SHARE PURCHASE AGREEMENT Among EFL OVERSEAS, INC. - and - 1693730 ALBERTA LTD. - and - NAHANNI ENERGY INC. - and - 1700665 ALBERTA LTD. - and - APEX ENERGY (2000), INC. - and - CANADA SOUTHERN PETROLEUM #1 L.P. September 14, 2012 TABLE OF CONTENTS

Schedule "B"

–

Major Facilities;

Schedule "C"

–

Seismic Data;

Schedule "D"

–

Asset Purchase and Sale Agreement;

Schedule "E"

–

Bank Accounts;

Schedule "F"

–

Claims and Default Notices;

Schedule "G"

–

Transportation, Processing and Sale Agreements;

Schedule "H"

–

Authorizations for Expenditure;

Schedule "I"

–

Abandonment and Reclamation and Environmental Matters

Schedule "J"

–

Form of Vendor's Officer's Certificate;

Schedule "K"

–

Form of the Purchaser's Officer's Certificate;

Schedule "L"

–

Disposition Resolution;

Schedule "M"

–

Terms of the Exchangeable Shares; and

Schedule "N"

–

Form of Devon Claim Mutual Release

(a)  

"Abandonment and Reclamation Liabilities" means all past, present and future obligations to abandon the Wells and restore and reclaim the surface sites thereof, to decommission and remove the facilities and equipment comprised in the Tangibles and restore, remediate and reclaim the surface sites thereof and to reclaim and restore the Lands to which the surface rights relate including the lands used to gain access thereto, all in accordance with generally accepted oil and gas industry practices in the jurisdiction where the Assets are located and in compliance with Applicable Law;

(b)  

"Affiliate" has the meaning specified in National Instrument 45-106 – Prospectus and Registration Exemptions ("NI 45-106");

(c)  

"Agreement" means this agreement including the recitals hereto and each schedule, as may be amended after the date hereof by written agreement between the Parties;

(d)  

"Applicable Laws" means, in relation to any Person, property or circumstance:

(i)  

statutes (including regulations enacted thereunder);

(ii)  

judgments and orders of courts of competent jurisdiction;

(iii)  

regulations, orders and directives issued by Government Authorities; and

(iv)  

the terms and conditions of all permits, licences, approvals and authorizations;

(e)  

"Asset Purchase and Sale Agreement" means the asset purchase and sale agreement substantially in the form attached as Schedule "D";

(f)  

"Asset Related Liabilities" has the meaning specified in Section 2.5(a);

(g)  

"Assets" means, collectively, the Petroleum and Natural Gas Rights, the Tangibles, the Seismic, and the Miscellaneous Interests;

(h)  

"Business Day" means any day other than a Saturday, Sunday or statutory holiday in Calgary, Alberta, or Houston, Texas;

(i)  

"Chamonix Debt Conversion and Stock Option Exercise" means the issuance by Nahanni of common shares in the capital of Nahanni to Chamonix Canada Inc. in respect of the following:

(i)  

common shares of Nahanni issued at a price of $0.10 per share upon the exercise by Chamonix Canada Inc. of options to acquire such shares; and

(ii)  

following the exercise provided for in (i) above, common shares of Nahanni issued at a price of $0.30 per share in settlement of the aggregate outstanding debt of Nahanni to Chamonix Canada Inc.;

(j)  

"Claim" means any claim, demand, lawsuit, proceeding, arbitration or governmental investigation, in each case, whether asserted, threatened, pending or existing, but does not include a Tax Claim;

(k)  

"Closing" means the closing of the sale of the SellCo Shares by the Vendor to the Purchaser and the payment by the Purchaser to the Vendor of the Purchase Price at the Closing Time;

(l)  

"Closing Date" means October 3, 2012 or such other date to which the Parties hereto may agree;

(m)  

"Closing Time" means 10:00 a.m. (Calgary time) on the Closing Date;

(n)  

"Confidentiality" refers to the obligations for confidentiality undertaken by Vendor and Purchaser as set out in Section 10 hereof;

(o)  

"Consideration Shares" means the Exchangeable Shares issuable to the Vendor in partial payment of the Purchase Price under Section 2.2;

(p)  

"CO&O" means the Kotaneelee Production Facilities Construction, Ownership and Operating Agreement effective as of December 1, 1980 originally among Amoco Canada Petroleum Company Ltd., Canadian Superior Oil Ltd., Columbia Gas Development of Canada Ltd., Amoco Canada Resources Ltd., and Esso Resources Canada Limited;

(q)  

"Customary Post-Closing Consents" means consents and approvals from any Government Authority or third party that are customarily obtained after closing in connection with transactions similar in nature to the Transaction including consents and approvals for the transfer of permits, licences, approvals and authorizations for the Wells, Tangibles, Leases and Surface Interests pursuant to the Reorganization;

(r)  

"Devon Working Interest Acquisition" means the acquisition by an Affiliate of EFLO of Devon Canada's entire right, interest (generally a working interest of 22.989%, with a working interest of 69.337% in one producing gas well) and operatorship in the Kotaneelee gas field;

(s)  

"Devon Claim" means that specific claim filed at the Court of Queen’s Bench of Alberta in favour of Devon Canada (Amended Statement of Claim – Action no. 1201-02113) for amounts payable by the Vendor to Devon Canada in its capacity as operator of the Leases and Tangibles related to the Kotaneelee gas field;

(t)  

"Disposition Resolution" means, the special resolution in connection with the Transaction to be considered by the Nahanni Shareholders at the Nahanni Shareholders' Meeting, substantially in the form set out in Schedule "L";

(u)  

"Dissent Rights" means rights afforded to the Nahanni Shareholders as provided for in Section 185(1)(e) of the OBCA in connection with the Disposition Resolution;

