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 (Benefit #1)
As Canadian Viking Income Plan Inc (CVIP) will own producing oil and gas assets, all Preferred Shares will earn a projected 10% per annum, paid on a monthly basis as dividend. In other words the Canadian Viking Income Plan pays each Unit holder $125.00 per month. Every Unit will earn a total of $1,500 in dividend income annually, secured by the production income. Based on this Monthly Dividend Income your anticipated minimum return for your entire Unit ($25,000) is 6%. This income is NOT LIMITED to 10% per Preferred Share - it’s an escalating percentage – we call it the Dividend Escalator©.
 (Benefit #2)
The Viking Income Plan created an attractive and revolutionary tool to provide more income to its Unit holders. The Dividend Escalator© is tied to the ever-changing price of oil on the commodity market. If the price of oil (Nymex) is above $60, the Escalator provides additional dividends to the Preferred Shares over and above the Monthly Dividend Income as described above. Please review the chart below and see how much your dividend amount can escalate with rising oil prices. | Escalating Dividend Percentage (annual) on $15,000 Preferred Shares per Unit | Monthly Dividend Income with Escalator | Oil Price (Nymex) | | 10% | $125.00 | <$60 | | 11.67% | $145.83 | $60-$70 | | 13.33% | $166.67 | $70-$80 | | 15% | $187.50 | $80-$90 | | 16.67% | $208.33 | $90-$100 | | 18.33% | $229.17 | $100-$110 | | 20% | $250.00 | $110-$120 | | 21.67% | $270.83 | $120-$130 | | 23.33% | $291.67 | $130-$140 | | 25% | $312.50 | $140-$150 | | 26.67% | $333.33 | $150-$175 | | 28.33% | $354.17 | $175-$200 | | 30.0% | $375.00 | >$200 |
Example: Assume that the price of oil, as traded on the New York Mercantile Exchange (Nymex), is hovering under the $60 mark for the first 3 months. A Unit holder may expect a monthly cheque of $125.00 (10% per annum on the Preferred Shares) as the anticipated minimum amount of Monthly Dividend Income. If during the 4th month the price of oil starts to rise, the Viking Income Plan will use the average close on each Friday to determine the price level for the Escalator. Assume that the average Friday closing prices in the 4th month are: $56.70, $59.20, $61.00 and $63.75 for an average of $60.16. As this is in the $60 - $70 bracket each Unit will receive a monthly cheque based on 11.67% per year on the 1,500 Preferred Shares, for a total of $145.83 that month. This escalating dividend percentage will continue to be calculated for the entire term of three years – on the same basis. After 36 months the 10% Monthly Dividend Income for the 1,500 Preferred Shares will be determined by an economic review of the producing properties.
 (Benefit #3)
The Unit also consists of 1,000 Flow-Through Common Shares valued at $10 each. Canada Revenue Agency allows investors a 100% Income Tax deduction of their investment under an approved Flow-Through Share program. The Viking Income Plan provides its Unit holders with a $10,000 deduction for each Unit purchased under this favorable tax program. Assuming the maximum offering of $2,500,000 (100 Units) is fully subscribed, Canadian Viking Income Plan Inc shall renounce $1,000,000 of its eligible drilling expenditures directly to the Unit holders ($10,000 per Unit). Based on the assumption that our investors are in the highest bracket for Income Tax – the Canadian government will provide for roughly 40% tax benefit. In practical terms each Unit holder may claim approximately $4,000 in tax refund, depending on income and province. We strongly recommend that each prospective investor consults their tax specialist to determine their personal tax benefits under the Flow-Through program. | | Scenario 1 $60 oil & 75 bbl/d | Scenario 2 $85 oil & 75 bbl/d | Scenario 3 $60 oil & 150 bbl/d | | YEAR | Annual Production Bonus Income | Cumulative Production Bonus Income | Annual Production Bonus Income | Cumulative Production Bonus Income | Annual Production Bonus Income | Cumulative Production Bonus Income | | 1 | 3181 | 3181 | 4940 | 4940 | 5404 | 5404 | | 2 | 1528 | 4709 | 2513 | 7453 | 2388 | 7792 | | 3 | 738 | 5447 | 1278 | 8731 | 1475 | 9267 |
 (Benefit #4)
It is no secret that tremendous returns can be enjoyed when drilling new oil or gas wells. Obviously it is not that easy to actually drill and discover new oil or gas reserves. If it was – everybody would be doing it! Canadian Viking Income Plan Inc (CVIP) has secured a Joint Venture Agreement under extremely favourable terms with its ‘parent company’ – Deep Creek Oil & Gas Inc. The first successes have already been achieved by Deep Creek in the second half of 2008. Oil has been proven on the acquired lands and the first production is established. This is important because the risk is now greatly reduced – we know the oil is there. The above mentioned $1,000,000 will be allocated to drill and develop these lands in South West Saskatchewan (Kindersley area). CVIP will earn a direct Interest in all the wells that it participates in. All Unit holders earn an additional monthly income – directly related to the production revenues from each well. It is impossible to guarantee the results or cash flow from a drill, but the engineers/geologists have projected the likely scenarios based on existing production in this area, core samples, information obtained from previous successful drills by Deep Creek, logs and reservoir calculations. The geological target is the “Viking” formation, hence the name Viking Income Plan. Besides strong economics for the project itself, Saskatchewan is very kind to oil and gas companies with their favourable royalty regime (versus Alberta). Lower royalties to the government means higher returns. The amount of Bonus Production Income is determined by the production rate (if the well is successful), decline rates (all wells have a declining production rate as the pool depletes), the price of oil, operating expenses and the royalty burden. Our forecasting model is based on 40% decline rates for the pool per year, which is deemed high and errors on the conservative side. Below we have projected the possible amount of Bonus Income based on three possible scenarios. CVIP mandates a direct 50% Pay-Out Ratio of net incoming production revenues from the drilling program. Please note that oil is paid in US dollars and Canadian companies calculate in Canadian dollars (positive exchange rate at the moment). - Conservative estimate of Initial Production rate of 75 barrels per day (bbl/d) and $60 oil (Canadian Dollars).
