U.S. Shareholder to 31% federal income tax withholding on any payment to such holder made in connection with the purchase of such holder’s ZORIN Shares. If a U.S. Shareholder has not been issued a TIN and has applied for one or intends to apply for one in the near future, such holder should write “Applied For” in the space provided for the TIN in the Substitute Form W-9, and sign and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer Identification Number. If “Applied For” is written in the Substitute Form W-9 and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% on all payments to such holder made in connection with the purchase of such holder’s ZORIN Shares until a TIN is provided to the Depositary.

9. Miscellaneous

(a)	If the space on this Letter of Acceptance and Transmittal is insufficient to list all certificates for ZORIN Shares, additional certificate numbers and number of ZORIN Shares may be included on a separate signed list affixed to this Letter of Acceptance and Transmittal.
(b)	If ZORIN Shares are registered in different forms (e.g. “John Doe” and “J. Doe”), a separate Letter of Acceptance and Transmittal should be signed for each different registration.
(c)	No alternative, conditional or contingent deposits will be accepted. All depositing Shareholders by execution of this Letter of Acceptance and Transmittal (or a facsimile thereof) waive any right to receive any notice of the acceptance of ZORIN Shares for payment.
(d)	The Offer and any agreement resulting from the acceptance of the Offer will be construed in accordance with and governed by the laws of the Province of Alberta and the laws of Canada applicable therein.
(e)	Additional copies of the Offer and Circular (including documents incorporated therein by reference), the Letter of Acceptance and Transmittal and the Notice of Guaranteed Delivery may be obtained from the Depositary or from the Soliciting Dealer at any of the addresses listed below.
(f)	The Offer is not being made to, nor will deposits of ZORIN Shares be accepted from or on behalf of, Shareholders resident in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction. Hawker may, in its sole discretion, take such action as it may deem necessary to make the Offer in any jurisdiction and extend the Offer to holders of ZORIN Shares in such jurisdiction.

10. Commissions

     No brokerage fees or commissions will be payable if the Offer is accepted by depositing ZORIN Shares directly with the Depositary or if the services of the Soliciting Dealer or a member of the Soliciting Dealer Group are used to accept the Offer.

11. Lost Certificates

     If a share certificate has been lost or destroyed, this Letter of Acceptance and Transmittal should be completed as fully as possible and forwarded, together with a letter describing the loss, to the Depositary at its office in Calgary listed on the back page of this Letter of Acceptance and Transmittal. The Depositary will provide replacement instructions which must be completed and submitted in good order to the Depositary prior to the Expiry Time. If a share certificate has been lost or destroyed, please ensure that you provide your telephone number to the Depositary so that the Depositary may contact you.

10

Office of the Depositary,
COMPUTERSHARE TRUST COMPANY OF CANADA

By Mail:

P.O. Box 7021
31 Adelaide Street E.
Toronto, Ontario
M5C 3H2
Attention: Corporate Actions

By Hand, by Courier or by Registered Mail:

Toronto	Calgary
100 University Avenue 9th Floor Toronto, Ontario M5J 2Y1 Attention: Corporate Actions	Watermark Tower Suite 600, 530-8th Avenue S.W. Calgary, Alberta T2P 3S8 Attention: Corporate Actions

Toll Free
(Canada and United States)
1-800-564-6253

E-mail:
caregistryinfo@computershare.com

Office of the Soliciting Dealer

3900 Bankers Hall West
888 Third Street S.W.
Calgary, Alberta
T2P 5C5

Tel: (403) 261-4850
Fax: (403) 261-7570

The Depositary or the Soliciting Dealer (see the back page of this document for addresses and telephone numbers) or your broker or other financial advisor can assist you in completing this Notice of Guaranteed Delivery.

THIS IS NOT A LETTER OF ACCEPTANCE AND TRANSMITTAL

NOTICE OF GUARANTEED DELIVERY

for Common Shares of

EXPLORATION LTD.

To be deposited pursuant to the Offer dated February 10, 2004

of

RESOURCES INC.

     The terms and conditions of the Offer are incorporated by reference in this Notice of Guaranteed Delivery. Capitalized terms used herein but not defined in this Notice of Guaranteed Delivery have the meanings ascribed to them in the Offer and Circular dated February 10, 2004 that accompanies this Notice of Guaranteed Delivery.

     If a Shareholder wishes to deposit common shares (“ZORIN Shares”) of ZORIN Exploration Ltd. (“ZORIN”) pursuant to the Offer and (i) the certificate(s) representing such ZORIN Shares are not immediately available, or (ii) such Shareholder cannot deliver the certificate(s) representing such ZORIN Shares and all other required documents to the Depositary prior to the Expiry Time (4:00 p.m. (Calgary time) on March 17, 2004 unless the Offer is extended or withdrawn), such ZORIN Shares may nevertheless be deposited under the Offer by utilizing the procedure contemplated by this Notice of Guaranteed Delivery provided that all of the following conditions are met:

(a)	such deposit is made by or through an Eligible Institution;
(b)	a properly completed and duly executed copy of this Notice of Guaranteed Delivery, or a manually signed facsimile hereof, is received by the Depositary at its office in Toronto at the address specified below, prior to the Expiry Time; and
(c)	the certificate(s) representing deposited ZORIN Shares in proper form for transfer, together with a properly completed and duly executed Letter of Acceptance and Transmittal, or a manually signed facsimile thereof, covering such ZORIN Shares, and all other documents required by the Letter of Acceptance and Transmittal, are received by the Depositary at its office in Toronto at the address specified below at or prior to 4:30 p.m. (Toronto time) on the third trading day on the TSX Venture Exchange (“TSXV”) after the Expiry Date.

     This Notice of Guaranteed Delivery may be delivered by hand or courier, transmitted by facsimile transmission or delivered by mail to the Depositary so as to be received by the Depositary at its office in Toronto not later than the Expiry Time and must include a guarantee by an Eligible Institution in the form set forth below.

     The Offer is not being made to, nor will deposits of ZORIN Shares be accepted from or on behalf of, any holders of ZORIN Shares in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction. The undersigned hereby declares that the undersigned is not acting for the account or benefit of a person from any such jurisdiction and is not in, or delivering this Notice of Guaranteed Delivery from, any such jurisdiction.

1

     This form is not to be used to guarantee signatures on the Letter of Acceptance and Transmittal. If a signature on a Letter of Acceptance and Transmittal is required to be guaranteed by an Eligible Institution, such signature guarantee must appear in the applicable space provided in the Letter of Acceptance and Transmittal.

TO:	HAWKER RESOURCES INC. (“HAWKER”)
AND TO:	COMPUTERSHARE TRUST COMPANY OF CANADA, AS DEPOSITARY

	By Hand, by Courier or by Registered Mail:
By Mail:	Toronto
P.O. Box 7021	100 University Avenue
31 Adelaide Street E	9th Floor
Toronto, Ontario	Toronto, Ontario
M5C 3H2	M5J 2Y1
Attention: Corporate Actions	Attention: Corporate Actions

By Facsimile Transmission

(416) 981-9663

     DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA A FACSIMILE NUMBER OTHER THAN TO THE DEPOSITARY AT ITS OFFICE IN TORONTO AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.

     The undersigned Shareholder hereby deposits with Hawker, upon the terms and subject to the conditions set forth in the Offer, the Circular and the related Letter of Acceptance and Transmittal, receipt of which is hereby acknowledged, the ZORIN Shares described below pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer, “Manner of Acceptance” and Instruction 2 of the related Letter of Acceptance and Transmittal.

     (This table is to be completed by holders of ZORIN Shares wishing to tender their ZORIN Shares to the Offer)

DESCRIPTION OF ZORIN SHARES DEPOSITED
(if insufficient space, attach a list in the same form)

Name of Shareholder (please print)	Certificate No. (if available)	Number of ZORIN Shares
	TOTAL ZORIN SHARES

Telephone Number (including area code) during business hours:

(     )

Dated:                                         , 2004.

Signature:

NOTE: DO NOT SEND CERTIFICATES REPRESENTING ZORIN SHARES WITH THIS NOTICE OF GUARANTEED DELIVERY. CERTIFICATES REPRESENTING ZORIN SHARES SHOULD BE SENT WITH YOUR LETTER OF ACCEPTANCE AND TRANSMITTAL.

2

SHAREHOLDER ELECTION

     Under the Offer, the undersigned hereby elects to receive for each ZORIN Share deposited, (please check one):

	CASH ALTERNATIVE: $0.40 cash, subject to the Maximum Cash Consideration and to proration in accordance with the provisions set forth in Section 1 of the Offer, “The Offer”
OR
	SHARE ALTERNATIVE: that fraction of one Hawker Share for each ZORIN Share as is equal to the Exchange Ratio, subject to the Maximum Share Consideration and to proration in accordance with the provisions set forth in Section 1 of the Offer, “The Offer”

     A Shareholder who does not properly indicate an election for the Cash Alternative or the Share Alternative will be deemed to have elected the Share Alternative in respect of 80% of the ZORIN Shares deposited under the Offer by such Shareholder and the Cash Alternative in respect of the remaining 20% of the ZORIN Shares deposited under the Offer by such Shareholder, subject to proration in accordance with the Offer.

     Where, under the terms of the Offer, the consideration payable to any particular Shareholder in exchange for ZORIN Shares is a combination of cash and Hawker Shares, a fraction of each ZORIN Share held by that Shareholder will be exchanged exclusively for cash and the remainder of each such ZORIN Share will be exchanged exclusively for a fraction of a Hawker Share. In that circumstance, the fraction of each ZORIN Share disposed of exclusively for a fraction of a Hawker Share will be equal to the fraction obtained by dividing the total fair market value of all of the Hawker Shares received by the Shareholder by the sum of the fair market value of such Hawker Shares and the total of the amount of cash received by the Shareholder. The balance of each such ZORIN Share will be disposed of for cash. See “Certain Canadian Federal Income Tax Considerations” in the Circular dated February 10, 2004 accompanying this Notice of Guaranteed Delivery.

GUARANTEE

     The undersigned, an Eligible Institution, hereby guarantees delivery to the Depositary (at its office in Toronto listed above) of the certificate(s) representing ZORIN Shares deposited hereby, in proper form for transfer, together with a properly completed and duly executed Letter of Acceptance and Transmittal in the form enclosed herewith or an originally signed facsimile copy thereof, and all other documents required by the Letter of Acceptance and Transmittal, all at or prior to 4:30 p.m. (Toronto time) on the third trading day on the TSXV after the Expiry Time.

Name of Firm:

Address of Firm:	Authorized Signature
	Name:
	Title:
Telephone Number:	Dated:

3

Inquiries

Office of the Depositary,
COMPUTERSHARE TRUST COMPANY OF CANADA

Toll Free
(Canada and United States)
1-800-564-6253

E-mail:
caregistryinfo@computershare.com

Office of the Soliciting Dealer

Calgary, Alberta
T2P 5C5

Tel: (403) 261-4850
Fax: (403) 261-7570

EXHIBIT INDEX

Exhibit No.	Description
Exhibit 1*:	Pre-Acquisition Agreement between the Registrant and Zorin Exploration Ltd. dated January 18, 2004.
Exhibit 2*:	Form of Pre-Tender Agreement between the Registrant and certain selling shareholders.
Exhibit 3:	The annual information form for the Registrant dated May 20, 2003 (the “AIF”).
Exhibit 4:	The comparative financial statements, together with the accompanying report of the auditors, for the Registrant, for the fiscal year ended December 31, 2002, addressed to the shareholders of SYNSORB Biotech, Inc. (now Hawker Resources, Inc.).
Exhibit 5:	Management’s discussion and analysis of financial condition and results of operations for the Registrant for the fiscal year ended December 31, 2002.
Exhibit 6:	The comparative unaudited interim consolidated financial statements for the Registrant for the three and nine month periods ended September 30, 2003.
Exhibit 7:	Management’s discussion and analysis of financial condition and results of operations for the Registrant for the three and nine month periods ended September 30, 2003.
Exhibit 8:	The management proxy circular dated March 7, 2003 for the Registrant, except the sections entitled “Composition of Compensation Committee”, “Report on Executive Compensation”, “Performance Graph” and “Corporate Governance Practices”.
Exhibit 9:	The material change report dated March 17, 2003 for the Registrant relating to the proposed conversion of the Registrant from a pharmaceutical research company into an oil and natural gas enterprise.
Exhibit 10:	The material change report dated April 14, 2003 for the Registrant relating to: the approval by the shareholders of the Registrant of the conversion of the Registrant from a pharmaceutical research company into an oil and natural gas enterprise, a financing in connection with such conversion, the change of the name of the Registrant to Hawker Resources, Inc. and a new board of directors; the acquisition by the Registrant of 1022971 Alberta Ltd. (“1022971”) and an option to acquire certain assets of Southward Energy Ltd. (“Southward”) and the completion of a $3.6 million equity financing.
Exhibit 11:	The material change report dated May 23, 2003 for the Registrant relating to the completion of an arrangement involving 1022971 and Southward.
Exhibit 12:	The material change report dated June 20, 2003 for the Registrant relating to the completion of a $15,225,000 equity financing.
Exhibit 13:	The material change report dated December 5, 2003 for the Registrant relating to the completion of a $45 million equity financing.
Exhibit 14:	The material change report dated December 10, 2003 for the Registrant relating to the definitive Agreement to acquire all of the shares of Pointwest and the Prospectus Offering.
Exhibit 15:	Those portions of the final short form prospectus (the “Prospectus”) for the Registrant dated December 19, 2003 relating to the offering of $45,360,000 of Hawker Shares (the “Prospectus Offering”) contained under the headings “Recent Developments – Proposed Acquisition of Pointwest Energy Inc.” and “Information Concerning the Pointwest Properties” as well as the consolidated financial statements of Pointwest Energy Inc. and the auditor’s report relating thereto, at page F-12 to F-22 inclusive, of the Prospectus and the statements of revenues and operating expenses relating to the Southward Properties and the auditors’ report relating thereto, at pages F-23 to F-25, inclusive, of the Prospectus.
Exhibit 16:	The material change report dated effective January 18, 2004 for the Registrant relating to the Offer.
Exhibit 17:	The comparative unaudited interim consolidated financial statements for Zorin Exploration Ltd. as at and for the three and nine month periods ended September 30, 2003.
Exhibit 18:	The comparative consolidated financial statements for Zorin Exploration Ltd. together with the accompanying report of the auditors, as at and for the fiscal year ended December 31, 2002.

* Incorporated by reference as filed with the Securities and Exchange Commission on January 30, 2004

EX-99.3

Exhibit 3

HAWKER RESOURCES INC.

RENEWAL ANNUAL INFORMATION FORM
FOR THE YEAR ENDED DECEMBER 31, 2002

May 20, 2003

TABLE OF CONTENTS

GLOSSARY OF TERMS
ABBREVIATIONS
CONVERSION
FORWARD-LOOKING STATEMENTS
	ITEM 1: CORPORATE STRUCTURE
		1.1 Name and Incorporation
		1.2 Intercorporate Relationships
	ITEM 2: GENERAL DEVELOPMENT OF THE BUSINESS
		2.1 History
		2.2 Significant Acquisitions and Significant Dispositions
		2.3 Trends
	ITEM 3:NARRATIVE DESCRIPTION OF THE BUSINESS
		3.1 General
		3.2 Corporate Strategy
		3.3 Business Strengths
		3.4 Drilling Activity
		3.5 Location of Production
		3.6 Location of Wells
		3.7 Land Holdings
		3.8 Reserve Estimates
		3.9 Reconciliation of Reserves
		3.10 Production History
		3.11 Netback History
		3.12 Capital Expenditures
		3.13 Future Commitments
	ITEM 4: SELECTED CONSOLIDATED FINANCIAL INFORMATION
		4.1 Annual Information
		4.2 Quarterly Information
		4.3 Dividend Policy
	ITEM 5: MANAGEMENT’S DISCUSSION AND ANALYSIS
	ITEM 6: MARKET FOR SECURITIES
	ITEM 7: DIRECTORS AND OFFICERS
	ITEM 8: ADDITIONAL INFORMATION
Annual Information Form dated May 20, 2003
Comparative Financial Statements
Management's Discussion and Analysis 12/31/2002
Unaudited Interim Consolidated Financial Statement
Management's Discussion and Analysis 9/30/2003
Management Proxy Circular dated 3/7/2003
Material Change Report dated 3/17/2003
Material Change Report dated 4/14/2003
Material Change Report dated 5/23/2003
Material Change Report dated 6/20/2003
Material Change Report dated 12/5/2003
Material Change Report dated 12/10/2003
Portions of the Final Short Form Prospectus
Material Change Report dated 1/18/2004
Unaudited Interim Consolidated Financial Statement
Consolidated Financial Statements for Zorin Exp.

TABLE OF CONTENTS

GLOSSARY OF TERMS				1
ABBREVIATIONS				3
CONVERSION				3
FORWARD-LOOKING STATEMENTS				4
ITEM 1:			CORPORATE STRUCTURE	5
	1.1	Name and Incorporation		5
	1.2	Intercorporate Relationships		5
ITEM 2:			GENERAL DEVELOPMENT OF THE BUSINESS	5
	2.1	History		5
	2.2	Significant Acquisitions and Significant Dispositions		7
	2.3	Trends		8
ITEM 3:			NARRATIVE DESCRIPTION OF THE BUSINESS	10
	3.1	General		10
	3.2	Corporate Strategy		12
	3.3	Business Strengths		12
	3.4	Drilling Activity		13
	3.5	Location of Production		13
	3.6	Location of Wells		14
	3.7	Land Holdings		15
	3.8	Reserve Estimates		16
	3.9	Reconciliation of Reserves		18
	3.10	Production History		18
	3.11	Netback History		19
	3.12	Capital Expenditures		19
	3.13	Future Commitments		19
ITEM 4:			SELECTED CONSOLIDATED FINANCIAL INFORMATION	21
	4.1	Annual Information		21
	4.2	Quarterly Information		21
	4.3	Dividend Policy		21
ITEM 5:			MANAGEMENT’S DISCUSSION AND ANALYSIS	21
ITEM 6:			MARKET FOR SECURITIES	26
ITEM 7:			DIRECTORS AND OFFICERS	26
ITEM 8:			ADDITIONAL INFORMATION	27

i

GLOSSARY OF TERMS

In this document, unless the context otherwise requires, the following words and phrases shall have the meanings set forth below:

“2% Debenture” means a debenture of the Corporation issued as part of the Financing on April 3, 2003 in the principal amount of $8.40, bearing interest at the rate of 2% per annum from the date of issue payable on the earlier of the maturity date of December 31, 2003 and the date of surrender;

“Arrangement” means the arrangement involving BidCo and Southward pursuant to section 193 of the Business Corporations Act (Alberta) completed on April 30, 2003;

“ARTC” means Alberta Royalty Tax Credit;

“BidCo” means 1022971 Alberta Ltd., all of the outstanding shares of which were acquired by the Corporation for an aggregate consideration of $1.00 on March 31, 2003;

“Class A Share” means a class A share in the capital of the Corporation;

“Common Share” means a common share in the capital of the Corporation;

“Conversion” means the deemed exercise of all of the Warrants which will occur immediately after the issuance of a receipt for a prospectus of the Corporation qualifying the issuance of up to $45,000,000 of Common Shares and pursuant to which the former holders of the Warrants will be issued, for each Warrant, 5 Common Shares and 9 Class A Shares upon the surrender of 5 Series V Shares, 9 Series W Shares and one 2% Debenture;

“Corporation” or “Hawker” means Hawker Resources Inc.;

“Equity Shares” means Common Shares and Class A Shares;

“established reserves” means proved reserves plus risked probable reserves;

“FinanceCo” means 970183 Alberta Ltd., a wholly owned subsidiary of Matco;

“Financing” means the financing completed by the Corporation on April 3, 2003 pursuant to which the Corporation issued 223,798 Common Shares and 430,493 Units for aggregate gross proceeds of approximately $3.7 million (which Units will be converted to 6,026,902 Equity Shares pursuant to the Conversion);

“gross” means Hawker’s working interest or royalty interest share of reserves or production, as the case may be, before the deduction of royalties and, with respect to land and wells, means the total number of acres or wells, as the case may be, in which Hawker has a working interest or a royalty interest;

“Matco” means Matco Investments Ltd.;

“Matco Capital” means Matco Capital Ltd., a corporation controlled by Matco;

“McDaniel” means McDaniel and Associates Consultants Ltd., independent oil and natural gas reservoir engineers;

“McDaniel Report” means the engineering report prepared by McDaniel evaluating the crude oil, natural gas liquids and natural gas reserves attributable to a 50% undivided interest in the Optioned Properties effective as of May 1, 2003 based upon detailed engineering evaluations made by McDaniel effective as of January 1, 2003, adjusted to take into account actual and estimated production from January 1, 2003 to May 1, 2003 and based on an engineering evaluation of wells drilled from January 1, 2003 to May 1, 2003, and which was prepared on the basis of both constant and escalating price and cost assumptions as detailed in the notes under “Narrative Description of the Business – Reserve Estimates”;

“net” means Hawker’s working interest share of production or reserves, as the case may be, after the deduction of royalties, and, with respect to land and wells, means Hawker’s working interest share therein;

“Optioned Properties” means all of the petroleum and natural gas rights and related assets of Southward other than those which are both west of the fifth meridian and in the Province of Alberta, as described under the heading “ Narrative Description of the Business – Location of Production”;

“probable additional reserves” means those reserves which an analysis of drilling, geological, geophysical and engineering data does not demonstrate to be proved under current technology and existing economic conditions, but where such analysis suggests the likelihood of their existence and future recovery. Probable additional reserves to be obtained by the application of enhanced recovery processes will be the increased recovery over and above that estimated in the proved category which can be realistically estimated for the pool on the basis of enhanced recovery processes which can be reasonably expected to be instituted in the future;

“proved reserves” means those reserves estimated as recoverable under current technology and existing economic conditions from that portion of a reservoir which can be reasonably evaluated as economically productive on the basis of analysis of drilling, geological, geophysical and engineering data, including the reserves to be obtained by enhanced recovery processes demonstrated to be economic and technically successful in the subject reservoir;

“Purchase Option” means the option in favour of the Corporation to purchase an undivided interest of up to 49% in the Optioned Properties at a purchase price based on an ascribed price, as at May 1, 2003 and subject to adjustment, of $136,900,000 for a 100% interest in the Optioned Properties;

“risked probable reserves” means probable additional reserves discounted by one-half to account for the additional risk of recovery for probable reserves;

“royalty interest” means an interest in an oil and gas property consisting of a royalty granted in respect of production from the property;

“Series V Share” means a series V voting preferred share in the capital of the Corporation;

“Series W Share” means a series W non-voting preferred share in the capital of the Corporation;

“Southward” means Southward Energy Ltd.;

“Statements of Revenues and Operating Expenses” means the statements of revenues and operating expenses relating to the proposed acquisition by the Corporation of an aggregate 50% undivided interest in the Optioned Properties audited by Deloitte & Touche LLP;

“TSX” means the Toronto Stock Exchange;

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“Tax Act” means the Income Tax Act (Canada);

“Unit” means a Unit issued by the Corporation on April 3, 2003 pursuant to the Financing for a subscription price of $8.46787851 per Unit consisting of: (i) a 2% Debenture; (ii) a Warrant; (iii) 5 Series V Shares; and (iv) 9 Series W Shares;

“Warrant” means a series A warrant of the Corporation which entitles the holder thereof to purchase 5 Common Shares and 9 Class A Shares upon the surrender of 5 Series V Shares and 9 Series W Shares and either the surrender of a 2% Debenture or the payment of $8.40. Pursuant to the Conversion, all of the Warrants will be deemed to be exercised immediately after a receipt is issued for a prospectus of the Corporation qualifying the issuance of up to $45,000,000 of Common Shares and upon such deemed exercise, the holders thereof will be deemed to have surrendered one 2% Debenture to the Corporation;

“working interest” means the percentage undivided interest held by a party in an oil and gas property; and

unless otherwise indicated, references herein to “$” or “dollars” are to Canadian dollars.

ABBREVIATIONS

Crude Oil and Natural Gas Liquids		Natural Gas
bbls	barrels	mcf	thousand cubic feet
bbls/d	barrels per day	mmcf	million cubic feet
mbbls	thousand barrels	bcf	billion cubic feet
boe	barrels of oil equivalent of natural gas	mcf/d	thousand cubic feet per day
	and crude oil on the basis of 1 bbl of	mmcf/d	million cubic feet per day
	crude oil for 6 mcf of natural gas	GJ	gigajoules
boe/d	barrels of oil equivalent per day	GJ/d	gigajoules per day
mboe	thousand boe
NGLs	natural gas liquids
mmbtu	million British thermal units
stb	standard stock tank barrel

CONVERSION

     The following table sets forth certain standard conversions from Standard Imperial units to the International System of Units (or metric units).

To Convert From	To	Multiply By
mcf	Thousand cubic metres (“103m3”)		0.0282
Thousand cubic metres	mcf		35.494
bbls	Cubic metres (“m3”)		0.159
Cubic metres	bbls		6.290
Feet	Metres		0.305
Metres	Feet		3.281
Miles	Kilometres		1.609
Kilometres	Miles		0.621
Acres	Hectares		0.405
Hectares	Acres		2.471

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FORWARD-LOOKING STATEMENTS

Certain statements contained in this document constitute forward-looking statements. When used in this document, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “seek”, “propose”, “estimate”, “expect”, and similar expressions, as they relate to the Corporation, are intended to identify forward-looking statements. Such statements reflect the Corporation’s current views with respect to future events and are subject to certain risks, uncertainties and assumptions, including, without limitation, those described in this Annual Information Form under the headings “Narrative Description of the Business”, “Selected Consolidated Financial Information” and “Management’s Discussion and Analysis”. In particular, this document contains forward-looking statements pertaining to the following:

• the quantity of the Corporation’s reserves;

• oil and natural gas production levels;

• capital expenditure programs;

• projections of market prices and costs;

• supply and demand for oil and natural gas;

• expectations regarding the Corporation’s ability to raise capital and to continually add to reserves through acquisitions and development; and

• treatment under governmental regulatory regimes.

The Corporation’s actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and elsewhere in this document:

• volatility in market prices for oil and natural gas;

• liabilities and risks inherent in oil and gas operations;

• uncertainties for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel;

• incorrect assessments of the value of acquisitions; and

• geological, technical, drilling and processing problems.

Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. Although the Corporation believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct.

Readers are cautioned that the foregoing list of factors is not exhaustive. Furthermore, the forward-looking statements contained in this document are made as of the date of this document, and the Corporation undertakes no obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.

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ITEM 1: CORPORATE STRUCTURE

1.1 Name and Incorporation

Hawker was incorporated as 599386 Alberta Ltd. under the Business Corporations Act (Alberta) on February 14, 1994 and changed its name to SYNSORB Biotech Inc. by Articles of Amendment filed on March 31, 1994. Effective May 8, 2002: (i) each former holder of common shares received one new common share for each eight cancelled common shares they previously held; (ii) the stated capital of the Corporation was reduced in respect of the common shares of the Corporation by $59,896,000; and (iii) 4,000,235 common shares of Oncolytics Biotech Inc. held by the Corporation were distributed to its shareholders. By Articles of Amendment filed on April 3, 2003, the name of the Corporation was changed to Hawker Resources Inc. and a new class of non-voting equity shares was created. The Common Shares of Hawker are listed for trading on the Toronto Stock Exchange under the symbol “HKR”.

The head office of the Corporation is located at 3200, 350 – 7^th Avenue S.W., Calgary, Alberta, T2P 3N9, and the registered office is located at 4500, 855 - 2^nd Street S.W., Calgary, Alberta, T2P 4K7.

1.2 Intercorporate Relationships

Hawker owns, directly or indirectly, all of the issued and outstanding securities of BidCo and Southward, both companies incorporated under the Business Corporations Act (Alberta) and registered to carry on business in Alberta. Hawker also owns, directly or indirectly, all interests of Southward Energy Partnership, a partnership formed under the laws of Alberta.

ITEM 2: GENERAL DEVELOPMENT OF THE BUSINESS

2.1 History

Prior to December 10, 2001, the Corporation was a biotechnology company focusing primarily on the discovery and development of pharmaceutical products for gastroenteric diseases. On that date, the Corporation announced that it was terminating the clinical trials of its remaining product and would consider future strategic alternatives.

Over the course of the fiscal year ended December 31, 2002, the Corporation divested itself of its position in Oncolytics Biotech Inc. by distributing 4,000,235 of such shares to its shareholders and by selling 2,255,565 of such shares through the TSX for aggregate gross proceeds of $6,898,000. During that period, the Corporation completed staff reductions and the winding-down of its clinical trials and continued to evaluate strategic alternatives. The Corporation held discussions with several industry parties in an attempt to reach a transaction with another pharmaceutical entity that would make use of the Corporation’s technology and its specialized manufacturing plant and equipment. These discussions did not lead to the Corporation receiving any acceptable proposal for such a transaction.

On October 30, 2002, the Corporation retained Network Capital Inc. as its financial advisor to seek a transaction to maximize value for shareholders, including pursuing transactions that would substantially reorganize the business of the Corporation.

On November 26, 2002, Southward announced a shareholder value maximization process, established an independent committee to oversee the process and retained a financial advisor. The process initiated by Southward required that binding offers be submitted by interested parties on or prior to March 3, 2003.

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In late December 2002, the Corporation approached an investor group led by David Tuer with respect to the transformation of the Corporation from a pharmaceutical research company into an oil and gas enterprise and the completion of the Financing. On January 6, 2003, the transformation of the Corporation to an oil and gas enterprise and the proposed Financing were announced, subject to obtaining shareholder approval, which was to be sought at the annual and special meeting of the Corporation on April 3, 2003.

In January 2003, the Corporation sold its manufacturing equipment for approximately $900,000 in net proceeds and in February 2003, the Corporation granted a third party an exclusive license to certain of its patents relating to toxin binding sugars for net proceeds of US $240,000. The Corporation is continuing to attempt to sell its manufacturing facility and related land.

In early March 2003, BidCo entered into an agreement with a third party which provided, as amended, that in the event that BidCo was successful in purchasing all of the common shares of Southward, the third party would purchase all of the petroleum and natural gas rights and related assets of Southward, except for a 1% interest in the Optioned Properties and 100% of the seismic data relating to the Optioned Properties, for a purchase price of $164,631,000, of which $135,531,000 was allocated for internal purposes to a 99% interest in the Optioned Properties.

In mid-March 2003, the Purchase Option was granted which provided the right to purchase an undivided interest of up to 49% in the Optioned Properties at a purchase price, subject to adjustment, equal to $1,369,000 for each 1% undivided interest in the Optioned Properties acquired pursuant to the Purchase Option. The right to exercise the Purchase Option was conditional upon the completion of the sale of the Southward assets to the grantor of the option, which condition was satisfied on April 30, 2003. The Purchase Option provided that it could be assigned to the Corporation, but that it could not be assigned to any other party without the prior written consent of the grantor of the option.

On March 16, 2003, BidCo entered into an arrangement agreement with Southward which contemplated that, subject to the terms and conditions of the agreement, BidCo and Southward would implement the Arrangement. The Arrangement provided that: (i) shareholders of Southward would transfer all of the outstanding common shares to BidCo in consideration for $4.77 per share; and (ii) all of the outstanding options to acquire common shares of Southward would be terminated, and in consideration for such termination the former holders of the options would receive the difference between the exercise price of each of their options and $4.77, provided that if such amount was less than $0.10 in respect of any option, the former holder thereof would receive $0.10.

On March 31, 2003, the Corporation acquired the Purchase Option and all of the shares of BidCo for an aggregate consideration of $1.00.

At the annual and special meeting of the shareholders of the Corporation held on April 3, 2003 a new board of directors was elected, including the appointment of Mr. Tuer, an experienced oil and gas senior executive, as the new Chairman of the Board and Chief Executive Officer of the Corporation, and the shareholders approved, among other things: (i) the Financing; (ii) the creation of the Class A Shares; and (iii) the name change to Hawker Resources Inc.

On April 3, 2003, the Corporation completed the Financing and issued 223,798 Common Shares and 430,493 Units for aggregate proceeds of approximately $3.7 million. Pursuant to the Conversion, the securities which comprise the Units will be converted into an aggregate of 6,026,902 Equity Shares immediately after a receipt is issued for a prospectus of the Corporation qualifying the issuance of up to $45,000,000 of Common Shares. Pursuant to the Financing, Matco Capital and Mr. Tuer beneficially acquired 28.8% and 14.4%, respectively, of the outstanding Equity Shares, after giving effect to the Conversion. During the period of March 13, 2003 to April 3, 2003, all outstanding in-the-money stock

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options were exercised, resulting in the issuance of an additional 275,000 Common Shares for aggregate proceeds of $192,250.

On April 28, 2003 the Arrangement was approved by the shareholders and optionholders of Southward and was also approved by the Court of Queen’s Bench of Alberta. On April 30, 2003, the Arrangement was completed by Southward and BidCo in accordance with the arrangement agreement. Pursuant to the Arrangement, BidCo paid an aggregate of approximately $120 million to the shareholders and optionholders of Southward and Southward became a wholly owned subsidiary of BidCo.

Concurrent with the completion of the Arrangement, Southward completed the sale of all of its oil and gas assets, with the exception of: (i) a 1% interest in the Optioned Properties; and (ii) 100% of the seismic data relating to the Optioned Properties, which were retained by Southward. Gross proceeds from the sale were $164,631,000, which were used by Southward as follows: (i) $46 million was used by Southward to repay existing bank indebtedness, including bank indebtedness incurred in connection with the termination of options and satisfaction of various employee obligations and transaction expenses; (ii) $117 million was advanced to BidCo to repay indebtedness incurred to acquire the common shares of Southward and compensate the holders of terminated options pursuant to the Arrangement; and (iii) the remaining proceeds of approximately $1.6 million were retained by Southward. Prior to the completion of the Arrangement, the Corporation granted a call option which gives the purchaser of the oil and gas assets of Southward the right to acquire from the Corporation a 99% interest in the seismic data in respect of the Optioned Properties, for a purchase price of $3,710,000. If this call option is exercised, and the Corporation exercises the Purchase Option, in whole or in part, the Corporation will be required to purchase an equivalent proportion of the seismic data in respect of the Optioned Properties at a purchase price based on an ascribed price of $4 million for a 100% interest in the seismic data.

2.2 Significant Acquisitions and Significant Dispositions

As discussed above, the Corporation has indirectly acquired all of the issued and outstanding securities of Southward pursuant to the Arrangement and, in conjunction therewith, was granted the Purchase Option. The Purchase Option gives the Corporation the right to purchase an undivided interest of up to 49% in the Optioned Properties, which together with the 1% undivided interest held by the Corporation in the Optioned Properties will give the Corporation an aggregate 50% undivided interest in the Optioned Properties upon the full exercise of the option.

The Optioned Properties are located east of Edmonton in the Lavoy and Cold Lake/Bonnyville areas of Alberta. The McDaniel Report estimates production for the last 8 months of 2003 from a 50% undivided interest in the Optioned Properties to be held by the Corporation to be an average of 19.0 mmcf/d, before royalties. Production from the Optioned Properties consists of sweet dry gas, with drilling depths typically less than 850 metres. The Optioned Properties include interests in 164.0 producing gas wells (141.2 wells net), related facilities and gathering systems, associated seismic and 284,325 acres (140,523 acres net) of undeveloped land.

The Purchase Option provides that the purchase price for the undivided interest in the Optioned Properties to be acquired by the Corporation will be based on an ascribed price, as at May 1, 2003 and subject to adjustment, of $136,900,000 for 100% of the Optioned Properties. The Purchase Option gives the Corporation the right to purchase an undivided interest of up to 49% in the Optioned Properties for a maximum purchase price of $67,081,000. The Corporation intends to fully exercise the Purchase Option and thereby own an aggregate 50% undivided interest in the Optioned Properties.

The Purchase Option provides that the closing of the acquisition of the Optioned Properties must occur on or prior to July 29, 2003 with an effective date of May 1, 2003. Accordingly, the Corporation will be

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entitled to the revenues attributable to the undivided interest acquired in the Optioned Properties from May 1, 2003, and will be obligated to pay interest on the purchase price from May 1, 2003 until closing at an interest rate equal to the prime rate of a designated Canadian chartered bank plus 1%.

The Corporation currently intends to exercise the Purchase Option on or before June 30, 2003. The McDaniel Report estimates that the cash flows attributable to the 49% interest in the Optioned Properties the Corporation intends to acquire on the exercise of the Purchase Option, net of royalties and capital expenditures and before income taxes, would be an aggregate of $5.3 million from May 1, 2003 to June 30, 2003. Interest on the purchase price under the Purchase Option as of June 30, 2003 would be approximately $670,810. Accordingly, the Corporation anticipates a favourable purchase price adjustment, based upon an anticipated June 30, 2003 closing of the purchase of the 49% interest in the Optioned Properties pursuant to the exercise of the Purchase Option, of approximately $4.63 million thereby effectively reducing the purchase price from approximately $67.1 million to approximately $62.5 million.

The Purchase Option provides that if the Corporation acquires an undivided interest in the Optioned Properties equal to or greater than 33 1/3%, it will be entitled to operate the Optioned Properties located in the Cold Lake/Bonnyville area. As the Corporation will hold an aggregate 50% interest in the Optioned Properties upon the closing of this offering, the Corporation intends to assume operatorship of the Optioned Properties in the Cold Lake/Bonnyville area.

The Corporation believes that the Optioned Properties have undeveloped potential and accordingly the Corporation intends to pursue exploration and development activities in the area with a view to developing additional reserves. There can be no assurance that such activities will be economically successful.

2.3 Trends

Commodity Price Volatility

Crude oil and natural gas prices are volatile and subject to a number of external factors. Prices are cyclical and fluctuate as a result of shifts in the balance between supply and demand for crude oil and natural gas, world and North American market forces, inventory and storage levels, OPEC policy, weather patterns and other factors. In early 2002, the industry initially saw a general weakening of prices for both oil and natural gas. However, through the second half of the year, commodity prices rebounded above historical averages. Currently, tight supply/demand balance has kept prices high for both crude oil and natural gas.

Crude oil is influenced by a world economy and OPEC’s ability to adjust supply to world demand. Recent success by OPEC and low North American crude stocks have kept crude oil prices high. However, the Corporation expects world prices of crude oil to decrease to historical average levels of approximately US $24 per barrel (WTI), but also expect continued global political factors to hold prices at those levels.

Natural gas prices are greatly influenced by market forces in North America. It is generally believed that natural gas has greater stability than crude oil in terms of short-term pricing as there is a shortage of natural gas production and natural gas storage levels are low. The Corporation expects natural gas prices to moderate somewhat through 2003, but expect the supply of North American natural gas to continue to be constrained by North American production decline rates.

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Industry Consolidation and Competition

Over the past few years, consolidation within the Canadian oil and gas industry has resulted in a significant reduction of the number of junior to intermediate-sized exploration and production companies. American companies have also been acquiring companies and assets in Canada. The strong demand for natural gas production and reserves is expected to result in a continued high level of corporate and asset transactions as buyers strive to increase their natural gas assets and sellers take advantage of high transaction prices.

Along with this merger and acquisition activity, a number of traditional exploration and production companies have recently converted into income or royalty trusts. This trend, which has increased competition for investment dollars and property acquisitions, is expected to continue in the short-term.

As occurred in 2000 and early 2001, the strength of commodity prices resulted in significantly increased operating cash flows and has led to increased drilling activity. The Canadian Association of Oilwell Drilling Contractors forecasts an 11% increase in industry drilling in 2003, approaching the number of wells drilled in 2001, which was a record year. This industry activity will increase competition for oilfield goods and services and may cause drilling and operating costs to increase.

Provincial Royalties and Incentives

For crude oil, natural gas and related product production from federal or provincial Crown lands, the royalty regime is a significant factor in the profitability of such production operations. Royalties payable on production from lands other than Crown lands are determined by negotiations between the freehold mineral owner and the lessee, although production from such lands is also subject to certain provincial taxes and royalties. Crown royalties are determined by governmental regulation and are generally calculated as a percentage of the value of the gross production. The rate of royalties payable generally depends in part on the type of product being produced, well productivity, geographical location and field discovery date. From time to time the various provincial governments in western Canada have established incentive programs which have included royalty rate reductions, royalty holidays and tax credits for the purpose of encouraging oil and gas exploration and development. The trend in recent years has been for provincial governments to allow such programs to expire without renewal, and consequently few such programs are currently operative.

Crude oil and natural gas royalty holidays for specific wells and royalty reduction reduce the amount of Crown royalties paid by the Corporation to the provincial governments. In Alberta, the Alberta royalty tax credit program also provides a rebate, to certain eligible producers, on Alberta Crown royalties paid in respect of eligible producing properties. These incentives result in increased profitability from operations of the Corporation.

Government Regulation

The oil and natural gas industry is subject to extensive controls and regulation imposed by various levels of government. In western Canada, the various provincial governments have legislation and regulations, which govern land tenure, royalties, production rates, environmental protection, the prevention of waste and other matters. It is not expected that these controls and regulation will affect the operations of the Corporation in a manner materially different than they would affect other oil and gas companies of similar size. All current legislation is a matter of public record and the Corporation is unable to predict what additional legislation or amendments may be enacted.