(v)  

"Dollar" or "$" means a Canadian dollar;

(w)  

"EFLO Public Record" means:

(i)  

the Form 10-K of EFLO for the fiscal year ended August 31, 2011;

(ii)  

the quarterly report of EFLO on Form 10-Q for the three and nine months ended May 31, 2012; and

(iii)  

the current reports of EFLO on Form 8-K filed with the United States Securities and Exchange Commission since August 31, 2011;

(x)  

"Encumbrance" means any lien, pledge, mortgage, charge, hypothecation, security interest, assignment by way of security, conditional sale, title retention arrangement, option, right of first refusal, pre-emptive right, easement, servitude, indenture, deed of trust, statutory or deemed trust, right of way, encroachment, licence to third parties, lease to third parties, security agreement, or other encumbrance or restriction or limitation on use of real or personal property, whether fixed or floating, or irregularity or imperfection in title thereto;

(y)  

"Environment" means the components of the earth and includes ambient air, land, surface and sub-surface strata, groundwater, surface water, all layers of the atmosphere, all organic and inorganic matter and living organisms, including plants, animals and humans, and the interacting natural systems that include such components;

(z)  

"Environmental Laws" means Applicable Laws that relate to environmental, health or safety matters;

(aa)  

"Environmental Liabilities" means:

(i)  

Claims, Losses and Liabilities resulting from the past, present or future use, storage, holding, handling, transportation, release, spill, emission, leaching, escape or migration of any substance or waste including any substance or waste regulated under Environmental Laws;

(ii)  

Claims, Losses and Liabilities in respect of past, present or future pollution or contamination of, or damage or injury to, the Environment;

(iii)  

obligations to test, monitor, remediate, protect or clean-up the Environment;

(iv)  

Claims, Losses and Liabilities under Environmental Laws; and

(v)  

Abandonment and Reclamation Liabilities;

(bb)  

"Escrow Period" means the period of time beginning on the Closing Date and ending six months following the Closing Date;

(cc)  

"Exchangeable Shares" means non-voting exchangeable shares in the capital of the Purchaser having the terms and conditions substantially as set out in Schedule "M";

(dd)  

"GAAP" or "Generally Accepted Accounting Principles" means those generally accepted accounting principles and practices in Canada applicable to private enterprises, as set forth in Part V of the CICA Handbook published by the Canadian Institute of Chartered Accountants or any successor institute;

(ee)  

"Government Authority" means a federal, provincial, territorial, municipal or other government or government department, agency or authority (including a court of law) having jurisdiction over a Party, the Assets or the Transaction;

(ff)  

"Holdback Amount" has the meaning specified in Section 2.3(a);

(gg)  

"Holdback Shares" has the meaning specified in Section 2.3(b);

(hh)  

"Income Tax Act" means the Income Tax Act, R.S.C. 1985, c.1 (5th Supplement);

(ii)  

"Income Taxes" means Taxes payable pursuant to the Income Tax Act and equivalent Canadian provincial legislation;

(jj)  

"Indemnified Party" has the meaning specified in Section 12.3;

(kk)  

"Indemnifying Party" has the meaning specified in Section 12.3;

(ll)  

"JOA" means the agreement dated as of May 28, 1959 originally among Canada Southern Petroleum Ltd., Magellan Petroleum Corporation, Oil Investments, Inc., Home Oil Company Limited, Kern County Land Company, Alminex Limited, United Oils Limited and Signal Oil and Gas Company;

(mm)  

"Land Schedule" means the schedule of lands included as Schedule "A";

(nn)  

"Lands" means, collectively, the lands set forth and described in the Land Schedule and includes, unless the context otherwise requires, the surface of such Lands and (subject to exceptions noted on the Land Schedule) the Petroleum Substances in all zones and formations within such Lands, together with the right to explore for, recover and own the Petroleum Substances to the extent those rights are granted by the Leases;

(oo)  

"Laws" means all national, federal, provincial, state, territorial, regional, municipal or local laws, common law, statutes, regulations, rules, ordinances, codes and by-laws and all legally binding Orders in each case in effect at or prior to the Closing Date;

(pp)  

"Leases" means, collectively the leases, licenses, permits and other documents of title (excluding fee simple interests ) that grant rights to Petroleum Substances within, upon or under the Lands and that are described in the Land Schedule and includes, if applicable all renewals and extensions of such documents and all documents issued in substitution therefore but only to the extent such documents of title relate to the Lands;

(qq)  

"Losses and Liabilities" means in respect of a Party and in relation to a matter, any and all:

(i)  

losses, costs, damages, expenses and charges (including all penalties, assessments and fines) that such Party suffers, sustains, pays or incurs, directly or indirectly, in connection with such matter and includes reasonable costs of legal counsel and other professional advisors and reasonable costs of investigating and defending Claims arising from the matter, regardless of whether such Claims are sustained and includes Taxes payable on any settlement payment or damage award in respect of such matter; and

(ii)  

liabilities and obligations (whether under common law, in equity, under Applicable Law or otherwise; whether tortious, contractual, vicarious, statutory or otherwise; whether absolute or contingent; and whether based on fault, strict liability or otherwise) that such Person incurs as a result of such matter or in connection therewith;

(rr)  

"Major Facilities" means the facilities specifically described in Schedule "B", if any;

(ss)  

"Miscellaneous Interests" means all right, title, interest and estate of SellCo in and to all property, rights and assets, whether contingent or absolute, legal or beneficial, present or future, vested or not (other than the Petroleum and Natural Gas Rights, the Tangibles and the Seismic), to the extent pertaining to the Petroleum and Natural Gas Rights, the Lands or lands pooled or unitized therewith or the Tangibles and to which SellCo is entitled at the Closing Date including the following property, rights and assets:

(i)  

contracts, agreements, books, records and documents to the extent that they relate to the Petroleum and Natural Gas Rights, the Tangibles or items listed in items (iii) or (iv) of this definition or any rights in relation thereto including the Title and Operating Documents and any rights of SellCo in relation thereto;

(ii)  

Surface Interests;

(iii)  

all production, engineering and other information relating directly to the Petroleum and Natural Gas Rights, the Lands or the Tangibles that SellCo either has in its custody or to which SellCo has access, excluding any such information that is subject to confidentiality restrictions or restrictions on transferability;

(iv)  

permits, licences, approvals and other authorizations, crossing privileges or other rights pursuant to which the Wells or the Tangibles are accessed, maintained or operated relating to any Petroleum and Natural Gas Rights or Tangibles, or the use thereof; and

(v)  

the Wells;

(tt)  

"Nahanni Lock-Up Agreements" means the agreements between EFLO and the Nahanni Lock-Up Shareholders, pursuant to which the Nahanni Lock-Up Shareholders have agreed not to sell or dispose of any of the shares of Nahanni beneficially owned or controlled or subsequently acquired by the Nahanni Lock-Up Shareholders and to vote the shares of Nahanni beneficially owned or controlled or subsequently acquired by the Nahanni Lock-Up Shareholders in favour of the Disposition Resolution and to otherwise support the Transaction and not exercise Dissent Rights;

(uu)  

"Nahanni Lock-Up Shareholders" means those Nahanni Shareholders that have entered into Nahanni Lock-Up Agreements with EFLO;

(vv)  

"Nahanni Information Circular" means the notice of the Nahanni Shareholders' Meeting to be sent to Nahanni Shareholders and the management proxy circular to be prepared in connection with the Nahanni Shareholders' Meeting together with any amendments thereto or supplements thereof, and any other registration statement, information circular or proxy statement which may be prepared in connection with the Nahanni Shareholders' Meeting;

(ww)  

"Nahanni Shareholders' Meeting" means such meeting or meetings of the Nahanni Shareholders, including any adjournment thereof, that is to be convened to consider, and if deemed advisable approve, the Disposition Resolution;

(xx)  

"Nahanni Shareholders" means the holders of common shares in the capital of Nahanni;

(yy)  

"OBCA" means the Business Corporations Act, R.S.O. 1990, c. B.16, as amended, including the regulations promulgated thereunder;

(zz)  

"Operations" means any and all operations on or in respect of the Lands or lands pooled or unitized therewith or relating to Petroleum Substances produced therefrom or the Tangibles, including: (i) drilling, completion, testing, recompleting, deepening, plugging back, side tracking, whipstocking, fracing, stimulating, injecting, equipping, operating and abandoning wells; (ii) construction, repair, expansion, decommissioning, maintenance and operation of oilfield facilities and equipment; (iii) producing, gathering, compressing, dehydrating, scrubbing, processing, treating, separating, extracting, collecting, refrigerating, measuring, storing, transporting or shipping Petroleum Substances (including processing, treatment and storage of sulphur and transmission, transportation, treatment and disposition of water); (iv) miscible flood and other enhanced recovery schemes; (v) geological, geophysical and seismic activities; and (vi) abandonment, reclamation, remediation and restoration operations;

(aaa)  

"Orders" means orders, judgments, decrees, rulings, directives, notices, directions, injunctions, writs, complaints, penalties or sanctions, issued, made or imposed by any Government Authority;

(bbb)  

"OTCQB" means the OTC Bulletin Board;

(ccc)  

"Party" means a Person who executes this Agreement;

(ddd)  

"Permitted Encumbrances" means any of the following:

(i)  

liens for Taxes, assessments and governmental charges that are not due or delinquent or if due, the validity of which are being diligently contested in good faith;

(ii)  

easements, rights of way, servitudes or other similar rights in land including: rights of way and servitudes for highways or other roads; railways; sewers; drains; gas and oil pipelines; gas or water mains; or electric light, power, telephone, telegraph or cable television conduits, poles, wires or cables;

(iii)  

the right reserved to or vested in any Government Authority by the terms of any lease, license, franchise, grant or permit or by any Applicable Law to terminate such lease, license, franchise, grant or permit or to require annual or other periodic payments as a condition of the continuance thereof;

(iv)  

the right reserved to or vested in any Government Authority to levy Taxes on Petroleum Substances or the income or revenue attributable thereto;

(v)  

rights reserved to or vested in any Government Authority to control or regulate any of the Assets in any manner, including any requirements relating to production rates or Operations;

(vi)  

undetermined or inchoate liens incurred or created in the ordinary course of business or a lien created as security in favour of the Person conducting Operations on or in respect of the Assets to which such liens relate for SellCo's proportionate share of the costs and expenses of such Operations that are not due or delinquent or are being diligently contested in good faith;

(vii)  

mechanics', builders' or materialmen's liens in respect of services rendered or goods supplied, but only insofar as such liens relate to goods or services for which payment is not due or the validity of which is being diligently contested in good faith;

(viii)  

the terms and conditions of the Title and Operating Documents, (including Transportation, Processing and Sale Agreements and contracts for the operation of Wells by contract field operators);

(ix)  

penalties that are disclosed in the Land Schedule and that have arisen under operating procedures or similar agreements as a consequence of elections by Nahanni, the Vendor, SellCo or any of their respective Affiliates not to participate in Operations on the Lands to which the penalty applies;

(x)  

the reservations, limitations, provisos and conditions in any original grants from the Crown of any of the Lands or any interest therein and statutory exceptions to title;