- Conservative estimate of Initial Production rate of 75 bbl/d and $85 oil.
- Higher estimate of Initial Production rate of 150 bbl/d and $60 oil
The realistic range of anticipated Initial Production rates is between 50 and 300 barrels per day. There is always a (small) chance of an unforeseen technical failure resulting in a loss of drilling funds, as one cannot predict Mother Nature at 700 meters of depth. Our technical team is very confident with the projection of 75 bbl/d based on success already accomplished in this area and specifically in this Viking formation. The above projections will render a general impression on how the amount of Bonus Production Income is influenced by production rates and the price of oil. Without emphasizing the possibilities of significant success – the projected amount of Bonus Production Income with a 300 bbl/d well at an average of $100 oil for the first 3 years is calculated at a $35,728 dollars for each Unit. All these projected calculations are for the first 3 years only. Each Unit will enjoy the Bonus Production Income for as long as the drilled wells produce! That can easily be 15 to 20 years! The Production Bonus Income shall be paid as dividend, which is tax efficient for the Unit holder. Again, the Bonus Production Income with the Viking Income Plan is in ADDITION to the projected Monthly Dividend Income of 10% for the Preferred Shares with the Dividend Escalator©. With strong oil prices and success in the field – the returns on your investment can be staggering.
 (Benefit #5)
Last but not least – the combined Unit holders own 90% of the Canadian Viking Income Plan Inc. The company will own producing oil and gas assets including the drilled production in Saskatchewan. As CVIP’s mandate is to distribute 50% of its net production revenue (Pay-Out Ratio) – the company actually accumulates a cash position as well. These funds will be allocated to cover administrative and other expense, but with success in the drilling program – your share position will grow in value too. Potential Returns and Income The Viking Income Plan has 5 separate ways to benefit – directly or indirectly related to oil. The return and income for your investment is therefore difficult to project – below is just an example. Example: With moderate success one $25,000 Unit investment, after three years, could look like this: - $8,731 (from the chart) Production Bonus Income (assuming an average of $85 oil and 75 bbl/d initial production and the conservative 40% decline rate per year built into the projections).
- $4,500 in Monthly Dividend Income.
- $2,250 in Escalating Dividend – (15% escalator with $85 oil equating to $187.50 per month x 36 months). This is over and above the Monthly Dividend Income.
- $4,000 Personal Income Tax deduction from Flow-Through Shares program.
With the assumptions in this example each Unit will enjoy a total return from their investment of $19,481 in the first 3 years. AND….you still own 2,500 shares that could easily be worth the original price of $10 (total of $25,000), but could be worth MUCH more with the continued drilling success we anticipate. This additional value builds up within the company, Canadian Viking Income Plan Inc. AND….after three years you will continue to receive your Production Bonus Income from the producing well for as long as it produces profitably – and that could be for as long as 15 to 20 years. AND….after three years you will continue to receive Monthly Dividend Income from the initial producing properties when it continues to produce economically viable quantities of oil and gas.
 Summary
The Viking Income Plan provides guaranteed income with an innovative increasing dividend rate tied to the volatile price of the world’s biggest commodity – oil. The investment utilizes and optimizes government tax programs to mitigate investors risk in uncertain economic times. Also, the income paid monthly and directly to the Viking Income Plan Unit holders is dividend which enjoys preferential tax treatment over interest. This investment allows individuals to participate for a fraction of the project in lucrative oil drilling programs. The majority of the profits from prospective production are being directly distributed to all Unit holders as Production Bonus Income. This could provide income to each Unit holder for 15 or 20 years to come. The foundation of the Viking Income Plan is solid producing oil and gas assets, which ensures investors that their investment is backed by tangible properties (unless oil prices go down to extremely low prices and is not worth producing anymore). Even though the focus is on optimizing income for its Unit holders – it does not take away from the potential for equity growth through your share position in Canadian Viking Income Plan Inc. We feel this investment offers tremendous positive upside and is an innovative product that fills a gap the Income Trusts left.
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