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Environmental

The Corporation believes that it is reasonably likely that the trend in environmental legislation and regulation will continue toward stricter standards. The Corporation is committed to meeting its responsibilities to protect the environment wherever it operates and anticipates making increased expenditures of both a capital and expense nature as a result of increasingly stringent laws relating to the protection of the environment.

Kyoto Protocol

In December 2002, Canada became a signatory to the Kyoto Protocol. This international treaty establishes commitments to reduce emissions of greenhouse gases that are believed to be responsible for increasing the surface temperatures of the Earth and affecting the global climate. The U.S. Government’s decision to withdraw from the Kyoto Protocol may have serious implications for Canada in the context of a continental or hemispheric energy market, but the U.S. is expected to develop a strategy to reduce greenhouse gases, perhaps using the NAFTA model. Early indications from the Government of Canada’s policy commitments are that Canada’s ratification will not significantly penalize the oil and gas industry. Some uncertainty will remain until the Federal government provides its detailed implementation plan and it becomes clearer what the effect will be on business economics, primarily on the cost site. However, the Corporation does not expect ratification of the Kyoto Protocol to have a material effect on its performance in 2003.

ITEM 3: NARRATIVE DESCRIPTION OF THE BUSINESS

3.1 General

The Corporation is a publicly traded Canadian company listed on the TSX that has recently transformed itself from a pharmaceutical research company into an oil and gas enterprise. The Corporation intends to report the financial results of its oil and gas activities as one industry segment. For operational purposes, the Corporation intends to manage all of its oil and gas activities as one integrated unit.

Competitive Conditions

The oil and gas industry is highly competitive. The Corporation will compete for reserve acquisitions, exploration leases, licences and concessions and skilled industry personnel with a substantial number of other oil and gas companies, many of which have significantly greater financial resources than the Corporation. The Corporation’s competitors include major integrated oil and natural gas companies and numerous other independent oil and natural gas companies and individual producers and operators. The Corporation’s ability to increase reserves in the future will depend not only on its ability to explore and develop its properties, but also on its ability to select and acquire suitable producing properties or prospects for exploratory drilling. Competitive factors in the distribution and marketing of oil and natural gas include price and methods and reliability of delivery.

The Corporation’s ability to successfully bid on and acquire additional property rights, to discover reserves, to participate in drilling opportunities and to identify and enter into commercial arrangements with customers will be dependent upon developing and maintaining close working relationships with its future industry partners and joint operators and its ability to select and evaluate suitable properties and to consummate transactions in a highly competitive environment.

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Seasonality

The Corporation expects to have seasonal impacts with regard to its exploration and development program. The Corporation expects to experience reduced activity in the second quarter of the fiscal year as limitations on the transportation of heavy equipment on municipal roads curtails the ability of drilling rigs and other oilfield equipment to get to and from well sites.

Government Regulation

The oil and natural gas industry is subject to extensive controls and regulation imposed by various levels of government. In western Canada, the various provincial governments have legislation and regulations, which govern land tenure, royalties, production rates, environmental protection and the prevention of waste. The oil and natural gas industry is also subject to regulation and intervention by governments in such matters as the award of exploration and production rights, the imposition of specific drilling obligations, environmental protection controls, control over the development and abandonment of fields (including restrictions on production) and, possibly, expropriation or cancellation of contract rights. It is not expected that these controls and regulation will affect the operations of the Corporation in a manner materially different than they would affect other oil and gas companies of similar size. All current legislation is a matter of public record and the Corporation is unable to predict what additional legislation or amendments may be enacted.

Environmental Regulation

The oil and natural gas industry is currently subject to environmental regulation pursuant to provincial and federal legislation. Environmental legislation provides for restrictions and prohibitions on releases or emissions of various substances produced or utilized in association with certain oil and gas industry operations. In addition, legislation requires that well and facility sites be abandoned and reclaimed to the satisfaction of provincial authorities. Compliance with such legislation can require significant expenditures. A breach of such legislation may result in the imposition of material fines and penalties, the revocation of necessary licenses and authorizations and civil liability for pollution damage.

In 1994, the United Nations’ Framework Convention on Climate Change came into force and three years later led to the Kyoto Protocol which will require, upon ratification, nations to reduce their emissions of carbon dioxide and other greenhouse gases. As a result of Canada’s ratification of the Kyoto Protocol reductions in greenhouse gases from the Corporation’s operations may be required which could result in increased capital expenditures and reductions in production of oil and gas.

The Corporation does not face any environmental issues or impacts that are unique to the Corporation. However, like all participants in the Canadian oil and gas industry, reclamation and restoration of abandoned wells and facilities is recognized as a corporate responsibility. The expenses associated with meeting this responsibility are provided for on a unit of production basis.

Oil and Natural Gas Prices

Oil prices are subject to international supply and demand. Political developments, especially in the Middle East, can affect world oil supply and oil prices. Natural gas prices are primarily affected by supply and demand in North America and, to a lesser extent, by prices of alternate sources of energy. The Corporation expects continued volatility and uncertainty in oil and natural gas prices.

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Employees

As at December 31, 2002, the Corporation did not have any full-time employees and as of May 20, 2003, the Corporation had 11 full-time employees.

3.2 Corporate Strategy

Vision - The Corporation’s primary ongoing business objective is to become a full cycle oil and gas company with a dual focus on exploration and development activities and on an aggressive acquisition strategy, with a particular emphasis on natural gas opportunities.

Drilling Program - Management intends to employ a “cheap deep” approach to exploration by implementing a high density drilling program with low cost options to look at deeper horizons, while continuing to seek out additional opportunities to add to the Corporation’s land base.

Responsible Fiscal Management - Approximately 50% of the Corporation’s anticipated cash flow will be directed towards the replacement of existing reserves, leaving a significant amount of cash flow available for a focused exploration program or to pay down debt. The Corporation intends to prudently add value through its drilling and exploration activities and carefully manage its costs, thereby positioning itself to add to its inventory of opportunities and undeveloped land holdings.

Prudent Use of Equity - Management recognizes that, at this early stage of development, equity must be used sparingly, and it intends to rely heavily on operational revenues and debt financing to satisfy liquidity requirements. The Corporation will attempt to minimize the dilution that would be caused to existing shareholders if large amounts of equity were issued.

3.3 Business Strengths

Strength of Management - Mr. Tuer has over 28 years of petroleum engineering and management experience in Canada and internationally, including experience as President and Chief Executive Officer of one of Canada’s largest energy companies. Mr. Terry Schmidtke has over 24 years of operational experience in the areas of reservoir engineering, field operations, strategic planning and acquisitions and divestitures. Mr. Herring has over 22 years of accounting and oil and gas experience.

Experienced, Interested Board - The Corporation’s board of directors is comprised of individuals with broad backgrounds and demonstrated experience in creating shareholder value. In particular, Mr. Tuer, Mr. Ronald Mathison, Mr. Martin Lambert and Mr. Stan Grad have extensive industry and transactional experience. Several of the directors have significant financial stakes in the Corporation.

Focused Production Areas - Following its acquisition of the Optioned Properties, Hawker will commence its energy business with high quality, tightly focused properties that management believes can be exploited through additional developmental drilling. The Optioned Properties contain close to 100 geophysically and geologically defined locations, and include over 140,000 net acres of undeveloped land.

Emphasis on Gas - Hawker’s initial production will be 100% natural gas. As the Corporation expands, its portfolio of oil producing properties will increase, but the emphasis on natural gas will remain part of Hawker’s business plan.

Price Certainty Through Hedging - An integral part of the Corporation’s strategy in acquiring an interest in the Optioned Properties was the prior negotiation of the right to secure certain hedging arrangements in

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respect of a portion of the production from the properties. These forward sales contracts reduce the economic uncertainty of the acquisition of an interest in the Optioned Properties by providing certainty to the price for a material portion of Hawker’s 2003 and first quarter 2004 gas production.

Advantageous Tax Position - The Corporation has non-capital losses and unclaimed expenditures of $37 million and $41 million, respectively, that are available for application against future taxable income. The Corporation also has $4.9 million of unclaimed investment tax credits available to reduce future year’s income tax. The acquisition by Hawker of an additional 49% undivided interest in the Optioned Properties will add to the Corporation’s tax pools by an amount equal to the purchase price of $67 million.

3.4 Drilling Activity

The following table sets forth the number of gross and net exploratory and development wells included in the Optioned Properties and which were completed, capped or abandoned during the periods indicated.

		Years Ended December 31
		2002				2001
		Gross Wells(1)		Net Wells(2)		Gross Wells(1)		Net Wells(2)
Exploratory
	Gas		8.0		4.0		—		—
	Dry(3)		3.0		1.5		—		—
Total Exploratory			11.0		5.5		—		—
Development
	Gas		15.0		7.0		31.0		15.4
	Dry(3)		3.0		1.5		21.0		10.5
Total Development			18.0		8.5		52.0		25.9
Total Drilling Activity			29.0		14.0		52.0		25.9

Notes:

(1)	“Gross Wells” means the total wells in which the Corporation will acquire an interest.
(2)	“Net Wells” means the total wells in which the Corporation will acquire an interest, multiplied by the working interest therein that relates to a 50% interest in the Optioned Properties.
(3)	“Dry Well” means a well which is not a productive well or a service well. A productive well is a well which is capable of producing oil and gas in commercial quantities or in quantities considered by the operator to be sufficient to justify the costs required to complete, equip and produce the well. A service well means a well such as a water or gas-injection, water-source or water-disposal well. Such wells do not have marketable reserves of crude oil or natural gas attributed to them but are essential to the production of the crude oil and natural gas reserves.

3.5 Location of Production

The following description of the Optioned Properties describes an undivided 50% interest in the properties.

Lavoy Area

The Lavoy area is located approximately 100 kilometres east of Edmonton, Alberta near the town of Vegreville, Alberta. The Corporation will acquire an interest in 140.0 producing gas wells (122.4 net wells) and 10 facilities, all of which are non-operated. These facilities have a combined working interest

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capacity of approximately 40 mmcf/d of sweet dry gas and are comprised of compressors and dehydration equipment.

Gross production in 2002 from the Lavoy area averaged 29 mmcf/d of sweet dry gas. The sweet dry gas produced in the Lavoy area contains no liquids, and does not require hydrocarbon dewpoint control at the transportation stage. The majority of the wells in the Lavoy area are controlled through SCADA, an electronic system for natural gas processing and control, using a data acquisition system that is controlled and sourced real-time from Calgary.

The Lavoy area is characterized by multi-zone potential from 14 producing horizons from the Paleozoic to the Upper Cretaceous. Zonal rights in the Lavoy area are typically 100% working interest from surface to basement. Drilling depths in the Lavoy area are typically less than 850 metres. In 2002, 29 wells (14 net wells) were drilled in Lavoy with a 79% success rate. In 2002, each successful well in the Lavoy area averaged approximately 520 mmcf of reserves, illustrating that the property is not mature from the perspective of development drilling.

Access to these properties is available year round, and the area lends itself to seismic acquisition, fracture technology, air drilling and coil tubing advancements. Two central dehydration and compression facilities were established in 2002 at East Warwick and West Lavoy. These facilities process 6.4 mmcf/d net of the Corporation’s production. The Corporation owns various working interests in a non-operated extensive gathering system that is closely accessible to all lands in the area, and there is ample gas transportation out of the area.

Cold Lake/Bonnyville

The Cold Lake/Bonnyville area is located approximately 250 kilometres northeast of Edmonton. The Corporation will acquire an interest in 24.0 producing gas wells (18.9 net wells) and one facility in the Cold Lake/Bonnyville area.

The Cold Lake/Bonnyville area is characterized by a large reserve potential at shallow depths, with multizone potential from four producing Cretaceous zones and drilling depths that are typically less than 500 metres.

Gross production in 2002 from the Cold Lake/Bonnyville area averaged 4.9 mmcf/d of sweet dry gas. As with the Lavoy area, the sweet dry gas produced in the Cold Lake/Bonnyville area contains no liquids, and does not require hydrocarbon dewpoint control at the transportation stage.

No wells were drilled on this property in 2002. The Corporation currently anticipates exploring two low risk locations into the Clearwater B pool, and is evaluating the project inventory in the area with a view to exploiting potential upside in the Colony McLaren and Clearwater zones.

The Corporation intends to assume operatorship of this property. Production from the Cold Lake/Bonnyville area is processed at a non-operated facility. Two field compressors were installed during 2002.

3.6 Location of Wells

The following table sets forth the producing wells and wells capable of producing included in the Optioned Properties as at December 31, 2002.

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		Gas Wells
		Producing				Shut-in(3)
		Gross(1)		Net(2)		Gross(1)		Net(2)
	Lavoy		140.0		61.7		36.0		17.3
	Cold Lake/Bonnyville		28.0		11.0		8.0		3.3
Total			168.0		72.7		44.0		20.6

Notes:

(1)	“Gross Wells” means all wells in which the Corporation will acquire a working interest.
(2)	“Net Wells” means the total wells in which the Corporation will acquire an interest, multiplied by the working interest therein that relates to a 50% interest in the Optioned Properties.
(3)	“Shut-in Wells” are wells which are capable of economic production or which the Corporation considers capable of production but which, for a variety of reasons, including but not limited to lack of markets or development, are not currently on production.

3.7 Land Holdings

The following table summarizes the undeveloped land included in the Optioned Properties as at March 31, 2003.

Property	Gross Acres(1)		Net Acres(2)
Lavoy		273,295		135,852
Cold Lake/Bonnyville		10,240		4,564
Manitoba		80		18
British Columbia		710		89
Total		284,325		140,523

Notes:

(1)	“Gross Acres” means the total acres in which the Corporation will acquire an interest.
(2)	“Net Acres” means the total acres in which the Corporation will acquire an interest, multiplied by the working interest therein that relates to a 50% interest in the Optioned Properties.

The undeveloped land holdings of the Corporation have been evaluated by Antelope Land Services Ltd. which ascribed a value of $10,590,389 to a 50% undivided interest in the undeveloped lands included in the Optioned Properties.

The Corporation has retained 100% of the seismic data relating to the Optioned Properties, which consists of approximately 6,234 kilometres of 2-D and 33.4 square kilometres of 3-D seismic data. Of this data, 3,337 kilometres of 2-D and 28 square kilometres of 3-D is purchased trade data in which the Corporation does not own any proprietary rights and will earn no revenue. The remaining 2,897 kilometres of 2-D and 5.4 square kilometres of 3-D seismic data constitutes proprietary seismic data. This seismic data will be used as a technological database to interpret and generate exploration and development prospects.

The Corporation has granted a call option in respect of this seismic data which gives the grantee the right to acquire an undivided 99% in this seismic data for a purchase price of $3,710,000. If this call option is exercised, and the Corporation exercises the Purchase Option, in whole or in part, the Corporation will be required to purchase an equivalent proportion of this seismic data at a purchase price based on an ascribed price of $4 million for a 100% interest in the seismic data.

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3.8 Reserve Estimates

McDaniel has prepared the McDaniel Report in which it evaluated the crude oil, natural gas liquids and natural gas reserves attributable to an undivided 50% interest in the Optioned Properties, effective May 1, 2003, and estimated the net present worth value of such reserves. The information used to prepare the McDaniel Report was made available to McDaniel by Southward or was obtained from public sources or McDaniel’s own files. The following tables summarize the reserve determinations contained in the McDaniel Report and the estimated future net present worth values therefrom.

The reserve determinations and estimated net present worth values included in the tables below do not include the ARTC and are stated prior to provision for income taxes and indirect costs, such as general and administrative expenses and facility site restoration, and may not necessarily be representative of the fair market value of the reserves. The probable reserves and the present worth value of such reserves as set forth in the tables below have been reduced by 50% to reflect the degree of risk associated with recovery of such reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized in the notes following the tables.

The reserve determinations and estimated net present worth values included in the tables below represent a 50% undivided interest in the Optioned Properties.

Optioned Properties (50% Interest)
Petroleum and Natural Gas Reserves and Pre-Tax Estimated Net Present Worth
Escalating Prices and Costs

		Natural Gas				Pre-Tax Estimated Net Present Worth
		(mmcf)				(thousands of dollars)
						Discounted at
		Gross		Net		0%		10%		15%		20%
Proved Reserves
	Producing		18,607		14,450		65,104		52,721		48,523		45,124
	Non-Producing		3,592		2,629		11,983		9,628		8,897		8,314
Total Proved Reserves			22,199		17,079		77,087		62,349		57,420		53,438
Risked Probable Reserves			4,195		3,181		13,502		8,678		7,332		6,341
Established Reserves			26,394		20,260		90,589		71,027		64,752		59,779

Optioned Properties (50% Interest)
Petroleum and Natural Gas Reserves and Pre-Tax Estimated Net Present Worth
Constant Prices and Costs

		Natural Gas				Pre-Tax Estimated Net Present Worth
		(mmcf)				(thousands of dollars)
						Discounted at
		Gross		Net		0%		10%		15%		20%
Proved Reserves
	Producing		18,607		14,450		87,183		68,053		61,720		56,662
	Non-Producing		3,592		2,629		15,154		11,778		10,734		9,910
Total Proved Reserves			22,199		17,079		102,337		79,831		72,454		66,572
Risked Probable Reserves			4,195		3,181		19,516		12,243		10,224		8,742
Established Reserves			26,394		20,260		121,853		92,074		82,678		75,314

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Notes to Reserve Determinations

The following notes provide important information relating to the preceding reserve determinations.

(1)	“Gross Reserves” are defined as the total of the Corporation’s working interests and/or royalty interests share of reserves before deducting royalties owned by others.
(2)	“Net Reserves” are defined as the total of the Corporation’s working interests and/or royalty interests share of reserves after deducting the amounts attributable to the royalties owned by others.
(3)	“Net Present Worth” values are based on net reserves and are expressed after giving effect to estimated operating expenses and capital expenditures but before provision for income taxes, overhead and general administrative expenses, and for the escalating price assumptions case, the operating expenses and capital expenditures have been escalated at 2.0% per year.
(4)	“Proved Reserves” are defined as those reserves estimated as recoverable under current technology and existing economic conditions, from that portion of a reservoir which can be reasonably evaluated as economically productive on the basis of analysis of drilling, geological, geophysical and engineering data, including the reserves to be obtained by enhanced recovery processes demonstrated to be economic and technically successful in the subject reservoir.
(5)	“Proved Producing Reserves” are defined to include both those proved reserves that are actually on production, or if not producing, that could be recovered from existing wells or facilities and where the reasons for the current non-producing status is the choice of the owner. An illustration of such a situation is where a well or zone is capable of production but is shut-in because its deliverability is not required to meet contract commitments.
(6)	“Proved Non-Producing Reserves” are defined as those reserves estimated as recoverable from existing wells that require relatively minor capital expenditures to produce.
(7)	“Proved Undeveloped Reserves” are defined as those reserves expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major capital expenditure will be required.
(8)	“Probable Additional Reserves” are defined as those reserves which an analysis of drilling, geological, geophysical and engineering data does not demonstrate to be proved under current technology and existing economic conditions, but where such analysis suggests the likelihood of their existence and future recovery. Probable additional reserves to be obtained by the application of enhanced recovery processes will be the increased recovery over and above that estimated in the proved category which can be realistically estimated for the pool on the basis of enhanced recovery processes which can be reasonably expected to be instituted in the future.
(9)	“Risked Probable Reserves” means probable additional reserves discounted by one-half to account for the additional risk of recovery for probable reserves.
(10)	“Established Reserves” means proved reserves plus risked probable reserves
(11)	The constant price assumptions table is based on the following prices and held constant over the life of the reserves (West Texas Intermediate (“WTI”) - $US 30.00/bbl; Edmonton Light $Cdn. 43.10/bbl; Alberta Average Natural Gas $Cdn. 6.90/mmbtu).
(12)	The escalating price assumptions table is based on the McDaniel price forecast (March 1, 2003) and escalating over the life of the reserves. An excerpt of the price forecast from the McDaniel Report, being the WTI oil price at Cushing, Oklahoma, the Edmonton Oil Price for 40 API, 0.5% sulphur crude, and the Alberta Average field price for gas, appears below.

	Crude Oil				Natural Gas
	WTI		Edmonton Light		Alberta Average
Year	($US/bbl)		($Cdn/bbl)		($Cdn/mmbtu)
2003		30.00		43.10		6.90
2004		26.00		37.20		5.65
2005		24.00		34.30		5.05
2006		23.00		32.80		4.80
2007		23.30		33.20		4.65
2008		23.80		33.90		4.70
2009		24.30		34.60		4.80

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	Crude Oil				Natural Gas
	WTI		Edmonton Light		Alberta Average
Year	($US/bbl)		($Cdn/bbl)		($Cdn/mmbtu)
2010		24.80		35.30		4.90
2011		25.30		36.00		5.00
2012		25.80		36.70		5.10
2013		26.30		37.50		5.20
2014		26.80		38.20		5.30
2015		27.30		38.90		5.40
2016		27.80		39.60		5.50
2017		28.40		40.40		5.60
2018		29.00		41.30		5.70
2019		29.60		42.20		5.85
2020		30.20		43.00		5.95
2021		30.80		43.90		6.10
2022		31.40		44.70		6.20

(13) The value of the ARTC has not been included in the Net Present Worth values.

(14) The McDaniel Report estimates that capital expenditures to be incurred in 2003, 2004 and 2005 and thereafter and in total, net to the Corporation, necessary to achieve the estimated net present worth values from proved plus probable additional reserves are as follows:

Escalating Price Assumptions			Constant Price Assumptions
2003	$	1,117,000		2003		$	1,110,300
2004		175,600		2004			168,800
2005+		287,300		2005	+		262,300
Total	$	1,579,900				$	1,541,400

(15)	All of the proved producing reserves in the Optioned Properties are currently on production.
(16)	The McDaniel Report estimates future abandonment costs of $20,000 for each well that has been assigned reserves. Actual abandonment costs may exceed this estimate. No allowance was included for future abandonment costs of any facilities.

3.9 Reconciliation of Reserves

The following table summarizes the changes to the proved reserves (before royalties) associated with a 50% undivided interest in the Optioned Properties from December 31, 2001 to December 31, 2002.

		Natural Gas (mmcf)
		Proved			Probable			Total
January 1, 2002			22,920			4,889			27,809
	Production		(6,310	)		—			(6,310	)
	Acquisitions		—			—			—
	New Development		5,920			2,060			7,980
	Dispositions		(269	)		(9	)		(278	)
	Revisions		(1,319	)		(531	)		(1,850	)
January 1, 2003			20,942			6,409			27,351

3.10 Production History

The following table shows the average daily production volumes from an undivided 50% interest in the Optioned Properties, before the deduction of royalties, for each of the fiscal quarters of 2001 and 2002.

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2002

2001

Three Months

Three Months

Three Months

Three Months

Three Months

Three Months

Three Months

Three Months

Ended

Ended

Ended

Ended

Ended

Ended

Ended

Ended

March 31

June 30

September 30

December 31

March 31

June 30

September 30

December 31

Natural Gas (mcf/d)

16,714

16,071

16,460

19,258

16,071

16,534

18,096

18,190

3.11 Netback History

The following table summarizes the average netbacks ($ per mcf) received for natural gas production from an undivided 50% interest in the Optioned Properties for each of the fiscal quarters of 2001 and 2002.

	2002								2001
	(unaudited)								(unaudited)
	Three Months		Three Months		Three Months		Three Months		Three Months		Three Months		Three Months		Three Months
	Ended		Ended		Ended		Ended		Ended		Ended		Ended		Ended
	March 31		June 30		September 30		December 31		March 31		June 30		September 30		December 31
Sales Price	$	3.10	$	3.10	$	3.37	$	4.72	$	9.26	$	6.07	$	3.99	$	3.55
Processing and Other Income		—		—		—		—		—		—		—		—
Royalties		0.83		0.93		0.97		1.12		2.46		1.60		0.84		0.75
Operating Costs		0.55		0.66		0.51		0.56		0.39		0.42		0.50		0.41
Netback		1.72		1.51		1.89		3.04		6.41		4.05		2.65		2.39

3.12 Capital Expenditures

The following table summarizes the capital expenditures in respect of an undivided 50% interest in the Optioned Properties in the categories indicated for each of the fiscal quarters of 2001 and 2002.

	2002								2001
	(unaudited)								(unaudited)
	Three Months		Three Months		Three Months		Three Months		Three Months		Three Months		Three Months		Three Months
	Ended		Ended		Ended		Ended		Ended		Ended		Ended		Ended
	March 31		June 30		September 30		December 31		March 31		June 30		September 30		December 31
Land acquisitions	$	197,314	$	67,739	$	320,420	$	126,603	$	839,101	$	1,354,036	$	1,727,559	$	487,130
Exploration (including drilling)		1,128,209		1,273,520		913,588		328,622		1,873,729		3,465,651		1,162,818		1,745,135
Development (including facilities)		266,080		592,692		1,363,206		389,783		890,289		1,537,726		1,169,140		888,443
Total		1,591,603		1,933,951		2,597,214		845,008		3,603,119		6,357,413		4,059,517		3,120,708

3.13 Future Commitments

As a pre-condition to BidCo entering into the arrangement agreement, Southward agreed that at the direction of BidCo it would enter into fixed price forward sales contracts in respect of up to 12,875 GJ/d of gas production from the Optioned Properties. At BidCo’s direction, on March 17, 2003, Southward entered into four forward sales contracts in respect of an aggregate of 12,880 GJ/d for 2003 and the first quarter of 2004, of which the Corporation will retain an interest in contracts in respect of 6,440 GJ/d, representing 36% of gas production attributable to a 50% undivided interest in the Optioned Properties for the last 8 months of 2003 (based on the McDaniel Report) at prices ranging from $6.24 to $7.15 per GJ. These forward sales contracts reduce the economic uncertainty of the acquisition of an interest in the Optioned Properties by providing certainty to the prices for a portion of the production from the properties.

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In addition to the forward sales contracts noted above, pursuant to the Purchase Option, the Corporation will acquire an interest in forward sales contracts and financial hedging contracts with respect to production from the Optioned Properties as follows:

	Volume			Contract Price(1)
Transaction Type	(GJ/d)			(GJ/d)			Expiry
Fixed Summer		1,658		$	4.10		October 31, 2003
Fixed Summer		3,220		$	6.64		October 31, 2003
Costless Collar Summer		3,220		$	6.24 - $7.00		October 31, 2003
Costless Collar Winter		4,830		$	6.36 - $7.15		March 31, 2004
Fixed Winter		1,610		$	6.76		March 31, 2004
Fixed Summer		1,450		$	5.06		October 31, 2003
Cogeneration Fuel Supply		263		$	1.959	(2)	October 31, 2008
Daily Declining Profile		977	(3)	netback(4)			October 31, 2011
Reserve Based		101	(5)	netback(6)			life of reserves

Notes:

(1)	The contract price net of costs is obtained by subtracting costs of $0.20 from the contract price.
(2)	The contract price increases over the term of the contract, with the price for each of the 12 month periods remaining in the term as follows:

Date	Price
November 1, 2003	$	2.008
November 1, 2004	$	2.058
November 1, 2005	$	2.110
November 1, 2006	$	2.163
November 1, 2007	$	2.217

(3) The Corporation’s obligations under this contract will, on November 1 of this year and each succeeding year, decline to the following:

Date		Obligation (GJ/d)
	November 1, 2003		841
	November 1, 2004		724
	November 1, 2005		623
November 1, 2006 and thereafter			568

(4)	TransCanada Pipelines Limited netback pricing.
(5)	Reserve based with respect to production from Mannville 2-19 well.
(6)	Progas Limited netback pricing.

Hawker’s aggregate future commitments represent an aggregate of 50% of its estimated 2003 production from total proved reserves at a weighted average price of $5.98 per GJ and 44% of its estimated first quarter 2004 production from total proved reserves at a weighted average price of $6.57 per GJ.

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ITEM 4: SELECTED CONSOLIDATED FINANCIAL INFORMATION

4.1 Annual Information

The following table sets forth selected consolidated financial information of the Corporation for each of the last three years ended December 31. This financial information reflects the Corporation’s operations as a pharmaceutical research company prior to its transformation into an oil and gas enterprise.

	Years Ended December 31
	(000s except per share amounts)
	2002		2001			2000
Revenue	$	139	$	729		$	1,513
Net earnings (loss)	$	3,766	($	22,988	)	($	7,889	)
Basic and diluted net earnings (loss) per share	$	0.76	($	4.64	)	($	1.63	)
Total assets	$	4,015	$	22,584		$	46,326
Total cash and cash equivalents	$	289	$	5,841		$	18,821
Total long-term debt		—		—		$	9,163
Cash dividends declared per Common Share	Nil		Nil			Nil

4.2 Quarterly Information

The following table sets forth certain financial information for the last eight financial quarters ended December 31, 2002. This financial information reflects the Corporation’s operations as a pharmaceutical research company prior to its transformation into an oil and gas enterprise.

	Quarter Ended
							(000s except per share amounts)
	Dec. 31			Sept. 30			June 30		Mar. 31		Dec. 31			Sept. 30			June 30			Mar. 31
	2002			2002			2002		2002		2001			2001			2001			2001
Revenue		—			—			—		—		—			—		$	214			—
Other income	$	1		$	2		$	4	$	132	$	50		$	93		$	147		$	50
Net earnings (loss)	($	1,241	)	($	6,567	)	$	8,056	$	3,518	($	13,621	)	($	1,612	)	($	3,687	)	($	4,068	)
Basic earnings (loss) per share	($	0.25	)	($	1.32	)	$	1.61	$	0.71	($	2.75	)	($	0.33	)	($	0.72	)	($	0.82	)

4.3 Dividend Policy

To date, the Corporation has not paid any dividends on its outstanding Common Shares. The future payment of dividends will be dependent upon the financial requirements of the Corporation to fund future growth, the financial condition of the Corporation and other factors which the board of directors of the Corporation may consider appropriate in the circumstances. It is unlikely that dividends will be paid in the foreseeable future.

ITEM 5: MANAGEMENT’S DISCUSSION AND ANALYSIS

THIS DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION OF THE CORPORATION AND THE RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED AUDITED FINANCIAL STATEMENTS AND THE RELATED NOTES.

21

Overview

Prior to December 10, 2001, the Corporation was a biotechnology company focusing primarily on the discovery and development of pharmaceutical products for gastroenteric diseases or conditions which could benefit from new or additional therapies. On December 10, 2001, the Corporation terminated development of SYNSORB Cd®, its sole development drug. Subsequent to that date, the Corporation has had no drug under active development and has no regular source of operating revenue or cash flow. After that date, the Corporation reduced its spending and terminated all contracts and commitments that were considered not critical to an orderly wind down of the clinical trials and the preservation of its asset base. During 2002, the employees of the Corporation were reduced to one full-time and one part-time employee.

Provision for SYNSORB Cd® Wind-down Costs

A provision for the future wind-down costs of clinical trials, reduction in staff and elimination of their costs associated with the development of the SYNSORB Cd® totalling $3,830,000 was included in the results for the year ended December 31, 2001. Of this amount, approximately $946,000 related directly to the wind down of clinical activity, $1,339,000 related to staff reductions and $1,545,000 related to other costs associated with halting SYNSORB Cd® related activity. An additional provision amount of $50,000 was included for the period ended June 30, 2002. As at December 31, 2002, the entire provision amount had been utilized. No further windup costs are anticipated.

Write-downs of Capital Assets

The decision to halt clinical trials led to a write-down of certain capital assets. In 2001, the Corporation wrote down its patents associated with SYNSORB related technology to nil, and the charge of $2,060,000 was included in amortization expense. In 2000, the Corporation wrote down its patents associated with SYNSORB Pk® to nil, and the charge of $602,000 was included in amortization expense.

As part of its drug development activity, in 1998 SYNSORB built a cGMP-compliant manufacturing facility. In 2001, the Corporation determined that continued ownership of this facility was unnecessary and wrote-down the value of the facility and associated equipment on December 31, 2001 to the estimated net realizable value based on its potential sale as a cGMP-compliant manufacturing facility. In 2001, this resulted in the Corporation writing-down the value of its building and land to $8,600,000 and writingdown the value of its manufacturing equipment to $2,000,000, and the total associated charge of $5,876,000 was included in amortization expense. Efforts to market the facility as a manufacturing facility were unsuccessful and the Corporation now expects to realize commercial value for the building and land. Accordingly, the Corporation wrote-down the value of the building and land to $2,500,000 and the associated charge of $6,100,000 is included in amortization expense. While the Corporation feels that these write-downs are appropriate, the book value of the building and land may not reflect the ultimate realizations which may be achieved on their disposition.

The manufacturing equipment was auctioned subsequent to December 31, 2002, the value of the manufacturing equipment as at December 31, 2002 was written down to $1,000,000 and the associated charge of $997,000 is included in amortization expense.

For the year ended December 31, 2001 the Corporation wrote off leasehold improvements, computer equipment and office furniture and equipment and the total charge of $267,000 was included in amortization expense.

22

Distribution of Shares of Oncolytics Biotech Inc.

At December 31, 2001 the Corporation owned 6,255,800 common shares of Oncolytics Biotech Inc. (“Oncolytics”).

Effective May 15, 2002 the Corporation distributed to its shareholders 4,000,235 common shares of Oncolytics which was accounted for as a return of capital. The deemed value of these shares, net of expenses, was $11,600,000 resulting in a gain on distribution of $8,325,000. As part of this transaction, the Corporation’s holding of 1,500,000 shares in BCY Life Science’s Inc. was transferred to Oncolytics. No gain or loss was recorded as a result of that transfer.

During the year ended December 31, 2002 the Corporation sold 2,255,565 common shares of Oncolytics for net proceeds of $6,898,000 resulting in a gain on sale of $4,899,000. As at December 31, 2002 the Corporation did not hold any common shares of Oncolytics.

Year Ended December 31, 2002 Compared with Year Ended December 31, 2001

Liquidity and Capital Resources

At December 31, 2002 the Corporation’s cash and working capital positions were $289,000 and $412,000, respectively, compared at December 31, 2001 balances of $5,841,000 and ($4,725,000) respectively.

As at December 21, 2002 the Corporation had no long term or short term debt. At December 31, 2001 the current portion of long term debt of the Corporation was $5,910,000, all of which was repaid during 2002.

The Corporation’s primary source of liquidity during 2002 was the liquidation of its assets. In 2002 the Corporation sold 2,255,565 common shares of Oncolytics for net proceeds of $6,898,000 resulting in a gain on sale of $4,899,000. As at December 31, 2002 the Corporation did not hold any common shares of Oncolytics. During 2002 the Corporation attempted to dispose of both its manufacturing equipment and its manufacturing facility. Subsequent to December 31, 2002 the Corporation disposed of most of its manufacturing equipment through auction realizing proceeds, net of expenses, of approximately $900,000 and has listed its manufacturing building and related land for sale as commercial premises. The Corporation also holds miscellaneous intellectual property rights with respect to certain drug technologies, which it may license, dispose of or abandon. In February 2003 the Corporation received U.S.$230,000 for an exclusive license of certain of its patents regarding toxin binding sugars. No assurance can be given as to whether any assets can be disposed of or what, if any, proceeds can or will be received with respect thereto.

In addition to the liquidation of assets, the Corporation may receive milestone payments and royalties with respect to the previous sale of its INH subsidiary or may choose to sell these rights. The Corporation cannot predict the likelihood, timing or amount of any milestone or royalty receipts.

Results of Operations

For the year ended December 31, 2002, the Corporation had total revenue of $139,000 compared to $729,000 for the year ended December 31, 2001. Interest income for the 12 months ended December 31, 2002 decreased significantly compared to the same period in 2001 as a result of lower average cash balances on hand and lower interest rates in 2002.

23

Expenses for the year ended December 31, 2002 of $9,126,000 were less than the expenses of $26,803,000 for the comparable period in 2001. Because the Corporation had terminated research and development in late 2001 and made a provision in that year for future wind down costs associated with drug development, research development expenses in 2002 were nil. Operating expenses for the 2002 period were $1,596,000, a significant reduction from $7,106,000 for 2001. The reduction is due to the termination of almost all employees, the termination of certain office space effective April 11, 2002 and the consolidation of all activity at the manufacturing facility.

Interest on long term debt in 2002 was $71,000, a significant reduction from $787,000 in 2001 due to the payment by the Corporation during 2002 of all of its long and short-term debt. Amortization in 2002 was $7,216,000 compared to $9,655,000 in 2001. Included in the 2001 amortization amounts was property and other capital asset write-downs of $8,203,000 arising from the termination of the Corporation’s drug development program. The amortization in 2002 included additional write-downs of the Corporation’s equipment and manufacturing facility based on the Corporation’s determination that those assets could only be sold on the basis of general commercial conditions and not their drug specific attributes.

Year Ended December 31, 2001 Compared with Year Ended December 31, 2000

Liquidity and Capital Resources

The Corporation’s cash and working capital position at December 31, 2001 were $5,841,000 and ($4,725,000) respectively, compared to December 31, 2000 balances of $18,821,000 and $14,942,000 respectively. The working capital deficiency of ($4,725,000) included $5,910,000 as the current portion of long term debt, all of which was repaid subsequent to year-end. On December 10, 2001, when it announced its decision to halt development of SYNSORB Cd® , the Corporation had cash of approximately $7,000,000 and long term debt, including current portion, totalling $6,383,625.

During 2001 the Corporation entered into a Common Share Purchase Agreement (CSPA) allowing the Corporation to access funds through the sale of a maximum of 1,000,000 Oncolytics common shares pursuant to a common share equity line. Under this agreement the Corporation was able, at its option, to sell the Oncolytics common shares over a period of 12 months commencing on June 19, 2001 at a discount from the average daily price of the common shares. During the year ended December 31, 2001 the Corporation sold 494,200 Oncolytics common shares, representing 7% of the Corporation’s total holdings in Oncolytics, for net proceeds of $3,481,070 under the terms of the CSPA. Subsequent to yearend the Corporation terminated the CSPA with no penalty.

On April 20, 2001 the Corporation issued 126,000 common shares on the exercise of options for proceeds of $126,000. No other equity was issued during 2001. During the year the Corporation repaid $2,866,000 of the principal outstanding with respect to its long-term debt and a further $5,910,000 was outstanding at December 31, 2001. Effective December 31, 2001, the Corporation agreed to a revised repayment schedule for its $5,000,000 credit facility drawn down during construction of the manufacturing facility. Therefore, all of the amount outstanding at December 31, 2001 was repayable within one year. Interest paid in 2001 with respect to these debt facilities was $787,000 compared to $1,176,000 for 2000.

On February 5, 2002 the Corporation prepaid the remaining $838,586 owing under a loan bearing an interest rate of 13.73% per annum, with certain intellectual property pledged as collateral. On March 1, 2002 the Corporation repaid the remaining principal of $4,000,000 outstanding on its floating rate debt.

24

Results of Operations

For the year ended December 31, 2001, the Corporation recorded total revenue of $729,000 compared to $1,513,000 for the year ended December 31, 2000. Milestone payments totalled $214,000 for the year ended December 31, 2001 compared to $106,000 for the same period in 2000. A payment of $94,000 was also received from a partnering agreement in 2000. Interest income for the twelve months ended December 31, 2001 decreased by 61% compared to the same period in 2000 as a result of a lower average cash on hand balance and lower interest rates in 2001.

Expenses for the years ended December 31, 2001 and 2000 of $9,255,000 and $7,889,000 respectively for research and development and clinical trials represented approximately 35% and 56% respectively of the Corporation’s total expenses. Included in 2001 research and development expenses were $1,384,000 of future wind-down costs since further development of SYNSORB Cd® was terminated in December 2001. Of this amount $946,000 relates directly to the wind down of the clinical trial and $438,000 relates to other costs associated with halting development of SYNSORB Cd®. There were minimal expenses associated with SYNSORB Pk® during 2001 as active development of the drug was suspended in December 2000.

During 2001, the Corporation spent $974,000 for research programs and other expenses to develop and broaden the SYNSORB technology, primarily in the field of carbohybrids. Ongoing research and development has been suspended since the termination of development of SYNSORB Cd®.

Operating expenses totalled $7,106,000 and $3,648,000 for the years ended December 31, 2001 and 2000 respectively. The increase of $3,458,000 primarily reflects $2,446,000 in future wind down costs and $507,000 in December 2001 staff termination costs. Included in the future wind down costs are $1,339,000 related to future staff terminations and $1,107,000 in other administrative costs relating to the termination of development of SYNSORB Cd® such as legal and audit fees, insurance, rent and other office costs.

Capital Expenditures

Capital expenditures for the year ended December 31, 2001 totalled $944,000, including $720,000 in patent costs incurred for the Corporation’s intellectual property, $92,000 in leasehold improvements, $127,000 in office and computer equipment, and $25,000 in manufacturing equipment. All capital expenditures, except those deemed necessary to maintain intellectual property, were suspended subsequent to the decision on December 10, 2001 to halt development of SYNSORB Cd®. The Corporation has offered its manufacturing facility for sale. Capital expenditures for the year ended December 31, 2000 totalled $980,000. At year-end 2001, the Corporation had no commitments for future capital spending.