(xi)  

liens granted in the ordinary course of business to a public utility or Government Authority in connection with Operations;

(xii)  

the burdens, encumbrances, royalties, adverse claims, (including reductions and conversions) and penalties set forth in the Land Schedule; and

(xiii)  

all rights of first refusal, pre-emptive purchase rights and similar rights as disclosed in the Land Schedule;

(eee)  

"Person" means any individual, body corporate, partnership (limited or general), trust, trustee, executor or similar official, Government Authority or other entity;

(fff)  

"Petroleum and Natural Gas Rights" means all of the right, title, estate and interest (whether absolute or contingent, legal or beneficial, present or future, vested or not, and whether or not an "interest in land") beneficially owned by SellCo at the Closing Time pursuant to the Title and Operating Documents in or to any of the following, by whatever name the same are known:

(i)  

rights to explore for, drill for, extract, win, produce, take, save or market Petroleum Substances from the Lands or lands pooled or unitized therewith;

(ii)  

rights to a share of the production of Petroleum Substances from the Lands or lands pooled or unitized therewith;

(iii)  

rights to a share of the proceeds of, or to receive payment calculated by reference to, the quantity or value of the production of Petroleum Substances from the Lands or lands pooled or unitized therewith; and

(iv)  

the interests set forth in the Land Schedule in and to and in respect of the Leases and the Lands;

(ggg)  

"Petroleum Substances" means petroleum, natural gas and all related hydrocarbons, including all liquid hydrocarbons and all other mineral substances, whether liquid, solid or gaseous and whether hydrocarbons or not (except coal, but including sulphur and hydrogen sulphide), produced in association with such petroleum, natural gas or related hydrocarbons or found in any water;

(hhh)  

"Prior Period Taxes" has the meaning specified in Section 11.1(a);

(iii)  

"Proceeding" means any investigative (including police), prosecutorial, disciplinary, regulatory, criminal, quasi-criminal, civil, judicial or arbitral action, suit, inquiry, hearing, investigation, grievance, arbitration or other proceeding conducted or imposed by or before a Government Authority or any other civil or judicial action;

(jjj)  

"Purchase Price" has the meaning specified in Section 2.2;

(kkk)  

"Purchaser's Securities Requirements" has the meaning specified in Section 14.4(e)(ii);

(lll)  

"Purchaser's Losses" means all Claims, Losses and Liabilities incurred or suffered by EFLO, the Purchaser, SellCo and their Related Parties;

(mmm)  

"Related Parties" means, in reference to a Party, its Affiliates, successors and assigns and its or its Affiliates' respective directors, officers and employees;

(nnn)  

"Reorganization" means the transactions described in the Asset Purchase and Sale Agreement;

(ooo)  

"Reorganization Date" means such date on or prior to the Closing Date as may be agreed to by the Purchaser;

(ppp)  

"Representatives" means, in reference to a Party, its and its Related Parties, representatives, agents, legal counsel, accountants, consultants and advisors;

(qqq)  

"Required Approvals" means consents, waivers, approvals, orders and authorizations required by any Government Authority in respect of the Transaction, excluding Customary Post-Closing Consents, the approvals required under the JOA and the CO&O, and any other approvals, consents, waivers, orders and authorizations that, if not obtained, would not reasonably be expected to have a material adverse effect on the Assets or the completion of the Transaction;

(rrr)  

"Retention Period" has the meaning specified in Section 14.3(a);

(sss)  

"Securities Laws" means the securities legislation (including rules and regulations made or promulgated under the applicable provincial enactments) of each of the Provinces and Territories of Canada, as well as the federal securities laws of the United States;

(ttt)  

"Seismic" means one trade copy of the Vendor's one hundred percent (100%) owned two dimensional ("2D") and three dimensional ("3D") proprietary Seismic Data located on and within one kilometre of the Lands, as set forth and described in Schedule "C";

(uuu)  

"Seismic Data" means, insofar as it pertains to the Seismic, reproducible copies of all field tapes; all final processed stacked tapes, including migrations; segP1 format survey floppy disk and all basic field data, including shot point maps, observer reports, driller reports, computer printed survey audits, and monitor records; and, in the case of 3D seismic, the 3D surveys, bin disks, and bin maps, each of which is as disclosed in Schedule "C";

(vvv)  

"SellCo Information" has the meaning specified in Section 14.4(e)(i);

(www)  

"Sellco Shares" means all of the shares in the capital of SellCo;

(xxx)  

"Surface Interests" means all right, title, interest and estate of SellCo as at the Closing Time to enter upon, use, occupy and enjoy the surface of the Lands, any lands with which the same have been pooled or unitized and any lands upon which the Wells or the Tangibles are located and any lands used to gain access thereto, in each case, for purposes related to the use or ownership of the Petroleum and Natural Gas Rights or the Tangibles or the Wells or Operations, whether the same are held by right of way, or otherwise;

(yyy)  

"Tangibles" means, collectively, all right, title, interest and estate of SellCo as at the Closing Time, whether absolute or contingent, legal or beneficial, present or future, vested or not, in and to:

(i)  

the Major Facilities described in Schedule "B";

(ii)  

all other equipment, systems, plants and facilities used or useful in producing Petroleum Substances from the Lands or lands pooled or unitized therewith or gathering, compressing, dehydrating, scrubbing, processing, treating, separating, extracting, collecting, refrigerating, measuring, storing, transporting or shipping such Petroleum Substances; and

(iii)  

all other tangible property and assets used or intended for use in producing, storing or injecting Petroleum Substances;

(zzz)  

"Taxation Authority" means the Canada Revenue Agency or any other Government Authority that is entitled to impose Taxes or to administer any tax legislation;

