OIL OPTIMIZATION INC .

Form 51-102F6 – Statement of Executive Compensation

For the Financial Year Ended: December 31 , 2014

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Oil Optimization Inc.’s (the "Corporation") executive officer compensation plans are intended to provide an appropriate overall compensation package that will permit the Corporation to attract and retain highly qualified and experienced senior executive officers and to encourage superior performance by the Corporation. The Corporation's compensation policies are intended to motivate individuals to achieve results. In addition, the Corporation believes that directors, officers and employees should have their benefits aligned with both the short and long-term interests of the shareholders. Among other things, the Board encourages equity ownership by executive officers.

The compensation of the Corporation's executive officers is comprised of two components: base salary and longterm incentives in the form of stock options. The Corporation strongly believes that stock options play an important role in increasing shareholder value. Stock options are directly related to the overall performance of the Corporation, and the individual's contribution to such performance. The modifying factors and their respective weight are reviewed by the Compensation Committee. The Compensation Committee is comprised of 3 directors and the majority of the members are independent directors. The Compensation Committee is chaired by Douglas Fletcher, an independent director.

Recommendation for compensation of the Named Executive Officers (as hereinafter defined) is made annually to the Compensation Committee by the President & CEO, considering the achievement of the objectives of such officers, the performance of the Corporation, the financial position of the Corporation, previous grants of options and other factors. The performance goals of such officers are related to compliance with regulatory requirements, with financial reporting responsibilities, with audit quality and completion and with the operation of the administrative functions of the Corporation. The Compensation Committee considers the recommendation and sets the Named Executive Officers base compensation and stock option compensation.

The Corporation relies solely on the Compensation Committee's determination of the achievement of the CEO's objectives, the performance of the Corporation, the financial position of the Corporation, previous grants of options and other factors in setting the base compensation and stock option compensation of the CEO. The performance goals of such officer are related to advancement of the Corporation's projects, maintenance of good relations and support in the investor community, effective administration of the Corporation's operations and identification of business development opportunities. In making its compensation decision, the Compensation Committee considers these factors, the business performance and anticipated future performance of the Corporation.

For the Corporation's management, including the Named Executive Officers, the Corporation utilizes base compensation to establish a reasonable fixed component of compensation, as compared to comparable positions in junior oil and gas exploration and development companies in its industry with similar scope and operations, to attract and maintain qualified leaders. The base compensation for the Named Executive Officers is paid as either salary or consulting fees. The Corporation also employs stock option awards to align compensation with the general creation of value for the shareholders. For further information with respect to the foregoing, see the table and notes under the section entitled "Executive Compensation – Compensation of Executive Officers"

Option-Based Awards

The Corporation strongly believes that granting stock options to senior officers play an important role in increasing shareholder value by motivating their achievement of the Corporation's long-term strategic objectives and by aligning their interests with those of other shareholders, resulting in a benefit to all shareholders. Options are awarded to directors, officers, employees and consultants of the Corporation by the Board based upon the recommendation of the Compensation Committee, which bases its decisions upon the level of responsibility and contribution of the individuals towards the Corporation's goals and objectives. The Compensation Committee considers the overall number of options that are outstanding relative to the number of outstanding common shares and previous option grants to such individual in determining whether to make any new grants of options and the size of such grants.

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Summary Compensation Table for Named Executive Officers

The following table sets forth all compensation paid, payable, awarded, granted, given or otherwise provided, directly or indirectly, for each of the Corporation's three most recently completed financial years to the CEO, CFO and the next three mostly highly compensated executive officers of the Corporation whose total compensation and bonus was, individually, in excess of $150,000 per annum (collectively the " Named Executive Officers "). Total compensation encompasses, as applicable, regular salary, dollar amount of option awards, non-equity incentive plan compensation which would include discretionary and non-discretionary bonuses, pension value with compensatory amounts for both defined and non-defined contribution retirement plans, and all other compensation which could include perquisites, tax gross-ups, premiums for certain insurance policies, payments resulting from termination, resignation, retirement or a change in control and all other amounts not reported in another column.