Annual amortization of capital investments totalled $9,655,000 or approximately 36% of the Corporation’s total expenses for the year 2001 compared to $1,404,000 or 10% for 2000. Included in the 2001 amortization amount are property and other capital assets write downs of $8,203,000 arising as a result of the termination of development of SYNSORB Cd®. Depreciation of the manufacturing facility commenced on January 1, 2001 at the rate of 5% per annum on a declining balance.

Income Taxes

As at December 31, 2002 the Corporation had non-capital losses of approximately $37,314,000 available to reduce future taxable income. These losses will expire in the years 2005 through 2008. In addition, the Corporation had unclaimed expenditures of approximately $41,000,000 available to reduce future taxable

25

income and $4,939,000 of unclaimed investment tax credits available to reduce future income tax payable. As at December 31, 2002 the Corporation had non-capital losses of approximately $37,314,000 available to reduce future taxable income. These losses will expire in the years 2005 through 2008. In addition, the Corporation had unclaimed expenditures of approximately $41,000,000 available to reduce future taxable income and $4,939,000 of unclaimed investment tax credits available to reduce future income tax payable. The acquisition by Hawker of an additional 49% undivided interest in the Optioned Properties will add to the Corporation’s tax pools by an amount equal to the purchase price of $67 million, subject to adjustment.

Treatment of Research and Development Costs

During 2001 and the previous two years, the research and development costs of the Corporation were expensed as incurred. Under Canadian generally accepted accounting principles (GAAP), development costs should be capitalized if certain criteria are met. Companies with major products in clinical trials do not necessarily meet these criteria. In the United States all research and development costs are expensed in accordance with US GAAP. The Corporation’s development costs in 2001, and the previous two years, did not meet the following two capitalization criteria: (i) the technical feasibility of the product or process must have been established; and (ii) the future market for the product or process must be clearly defined. With regard to (i), the Corporation was conducting clinical trials for SYNSORB Cd® and SYNSORB Pk® and the technical feasibility of these products was not known. With regard to (ii), the future market for these products was not clearly defined. For these reasons, the Corporation’s development costs were expensed and not capitalized.

Risks and Uncertainties

Throughout the conduct of its clinical trials, the Corporation has maintained product liability insurance at levels consist with the current industry practice. No assurance can be given that this coverage will provide full protection against all risks.

ITEM 6: MARKET FOR SECURITIES

The Corporation’s Common Shares are listed for trading on the TSX under the trading symbol “HKR”.

ITEM 7: DIRECTORS AND OFFICERS

The following table sets out the names and municipalities of residence of each of the current directors and officers of the Corporation, their current positions and offices with the Corporation and their principal occupations and positions held during the last five years.

Name and Municipality of	Position with the	Director or	Present Occupation and Positions Held
Residence	Corporation	Officer Since	During the Last Five Years
David A. Tuer Calgary, Alberta	Chief Executive Officer and a Director	January 6, 2003	Chief Executive Officer and a Director of Hawker and Chairman, Calgary Health Region. Prior to October 2001, President, Chief Executive Officer and a Director of PanCanadian Petroleum Limited
Ronald P. Mathison(1)(2)(3) Calgary, Alberta	Chairman and a Director	April 3, 2003	President and Director of Matco Investments Ltd.
Stan G.P. Grad (3) Calgary, Alberta	Director	April 21, 2003	Independent Businessman
Bruce J. Kenway, C.A.(1)	Director	March 31, 1994	Partner, Kenway Mack Slusarchuk

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Name and Municipality of	Position with the	Director or	Present Occupation and Positions Held
Residence	Corporation	Officer Since	During the Last Five Years
Calgary, Alberta			Stewart LLP, Chartered Accountants
Martin A. Lambert(1)(2) Calgary, Alberta	Director	April 3, 2003	Partner, Bennett Jones LLP
Keith T. Smith (3) Calgary, Alberta	Director	April 3, 2003	President and Chief Executive Officer of zed.i solutions inc. from April 2001. Prior thereto, Vice President, Corporate Development with zed.i solutions inc. since April 2000 and Executive Vice President of Acanthus Resources Ltd., a private oil and gas company, from August 1998 to April 2000. Prior thereto, Executive Vice President of WestCastle Energy Corp., the Manager of WestCastle Energy Trust, and a Director of WestCastle Acquisition Corp., the operating company of WestCastle Energy Trust from February 1997 to August 1998
Barry Herring Calgary, Alberta	Chief Financial Officer	May 6, 2003	Chief Financial Officer of the Corporation since May 6, 2003. Prior thereto, Vice President, Finance and Chief Financial Officer of Southward Energy Ltd. from January 2002 to April 2003, Senior Vice President of Calpine Canada from June 2000 to September 2000, Vice President, Finance and Operations of Quintana Minerals Canada Corp. from May 1999 to June 2000 and Vice President, Finance and Operations of Ocean Energy Inc. from 1997 to 1999.
Terry C. Schmidtke Calgary, Alberta	Chief Operating Officer	April 21, 2003	Chief Operating Officer of the Corporation since April 21, 2003. Prior thereto, Senior Vice President, Central Plains Region for EnCana Corporation from April 2002 to March 2003, and General Manager of various business units of PanCanadian Petroleum Limited since 1994.
Darrell R. Peterson Calgary, Alberta	Corporate Secretary	April 3, 2003	Partner, Bennett Jones LLP since March 2003. Prior thereto, Associate of Bennett Jones LLP.

Notes:

(1)	Member of Audit Committee.
(2)	Member of Corporate Governance Committee.
(3)	Member of Reserves Committee.

The officers and directors of the Corporation, as a group, beneficially own, directly or indirectly, 5,230,767 Equity Shares or approximately 46% of the outstanding Equity Shares (calculated as though the Conversion had occurred).

ITEM 8: ADDITIONAL INFORMATION

Additional information, including information as to directors’ and officers’ remuneration and indebtedness, principal holders of the Corporation’s securities, options to purchase securities and interests

27

of insiders in material transactions is contained in the Information Circular of the Corporation for the Annual and Special Meeting of Shareholders of the Corporation held on April 3, 2003.

Additional financial information is provided in the Corporation’s audited consolidated financial statements for the year ended December 31, 2002.

When the Corporation’s securities are in the course of a distribution pursuant to a short form prospectus or when a preliminary short form prospectus has been filed in respect of a distribution of the Corporation’s securities, upon request to the Chief Financial Officer, the Corporation will provide to any person:

1)	one copy of this Annual Information Form together with one copy of any document, or the pertinent pages of any document, incorporated by reference in this annual information form;
2)	one copy of the Corporation’s audited consolidated financial statement for the year ended December 31, 2002, together with the report of the auditors thereon, and one copy of any of the Corporation’s interim consolidated financial statements subsequent to such audited financial statements; and
3)	one copy of the Corporation’s Information Circular for the Annual and Special Meeting of the Shareholders of the Corporation held on April 3, 2003.

At any other time, one copy of each of the documents referred to in 1, 2 and 3 above may be obtained upon request to Chief Financial Officer for the Corporation, provided that the Corporation may require the payment of a reasonable charge if the request is made by a person who is not a shareholder of the Corporation.

Any request for any documents referred to above should be made to the Chief Financial Officer, Hawker Resources Inc., 3200, 350 — 7th Avenue S.W., Calgary, Alberta, T2P 3N9 and fax (403) 266-1814.

28 EX-99.4 4 h12489bexv99w4.htm COMPARATIVE FINANCIAL STATEMENTS

Exhibit 4

Financial Statements of

SYNSORB Biotech Inc.

December 31, 2002 and 2001

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AUDITORS’ REPORT

To the Shareholders of
SYNSORB Biotech Inc.

We have audited the balance sheets of SYNSORB Biotech Inc. as at December 31, 2002 and 2001 the statements of earnings and deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2002 and 2001 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

Calgary, Canada	/s/ Ernst & Young LLP
February 5, 2003 (except for note 13(b)
which is as of March 7, 2003)	Chartered Accountants

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SYNSORB Biotech Inc. (Incorporated under the Alberta Business Corporations Act)
(see Note 1)
Balance Sheets
As at December 31

(in thousands of dollars)		2002			2001
ASSETS
Current
	Cash and cash equivalents	$	289		$	5,841
	Accounts receivable		27			62
	Prepaids		176			153
			492			6,056
Capital assets (Notes 1 and 4)			3,523			10,783
Investments (Note 3)			—			5,745
		$	4,015		$	22,584
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
	Accounts payable and accrued liabilities (Note 1)	$	80		$	4,871
	Current portion of long-term debt (Note 5)		—			5,910
			80			10,781
Alberta Heritage Foundation grant (Note 6)			387			387
Shareholders’ equity (Note 7)
	Share capital		12,741			84,271
	Deficit		(9,193	)		(72,855	)
			3,548			11,416
		$	4,015		$	22,584

See accompanying notes
On behalf of the Board:
“Gerry Quinn”	“Bruce Kenway”
Director:	Director:
Gerry C. Quinn	Bruce J. Kenway

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SYNSORB Biotech Inc.

Statements of Earnings and Deficit
For the years ended December 31

(in thousands of dollars, except per share amounts)		2002			2001
Revenue
	Interest income	$	32		$	515
	Other		107			214
			139			729
Expenses
	Research and development (Note 1)		—			9,255
	Operating (Note 1)		1,596			7,106
	Interest on long-term debt		71			787
	Maintenance of patents		243			—
	Amortization and asset write-downs (Note 1)		7,216			9,655
			9,126			26,803
Loss before the following			(8,987	)		(26,074	)
Gain on dilution of investment in Oncolytics (Note 3)			—			357
Gain on sale and distribution of Oncolytics shares (Note 3)			13,224			3,004
Share of loss from equity investment in Oncolytics			(471	)		(1,831	)
Earnings (loss) before tax			3,766			(24,544	)
Recovery of future income taxes (Note 11)			—			1,556
Net earnings (loss) for the year			3,766			(22,988	)
Deficit, beginning of year			(72,855	)		(49,867	)
Reduction of stated capital (Note 7)			59,896			—
Deficit, end of year		$	(9,193	)	$	(72,855	)
Basic and diluted net earnings (loss) per common share (Note 7)		$	0.76		$	(4.64	)

See accompanying notes

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SYNSORB Biotech Inc.

Statements of Cash Flows
For the years ended December 31

(in thousands of dollars)			2002			2001
Operating activities
Net earnings (loss) for the year			$	3,766		$	(22,988	)
	Add non-cash items
		Amortization and asset write-downs		7,216			9,655
		Gain on sale and distribution of Oncolytics shares (Note 3)		(13,224	)		(3,004	)
		Gain on dilution of investment in Oncolytics (Note 3)		—			(357	)
		Share of loss from equity investment in Oncolytics		471			1,831
		Recovery of future income taxes		—			(1,556	)
		Issuance of stock options for services		12			—
				(1,759	)		(16,419	)
Decrease in accounts receivable				35			135
Increase in prepaid expenses				(23	)		(34	)
(Decrease) increase in accounts payable and accrued liabilities				(4,791	)		3,541
				(6,538	)		(12,777	)
Investing activities
	Purchase of capital assets			—			(944	)
	Proceeds from sale of capital assets			44			—
	Proceeds from sale of Oncolytics shares (Note 3)			6,898			3,481
				6,942			2,537
Financing activities
	Common shares issued on exercise of options and warrants			—			126
	Costs of distribution of shares in Oncolytics			(46	)		—
	Repayment of long-term debt			(5,910	)		(2,866	)
				(5,956	)		(2,740	)
Decrease in cash and cash equivalents				(5,552	)		(12,980	)
Cash and cash equivalents, beginning of year				5,841			18,821
Cash and cash equivalents, end of year			$	289		$	5,841
Cash interest paid				71			787
Cash interest received				56			580
Cash taxes paid				10			86

See accompanying notes

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SYNSORB Biotech Inc.

Notes to Financial Statements
December 31, 2002 and 2001

1. NATURE OF OPERATIONS

During 2001 SYNSORB Biotech Inc. (“SYNSORB” or “the Company”) conducted pharmaceutical drug development with respect to SYNSORB Cd® for the prevention of recurrent C.difficile associated diarrhea. On December 10, 2001 the Company terminated development of SYNSORB Cd® including its phase III clinical trials. Subsequent to December 10, 2001 the Company had no drug in active development. On March 7th, SYNSORB entered into an agreement with an unrelated company to transform SYNSORB into an oil and gas enterprise (see Note 13).

Measurement Uncertainty

As a result of the decision to halt development of SYNSORB Cd®, the Company made provision for future wind-down costs and wrote down the carrying value of its capital assets in its financial statements for the year ended December 31, 2001. These cost provisions and write-downs incorporated estimates of potential costs, market realizations and timing which are uncertain and dependent on factors over which management may have no control. These cost provisions and write-downs have been reviewed as at December 31, 2002. However, future adjustments could be required and such adjustments could have a material impact on income.

Provision for SYNSORB Cd® Trial Wind-Down Costs

A provision for the future wind-down costs of the clinical trials, reduction in staff and elimination of other costs associated with the development of SYNSORB Cd® totaling $3,830,000 was included in research and development and operating expenses for the year ended December 31, 2001. An additional provision amount of $50,000 was included in the results for the period ended June 30, 2002. As at December 31, 2002 the entire provision amount had been utilized. No further wind-down costs are anticipated.

Impairment of Capital Assets

The decision to halt development of SYNSORB Cd® has led to the write-down of certain capital assets.

SYNSORB built a cGMP-compliant manufacturing facility in 1998 as part of its drug development activity. As a result of the decision to halt development of SYNSORB Cd®, the Company determined that continued ownership of its manufacturing facility was unnecessary and the facility was advertised for sale as a cGMP-compliant manufacturing facility. Sale of the facility as a cGMP-compliant manufacturing facility would have achieved the highest net realizable value for the facility. The Company wrote down the value of the manufacturing facility and associated equipment at December 31, 2001 to their estimated net realizable values based on potential sale as a cGMP-compliant manufacturing facility.

Efforts to market the facility as a cGMP-compliant manufacturing facility to pharmaceutical companies were unsuccessful. The Company now expects to realize commercial value for the land and building. Accordingly, the Company wrote down the carrying value of the building and land to $2,500,000 (December 31, 2001: $8,600,000).

Most of the manufacturing equipment was auctioned subsequent to December 31, 2002 for proceeds approximating their carrying value. The carrying value of the manufacturing equipment as at December 31, 2002 was written down to $1,000,000 (December 31, 2001: $2,000,000).

- 7 -

For the year ended December 31, 2001, SYNSORB wrote off its patents associated with SYNSORB-related technology and its leasehold improvements. The Company also wrote down its computer equipment and its office furniture and equipment. In 2002, costs associated with maintenance of patents are expensed as incurred.

The asset write-downs are included in amortization expense.

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December 31, 2002
	Carrying value		Asset		Carrying value
(in thousands of dollars)	before write-down		write-down		after write-down
Building and land	$	8,600	$	6,100	$	2,500
Manufacturing equipment		1,997		997		1,000
Computer & office furniture & equipment		23		—		23
			$	7,097

December 31, 2001
	Carrying value		Asset		Carrying value
(in thousands of dollars)	before write-down		write-down		after write-down
Patents	$	2,060	$	2,060		—
Building and land		13,367		4,767	$	8,600
Manufacturing equipment		3,109		1,109		2,000
Leasehold, computer & office furniture & equipment		450		267		183
			$	8,203

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of SYNSORB Biotech Inc. (“the Company”) have been prepared in accordance with Canadian generally accepted accounting principles. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements necessarily involves the use of estimates and approximations that have been made using careful judgment. The financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the accounting policies summarized below.

Revenue Recognition

Revenue from product sales is recognized when the product is delivered. Revenue from the granting of licenses to develop, import, package, market, distribute and sell the SYNSORB products is recognized in full in the period in which the agreement is completed. Revenue from milestone payments and royalties is recognized when received.

Investments

The Company used the equity method of accounting for its investment in Oncolytics Biotech Inc. (“Oncolytics”) up until the distribution of the majority of its holding in Oncolytics on May 15, 2002. Under this method of accounting, the Company included in its net earnings its share of the net earnings or losses of Oncolytics. Subsequent to this date, the investment has been accounted for on a cost basis and accordingly, no net earnings or losses of Oncolytics have been included in net earnings subsequent to May 15, 2002.

Capital Assets

Capital assets are recorded at cost. Amortization is provided to amortize the cost of assets over their estimated useful lives. An impairment in the carrying value of these capital assets is recorded in the statement of earnings and deficit in the year that the impairment becomes evident. Amortization is recorded using the declining balance and straight-line methods at the following annual rates:

Building	5% declining balance
Manufacturing equipment	20% straight-line
Computer equipment	30% declining balance
Office furniture and equipment	20% declining balance

- 9 -

Research and Development

Research costs are expensed as incurred. Development costs that meet specific criteria related to technical, market and financial feasibility are capitalized.

Stock Based Compensation

On January 1, 2002 the Company adopted the new CICA standard for stock-based compensation. As permitted by CICA the Company has applied this change prospectively for new awards granted on or after January 1, 2002.

For stock options granted to employees and directors on or after January 1, 2002 under stock option plans with no cash settlement features, the Company has chosen to recognize no compensation. However, direct awards of stock to employees and stock and stock option awards granted to non-employees are accounted for in accordance with the fair value method of accounting for stock-based compensation. The fair value of direct awards of stock are determined by the quoted market price of the Company’s stock and the fair value of stock options are determined using the Black-Scholes option pricing model. In periods prior to January 1, 2002, the Company recognized no compensation when stock or stock options were issued to employees.

During the year ended December 31, 2002, the Company granted stock options to a non-employee and recorded $12,000 in compensation included in operating expenses based on the fair value of the options granted.

Future Income Taxes

The Company follows the liability method of accounting for income taxes. Under this method, future tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using substantially enacted tax rates and laws that will be in effect when the differences are expected to reverse. Income tax expense for the period is the tax payable for the period and any change during the period in future income tax assets and liabilities. A valuation allowance is recorded to the extent that there is uncertainty regarding utilization of future tax assets.

Earnings Per Share

The Treasury method is used to calculate diluted earnings per share. This method assumes that any proceeds from the exercise of stock options and warrants would be used to purchase common shares at the average market price during the period.

3. BUSINESS ACQUISITIONS AND DISPOSITIONS

The Company acquired all of the issued and outstanding common shares of Oncolytics Biotech Inc. (“Oncolytics”) on April 12, 1999. Oncolytics subsequently issued common shares which reduced the Company’s ownership interest to 38.6% at December 31, 2000. During 2001, Oncolytics issued further common shares which resulted in a gain on dilution of $357,000. As at December 31, 2001, the Company held 6,255,800 common shares of Oncolytics.

On May 7, 2002 approval was received from both the shareholders of the Company and the shareholders of Oncolytics for the distribution of not less then 4,000,000 Oncolytics shares to the shareholders of the Company on a pro rata basis. On May 8, 2002 the Company received approval from the Court of the Queen’s Bench of Alberta to distribute these Oncolytics shares and the distribution of 4,000,235 Oncolytics shares was made effective May 15, 2002. The deemed value of these shares on the date of distribution, net of legal fees with respect to the transaction, was $11,600,000 resulting in a gain on distribution of $8,325,000. The transaction was marked to market and accounted for as a return of capital (see Note 7). As part of this transaction the Company’s holding of 1,500,000 million shares in BCY Life Sciences Inc. was transferred to Oncolytics. No value had been assigned to these shares in the accounts of the Company and

- 10 -

no gain or loss was recorded as a result of the transaction. The market value of the BCY shares on May 15, 2002 was $300,000.

During the year ended December 31, 2002, the Company sold 2,255,565 (December 31, 2001: 494,200) common shares in Oncolytics for net proceeds of $6,898,000 (December 31, 2001: $3,481,000) resulting in a gain on sale of $4,899,000 (December 31, 2001: $3,004,000). As at December 31, 2002 the Company did not hold any common shares of Oncolytics.

4. CAPITAL ASSETS

	2002
			Accumulated
			Amortization and
(in thousands of dollars)	Cost		Write-Downs		Carrying Value
Land	$	600		—	$	600
Building		13,423	$	11,523		1,900
Patents		3,708		3,708		—
Manufacturing equipment		4,303		3,303		1,000
Computer equipment		422		402		20
Office furniture and equipment		104		101		3
Leasehold improvements		350		350		—
	$	22,910	$	19,387	$	3,523

	2001
			Accumulated
			Amortization and
(in thousands of dollars)	Cost		Write-Downs		Carrying Value
Land	$	600		—	$	600
Building		13,423	$	5,423		8,000
Patents		3,708		3,708		—
Manufacturing equipment		4,309		2,309		2,000
Computer equipment		521		404		117
Office furniture and equipment		248		182		66
Leasehold improvements		350		350		—
	$	23,159	$	12,376	$	10,783

5. LONG-TERM DEBT

	2002		2001
	Accumulated
	Amortization and
(in thousands of dollars)	Write-Downs		Carrying Value
Loan payable with interest at 13.73% per annum with certain intellectual property pledged as collateral		—	$	910
Loan payable, with monthly interest payments at the lender’s floating basic rate plus 3% per annum (December 31, 2001: 8.86%). Land and building have been pledged as collateral		—		5,000
		—		5,910
Current portion		—		(5,910	)
		—		—

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6. ALBERTA HERITAGE FOUNDATION GRANT

Pursuant to the terms of a technology commercialization agreement the Company received a grant from the Alberta Heritage Foundation. The Company is required to repay the amount advanced of $387,000 plus a royalty equivalent to the amount initially received. Any required repayment and royalty is based on gross sales of SYNSORB related products commencing January 1, 2000 with payments equal to the lesser of 5% of gross sales or $100,000 per annum commencing 90 days after January 1, 2001.

7. SHARE CAPITAL

(a)      Authorized:

          Unlimited number of voting common shares without par value.
          Unlimited number of preferred shares to be issued in series.

(b)      Common Shares Issued:

	2002					2001
	Number of		Amount			Number of		Amount
	Shares		(in 000’s)			Shares		(in 000’s)
Balance, beginning of year		4,959,937	$	84,271			4,944,187	$	84,145
Reduction of stated capital		—		(59,896	)		—		—
Return of capital on distribution of Oncolytics shares (Note 3)		—		(11,646	)		—		—
Issuance of stock options for services		—		12			—		—
Issued for cash on exercise of options and warrants		—		—			15,750		126
Balance, end of year		4,959,937	$	12,741			4,959,937	$	84,271

Options exercised in 2001 relate to shares issued to a licensor pursuant to a licensing agreement and do not form part of the Company’s stock option plan.

(c)      Share consolidation

On May 7, 2002, the shareholders of the Company approved the consolidation of the common shares on the basis of one new common share being issued for every eight previously issued and outstanding common shares. All outstanding share and option numbers reflect the one for eight consolidation. The consolidated shares began trading on May 16, 2002. Simultaneously with the share consolidation was the distribution of the 4,000,235 shares in Oncolytics to the shareholders of the Company. This distribution was accounted for as a capital transaction and accordingly, the stated capital of the common shares was reduced by $11,646,000.

(d)      Reduction of stated capital

Pursuant to the Plan of Arrangement ratified by shareholders of the Company at the May 7, 2002 Annual and Special Meeting, the stated capital of SYNSORB shares was reduced to the net realizable value of the Company’s assets as at May 7, 2002.

(e)      Options and warrants

The Company has a stock option plan that provides for the issuance of options to its directors, officers, employees and non-employees to acquire up to 456,513 common shares. The dates on which options vest are set by the board of directors at the time of grant. The date on which options expire are also set by the board of directors at the time of grant and cannot exceed ten years. The Company has issued stock options to acquire common shares through its stock option plan of which the following are outstanding at December 31:

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	2002					2001
	Weighted					Weighted
	average					average
	exercise price					exercise price
	Shares			$		Shares			$
Outstanding at beginning of the year		244,440			40.88		275,877			49.60
Granted		275,000			0.70		65,625			12.88
Exercised		—			—		—			—
Expired		(6,250	)		68.00		—			—
Forfeited		(182,625	)		35.76		(97,062	)		46.64
Outstanding at year end		330,565			9.80		244,440			40.88
Options exercisable at end of year		329,065			9.80		212,550			45.04

The following table summarizes information about the stock options outstanding at December 31, 2002:

	Number		Weighted average		Weighted		Number		Weighted
	outstanding		remaining		average		exercisable		average
	December 31,		contractual life		exercise		December 31,		exercise
	2002		(years)		price		2002		price
Range of exercise prices
$0.50 to $1.00		275,000		2.88	$	0.70		275,000	$	0.70
$1.01 to $15.00		2,500		7.07	$	10.78		1,000	$	12.79
$15.01 to $30.00		11,313		2.58	$	22.00		11,313	$	22.00
$30.01 to $50.00		18,314		3.55	$	42.46		18,314	$	42.46
$50.01 to $70.00		938		3.89	$	64.80		938	$	64.80
$70.01 to $90.00		22,500		2.00	$	85.87		22,500	$	85.87
		330,565		2.88	$	9.80		329,065	$	9.80

In addition to the stock option plan, the Company has granted options and warrants to underwriters and financial institutions pursuant to public offerings and a licensing agreement, of which 10,625 warrants were outstanding at December 31, 2002 (68,750 options and 15,625 warrants at December 31, 2001), with a weighted average price of $36.00 per share ($33.60 at December 31, 2001).

(f)      Per share amounts

Earnings (loss) per common share calculations are based on earnings (loss) for the year as the numerator in the calculation and the weighted average number of common shares outstanding during the year (2002: 4,959,937; 2001: 4,955,199) as the denominator. For the year ended December 31, 2002, options to purchase 341,816 common shares at an average price of $10.72 and warrants for the purchase of 10,625 common shares at a price of $36.00 were not included in the computation of diluted earnings per share because the exercise price of the options and warrants was greater than the average market price of the common shares. For the year ended December 31, 2001, option and warrant conversions were not included in the computation of diluted earnings per share because the effect on the net loss for the year of the issue of additional shares on the conversions would be anti-dilutive. Per share amounts for 2001 have been restated to reflect the share consolidation noted in (c) above that took place in May 2002.

8. STOCK BASED COMPENSATION

The Company has a stock option plan that provides for the issuance of options to its officers, directors and employees. The Company applies the intrinsic value based method of accounting for stock-based compensation awards granted to officers, directors and employees. Accordingly, no compensation cost has been recognized under the stock-based compensation plan. Consideration paid on the exercise of stock options and purchase of stock is credited to share capital. Had compensation costs for the Company’s stock based compensation plan been determined based on the fair value at the grant dates for awards under those

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plans, consistent with the fair value based method of accounting for stock based compensation, the Company’s net earnings and earnings per share would have been reduced to the pro forma amounts indicated below:

(in thousands of dollars, except per share amounts)		2002
Net earnings
	As reported	$	3,766
	Pro forma	$	3,646
Basic and diluted net earnings per common share
	As reported	$	0.76
	Pro forma	$	0.74

The pro forma amounts shown above do not include the compensation costs associated with stock options granted prior to January 1, 2002. The fair value of common share options granted is estimated to be $120,000 as at the date of grant using the Black-Scholes option pricing model and the following assumptions:

	2002
Risk-free interest rate (%)		2.89
Expected life (years)		1.00
Expected volatility (%)		1.97
Expected dividend yield (%)		—

9. RELATED PARTY TRANSACTIONS

During the year ended December 31, 2002, the Company paid $214,000 (December 31, 2001: Nil) to Scout Capital Corporation (“Scout”), a significant shareholder, as reimbursement of Scout’s costs with respect to the Company’s annual general meeting. An additional amount of $34,000 was paid to Scout during 2002 to reimburse Scout for expenses incurred on behalf of the Company. The Company also paid $50,000 to Scout pursuant to an agreement under which Scout is to provide the Company with administrative and executive services until the end of April 2003. The fees charged were based on estimated time to be spent on Company matters at standard rates.

10. FINANCIAL INSTRUMENTS

Financial instruments of the Company consist of cash and cash equivalents, accounts receivable, investments, accounts payable and accrued liabilities, Alberta Heritage Foundation grant, and long-term debt. As at December 31, 2002 and 2001, there were no significant differences between the carrying values of these amounts and their estimated market values except as otherwise disclosed in the financial statements.

Cash equivalents consist primarily of highly liquid money market securities and investment deposits which are readily convertible into cash. Cash equivalents are carried at cost plus accrued interest. The cash equivalents earned an effective interest rate of 2.50% (2001: 4.52%). Of the total cash and cash equivalents at December 31, 2001, $5,104,000 was held in highly liquid money market securities and investment deposits that matured within ninety days. At December 31, 2002, there were no cash equivalents held.

11. INCOME TAXES

The provision for income taxes recorded in the financial statements differs from the amount which would be obtained by applying the statutory income tax rate to the net earnings (loss) before tax as follows:

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(in thousands of dollars)	2002			2001
Earnings (loss) before tax	$	3,766		$	(24,544	)
Statutory Canadian corporate tax rate		39.24	%		42.12	%
Anticipated tax expense (recovery)		1,478			(10,338	)
Gain on dilution of investment in Oncolytics		—			(75	)
Taxable income from investment in Oncolytics		—			421
Non-taxable portion of capital gain		(2,536	)		(633	)
Non-deductible portion of equity loss		92			—
Non-deductible expenses		3			26
Future tax assets valuation allowance		963			9,043
Future income tax expense (recovery)		—		$	(1,556	)

Future income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the Company’s future income tax assets and liabilities are as follows:

(in thousands of dollars)	2002			2001
Future tax liabilities:
Book value of investment in excess of tax adjusted cost base		—		$	(1,034	)
Future tax assets:
Non-capital loss carryforwards	$	13,105			15,670
UCC and scientific research and development pools in excess of book value of capital assets		13,197			10,772
Share issue costs		400			691
Net future tax assets		26,702			26,099
Valuation allowance		(26,702	)		(26,099	)
Net future taxes		—			—

The Company has non-capital losses for income tax purposes of approximately $37,314,000 which are available for application against future taxable income and which expire in the years:

2005	$	6,570,000
2006		11,410,000
2007		5,103,000
2008		14,231,000

The income tax benefits of these losses have not been recognized in the financial statements. The Company has unclaimed expenditures of approximately $41,098,000 available to reduce future year’s taxable income. The Company also has approximately $4,939,000 of unclaimed investment tax credits available to reduce future year’s income tax.

12. CLASS ACTION LAWSUIT

A class action statement of claim for violations of Federal securities laws was brought against the Company and its executive officers in the United States District Court, Southern District of New York, on January 17, 2002. A second action, citing identical particulars, was filed with the same court on February 22, 2002, and three other complaints were later filed. These actions were subsequently consolidated into one claim. Under terms of its insurance policies, the Company has the obligation to fund $200,000 with respect to legal costs associated with contesting this action. This amount was paid on March 8, 2002. An agreement in principle regarding settlement has been reached with counsel to the plaintiffs in the consolidated action and the cost of the proposed settlement will be covered by the Company’s insurance policies.

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13. SUBSEQUENT EVENTS

During January 2003, the Company sold most of its manufacturing equipment for proceeds approximating its carrying value.

The Company entered into a financing agreement effective March 7, 2003 with an unrelated party under which the Company proposes to raise $3,000,000. Under this agreement, the Company would issue the following: 354,280 Series A Debentures for $2,975,952; 354,280 Series A Warrants for $9,771; 1,771,400 voting preferred shares for $5,099; 3,188,520 non-voting preferred shares for $9,178.

In addition, the unrelated party has the right to acquire a further 40,785 units for $345,364. As a result the Company would issue the following: 40,785 Series A Debentures for $342,595; 40,785 Series A Warrants for $1,125; 203,925 voting preferred shares for $587; 367,066 non-voting preferred shares for $1,057.

If the financing agreement is not completed the Company may be required to pay a non-completion fee of $150,000. The intent of the unrelated party is to transform the Company into an oil and gas enterprise. Completion of the transaction is subject to shareholder and regulatory approvals.

Concurrent with the above financing, the Company has entered into an agreement with two other unrelated parties to issue the following: 75,000 common shares for $45,364; 35,428 Series A Debentures for $297,595; 35,428 Series A Warrants for $977; 177,140 voting preferred shares for $510; 318,852 non-voting preferred shares for $918.

Each Series A Warrant will entitle the holder thereof to purchase five common shares and nine Class A shares on the concurrent surrender of the warrant, voting preferred shares, and non-voting preferred shares, and the payment of $0.60 for each common share and each Class A common share.

EX-99.5 5 h12489bexv99w5.htm MANAGEMENT'S DISCUSSION AND ANALYSIS 12/31/2002

Exhibit 5

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF THE FINANCIAL POSITION AND RESULTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002

     The following should be read in conjunction with the Corporation’s audited financial statements as at and for the year ended December 31, 2002 and the notes thereto.

     On December 10, 2001, the Corporation terminated development of SYNSORB Cd®, its sole development drug. Subsequent to that date, the Corporation has had no drug under active development and has no regular source of operating revenue or cash flow.

     After December 10, 2001, the Corporation reduced its spending and terminated all contracts and commitments that were considered not critical to an orderly wind down of the clinical trials and the preservation of its asset base.

Provision for SYNSORB Cd® Wind-down Costs

     A provision for the future wind-down costs of clinical trials, reduction in staff and elimination of their costs associated with the development of the SYNSORB Cd® totaling $3,830,000 was included in the results for the year ended December 31, 2001. An additional provision amount of $50,000 was included for the period ended June 30, 2002. As at December 31, 2002, the entire provision amount had been utilized. No further wind-down costs are anticipated.

Write-downs of Corporate Assets

     The decision to halt clinical trials led to a write-down of certain capital assets. The Corporation determined that continued ownership of its manufacturing facility was unnecessary. The Corporation wrote down the value of its manufacturing facility and associated equipment on December 31, 2001 to the estimated net realizable value based on a potential sale as a cGMP-compliant manufacturing facility. Efforts to market the facility as a cGMP-compliant manufacturing facility were unsuccessful and the Corporation now expects to realize commercial value for the land and building. Accordingly, the Corporation wrote-down the value of the building and land to $2,500,000 (December 31, 2001: $8,600,000). The manufacturing equipment was auctioned subsequent to December 31, 2002 and the value of the manufacturing equipment as at December 31, 2002 was written down to $1,000,000 (December 31, 2001: $2,000,000). For the year ended December 31, 2001 the Corporation wrote off patents associated with its drug technology and leasehold improvements and wrote-down computer equipment and office furniture and equipment. The asset write-downs were included in amortization expense.

- 2 -

Distribution of Shares of Oncolytics Biotech Inc. (“Oncolytics”)

     Effective May 15, 2002 the Corporation distributed to its shareholders 4,000,235 common shares of Oncolytics which was accounted for as a return of capital. The deemed value of these shares, net of expenses, was $11,600,000 resulting in a gain on distribution of $8,325,000. As part of this transaction, the Corporation’s holding of 1,500,000 common shares in BCY Life Science’s Inc. was transferred to Oncolytics. No gain or loss was recorded as a result of that transfer. Effective May 15, 2002, the common shares of the Corporation were consolidated on a 1 for 8 basis.

     During the year ended December 31, 2002 the Corporation sold 2,255,565 common shares of Oncolytics for net proceeds of $6,898,000 resulting in a gain on sale of $4,899,000. As at December 31, 2002 the Corporation did not hold any common shares of Oncolytics.

Liquidity and Capital Resources

     At December 31, 2002 the Corporation’s cash and working capital positions were $289,000 and $412,000, respectively, compared to December 31, 2001 balances of $5,841,000 and ($4,725,000), respectively.

     As at December 31, 2002 the Corporation had no long-term or short-term debt. At December 31, 2001 the current portion of long term-debt of the Corporation was $5,910,000, all of which was repaid during 2002.

     The Corporation’s primary source of liquidity during 2002 and its current primary source of liquidity is the liquidation of its assets. In 2002, the Corporation sold 2,255,565 common shares of Oncolytics for net proceeds of $6,898,000 resulting in a gain on sale of $4,899,000. As at December 31, 2002 the Corporation did not hold any common shares of Oncolytics. During 2002 the Corporation attempted to dispose of both its manufacturing equipment and its manufacturing facility. Subsequent to December 31, 2002 the Corporation disposed of most of its manufacturing equipment through auction realizing proceeds, net of expenses, of approximately $900,000 and has listed its building and related land for sale as commercial premises. The Corporation also holds miscellaneous intellectual property rights with respect to certain drug technologies, which it may license, dispose of or abandon. In February 2003 the Corporation received net proceeds of approximately U.S.$240,000 for an exclusive license of certain of its patents regarding toxin binding sugars. No assurance can be given as to whether any additional assets can be disposed of or what, if any, proceeds can or will be received with respect thereto.

     In addition to the liquidation of assets, the Corporation may receive milestone payments and royalties with respect to the previous sale of its INH Technologies Inc. subsidiary or may choose to sell these rights. The Corporation cannot predict the likelihood, timing or amount of any milestone or royalty receipts.

     The Corporation has entered into a Financing Agreement effective March 7, 2003 with an unrelated party, pursuant to which the Corporation will issue by way of a private placement $2,975,952 principal amount of secured debentures, together with 354,280 voting and non-voting common share purchase warrants with 1,771,400 associated voting preferred shares and

- 3 -

3,188,520 associated non-voting preferred shares. One warrant, five voting preferred shares, and nine non-voting preferred shares entitle the holder to acquire five voting common shares and nine non-voting common shares at a price of approximately $0.60 per common share, and the debentures can be used to pay the warrant exercise price. The investor group also has the right to acquire up to an additional $342,595 principal amount of debentures together with an additional 40,785 warrants, 203,925 voting preferred shares, and 367,066 non-voting preferred shares.

     Concurrent with this financing, the Corporation has entered into an agreement with two other unrelated investors, who will subscribe, by way of private placement, for 75,000 voting common shares, and $297,595 principal amount of debentures, together with 35,428 warrants, 177,140 voting preferred shares, and 318,852 non-voting preferred shares.

     The private placement is subject to regulatory, shareholder and other customary approvals and is scheduled to close on or about April 4, 2003. The investor group has announced that it intends to cause the Corporation to focus on oil and gas activities in the future. There can be no assurance that the proposed private placement will be completed as proposed or at all.

     The Corporation believes its capital resources as at January 31, 2003 will be sufficient to sustain its remaining operations until completion of the proposed private placement. However, if the proposed private placement was not approved by shareholders or otherwise not completed, the Corporation would have limited capital resources and would be dependent for future capital resources upon the disposition of its remaining assets. However, there can be no assurance that the Corporation’s existing capital resources will be sufficient for any particular purpose or that the remaining assets will be sold or, if sold, when, on what terms and for what proceeds. If adequate funds are not available, the Corporation’s financial condition and future prospects may be adversely affected.

     If the proposed private placement is approved and completed, the Corporation’s new management intends to shift the focus of the Corporation’s activities to the oil and gas sector. While the proposed private placement will result in the Corporation issuing up to $3,616,142 principal amount of debentures, the proceeds of those debentures, along with an additional $460,000 of the Corporation’s cash, will have to be pledged as security for repayment of the debentures. Accordingly, the private placement will not be a source of additional capital resources and liquidity to the Corporation until the warrants issued in the private placement are exercised and the proceeds received as additional equity capital.

     The oil and gas industry is capital intensive and the Corporation is likely to require significant additional capital resources in order to succeed in the oil and gas sector. At present, the Corporation has not identified any source of these additional capital resources and it is unlikely that such resources would be available to it unless particular oil and gas assets are identified to be acquired.

     The Corporation’s ability to raise additional capital will depend upon a number of factors, such as general economic conditions and conditions in the oil and gas industry, that are beyond its control. If additional capital is required and is not available to the Corporation on acceptable terms, the Corporation’s financial condition and prospects may be impaired.

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Results of Operations

     For the year ended December 31, 2002, the Corporation had total revenue of $139,000 compared to $729,000 for the year ended December 31, 2001. Interest income for the 12 months ended December 31, 2002 decreased significantly compared to the same period in 2001 as a result of lower average cash balances on hand and lower interest rates in 2002.

     Expenses for the year ended December 31, 2002 of $9,126,000 were less than the expenses of $26,803,000 for the comparable period in 2001. Because the Corporation had terminated research and development in late 2001 and made a provision in that year for future wind-down costs associated with drug development, research and development expenses in 2002 were nil (2001: $9,255,000). Operating expenses for 2002 were $1,596,000, a significant reduction from $7,106,000 for 2001. The reduction is due to the termination of employees, the termination of certain office space effective April 11, 2002 and the consolidation of all activity at the manufacturing facility.

     Interest on long-term debt in 2002 was $71,000, a significant reduction from $787,000 in 2001 due to the repayment by the Corporation during 2002 of all of its long and short-term debt. Amortization and asset write-downs in 2002 were $7,216,000 compared to $9,655,000 in 2001. Included in the 2001 amortization amounts was property and other capital asset write-downs of $8,203,000 arising from the termination of the Corporation’s drug development program. The amortization in 2002 included additional write-downs of the Corporation’s equipment and manufacturing facility based on the Corporation’s determination that those assets could only be sold on the basis of general commercial conditions and not their cGMP compliant attributes.