(aaaa)  

"Tax Returns" means all returns, reports, declarations, statements, bills, schedules or written information of, or in respect of, Taxes that are required to be filed with, or supplied to, any Taxation Authority;

(bbbb)  

"Taxes" means all taxes, however denominated, including any interest, penalties, or other additions thereto that are imposed by a Taxation Authority, and shall for greater certainty include, but not be limited to, federal and provincial income and capital taxes, payroll and employee withholding taxes, employment insurance premiums, Canada pension plan contributions, goods and services tax, sales and use taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business license taxes, occupation taxes, real and personal property taxes, stamp taxes, environmental taxes, workers' compensation premiums, and all other amounts of the same or a similar nature to any of the foregoing, whether or not such amounts are described as taxes, but does not include any royalty payable pursuant to or in respect of a Lease;

(cccc)  

"Tax Claim" has the meaning specified in Section 11.1(b);

(dddd)  

"Tax Indemnity" has the meaning specified in Section 11.1(b);

(eeee)  

"Third Party Claim" has the meaning specified in Section 12.3;

(ffff)  

"Title and Operating Documents" means all agreements, contracts, instruments and other documents that govern the ownership or use of the Assets or relate to Permitted Encumbrances or Operations, including: (A) the Leases and other agreements and instruments pursuant to which the Petroleum and Natural Gas Rights were issued, granted or created; (B) permits, licenses, approvals and authorizations; (C) operating agreements, unit agreements, pooling agreements, trust declarations, participation agreements, farmin agreements, farmout agreements and royalty agreements; (D) agreements that create or relate to Surface Interests; (E) Transportation, Processing and Sale Contracts; (F) gas gathering and common stream agreements; (G) agreements for the construction, ownership and/or operation of Tangibles; (H) trust declarations and other documents and instruments that evidence SellCo's interests in the Assets as at the Closing Time; and (I) trust declarations pursuant to which SellCo holds interests in the Lands or lands pooled or unitized therewith in trust for other Persons as at the Closing Time;

(gggg)  

"Trading Period" means the ten consecutive trading days on which the OTCQB is open for trading immediately preceding the Closing Date;

(hhhh)  

"Transaction" means the entering into of this Agreement, the Reorganization and the sale and purchase of the SellCo Shares in accordance with this Agreement;

(iiii)  

"Transportation, Processing and Sale Agreements" means the contracts for the processing, compression, treatment, gathering, storage, transportation or sale of Petroleum Substances produced from the Lands or lands pooled or unitized therewith, including but not limited to those specifically described in Schedule "G", if any;

(jjjj)  

"Vendor Parties" means Nahanni, the Vendor, Apex and SellCo and "Vendor Party" means any one of them;

(kkkk)  

"Vendor's Counsel" means McMillan LLP;

(llll)  

"Vendor's Knowledge" means the actual knowledge of the Vendor's senior executive officers responsible for the matters in question after due inquiry;

(mmmm)  

"Vendor's Losses" means all Claims, Losses and Liabilities incurred or suffered by the Vendor, Nahanni, Apex and their Related Parties;

(nnnn)  

"Volume Weighted Average Trading Price" shall be determined by dividing (a) the aggregate dollar trading value of all the common shares in the capital of EFLO sold or traded on the OTCQB during the Trading Period, by (b) the total number of common shares in the capital of EFLO sold or traded on the OTCQB during the Trading Period; and

(oooo)  

"Wells" means all producing, suspended, shut in, abandoned (including without limitation all abandoned wells, whether or not reclamation certified or reclamation exempt), water source, disposal, injection or similar wells located on the Lands or any lands pooled or unitized therewith, including those wells listed in the Land Schedule or Part 2 of Schedule "A" hereto.

(a)  

the headings of Articles and Sections in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement;

(b)  

whenever the singular or masculine or neuter is used in this Agreement or in the schedules, each shall be interpreted as meaning the plural or feminine or body politic or corporate, and vice versa, as the context requires;

(c)  

if there is any conflict or inconsistency between the provisions of this Agreement and those of a schedule attached hereto, the provisions of this Agreement shall prevail to the extent of the conflict;

(d)  

all documents executed and delivered pursuant to the provisions of this Agreement are subordinate to the provisions hereof and the provisions hereof shall govern and prevail in the event of a conflict;

(e)  

"this Agreement", "herein", "hereby", "hereunder", "hereof" and similar expressions refer to this Agreement as a whole (including Schedules) and not to any particular Article, Section or section on or other provision hereof and  references herein to any agreement or instrument, including this Agreement, shall be a reference to the agreement or instrument as varied, amended, modified, or supplemented or replaced from time to time;

(f)  

a reference to an Article, Section or Schedule is a reference to an Article, Section or section in, or a Schedule to, this Agreement and unless otherwise stated or the context so requires, a reference in a Section to a section is a reference to a section of that Section;

(g)  

"including" means "including without limitation" and "includes" means "includes without limitation";

(h)  

any reference to a statute shall include and shall be deemed to be a reference to such statute and to the regulations made pursuant thereto, and all amendments made thereto and in force at the date hereof; and

(i)  

if Closing does not occur, each provision of this Agreement that presumes that Closing has occurred shall be construed as having been contingent upon Closing having occurred.

