Reserves Committee Mandate and Terms of Reference for Reserves Committee Chair

Role and Objective

The Reserves Committee (the "Committee") is a committee of the Board of Madalena to which the Board has delegated the responsibility for the matters set forth herein in respect of certain responsibilities of the Board in accordance with National Instrument 51-101 ("NI 51-101").

Membership of Committee

1. The Committee will be comprised of at least three (3) directors of Madalena or such greater number as the Board may determine from time to time, a majority of whom shall be:

  1. individuals who are not and have not been, during the preceding 12 months:
    1. an officer or employee of Madalena or of an affiliate of Madalena;
    2. a person who beneficially owns 10% or more of the outstanding voting securities of Madalena; or
    3. a relative of a person referred to in subparagraphs (i) or (ii), residing in the same home as that person; and
  2. free from any business or other relationship which could reasonably be seen to interfere with the exercise of their independent judgment.

2. The Board may from time to time designate one of the members of the Committee to be the Chair of the Committee.

Mandate and Responsibilities of the Committee

The Committee is responsible for:

  1. reviewing the Company's procedures relating to the disclosure of information with respect to oil and gas activities including reviewing its procedures for complying with its disclosure requirements and restrictions set forth under applicable securities requirements;

  2. reviewing the Company's procedures for providing information to the independent evaluator;

  3. meeting, as considered necessary, with management and the independent evaluator to determine whether any restrictions placed by management affect the ability of the evaluator to report without reservation on the Reserves Data (as defined in NI 51-101) (the "Reserves Data") and to review the Reserves Data and the report of the independent evaluator thereon (if such report is provided);

  4. reviewing the appointment of the independent evaluator and, in the case of any proposed change to such independent evaluator, determining the reason therefor and whether there have been any disputes with management;

  5. providing a recommendation to the Board of Directors as to whether to approve the content or filing of the statement of the Reserves Data and other information that may be prescribed by applicable securities requirements including any reports of the independent engineer and of management in connection therewith;

  6. reviewing the Company's procedures for reporting other information associated with oil and gas producing activities;

  7. generally reviewing all matters relating to the preparation and public disclosure of estimates of the Company's reserves;

  8. co-ordinate meetings with the Audit Committee of the Company, the Company's senior engineering management, independent evaluating engineers and auditors as required to address matters of mutual concern in respect of the Company's evaluation of petroleum and natural gas reserves.

Meetings and Administrative Matters

  1. At all meetings of the Committee every question shall be decided by a majority of the votes cast. In case of an equality of votes, the Chairman of the meeting shall be entitled to a second or casting vote.

  2. The Chair will preside at all meetings of the Committee, unless the Chair is not present, in which case the members of the Committee that are present will designate from among such members the Chair for purposes of the meeting.

  3. A quorum for meetings of the Committee will be a majority of its members, and the rules for calling, holding, conducting and adjourning meetings of the Committee will be the same as those governing the Board unless otherwise determined by the Committee or the Board.

  4. Meetings of the Committee should be scheduled to take place at least once per year and at such other times as the Chair of the Committee may determine.

  5. The Committee shall meet at the end of or during its regular annual meeting and, if deemed appropriate by the Chair, any other meeting of the Committee, without members of management being present.

  6. Agendas, approved by the Chair, will be circulated to Committee members along with background information on a timely basis prior to the Committee meetings.

  7. The Committee may invite such officers, directors and employees of the Company as it sees fit from time to time to attend at meetings of the Committee and assist in the discussion and consideration of the matters being considered by the Committee.

  8. Minutes of the Committee will be recorded and maintained and circulated to directors who are not members of the Committee or otherwise made available at a subsequent meeting of the Board.

  9. The Committee may retain persons having special expertise and may obtain independent professional advice to assist in fulfilling its responsibilities at the expense of the Company.

  10. Any members of the Committee may be removed or replaced at any time by the Board and will cease to be a member of the Committee as soon as such member ceases to be a director. The Board may fill vacancies on the Committee by appointment from among its members. If and whenever a vacancy exists on the Committee, the remaining members may exercise all its powers so long as a quorum remains. Subject to the foregoing, following appointment as a member of the Committee, each member will hold such office until the Committee is reconstituted.

  11. Any issues arising from these meetings that bear on the relationship between the Board and management should be communicated to the Chairman of the Board by the Committee Chair.


The Chair is appointed annually and reports to the Board. The Chair's primary role is managing the affairs of the Committee, including ensuring the Committee is organized properly, functions effectively and meets its obligations and responsibilities.

The Chair works with the CEO of the Company to ensure effective relations with Committee members.

The Chair maintains ongoing communications with the CEO and with such other Officers of the Company as the Chair determines appropriate.

The Chair has the responsibility to lead the Committee in overseeing management's formulation of and compliance with reserves policies and procedures and report to the Board after each Committee meeting.

The Chair also has the responsibility to ensure the Committee is alert to its obligations to the Board and pursuant to law and to chair Committee meetings.

The Chair is responsible to:

  1. assist the Board in its recommendation of Committee members and its review of the performance and suitability of the Committee;
  2. ensure the co-ordination of the agenda, information packages and related events for Committee meetings in conjunction with the Board Chair, the General Counsel and the Corporate Secretary;
  3. maintain a liaison and communication with Committee members, other Directors and the Board Chair to co-ordinate input from Committee members and Directors, and optimize the effectiveness of the Committee;
  4. in collaboration with the General Counsel and other Officers, ensure information requested by Committee members is provided and meets their needs; and
  5. in conjunction with the Reserves Committee, Board and the Board Chair, review and assess Committee attendance, performance and compensation and the size and composition of the Committee.