Tax Pools

     The Corporation has certain losses and expenditures that may be available to reduce future year’s taxable income. See Note 11 to the Corporation’s 2002 audited financial statements.

     Class Action Law Suit

     A class action complaint for alleged violation of United States federal securities laws was brought against the Corporation and its executive officers in the United States District Court, Southern District of New York, on January 17, 2002. Actions subsequently filed regarding the same matter have been consolidated into a single action in that Court. Under the terms of the Corporation’s insurance policies, the Corporation has funded $200,000 with respect to legal costs associated with these actions. An agreement in principle regarding settlement has been reached with counsel to the plaintiffs in the consolidated action and the cost of the proposed settlement will be covered by the Corporation’s insurance policies. The proposed settlement is subject to the approval of the Court and does not cover the claims of plaintiffs who decide to opt out of the settlement. No assurance can be given that the settlement will be approved by the Court or as to the size of claims of plaintiffs who may opt out of the settlement and bring actions independently against the Corporation.

- 5 -

Risks and Uncertainties

     The Corporation has terminated development of its drug products and offered for sale substantially all of it drug related assets. While certain of these assets have been disposed of, there can be no assurance that a buyer will be found to purchase the manufacturing facility and land, the significant remaining asset of the Corporation.

     Throughout the conduct of its clinical trials, the Corporation has maintained product liability insurance at levels consistent with current industry practice. No assurance can be given that this coverage will provide full protection against all risks.

     If the proposed private placement is approved, the new management of the Corporation has announced its intention to enter the oil and gas sector. If this occurs, the Corporation and its business activities will be subject to the risks of the oil and gas industry, including the fluctuation of commodity prices, the risks of exploration and development, competition from significantly larger and better funded entities, the need for a significant amount of capital, environmental risks, government regulation and the uncertainty caused by the Kyoto Protocol on the energy industry. EX-99.6 6 h12489bexv99w6.htm UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENT

Exhibit 6

HAWKER

Resources Inc.

Third Interim Report
For the Three and Six Months Ended September 30, 2003

Hawker Resources Inc.

Consolidated Balance Sheets
As at

		September 30			December 31
(in thousands of dollars)		2003			2002
		(unaudited)			(audited)
ASSETS (Note 6)
Current
	Cash	$	—		$	289
	Accounts Receivable		8,777			27
	Prepaids		1,030			176
			9,807			492
Assets held for sale (Note 4)			2,190			3,500
Capital assets (Notes 3 and 5)			69,684			23
		$	81,681		$	4,015
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
	Accounts payable and accrued liabilities	$	10,314		$	80
Bank loan (Note 6)			23,119			—
Leasehold inducements			140			—
Alberta Heritage Foundation grant (Note 7)			—			387
Future site restoration and abandonment			146			—
Commitments and contingencies (Notes 3, 14 and 15)
Shareholders’ Equity
	Share capital (Note 8)		58,323			12,741
	Deficit		(10,361	)		(9,193	)
			47,962			3,548
		$	81,681		$	4,015

See accompanying notes to the consolidated financial statements

Hawker Resources Inc.

Consolidated Statements of Earnings (Loss) and Deficit
Periods ended September 30, 2003 and 2002

		Three Months			Three Months			Nine Months			Nine Months
		Ended			Ended			Ended			Ended
(in thousands of dollars, except per		September 30,			September 30,			September 30,			September
share amounts)		2003			2002			2003			30, 2002
		(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenue
	Production revenue	$	8,786		$	—		$	8,786		$	—
	Royalties		(2,389	)		—			(2,389	)		—
			6,397			—			6,397			—
	Interest income		39			2			68			31
	Other		—			—			382			107
			6,436			2			6,847			138
Expenses
	Production		838			—			838			—
	General and administrative		967			590			2,329			1,249
	Interest on bank debt		238			—			267			71
	Depletion and depreciation		4,193			7			4,196			23
	Site restoration and abandonment		146			—			146			—
			6,382			597			7,776			1,343
Earning (loss) before the following			54			(595	)		(929	)		(1,205	)
Lease abandonment expense			(322	)		—			(322	)		—
Operating costs and write-downs associated with assets held for sale			11			(6,098	)		(179	)		(6,314	)
Gain on the sale and distribution of Oncolytics shares			—			126			—			12,997
Share of loss from equity investment in Oncolytics			—			—			—			(471	)
Alberta Heritage Foundation grant settlement (Note 7)			—			—			368			—
Earnings (loss) before income taxes			(257	)		(6,567	)		(1,062	)		5,007
Current income tax expense (Note 10)			106			—			106			—
Net earnings (loss) for the period			(363	)		(6,567	)		(1,168	)		5,007
Deficit, beginning of period			(9,998	)		(61,281	)		(9,193	)		(72,855	)
Deficit, end of period		$	(10,361	)	$	(67,848	)	$	(10,361	)	$	(67,848	)
Basic and diluted net earnings (loss) per common share (Note 8)		$	(0.01	)	$	(1.32	)	$	(0.08	)	$	1.01

See accompanying notes to the consolidated financial statements

Hawker Resources Inc.

Consolidated Statements of Cash Flows
Periods ended September 30, 2003 and 2002

		Three Months			Three Months			Nine Months			Nine Months
		Ended			Ended			Ended			Ended
		September 30,			September 30,			September 30,			September 30,
(in thousands of dollars)		2003			2002			2003			2002
		(unaudited)			(unaudited)			(unaudited)			(unaudited)
OPERATING ACTIVITIES
Net earnings (loss) for the period		$	(363	)	$	(6,567	)	$	(1,168	)	$	5,007
Add (deduct) non-cash items:
	Depletion, depreciation and asset write-downs		4,193			6,079			4,341			6,151
	Site restoration and abandonment		146			—			146			—
	Alberta Heritage Foundation grant settlement (Note 7)		—			—			(368	)		—
	Share of loss from equity investment in Oncolytics		—			—			—			471
	Gain on sale and distribution of Oncolytics shares		—			(126	)		—			(12,997	)
			3,976			(614	)		2,951			(1,368	)
Net change in non-cash working capital (Note 13)			2,502			(136	)		2,708			(4,675	)
			6,478			(750	)		5,659			(6,043	)
INVESTING ACTIVITIES
Proceeds from sale of capital assets			150			—			1,173			37
Acquisition of oil and gas properties (Note 3)			(2,587	)		—			(71,630	)		—
Additions to oil and gas properties			(5,172	)		—			(5,647	)		—
Additions to other capital assets			(244	)		—			(244	)		—
Leasehold inducements received			170			—			170			—
Proceeds from sale of Oncolytics shares			—			207			—			6,429
			(7,683	)		207			(76,178	)		6,466
Net change in non-cash working capital (Note 13)			(621	)		—			1,529			—
			(8,304	)		207			(74,649	)		6,466
FINANCING ACTIVITIES
Common shares issued on exercise of options			—			—			192			—
Common shares issued for cash			—			—			45,047			—
Issue of debentures and warrants			—			—			3,645			—
Increase (decrease) in bank loan			(1,225	)		—			23,119			—
Share issuance costs			(14	)		—			(3,302	)		—
Costs of distribution of shares in Oncolytics			—			—			—			(46	)
Repayment of bank debt			—			—			—			(5,910	)
			(1,239	)		—			68,701			(5,956	)
Net change in non-cash working capital (Note 13)			(395	)		—			—			—
			(1,634	)		—			68,701			(5,956	)
Decrease in cash			(3,460	)		(543	)		(289	)		(5,533	)
Cash, beginning of period			3,460			851			289			5,841
Cash, end of period		$	—		$	308		$	—		$	308

Supplemental disclosure of cash flow information (Note 13)

See accompanying notes to the consolidated financial statements

Hawker Resources Inc.

Notes to Consolidated Financial Statements
Periods ended September 30, 2003 and 2002
(Tabular amounts in thousands of dollars, unless otherwise noted) (unaudited)

1. NATURE OF OPERATIONS

Prior to 2002, SYNSORB Biotech Inc. (“SYNSORB”) conducted pharmaceutical drug development with respect to SYNSORB Cd^® for the prevention of recurrent C.difficile associated diarrhea. On December 10, 2001 SYNSORB terminated development of SYNSORB Cd^® including its phase III clinical trials. Subsequent to December 10, 2001 SYNSORB had no drug in active development. At the Annual and Special Meeting of SYNSORB shareholders held April 3, 2003, shareholders approved the planned conversion of the company into an oil and gas enterprise and changed the company’s name to Hawker Resources Inc.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The interim consolidated financial statements of Hawker Resources Inc. (the “Company” or “Hawker”) have been prepared in accordance with Canadian generally accepted accounting principles and are consistent with the accounting policies and methods of computation used in the preparation of the financial statements as at December 31, 2002. Certain new accounting policies have been adopted by the Company as a result of the new oil and gas operations of Hawker and are summarized below. The interim consolidated financial statements contain disclosures which are supplemental to the Company’s annual financial statements. Certain disclosures, which are normally required to be included in the notes to the annual financial statements, have been condensed or omitted. The interim consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2002.

(a) Basis of Consolidation

These consolidated financial statements include the accounts of Hawker and its wholly owned subsidiary, 1053639 Alberta Ltd.

(b) Capitalized Costs

The Company follows the full cost method of accounting whereby all costs relating to the acquisition of, exploration for and development of oil and gas reserves are capitalized in a single Canadian cost center. Such costs include lease acquisition, lease rentals on undeveloped properties, geological and geophysical, drilling both productive and non-productive wells, production equipment and overhead charges directly related to acquisition, exploration and development activities.

Gains or losses are not recognized upon the disposition of oil and gas properties unless such a disposition would change the depletion rate by 20 percent or more. Gains and losses are recognized upon the disposition of other assets.

(c) Depletion and Depreciation

All costs of acquisition, exploration and development of oil and gas reserves, associated tangible plant and equipment costs (net of salvage value), and estimated costs of future development of proven undeveloped reserves are depleted and depreciated by the unit of production method based on estimated gross proven reserves as determined by independent engineers.

Costs of unproved properties are initially excluded from oil and gas properties for the purpose of calculating depletion. When proven reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion.

The relative volumes of oil and natural gas reserves and production are converted to equivalent barrels of oil based on the relative energy content of each product on a 6 to 1 basis.

(d) Future Site Restoration and Abandonment Costs

Estimated future costs relating to future site restoration and abandonment of oil and gas properties and related facilities are accrued on a unit of production basis over the estimated life of the gross proven reserves. Costs are estimated, net of expected recoveries, based upon current prices, technology and industry standards. The accumulated provision for future site restoration and abandonment costs is classified as a non-current liability and actual expenditures are charged against the accumulated provision as incurred.

(e) Ceiling Test Limitations

The Company applies a ceiling test to the capitalized costs of its oil and gas properties, net of future income taxes and future site restoration and abandonment costs, to ensure that the net carrying value does not exceed the estimated value of future net revenues from production of gross proven reserves plus undeveloped properties less future production-related general and administrative expenses, financing costs, estimated future site restoration and abandonment costs and income taxes. Any reduction in the net carrying value of oil and gas properties as a result of the ceiling test is charged to operations.

The calculation of future net revenues is based on sales prices, costs and regulations in effect at period end.

The carrying value of undeveloped properties (land and seismic data) is reviewed periodically and written down to net realizable value if impairment is determined.

(f) Leasehold Inducements

Leasehold inducements are accounted for as a reduction of rental expense over the term of the related lease.

(g) Revenue Recognition

Oil and natural gas sales are recognized as revenue when the commodities are delivered to purchasers.

(h) Hedging and Forward Sales Contracts

In certain circumstances, fixed price commodity contracts are used to reduce the Company’s exposure to adverse fluctuations in commodity prices to protect future cash flow used to finance the Company’s capital expenditure program. Gains and losses relating to fixed price contracts that meet hedge criteria are recognized as part of natural gas sales concurrently with the hedged transaction. The Company does not enter into financial instruments for trading or speculative purposes.

The Company believes the derivative financial instruments are effective as hedges, both at inception and over the term of the instrument, as the term to maturity, the notional amount and the commodity price basis in the instruments all match the terms of the future revenue stream being hedged.

Realized and unrealized gains and losses associated with fixed price commodity contracts which have been terminated or cease to be effective prior to maturity, are deferred as other current, or non-current, assets or liabilities on the balance sheet, as appropriate, and recognized in earnings in the period in which the underlying hedged transaction is recognized. In the event a designated hedged item is sold, extinguished or matures prior to the termination of the related derivative instrument, any realized or unrealized gain or loss on such derivative instrument is recognized in earnings.

(i) Joint Ventures

Certain of the Company’s exploration, development and production activities are conducted jointly with others and, accordingly, these consolidated financial statements reflect only the Company’s proportionate interest in such activities.

(j) Stock Based Compensation

The Company has a stock based compensation plan, which is described in note 8. As options are issued at current market value, they have no intrinsic value at inception and therefore, no compensation expense is recorded when the options are granted. Consideration paid by employees or directors on the exercise of stock options is credited to share capital.

(k) Measurement Uncertainty

The amount recorded for depletion and depreciation of oil and gas properties, the provision for future site restoration and abandonment costs and the ceiling test calculation are based on estimates of gross proven reserves, production rates, commodity prices, future costs and other relevant assumptions. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future years could be significant.

3. ACQUISITIONS AND DISPOSALS

1022971 Alberta Ltd.

On March 31, 2003 the Company acquired all of the shares of 1022971 Alberta Ltd. (“1022971”) for a nominal amount and the Company was assigned an option to purchase up to a 49% interest in certain oil and gas properties west of the 4th meridian (“W4M Properties”) owned by Southward Energy Ltd. (“Southward”). On April 30, 2003, 1022971 acquired all of the shares of Southward. Immediately thereafter, Southward sold its oil and gas properties, excluding a 1% undivided interest in the W4M Properties and a 100% interest in seismic data, to an independent third party.

On June 30, 2003, the Company exercised its option to purchase a 49% interest in the W4M Properties. Further on June 30, 2003, the Company purchased the 1% undivided interest in the W4M Properties of Southward and the non-cash working capital of Southward was conveyed to the Company. Also on June 30, 2003, all of the shares of 1022971, which included Southward and all of its subsidiaries, were sold for nominal consideration to an independent third party.

The resultant acquisition of a 50% interest in the W4M Properties on June 30, 2003 has been accounted for using the purchase method of accounting. The Company has not yet completed its final evaluation of the fair value of the assets acquired and the liabilities assumed at the date of the acquisition.

Allocation of purchase price:
	Capital assets	$	66,774
	Non-cash working capital		3,656
		$	70,430
Consideration given:
	Cash	$	67,100
	Acquisition costs		3,330
		$	70,430

The Company has agreed to indemnify the purchaser of Southward for income tax and legal expenses to a maximum amount of $1 million for matters arising prior to the April 30, 2003 acquisition of Southward.

In connection with sale of Southward, the Company has a commitment to purchase various seismic data from Southward in the amount of $2,000,000. Subsequent to the end of the quarter, this seismic purchase was completed. Under the same agreement, the Company has the right to purchase up to $11,000,000 of additional seismic data prior to January 31, 2004. Under an amending agreement, the Company has committed to purchase additional seismic data in the amount $300,000 prior to January 31, 2004.

1053638 Alberta Ltd. and 1053639 Alberta Ltd.

On August 14, 2003, the Company acquired all of the shares of 1053638 Alberta Ltd. and 1053639 Alberta Ltd., seismic data companies. The acquisitions were accounted for by the purchase method and the purchase price was allocated as follows:

Allocation of purchase price:
Capital assets		$	1,500
		$	1,500
Consideration given:
	Cash	$	1,500
		$	1,500

On August 19, 2003, the Company sold all of the shares of 1053638 Alberta Ltd. The proceeds were allocated as follows:

Allocation of sales proceeds:
Capital assets		$	300
		$	300
Consideration received:
	Cash	$	300
		$	300

The disposition of 1053638 Alberta Ltd. did not result in any gain or loss to the Company.

4. ASSETS HELD FOR SALE

Assets held for sale are comprised of the pharmaceutical manufacturing facility and related manufacturing equipment associated with the former biotech operations of the Company. Manufacturing equipment with a carrying value of $940,000 was sold during the six months ended June 30, 2003. During the second quarter of 2003, the Company wrote down the carrying value of the remaining assets held for sale by $145,000 to the estimated net realizable value of $2,340,000.

The Company has entered into an agreement for the sale of these assets for gross consideration of $2,500,000. Pursuant to this agreement, a non-refundable deposit of $75,000 and a non-refundable milestone payment of $150,000 have been received by the Company and applied to reduce the carrying value of the assets held for sale. Costs associated with the transaction are estimated at $85,000.

5. CAPITAL ASSETS

	September 30, 2003
			Accumulated
			Depletion and		Carrying
	Cost		Depreciation		Value
Oil and gas properties	$	73,621	$	4,192	$	69,429
Computer equipment		15		5		10
Office furniture and equipment		86		11		75
Leasehold improvements		170		—		170
	$	73,892	$	4,208	$	69,684

At September 30, 2003, oil and gas properties included $13,238,000 relating to unproved properties which have been excluded from the depletion and depreciation calculation. Future development costs on proven undeveloped reserves of $470,000 are included in the depletion and depreciation calculation.

At September 30, 2003, the Company capitalized $240,000 of overhead directly related to exploration and development activities.

Total future site restoration and abandonment costs as at September 30, 2003 are estimated to be $2,047,000 for which a provision of $146,000 has been recorded.

6. BANK LOAN

The Company has a $28 million extendible revolving term credit facility from a Canadian chartered bank. This facility bears interest at rates varying from Canadian prime rate or U.S. base rate of such bank to the Canadian prime rate or U.S. base rate plus 30 basis points, payable monthly in arrears. The Company may also borrow by way of bankers’ acceptances which are subject to a stamping fee or by way of LIBOR based loans which are subject to an interest rate spread payable to the bank. The loan is a revolving facility until March 31, 2004 with annual extension periods available at the bank’s discretion. After the revolving phase, the facility becomes a term facility payable in full one year from the date the revolving facility is terminated. This facility is subject to semi-annual review and re-determination of the Company’s borrowing base by the bank, with the next review to occur by November 30, 2003. So long as the loan remains revolving and the borrowing base supports the facility outstanding, there are no repayment requirements.

Collateral pledged for the facility consists of a first floating charge demand debenture in the amount of $60 million over all of the property of the Company.

7. ALBERTA HERITAGE FOUNDATION GRANT

Pursuant to the terms of a technology commercialization agreement pertaining to pharmaceutical drug development, the Company received a grant from the Alberta Heritage Foundation for Medical Research (“AHFMR”) during 1995. The Company was required to repay the amount advanced of $387,000 plus a royalty equivalent to the amount initially received. Any required repayment and royalty was based on gross sales of SYNSORB related products commencing January 1, 2000 with payments equal to the lesser of 5% of gross sales or $100,000 per annum commencing 90 days after January 1, 2001. Due to the conversion of the Company into an oil and gas enterprise and the nascent stage of the SYNSORB technology, the AHFMR accepted a royalty payment of $18,550 during the third quarter of 2003 in exchange for a full release of Hawker from the terms of the technology commercialization agreement.

8.	SHARE CAPITAL
(a)	Authorized:
	Unlimited number of voting common shares without par value. Unlimited number of non-voting class A common shares without par value. Unlimited number of preferred shares to be issued in series.
(b)	Common Shares Issued

	Number of Shares		Amount
Balance at January 1, 2003		4,959,937	$	12,741
Issued for cash		14,361,000		45,047
Share issuance costs		—		(3,392	)
Issued on debenture and warrant conversion		2,152,465		1,302
Issued for services received		148,798		90
Issued for cash on exercise of options		275,000		192
Balance at September 30, 2003		21,897,200	$	55,980

(c) Class A Common Shares Issued

	Number of Shares		Amount
Balance at January 1, 2003		—	$	—
Issued on debenture and warrant conversion		3,874,437		2,343
Balance at September 30, 2003		3,874,437	$	2,343

(d) Issue of Debentures and Warrants

Pursuant to various financing agreements entered into April 3, 2003, the Company raised $3,645,000 through the issue of 430,493 Series A Debentures for $3,616,000, 430,493 Series A Warrants for $12,000, 2,152,465 voting preferred shares for $6,000 and 3,874,437 non-voting preferred shares for $11,000.

Each Series A Warrant entitled the holder thereof to purchase five common shares and nine Class A common shares on the concurrent surrender of the warrant, five voting preferred shares, nine non-voting preferred shares, and one Series A Debenture. On May 29, 2003, immediately after the issue of a receipt for the prospectus offering common shares for sale and issue, the Series A Warrants were exercised and the Company issued 2,152,465 common shares and 3,874,437 Class A common shares upon the surrender of the voting and non-voting preferred shares and Series A Debentures.

(e) Stock Options

The Company has a stock option plan that provides for the issuance of options to its directors, officers, employees and non-employees to acquire up to 1,181,513 common shares. The dates on which options vest are set by the board of directors at the time of grant. The exercise price of an option granted is the closing price of the Company’s stock on the last trading date prior to the grant date. The dates on which options expire are also set by the board of directors at the time of grant and cannot exceed ten years. The Company has issued stock options to acquire common shares through its stock option plan of which the following are outstanding at September 30, 2003:

				Weighted average
				exercise price
	Shares			$
Outstanding at January 1, 2003		330,565			9.80
Granted		368,000			3.59
Exercised		(275,000	)		0.70
Expired		(12,500	)		87.20
Forfeited		(27,064	)		52.20
Outstanding at September 30, 2003		384,001			4.85
Options exercisable at September 30, 2003		15,501			34.68

For the nine month period ended September 30, 2003, no stock options were granted to non-employees. The Company has undertaken to facilitate the surrender of out-of -the-money options that were issued in previous years when the Company conducted pharmaceutical drug development. Subsequent to September 30, 2003, the Company granted options to purchase 15,000 common shares at $4.15, which expire during the third quarter of 2008.

(f) Per Share Amounts

The weighted average number of shares outstanding during the three month period ended September 30, 2003 of 25,771,637 and during the nine month period ended September 30, 2003 of 13,840,301 (three and nine month periods ended September 30, 2002: 4,959,937) were used to calculate earnings (loss) per common share. For the period ended September 30, 2003, all of the stock options and warrants were not included in the computation of diluted earnings (loss) per share because the effect on the net loss for the period of the issue of additional shares on the conversions would be anti-dilutive. For the nine months ended September 30, 2002, the respective exercise price of the stock options and warrants exceeded the average market price of the common shares making the options and warrants anti-dilutive.

9. STOCK BASED COMPENSATION

Under the fair value based method of accounting for stock based compensation, the Company’s net earnings (loss) and net earnings (loss) per share would have been reduced to the pro forma amounts indicated below:

		Three Months			Nine Months
		Ended			Ended
(in thousands of dollars, except per share amounts)		September 30, 2003			September 30, 2003
Net earnings (loss)
	As reported	$	(363	)	$	(1,168	)
	Pro forma	$	(420	)	$	(1,238	)
Basic and diluted net earnings (loss) per common share
	As reported ($/share)	$	(0.01	)	$	(0.08	)
	Pro forma ($/share)	$	(0.02	)	$	(0.09	)

The pro forma amounts shown above do not include the compensation costs associated with stock options granted prior to January 1, 2002. The fair value of common share options granted in 2003 is estimated to be $680,000 as at the date of grant using the Black-Scholes option pricing model and the following assumptions:

	2003
Risk-free interest rate (%)		3.78
Expected life (years)		4.00
Expected volatility (%)		55.10
Expected dividend yield (%)		0

For the purposes of disclosures, the estimated fair value of the options is amortized to expense over the options’ vesting period on a straight-line basis.

10. INCOME TAXES

The Company has non-capital losses for income tax purposes of approximately $32 million which are available for application against future taxable income and which expire in the following years:

2005	$	4,400
2006		11,400
2007		5,100
2008		11,100
	$	32,000

The income tax benefit of these losses has not been recognized in the financial statements. The Company has unclaimed expenditures of approximately $118.8 million as at September 30, 2003 available to reduce future year’s taxable income. The Company also has approximately $5.7 million of unclaimed investment tax credits available to reduce future years’ income taxes payable.

11. RELATED PARTY TRANSACTIONS

A director of the Company is a partner of a law firm that was paid $1,746,000 for legal services for the period from the date elected as a director, April 3, 2003, to September 30, 2003. The fees charged were based on standard rates and time spent on company matters.

12.	FINANCIAL INSTRUMENTS
(a)	Fair Value

The Company has financial instruments consisting of accounts receivable, accounts payable and accrued liabilities and bank loan. The carrying value of these instruments approximates fair value unless otherwise stated.

Pursuant to the exercise of the purchase option (Note 3), the Company acquired an interest in forward sales contracts and financial hedging contracts with respect to production from the purchased properties as follows:

Transaction Type	Volume (GJ/d)			Contract Price (GJ/d)		Expiry
Fixed Summer		1,658			$4.10	October 31, 2003
Fixed Summer		3,220			$6.64	October 31, 2003
Costless Collar Summer		3,220		$	6.24 - $7.00	October 31, 2003
Costless Collar Winter		4,830		$	6.36 - $7.15	March 31, 2004
Fixed Winter		1,610			$6.76	March 31, 2004
Fixed Summer		1,450			$5.06	October 31, 2003
Cogeneration Fuel Supply		263		$	1.959 - $2.217	October 31, 2008
Daily Declining Profile		977	(1)	Netback(2)		October 31, 2011
Reserve Based		101		Netback(3)		Life of reserves

Based on dealer quotes, had these contracts been closed on September 30, 2003, a loss of $1,351,000 would have been realized.

Notes:

⁽¹⁾ The Company’s obligations under this contract will, on November 1 of this year and each succeeding year, decline to the following:

Date		Obligation (GJ/d)
	November 1, 2003		841
	November 1, 2004		724
	November 1, 2005		623
November 1, 2006 and thereafter			568

⁽²⁾ TransCanada Pipelines Limited netback pricing.

⁽³⁾ Progas Limited netback pricing.

(b) Credit Risk

A substantial portion of the Company’s accounts receivable are with entities in the oil and gas industry. The Company generally extends unsecured credit to these companies, and therefore, the collection of accounts receivable may be affected by changes in economic or other conditions and may accordingly impact the Company’s overall credit risk. Management believes the risk is mitigated by the size, reputation and diversified nature of the companies to which they extend credit. The Company has not previously experienced any material credit losses on the collection of receivables.

(c) Interest Rate Risk

The Company is exposed to interest rate risk in relation to interest expense on its revolving credit facility.

13. CASH FLOW INFORMATION

Changes in non-cash working capital were comprised of the following:

	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
	September 30,			September 30,			September 30,			September 30,
	2003			2002			2003			2002
Accounts receivable		(361	)		34			(2,185	)		42
Prepaids		(257	)		92			(854	)		(95	)
Accounts payable and accrued liabilities		2,104			(262	)		7,276			(4,622	)
Net change		1,486			(136	)		4,237			(4,675	)
Net change by activity:
Operating		2,502			(136	)		2,708			(4,675	)
Investing		(621	)		—			1,529			—
Financing		(395	)		—			—			—
Net change		1,486			(136	)		4,237			(4,675	)

     The following shows the actual cash amount paid:

	Three Months		Three Months		Nine Months		Nine Months
	Ended		Ended		Ended		Ended
	September 30,		September 30,		September 30,		September 30,
	2003		2002		2003		2002
Cash interest paid		186		—		215		71
Cash interest received		62		2		68		31
Cash taxes paid		—		—		—		10

14. CONTINGENCIES

The Company, in the normal course of operations, is subject to a variety of legal and other claims against the Company. Management and the Company’s legal counsel evaluate all claims on their apparent merits, and accrue management’s best estimate of the likely costs to satisfy such claims. Management believes that the outcome of legal and other claims filed against the Company will not have a significant impact on the Company’s financial position, operations or cash flows.

15. COMMITMENTS

The Company is committed to payments under operating leases for office space as follows:

Balance of 2003	$	140
2004		609
2005		717
2006		413
2007		385
	$	2,264

EX-99.7 7 h12489bexv99w7.htm MANAGEMENT'S DISCUSSION AND ANALYSIS 9/30/2003

Exhibit 7

Management’s Discussion and Analysis

Management’s discussion and analysis (MD&A) should be read in conjunction with the unaudited consolidated interim financial statements for the three and nine months ended September 30, 2003 and the audited financial statements and MD&A for the year ended December 31, 2002. This discussion contains forward-looking statements that are not historical in nature and involve risks and uncertainties. Forward-looking statements are not guarantees as to the Company’s future results since there are inherent difficulties in predicting future results. Accordingly, actual results could differ materially from those expressed or implied in the forward-looking statements.

Prior to 2002, SYNSORB Biotech Inc. (“SYNSORB”) conducted pharmaceutical drug development with respect to SYNSORB Cd^® for the prevention of recurrent C.difficile associated diarrhea. On December 10, 2001 SYNSORB terminated development of SYNSORB Cd^® including its phase III clinical trials. Subsequent to December 10, 2001 SYNSORB had no drug in active development. At the Annual and Special Meeting of SYNSORB shareholders held April 3, 2003, shareholders approved the planned conversion of the company into an oil and gas enterprise and changed the company’s name to Hawker Resources Inc. (“Hawker” or “the Company”).

On June 30, 2003, the conversion of the Company to an oil and gas enterprise was completed when Hawker acquired natural gas properties located in Alberta, Canada.

Financial Highlights

		Three Months Ended						Nine Months Ended
(in thousands of dollars, except per share amounts)		September 30, 2003			September 30, 2002			September 30, 2003			September 30, 2002
Revenue		$	8,786		$	—		$	8,786		$	—
Cash flow from operations (1)			3,976			(614	)		2,951			(1,368	)
	Per common share – basic and diluted		0.15			(0.12	)		0.21			(0.28	)
Net earnings (loss)			(363	)		(6,567	)		(1,168	)		5,007
	Per common share – basic and diluted		(0.01	)		(1.32	)		(0.08	)		1.01

⁽¹⁾ Cash flow from operations is a non-GAAP term that represents net earnings adjusted for non-cash items including depletion and depreciation, site restoration, asset write-downs and gains (losses) on sale of assets. Cash flow per share is calculated by dividing cash flow from operations as previously described by the weighted average number of common shares outstanding during the period. The Company evaluates its performance based on earnings and cash flow from operations. The Company considers cash flow a key measure as it demonstrates the Company’s ability to generate the cash flow necessary to fund future growth through capital investment and to repay debt.

Revenue

Production revenue for the third quarter of 2003 and for the nine months ended September 30, 2003 was $8,786,000. The third quarter of 2003 marked the commencement of oil and gas operations for the Company and accordingly, there were no production revenues for the corresponding periods of 2002.

All of the Company’s production is natural gas. Natural gas sales volumes for the third quarter of 2003 averaged 16,444 mcf/d and the average price received was $5.81 per mcf. Hawker’s production was from the Lavoy area and the Cold Lake/Bonnyville area.

Interest income for the three months ended September 30, 2003 was $39,000 versus $2,000 for the three months ended September 30, 2002. Interest income for the nine months ended September 30, 2003 was

$68,000, an increase of 119% from the $31,000 for the first nine months of 2002. The increases were due to higher cash balances during the 2003 as compared to 2002.

There was no other revenue received by the Company during the third quarter of 2003 or the third quarter of 2002. Other revenue received by the Company during the nine months ended September 30, 2003 primarily related to an exclusive license agreement of certain of its patents regarding toxin-binding sugars. Pursuant to this license agreement, the Company received net proceeds of $375,000. Other revenue of $107,000 received during the nine months ended September 30, 2002 related to a milestone payment received by the Company with respect to the previous sale of its INH Technologies Inc. subsidiary. No milestone payments were received in the first nine months of 2003.

Royalty Expense

Royalty expense for the third quarter of 2003 and for the nine months ended September 30, 2003 was $2,389,000, or 27% of production revenue. There was no royalty expense for 2002 as the Company did not have oil and gas operations.

Production Expense

Production expense for the three and nine months ended September 30, 2003 was $838,000 or $0.55 per mcf. There was no production expense for 2002 as the Company did not have oil and gas operations.

General and Administrative Expense

Net general and administrative expenses for the third quarter of 2003 were $967,000, an increase of 64% from the $590,000 for the same period in 2002. The increase in general and administrative expenses was attributable to the addition of staff, use of consultants and increased general administrative costs associated with the Company becoming a fully operational oil and gas entity. General and administrative expenses totaled $2,329,000 for the nine months ended September 30, 2003 as compared with $1,249,000 for the nine months ended September 30, 2002. The increase in general and administrative expenses for the first nine months of 2003 was also due to the addition of staff, increased professional fees and increased general administrative costs associated with the Company becoming a fully operational oil and gas entity. General and administrative expenses totalling $240,000 were capitalized for the three and nine months ended September 30, 2003.

Interest Expense

Interest expense for the three months ended September 30, 2003 was $238,000, reflecting interest on the bank credit facility that was drawn on for the acquisition of natural gas properties on June 30, 2003. There was no interest expense for the corresponding period in 2002 as the Company’s debt under a previous facility had been repaid earlier during 2002. Interest expense for the first nine months of 2003 was $267,000 as compared with $71,000 for the nine months ended September 30, 2002. The increase in interest expense was a result of the use of debt to fund a portion of the acquisition of natural gas properties.

Lease Abandonment Expense

During the third quarter of 2003, the Company consolidated its office space. A provision of $322,000 was made for residual lease costs on office space no longer occupied by the Company. There was no lease abandonment expense for 2002.

Operating Costs and Write-Downs Associated with Assets Held for Sale

During the third quarter of 2003, there was a net recovery of operating costs associated with assets held for sale in the amount of $11,000. The recovery was due to rent received for short-term use of the building by a third party. Operating costs and write-downs associated with assets held for sale amounted to $6,098,000 for the three months ended September 30, 2002. During the third quarter of 2002, the Company wrote-down the carrying value of assets held for sale by $6,072,000. For the nine months ended September 30,

2003, operating costs and write-downs associated with assets held for sale were $179,000 as compared with $6,314,000 for the first nine months of 2002.

Depletion and Depreciation

Depletion and depreciation expense for the third quarter of 2003 was $4,193,000 as compared with $7,000 for the third quarter of 2002. On a unit of production basis, depletion and depreciation expense was $16.63 per boe for the third quarter of 2003. Depletion and depreciation for the nine months ended September 30, 2003 was $4,196,000 as compared with $23,000 for the same period in 2002. Depletion and depreciation associated with oil and gas assets accounted for the large increase in depletion and depreciation expense for both the third quarter of 2003 and the nine months ended September 30, 2003. Depreciation expense for both the third quarter of 2002 and the nine months ended September 30, 2002 related solely to computer equipment and office furniture and equipment.

Site Restoration and Abandonment

Site restoration expense for the three and nine months ended September 30, 2003 was $146,000 or $0.58 per boe. Oil and gas operations for the Company commenced during the third quarter of 2003 and accordingly, there was no site restoration expense for the three and nine months ended September 30, 2002.

Income Taxes

The Company’s tax expense was solely comprised of the Large Corporations Tax, and for the three and nine month periods ended September 30, 2003, totalled $106,000. There was no tax expense for the three and nine month periods ended September 30, 2002. The increase is due to the higher capital base of the Company attributable to the debt and equity financings completed during 2003. Currently, the Company has tax pools in excess of future taxable income, based on existing assets.

Liquidity and Capital Resources

Pursuant to various financing agreements entered into April 3, 2003, the Company raised $3,645,000 through the issue of 430,493 Series A Debentures for $3,616,000, 430,493 Series A Warrants for $12,000, 2,152,465 voting preferred shares for $6,000 and 3,874,437 non-voting preferred shares for $11,000.

Each Series A Warrant entitled the holder thereof to purchase five common shares and nine Class A common shares on the concurrent surrender of the warrant, five voting preferred shares, nine non-voting preferred shares, and one Series A Debenture. On May 29, 2003, immediately after the issue of a receipt for the prospectus offering common shares for sale and issue, the Series A Warrants were exercised and the Company issued 2,152,465 common shares and 3,874,437 Class A common shares upon the surrender of the voting and non-voting preferred shares and Series A Debentures.

On May 29, 2003, the Company issued a fully marketed prospectus offering 14,286,000 common shares to the public priced at $3.15 per share. The issuance was fully subscribed and the public offering was completed on June 12, 2003. The Company received $42,301,000, net of underwriting fees.

On March 31, 2003 the Company acquired all of the shares of 1022971 Alberta Ltd. (“1022971”) for a nominal amount and the Company was assigned an option to purchase up to a 49% interest in certain oil and gas properties west of the 4th meridian (“W4M Properties”) owned by Southward Energy Ltd. (“Southward”). On April 30, 2003, 1022971 acquired all of the shares of Southward. Immediately thereafter, Southward sold its oil and gas properties, excluding a 1% undivided interest in the W4M Properties and a 100% interest in seismic data, to an independent third party.

On June 30, 2003, the Company exercised its option to purchase the W4M Properties. Further on June 30, 2003, the Company purchased the 1% undivided interest in the W4M Properties of Southward and the non-cash working capital of Southward was conveyed to the Company. Also on June 30, 2003, all of the shares of 1022971, which included Southward and all of its subsidiaries, were sold for nominal consideration to an

independent third party. The total purchase price of the 50% interest in the W4M Properties and non-cash working capital of $70,430,000 was funded by the net proceeds of the prospectus offering and bank debt.

In connection with sale of Southward, the Company, as at September 30, 2003, had a commitment to purchase various seismic data from Southward in the amount of $2,000,000. Subsequent to the end of the quarter, this seismic purchase was completed. Under the same agreement, the Company has the right to purchase up to $11,000,000 of additional seismic data prior to January 31, 2004. Under an amending agreement, the Company has committed to purchase additional seismic data in the amount $300,000 prior to January 31, 2004.

On August 14, 2003, the Company acquired all of the shares of 1053638 Alberta Ltd. and 1053639 Alberta Ltd., seismic data companies, for cash consideration of $1,500,000. On August 19, 2003, the Company sold all of the shares of 1053638 Alberta Ltd. for cash proceeds of $300,000.

During the three and nine months ended September 30, 2003, the Company spent $6,616,000 and $7,091,000, respectively, on capital asset additions, excluding property acquisitions. There were no capital expenditures during either the third quarter or first nine months of 2002, reflecting the wind-down of the biotech operations of the Company.

Capital Expenditures

		Three Months Ended		Nine Months Ended
(in thousands of dollars)		September 30, 2003		September 30, 2003
Exploration and Development Expenditures
	Lease acquisition and retention	$	926	$	1,401
	Geological and geophysical		2,944		2,944
	Drilling and completion		1,835		1,835
	Facilities and equipment		667		667
Total Exploration and Development Expenditures			6,372		6,847
	Other capital assets		244		244
Total Capital Expenditures		$	6,616	$	7,091

During the third quarter, the Company participated in the drilling of 17 gross (8 net) wells. This resulted in 14 gross (6.5 net) natural gas wells, 2 gross (1 net) dry holes and 1 gross (0.5 net) well pending. As at September 30, 2003, none of these wells had been tied in.

During the three months ended September 30, 2003, the Company received proceeds of $150,000 on assets held for sale, representing a non-refundable deposit for the sale of the manufacturing facility and remaining equipment. For the nine months ended September 30, 2003, proceeds of $1,173,000 were received on assets held for sale as compared with $37,000 for the nine months ended September 30, 2002.

During the first nine months of 2003, the Company received proceeds of $192,000 from the exercise of stock options under the stock option plan.

The Company has a $28 million credit facility. As at September 30, 2003, $4.8 million of this facility remained unutilized. This capacity, combined with cash flow from operations, is expected to be sufficient to support the Company’s remaining 2003 capital program.

As at September 30, 2003, the Company’s working capital deficiency was $507,000 compared to working capital of $412,000 as at December 31, 2002.

Pursuant to the terms of a technology commercialization agreement pertaining to pharmaceutical drug development, the Company received a grant from the Alberta Heritage Foundation for Medical Research (“AHFMR”) in 1995. The Company was required to repay the amount advanced of $387,000 plus a royalty

equivalent to the amount initially received. Any required repayment and royalty was based on gross sales of SYNSORB related products commencing January 1, 2000 with payments equal to the lesser of 5% of gross sales or $100,000 per annum commencing 90 days after January 1, 2001. Due to the conversion of the Company into an oil and gas enterprise and the nascent stage of the SYNSORB technology, the AHFMR accepted a royalty payment of $18,550 during the third quarter of 2003 in exchange for a full release of Hawker from the terms of the technology commercialization agreement.

Outlook

As of September 30, 2003, Hawker has a 50% working interest in two properties: the non-operated Lavoy area and the Cold Lake/Bonnyville area, which is operated by Hawker. These properties currently produce a total of approximately 16 mmcf/d and will be self-financing on a go forward basis. In this initial natural gas acquisition, the majority of the assets acquired were non-operated. Since that time, the Company has put in place the staff needed and acquired land and seismic that will lead to more operated production in the future. The Company intends to expand these areas and seek new core areas.