(a)  

(b)  

–        Major Facilities;

(c)  

–        Seismic Data;

(d)  

–        Asset Purchase and Sale Agreement;

(e)  

–        Bank Accounts;

(f)  

–        Claims and Default Notices;

(g)  

–        Transportation, Processing and Sale Agreements;

(h)  

–        Authorizations for Expenditure;

(i)  

–        Abandonment and Reclamation and Environmental Matters;

(j)  

–        Form of Vendor's Officer's Certificate;

(k)  

–        Form of the Purchaser's Officer's Certificate;

(l)  

–        Disposition Resolution;

(m)  

–        Terms of the Exchangeable Shares; and

(n)  

–        Form of Devon Claim Mutual Release

(a)  

the issuance by the Purchaser to the Vendor of such number of Exchangeable Shares as is equal to the result (rounded down to the nearest whole number) arrived at by dividing $4,100,000 by the Volume Weighted Average Trading Price (the "Consideration Shares"); and

(b)  

the sum of $400,000 (the "Cash Consideration"), subject to Section 2.4.

(a)  

the Cash Consideration, net of the amount provided for in Section 2.4, shall be paid to the Vendor's Counsel, the Vendor's Counsel shall deposit such amount (the "Holdback Amount") in an interest bearing trust account and such amount shall be released as set forth in Section 2.4 and 2.5 hereof.  Any interest earned on the Holdback Amount shall be paid to the applicable party as the case may be per Section 2.4; and

50% of the Consideration Shares (the "Holdback Shares") shall be considered to be subject to holdback and return to the Purchaser for cancellation for a Representation Breach (as such term is defined in Section 2.5(a)).

(a)  

During the Escrow Period, the Holdback Amount may be utilized: (i) to pay any undisclosed currently existing liabilities of Nahanni of which Nahanni is aware or should reasonably be aware (not including operating costs incurred in the ordinary course of business) (the "Nahanni Liabilities") or (ii) to pay, settle or satisfy those expenses or damages which are incurred as a result of any breach of representations, warranties or covenants contained in this Agreement by and of the Vendor Parties or a Related Party of any of the foregoing or any indemnity provided for in the Agreement or in the Asset Purchase and Sale Agreement (each, a "Representation Breach").  Further, during the Escrow Period, the Holdback Shares shall be subject to forfeiture and return to the Purchaser for cancellation in respect of those expenses or damages which are incurred as a result of any Representation Breach, on the basis set out in Section 2.5(c) below.

(b)  

During the Escrow Period, Nahanni may make a request for the disbursement of any portion of the Holdback Amount for the purpose of satisfying Nahanni Liabilities by providing to the Purchaser and the Vendor's Counsel a copy of the applicable invoice, together with a request for the disbursement of the applicable portion of the Holdback Amount.  Such amount shall be deducted from the Holdback Amount and delivered by Vendor's Counsel to Nahanni not earlier than three Business Days and not later than five Business Days after the receipt by Vendor's Counsel of a direction of Nahanni addressed to the Vendor's Counsel and the Purchaser directing the payment of such Nahanni Liabilities, provided that no Holdback Amount shall be disbursed at any time while an unresolved Representation Breach is alleged to have occurred and regardless of whether notice of such Representation Breach is given before or after notice requesting disbursement for the payment of Nahanni Liabilities.  Provided that Vendor's Counsel is entitled to release the Holdback Amount if Purchaser has not delivered evidence of such Representation Breach, which is substantial in the reasonable opinion of the Vendor's Counsel ("Substantive Evidence").

(c)  

During the Escrow Period, if the Purchaser, acting reasonably, determines that any Representation Breach has occurred, the Purchaser shall notify Nahanni and the Vendor's Counsel of such Representation Breach and may undertake whatever action it considers necessary, acting reasonably, to remedy the damages caused by such Representation Breach, provided it may not admit liability or settle a third party claim without the Vendor's consent, not to be unreasonably withheld.  The verified reasonable costs incurred and paid by the Purchaser, and any verified damages incurred by the Purchaser, in relation to any Representation Breach (but not including any Nahanni Liabilities) (the "Remediation Expenses") shall be deducted from the Holdback Amount and delivered by Vendor's Counsel to the Purchaser not earlier than three Business Days and not later than five Business Days after the receipt by Vendor's Counsel of a direction of the Purchaser addressed to the Vendor's Counsel and the Vendor directing the payment of such Remediation Expenses, accompanied by Substantive Evidence.  To the extent that the Holdback Amount is insufficient to satisfy the Remediation Expenses, such excess Remediation Expenses shall be quantified and a number of Holdback Shares shall be forfeited and returned to the Purchaser for cancellation equal to the amount of such excess Remediation Expenses divided by the Volume Weighted Average Trading Price immediately prior to the date of notice by the Purchaser to the Vendor.   Prior to the delivery of the aforementioned direction by the Purchaser to Vendor's Counsel, the Purchaser must provide written notice of the amount of the Remediation Expenses to the Vendor and the Vendor's Counsel, and such amount shall be final and binding upon the Parties for all purposes hereof unless the Vendor shall have notified the Purchaser and the Vendor's Counsel in writing within 10 Business Days of receipt of such notice from the Purchaser that the Vendor disputes such amount, which notice shall set forth in reasonable detail the basis of the objection.  For greater certainty, if no such notice is given by the Vendor within such 10 Business Days, the Vendor shall be deemed to have accepted and agreed for all purposes hereunder to the amount of the Remediation Expenses.  If the Parties are unable to agree on the amount of the Remediation Expenses within 10 Business Days of receipt by the Purchaser of a dispute notice from the Vendor, such determination shall be made in accordance with Section 2.6.

(d)  

Provided that at such time no liability in respect of an agreed Representation Breach remains outstanding and no unresolved Representation Breach remains in dispute, and in respect of which Substantive Evidence has been delivered to Vendor's Counsel, on the date that is the first Business Day following the date that is 6 months following the Closing Date, the remaining amount of the Holdback Amount shall be paid from the Holdback Amount by the Vendor's Counsel to the Vendor and the Holdback Shares shall cease to be considered subject to Section 2.3(b) above, and Vendor's Counsel shall provide written confirmation of the same to the Purchaser.

