6.	IMPAIRMENT OF PROPERTY AND EQUIPMENT

	January 31, 2012 (in thousands)										April 30, 2011 (in thousands)
	Book Value		Valuation Allowance			Accumulated Depreciation			Net Book Value		Net Book Value
Saskatchewan Oil Sands Rights
Permits and leases	$	407,248	$	(279,476	)	$	-		$	127,772	$	134,023
Licenses		-		-			-			-		-
Alberta Oil Sands Rights
Permits		35,930		(25,698	)		-			10,232		10,772
Leases		7,964		(7,964	)		-			-		-
Saskatchewan Oil Shale Rights (Permits)		11,264		(11,264	)		-			-		-
Equipment		13,469		-			(9,061	)		4,408		6,214
Assets Under Construction		3,134		-			-			3,134		2,786
Total Property and Equipment	$	479,009	$	(324,402	)	$	(9,061	)	$	145,546	$	153,795

The Company evaluates undeveloped properties periodically for impairment on a property-by-property basis considering a combination of time, geological and engineering factors as well as the Company's current exploration plans and the ability to obtain necessary financing to advance the development of the properties. Where circumstances indicate impairment in value, a valuation allowance is provided. The Company monitors internal and external indicators of impairment periodically. Property and equipment has a net book value of $145.5 million as at January 31, 2012 compared to $153.8 million as at April 30, 2011.

a)	Saskatchewan Oil Sands Permits and Leases

The Company initiated a strategic alternative review process on August 17, 2010 to consider all alternatives to increase shareholder value, including strategic financing opportunities, asset divestitures, joint ventures and/or corporate sale, merger or other business combination. The formal phase of the strategic alternative review process did not result in any firm proposals to the Company. The discussions and negotiations throughout the process have illustrated that potential future partners or acquirers would need to see a further level of development, reducing the remaining areas of uncertainty, in order to be prepared to make a substantial investment. The conclusion of the formal phase of the strategic alternative review process indicated that the carrying value of the Saskatchewan Oil Sands Permits was greater than their fair value or estimated future net cash flows at April 30, 2011.

Potential partners or purchasers would negotiate a price that is dependent upon specific facts regarding the property, including the nature and extent of geological and geophysical data, the terms of the permits holding the acreage in the property and a level of asset development that would reflect the results of the Axe Lake reservoir testing efforts. We estimated the fair value of the property by calculating the property's risk adjusted net present value. We categorize the measurement of fair value of the Saskatchewan Oil Sands Leases as Level 3 inputs. Since the Saskatchewan Oil Sands Permits are nonproducing undeveloped properties with no quoted market, their estimable cash flow streams involve significant judgment and the results are based on estimated future events. The property's expected future cash flows were calculated on an estimate of contingent resources using a discount rate and price forecast selected by management. The property's risk adjusted net present value gave effect to such factors as future production costs, drilling and completion costs, prevailing commodity prices, transportation systems for oil and gas production in the vicinity and other economic factors. Management also used market data to support the risk adjusted net present value that was calculated. The results of this assessment indicated impairment and the Company recorded a valuation allowance in the year ended April 30, 2011.

During the period ended October 31, 2011, management reviewed its estimate of fair value of the Saskatchewan Oil Sands Leases at Axe Lake as a result of the Company entering into creditor protection on November 29, 2011. In its analysis, management updated the status of various factors, including intent to develop, remaining lease term, geological and geophysical evaluations, drilling results and activity, business and industry climate, assignment of contingent resources and the economic viability of development if contingent resources are assigned. During the period ended October 31, 2011, these factors did not indicate that they would trigger impairment of the property's value. Management also reviewed the property's risk adjusted net present value and the cash flow projections of future production costs, drilling and completion costs, prevailing commodity prices, transportation systems for oil and gas production in the vicinity and other economic factors. The Company determined that these assumptions and projections did not change materially from those used in management's assessment performed at April 30, 2011. The data obtained from market participants to support management's conclusions remained comparable during the period ended October 31, 2011. The uncertainty related to the Company's ability to continue with the development of the Saskatchewan Oil Sands Leases increased when the formal phase of the strategic alternative review process concluded in June 2011 and triggered an impairment of the property. Creditor protection allows the Company to continue with its day to day operations while working on a restructuring plan that would contribute to advancing the development at Axe Lake. Management concluded that no additional valuation allowance was required during the period ended October 31, 2011.

During the period ended January 31, 2012, management assessed the carrying value of the Saskatchewan Oil Sands Leases at Axe Lake in conjunction with the periodic assessment of impairment of unproved properties. Because no impairment indicators impacting the property's value were triggered during that period, management concluded that no additional valuation allowance was required during the period ended January 31, 2012. The valuation allowance amounts to $279.5 million at January 31, 2012 (April 30, 2011 - $296.2 million).

b)	Saskatchewan Oil Sands Licenses

The Company has determined that the presence of extensive top-water in the reservoirs would not allow for commercial development in the near term. Accordingly, an impairment provision on the full carrying value of the Saskatchewan Oil Sands Licenses was recorded in the year ended April 30, 2011. These licenses were relinquished on August 12, 2011 and the book value and valuation allowance were then written off.

c)	Alberta Oil Sands Permits

The Company has recognized a full impairment on the Alberta Oil Sands Permits related to the Raven Ridge prospect at April 30, 2011. Following the conclusion of the formal phase of the strategic alternative review process, the Raven Ridge prospect has been excluded from the Company's current and future exploration plans and no further development is expected. Accordingly, an impairment provision on the full carrying value of the Raven Ridge prospect was recorded in the year ended April 30, 2011. The valuation allowance amounts to $25.7 million at January 31, 2012 (April 30, 2011 - $27.2 million).

The Company performed a fair value assessment of the Alberta Oil Sands Permits at Wallace Creek at April 30, 2011 using best estimate of contingent resources of the prospect. The results of this assessment indicated that the fair value of the property was in excess of its carrying value, thus supporting its net book value at April 30, 2011. Since that date, management has not identified any conditions or changes with respect to the assets or their environment which would indicate impairment of the Wallace Creek permits. The net book value of the Wallace Creek prospect is $10.2 million at January 31, 2012 (April 30, 2011 - $10.8 million).

d)	Alberta Oil Sands Lease

The Company has recognized a full impairment on the Eagles Nest Prospect at April 30, 2011. Since the property is geographically distant from our other oil sands discoveries and is largely unexplored, the Company announced on September 22, 2010 its intention to divest the Eagles Nest oil sands lease. The Company did not receive any offers under financial terms that were acceptable and determined that it was in the best interest to retain these assets until an adequate offer is received or additional funds are available for the development of these longer-term assets. Following the conclusion of the formal phase of the strategic alternative review process, an impairment provision on the full carrying value of the lease was recorded in the year ended April 30, 2011. The valuation allowance amounts to $8.0 million at January 31, 2012 (April 30, 2011 - $8.4 million). (See note 15).

e)	Saskatchewan Oil Shale Permits

Due to the considerable time, effort and financial resources required for the exploration and development of the property, the Company recognized a full impairment on the property in the year ended April 30, 2011. The Company has no plan to further develop the property. As at January 31, 2012, the cumulative impairment on the Pasquia Hills properties amounts to $11.3 million (April 30, 2011 - $11.9 million).

Equipment

Based on an assessment of the carrying value of the leasehold improvements and office equipment related to the Calgary head office, the Company determined that it may not be able to recover the value and recorded an impairment of $1.1 million on these assets at April 30, 2011. This impairment amounted to $0.9 million at January 31, 2012 following the sale of furniture and fixture.