The oil and gas industry is capital intensive and the Company is likely to require significant additional capital resources in order to succeed in the oil and gas sector. At present, the Company has not identified any source of these additional capital resources and it is unlikely that such resources would be available to it unless particular oil and gas assets are identified to be acquired.

The Company’s ability to raise additional capital will depend upon a number of factors, such as general economic conditions and conditions in the oil and gas industry, that are beyond its control. If additional capital is required and is not available to the Company on acceptable terms, the Company’s financial condition and prospects may be impaired.

EX-99.8 8 h12489bexv99w8.htm MANAGEMENT PROXY CIRCULAR DATED 3/7/2003

Exhibit 8

Management Proxy Circular dated March 7, 2003

(Except for the sections entitled “Composition of Compensation Committee”, “Report on Executive Compensation”, “Performance Graph” and “Corporate Governance Practices”, which are not incorporated by reference to the Home Jurisdiction Documents)

SYNSORB Biotech Inc.

March 7, 2003

Dear Shareholder:

     SYNSORB’s Annual and Special Meeting of Shareholders will be held at the Telus Convention Centre, 120 – 9th Avenue S.E., Calgary, Alberta commencing at 10:00 a.m. (Calgary time), on April 3, 2003.

     At the Meeting, shareholders will be asked to vote upon resolutions that will result in the conversion of the business of SYNSORB from that of a pharmaceutical research company to an oil and gas enterprise (the “Conversion”), involving a significant financing through several private placements, the approval of future private placements in the ensuing 12 months, the reservation and allotment of 1,000,000 Common Shares for issuance upon the exercise of options under the stock option plan, a change of name to Hawker Resources Inc., and a management change, including my recent appointment as a director, Chairman of the Board of Directors and Chief Executive Officer. Shareholders will also be asked to vote upon the election of directors, and the appointment of auditors.

     The Board of Directors of SYNSORB recommends that you vote for each of the resolutions to be considered. The accompanying Information Circular contains a detailed description of the proposed matters, including the approvals required for each matter to become effective, and information relating to the business and affairs of SYNSORB. Please give this material your careful consideration and, if you require assistance, consult your professional advisors.

     As SYNSORB does not intend to prepare an Annual Report for the year ended December 31, 2002, the Corporation has appended its audited annual financial statements for the year ended December 31, 2002, as well as its Management Discussion and Analysis, to the Information Circular.

     I am confident that if you support the resolutions at the Meeting, a new and promising direction will be available to SYNSORB. With a strong Board of Directors, and the capital required to pursue appropriately identified opportunities, management of SYNSORB believes that the Corporation will be in a position to improve shareholder value.

     We hope that you will be able to attend the Meeting in person; however, if you cannot attend, make your vote count and return your proxy promptly so that it is received on or before 4:00 p.m. on April 1, 2003, endorsing the recommendations made by the Board of Directors.

Sincerely,

/s/ David Tuer

David Tuer, Chairman of the Board

SYNSORB BIOTECH INC.

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

     The Annual and Special Meeting (the “Meeting”) of the holders of common shares (the “Common Shares”) of SYNSORB Biotech Inc. (“SYNSORB” or the “Corporation”) will be held at the Telus Convention Centre, 120 – 9th Avenue S.E., Calgary, Alberta on April 3, 2003 at 10:00 a.m. (Calgary time) for the following purposes:

1.	considering, and if deemed advisable, passing with or without variation, an ordinary resolution (the “Financing Resolution”) approving the issuance of certain securities of SYNSORB to certain investors in three separate private placements;
2.	considering, and if deemed advisable, passing with or without variation, a special resolution (the “Class A Share Resolution”) approving the amendment to the Articles of the Corporation to provide for the creation and issuance of a new class of shares;
3.	considering, and if deemed advisable, passing with or without variation, an ordinary resolution (the “Private Placement Resolution”) approving generally, additional private placements that SYNSORB may make in the future with respect to certain matters;
4.	considering, and if deemed advisable, passing with or without variation, a special resolution (the “Name Change Resolution”) approving the change of name of SYNSORB to Hawker Resources Inc.;
5.	considering, and if deemed advisable, passing with or without variation, an ordinary resolution (the “Option Resolution”) approving the reservation and allotment for issuance of up to 1,000,000 Common Shares issuable pursuant to the exercise of options under the stock option plan;
6.	receiving and considering the consolidated financial statements of the Corporation for the financial year ended December 31, 2002 and the report of the auditors thereon;
7.	electing directors of the Corporation;
8.	appointing auditors of the Corporation for the ensuing year; and
9.	transacting such other business as may properly come before the Meeting.

     Information relating to these items is set forth in the accompanying Information Circular of SYNSORB dated March 7, 2003. The text of the resolutions in respect of Items 1 through 5 above are set forth as Schedule “A” to the Information Circular.

     A shareholder may attend the Meeting in person or may be represented by proxy. A form of proxy for use at the Meeting or any adjournment thereof is enclosed with this Notice. Shareholders unable to attend the Meeting are requested to date, sign and return the enclosed proxy to the Corporation’s transfer agent, Computershare Trust Company of Canada, 6th Floor, 530 - 8th Avenue S.W., Calgary, Alberta, T2P 3S8, Attention: Corporate Trust Department, in the enclosed envelope. In order to be valid, proxies must be received by Computershare on or before the second last business day preceding the date of the Meeting or any adjournment thereof.

     Only holders of Common Shares of record at the close of business on February 12, 2003 will be entitled to notice of, and to vote at, the Meeting or any adjournments thereof, except that a transferee of shares after such record date may, not later than 10 days before the Meeting, establish a right to vote by providing evidence of ownership of shares and requesting that the transferee’s name be placed on the voting list in place of the transferor.

DATED this 7^th day of March, 2003.

BY ORDER OF THE BOARD OF DIRECTORS

David Tuer

Chairman of the Board

TABLE OF CONTENTS

CHAPTER 1 - GENERAL INFORMATION			1
	Appointment and Revocation Of Proxies		1
	Exercise of Discretion		2
	Persons Making the Solicitation		2
	Interests of Insiders in Material Transactions		2
	Interest of Certain Persons in Matters to be Acted Upon		3
	Voting Securities and Principal Holders Thereof		3
	Indebtedness of Directors and Officers		3
	Stock Exchange Listings		3
	Other Matters to be Acted Upon		4
CHAPTER 2 – PROPOSED CHANGE OF BUSINESS			5
	Background to the Change of Business		5
	Purpose of the Financing and Management Change		5
	Recommendation of the Board of Directors		6
	Details of the Conversion		6
	The Financing		7
		The Debentures	7
		The Warrants	8
		The Series V Shares	8
		The Series W Shares	8
		FinanceCo’s Holdings Upon Conversion of the Units	9
	The Amendment to the Articles and the Class A Shares		9
	The Network and Smith Subscriptions		9
	Future Private Placements		9
	Management Change		11
	The Name Change		11
	Common Shares Reserved for Issuance Upon Exercise of Stock Options		12
	Exclusive Dealing		12
	Optionholders		13
	Expense and Non-Completion Fees		13
	Conditions to the Financing		13
	Closing Date of the Financing		13
	Notice to United States Shareholders		13
CHAPTER 3 – SYNSORB BIOTECH INC			15
	SYNSORB and Its Share Capital		15
	Stock Exchange Listings		15
CHAPTER 4 - ELECTION OF DIRECTORS			16
	Committees of the Board		16
CHAPTER 5 - APPOINTMENT OF AUDITOR			17

(i)

CHAPTER 6 - EXECUTIVE COMPENSATION		18
	Composition of Compensation Committee
	Report on Executive Compensation
	Compensation of Executive Officers	18
	Stock Options	19
	Performance Graph
	Employment Agreements	19
	Compensation of Directors	20
CHAPTER 7 - CORPORATE GOVERNANCE PRACTICES

(ii)

SYNSORB BIOTECH INC.

INFORMATION CIRCULAR

for the Annual and Special Meeting of Shareholders

to be held on April 3, 2003

CHAPTER 1 - GENERAL INFORMATION

     This Information Circular is furnished in connection with the solicitation of proxies by the management (“Management”) of SYNSORB Biotech Inc. (the “Corporation” or “SYNSORB”) for use at the Annual and Special Meeting of the holders (“Shareholders”) of common shares (the “Common Shares”) of the Corporation to be held at the Telus Convention Centre, 120 – 9th Avenue S.E., Calgary, Alberta, on April 3, 2003, at 10:00 a.m. (Calgary time), or at any adjournment thereof (the “Meeting”), for the purposes set forth in the Notice of Meeting. The information contained herein is given as of March 7, 2003, except where otherwise indicated. There is enclosed herewith a form of proxy for use at the Meeting. Each Shareholder who is entitled to attend at meetings of Shareholders is encouraged to participate in the Meeting, and Shareholders are urged to vote on matters to be considered in person or by proxy.

Appointment and Revocation Of Proxies

     Those Shareholders desiring to be represented by proxy must deposit their respective forms of proxy with Computershare Trust Company of Canada, Attention: Corporate Trust Department, 6th Floor, 530 - 8th Avenue S.W., Calgary, Alberta, T2P 3S8 by no later than 4:00 p.m. (Calgary time) on the second last business day preceding the date of the Meeting, or any adjournment thereof. A proxy must be executed by the Shareholder or by his attorney authorized in writing, or if the Shareholder is a corporation, under its seal or by an officer or attorney thereof duly authorized. A proxy is valid only at the Meeting in respect of which it is given or any adjournment of the Meeting.

     Each Shareholder submitting a proxy has the right to appoint a person to represent him or it at the Meeting other than the persons designated in the form of proxy furnished by the Corporation. The Shareholder may exercise this right by striking out the names of the persons so designated and inserting the name of the desired representative in the blank space provided, or by completing another form of proxy and in either case depositing the proxy with Computershare Trust Company of Canada at the place and within the time specified above for the deposit of proxies.

     An instrument of proxy may be revoked by the person giving it at any time prior to the exercise thereof. If a person who has given a proxy attends personally at the Meeting at which such proxy is to be voted, such person may revoke the proxy and vote in person. In addition to revocation in any other manner permitted by law, a proxy may be revoked by instrument in writing executed by the Shareholder or his attorney authorized in writing, or if the Shareholder is

a corporation, under its seal or by an officer or attorney thereof duly authorized, and deposited either with Computershare Trust Company of Canada, or with the Chairman of the Meeting, at anytime prior to the Meeting.

Exercise of Discretion

     The Common Shares represented by the enclosed form of proxy will be voted or withheld from voting in accordance with the instructions of the Shareholder. The persons appointed under the enclosed form of proxy are conferred with discretionary authority with respect to amendments or variations of those matters specified in the proxy and Notice of Meeting and with respect to any other matters which may properly be brought before the Meeting or any adjournment thereof in accordance with their best judgement. At the time of printing of this Information Circular, Management of the Corporation knew of no such amendment, variation, or other matter.

     Unless otherwise specified, proxies will be voted in favour of the approval of the Financing Resolution, the Class A Share Resolution, the Private Placement Resolution, the Option Resolution, the Name Change Resolution, the election of the persons nominated as directors (provided that if a vacancy among such nominees occurs for any reason prior to the Meeting, proxies shall not be voted with respect to such vacancy), and the reappointment of Ernst & Young LLP, chartered accountants, as auditors of the Corporation.

Persons Making the Solicitation

     This solicitation is made on behalf of Management of the Corporation. The cost incurred in the preparation and mailing of this Information Circular will be borne by the Corporation. Proxies may also be solicited by personal interviews, personal delivery, telephone or any form of electronic communication or by directors, officers and employees of the Corporation who will not be directly compensated therefor.

Interests of Insiders in Material Transactions

     Except as described below and elsewhere herein, none of the Corporation’s insiders, proposed nominees for election as directors of the Corporation, or their associates and affiliates, has any material interest in any transaction with the Corporation since the commencement of the Corporation’s last financial year which has not been previously disclosed.

     During the year ended December 31, 2002, the Corporation paid $214,000 to Scout Capital Corporation (“Scout”) as reimbursement of Scout’s costs with respect to the Corporation’s annual general meeting. An additional amount of $34,000 was paid to Scout during 2002 to reimburse Scout for expenses incurred on behalf of the Corporation. The Corporation also paid $50,000 to Scout pursuant to an agreement under which Scout is to provide the Corporation with administrative and executive services until the end of April 2003. The fees charged were based on estimated time to be spent on Corporation matters at standard rates.

-2-

Interest of Certain Persons in Matters to be Acted Upon

     Except as described elsewhere herein, none of the directors or senior officers of the Corporation, nor any of their known associates, has any substantial interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting.

Voting Securities and Principal Holders Thereof

     As at March 7, 2003, the Corporation had outstanding 4,959,937 Common Shares. Each Common Share confers upon the holder thereof the right to one vote at meetings of Shareholders.

     The close of business on February 12, 2003 is the record date for the determination of holders of Common Shares who are entitled to notice of, and to attend and vote at, the Meeting. Any transferee or person acquiring Common Shares after such date may, on proof of ownership of Common Shares, demand not later than 10 days before the Meeting that his name be included in the list of persons entitled to attend and vote at the Meeting.

     To the knowledge of the directors and senior officers of SYNSORB, as of the date hereof, other than Scout, no person or company beneficially owns, directly or indirectly, or exercises control or direction over, more than 10% of the issued and outstanding Common Shares. Scout has advised the Corporation that it owns 754,592 Common Shares, representing approximately 15% of the issued and outstanding Common Shares, and has indicated its intention to vote in favour of the resolutions implementing the transactions set out herein. Prior to October 24, 2002, David Tonken was President and Chief Executive Officer of Scout, and after that date, Geoffrey Smith (“Smith”) was President and Chief Executive Officer of Scout. At various times during 2002, Smith, Jim Silye, David Tonken and Tim Tycholis were directors of Scout.

Indebtedness of Directors and Officers

     No individual who is, or at any time during the most recent completed financial year of SYNSORB was, a director, executive officer or senior officer of SYNSORB, nor any proposed nominee for election as a director of SYNSORB, nor any associate or affiliate of any one of them:

     (a)  is, or at any time since the beginning of the most recent completed financial year of SYNSORB has been, indebted to SYNSORB or any of its subsidiaries; or

     (b)  was indebted to another entity, where such indebtedness is, or was at any time during the most recent completed financial year of SYNSORB, the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by SYNSORB or any of its subsidiaries.

Stock Exchange Listings

     SYNSORB Common Shares are currently listed on the Toronto Stock Exchange (the “TSX”) under the trading symbol “SYB”.

-3-

Other Matters to be Acted Upon

     Management knows of no matters to come before the Meeting other than the matters referred to in the Notice of Meeting. However, if any other matters properly come before the Meeting, the accompanying proxy will be voted on such matters in the best judgement of the person or persons voting the proxy.

-4-

CHAPTER 2 - PROPOSED CHANGE OF BUSINESS

Background to the Change of Business

     Prior to December 10, 2001, SYNSORB carried on a pharmaceutical development business. On that date SYNSORB announced that it was terminating clinical trial of its remaining product and would consider future strategic alternatives. In the following months, SYNSORB reduced its expenditure rate, laid off executives and staff and reviewed alternatives for maximizing shareholder value. At that time, SYNSORB held a significant shareholding in Oncolytics Biotech Inc., (“Oncolytics”), a Calgary based drug development company. At a shareholder meeting held May 7, 2002, the Shareholders approved the distribution of approximately 85% of the remaining Oncolytics shares held by SYNSORB to its Shareholders, approved a share consolidation and elected a Board of Directors consisting of certain members of the prior Board of Directors of SYNSORB as well as representatives of Scout, a significant Shareholder of SYNSORB. At that time, Jim Silye became the new President and Chief Executive Officer of SYNSORB.

     Under the leadership of Mr. Silye and the Board of Directors of SYNSORB, SYNSORB completed staff reductions and the winding-down of its clinical trials and continued to evaluate strategic alternatives. SYNSORB held discussions with several industry parties in an attempt to reach a transaction with another pharmaceutical entity that would make the best use of SYNSORB’s technology and its specialized manufacturing plant and equipment. These discussions did not lead to SYNSORB receiving any acceptable proposal for such a transaction.

     In October 2002, the SYNSORB Board of Directors appointed a committee of directors to consider strategic alternatives and engaged Network Capital Inc. (“Network”), a Calgary based advisory firm experienced in financial turnarounds, to assist it in evaluating alternatives.

     In November 2002, SYNSORB determined to dispose of its manufacturing equipment and to list its manufacturing plant for sale as commercial premises. In January 2003, SYNSORB completed a two-day auction of its equipment from which it received approximately $ 900,000 in proceeds, net of expenses. SYNSORB is continuing to attempt to sell its manufacturing plant.

     In late December 2002, representatives of SYNSORB entered into negotiations with representatives of 970183 Alberta Ltd. (“FinanceCo”) with respect to a financing and change of business, and on January 6, 2003, SYNSORB announced its intention to enter into a financing with FinanceCo (the “Financing”), as well as its appointment of Mr. David Tuer, an experienced oil and gas senior executive, as the new Chairman of the Board and Chief Executive Officer of SYNSORB.

Purpose of the Financing and Management Change

     The conversion of the former pharmaceutical research company into an oil and gas enterprise (the “Conversion”) will be implemented primarily through a change in the Management of SYNSORB, including the recent appointment of David Tuer, and the completion of the Financing with FinanceCo. The Financing will result in FinanceCo owning approximately 48% of the outstanding equity of the Corporation and approximately 26% of the outstanding

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Common Shares. Under the new Management, the Corporation is expected to become a full cycle oil and gas company, with a dual focus on exploration and development.

     At the Meeting, the Shareholders will be asked to consider, and if deemed advisable, pass with or without variation, a resolution (the “Financing Resolution”) approving the issuance of certain securities of SYNSORB to FinanceCo and to certain other investors, a resolution (the “Class A Share Resolution”) approving an amendment to the Articles providing for the creation and issuance of a new class of shares, a resolution (the “Private Placement Resolution”) approving additional private placements that SYNSORB may make in the future, a resolution (the “Name Change Resolution”) approving the change of name of SYNSORB to Hawker Resources Inc., a resolution (the “Option Resolution”) approving the reservation and allotment of up to 1,000,000 Common Shares for issuance upon the exercise of options under the stock option plan, approval of the annual financial statements of the Corporation for the financial year ended December 31, 2002 and the report of the auditors thereon, the election of directors of the Corporation, the appointment of auditors of the Corporation for the ensuing year, and such other business as may properly come before the Meeting. The texts of the Financing Resolution, the Class A Share Resolution, the Private Placement Resolution, the Name Change Resolution and the Option Resolution are set out in Schedule “A” attached hereto.

     If the relevant Resolutions are approved and the Conversion proceeds, the Corporation shall have six months from the closing of the Financing to meet all of the appropriate original listing requirements of the TSX, as required upon the change in the business of a TSX listed company.

Recommendation of the Board of Directors

     The Board of Directors has approved the Conversion and the transactions contemplated thereby and have authorized its submission to the Shareholders. The Board of Directors has concluded that the Conversion is fair to, and in the best interests of, SYNSORB and its Shareholders and recommends that Shareholders vote in favour of each of the Financing Resolution, the Class A Share Resolution, the Private Placement Resolution, the Option Resolution and the Name Change Resolution.

     Unless specified in a Proxy that the Common Shares represented thereby shall be voted “AGAINST” or “WITHELD FROM VOTING” on a resolution set out in the Proxy, it is the intention of Management designees to vote “FOR” each resolution set out in the Proxy, including those resolutions attached as Schedule “A” hereto.

Details of the Conversion

     The principal components of the Conversion are the completion of a significant financing (the “Financing”) involving a private placement with FinanceCo, the possibility of additional private placements in the 12 months following the closing of the initial private placement, a management change (the “Management Change”) including the recent appointment of David Tuer as a director and Chairman of the Board of Directors, and Chief Executive Officer of SYNSORB, a reservation and allotment of up to 1,000,000 Common Shares for issuance upon

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exercise of options, and a change of name of the Corporation to Hawker Resources Inc. (the “Name Change”).

     The terms of the proposed Financing are based on the understanding between the parties involved that the combination of cash and tangible assets available in SYNSORB, after satisfaction of or provision for all liabilities (including the current class action claims), is not less than $3 million, that there are 4,959,937 Common Shares of SYNSORB outstanding, and that there are no rights to acquire any SYNSORB securities outstanding or issuable other than those specifically set out in the Financing Agreement dated March 7, 2003 among the Corporation, FinanceCo and David Tuer.

The Financing

Under the terms of the Financing,

1.	FinanceCo will subscribe for 354,280 units (“Units”), each Unit having a subscription price of $8.46787851, and consisting of
(a)	one Series A debenture of the Corporation in the principal amount and with an allocated cost of $8.40 (each a “Debenture” and collectively the “Debentures”),
(b)	one Series A warrant of the Corporation at a price and with an allocated cost of $0.02757937 (each a “Warrant” and collectively the “Warrants”), and
(c)	five voting preferred shares, Series V in the capital of the Corporation at a price and with an allocated cost of $0.00287851 per share (each a “Series V Share” and collectively the “Series V Shares”),
(d)	nine non-voting preferred shares, Series W in the capital of the Corporation at a price and with an allocated cost of $0. 00287851 per share (each a “Series W Share” and collectively the “Series W Shares”),

     for an aggregate subscription price of $3,000,000.

     In addition, FinanceCo shall have the right to subscribe at any time prior to 4:00 p.m. (Calgary time) on April 30, 2003, at a price per Unit of $8.46787851 for up to the number of Units that is equal to 1/14 of the number of Common Shares issued prior thereto to Smith plus the number of Units issued prior thereto to Network, upon the separate subscription of Network and Smith (as set out below) (the “Anti-Dilution Right”), provided, however, that at no time will FinanceCo be entitled to exercise the Anti-Dilution Right to acquire a number of Units which, when added to the number of Units previously acquired by FinanceCo and its assignees, would result in a number of Units equal to or greater than 1/14 of the number of Common Shares then outstanding.

     The Debentures

     The Debentures shall be issued at par for a principal amount of $8.40 per Debenture, and shall bear interest on the principal amount outstanding at the rate of 2% per annum from the date

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of issue, payable on the earlier of the maturity date of December 31, 2003 and the date of surrender of the Debentures to the Corporation in connection with the exercise of the Warrants, as described below. The Debentures will be secured by a first perfected pledge of cash, term deposits and money market interests having a security value at all times of not less than 112.5% of the amount outstanding under the Debentures (including accrued or unpaid interest).

     The Warrants

     Each Warrant will be issued at a price of $0.02757937 per Warrant and will entitle the holder thereof to purchase five Common Shares and nine Class A Shares (as described below under the section entitled “the Amendment to the Articles and the Class A Shares”) in the capital of the Corporation at any time prior to 4:00 p.m. (Calgary time) on December 31, 2003, either (a) by the payment of Cdn $0.60 per Common Share, Cdn $0.60 per Class A Share and the surrender of five Series V Shares and nine Series W Shares, or (b) by the surrender of one Debenture, five Series V Shares and nine Series W Shares. If any payment is made by tender of Debentures, any accrued interest on such Debentures to the date of the exercise of the accompanying Warrants will be paid by the Corporation in cash.

     The Series V Shares

     The Series V Shares shall have no rights other than the right to one vote per share, voted equally and together with the outstanding Common Shares on all matters in respect of which the Common Shares are entitled to vote, including the election of directors and all special resolutions. The Series V Shares shall not carry any entitlement to receive dividends. The Series V Shares shall have preference over the Common Shares in participating in the distribution of property or assets in the event of liquidation, dissolution or winding-up of the Corporation for the payment of $0.00287851 per Series V Share held. The Series V Shares shall be, and shall be deemed to be, redeemed without further notice, formality or payment at a price of $0.00287851 per share, immediately and concurrently upon the earlier of the issuance of Common Shares upon the exercise of Warrants, and the expiry of the Warrants on December 31, 2003, and upon such redemption, all Series V Shares acquired by the Corporation shall be cancelled.

     If there is any adjustment to the Common Shares, by way of subdivision, consolidation or issuance, the voting rights of the Series V Shares shall be adjusted appropriately to maintain the holder’s proportionate position with respect to the voting rights of the Common Shares (subject to the discretion of the Board of Directors of SYNSORB to vary such adjustment if deemed necessary to fairly protect the rights of the holders of Series V Shares).

     The Series W Shares

     Holders of the Series W Shares are not entitled to receive notice of or to attend or vote at any meeting of the holders of shares, other than the Series W Shares of the Corporation, except meetings at which the holders of the Series W Shares are entitled by law to vote. The Series W Shares shall not carry any entitlement to receive dividends. In accordance with the Articles of the Corporation, the Series W Shares shall have preference over the Common Shares in participating in the distribution of property or assets in the event of liquidation, dissolution or

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winding-up of the Corporation for the payment of $0.00287851 per Series W Share held. The Series W Shares shall be, and shall be deemed to be, redeemed without further notice, formality or payment at a price of $0.00287851 per Series W Share, immediately and concurrently upon the earlier of the issuance of Class A Shares upon the exercise of Warrants, and the expiry of the Warrants on December 31, 2003, and upon such redemption, all Series W Shares acquired by the Corporation shall be cancelled.

     FinanceCo’s Holdings Upon Conversion of the Units

     If the Anti-Dilution Right is fully exercised by FinanceCo, then, upon conversion of all of the Units held by FinanceCo and Network on or before 4:00 p.m. (Calgary time) on December 31, 2003, FinanceCo would hold approximately 48% of the outstanding equity and approximately 26% of the outstanding Common Shares of the Corporation.

The Amendment to the Articles and the Class A Shares

     It is proposed that the Articles of the Corporation be amended to provide for the creation of a new class of non-voting common shares that shall have all of the rights and privileges associated with the Common Shares of the Corporation, excluding the right to vote (the “Class A Shares”). When created, these will be issued upon exercise of the Warrants (as described above) upon conversion of the Units.

     At the Meeting, the Shareholders will be asked to consider, and if deemed advisable, pass the special resolution included in Schedule “A” as the Class A Share Resolution.

The Network and Smith Subscriptions

     Network has agreed to subscribe for 35,428 Units for an aggregate subscription price of $300,000, and Smith has agreed to subscribe for 75,000 Common Shares for an aggregate subscription price of $45,363.63. Concurrent with the Financing, Network will be issued 148,798 Common Shares in payment of a success fee (the “Success Fee”), as set out in a retainer agreement between Network and SYNSORB dated October 30, 2002.

     The Common Shares issuable to Network and Smith shall be issued upon closing (anticipated to be at 10:00 a.m. (Calgary time) on April 4, 2003 – the “Closing”)) as fully paid and non-assessable upon payment of the subscription price therefor. The Common Shares will have a hold period of four months from the date of issuance. The Units issued to Network shall be convertible on the same terms as those subscribed for by FinanceCo.

Future Private Placements

     In addition to the private placements referred to under the sections entitled “The Financing” and “the Network and Smith Common Shares” above, the Corporation will, from time to time, investigate opportunities to raise financing on advantageous terms, in order to give SYNSORB greater flexibility in consummating future oil and gas acquisitions. The Corporation expects to undertake one or more financings over the next year, some of which may be structured as private placements.

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     Under the rules of the TSX, the aggregate number of shares of a listed company which are issued or made subject to issuance (i.e. issuable under a share purchase warrant or option or other convertible security) by way of one or more private placement transactions during any particular six-month period must not exceed 25% of the number of shares outstanding (on a non-diluted basis) prior to giving effect to such transactions (the “TSX 25% Rule”), unless there has been shareholder approval of such transactions.

     The TSX has a working practice that it will accept advance approval by shareholders in anticipation of private placements that may exceed the TSX 25% Rule, provided such private placements are completed within twelve months of the date such advance shareholder approval is given.

     The Corporation’s issued and outstanding share capital is currently 4,959,937 Common Shares (before giving effect to the Financing) and the Corporation proposes that the maximum number of shares, which either would be issued or made subject to issuance under one or more private placements in the twelve month period commencing on the date of the Meeting, would not exceed 4,959,937 Common Shares in the aggregate, or 100% of the Corporation’s issued and outstanding as at the date hereof.

     Any private placement proceeded with by the Corporation under the advance approval being sought at the Meeting will be subject to the following additional restrictions:

(a)	it must be substantially with parties at arm’s length to the Corporation;
(b)	it cannot materially affect control of the Corporation;
(c)	it must be completed within a twelve month period following the date the shareholder approval is given; and
(d)	it must comply with the private placement pricing rules of the TSX which currently require that the issue price per common share must not be lower than the closing market price of the common shares on the TSX on the trading day prior to the date notice of the private placement is given to the TSX (the “Market Price”), less the applicable discount, as follows:

Market Price	Maximum Discount
$0.50 or less		25	%
$0.51 to $2.00		20	%
Above $2.00		15	%

(For these purposes, a private placement of unlisted convertible securities is deemed to be a private placement of the underlying listed securities at an issue price equal to the lowest possible price at which the securities are convertible by the holders thereof).

     The TSX retains the discretion to decide whether or not a particular placement is “substantially” at arm’s length or will materially affect control in which case specific shareholder approval may be required.

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     At the Meeting, the Shareholders will be asked to consider, and if deemed advisable, pass the ordinary resolution included in Schedule “A” as the Private Placement Resolution.

Management Change

     On January 6, 2003, upon announcement of the proposed Conversion and upon resolution by the Board of Directors of the Corporation, David Tuer was appointed a director, Chairman of the Board of Directors and Chief Executive Officer of SYNSORB. Mr. Tuer’s remuneration is to be $1.00 per day, and such other benefits and perquisites as are determined from time to time by the Board of Directors, from December 24, 2002 until the date of the Meeting. If Shareholder approval is not obtained by April 30, 2003, Mr. Tuer will resign all positions with SYNSORB forthwith. If Shareholder approval is obtained, Mr. Tuer will be employed under a mutually agreeable employment contract between himself and SYNSORB, including the terms set out below:

1.	SYNSORB will be Mr. Tuer’s principal vehicle for participation in the upstream conventional oil and gas business. Mr. Tuer will not accept or hold any other executive, officer or employment positions in any other entity that is principally engaged in such a business; however, Mr. Tuer shall be entitled to serve as a director of any such entity, including as Chairman or lead director. In the event of any such involvement in such an entity, Mr. Tuer shall take reasonable steps to avoid or minimize conflict of interest situations that may otherwise arise.
2.	Mr. Tuer shall hold himself out as being the person, in conjunction with the Board of Directors of SYNSORB, principally responsible for the development, approval, execution and implementation of SYNSORB’s business plan and strategies.
3.	Mr. Tuer shall be entitled to an annual salary plus such discretionary bonus, if any, as the Board of Directors of SYNSORB may determine is appropriate, having regard to such factors as Mr. Tuer or the Board of Directors of SYNSORB may consider relevant, with the principal focus being on shareholder value enhancement, as reflected by share price appreciation from $0.65 per share (being the share price on December 24, 2002, the date of settlement of the general terms of the Conversion, and prior to the announcement of the proposed Conversion).
4.	Upon the Closing of the Financing, Mr. Tuer shall be entitled to be compensated, as set out in paragraphs 1 through 3 above, retroactively to the date of announcement of his hiring.

     Other than described elsewhere herein, no director, individual or entity is entitled to any compensation, severance, bonus payments or other similar payments as a consequence of the completion of the proposed Conversion or otherwise.

The Name Change

     At the Meeting, the Shareholders will be asked to consider and, if deemed advisable, pass a special resolution to authorize the Corporation to file articles of amendment under the Business Corporations Act (Alberta) changing the name of the Corporation from SYNSORB Biotech Inc.

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to Hawker Resources Inc., or such other name as the Board of Directors of the Corporation deems appropriate and as may be approved by the Registrar of Corporations (Alberta). To be adopted, the Name Change Resolution (as set out in Schedule “A” attached hereto) must be approved by two-thirds of the votes cast, in person or by proxy, at the Meeting by Shareholders.

     The Directors may determine not to implement the Name Change Resolution at any time after the Meeting, but prior to the issuance of a certificate of amendment, without further action on the part of the Shareholders.

Common Shares Reserved for Issuance Upon Exercise of Stock Options

     The stock option plan of the Corporation (the “Plan”) provides that Common Shares of the Corporation shall be made available from treasury for purchase by directors, officers, employees and consultants of the Corporation or its subsidiaries upon the exercise of options granted pursuant to the Plan. The Plan currently reserves for issuance upon the exercise of stock options 487,500 Common Shares (taking into account the one-for-eight consolidation of the Common Shares in May of 2002).

     The Board of Directors of the Corporation is seeking Shareholder approval for an amendment to the Plan that would result in the reservation and allotment for issuance of an additional 1,000,000 Common Shares, for a total of 1,487,500 Common Shares (the “New Total”), issuable upon the exercise of options to be granted in the future under the Plan.

     The TSX requires that, in the event of a share compensation arrangement that, together with all of a company’s other previously established or proposed share compensation arrangements, could result, at any time, in the number of shares reserved for issuance pursuant to stock options exceeding 10% of the outstanding issue, shareholder approval is required. If the number of shares reserved for issuance pursuant to stock options granted to insiders exceeds 10% of the outstanding issue, a disinterested shareholder vote is required in which the votes attached to securities beneficially owned by insiders to whom shares may be issued pursuant to the share compensation arrangements, as well as the associates of insiders, may not be voted. As the New Total represents more than 10% of the Common Shares that are issued and outstanding prior to completion of the Financing, and the issuance of Common Shares to Network and Smith, a vote by disinterested Shareholders with respect to the Option Resolution is required.

     The text of the resolution setting out the amendment providing for such reservation and allotment of Common Shares is included in Schedule “A” as the Option Resolution, attached hereto.

Exclusive Dealing

     Throughout much of 2002, Management of the Corporation has been engaged in the process of attempting to identify a potential transaction which would maximize Shareholder value. In connection with the Financing, SYNSORB agreed to negotiate in good faith, and on an exclusive basis, with FinanceCo to finalize the documents and agreements necessary to effect the Financing. In this regard, SYNSORB and its directors, officers and representatives agreed to cease all discussions and negotiations that had been previously commenced with any other parties, and not to solicit or entertain any discussions or negotiations with any other

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parties until Closing, that would be inconsistent with the successful completion of the Financing.

     Notwithstanding the foregoing, in order to discharge properly its fiduciary duties, the Board of Directors of SYNSORB may respond to an unsolicited bona fide written competing proposal that constitutes a commercially feasible transaction, which could be carried out within a commercially reasonable time frame (and, in any event, within 90 days of the announcement or presentation of the competing proposal), for which adequate financial arrangements have been made, and which the Board of Directors determines in good faith would be a financially superior transaction for the Shareholders than that contemplated by the Conversion.

Optionholders

     As a condition of the Financing, each director has agreed to exercise all options to acquire Common Shares held by him prior to Closing, or, if such options are not exercised prior to Closing, has agreed that such options shall expire upon Closing.

Expense and Non-Completion Fees

     If, for any reason other than the fault of FinanceCo, the Financing is not completed by April 30, 2003, FinanceCo shall be entitled to receive from SYNSORB on May 1, 2003 an expense fee of $150,000. However, if such non-completion is a direct or indirect result of an alternate proposal with respect to SYNSORB, then FinanceCo shall be entitled to receive from SYNSORB an additional fee equal to the amount by which 5% of the value (as determined by an independent third party to be appointed by FinanceCo) of such alternate proposal to SYNSORB and/or its Shareholders exceeds $150,000, to be paid to FinanceCo’s counsel in trust until payment on the date of implementation of the alternate proposal. If the alternate proposal is not consummated within 12 months of the entering into the agreement related thereto, or if the alternate proposal is abandoned, the non-completion fee will be returnable to SYNSORB.

     If, for any reason other than the fault of SYNSORB, FinanceCo elects not to complete the Financing, SYNSORB shall be entitled to receive from FinanceCo an expense fee of $150,000.

Conditions to the Financing

     For the Financing to be implemented, the Financing Resolution must be passed, with or without variation, by at least a majority of the votes cast by Shareholders present in person or by proxy at the Meeting.

Closing Date of the Financing

     The date of closing of the Financing is anticipated to be at 10:00 a.m. (Calgary time) on April 4, 2003.

Notice to United States Shareholders

     The solicitation of proxies in respect of the Conversion and related transactions contemplated herein are made in the United States with respect to the securities of a Canadian

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issuer in accordance with Canadian corporate and securities laws. Shareholders should be aware that requirements under such Canadian laws may differ from requirements under United States corporate and securities laws relating to United States corporations.

     The financial information included herein has been prepared in accordance with Canadian generally accepted accounting principles, which differ from United States generally accepted accounting principles in certain material respects, and thus may not be comparable to financial information of United States companies.

     Enforcement by Shareholders of civil liabilities under the United States securities laws may be affected adversely by the fact that SYNSORB is organized under the laws of a jurisdiction other than the United States, that some or all of its officers and directors are residents of countries other than the United States, that some or all of the experts named in this Information Circular may be residents of countries other than the United States, and that all or a substantial portion of the assets of SYNSORB and such person may be located outside the United States.

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CHAPTER 3 – SYNSORB BIOTECH INC.

SYNSORB and Its Share Capital

     SYNSORB is an Alberta corporation whose head office is located at 411 - 19th Street S.E., Calgary, Alberta T2E 6J7 and its registered office is located at 4500, 855 - 2^nd Street S.W., Calgary, Alberta, T2P 4K7. The Corporation’s year end is December 31.

     The Corporation is authorized to issue an unlimited number of Common Shares and an unlimited number of preferred shares, issuable in series, of which as at March 7, 2003, 4,959,937 Common Shares and no preferred shares are issued and outstanding as fully paid and non-assessable. No amendment to the Articles will be required to issue the Series V Shares and Series W Shares.

Stock Exchange Listings

     The Common Shares are listed on the TSX under the trading symbol “SYB”. The following table summarizes the market price ranges and volumes of trading of SYNSORB Common Shares on the exchanges during the periods indicated:

	TSX
	Price Range
					Trading
	High		Low		Volume
	(Cdn$)		(Cdn$)
2002
First Quarter		0.59		0.28		13,834,685
Second Quarter to May 15, 2002(1)		0.42		0.37		5,714,844
Second Quarter from May 16, 2002(2)		1.45		1.13		659,942
Third Quarter		1.35		0.67		475,185
Fourth Quarter		0.85		0.56		590,560
2003
January		3.43		0.73		5,847,175
February		3.25		2.71		346,568
March (to March 6)		3.00		2.86		33,638

Notes:
(1)	Prior to the 8:1 share consolidation on May 16, 2002.
(2)	Subsequent to the 8:1 share consolidation on May 16, 2002.

     The closing price of the SYNSORB Common Shares on the TSX on January 3, 2003, the last trading day prior to the announcement of the proposed Conversion, was Cdn $0.73 and on January 7, 2003, the day after the announcement of the Conversion, was Cdn $2.29 on the TSX.

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CHAPTER 4 - ELECTION OF DIRECTORS

     The following table sets forth, in respect of each nominee director, all positions currently held with the Corporation, principal occupation or employment within the preceding five years, and the approximate number of Common Shares beneficially owned, directly or indirectly, or over which voting control is exercised as of March 7, 2003. The information contained herein is based upon information furnished by the nominees and by the Corporation.

     Unless specified in a Proxy that the Common Shares represented by the Proxy shall be voted as “WITHELD FROM VOTING”, it is the intention of Management designees to vote “FOR” the election of the nominees.

			Number of Common
	Date since	Office or Position in the Corporation,	Shares Owned
Name and Municipality of	served as a	if any, and Principal Occupation	Beneficially or Subject
Residence	Director	within Last Five Years	to Control or Direction
Bruce J. Kenway, C.A. Calgary, Alberta	March 31, 1994	Chartered accountant, Kenway Mack Slusarchuk Stewart, Chartered Accountants		10,637
Gerry C. Quinn, C.A. Mississauga, Ontario	January 16, 1995	President of The Erin Mills Investment Corporation (a venture capital company).		9,750
David Tonken Edmonton, Alberta	May 7, 2002	President, Genesis Capital Partners Ltd. Prior to October 24, 2002, President of Scout Capital Corp.		nil
Jim Silye Calgary, Alberta	May 7, 2002	Executive Officer of SYNSORB. Prior to May 2002, Independent Businessman.		12,750
Tim Tycholis Calgary, Alberta	May 7, 2002	Independent Businessman		142,900
David Tuer Calgary, Alberta	January 6, 2003	Chairman, Calgary Health Region. Prior to October 2001, President and Chief Executive Officer, PanCanadian Energy Corporation. Chairman of the Board and Chief Executive Officer of SYNSORB from January 6, 2003		nil

Committees of the Board

     While the Board has left in place its committee structure and the guidelines which set out the responsibilities of its various committees, because of the proposed changes to the nature of SYNSORB’s business activities, with the exception of the Audit Committee, the Board has adopted the practice of acting as a Committee of the Whole in carrying out the responsibilities of the Compensation, Corporate Governance and Environmental Committees.

     If approval of the Resolutions by the Shareholders is obtained, the Board of Directors will consider re-establishing separate Compensation, Corporate Governance and Environmental Committees after Closing, as business circumstances dictate. Consequently, the descriptions of the practices set out in Chapters 6 and 7 below may differ significantly after Closing.