(e)  

The Vendor agrees to cooperate in dealing with the registrar and transfer agent for the Consideration Shares and any trustee exercising control over such shares to complete the return and/or transfer of any Holdback Shares subject to forfeiture under Section 2.5(c).

(a)  

the arbitration tribunal shall consist of one arbitrator appointed by mutual agreement of the Purchaser and the Vendor, or in the event of failure to agree within 10 Business Days following delivery of the written notice to arbitrate, any Party may apply to a judge of the Court of Queen's Bench of Alberta to appoint an arbitrator qualified by education and training to pass upon the particular matter to be decided;

(b)  

the arbitrator shall be instructed that time is of the essence in the arbitration proceeding;

(c)  

after written notice is given to the dispute to arbitration, the Purchaser and the Vendor will meet within 10 Business Days of delivery of the notice and will negotiate in good faith to agree upon the rules and procedures for the arbitration, in an effort to expedite the process and otherwise ensure that the process is appropriate given the nature of the dispute and the values at risk, failing which the rules and procedures for the arbitration shall be determined by the arbitrator;

(d)  

the arbitration shall take place in Calgary, Alberta;

(e)  

the fees and other costs associated with the arbitrator shall be shared equally by the Purchaser and the Vendor and each Party shall be responsible for its own costs;

(f)  

the arbitration shall be final and binding on the Parties and not subject to any appeal;

(g)  

judgment upon any award may be entered in any court having jurisdiction or application may be made to the court for a judicial recognition of the award or an order of enforcement, as the case may be;

(h)  

the disputes referred to arbitration (including without limitation the scope of the agreement to arbitrate, any statute of limitations, conflict of laws rules, tort claims and interest claims) shall be governed by the substantive Laws of the Province of Alberta and the federal Laws of Canada applicable therein; and

(i)  

the Parties agree that the arbitration shall be kept confidential and that the existence of the proceeding and any element of it (including any pleadings, briefs or other documents submitted or exchanged, any testimony or other oral submissions and any awards) shall not be disclosed beyond the arbitrator, the Parties, their counsel and any Person necessary to the conduct of the proceeding, except as may lawfully be required in judicial proceedings relating to the arbitration or otherwise.

(a)  

For the purpose of this Agreement, the following terms shall have the meanings as set forth below:

(i)  

"Tax Pools" means:

(A)  

Canadian oil and gas property expense or cumulative Canadian oil and gas property expense, as the context requires ("COGPE");

(B)  

Canadian development expense or cumulative Canadian development expense, as the context requires ("CDE");

(C)  

Canadian exploration expense or cumulative Canadian exploration expense, as the context requires ("CEE"); and

(D)  

undepreciated capital cost of depreciable property, which shall not be less than zero ("UCC");

(ii)  

"Transferred Tax Pools" means the Tax Pools of SellCo as at the Closing Time, such amounts not to be less than the Tax Pools disclosed in Section 2.8(b).

(b)  

At Closing, the Transferred Tax Pools shall not be less than the Tax Pools as set out below:

(i)  

COGPE:        $1,632,937

(ii)  

CDE:             $Nil

(iii)  

CEE:              $Nil

(iv)  

UCC:             $530,785

(c)  

The Parties acknowledge and agree that the Vendor Parties make no representation or warranty as to the transferability to the Purchaser of the Transferred Tax Pools or the ability of SellCo or any successor to use those pools.

(a)  

hold legal title to such Title and Operating Documents in trust, for the exclusive benefit of SellCo or its successor in interest;

(b)  

do such things as are reasonably required for SellCo or its successor in interest to deal with the Assets to which such Title and Operating Documents relate; and

(c)  

cooperate, acting reasonably, with any reasonable request of SellCo so as to allow SellCo to operate such Assets as if it were the holder of legal title to such Title and Operating Documents.

(a)  

conduct the business of the Vendor Parties in material compliance with Applicable Laws and generally accepted oil and gas industry practices in the jurisdiction where the Assets are located;

(b)  

cause the Assets to be operated and maintained, in accordance with and subject to the Title and Operating Documents, Applicable Laws and generally accepted oil and gas industry practices in the jurisdiction where the Assets are located;

(c)  

pay all costs and expenses relating to the Assets that become due prior to the Closing Date; and

(d)  

perform and comply in all material respects with all material covenants and conditions contained in the Title and Operating Documents to be performed and complied with by any one or more of the Vendor Parties prior to Closing.

(a)  

sell, transfer, assign, farmout, surrender, abandon, forfeit, grant an encumbrance (other than a Permitted Encumbrance) or otherwise dispose of or alienate any of the Assets, other than the transfer of the Assets to SellCo pursuant to the Reorganization;

(b)  

other than in the ordinary course of business or as otherwise contemplated herein, amend in any material respect or terminate any material agreement or instrument relating to the Assets or enter into any new material agreement or commitment relating to the Assets;

(c)  

subject to the provisions of Section 4.3, enter into any obligations or commitments out of the ordinary course of business with respect to the Assets of which the Vendor's or SellCo's, as the case may be, share is estimated in the aggregate to be in excess of $10,000 for any single item or related series of items except as may be reasonably necessary to protect or ensure life and safety or to preserve the Assets or title to the Assets;

(d)  

subject to the provisions of Section 4.3, propose or initiate the exercise of any right (including bidding rights at Crown sales) or option relative to or arising as a result of the ownership of the Assets, or propose or initiate any Operations on the Lands which have not been commenced or committed to by the Vendor on the date hereof that is in the aggregate in excess of $10,000 for any single item or related series of items, except that the Vendor or SellCo, as the case may be, may propose or initiate any Operations on the Lands for, and propose or initiate the exercise of any right or option relative to, the preservation of any of the Leases or the Assets;

