#2 From the Xun Energy Forum: Thank you ENGGEO

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Thank you ENGGEO for your post and questions in Post #1 above.

We have replicated your post below:

Good Morning Jerry. The settlement sounds like a good thing overall for Xun as you suggest in the 8K.

Does the setting of a floor price have to be so it is tradeable the day it is issued or can it be set above the market price that day. So even though the price is currently at $0.0001 could a floor price of $0.001 be set? The reason I ask is I cannot see how Xun can pay all of the $2mm without raising the number of shares which it appears is not allowed by the settlement.

Also, the payment to Vencedor per the settlement is for five wells drilled and operating in Pennsylvania (2,3,4,,14 and the existing well 15). Will they now continue operations to place the other four wells?

As ever thanks for keeping the communications open.

Question #1: Does the setting of a floor price have to be so it is tradeable the day it is issued or can it be set above the market price that day. So even though the price is currently at $0.0001 could a floor price of $0.001 be set?

Response #1: No, the Safety Net Price could not be set at $.001 when the market is at $.0001. This would not be in compliance with the SEC Act. The Safety Net price was built into the Stipulation to relieve any unduly downward pressure by shorters. One would hope that shorters realizing that there is a Safety Net Price process in place, that it would be a deterrent from shorting the stock.

Question #2: Also, the payment to Vencedor per the settlement is for five wells drilled and operating in Pennsylvania (2,3,4,,14 and the existing well 15). Will they now continue operations to place the other four wells?

Response #2: At the time Vencedor Energy Partners (VEP) assigned its receivable to Equity Capital, on August 5, 2013, the Company was obligated to pay $835,000 to VEP of an 8 well drilling program on the Rice Lease costing $1,336,000. They permitted 5 locations and per the Participation and Operating Agreement - Rice Lease (POA), the Company has to prepay VEP prior to them doing any work on the leases per the POA. The pricing, an average of $167,000 per well, is on the basis of doing 4 to 6 wells at one time to take advantage of economies of scale. VEP invoiced the Company on December 18, 2012 and the Company was obligated to pay this lump sum on receipt of the invoice per the POA. Based on immediate payment, all 5 wells would have been completed on or before March 31, 2013. The financing the Company was working on with a funder did not come materialize and as a result VEP could not start the drilling as scheduled in the POA. VEP started work on the Rice Lease in March at their own cost and carried the costs until the Company began making advances on the account from funds received through CPN's.

Upon receipt of the funds by VEP from Equity Capital, VEP is obligated to complete its obligations to the Company. VEP cannot return any unused portion of the cash or invest in the Company or any of its affiliates. VEP invoiced for $835,000 for services to be rendered on a prepaid basis and it is expected that VEP will complete its obligation of drilling and completing oil wells equal to or greater than $835,000 for the Company, whether on the Rice lease or any other oil and gas lease the Company approves. In simple terms the $835,000 rolls forward until it is expended.

THERE ARE NO ASSURANCES THAT EQUITY CAPITAL WILL BE ABLE TO SELL THE COMMON STOCK RECEIVED PER THE 3(A)10 EXEMPTION. THERE ARE NO ASSURANCES THAT THERE WILL BE A MARKET FOR THE COMMON STOCK BASED ON CURRENT MARKET LIQUIDITY AND CONDITIONS. THERE ARE NO ASSURANCES THAT SHOULD VEP COMPLETE ITS OBLIGATION OF DRILLING AND COMPLETING OIL OR GAS WELLS, THAT THE COMPLETED OIL OR GAS WELLS WILL PRODUCE OIL OR GAS. THERE ARE NO ASSURANCES THAT IF THE COMPLETED OIL OR GAS WELLS PRODUCE OIL OR GAS, THAT IT WILL BE PROFITABLE.

DISCLAIMER: SUBJECT TO SAFE HARBOR CLAUSE.

We thank you for your interest, support and faith in the Company.

Respectfully,
Xun Energy, Inc.
Jerry G. Mikolajczyk
President and CEO.

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