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CHAPTER 5 - APPOINTMENT OF AUDITOR

     It is proposed that Ernst & Young LLP, chartered accountants for the Corporation since its inception, be re-appointed as the auditors of the Corporation to hold office until the next annual meeting of Shareholders at a remuneration to be fixed by the Board of Directors.

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CHAPTER 6 - EXECUTIVE COMPENSATION

     The information set out below in this Chapter 6 provides the details of Executive Compensation in existence prior to implementation of the Conversion. While the specific information for the fiscal year of the Corporation ended December 31, 2002 will not change, if Shareholder approval is obtained for the Financing and the Corporation is converted to an oil and gas enterprise, certain of the information set out below regarding the approach and practice of the Corporation with respect to Executive Compensation may change.

Compensation of Executive Officers

     The following table details compensation information for the three financial years of the Corporation ended December 31, 2002 for the executive officers in place during 2002 (collectively, the “Named Executive Officers”). No other executive officer of the Corporation received a combined base salary and bonus of more than $100,000 in the fiscal year of the Corporation ended December 31, 2002.

SUMMARY COMPENSATION TABLE

									Long-Term
									Compensation
			Annual Compensation						wards
									Common
							Other		Shares Under
							Annual		Options		All Other
Name and			Salary		Bonus		Compensation		Granted		Compensation
Principal Position	Year		($)		($)		($) (1)		($)		($)(2)
David J. Cox		2002		118,792		nil		63,412		nil		374,250
President and CEO(3)		2001		249,500		65,200		37,425		50,000		nil
		2000		220,000		10,200		33,000		nil		nil
Bill Hogg,		2002		99,110		2,000		27,109		nil		300,000
President and CEO(4)		2001		138,542		nil		20,781		150,000		54,875
		2000		—		—		—		—		nil
Jim Silye, CEO(5)		2002		85,250		nil		nil		75,000		nil
		2001		—		—		—		—		—
		2000		—		—		—		—		—
R. Murray Ratcliffe		2002		70,808		nil		30,938		nil		187,500
Vice President, R&D		2001		187,500		30,000		28,125		10,000		nil
and Manufacturing(6)		2000		180,000		—		27,000		—		nil

Notes:
(1)	This constitutes amounts paid by the Corporation on behalf of the executive officer into a fund maintained by the Corporation, which is used to fund a Health and Welfare Benefits Plan for the employees of the Corporation. Under this plan the Corporation pays for certain health related expenses incurred by employees and their dependants. Any annual amounts paid into the plan on behalf of an employee that are not utilized by the employee during such year for health related expenses may, at the direction of the employee, be transferred into a registered retirement savings plan of the employee.
(2)	This constituted severance payments.
(3)	Commenced employment with the Corporation October 13, 1997, and terminated employment on March 31, 2002.

-18-

(4)	Commenced permanent employment with the Corporation March 26, 2001 and prior thereto had been Acting Vice President and CFO on contract. Appointed President and CEO March 19, 2002. Terminated employment with the Corporation effective May 7, 2002.
(5)	Chief Executive Officer from May 7, 2002.
(6)	Commenced employment with the Corporation on February 27, 1997, and terminated employment on March 13, 2002.

Stock Options

     The following table details information with respect to the grant of options by the Corporation to the Named Executive Officers during the fiscal year of the Corporation ended December 31, 2002.

OPTION GRANTS DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR

								Market Value of
	Common		% of Total			Exercise or		Common Shares
	Shares		Options			base		Underlying
	under Options		Granted to			Price		Options on the
	Granted		Employees in			($/Common		Date of Grant		Expiration
Name	#		Financial Year			Share)		($/Common Share)		Date
David J. Cox		—		—			—		—		—
Bill Hogg		—		—			—		—		—
Jim Silye		25,000		9.1	%	$	0.69	$	0.69	Nov. 8, 2005
		50,000		18.2	%	$	0.70	$	0.70	Nov. 15, 2005
R. Murray Ratcliffe		—		—			—		—		—

     The following table details information with respect to all options of the Corporation exercised by Named Executive Officers during the last fiscal year of the Corporation and all options held by named Executive Officers and outstanding on December 31, 2001.

AGGREGATED OPTION EXERCISES DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR END AND FINANCIAL YEAR-END OPTION VALUES

					Unexercised Options		Value of Unexercised in
	Common Shares				at Financial		the Money Options at
	Acquired on		Aggregate		Year-End		Financial Year End
	Exercise		Value Realized		Exercisable/unexercisable		Exercisable/unexercisable
Name	#		($)		(#)		($)
David J. Cox		—		—		—		—
Bill Hogg		—		—		—		—
Jim Silye		—		—		75,000/-	nil/-
R. Murray Ratcliffe		—		—		—		—

Employment Agreements

     All employment agreements have been terminated.

-19-

Compensation of Directors

     In the aggregate, a total of $138,350 in directors fees was paid to the board of directors during the fiscal year ended December 31, 2002. The following table sets out the amounts paid to each individual director. Messrs. Casey and Crooke resigned from the Board on March 19, 2002.

			Options
Director	Fees Paid ($)		Granted
Richard Casey		15,900		nil
Stan Crooke		7,950		nil
Gerry Quinn		60,250		50,000
Bruce Kenway		24,250		50,000
David Tonken		5,000		25,000
Jim Silye		nil		75,000	(1)
Tim Tycholis		25,000		75,000
TOTAL		138,350		275,000

Note:
(1)	25,000 of these options were granted to Mr. Silye in his capacity as President and Chief Executive Officer. 50,000 of these options were granted to Mr. Silye in his capacity as a director.

     Directors of the Corporation are eligible to receive stock options. During 2002, the Directors, were granted a combined total of 275,000 options to purchase Common Shares with a weighted average exercise price of $0.70.

     Directors of the Corporation are also reimbursed for their reasonable out-of-pocket disbursements incurred for the business of the Corporation.

     Mr. Tuer, who was appointed as a director, Chairman of the Board of Directors and Chief Executive Officer of SYNSORB is currently receiving, and, upon Shareholder approval of the proposed Financing, will receive the compensation as set out in Chapter 2 under the section entitled “Management Change”.

     There are no established policies in place for the compensation of directors for 2003.

-20-

BOARD APPROVAL

     The contents and the sending of this Information Circular have been approved by the Board of Directors of the Corporation.

BY ORDER OF THE BOARD OF DIRECTORS

David Tuer

Chairman of the Board

CERTIFICATE

     The foregoing contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made.

David Tuer

Chairman of the Board

DATED in Calgary, Alberta on this 7^th day of March, 2003.

-21-

SCHEDULE “A”

RESOLUTIONS

FINANCING RESOLUTION

BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT:

1. the Financing involving the issuance of Units consisting of Debentures, Warrants, Series V Shares, and Series W Shares of SYNSORB to FinanceCo and Network, and the issuance of Common Shares to Network and Smith, by way of private placements, all as defined and more particularly described in the Information Circular dated March 7, 2003 accompanying the Notice of this Meeting, is authorized and approved.

CLASS A SHARE RESOLUTION

BE IT RESOLVED AS A SPECIAL RESOLUTION THAT:

1.	SYNSORB restate its Articles of Incorporation (the “Restated Articles”) to provide for the creation of a class of non-voting common shares, to be known as the Class A Shares, that will have all of the rights and privileges associated with the Common Shares of the Corporation, excluding the right to vote; and
2.	the Restated Articles shall be effective on the date shown on the Certificate of Amendment and Registration of the Restated Articles and shall supersede the original Articles of Incorporation and any and all amendments thereto.

PRIVATE PLACEMENT RESOLUTION

BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT: 1. 1.

1. the issuance by SYNSORB in one or more private placements during the twelve month period commencing April 3, 2003 of such number of securities that would result in SYNSORB issuing or making issuable up to 4,959,937 Common Shares, as is more particularly described in the Information Circular, is authorized and approved.

NAME CHANGE RESOLUTION

BE IT RESOLVED AS A SPECIAL RESOLUTION THAT:

1. the Corporation is authorized to file articles of amendment pursuant to section 173(1)(a) of the Business Corporations Act (Alberta) changing the name of the Corporation from SYNSORB Biotech Inc. to Hawker Resources Inc., or such other name that the Board of

A-1

	Directors deems appropriate and as may be approved by the Registrar of Corporations (Alberta); and
2.	the directors of the Corporation are authorized to revoke this special resolution without further shareholder approval at any time prior to the issuance of a certificate of amendment issued pursuant to this special resolution.

OPTION RESOLUTION

BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT:

1.	an amendment to the stock option plan (the “Plan”) providing for the reservation and allotment for issuance of up to an additional 1,000,000 Common Shares issuable upon the exercise of options granted pursuant to, and conditional upon the exercise in accordance with the terms of, the Plan, is authorized and approved, and Section 4 of the Plan shall be amended to read as follows:
	At the time of grant of a Stock Option, the Directors shall fix the number of Common Shares subject thereto.
	The number of Common Shares reserved for issuance pursuant to this Plan shall not exceed 1,487,500 and the number of Common Shares under option at any one time shall not exceed the number of Common Shares then reserved for issuance pursuant to this Plan.
	The number of Common Shares reserved for issuance pursuant to this Plan in respect of all Stock Options granted to any one Optionee at any one time shall not exceed five percent (5%) of the aggregate number of Common Shares issued and outstanding at that time.
	Common Shares optioned under Stock Options that expire or otherwise terminate shall be available to be optioned under subsequent grants of Stock Options;

A-2 EX-99.9 9 h12489bexv99w9.htm MATERIAL CHANGE REPORT DATED 3/17/2003

Exhibit 9

MATERIAL CHANGE REPORT UNDER

SECURITIES ACT (BRITISH COLUMBIA) SECTION 85(1) FORM 27
SECURITIES ACT (ALBERTA) SECTION 146(1) FORM 27
THE SECURITIES ACT (SASKATCHEWAN) SECTION 84(1) FORM 25
THE SECURITIES ACT (MANITOBA)
SECURITIES ACT (ONTARIO) SECTION 75(2) FORM 27
SECURITIES ACT (QUEBEC) SECTION 73
THE SECURITIES ACT (NEWFOUNDLAND) SECTION 76(2) FORM 26
SECURITIES ACT (NOVA SCOTIA) SECTION 81(2) FORM 27
SECURITY FRAUDS PREVENTION ACT (NEW BRUNSWICK)
SECURITIES ACT (PRINCE EDWARD ISLAND)
SECURITIES ACT (NORTHWEST TERRITORIES) SECTION 44
SECURITIES ACT (NUNAVUT) SECTION 44
SECURITIES ACT (YUKON)

1.	Reporting Issuer:
	SYNSORB Biotech Inc. (“SYNSORB”)
2.	Date of Material Change:
	March 7, 2003
3.	Press Release:
	A press release was issued March 11, 2003 (as attached).
4.	Summary of Material Change:
	SYNSORB announced on March 11, 2003 that it had signed definitive documentation on March 7, 2003 with an unrelated investing company that will see the former pharmaceutical research company transformed into an oil and gas enterprise. On January 6, 2003, SYNSORB had previously announced that the investing company would invest up to $3 million in SYNSORB and that SYNSORB had appointed Mr. David Tuer as a Director, the Chairman of the Board and the Chief Executive Officer of SYNSORB.
5.	Full Description of Material Change:
	SYNSORB announced on March 11, 2003 that it had signed definitive documentation on March 7, 2003 with an unrelated investing company that will see the former pharmaceutical research company transformed into an oil and gas enterprise. On January 6, 2003, SYNSORB had previously announced that the investing company would invest up to $3 million in SYNSORB and that SYNSORB had appointed

	Mr. David Tuer as a Director, the Chairman of the Board and the Chief Executive Officer of SYNSORB.
	Completion of the financing is still subject to obtaining all regulatory approvals, including approval of the Toronto Stock Exchange, and approval of shareholders of SYNSORB at a meeting of shareholders to be held on April 3, 2003. In connection with this meeting, SYNSORB has mailed to its shareholders copies of an Information Circular dated March 7, 2003, which is accessible on SEDAR.
6.	Reliance on Subsection 146(2) of Securities Act (Alberta) or equivalent section:
	N/A
7.	Omitted Information:
	N/A
8.	Senior Officers:
	Jim Silye, President of SYNSORB, may be contacted at (403) 283-5900 for further information.
9.	Statement of Senior Officer:
	The foregoing accurately discloses the material change referred to herein.

SYNSORB BIOTECH INC

(signed) Jim Silye

Jim Silye

President

IT IS AN OFFENSE FOR A PERSON TO MAKE A STATEMENT IN A DOCUMENT REQUIRED TO BE FILED OR FURNISHED UNDER THE SECURITIES ACT OR THIS REGULATION THAT, AT THE TIME AND IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH IT IS MADE, IS A MISREPRESENTATION.

2 EX-99.10 10 h12489bexv99w10.htm MATERIAL CHANGE REPORT DATED 4/14/2003

Exhibit 10

HAWKER RESOURCES INC.

MATERIAL CHANGE REPORT

UNDER SECTION 146(1) OF THE SECURITIES ACT (ALBERTA) (FORM 27) AND UNDER COMPARABLE PROVISIONS OF OTHER PROVINCIAL SECURITIES LEGISLATION

1.	Reporting Issuer:
	Hawker Resources Inc. 3200, 350 - 7th Avenue SW Calgary, AB T2P 3N9
2.	Date of Material Change:
	April 3, 2003
3.	Press Release:
	News releases disclosing the details outlined in this Material Change Report were issued by Hawker Resources Inc. (“Hawker”) on April 3, 2003 and on April 4, 2003, were disseminated through the facilities of Canada Newswire Limited and would have been received by the securities commissions where Hawker is a “reporting issuer” and the stock exchange on which the securities of Hawker are listed and posted for trading in the normal course of their dissemination.
4.	Summary of Material Change:
	On April 3, 2003, shareholders approved the planned conversion of the company into an oil and gas enterprise, changed the company’s name and elected a new board of directors. In addition, Hawker announced that it had acquired all of the shares of 1022971 Alberta Ltd., the private company that has agreed to acquire all of the shares of Southward Energy Ltd. and an option to acquire certain assets of Southward Energy Ltd.
	On April 4, 2003 Hawker announced the closing, on April 3, 2003, of its previously announced financing. Proceeds of approximately $3.6 million were received on issuance of 498,798 common shares and 430,493 units consisting of debentures, warrants and special shares.
5.	Full Description of Material Change:
	On April 3, 2003, shareholders approved the planned conversion of the company into an oil and gas enterprise and changed the company’s name to Hawker Resources Inc. The shareholders approved a new board of directors comprised of David Tuer, Bruce Kenway, Ronald P. Mathison, Martin A. Lambert, Paul M. Farion and Keith T. Smith. In addition, shareholders approved a previously announced (March 11, 2003) financing in connection with the conversion.
	Also on April 3, 2003, Hawker announced that it had secured, for nominal consideration, all of the shares of 1022971 Alberta Ltd. and an option expiring on or about July 29, 2003 to acquire up to 50% of the assets of Southward Energy Ltd. other than those which lie west of the 5th meridian. 1022971 Alberta Ltd. is the corporation which has agreed to acquire all of the shares of

- 2 -

	Southward Energy Ltd. pursuant to a proposed arrangement to be completed on or about April 30, 2003 and to cause Southward Energy Ltd. to sell all or substantially all of its resource assets in connection therewith. The option itself is conditional upon the proposed arrangement and related transactions having been successfully completed and the exercise of the option is conditional upon various matters including Hawker obtaining the necessary financing.
	On April 4, 2003 Hawker announced the closing, on April 3, 2003, of its previously announced financing. Proceeds of approximately $3.6 million were received on issuance of 498,798 common shares and 430,493 units consisting of debentures, warrants and special shares. All of the in-the-money options of Hawker were exercised upon closing of the financing. Approximately 56,000 options remain outstanding at exercise prices in excess of $9.40.
	The board of directors of Hawker ratified the previously announced acquisition of all of the shares of 1022971 Alberta Ltd. and the conditional option to acquire certain oil and gas assets currently owned by Southward Energy Ltd.
6.	Reliance on Subsection 146(2) of Securities Act (Alberta) or equivalent section:
	Not Applicable.
7.	Omitted Information:
	No information has been omitted.
8.	Senior Officers:
	David Tuer, Chief Executive Officer of Hawker may be contacted at (403) 294-0067 for further information.
9.	Statement of Senior Officer:
	The foregoing accurately discloses the material change referred to in this report.
	DATED at Calgary, Alberta this 14th day of April, 2003.

HAWKER RESOURCES INC.
Per:
	(signed) David Tuer
	Chief Executive Officer

cc:     Toronto Stock Exchange EX-99.11 11 h12489bexv99w11.htm MATERIAL CHANGE REPORT DATED 5/23/2003

Exhibit 11

MATERIAL CHANGE REPORT

UNDER SECTION 146(1) OF THE SECURITIES ACT (ALBERTA) (FORM 27) AND
UNDER COMPARABLE PROVISIONS OF OTHER PROVINCIAL SECURITIES
LEGISLATION

1.	Reporting Issuer:
	Hawker Resources Inc. (“Hawker”) 500, 340-112th Avenue S.W. Calgary, Alberta T2R 1L5
2.	Date of Material Change:
	April 30, 2003
3.	Press Release:
	Hawker issued a press release disclosing the nature and substance of the material change on April 30, 2003 through the facilities of CCN Matthews. A copy of such press release is attached hereto as Schedule “A”.
4.	Summary of Material Change:
	On April 30, 2003, 1022971 Alberta Ltd. (“1022971”), a wholly-owned subsidiary of Hawker, completed a statutory arrangement (the “Arrangement”) with Southward Energy Ltd. (“Southward”) under the Business Corporations Act (Alberta). Pursuant to the Arrangement, 1022971 acquired all of the outstanding common shares of Southward for a price of Cdn.$4.77 per share. A concurrent sale of substantially all of Southward’s assets to an arm’s length third party was also completed with Hawker retaining an option to acquire certain of the sold properties.
5.	Full Description of Material Change:
	On April 30, 2003, 1022971, a wholly-owned subsidiary of Hawker, completed a statutory arrangement (the “Arrangement”) with Southward under the Business Corporations Act (Alberta). Pursuant to the Arrangement, 1022971 acquired all of the outstanding common shares of Southward for a price of Cdn.$4.77 per share.
	The Arrangement was approved by the Court of Queen’s Bench of Alberta following a special meeting of the shareholders and optionholders of Southward held on April 28, 2003 at which a special resolution approving the Arrangement was passed.
	Southward is now a wholly-owned subsidiary of 1022971 and applications have been made to cause Southward to cease to be a reporting issuer and to de-list Southward shares from the Toronto Stock Exchange.

- 2 -

	Concurrent with the acquisition of all of the outstanding common shares, Hawker sold substantially all of Southward’s assets to an arm’s length third party. Hawker retains an option to acquire an undivided interest in up to 50% of certain of the sold properties located east of Edmonton in the Lavoy and Cold Lake/Bonnyville areas of Alberta.
6.	Reliance on Confidentiality Provision:
	Not applicable.
7.	Omitted Information:
	Not applicable.
8.	Senior Officer:
	Barry Herring Chief Financial Officer Phone: (403) 444-3330 Fax: (403) 266-1814
9.	Statement of Senior Officer:
	The foregoing statement accurately discloses the material change referred to herein.
	DATED at Calgary, Alberta this 23rd day of May, 2003.

SOUTHWARD ENERGY LTD.

Per: “Barry Herring”

Barry Herring

Chief Financial Officer

cc:      Toronto Stock Exchange

Schedule “A”

News release via CCN Matthews, Vancouver 604-6834066

Not for distribution in the United States or over U.S. Wire Services. Any failure to comply with this restriction may constitute a violation of U.S. Securities Laws.

     Attention Business/Financial Editors:

     Hawker Resources Achieves Major Milestones

CALGARY, April 30, 2003 - Hawker Resources Inc. (HKR:TSX) announced today that the arrangement between Southward Energy Ltd. and a wholly owned subsidiary of Hawker has been completed. Pursuant to the arrangement, all of the outstanding common shares of Southward were acquired at a price of $4.77 per share. The previously announced concurrent sale of substantially all of Southward’s assets to an arm’s length third party has also closed.

“The completion of the acquisition of Southward is a major milestone for Hawker,” said David Tuer, CEO of Hawker. “This milestone was achieved by placing substantially all of Southward’s assets with a third party on a basis which allows us to reacquire up to 50% of what we consider to be the best assets of Southward. It is very difficult to secure assets of this quality on an option basis at the same price an informed arm’s length party has agreed to pay for those assets, and even more difficult to secure a right to such assets which is subject to financing. Hawker has achieved both of these difficult objectives and is now moving ahead with its proposed financing and the execution of its business plan.”

The Hawker option is to reacquire an interest in the properties of Southward located east of Edmonton in the Lavoy and Cold Lake/Bonnyville areas of Alberta together with other minor interests and expires July 29, 2003. Hawker intends to fully exercise the option to bring its aggregate interest in the properties to 50%. Hawker has filed a preliminary prospectus for a fully marketed $40,000,000 common share offering, the net proceeds of which will be used, together with bank financing, to fund the exercise price of the option. The exact number of common shares to be issued and the price per common share will be determined in approximately four weeks, following the marketing of the offering. Hawker’s preliminary prospectus is available at www.sedar.com.

ADVISORY: The Toronto Stock Exchange has neither approved nor disapproved the information contained herein. Certain information regarding the company, including management’s assessment of future plans and operations, may constitute forward-looking statements under applicable securities law and necessarily involve risks associated with oil and gas exploration, production, marketing and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources; as a consequence, actual results may differ materially from those anticipated. The company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contemplated by the forward-looking statements.

-0- 04/30/2003

For further information: David A. Tuer, Chief Executive Officer, Telephone: (403) 294-0067, Fax: (403) 294-0062

EX-99.12 12 h12489bexv99w12.htm MATERIAL CHANGE REPORT DATED 6/20/2003

Exhibit 12

MATERIAL CHANGE REPORT
UNDER
SECTION 146(1)OF THE SECURITIES ACT (ALBERTA)
SECTION 75(2) OF THE SECURITIES ACT (ONTARIO)
SECTION 85(1) OF THE SECURITIES ACT (BRITISH COLUMBIA)
SECTION 84(1) OF THE SECURITIES ACT (SASKATCHEWAN)
SECTION 73 OF THE SECURITIES ACT (QUEBEC)
SECTION 81(2) OF THE SECURITIES ACT (NOVA SCOTIA)
SECTION 76(2) OF THE SECURITIES ACT (NEWFOUNDLAND)
AND SIMILAR PROVISIONS OF OTHER PROVINCIAL LEGISLATION

1.	Reporting Issuer:
	The name and address of the reporting issuer is:
	Hawker Resources Inc. Suite 500, 340 – 12th Avenue S.W Calgary, Alberta T2R 1L5 (the “Corporation”)
2.	Date of Material Change:
	June 12, 2003.
3.	News Release
	A press release disclosing the nature and substance of the material change and attached hereto as Appendix “A” was issued on June 12, 2003.
4.	Summary of Material Change:
	The Corporation announced the completion of its previously announced public offering of 14,286,000 common shares at a price of $3.15 per common share for gross proceeds of approximately $45.0 million.
5.	Full Description of Material Change:
	Details of the transaction are provided in the press release dated June 12, 2003, a copy of which is attached hereto as Appendix “A”.
6.	Reliance on confidentiality provisions of the Act:
	Not applicable.

- 2 -

7.	Omitted Information:
	Not applicable.
8.	Senior Officer:
	For further information, please contact Mr. Barry R. Herring, Chief Financial Officer at the above mentioned address or at (403) 261-6883.
9.	Statement of Senior Officer:
	The foregoing accurately discloses the material change referred to in this report.
	DATED at Calgary, Alberta, this 20th day of June, 2003.

Hawker Resources Inc.
Per:	“Barry R. Herring”
	Barry R. Herring
	Chief Financial Officer

- 3 -

News release via CCN Matthews, Vancouver 604-683-1066

Not for distribution in the United States or over U.S. Wire Services. Any failure to comply with this restriction may constitute a violation of U.S. Securities Laws.

Attention Business/Financial Editors:

Hawker Resources Completes Equity Offering

CALGARY, June 12, 2003 – Hawker Resources Inc. (TSX:HKR) today completed its previously announced public offering of 14,286,000 common shares at a price of $3.15 per common share for gross proceeds of approximately $45.0 million. After completion of the offering, Hawker has 25,771,637 equity shares outstanding. The underwriting syndicate was led by Peters & Co. Limited and included FirstEnergy Capital Corp., Griffiths McBurney & Partners and Tristone Capital Inc.

Net proceeds of the offering, together with funds drawn on Hawker’s recently obtained credit facility, will be used to fund the previously announced acquisition of former Southward Energy Ltd. assets on June 30, 2003. The properties include both producing assets and prospective exploration plays on lands located east of Edmonton in the Lavoy and Cold Lake/Bonnyville areas of Alberta.

The common shares have not been, and will not be, registered under the United States Securities Act of 1933 and may not be offered or sold in the United States without an exemption from the applicable registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy the common shares in the United States.

For further information: Barry R. Herring, Chief Financial Officer, Telephone: (403) 261-6883, Fax: (403) 266-1814

ADVISORY: The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein. Certain information regarding the company, including management’s assessment of future plans and operations, may constitute forward-looking statements under applicable securities law and necessarily involve risks associated with oil and gas exploration, production, marketing and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources; as a consequence, actual results may differ materially from those anticipated. The company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contemplated by the forward-looking statements.

EX-99.13 13 h12489bexv99w13.htm MATERIAL CHANGE REPORT DATED 12/5/2003

Exhibit 13

MATERIAL CHANGE REPORT
UNDER
SECTION 146(1)OF THE SECURITIES ACT (ALBERTA)
SECTION 75(2) OF THE SECURITIES ACT (ONTARIO)
SECTION 85(1) OF THE SECURITIES ACT (BRITISH COLUMBIA)
SECTION 84(1) OF THE SECURITIES ACT (SASKATCHEWAN)
SECTION 73 OF THE SECURITIES ACT (QUEBEC)
SECTION 81(2) OF THE SECURITIES ACT (NOVA SCOTIA)
SECTION 76(2) OF THE SECURITIES ACT (NEWFOUNDLAND)
AND SIMILAR PROVISIONS OF OTHER PROVINCIAL LEGISLATION

1.	Reporting Issuer:
	The name and address of the reporting issuer is:
	Hawker Resources Inc. Suite 500, 340 – 12th Avenue S.W Calgary, Alberta T2R 1L5 (the “Corporation”)
2.	Date of Material Change:
	December 5, 2003.
3.	News Release
	A press release disclosing the nature and substance of the material change and attached hereto as Appendix “A” was issued on December 5, 2003.
4.	Summary of Material Change:
	The Corporation announced the completion of its previously announced private placement of 2,900,000 flow-through common shares at a price of $5.25 per common share for gross proceeds of $15,225,000.
5.	Full Description of Material Change:
	Details of the transaction are provided in the press release dated December 5, 2003, a copy of which is attached hereto as Appendix “A”.
6.	Reliance on confidentiality provisions of the Act:
	Not applicable.

7.	Omitted Information:
	Not applicable.
8.	Senior Officer:
	For further information, please contact Mr. Barry R. Herring, Chief Financial Officer at the above mentioned address or at (403) 261-6883.
9.	Statement of Senior Officer:
	The foregoing accurately discloses the material change referred to in this report.
	DATED at Calgary, Alberta, this 5th day of December, 2003.

Hawker Resources Inc.
Per:	“Barry R. Herring”
	Barry R. Herring
	Chief Financial Officer

2

Hawker Resources Inc. Completes Flow-Through Common Share Private Placement

December 5, 2003

CALGARY, ALBERTA

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Hawker Resources Completes Private Placement

Hawker Resources Inc. today completed its previously announced “bought deal” private placement of 2,900,000 flow-through common shares (“Flow-Through Shares”) at a price of $5.25, for total gross proceeds of $15,225,000. Hawker now has 28,671,637 equity shares outstanding. The underwriting syndicate was led by Peters & Co. Limited and included Tristone Capital Inc., FirstEnergy Capital Corp. and Griffiths McBurney & Partners.

Net proceeds of the offering will be used to incur Canadian Exploration Expenses under the Income Tax Act (Canada) (the “Qualifying Expenditures”) prior to December 31, 2004 in the aggregate amount of $15,225,000. Hawker shall renounce the Qualifying Expenditures so incurred to the purchasers of the Flow-Through Shares such that $5.25 per Flow-Through Share shall be deductible against the subscribers’ income for the fiscal year ended December 31, 2003. The proceeds of the Flow-Through Share offering will be used to incur Qualifying Expenditures for the continued exploration of Hawker’s oil and natural gas properties prior to December 31, 2004. The proceeds of the private placement may be used to temporarily reduce indebtedness until required for the foregoing purposes.

Hawker is an Alberta-based corporation engaged in the business of exploring for and developing oil and natural gas reserves in western Canada and acquiring oil and natural gas properties. Hawker’s common shares are listed on the Toronto Stock Exchange under the symbol “HKR”.

FOR FURTHER INFORMATION PLEASE CONTACT:

Hawker Resources Inc.

Mr. David A. Tuer, President & CEO
Tel.: (403) 290-4874

Mr. Barry R. Herring, Vice President & CFO
Tel.: (403) 290-4856

ADVISORY: The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein. Certain information regarding the company, including management’s assessment of future plans and operations, may constitute forward-looking statements under applicable securities law and necessarily involve risks associated with oil and gas exploration, production, marketing and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources; as a consequence, actual results may differ materially from those anticipated. The company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contemplated by the forward-looking statements.

3 EX-99.14 14 h12489bexv99w14.htm MATERIAL CHANGE REPORT DATED 12/10/2003

Exhibit 14

MATERIAL CHANGE REPORT
UNDER
SECTION 146(1)OF THE SECURITIES ACT (ALBERTA)
SECTION 75(2) OF THE SECURITIES ACT (ONTARIO)
SECTION 85(1) OF THE SECURITIES ACT (BRITISH COLUMBIA)
SECTION 84(1) OF THE SECURITIES ACT (SASKATCHEWAN)
SECTION 73 OF THE SECURITIES ACT (QUEBEC)
SECTION 81(2) OF THE SECURITIES ACT (NOVA SCOTIA)
SECTION 76(2) OF THE SECURITIES ACT (NEWFOUNDLAND)
AND SIMILAR PROVISIONS OF OTHER PROVINCIAL LEGISLATION

1.	Reporting Issuer:
	The name and address of the reporting issuer is:
	Hawker Resources Inc. Suite 500, 340 – 12th Avenue S.W Calgary, Alberta T2R 1L5 (the “Corporation”)
2.	Date of Material Change:
	December 10, 2003.
3.	News Release:
	A press release disclosing the nature and substance of the material change and attached hereto as Appendix “A” was issued on December 10, 2003.
4.	Summary of Material Change:
	The Corporation announced that it has entered into a definitive agreement to acquire all of the shares of Pointwest Energy Inc. for an overall purchase price of approximately $88 million inclusive of debt.
5.	Full Description of Material Change:
	Details of the transaction are provided in the press release dated December 10, 2003, a copy of which is attached hereto as Appendix “A”.
6.	Reliance on confidentiality provisions of the Act:
	Not applicable.

7.	Omitted Information:
	Not applicable.
8.	Senior Officer:
	For further information, please contact Mr. Barry R. Herring, Chief Financial Officer at the above mentioned address or at (403) 261-6883.
9.	Statement of Senior Officer:
	The foregoing accurately discloses the material change referred to in this report.
	DATED at Calgary, Alberta, this 10th day of December, 2003.

Hawker Resources Inc.
Per:	“Barry R. Herring”
	Barry R. Herring
	Chief Financial Officer

-2-

HAWKER RESOURCES INC. AGREES TO ACQUIRE POINTWEST ENERGY INC.

December 10, 2003

Calgary, Alberta

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Hawker Resources Inc. (“Hawker”) (TSX:HKR) has entered into a definitive agreement to acquire all of the shares of Pointwest Energy Inc. (“Pointwest”) for an overall purchase price of approximately $88 million, inclusive of debt. The directors, officers and certain shareholders of Pointwest holding more than 92% of the shares of Pointwest have agreed to irrevocably accept the offer by Hawker.

Pointwest currently produces approximately 3,600 barrels of oil equivalent per day, weighted 95% toward natural gas, and has 29,400 net acres of undeveloped land. The consolidated company will have initial production of approximately 36.9 MMCFD of natural gas and 180 BPD of crude oil and natural gas liquids.

Funding required to complete the acquisition will be obtained through a combination of equity and debt financing. Hawker has entered into an agreement, on a bought deal basis, with an underwriting syndicate led by Peters & Co. Limited and including Tristone Capital Inc., FirstEnergy Capital Corp., GMP Securities Ltd., and CIBC World Markets Inc. for an offering, by way of a short form prospectus, of 11,200,000 common shares at a price of $4.05 per share for gross proceeds of $45,360,000. It is a condition of the offering that the acquisition close concurrently with closing of the offering, and the financing and acquisition are both expected to close on December 30, 2003. The balance of the funds required to complete the acquisition will be advanced under a credit facility arranged with a Canadian chartered bank.

Hawker President David Tuer noted that “The addition of the Pointwest assets to our own inventory of production and exploration properties offers Hawker the opportunity to grow significantly over the next several years. The acquisition is expected to be strongly accretive to our cash flow and earnings in 2004, moves the Company to a much higher level of production and drilling activity, and substantially increases the proportion of Hawker’s asset base that is operated.”

Hawker is an Alberta-based corporation engaged in the business of exploring for and developing oil and natural gas reserves in western Canada and acquiring oil and natural gas properties. Hawker’s common shares are listed on the Toronto Stock Exchange under the symbol “HKR”.

The common shares have not been and will not be registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act. This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction.

FOR FURTHER INFORMATION PLEASE CONTACT:

Hawker Resources Inc.

     Mr. David A. Tuer, President & CEO
     Tel.: (403) 290-4874

     Mr. Barry R. Herring, Senior Vice President & CFO
     Tel.: (403) 290-4856

ADVISORY: Certain information regarding the company, including management’s assessment of future plans and operations, may constitute forward-looking statements under applicable securities law and necessarily involve risks associated with oil and gas exploration, production, marketing and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources; as a consequence, actual results may differ materially from those anticipated. The company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contemplated by the forward-looking statements.

-2- EX-99.15 15 h12489bexv99w15.htm PORTIONS OF THE FINAL SHORT FORM PROSPECTUS

Exhibit 15

EXCERPTS FROM PROSPECTUS

DATED DECEMBER 19, 2003
RELATING TO THE OFFERING OF $45,360,000 OF HAWKER SHARES

1

RECENT DEVELOPMENTS

Proposed Acquisition of Pointwest Energy Inc.

On December 9, 2003, Hawker entered into an acquisition agreement (the “Acquisition Agreement”) with Pointwest providing for the acquisition by Hawker of all of the issued and outstanding Pointwest common shares for an aggregate cost of approximately $88 million, including Pointwest net debt of approximately $14 million, transaction costs of approximately $1 million and approximately $6 million payable by Pointwest for cancellation of outstanding options to acquire Pointwest common shares.

Pointwest’s average production for the nine months ended September 30, 2003 was approximately 3,355 boe/d, and was 89% weighted to natural gas. See “Information Concerning the Pointwest Properties – Selected Historical Quarterly Information – Production History”. The asset base is highly concentrated in the Boundary Lake North area of British Columbia, just west of the Alberta border. Approximately 90% of the production from the Pointwest properties is operated by Pointwest, with Pointwest having approximately an 80% working interest in such production.

The acquisition of Pointwest will be effected by the Corporation making an offer to all Pointwest shareholders (the “Offer”), on an exempt take-over bid basis, to acquire all Pointwest common shares (including any common shares of Pointwest issued on the exercise of presently outstanding options) at a purchase price of $12.71 cash per Pointwest common share.

The Acquisition Agreement provides that all holders of outstanding options under Pointwest’s stock option plan may exercise their options and tender to the Offer the Pointwest common shares issued upon such exercise. Alternatively, in lieu of exercising options, holders of options are entitled to receive from Pointwest a cash payment equal to the difference between the exercise price of any such option and the Offer price of $12.71 in exchange for cancellation of such options (the “cashless exercise option”). The aggregate amount payable by Pointwest pursuant to the cashless exercise option for all outstanding options is approximately $6 million.

The closing of the Offering is conditional upon the concurrent closing of the acquisition of Pointwest, both of which are anticipated to occur on or about December 30, 2003, but, in any event, not later than January 29, 2004.

Hawker’s obligation to complete the Offer is conditional upon, among other things, the tendering to the Offer of at least 90% of the Pointwest common shares (on a fully-diluted basis) (the “Minimum Condition”). The Acquisition Agreement is also subject to the completion of the Offering and the satisfaction of certain industry standard terms and conditions. The Acquisition Agreement obligates the Corporation to use its reasonable commercial efforts to consummate the Offer, including the completion of the Offering.

Concurrent with execution of the Acquisition Agreement, the directors, officers and certain shareholders of Pointwest executed pre-tender agreements (“Pre-Tender Agreements”) whereby such persons agreed to, among other things, irrevocably deposit all of their Pointwest common shares to the Offer. Pursuant to the Pre-Tender Agreements, each director, officer or shareholder party thereto agreed not to exercise any options held by them to acquire Pointwest common shares and instead to utilize the cashless exercise option except for two individuals who have indicated to management of the Corporation that they intend to exercise their options and tender to the Offer the Pointwest common shares received upon such exercise.

The Pre-Tender Agreements received by Hawker encompass approximately 92% of the basic outstanding Pointwest common shares, assuming the exercise of the options held by the two individuals described above. The Pre-Tender Agreements terminate only in the event that: (i) Hawker fails to make the Offer by December 15, 2003; (ii) Hawker does not take up and pay for the Pointwest common shares on or before January 9, 2004; (iii) the Corporation waives the Minimum Condition, decreases the consideration offered pursuant to the Offer or otherwise modifies or amends the Offer in a manner materially adverse to the holders of Pointwest common shares; or (iv) the Acquisition Agreement is terminated pursuant to certain of its terms.

2

The Acquisition Agreement can only be terminated in certain limited circumstances, including by Pointwest:

(a)	if the Corporation has not mailed the Offer to Pointwest shareholders on or before midnight (Calgary time) on December 15, 2003;
(b)	if the Corporation has not taken up and paid for the Pointwest common shares deposited to the Offer within 30 days following mailing of the Offer to Pointwest shareholders;
(c)	if the Offer expires without the Corporation taking up and paying for any Pointwest common shares as a result of a condition to the Offer not being satisfied or waived unless such circumstance is due to the failure of Pointwest to perform its obligations under the Acquisition Agreement; and
(d)	if there has been a misrepresentation, breach or non-performance by the Corporation of any representation, warranty or covenant in the Acquisition Agreement which would reasonably be expected to have a material adverse effect on Pointwest, subject to notice to the Corporation and a cure period.

Management of Hawker believes that the acquisition of Pointwest will provide benefits to the combined entity, including:

(a)	a stronger entity with a larger production, reserve and undeveloped land base and the financial capacity to compete more effectively in the oil and natural gas industry in western Canada;
(b)	enhanced exploitation opportunities through further development of Pointwest’s undeveloped land base in the core areas where the Corporation has experienced exploration success;
(c)	increased opportunities for working interest consolidations and property swaps resulting from the larger property base of the consolidated entity; and
(d)	increased control over operations due to the proportion of the asset base that will be operated by Hawker.

Upon the completion of the acquisition of Pointwest, Hawker will have initial production on a combined basis of approximately 37 mmcf/d of natural gas and NGLs and 180 bbls/d of crude oil.

For further discussion and analysis of the effect on the Corporation of acquiring Pointwest see “Consolidated Capitalization of the Corporation” and the unaudited pro forma consolidated financial statements of the Corporation and notes thereto set forth in this short form prospectus.

INFORMATION CONCERNING THE POINTWEST PROPERTIES

Oil and Natural Gas Reserves

Gilbert Laustsen Jung Associates Ltd. (“GLJ”), independent oil and natural gas reservoir engineers of Calgary, Alberta, has prepared a report (the “GLJ Report”) in which it evaluated the oil, natural gas and NGL reserves of Pointwest, effective September 30, 2003. GLJ conducted evaluations based on both escalated and constant price assumptions of Pointwest’s oil, natural gas and NGL reserves and the present worth of estimated future cash flows associated with such reserves. The results of the evaluation of GLJ, contained in the GLJ Report, based on both escalated and constant price assumptions, are summarized in the tables below. The present worth of estimated future cash flows contained in the following tables may not be representative of the fair market value of the reserves. Assumptions relating to costs, prices for future production and other matters are summarized in the notes following the tables. There is no assurance that such process and cost assumptions will be attained and variances could be material. All estimated future cash flows as set forth in the following tables are stated prior to provision for income taxes, indirect costs, and future site restoration costs, and after deduction of operating costs, royalties and estimated future capital expenditures.