(e)  

enter into any transaction other than the Reorganization and any transactions in the ordinary course of the business of operating the Assets following completion of the Reorganization;

(f)  

incur any liability, other than pursuant to the Reorganization and any liabilities incurred in the ordinary course of the business of operating the Assets following completion of the Reorganization;

(g)  

make loans or advances, other than loans and advances with respect to the Assets made following completion of the Reorganization in accordance with the terms of operating agreements to which the Vendor is a party or by which it is bound as at the date hereof;

(h)  

except for the shares to be issued by Nahanni to Chamonix Canada Inc. pursuant to the Chamonix Debt Conversion and Stock Option Exercise (to which EFLO consents) and  SellCo Shares issued to the Vendor pursuant to the Reorganization, issue, sell or agree to issue or sell any shares, rights, options, warrants or other securities of the Vendor Parties;

(i)  

change in any material respect its bookkeeping, record keeping or accounting methods and procedures;

(j)  

amend in any material manner or terminate any agreement or instrument relating to the Assets or enter into any new agreement or commitment relating to and having a material effect on the Assets; or

(k)  

hire any employees.

(a)  

If, after the date hereof, a Vendor Party receives any notice of Operations (including casing point and abandonment elections and notices relating to the exercise of options to drill wells or conduct exploration or development operations under farmout and similar agreements) from a person other than a Purchaser or its affiliates on the Lands or lands pooled or unitized therewith or the exercise of any right (including rights of first refusal and rights under area of mutual interest provisions) or any option relating to the Assets of which the Vendor Parties' share is estimated to be in the aggregate in excess of $10,000 for any single item or related series of items (each such Operation or exercise of a right or option being referred to as a "Proposal") from a third party then, in a timely manner, the Vendor shall, or the Vendor shall cause SellCo to, as the case may be, give notice, including full particulars of the Proposal, to the Purchaser and, as soon as is practicable, the Vendor shall, or the Vendor shall cause SellCo to, as the case may be, give the Purchaser notice of whether or not the Vendor or SellCo, as the case may be, elects to participate in such Proposal.  The notice to the Purchaser shall contain the length of any period during which the Vendor or SellCo, as the case may be, is required to respond to any notice received by it in accordance with the applicable Title and Operating Document.

(b)  

If the Purchaser and the Vendor or SellCo, as the case may be, disagree on the response to the Proposal, a meeting shall be convened immediately to discuss the differences.  If consensus is not reached at that meeting, the Purchaser will have the unilateral right to decide the response, provided Purchaser may not unilaterally commit Vendor or SellCo to an expenditure exceeding $25,000.

(a)  

Nahanni shall take all necessary action in accordance with applicable Laws, to: (i) duly call, give notice of, convene and hold the Nahanni Shareholders' Meeting as promptly as practicable, and in any event not later than September 29, 2012, to vote upon the Transaction and any other matters as may be properly brought before the meeting; and (ii) solicit proxies of Nahanni Shareholders in favour of the Transaction.

(b)  

Subject to the terms of this Agreement, Nahanni agrees to convene and conduct the Nahanni Shareholders' Meeting in accordance with its constating documents and applicable Laws and agrees not to propose to adjourn or postpone its meeting without the prior consent of EFLO:

(i)  

except as required for quorum purposes (in which case the meeting shall be adjourned and not cancelled) or by applicable Law or by a Government Entity; or

(ii)  

except for an adjournment for the purpose of attempting to obtain the requisite approval of the Disposition Resolution.

(c)  

Upon the request of EFLO acting reasonably, Nahanni shall adjourn or postpone its meeting to a date specified by EFLO, provided that such meeting, as so adjourned or postponed, shall occur not later than 20 business days after the date on which such meeting was originally scheduled to occur.

(d)  

Nahanni shall advise EFLO (a) as reasonably requested, and on a daily basis on each of the last seven business days prior to the Nahanni Shareholders' Meeting, as to the aggregate tally of the proxies and votes received in respect of such meeting and all matters to be considered at such meeting; and (b) of any written notice of dissent, withdrawal of such notice, and any other notice received pursuant to the exercise of Dissent Rights.

(e)  

Nahanni shall promptly provide the Nahanni Information Circular to EFLO, for review by EFLO and its counsel, and shall permit EFLO to participate in the preparation of the Nahanni Information Circular to the extent that information concerning EFLO, its business and the Exchangeable Shares is required to be contained therein and will not mail the Nahanni Information Circular to Nahanni Shareholders until such time as EFLO agrees, acting reasonably.  The Nahanni Information Circular shall contain the unanimous determination of the board of directors of Nahanni that the Transaction is in the best interests of Nahanni and Nahanni Shareholders and the unanimous recommendation of the board of directors of Nahanni that Nahanni Shareholders vote in favour of the special resolution approving the Transaction and the sale of the Assets.

(f)  

As of the date the Nahanni Information Circular is first mailed to the Nahanni Shareholders and the date of the Nahanni Shareholders' Meeting, the information contained in the Nahanni Information Circular shall be complete and correct in all material respects, shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they are made, not misleading and shall comply in all material respects with all Applicable Laws. Nahanni shall promptly correct any such information contained in the Nahanni Information Circular which shall have become false or misleading at any time prior to the Nahanni Shareholders' Meeting.  Without limiting the generality of the foregoing, Nahanni shall ensure that the Nahanni Information Circular provides Nahanni Shareholders with information in sufficient detail to permit them to form a reasoned judgment concerning the matters to be placed before them at the Nahanni Shareholders' Meeting.