3

Pointwest Properties
Petroleum and Natural Gas Reserves and Pre-Tax Estimated Net Present Worth
Escalating Prices and Costs

	Gross Reserves						Net Reserves						Pre-Tax Estimated Net Present Worth
													(thousands of dollars)
					Natural						Natural
			Natural		Gas				Natural		Gas		Discounted at
	Oil		Gas		Liquids		Oil		Gas		Liquids
	(mbbls)		(bcf)		(mbbls)		(mbbls)		(bcf)		(mbbls)		0%		10%		15%		20%
Proved Producing		126		17.8		220		111		14.1		171		69,913		49,681		44,485		40,613
Proved Non- Producing		120		9.7		120		100		7.3		91		27,796		20,461		18,038		16,118
Total Proved		246		27.5		340		211		21.4		262		97,709		70,142		62,523		56,731
Risked Probable		39		3.3		38		34		2.6		30		12,751		6,265		4,984		4,126
Established Reserves		285		30.8		378		245		24.0		292		110,460		76,407		67,507		60,857

Pointwest Properties
Petroleum and Natural Gas Reserves and Pre-Tax Estimated Net Present Worth
Constant Prices and Costs

	Gross Reserves						Net Reserves						Pre-Tax Estimated Net Present Worth
													(thousands of dollars)
					Natural						Natural
			Natural		Gas				Natural		Gas		Discounted at
	Oil		Gas		Liquids		Oil		Gas		Liquids
	(mbbls)		(bcf)		(mbbls)		(mbbls)		(bcf)		(mbbls)		0%		10%		15%		20%
Proved Producing		127		17.8		219		111		14.1		171		76,990		54,689		48,699		44,206
Proved Non- Producing		124		9.7		120		103		7.2		91		32,403		23,587		20,689		18,396
Total Proved		251		27.5		33.9		214		21.3		262		109,393		78,276		69,388		62,602
Risked Probable		38		3.3		39		32		2.7		30		13,854		71,118		5,673		4,693
Established Reserves		289		30.8		378		246		24.0		292		123,247		85,394		75,061		67,295

Notes to Reserve Determinations

The following notes provide important information relating to the preceding reserve determinations.

(1)	“Gross” reserves are defined as Pointwest’s working, lessor royalty, and overriding royalty interest share of the remaining reserves, before deduction of any royalties.
(2)	“Net” reserves are defined as the Gross remaining reserves of the properties in which Pointwest has an interest, less all crown, freehold, and overriding royalties and interests owned by others.
(3)	Definitions used for reserve categories in the GLJ Report are as follows:

“Proved Reserves”: Those reserves estimated as recoverable under current technology and existing economic conditions in the case of constant price and cost analyses and anticipated economic conditions in the case of escalated price and cost analyses, from that portion of a reservoir which can be reasonably evaluated as economically productive on the basis of analysis of drilling, geological, geophysical and engineering data, including the reserves to be obtained by

4

enhanced recovery processes demonstrated to be economic and technically successful in the subject reservoir.

“Probable Reserves”: Those reserves which analysis of drilling, geological, geophysical and engineering data does not demonstrate to be proved, but where such analysis suggests the likelihood of their existence and future recovery under current technology and existing or anticipated economic conditions. Probable additional reserves to be obtained by the application of enhanced recovery processes will be the increased recovery over and above that estimated in the proved category which can be realistically estimated for the pool on the basis of enhanced recovery processes which can be reasonably expected to be instituted in the future.

Development and Production Status

GLJ has divided the proved and probable reserves into producing and nonproducing categories and has further subdivided proved nonproducing reserves into developed nonproducing and undeveloped subcategories, in accordance with the following criteria:

“Producing Reserves”: Those reserves that are actually on production or, if not producing, that could be recovered from existing wells and facilities and where the reasons for the current nonproducing status is the choice of the owner rather than the lack of markets or some other reasons. An illustration of such a situation is a well or zone which is capable but is shut-in because its deliverability is not required to meet contract commitments. If reserves are currently shut-in, the date of resumption of production must be known with reasonable certainty.

“Nonproducing Reserves”: Those reserves that are not currently producing either due to lack of facilities and/or markets. The nonproducing category may be subdivided into developed and undeveloped (GLJ presents these subcategories only for proved reserves):

Developed Nonproducing Reserves

Nonproducing reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production.

Undeveloped Reserves

Those reserves expected to be recovered from known accumulations where a significant expenditure (e.g. when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.

In multi-well pools it may be appropriate to allocate total pool reserves between the producing and nonproducing categories, or to subdivide the reserves for the pool between developed and undeveloped. This allocation should be based on the estimator’s assessment as to the reserves that will be recovered from specific wells, facilities and completion intervals in the pool and their respective development and production status.

Evaluated Reserves Categories

Production/revenue projections are prepared on an unrisked basis for each of the following main reserves categories:

Proved Producing
Proved Developed Nonproducing
Proved Undeveloped
Total Proved
Proved Plus Probable Producing
Total Proved Plus Probable

Where “Total Proved” and “Total Proved Plus Probable” represent the sum of the producing, developed nonproducing and undeveloped reserves. Other reserves categories are presented within this summary report for analysis convenience and are determined by difference. GLJ evaluates the possible reserves component only when specifically requested to do so.

5

When evaluating reserves, GLJ evaluators generally first identify the producing situation and assign proved and proved plus probable reserves in recognition of the existing level of development and the existing depletion strategy. Incremental nonproducing (developed nonproducing or undeveloped) reserves are subsequently assigned recognizing future development opportunities and enhancements to the depletion mechanism. It should be recognized that future developments may result in accelerated recovery of producing reserves.

(4)

The price forecasts that formed the basis for the revenue projections in the GLJ Report were based on GLJ’s October 1, 2003 price model. The oil, natural gas and NGL escalating prices used in the GLJ Report are as follows:

										Alberta Natural Gas Liquids
				Edmonton		Alberta
		WTI Cushing		Par Price(1)		Plantgate		Alberta 30		Edmonton		Edmonton		Edmonton
		Oklahoma		40° API		Index		Day spot		Propane		Butane		Pentanes Plus
Year		(USS/bbl)		($/bbl)		($/mmbtu)		AECO ($/mcf)		$Cdn/bbl		$Cdn/bbl		$Cdn/bbl
2003 Q4			28.25		38.00		5.50		5.75		26.00		29.00		38.50
	2004		25.00		34.00		5.80		6.05		21.25		23.00		34.50
	2005		23.00		32.00		4.70		4.95		20.00		22.00		32.50
	2006		23.00		32.00		4.70		4.95		20.00		22.00		32.50
	2007		23.00		32.00		4.70		4.95		20.00		22.00		32.50
	2008		23.00		32.00		4.75		5.00		20.00		22.00		32.50
	2009		23.00		32.00		4.85		5.10		20.00		22.00		32.50
	2010		23.25		32.50		4.95		5.20		20.50		22.50		33.00
	2011		23.75		33.00		5.05		5.30		23.00		23.00		33.50
	2012		24.00		33.50		5.15		5.35		23.50		23.50		34.00
	2013		24.50		34.00		5.20		5.45		21.75		24.00		34.50
	2014+	+1.5%/yr		+1.5%/yr		+1.5%/yr		+1.5%/yr		+1.5%/yr		+1.5%/yr		+1.5%/yr

Note:

                    (1) 40 degrees API, 0.3% sulphur.

The oil, natural gas and NGL constant prices used in the GLJ Report are based on the following constant prices:

Wellhead Prices:

Natural gas	$5.51/mcf
Crude oil	$35.42/bbl
Natural gas liquids	$32.36/bbl

(5)	In the course of the evaluation, Pointwest provided GLJ personnel with basic information which included land data, well information, geological information, contract information, operating cost data, financial data and discussions of future operating plans. Other engineering, geological or economic data required to conduct the evaluation and upon which the GLJ Report is based, was obtained from public records, other operators, and from GLJ nonconfidential files. The extent and character of ownership and accuracy of all factual data supplied for the independent evaluation, from all sources, has been accepted as represented. The accuracy of any reserves or production estimate is a function of the quality and quantity of available data and of engineering interpretation and judgment. While reserves and production estimates presented herein are considered reasonable, the estimates should be accepted with the understanding that reservoir performance subsequent to the date of the estimate may justify revision, either upward or downward. Revenue projections presented in the GLJ Report are based in part on forecasts of market prices, currency exchange rates, inflation, market demand and government policy which are subject to many uncertainties and may, in future, differ materially from the forecasts utilized in the GLJ Report. Present values of revenues documented in the GLJ Report do not necessarily represent the fair market value of the reserves evaluated therein.
(6)	Columns may not add due to rounding.
(7)	The GLJ Report includes certain capital expenditures over 2003, 2004 and 2005 in order to achieve the predicted present worth values in the escalated price and constant price cases. Total capital expenditures (net to Pointwest total proved reserves) of $2,682,000 and $7,090,000 are to be expended in 2003 and 2004, respectively, in the escalated price case and $2,682,000 and $6,985,000 are to be expended in 2003 and 2004, respectively, in the constant price case. Total capital expenditures (net to Pointwest total proved

6

reserves) required during the remaining life of the Pointwest properties are $84,000 in the constant price case.

Principal Producing Properties

The following is a description of Pointwest’s principal properties on production or under development as at September 30, 2003. The term “net”, when used to describe Pointwest’s share of production, means the total of Pointwest’s working interest share before deduction of royalties owned by others.

Boundary Lake North

The Boundary Lake North assets are located near Fort St. John, British Columbia, just west of the Alberta border, and are comprised of a significant contiguous group of properties with high working interests. Pointwest has an average 84% working interest in 39,818 gross acres (33,414 net acres) of land in the Boundary Lake North area. Production is approximately 3,043 boe/d, comprised of approximately 17,500 mcf/d of natural gas and approximately 121 bbls/d of oil and NGLs. The Boundary Lake North properties offer year-round access.

The Boundary Lake North area is characterized by multi-target zones for both natural gas and oil, including the Gething, Baldonnel, Boundary, Coplin, Halfway and Doig formations. Pointwest operates the wells in the area, as well as the associated pipelines, compression and dehydration facility.

The GLJ Report assigns 22,535 mmcf of proved natural gas reserves and 371 mbbls of proved crude oil and NGLs reserves to the Boundary Lake North property. In addition, 2,341 mmcf of risked probable natural gas reserves and 44 mbbls of risked probable crude oil and NGLs reserves have been assigned to this property. The GLJ Report is an evaluation of Pointwest’s oil, natural gas and NGL reserves as at September 30, 2003. Hawker believes that drilling activities on the Pointwest properties in the fourth quarter of 2003 indicate that significant reserve additions and, upon tie-in, increased production volumes are possible.

Valhalla

The Valhalla acreage is situated 60 kilometers northwest of Grande Prairie, Alberta. Pointwest has a 100% working interest in 1,940 gross acres in the area, and holds a rolling option farm-in on an additional 4,160 gross acres in the area. Production is approximately 297 boe/d, comprised of approximately 1,500 mcf/d of natural gas and approximately 47 bbls/d of oil and NGLs. Like the Boundary Lake North assets, the Valhalla assets allow for year-round access.

Petroleum and natural gas rights held vary on the acreage, but are generally to the base of the Montney formation. Production is being derived from the Montney, Gething and Doe Creek formations. The Valhalla acreage is centrally located on the Peace River Arch, an area which often offers stacked multi-target reservoirs with hydrocarbon migration and reservoir distribution influenced by faulting.

Land Summary

Pointwest has an interest in approximately 88,082 acres of land (52,489 net acres) in western Canada. Of the net acreage, approximately 61% is undeveloped (40,827 gross acres and 32,073 net acres). The following table summarizes the developed and undeveloped land included in Pointwest’s properties, as at October, 2003.

						Average
						Working
Property		Gross Acres(1)		Net Acres(2)		Interest
Boundary Lake North
	Developed land		16,771		12,075		72	%
	Undeveloped land		23,047		21,339		93	%
	Total		39,818		33,414		84	%

7

						Average
						Working
Property		Gross Acres(1)		Net Acres(2)		Interest
Valhalla
	Developed land		1,300		1,300		100	%
	Undeveloped land		640		640		100	%
	Total		1,940		1,940		100	%
Other Areas
	Developed land		32,867		9,714		30	%
	Undeveloped land		13,457		7,421		55	%
	Total		46,324		17,135		37	%
Total
	Developed land		50,938		23,089		45	%
	Undeveloped land		37,144		29,400		79	%
	Total		88,082		52,489		60	%

Notes:

(1)	“Gross Acres” means the total acres in which Pointwest holds an interest.
(2)	“Net Acres” means the total acres in which Pointwest holds an interest, multiplied by the working interest therein.

Oil and Natural Gas Wells

The following table sets forth the producing wells and wells capable of producing included in the Pointwest properties as at September 30, 2003.

	Oil Wells								Natural Gas Wells
	Producing				Shut-in(3)				Producing				Shut-in(3)
	Gross(1)		Net(2)		Gross(1)		Net(2)		Gross(1)		Net(2)		Gross(1)		Net(2)
Boundary Lake North		1.00		0.375		—		—		17.00		13.89		6.00		5.35
Valhalla		1.00		0.60		—		—		2.00		2.00		2.00		1.09
Other Areas		1.00		0.11		—		—		41.00		17.15		20.00		4.78
Total		3.00		1.09		—		—		60.00		33.04		28.00		11.22

Notes:

(1)	“Gross Wells” means all wells in which Pointwest has a working interest.
(2)	“Net Wells” means the total wells in which Pointwest has a working interest, multiplied by the working interest therein.
(3)	“Shut-in Wells” are wells which are capable of economic production or which Pointwest considers capable of production but which, for a variety of reasons, including but not limited to lack of markets or development, are not currently on production.

Drilling History

The following table sets forth the number of gross and net exploratory and development wells comprised in the Pointwest properties which were completed, capped or abandoned during the periods indicated.

	Nine Months Ended
	September 30				Years Ended December 31
	2003				2002				2001
	Gross Wells(1)		Net Wells(2)		Gross Wells(1)		Net Wells(2)		Gross Wells(1)		Net Wells(2)
Exploratory
Gas		4.0		3.6		4.0		3.8		1.0		0.8
Oil		—		—		—		—		—		—
Dry(3)		—		—		1.0		1.0		2.0		2.0
Total Exploratory		4.0		3.6		5.0		4.8		3.0		2.8
Development
Gas		5.0		4.6		6.0		5.5		4.0		3.6
Oil		—		—		2.0		1.5		3.0		2.6

8

	Nine Months Ended
	September 30				Years Ended December 31
	2003				2002				2001
	Gross Wells(1)		Net Wells(2)		Gross Wells(1)		Net Wells(2)		Gross Wells(1)		Net Wells(2)
Dry(3)		—		—		—		—		—		—
Total Development		5.0		4.6		8.0		7.0		7.0		6.2
Total Drilling Activity		9.0		8.2		13.0		11.8		10.0		9.0

Notes:

(1)	“Gross Wells” means the total wells in which Pointwest has an interest.
(2)	“Net Wells” means the total wells in which Pointwest has an interest, multiplied by the working interest therein.
(3)	“Dry Well” means a well which is not a productive well or a service well. A productive well is a well which is capable of producing oil and natural gas in commercial quantities or in quantities considered by the operator to be sufficient to justify the costs required to complete, equip and produce the well. A service well means a well such as a water or gas-injection, water-source or water-disposal well. Such wells do not have marketable reserves of crude oil or natural gas attributed to them but are essential to the production of the crude oil and natural gas reserves.

Reconciliation of Reserves

The following table summarizes the changes to the proved reserves (before royalties) in the Pointwest properties from December 31, 2001 to September 30, 2003.

	Oil and NGLs (mbbls)									Natural Gas (mmcf)
	Proved			Probable			Total			Proved			Probable		Total
December 31, 2001		284			202			486			4,307			1,716		6,023
Production		(106	)		—			(106	)		(3,522	)		—		(3,522	)
Acquisitions		—			—			—			—			—		—
Additions		447			(34	)		413			18,853			2,428		21,281
Dispositions		—			—			—			—			—		—
December 31, 2002		625			168			793			19,638			4,144		23,782
Production		(103	)		—			(103	)		(4,840	)		—		(4,840	)
Acquisitions		8			—			8			552			34		586
Additions		56			(13	)		43			12,123			2,432		14,555
Dispositions		—			—			—			—			—		—
September 30, 2003		586			155			741			27,473			6,610		34,083

Selected Historical Quarterly Information

Production History

The following table shows the average daily production volumes from the Pointwest properties, before the deduction of royalties, for each of the fiscal quarters of 2001 and 2002.

	2002								2001
	Three Months		Three Months		Three Months		Three Months		Three Months		Three Months		Three Months		Three Months
	Ended		Ended		Ended		Ended		Ended		Ended		Ended		Ended
	March 31		June 30		September 30		December 31		March 31		June 30		September 30		December 31
Natural Gas (mcf/d)		1,772		4,507		14,036		18,059		—		323		1,007		1,432
Crude Oil & NGLs (bbls/d)		181		200		282		495		—		6		26		27
boe/d		476		951		2,621		3,505		—		60		194		266

The following table shows the average daily production volumes from the Pointwest properties, before the deduction of royalties, for each of the first three fiscal quarters of 2003.

9

	2003
	Three Months		Three Months		Three Months
	Ended		Ended		Ended
	March 31		June 30		September 30
Natural Gas (mcf/d)		20,951		16,892		15,410
Crude Oil & NGLs(bbls/d)		468		395		276
boe/d		3,960		3,210		2,844

The production rates of Pointwest vary over time and as between periods due to several factors. The oil and gas reservoirs in which Pointwest holds interests are generally characterized by favourable initial rates of production from successful wells, followed by rapid initial decline rates, until a more stable production rate is reached. In an active drilling program, as undertaken by Pointwest historically and as planned by Hawker in the future, corporate production rates tend to rise as each new well comes onstream and then begin to decline. Accordingly, rates will vary over time. Hawker’s focus is on the overall well economics, being the aggregate return anticipated over the life of each well relative to its capital, operating and other costs. Hawker believes these economics to be very favourable for both its existing properties and the Pointwest properties.

Netback ($ per boe)

The following table summarizes the average netbacks received for the production from the Pointwest properties for each of the fiscal quarters of 2001 and 2002.

	2002								2001
			Three								Three
	Three Months		Months		Three Months		Three Months		Three Months		Months		Three Months		Three Months
	Ended		Ended		Ended		Ended		Ended		Ended		Ended		Ended
	March 31		June 30		September 30		December 31		March 31		June 30		September 30		December 31
Sales Price	$	25.64	$	26.24	$	21.50	$	36.27		—	$	27.06	$	23.53	$	22.65
Royalties		4.39		5.24		4.82		8.98		—		3.66		3.41		2.82
Operating Costs		5.53		5.21		5.22		4.62		—		6.77		8.76		11.86
Netback		15.72		15.79		11.46		22.67		—		16.63		11.36		7.97

The following table summarizes the average netbacks received for the production from the Pointwest properties for each of the first three fiscal quarters of 2003.

	2003
	Three Months		Three Months		Three Months
	Ended		Ended		Ended
	March 31		June 30		September 30
Sales Price	$	49.26	$	42.95	$	38.08
Royalties		12.53		9.16		9.82
Operating Costs		4.53		4.60		4.33
Netback		32.20		29.19		23.93

Capital Expenditures

The following table summarizes the capital expenditures in respect of the Pointwest properties in the categories indicated for each of the fiscal quarters of 2001 and 2002.

	2002								2001
	Three										Three
	Months		Three Months		Three Months		Three Months		Three Months		Months		Three Months		Three Months
	Ended		Ended		Ended		Ended		Ended		Ended		Ended		Ended
	March 31		June 30		September 30		December 31		March 31		June 30		September 30		December 31
Land acquisitions	$	203,588	$	5,592,659	$	544,685	$	1,295,726	$	369,112	$	428,609	$	130,963	$	185,027
Exploration (including drilling)		1,746,534		28,557		1,883,232		1,243,562		—		63,000		1,785,267		466,964
Development (including facilities)		4,043,1667		7,938,166		4,056,449		7,421,658		10,371		1,786,486		1,221,987		1,433,006
Total		5,993,289		13,559,382		6,484,366		9,960,946		379,483		2,278,095		3,138,217		2,084,997

10

The following table summarizes the capital expenditures in respect of the Pointwest properties in the categories indicated for each of the first three fiscal quarters of 2003.

	2003
	Three Months		Three Months		Three Months
	Ended		Ended		Ended
	March 31		June 30		September 30
Land acquisitions	$	1,156,639	$	722,537	$	16,395
Exploration (including drilling)		3,329,575		1,166,806		2,700,822
Development (including facilities)		7,405,941		1,829,784		7,020,173
Total		11,892,155		3,719,127		9,737,390

Future Commitments

Pointwest currently has no forward sales contracts or financial hedging contracts with respect to production from the Pointwest properties.

11

Auditors’ Report

To the Board of Directors of
Pointwest Energy Inc.

We have audited the consolidated balance sheets of Pointwest Energy Inc. as at December 31, 2002 and 2001 and the consolidated statements of operations and retained earnings (deficit) and cash flows for each of the years in the two-year period ended December 31, 2002 and for the period from July 25, 2000 to December 31, 2000. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the company as at December 31, 2002 and 2001 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2002 and for the period from July 25, 2000 to December 31, 2000 in accordance with Canadian generally accepted accounting principles.

/s/ KPMG LLP

Chartered Accountants

Calgary, Canada
April 12, 2003, except for note 11 as to which the date is December 12, 2003

F-12

Pointwest Energy Inc.
Consolidated Balance Sheets

		September 30,		December 31,		December 31,
		2003		2002		2001
Assets		(unaudited)
Current
	Cash and cash equivalents (note 4)	$	219,815	$	243,223	$	8,731,454
	Accounts receivable		5,267,443		5,353,302		935,728
	Prepaid expenses and deposits		316,776		177,969		144,536
			5,804,034		5,774,494		9,811,718
Property and equipment (note 5)			56,492,081		42,618,103		13,536,024
		$	62,296,115	$	48,392,597	$	23,347,742
Liabilities
Current
	Accounts payable and accrued liabilities	$	12,599,416	$	12,581,545	$	2,891,134
	Demand credit facility (note 6)		5,250,000		5,150,000		—
			17,849,416		17,731,545		2,891,134
Provision for site restoration and abandonment			774,183		370,283		121,683
Future income taxes (note 8)			10,728,577		5,228,577		3,445,181
			29,352,176		23,330,405		6,457,998
Shareholders’ Equity
Share capital (note 7)			24,900,551		24,900,551		18,551,551
Retained earnings (deficit)			8,043,388		161,641		(1,661,807	)
			32,943,939		25,062,192		16,889,744
		$	62,296,115	$	48,392,597	$	23,347,742

Subsequent event (note 11)
On behalf of the Board
(signed) Cameron McVeigh Director	(signed) Larry J. Macdonald Director

See accompanying notes

F-13

Pointwest Energy Inc.
Consolidated Statements of Operations and Retained Earnings (Deficit)

	Nine months ended						Years ended						Period from
	September 30						December 31						July 25 to
													December 31
	2003			2002			2002			2001			2000
	(unaudited)
Revenue
Petroleum and natural gas sales	$	40,069,997		$	8,555,195		$	20,248,861		$	1,120,382		$	—
Royalties, net of ARTC		(9,707,815	)		(1,806,422	)		(4,701,366	)		(149,667	)		—
		30,362,182			6,748,773			15,547,495			970,715			—
Interest and other income		—			27,731			27,731			288,049			14,723
		30,362,182			6,776,504			15,575,226			1,258,764			14,723
Expenses
Production		4,091,978			1,945,965			3,435,315			483,000			—
General and administrative		770,593			689,378			1,193,065			799,734			211,586
Interest		212,893			57,288			137,025			55,538			—
Depletion, depreciation and site restoration		11,878,593			3,448,228			7,164,503			2,570,692			4,251
		16,954,057			6,140,859			11,929,908			3,848,964			215,837
Income (loss) before taxes		13,408,125			635,645			3,645,318			(2,590,200	)		(201,1140	)
Capital taxes		26,378			19,000			38,474			25,000			—
Future income tax (recovery) (note 8)		5,500,000			550,000			1,783,396			(1,154,507	)		—
		5,526,378			569,000			1,821,870			(1,129,507	)		(201,1140	)
Income (loss) for the period		7,881,747			66,645			1,823,448			(1,460,693	)		(201,114	)
Retained earnings (deficit), beginning of period		161,641			(1,661,807	)		(1,661,807	)		(201,114	)		—
Retained earnings (deficit), end of period	$	8,043,388		$	(1,595,162	)	$	161,641		$	(1,661,807	)	$	(201,114	)

See accompanying notes

F-14

Pointwest Energy Inc.
Consolidated Statements of Cash Flows

													Period from
	Nine months ended						Years ended						July 25 to
	September 30						December 31						December 31
	2003			2002			2002			2001			2000
	(unaudited)
Operating
Income (loss) for the period	$	7,881,748		$	66,645		$	1,823,448		$	(1,460,693	)	$	(201,114	)
Depletion, depreciation and site restoration		11,878,593			3,448,228			7,164,503			2,510,692			4,251
Future income tax provision (recovery)		5,500,000			550,000			1,783,396			(1,154,507	)		—
Funds from (used in) operating activities		25,260,341			4,064,873			10,771,347			(104,508	)		(196,863	)
Changes in non-cash working capital (note 10)		(1,752,754	)		(2,184,946	)		(2,704,009	)		(418,780	)		14,879
		23,507,587			1,879,927			8,067,338			(523,288	)		(181,984	)
Financing
Issue of common shares		—			6,349,000			6,349,000			15,103,000			4,935,100
Bank borrowing		100,000			5,800,000			5,150,000			—			—
		100,000			12,149,000			11,499,000			15,103,000			4,935,100
Investing
Expenditures on property and equipment		(24,650,432	)		(19,614,267	)		(29,575,214	)		(7,880,792	)		(70,188	)
Acquisition of property and equipment		(698,240	)		(6,422,768	)		(6,422,768	)		—			—
Purchase of Myriad Energy Corporation (note 3)		—			—			—			(4,822,537	)		—
Changes in non-cash working capital (note 10)		1,717,677			4,019,790			7,943,413			2,172,143			—
		(23,630,995	)		(22,017,245	)		(28,054,569	)		(10,531,186	)		(70,188	)
(Decrease) increase in cash and cash equivalents		(23,408	)		(7,988,318	)		(8,488,231	)		4,048,526			4,682,928
Cash and cash equivalents, beginning of period		243,223			8,731,454			8,731,454			4,682,928			—
Cash and cash equivalents, end of period	$	219,815		$	743,136		$	243,223		$	8,731,454		$	4,682,928

See accompanying notes

F-15

Pointwest Energy Inc.
Notes to the Consolidated Financial Statements

1. Nature of operations

Pointwest Energy Inc. (the “Company”) is engaged in the exploration for and production of petroleum and natural gas predominately in Western Canada. The Company was incorporated under the Business Corporations Act (Alberta) on July 25, 2000. In December 2000, the articles of incorporation were amended to remove the private company restrictions.

2. Summary of significant accounting policies

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles and include the accounts of the Company and its wholly owned subsidiary, Myriad Energy Corporation and a production partnership, Pointwest Energy. The financial statements have, in management’s opinion, been properly prepared using careful judgment within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:

a) Property and equipment

i)	Capitalized costs
	The Company follows the full cost method of accounting for its petroleum and natural gas operations. Under this method, all costs related to the exploration for and development of petroleum and natural gas reserves are capitalized. Costs include lease acquisitions, lease rentals on non-producing properties, geological and geophysical costs, and costs of drilling both productive and non-productive wells and production equipment costs. General and administrative costs are not capitalized other than to the extent of the Company’s working interest in operated capital expenditure programs on which operator’s fees have been charged equivalent to standard industry operating agreements. Proceeds from the sale of properties are applied against capitalized costs and gains or losses are not recognized unless such sale would alter the depletion rate by more than 20%.
ii)	Depletion and depreciation
	Depletion and depreciation of oil and gas properties, net of estimated salvage or residual value, is provided using the unit-of-production method based upon estimated gross proven petroleum and natural gas reserves as determined by independent engineers. For depletion and depreciation purposes, relative volumes of petroleum and natural gas production and reserves are converted at the energy equivalent conversion rate of six thousand cubic feet of natural gas to one barrel of crude oil.
	Office equipment is depreciated on a declining balance basis over its estimated useful life at rates varying from 20% to 50%.
iii)	Impairment test
	The Company calculates a ceiling test whereby the carrying value of its property and equipment, net of recorded future income taxes and the accumulated provision for future site restoration and abandonment costs, is compared each reporting period-end to an estimate of future net cash flow from the production of gross proven reserves plus the lower of cost or market of unevaluated land and seismic. Net cash flow is estimated using period-end prices, less estimated future general and administrative expenses, financing costs, estimated future site restoration and abandonment costs and income taxes. Should this comparison indicate an excess carrying value, the excess is charged against operations in the period as additional depletion and depreciation.

F-16

Pointwest Energy Inc.
Notes to the Consolidated Financial Statements

b)	Site restoration and abandonment costs
	The estimated cost of site restoration and abandonments is based on the current cost and the anticipated method and extent of site restoration in accordance with existing legislation and industry practice. Estimated future site restoration and abandonment costs are accrued on the unit-of-production basis based on gross proven reserves. The provision is recorded on the statement of operations. Future site restoration and abandonment expenditures are charged to the accumulated provision as incurred.
c)	Use of estimates
	The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The amounts recorded for depletion and depreciation of property and equipment and the provision for site restoration and abandonment and the ceiling test are based on estimates of gross proven reserves, production rates, oil and gas prices, future costs and other relevant assumptions. These estimates are reviewed regularly and changes in such estimated in future years could be significant. As adjustments become necessary, they are reported in earnings in the periods in which they become known.
d)	Joint operations
	Substantially all of the exploration and production activities of the Company are conducted jointly with others. These consolidated financial statements reflect only the Company’s proportionate interest in such activities.
e)	Flow-through shares
	The Company finances a portion of its exploration and development activities through the issue of flow-through shares. Under the terms of the flow-through share issues, the tax deduction of the related expenditures are renounced to subscribers. For accounting purposes, a future tax liability is recognized and share capital is reduced when the shares are issued.
f)	Future income taxes
	The Company follows the liability method of accounting for income taxes. Under this method future tax assets and liabilities are determined based on differences between financial reporting and income tax bases of assets and liabilities, and are measured using substantively enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect on future tax assets and liabilities of a change in tax rates is recognized in net income in the period in which the change is substantively enacted.
g)	Stock-based compensation plan
	The Company has a stock based compensation plan, which is described in note 7. No compensation expense is recorded for this plan when stock options are issued to employees and directors. Any consideration paid on the exercise of stock options is credited to share capital.
h)	Revenue recognition
	Revenues from the sale of petroleum and natural gas are recorded when title passes to an external party.

F-17

Pointwest Energy Inc.
Notes to the Consolidated Financial Statements

3. Acquisition

In May 2001, the Company acquired all of the issued and outstanding shares of Myriad Energy Corporation (a private oil and gas company) for total cash consideration of $5,149,413, including $148,619 of acquisition costs. The transaction has been accounted for using the purchase method with the result of the operations of Myriad included in the accounts from May 2001.

Cash	$	326,876
Non-cash working capital		(42,628	)
Property and equipment		8,061,487
Future site restoration and abandonment		(83,183	)
Future tax liability		(3,113,139	)
		5,149,413
Less: cash acquired		(326,876	)
Cash expenditure	$	4,822,537

4. Cash and cash equivalents

	September 30,		December 31,		December 31,
	2003		2002		2001
Cash in bank	$	219,815	$	243,223	$	3,734,654
Term deposits		—		—		4,996,800
	$	219,815	$	243,223	$	8,731,454

5. Property and equipment

	September 30, 2003
			Accumulated
			depletion and
	Cost		depreciation		Net
Petroleum and natural gas properties	$	77,255,770	$	20,809,401	$	56,446,369
Office equipment		103,351		57,639		45,712
	$	77,359,121	$	20,867,040	$	56,492,081

	December 31, 2002
			Accumulated
			depletion and
	Cost		depreciation		Net
Petroleum and natural gas properties	$	51,914,893	$	9,346,400	$	42,568,493
Office equipment		95,556		45,946		49,610
	$	52,010,449	$	9,392,346	$	42,618,103

	December 31, 2001
			Accumulated
			depletion and
	Cost		depreciation		Net
Petroleum and natural gas properties	$	15,924,543	$	2,450,400	$	13,474,143
Office equipment		87,924		26,043		61,881
	$	16,012,467	$	2,476,443	$	13,536,024

At September 30, 2003 petroleum and natural gas properties included undeveloped land of $1,549,363 (December 31, 2002 - $1,332,401; December 31, 2001 - $891,826; December 31, 2000 - $Nil), which has been excluded from

F-18

Pointwest Energy Inc.
Notes to the Consolidated Financial Statements

the depletion calculation. Future capital expenditures in the amount of $7,894,780 (December 31, 2002 - $2,942,000; December 31, 2001 - $1,028,000; December 31, 2000 - $Nil ) have been included in the depletion calculation.

At December 31, 2001, the application of the ceiling test resulted in a $1.7 million pre-tax write-down ($960,000 after tax) of the oil and gas assets.

At September 30, 2003 total future site restoration and abandonment costs are estimated to be $2,046,200 (December 31, 2002 - $1,657,000) of which $774,183 has been accrued as at September 30, 2003 (December 31, 2002 - $370,283).

The Company did not capitalize any general and administrative costs during any of the periods, other than to the extent of the Company’s working interest in operated capital expenditure programs on which operator’s fees have been charged equivalent to standard industry operating agreements.

6. Demand credit facility

The Company has a $20.2 million demand revolving credit facility at an interest rate of prime plus 0.5% when the debt to equity ratio is equal to or less than 1.5 to 1 and prime plus 0.75% when the debt to equity ratio is greater than 1.5 to 1. Security is provided by a general security agreement, and a $25.0 million floating debenture. The Company had borrowed $5,250,000 under this facility as at September 30, 2003 (December 31, 2002 - $5,150,000).

7.	Share capital
a)	Authorized
	Unlimited number of Class A voting shares
b)	Issued Class A common shares

	Number of
	Shares		Amount
Balance – December 31, 2000		1,249,100	$	5,353,100
Private placements		2,499,600		12,498,000
Flow-through shares		279,000		1,395,000
Tax benefits related to renounced expenditures on flow-through shares		—		(594,549	)
Share subscription receivable		—		(100,000	)
Balance – December 31, 2001		4,027,700		18,551,551
Share subscription received		—		100,000
Private placements		1,249,800		6,249,000
Balance – September 30, 2003 and December 31, 2002		5,277,500	$	24,900,551

c)

Private placement

Under the terms of a private placement in December 2000, participants subscribed for units of the Company. Subscriptions for less than 50,000 units received one common share per unit. Participants subscribing for 50,000 units or greater received 0.1 common shares, 0.6 Class A Call Obligation and 0.3 Class B Obligation. Each Class A and Class B Obligation required the holder to subscribe for 1 common share at a price of $5.00 on or before June 30, 2002. During 2001, obligations called and paid resulted in the issue of 2,499,600 class A common shares for proceeds of $12,498,000. During 2002, the balance of

F-19

Pointwest Energy Inc.
Notes to the Consolidated Financial Statements

	obligations were called and paid resulting in the issue of 1,249,800 class A common shares for proceeds of $6,249,000.
d)	Flow-through shares
	In December 2001, 279,000 flow-through Class A shares were issued at $5.00 per share for gross proceeds of $1,395,000. At December 31, 2001 the tax deductions related to these proceeds were renounced to the investors and the Company had met its obligations of these expenditures. Of the 279,000 flow through shares issued during 2001, 264,000 were issued to directors.
e)	Stock options
	The Company has a stock option plan, administered by the board of directors, in which up to 791,610 shares are reserved for issuance. Under the plan, the options that have been granted vest one-third per year and expire five years from date of issuance.
7.	Share capital (continued)
	Shares have been reserved for the following stock options outstanding:

	Period ended				Year ended				Year ended
	September 30, 2003				December 31, 2002				December 31, 2001
			Weighted				Weighted				Weighted
			Average				Average				Average
			Exercise				Exercise				Exercise
			Price				Price				Price
	Shares		$		Shares		$		Shares		$
Opening		778,417		5.00		573,933		5.00		187,180		5.00
Granted		13,194		7.45		204,484		5.00		386,753		5.00
Closing		791,611		5.04		778,417		5.00		573,933		5.00

The following summarizes information about stock options outstanding as at September 30, 2003:

			Weighted Average
	Number		Remaining		Number
Exercise Price	Outstanding At		Contractual Life		Exercisable At		Weighted Average
$	September 30, 2003		(years)		September 30, 2003		Exercise Price
5.00		778,417		2.0		518,945		5.00
7.45		13,194		3.5		—		—
		791,611		2.0		518,945		5.00

During the period ended September 30, 2003, the Company granted 13,194 options to an employee. For the purposes of pro forma disclosure, the estimated fair value of the options is recognized over the vesting period of the option. Had the fair value method been used, the Company’s income for the nine months ended September 30, 2003 would have been reduced by $8,816.

The value of the stock options granted was determined using the Black-Scholes option pricing model and resulted in a total pro forma cost of $21,800 based on the following assumptions: risk free interest rate of 5.0%; expected term of 5.0 years; weighted average stock volatility of 0%; and no expected future dividends.

8. Income taxes

F-20

Pointwest Energy Inc.
Notes to the Consolidated Financial Statements

The components of the future income tax liability are:

	September 30,			December 31,			December 31,
	2003			2002			2001
Property and equipment	$	11,344,630		$	5,577,963		$	3,579,250
Provision for future site restoration		(306,731	)		(155,963	)		(51,861	)
Benefit of non-capital loss		—			—			(94,517	)
Benefit of provincial tax deduction		(309,342	)		(193,423	)		—
Other		—			—			12,309
Liability per financial statements	$	10,728,577		$	5,228,577		$	3,445,181

The provision for future income taxes differs from the amount computed by applying the combined federal and provincial tax rates to the loss before taxes. The difference results from the following:

	September 30						December 31
	2003			2002			2002			2001			2000
Expected income tax rate		40.62	%		42.12	%		42.12	%		42.62	%		44.62	%
Expected income tax expense (recovery)	$	5,446,380		$	267,734		$	1,535,408		$	(1,103,943	)	$	(89,696	)
Crown royalties and production taxes		3,561,405			735,792			1,996,773			56,280			—
ARTC		(124,829	)		—			(193,206	)		(14,069	)		—
Resource allowance		(3,075,362	)		(459,022	)		(1,343,903	)		33,751			24,009
Benefit of provincial tax deduction		(115,919	)		—			(193,423	)		—			—
Effect of federal and provincial tax rate reduction		(316,526	)		—			(41,382	)		(37,043	)		—
Other		124,851			5,496			23,129			(24,412	)		227
Recorded benefit of losses		—			—			—			(65,071	)		65,460
Income tax expense (recovery)	$	5,500,000		$	550,000		$	1,783,396		$	(1,154,507	)	$	—

9.	Financial instruments
a)	Fair values of financial assets and liabilities
	Financial instruments consist of cash and cash equivalents, accounts receivable, deposits, accounts payable and accrued liabilities and the demand credit facility. At September 30, 2003 and December 31, 2002 and 2001 there are no significant differences between the carrying amounts reported on the balance sheet and estimated fair values. At September 2003 and December 31, 2002 and 2001, the Company had no outstanding hedging contracts.
b)	Credit risk
	The majority of the accounts receivable are in respect of oil and natural gas operations. The Company generally extends unsecured credit to these customers, and therefore, the collection of accounts receivables may be affected by changes in economic or other conditions. Management believes the risk is mitigated by the size and reputation of the companies to which they extend credit. The Company has not experienced any material credit loss in the collection of receivables to date.
c)	Interest rate risk
	The Company is exposed to a floating rate of interest on its bank borrowings.

F-21

Pointwest Energy Inc.
Notes to the Consolidated Financial Statements

10.	Supplemental cash flow information
a)	Change in non-cash working capital

	September 30						December 31
	2003			2002			2002			2001			2000
Accounts receivable	$	85,859		$	(2,819,724	)	$	(4,417,574	)	$	(932,787	)	$	(2,941	)
Prepaid expenses and deposits		(138,807	)		59,408			(33,433	)		(89,585	)		72,771
Accounts payable and accrued liabilities		17,871			4,595,160			9,690,411			2,818,363			(54,951	)
Working capital acquired from Myriad (note 3)		—						—			(42,628	)
	$	(35,077	)	$	1,834,844		$	5,239,404		$	1,753,363		$	14,879

The change in non-cash working capital has been allocated to the following activities:

	2003			2002			2002			2001			2000
Operating	$	(1,752,754	)	$	(2,184,946	)	$	(2,704,009	)	$	(418,780	)	$	14,879
Investing	$	1,717,677		$	4,019,790		$	7,943,413		$	2,172,143		$	—

b) Interest and capital tax paid

	September 30				December 31
	2003		2002		2002		2001		2000
Interest	$	212,893	$	57,288	$	192,563	$	—	$	—
Capital tax	$	26,378	$	19,000	$	63,474	$	—	$	—

11. Subsequent event

The Company has signed a lock-up agreement with a public company Hawker Resources Inc. for the sale of all of its shares at a price of $12.71 per share. As part of the sale, the Company has agreed to pay the holders of 791,611 outstanding stock options approximately $6.1 million in exchange for cancellation of their options.

F-22

AUDITORS’ REPORT

To the Directors of
Hawker Resources Inc.:

We have audited the accompanying statements of revenues and operating expenses relating to the proposed acquisition by Hawker Resources Inc. of certain petroleum and natural gas properties (the “Southward Properties”) for each of the years in the three-year period ended December 31, 2002. This financial information is the responsibility of the management of Hawker Resources Inc. Our responsibility is to express an opinion on this financial information based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial information is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial information. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial information.

In our opinion, these statements present fairly, in all material respects, the revenues and operating expenses of the Southward Properties to be acquired as described in Note 1 for each of the years in the three-year period ended December 31, 2002 in accordance with Canadian generally accepted accounting principles.

Calgary, Alberta	(Signed) “Deloitte & Touche LLP”
April 21, 2003	Chartered Accountants

F-23

Hawker Resources Inc.

Southward Properties
Statements of Revenues and Operating Expenses

	Six Months			Year ended
	Ended			December 31,
	June 30,
	2003			2002			2001			2000
	(Unaudited)
REVENUES	$	21,248,479		$	24,395,200		$	35,146,368		$	22,121,330
ROYALTIES		(5,757,489	)		(6,088,471	)		(9,020,145	)		(6,118,864	)
		15,490,990			18,306,729			26,126,223			16,002,466
OPERATING EXPENSES		1,794,604			3,708,256			2,792,051			1,915,539
EXCESS OF REVENUES OVER OPERATING EXPENSES	$	13,696,386		$	14,598,473		$	23,334,172		$	14,086,927

F-24

Hawker Resources Inc.
Southward Properties
Notes to the Statement of Revenues and Operating Expenses
For the Six Months Ended June 30, 2003 (Unaudited) and for Each of the Years in the Three-Year Period Ended December 31, 2002

1.	BASIS OF PRESENTATION
	The accompanying statements of revenues and operating expenses have been prepared for inclusion in the prospectus (the “Prospectus”) of Hawker Resources Inc. (the “Company”) relating to the sale and issue of common shares by the Company.
	The Company, through its wholly-owned subsidiary, 1022971 Alberta Ltd., has entered into an arrangement agreement with Southward Energy Ltd. (“Southward”) that contemplates the acquisition of all of the outstanding common shares of Southward in an arm’s length transaction. The Company has also entered into an agreement to sell all of the petroleum and natural gas properties of Southward, with the exception of an undivided interest of 1% in certain properties (the “Optioned Properties”) which will be retained by the Company. The Optioned Properties, which are further described elsewhere in the Prospectus, are comprised of all of the petroleum and natural gas properties of Southward except for those which are located in the west of the fifth meridian area in the province of Alberta.
	The Company holds an option to acquire an undivided interest of 49% in the Optioned Properties, which upon exercise will result in the Company holding an aggregate undivided interest of 50% in the Optioned Properties (the “Southward Properties”).
	These statements have been derived from financial information provided by the vendor of the Southward Properties and relate only to 50% of the working interests in such properties, which are to be acquired by the Company. These statements include only those revenues and operating expenses which are directly related to the Southward Properties and do not include any expenses related to general and administrative costs, interest, income and capital taxes or any provisions related to depletion, depreciation or future site restoration and abandonment.
2.	SIGNIFICANT ACCOUNTING POLICIES

a.	Revenue
	Production sales are recorded when the commodities are sold. Processing income is recognized at the time services are performed.
b.	Operating Expenses
	Operating expenses include all costs related to the lifting, gathering, transporting and processing of oil and gas related products.

F-25 EX-99.16 16 h12489bexv99w16.htm MATERIAL CHANGE REPORT DATED 1/18/2004

Exhibit 16

SECURITIES ACT (BRITISH COLUMBIA) SECTION 85(1) FORM 27
SECURITIES ACT (ALBERTA) SECTION 146(1) FORM 27
THE SECURITIES ACT (SASKATCHEWAN) SECTION 84(1) FORM 25
THE SECURITIES ACT (MANITOBA)
SECURITIES ACT (ONTARIO) SECTION 75(2) FORM 27
SECURITIES ACT (QUEBEC) SECTION 73
THE SECURITIES ACT (NEWFOUNDLAND) SECTION 76(2) FORM 26
SECURITIES ACT (NOVA SCOTIA) SECTION 81(2) FORM 27
SECURITY FRAUDS PREVENTION ACT (NEW BRUNSWICK)
SECURITIES ACT (PRINCE EDWARD ISLAND)
SECURITIES ACT (NORTHWEST TERRITORIES) SECTION 44
SECURITIES ACT (NUNAVUT) SECTION 44
SECURITIES ACT (YUKON)

1.	Reporting Issuer:
	The name and address of the reporting issuer is:
	Hawker Resources Inc. (the “Corporation”) Suite 500, 340 – 12th Avenue S.W Calgary, Alberta T2R 1L5
2.	Date of Material Change:
	January 18, 2004.
3.	Press Release:
	A press release disclosing the nature and substance of the material change and attached hereto as Appendix “A” was issued on January 18, 2004.
4.	Summary of Material Change:
	The Corporation announced that it has entered into an agreement whereby the Corporation has agreed to make an offer (the “Offer”) to acquire all of the outstanding common shares of ZORIN Exploration Ltd. (“ZORIN”), including any which may become outstanding pursuant to the exercise of any options or warrants to acquire common shares of ZORIN. The Offer will be made by a formal take-over bid to the shareholders of ZORIN.
5.	Full Description of Material Change:
	Details of the transaction are provided in the press release dated January 18, 2004, a copy of which is attached hereto as Appendix “A”. In addition, the Corporation and ZORIN entered into a pre-acquisition agreement dated January 18, 2004 in respect of the Offer, a copy of which is attached hereto as Appendix “B”.

- 2 -

6.	Reliance on Section 146(2) of the Securities Act (Alberta) or Equivalent Sections:
	Not applicable.
7.	Omitted Information:
	Not applicable.
8.	Senior Officers:
	For further information, please contact Mr. Barry R. Herring, Chief Financial Officer of the Corporation at the above mentioned address or at (403) 261-6883.
9.	Statement of Senior Officer:
	The foregoing accurately discloses the material change referred to in this report.
	DATED at Calgary, Alberta, effective the 18th day of January, 2004.

HAWKER RESOURCES INC.
Per:	“Barry R. Herring” Barry R. Herring
	Chief Financial Officer

APPENDIX “A”

HAWKER RESOURCES INC. ANNOUNCES OFFER FOR
ZORIN EXPLORATION LTD.

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWS.

CALGARY, ALBERTA (January 18, 2004) - Hawker Resources Inc. (“Hawker”) (TSX - HKR) and Zorin Exploration Ltd. (“Zorin”) (TSXV - ZEL) jointly announce today that they have entered into an agreement whereby Hawker has agreed to make an offer (the “Offer”) to acquire all of the outstanding common shares of Zorin (the “Shares”) at a price of $0.40 per share. The Offer will be made by way of a formal take-over bid to the shareholders of Zorin (“Zorin Shareholders”). Hawker expects to mail the formal Offer to Zorin Shareholders as soon as practicable and in any event no later than February 4, 2004 and anticipates closing in March, 2004.

Under the Offer, each Zorin Shareholder may elect, subject to proration, to receive either $0.40 cash per Share, subject to an aggregate maximum of $1,484,640 in cash available under the Offer, or a fraction of a Hawker common share determined by multiplying the exchange ratio by one Hawker common share, subject to an aggregate maximum of 80% of the total consideration under the Offer being payable in Hawker common shares. The exchange ratio will be determined by dividing $0.40 by the weighted average trading price of the Hawker common shares on the Toronto Stock Exchange for the 10 trading days prior to (and excluding) the scheduled expiry date of the Offer on which at least one board lot of Hawker common shares is traded (the “Average Trading Price”).

The officers and directors of Zorin, who hold approximately 60% of the issued and outstanding Shares in aggregate, unanimously support the Offer and have executed pre-tender agreements pursuant to which they have agreed to tender all of their Shares to the Offer.

The transaction is valued at approximately $7.4 million plus approximately $4 million of Zorin net debt to be assumed by Hawker.

Hawker President and CEO David Tuer commented that: “The combination of Zorin’s properties in Southern Alberta with our own properties offers Hawker an opportunity to grow our production quickly at reduced costs.”

The Board of Directors of both Hawker and Zorin have unanimously approved the transaction. The Zorin Board of Directors has concluded that the transaction is in the best interests of its shareholders and will recommend that shareholders tender their Shares to the Offer. Waterous & Co. acted as financial advisor for Zorin and has provided the Board of Directors of Zorin with their opinion that the Offer is fair to the Zorin Shareholders from a financial point of view. Peters & Co. Limited acted as financial advisor to Hawker and will be the manager of a soliciting dealer group to be formed for the Offer.

- 2 -

Zorin has agreed, under certain conditions, to pay Hawker a non-completion fee of $375,000 if the transaction is not completed. Hawker has the right to terminate the Offer if the Average Trading Price is less than $4.75 in which event Hawker has agreed to pay Zorin a fee of $375,000. Zorin has agreed not to solicit proposals from other parties and has granted Hawker the right to match any other proposal that Zorin may receive. The Offer will be subject to typical conditions for offers of this nature, including receipt of all required regulatory approvals and no material adverse changes.

This news release shall not constitute an offer to sell or the solicitation of any offer to buy securities in any jurisdiction. The Hawker common shares offered pursuant to the Offer will not be and have not been registered under the United States Securities Act of 1933, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act.

ADVISORY: Neither the Toronto Stock Exchange or the TSX Venture Exchange accepts responsibility for the adequacy or accuracy of this release. Certain information regarding the company, including management’s assessment of future plans and operations, may constitute forward-looking statements under applicable securities law and necessarily involve risks associated with oil and gas exploration, production, marketing and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources; as a consequence, actual results may differ materially from those anticipated. The company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contemplated by the forward-looking statements.

-30-

FOR FURTHER INFORMATION PLEASE CONTACT:

Hawker Resources Inc.
Barry R. Herring
Chief Financial Officer
(403) 261-6883
(403) 266-1814 (FAX)

EX-99.17 17 h12489bexv99w17.htm UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENT

Exhibit 17

ZORIN Exploration Ltd.
3rd Quarter, 2003 Report to Shareholders

o ZORIN retains Waterous & Co. to identify strategic alternatives to maximize shareholder value

o Third Quarter 2003 Net Earnings after tax up 10%

o Third Quarter 2003 Cash Flows from Operations up 47%

Highlights For the three month period ended September 30, 2003

		2003		2002		Change
Financials ($000’s except per share amounts)
Revenue		$	1,142	$	921		24	%
Cash flow from operations		$	403	$	274		47	%
Cash flow from operations per share – basic		$	0.02	$	0.01
	- diluted	$	0.02	$	0.01
Net earnings		$	145	$	132		10	%
Earnings per share	- basic	$	0.01	$	0.01
	- diluted	$	0.01	$	0.01
Capital Expenditures		$	650	$	259		151	%
Bank Line of Credit		$	2,909	$	2,744		6	%
Shareholders’ equity		$	5,036	$	4,457		13	%
Common shares			18,558		18,368		1	%
Operations
Oil and NGL’s (Bbl/d)			190		252		-24	%
Natural gas (Mcf/d)			1,012		1,036		-2	%
Average daily production (Boepd@6:1)			359		424		-15	%

ZORIN 3rd Quarter, 2003 Report to Shareholders

Message to Shareholders

ZORIN EXPLORATION LTD. increased cash flow from operations 47% for the third quarter of 2003 over the same period in 2002.

On September 23, 2003, ZORIN Exploration Ltd. announced that its Board of Directors had unanimously approved the initiation of a process intended to maximize shareholder value, and has retained Waterous & Co. as its advisor and agent to assist the Company in identifying and evaluating strategic alternatives.

The new Second White Specs gas wells placed on production by ZORIN and Husky in late May 2003 at Granlea, Alberta have inspired still further drilling by other operators. The Second White Specs shallow gas horizon is finally being developed, with applications to increase the number of wells per section to 4 from less than 1 well per section across most of the immediate area. These new wells have shown stable production rates of over 200 MCF/d. This will provide substantial additional drilling opportunities and increasing revenues to ZORIN from gas gathering and processing facilities at Granlea, Alberta.

Oil production at Manitou Lake, Saskatchewan has steadily increased production over the quarter up to 214 BOPD in September.

Competition has also arrived in Ohio, with another operator recently shooting seismic on strike, and covering some of ZORIN’s lands north of our Tymochtee Creek field. The competitor drilled two wells with one well being abandoned, and the second partially plugged.

On behalf of the Board of Directors

Wayne R. Toole

Wayne R. Toole - PEng
President and CEO
Calgary, Alberta, Canada                      November 18, 2003

ZORIN 3rd Quarter, 2003 Report to Shareholders

FORWARD-LOOKING STATEMENTS

Statements throughout this quarterly report that are not historical facts may be considered “forward looking statements”. These forward-looking statements sometimes include words to the effect that management believes or expects a stated condition or result. All estimates and statements that describe the Company’s objectives, goals or future plans are forward looking statements. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to any number of factors, including such variables as new information regarding recoverable reserves, changes in demand and commodity prices for oil and gas, legislative, environmental and other regulatory or political changes, competition in areas where the company operates and other factors discussed in this annual report.

ZORIN 3rd Quarter, 2003 Report to Shareholders

Operations Report

Granlea, Alberta

Gas production was stable compared to the third quarter of 2002 at 1012 Mcf/d. There was little activity at Granlea as all the area operators waited for confirmation of how the new Second White Specs wells would perform since being placed on production in late May 2003. With the good performance both ZORIN and the other major operator in the area have applied to down space the drilling and producing targets allowing for 4 wells per section to be drilled. In the last month, ten new Second White Specs well sites have been prepared by another operator aggressively pursuing the large reserves and high productivity demonstrated in this area. The continued development of this shallow Second White Specs gas field by ZORIN and others will slow our gas production declines and provide increased processing revenues at our Granlea gas facilities. One new 55.5% working interest gas well was tied-in and placed on production at the end of September.

Manitou Lake, Saskatchewan

ZORIN’s six wells at Manitou Lake averaged 182 Bopd (net to ZORIN) through the third quarter of 2003. For the month of September 2003, Manitou Lake production averaged 214 Bopd. New wells at C1-32 and B11-32-44-27W3M were placed on production during the quarter.

Eastern - Ohio

The Hackworth well commenced production late in the third quarter following completion of the Born Battery and water disposal facility. The Born water disposal facility and well are capable of disposing of over 2,800 Bwpd. Oil production from our Ohio property averaged 12 Bopd in September, representing production primarily from the Roszman #1 well.

Management’s Discussion and Analysis

Revenue

ZORIN’s net revenues for the third quarter of 2003 were $1,011 thousand, up 25% from the same period in 2002. These revenues came from oil and gas sales of $946 thousand, and from processing third party gas and other income of $196 thousand, less crown and other royalties of $131 thousand. Compared to the same period in 2002, the increase in revenues was due to natural gas prices being up 85%, at $5.14 per Mcf, and oil prices up 18% to $26.19. Third party processing and other income was also up 51% compared to 2002 as a result of higher throughputs and increased fees. ZORIN’s cash flow from operations was also up 47% to $403 thousand for the third quarter of 2003 compared to the same period in 2002, due to higher commodity prices.

Operating Expenses

Operating expenses incurred in the third quarter of 2003 were $322 thousand, up 7% compared to the same period in 2002, to produce an average of 359 Boe/d, and to process substantially greater third party natural gas volumes at Granlea. Expenses were higher than the third quarter of 2002 due to additional workovers needed on our heavy oil wells. Combined operating costs of $9.75 per Boe were offset 61% with income derived from processing and contract operating

ZORIN 3rd Quarter, 2003 Report to Shareholders

fees of $5.93 per Boe, resulting in a net operating cost of $3.82 per Boe. Significant additional processing revenues at Granlea are expected late in the 4th quarter, as ten more shallow Second White Specs wells and one new Sawtooth gas well are expected to be tied –in by other operators.

Investing Activities

Capital expenditures for the third quarter of 2003 were up 151% from 2002 at $650 thousand. 2003 Capital was spent on the extension of our Granlea gathering system and on drilling and completions at Manitou Lake.

General and Administration

General and administration expenses of $123 thousand were 26% higher in the third quarter of 2003 compared to 2002 with increased accounting, engineering, insurance and outside consulting costs.

Net Income Before Tax

Net Income before tax was up 17% in the third quarter of 2003 at $256 thousand, compared to $220 thousand in 2002. This increase was due to substantially higher oil and gas prices, but moderated by a 90% increase in depreciation and depletion of $270 thousand, for the third quarter of 2003. The higher depletion was largely due to low reserve estimates, based on our December 31, 2002 engineering reports.

Working Capital

The company had a working capital deficiency of $4.0 million at September 30, 2003, compared to a deficiency at the same time in 2002 of $3.1 million (working capital includes all amounts outstanding under ZORIN’s bank Line of Credit plus any short term debt). ZORIN had no long-term debt at the end of the third quarter of 2003 or 2002.

Average Daily Production

ZORIN’s average daily production of 359 Boe/d in the third quarter of 2003 was 15% lower than the average production in 2002 over the same period, (using a 6:1 ratio of gas to Boe’s). Natural gas production for the third quarter of 2003 was down 2% compared to the same period in 2002. Oil production also decreased 24% from 252 Bopd in the third quarter of 2002 to 190 Bopd during the third quarter of 2003. Manitou Lake oil production averaged 182 Bopd during the third quarter of 2003, while September production was back up to 214 BOPD. ZORIN’s production was comprised of 44% natural gas and 56% oil in the third quarter of 2003.

ZORIN 3rd Quarter, 2003 Report to Shareholders

KEY PERSONNEL & DIRECTORS

Wayne R. Toole, PENG – Pres., CEO & Director

Denyce D. Lundeen, CGA - CFO & Director

Donald J. Andrews, QC – Director

Robert Rooney, LLB – Director

Michael J. Hopkins, LLB – Director

Alex Pochmursky, PENG, MBA – Director

Brad D. Markel, LLB - Corporate Secretary

Murielle J. Fisette - Corporate Administrator

Auditors: Ramsay, Dalton & Co.

Bank: Alberta Treasury Branches

Transfer Agent: Computershare Trust Co. of Canada

Exchange Listing: TSX Venture Exchange Symbol: ZEL

For Further Information: Phone:		(403) 266-4445	Fax: (403) 233-7295
e-mail:	info@zorinex.com
Web Page:	www.zorinex.com
Address:	2350, 801 - 6th Ave. S.W. Calgary, AB, T2P 3W2

ZORIN 3rd Quarter, 2003 Report to Shareholders

ZORIN Exploration Ltd
Consolidated Balance Sheet
(Unaudited) (thousands)

		September			Dec 31
		2003			2002
ASSETS
CURRENT ASSETS
	Cash		—			—
Accounts receivable			597			741
	Prepaids		124			110
			721			851
CAPITAL ASSETS
	Cost		14,663			12,533
	Accumulated depreciation & depletion		(4,188	)		(3,468	)
	Net		10,475			9,065
		$	11,196		$	9,916
LIABILITIES
CURRENT LIABILITIES
	Accounts payable		1,476		$	1,071
	Operating Line-of-credit		2,909			339
	Income tax payable		2,744			178
			4,724			3,993
Future income tax liability			1,234			1,290
Provision for site restoration costs			202			176
			1,436			1,466
SHAREHOLDERS’ EQUITY
	Capital stock		2,560			2,527
	Retained earnings		2,476			1,930
			5,036			4,457
		$	11,196		$	9,916

ZORIN 3rd Quarter, 2003 Report to Shareholders

ZORIN Exploration Ltd
Consolidated Statement of Income and Retained Earnings
                        For the Three and Nine Months Ended September 30
(Unaudited) (thousands)

		2003			2002			2003			2002
		3 months						9 months
REVENUE
	Oil and gas sales		946		$	791			3,216		$	2,604
	Less royalties		(131	)		(116	)		(444	)		(336	)
			815			675			2,772			2,268
Gas processing and other income			196			130			417			371
			1,011		$	805			3,189		$	2,639
EXPENSES
	Operating		322		$	301			985		$	852
	General and administrative		123			98			379			274
	Depletion & depreciation		270			142			748			901
	Interest expense		40			44			112			122
			755		$	585			2,224		$	2,149
INCOME BEFORE TAXES			256		$	220		$	965		$	490
INCOME AND OTHER TAXES
	Current		123		$	88			475		$	192
	Future		(12	)		0			(56	)		—
			111			88			419			192
Net Income			145			132		$	546			298
Retained earnings - Beginning of period			2,331			1,744			1,930			1,578
Retained earnings - End of period		$	2,476		$	1,876			2,476		$	1,876
Net Income per Share
	Basic		0.01			0.01			0.03			0.02
	Diluted		0.01			0.01			0.03			0.02

ZORIN 3rd Quarter, 2003 Report to Shareholders

ZORIN Exploration Ltd
Consolidated Statement of Cash Flow
For the Three and Nine Months Ended September 30
(Unaudited) (thousands)

			2003			2002			2003			2002
			3 months						9 months
OPERATING ACTIVITIES
		Net income for the period		145		$	132		$	546		$	298
		Items not affecting cash
		Depreciation and depletion		270			142			748			901
		Future income taxes		(12	)		—			(56	)		—
		Cash Flow from Operations		403			274		$	1,238			1,199
	Changes in non-cash working capital			162			(246	)		696			(432	)
			$	565		$	28		$	1,934		$	767
FINANCING ACTIVITIES
		Issuance of shares		3			141			33			871
			$	3		$	141		$	33		$	871
INVESTING ACTIVITIES
		Oil and gas expenditures	$	(650	)	$	(259	)		(2,132	)	$	(2,227	)
		Furniture & Fixtures		—			—			—			—
				(650	)		(259	)		(2,132	)		(2,227	)
INCREASE/(DECREASE) IN CASH				(82	)		(90	)		(165	)		(589	)
Bank Indebtedness at beginning of period				(2,827	)		(3,097	)		(2,744	)		(2,598	)
Bank Indebtedness at the end of period				(2,909	)		(3,187	)		(2,909	)		(3,187	)

ZORIN 3rd Quarter, 2003 Report to Shareholders

Notes to Financial Statements

Accounting Policies

The interim financial statements of ZORIN Exploration Ltd. (the “Company”) have been prepared following the same accounting policies and methods of computation as the financial statements of the Company for the year ended December 31, 2002. The disclosures provided below are incremental to those included with the annual financial statements and certain disclosures, which are normally required to be included in the notes to the annual financial statements, have been condensed or omitted. These interim financial statements should be read in conjunction with the financial statements and notes thereto in the Company’s annual report for the year ended December 31, 2002.

Operating Line-of-Credit

All of the Company’s debt is in the form of a line of credit, containing no specific principal repayment terms. As of January 1, 2002 this debt was reclassified to a current liability. ZORIN currently has a $3.475 million operating line-of-credit.

Share Capital

(thousands)	Number		Amount
Common Shares
Balance at December 31, 2002		18,408	$	2,527
Issued on exercise of stock options		150	$	26
Issued through private placement		—		—
Share issue expense		—		—
Balance at September 30, 2003		18,558	$	2,553
Warrants
Balance at September 30, 2003		1,660	$	7
Total capital stock			$	2,560

a) Earnings and cash flow per share

At September 30, 2003, there were 18,558,000 common shares of the Company outstanding; this number was used for basic per share calculations.

At September 30, 2003, there were 18,560,833 diluted common shares of the Company calculated as outstanding; this number was used for diluted per share calculations.

ZORIN 3rd Quarter, 2003 Report to Shareholders

b) Stock options

At September 30, 2003, the fair market value of the Companies outstanding stock options was $850, using the Black and Scholes model.

The following table sets forth a reconciliation of the stock option plan activity through to September 30, 2003.

			Weighted average
(thousands)	Number of options		exercise price
Balance, December 31, 2002		1,552	$	0.56
Granted		0		—
Exercised and Expired		150	$	0.26
Balance, September 30, 2003		1,402	$	0.59

Supplemental Cash Flow Information

Changes in non-cash working capital

	September 30, 2003			September 30, 2002
Nine months ended ($ Thousands)
Accounts receivable		144			(28	)
Prepaids		(14	)		—
Accounts payables		405			(520	)
Income and other taxes payable		161			116
		696			(432	)

Financial Instruments
Commodity Price Contracts

The Company did not have any financial instruments in effect during the quarter.

EX-99.18 18 h12489bexv99w18.htm CONSOLIDATED FINANCIAL STATEMENTS FOR ZORIN EXP.

Exhibit 18

ZORIN EXPLORATION LTD.

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and 2001

RAMSAY, DALTON & CO.

CHARTERED ACCOUNTANTS

AUDITORS’ REPORT

To the Shareholders of
Zorin Exploration Ltd.

               We have audited the consolidated balance sheets of Zorin Exploration Ltd. as at December 31, 2002 and 2001 and the consolidated statements of income, retained earnings and cash flow for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

               We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation.

               In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2002 and 2001 and the results of its operations and the changes in its cash flow for the years then ended in accordance with Canadian generally accepted accounting principles.

	“Ramsay, Dalton & Co.”
Calgary, Alberta	Chartered Accountants
April 4, 2003

Suite 1100, 800 – 6th Avenue S.W., Alberta T2P, Telephone (403) 265-9464, Fax (403) 263-6523

ZORIN EXPLORATION LTD.

CONSOLIDATED BALANCE SHEETS

		December 31,		December 31,
		2002		2001
ASSETS
CURRENT ASSETS
	Cash	$	—	$	24,838
	Accounts receivable		741,009		376,363
	Prepaid expenses and deposits		110,042		124,234
	Income tax recoverable		—		105,453
			851,051		630,888
PROPERTY AND EQUIPMENT – Notes 3 and 4			9,064,950		7,829,890
		$	9,916,001	$	8,460,778
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
	Bank indebtedness – Note 4	$	2,744,158	$	2,622,978
	Accounts payable		1,070,426		1,242,417
	Income taxes payable		178,313		—
			3,992,897		3,865,395
FUTURE INCOME TAXES			1,290,000		1,029,000
PROVISION FOR SITE RESTORATION COSTS			175,378		118,465
			5,458,275		5,012,860
SHAREHOLDERS’ EQUITY
	Share capital – Note 5		2,527,465		1,869,915
	Retained earnings		1,930,261		1,578,003
			4,457,726		3,447,918
		$	9,916,001	$	8,460,778

ON BEHALF OF THE BOARD:

“W. R. Toole”
	,  Director
“D. J. Lundeen”
	,  Director

See accompanying notes

ZORIN EXPLORATION LTD.

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

			Year ended			Year ended
			December 31,			December 31,
			2002			2001
REVENUE
	Oil and gas sales		$	3,754,490		$	3,264,800
	Royalties, net of tax credit			(572,637	)		(649,832	)
				3,181,853			2,614,968
	Gas processing and gathering income			235,462			275,797
	Administrative fees and other income			287,214			288,301
				3,704,529			3,179,066
EXPENSES
	Operating – Note 7			1,116,860			769,576
	General and administrative – Note 7			369,534			348,797
	Depletion and depreciation			1,393,243			1,071,800
	Interest expense			164,634			113,321
				3,044,271			2,303,494
		Income before income taxes		660,258			875,572
INCOME TAXES – Note 6				308,000			370,000
		Net income		352,258			505,572
RETAINED EARNINGS, beginning of year				1,578,003			1,072,431
RETAINED EARNINGS, end of year			$	1,930,261		$	1,578,003
NET INCOME PER SHARE
	Basic		$	0.02		$	0.03
	Diluted		$	0.02		$	0.03

See accompanying notes

ZORIN EXPLORATION LTD.

CONSOLIDATED STATEMENTS OF CASH FLOW

				Year ended			Year ended
				December 31,			December 31,
				2002			2001
OPERATING ACTIVITIES
	Net income for the period			$	352,258		$	505,572
	Items not affecting cash:
		Depreciation and depletion			1,393,243			1,071,800
		Future income taxes			22,000			130,000
		Site restoration charged to reserve			(11,087	)		(18,535	)
					1,756,414			1,688,837
	Changes in non-cash working capital – Note 9				(238,679	)		157,208
					1,517,735			1,846,045
FINANCING ACTIVITIES
	Issuance of shares				896,550			1,476,680
INVESTING ACTIVITIES
	Oil and gas expenditures				(2,560,303	)		(5,020,247	)
	Office furniture				—			(47,486	)
					(2,560,303	)		(5,067,733	)
			Decrease in cash		(146,018	)		(1,745,008	)
BANK INDEBTEDNESS, beginning of year					(2,598,140	)		(853,132	)
BANK INDEBTEDNESS, end of year				$	(2,744,158	)	$	(2,598,140	)
CASH EXPENDITURES ON INTEREST				$	164,634		$	113,321
CASH EXPENDITURES ON INCOME TAXES				$	13,352		$	687,522
CASH FLOW PER SHARE
	Basic			$	0.10		$	0.11
	Diluted			$	0.10		$	0.10

ZORIN EXPLORATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and 2001

NOTE I — BASIS OF PRESENTATION

          Zorin Exploration Ltd. was incorporated under the Business Corporations Act (Alberta) on May 30, 1997. On September 1, 1998, Zorin Exploration Ltd. (“Zorin” or the “Company”) completed its major transaction by acquiring the shares of 752868 Alberta Ltd. (Note 3), a company incorporated under the Business Corporation Act (Alberta) on September 1, 1997. On September 17, 1998, Zorin amalgamated with 752868 Alberta Ltd. and continued as Zorin.

          The financial statements of Zorin Exploration Ltd. have been prepared in accordance with accounting principles generally accepted in Canada. In the process of preparing these financial statements, management has made certain estimates and assumptions that affect the recorded amount of assets and liabilities at year-end and revenues and expenses for the year. These estimates and assumptions are based on management’s best information and judgment and, in the near term, are not expected to materially change the recorded amount of assets, liabilities, revenues and expenses.

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

a) Consolidation

          The consolidated financial statements include the accounts of Mar Oil Company, a wholly owned U.S. subsidiary. Mar Oil Company was incorporated on April 1, 2000 under the laws of Delaware and is developing oil and gas properties in Ohio.

b) Capital assets

i) Petroleum and natural gas properties

          The Company follows the full cost method of accounting for petroleum and natural gas properties and equipment whereby all costs relating to the exploration for and development of oil and gas reserves, are capitalized. Such costs include lease acquisition costs, geological and geophysical expenditures, costs of drilling both productive and non-productive wells, related plant and production equipment costs and related overhead charges.

          Proceeds on disposal of properties are normally applied as a reduction of the capitalized costs without recognition of a gain or loss except where such a disposal would alter the depletion and depreciation rate by 20% or more.

          The Company carries its petroleum and natural gas properties at the lower of the capitalized cost and net recoverable amount. Capitalized cost is calculated as the net book value of the related assets less the accumulated provisions for future income taxes and site restoration costs. Net recoverable amount is limited to the sum of future net revenues from proven properties and the cost of unproved properties, net of provisions for impairment, less estimated future financing and administrative expenses and income taxes. Future net revenues are based on prices and costs prevailing at the year-end.

          Depletion and depreciation of capitalized costs are provided for by using the unit-of-production method based on the Company’s total estimated gross proven reserves as determined by independent engineers. Natural gas reserves and production are converted to equivalent barrels of oil based upon the relevant energy content. In determining the depletion base, the Company includes future costs to be incurred in developing proven reserves and excludes the cost of undeveloped land. The Company’s gas processing plant is being depreciated over 15 years by the straight-line method.

/2

ZORIN EXPLORATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and 2001

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)

ii) Other assets

          Depreciation is provided on office furniture and equipment at an annual rate of 20% on a straight-line basis.

c) Site restoration costs

          The estimated costs for future site restoration and abandonment are provided for on a unit-of-production basis. These estimates are based upon regulation and industry standards in effect at year-end. The annual charge is included with depletion and depreciation and the actual site restoration costs are charged to the site restoration provision as incurred.

d) Joint venture operations

          Substantially all of the Company’s exploration and production activities are conducted jointly with other entities and accordingly these financial statements reflect only the Company’s proportionate interest in such activities.

e) Future income taxes

          Effective January 1, 2000, Zorin adopted the liability method of accounting for income taxes as recommended by the Canadian Institute of Chartered Accountants (CICA). Under the liability method Zorin records future income taxes for the effect of any difference between the accounting and income tax basis of an asset or liability. Zorin has adopted the CICA recommendations retroactively by increasing future (deferred) tax liabilities by $34,000 and reducing retained earnings at January 1, 2000 by $34,000 without restating prior years.

f) Per share information

          Earnings per share and cash flow per share are calculated based on the weighted average number of shares outstanding. Zorin has retroactively adopted the new standard for the computation and disclosure of earnings per share as proposed by the CICA. Under the new standard, the treasury stock method is used to determine the dilutive effect of stock options and other dilutive instruments. Hal Zorin not adopted the new recommendation, the diluted earnings per share at December 31, 2001 would have been unchanged.

g) Flow—through shares

          The resource expenditure deductions for income tax purposes related to exploratory and development activities funded by flow-through share arrangements are renounced to investors in accordance with income tax legislation. Share capital is reduced by the value of the renounced tax deductions and a future tax liability recorded.

/3

ZORIN EXPLORATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and 2001

NOTE 3 — PROPERTY AND EQUIPMENT

	December 31, 2002
			Accumulated
	Cost		Amortization		Net Book Value
Petroleum and natural gas properties	$	12,473,536	$	3,444,842	$	9,028,694
Office, furniture and equipment		59,172		22,916		36,256
	$	12,532,708	$	3,467,758	$	9,064,950

	December 31, 2001
			Accumulated
	Cost		Amortization		Net Book Value
Petroleum and natural gas properties	$	9,913,233	$	2,128,663	$	7,784,570
Office, furniture and equipment		59,172		13,852		45,320
	$	9,972,405	$	2,142,515	$	7,829,890

          Unproved property costs of $2,755,031 at December 31, 2002 (2001 - $1,832,194) have been excluded from capitalized costs subject to depletion.

          The Company capitalized $304,524 of general and administrative costs for the year ending December 31, 2002 (2001 - $232,961).

NOTE 4 — BANK INDEBTEDNESS

          At December 31, 2002, the Company has a $3,475,000 revolving production loan facility. The loan facility can be drawn in the form of loans, demand promissory notes or letters of credit. The demand loan bears interest at the bank’s prime lending rate plus 1% per annum paid monthly in arrears. The credit facility is reviewed annually by the bank and provided certain covenants are met, no principal repayments will be required in the next 12 months. Bank indebtedness reported as long-term debt in 2001 has been reclassified as a current liability to meet current reporting requirements.

          Collateral pledged for the credit facility is comprised of the following:

a)	A $7,000,000 fixed charge demand debenture over certain of the Company’s oil and gas properties and a floating charge over all other assets;
b)	A general security agreement; or
c)	A specific assignment of long-term gas contracts.

/4

ZORIN EXPLORATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and 2001

NOTE 5 — SHARE CAPITAL

		Number		Amount
	Balance December 31, 2000		14,875,000	$	824,234
Shares issued on exercise of options			723,000		155,250
Flow-through shares issued			1,000,000		1,000,000
Less tax effect of flow-through shares			—		(431,000	)
Shares issued by private placement			603,000		337,680
Less share issue costs			—		(16,249	)
	Balance December 31, 2001		17,201,000	$	1,869,915
Shares issued on exercise of options			150,000		30,000
Flow-through shares issued			550,000		550,000
Less tax effect of flow-through shares			—		(239,000	)
Shares issued by private placement			507,000		321,500
Less share issue costs			—		(4,950	)
	Balance December 31, 2002		18,408,000	$	2,527,465

          Pursuant to the flow-through shares issued in 2002 Zorin is required to incur a further $370,568 of resource expenditures at December 31 , 2002.

Warrants

          The 603,000 shares issued by private placement in 2001 have warrants attached allowing the holder to purchase one share at $0.70 until December 2003. Shares issued in 2002 have warrants attached as follows:

110,000	at $0.85 until	April 2003
30,000	at $0.85 until	May 2003
426,000	at $0.85 until	April 2004
154,000	at $0.85 until	May 2004
282,000	at $0.60 until	September 2004
55,000	at $0.60 until	October 2004

          No warrants have been converted to shares at December 31, 2002.

Options

          Zorin has the following stock options outstanding to its directors, employees and consultants at December 31, 2002.

/5

ZORIN EXPLORATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and 2001

NOTE 5 — SHARE CAPITAL (continued)

Number
of Shares		Exercise Price		Expiry Date
	100,000	$	0.20	August 31, 2003
	67,000	$	0.25	October 2, 2004
	10,000	$	0.30	March 9, 2005
	40,000	$	0.44	December 19, 2006
	375,000	$	0.52	May 2, 2006
	100,000	$	0.56	November 5, 2006
	165,000	$	0.60	September 5, 2006
	50,000	$	0.64	July 23, 2006
	500,000	$	0.68	May 28, 2006
	45,000	$	0.66	May 21, 2004
	100,000	$	0.67	April 8, 2007
	1,552,000

          Options for 150,000 shares were exercised during the year ended December 31, 2002 (2001 — 723,000) and options for 50,000 shares expired. New options for 145,000 shares were issued during the year.

          The fair value of options outstanding at December 31, 2002 using the Black-Scholes option pricing model is $31,150. The assumptions used in the model were: weighted fair value of options granted below current market value, $0.19; market price at December 31, 2002, $0.40; risk-free interest rate, 4%; expected remaining life, 1 year; expected volatility, 0.6.

Per share amounts

          Net income and cash flow per share are based on the weighted average number of shares outstanding as follows:

	2002		2001
Outstanding shares		17,817,986		15,748,523
Diluted shares		17,996,069		16,070,134

NOTE 6 — INCOME TAXES

          Income taxes differ from the results which would be obtained by applying the combined Canadian federal and provincial income tax rates to earnings before income taxes.

/6

ZORIN EXPLORATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and 2001

NOTE 6 — INCOME TAXES (continued)

          The difference results from the following:

			2002			2001
Income before taxes			$	660,258		$	769,611
Corporate tax rate				43.4	%		43.1	%
Computed income tax expense			$	286,552		$	377,372
Increase (decrease) resulting from:
	Non-deductible Crown payments			198,067			165,611
	Resource allowance			(188,301	)		(154,247	)
	Other items			11,682			(18,736	)
		Provision recorded	$	308,000		$	370,000
Current taxes			$	286,000		$	240,000
Future taxes				22,000			130,000
			$	308,000		$	370,000

          Zorin has the following tax pools relating to oil and gas property in Canada available for carry-forward: $1,198,574 — 10%, $770,660 —25%, $1,004,950 — 30%.

          The components of Zorin’s future tax liability are temporary differences composed of the following:

	2002			2001
Property and equipment	$	2,836,000		$	2,505,000
Future development and site restoration		(190,000	)		(118,000	)
Share issue costs		(10,000	)		—
	$	2,636,000		$	2,387,000
Future income tax liability at 43.4% (2001 – 43.1%)	$	1,144,000		$	1,029,000

NOTE 7 — RELATED PARTY TRANSACTIONS

          Zorin has farmed out the purchase of production equipment for the development of its Saskatchewan properties to a company controlled by officers and directors of Zorin. Zorin leases these assets back on a monthly basis. Net payments under these arrangements for 2002 were $60,060.

          Zorin also leases certain office furnishings and computer equipment from the president of the company for a total of $21 ,000 during the 2002 year.

          Zorin contracts its accounting services to a company associated with the Chief Financial Officer and director of Zorin. Payments under the contract for 2002 were $88,015.

/7

ZORIN EXPLORATION LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and 2001

NOTE 8 — FINANCIAL INSTRUMENTS

          The Company’s financial instruments recognized on the balance sheet consist of cash, accounts receivable, accounts payable and long-term debt. About $30,000 of net liabilities at December 31 , 2002 is in US funds. The fair values of the Company’s financial instruments approximate their carrying value. The fair value of the bank indebtedness approximates its carrying amount as the cost of borrowing approximates the market rate for similar borrowings.

          From April 1 to September 30, 2002 Zorin contracted to sell up to 200 barrels a day of oil at a price of US$21.25 per barrel. It has not purchased any other derivative financial instruments.

NOTE 9 — CHANGES IN NON-CASH WORKING CAPITAL

	2002			2001
Accounts receivable	$	(364,646	)	$	666,697
Prepaid expenses and deposits		14,192			(31,011	)
Accounts payable		(171,991	)		(3,598	)
Income taxes payable		283,766			(474,880	)
	$	(238,679	)	$	157,208

NOTE 10 — COMMITMENTS

          Zorin has entered into a five-year lease for office premises until April 2006 at a base rent of $42,630 per year.

/8

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