Notes:

• (1) Mr. Desmarais was appointed as President and a director on October 27, 2010 and as Chief Executive Officer on December 31, 2010. As at December 31, 2014, $390,000 of Mr. Desmarais compensation has been accrued and remains unpaid. As at December 31, 2014, Mr. Desmarais has also provided the Corporation with a loan of $257,645 for working capital. No interest is payable on the loan and Mr. Desmarais can seek full re-payment of the loan at any time.

• (2) Mr. Serin served as Chief Financial Officer from December 23, 2010 to February 18, 2014. As at December 31, 2014, $72,500 of Mr. Serin's compensation has been accrued and remains unpaid.

• (3) Mr. Shivji served as Chief Financial Officer from June 2, 2014 to October 1, 2014.

• (4) Mr. Peng was appointed as Chief Financial officer on October 26, 2014. Mr. Peng's services are provided through Marrelli Support Services ("MSSI"). This amount also includes the costs for book-keeping and accounting services provided to the Corporation by MSSI.

• (5) The fair value of the stock options granted on June 10, 2014 was calculated ~~a~~ ssuming 10% forfeiture rate of the stock options prior to expiry, a volatility of 166%, a risk free interest rate of 1.6%, a 5 year term and vesting one third on grant date, one third six months after grant date and one third eighteen months after the grant date, using the Black- Scholes valuation model.

• (6) On May 21, 2014, the Corporation received approval from TSX-V to re-price the exercise price of the 7,250,000 stock options granted on January 20, 2011 from $0.17 per share to $0.05 per share. These options were already fully vested on the date of the re-pricing. The incremental increase in fair value of these stock options resulting from the re-pricing was $15,455, calculated using the Black-Scholes valuation model with the assumptions of 0% forfeiture rate of the stock options prior to expiry, a volatility of 199%, a risk free interest rate of 1.1%, a expected life of 1.67 years.

Incentive Plan Awards for Named Executive Officers

Outstanding Share-Based Awards and Option-Based Awards

The following table sets forth information concerning all option-based and share-based awards for each Named Executive Officer that were granted before, and remain outstanding as of the most recently completed fiscal year ended December 31, 2014.

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Notes:

(1) The option-based awards relate to those stock options awarded pursuant to the Corporation’s Amended and Restated Stock Option Plan. (2) The value of unexercised in-the-money options was calculated based on the difference between the closing price of the shares underlying the options as at December 31, 2014, which was $0.05, and the exercise price of each option.

Incentive Plan Awards – Value Vested or Earned During the Fiscal Year Ended December 31 , 2014

The following table provides information concerning the value of incentive plan awards of the Corporation with respect to each Named Executive Officer during the fiscal year ended December 31, 2014. The Corporation did not grant any incentive plan awards to Named Executive Officers during the fiscal year ended December 31, 2014.

Note:

(1) The value of option-based awards was calculated based on the difference between the closing price of the shares underlying the options as at the vesting date and the exercise price of each option.

Pension Plan Benefits

The Corporation does not have any pension plans that provide for payments of benefits at, following or in connection with retirement or provide for retirement or deferred compensation plans for its Named Executive Officers or directors.

Termination and Change of Control Benefits

On January 20, 2011, the Board authorized the Corporation to enter into a consulting agreement with Luc Desmarais, President and Chief Executive Officer of the Corporation, which provides for compensation of $120,000 per annum. The Board also approved termination provisions entitling Mr. Desmarais to receive: (i) 9 months' notice, or payment in lieu thereof, in the event the Corporation terminates his consulting duties, other than for cause, and (ii) 18 months' notice, or payment in lieu thereof, if the termination is a result of a change of control, takeover bid or similar transaction. In the event that Mr. Desmarais was terminated without cause and without notice on December 31, 2014, then based on his current salary of $120,000 per annum, Mr. Desmarais would be entitled to a severance payment of $90,000. In the event that Mr. Desmarais was terminated on December 31, 2014 as a result of a change in control of the Corporation, then Mr. Desmarais would be entitled to a severance payment of $180,000.

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COMPENSATION OF DIRECTORS

Summary Compensation Table for Directors

The following table sets forth information concerning the annual and long-term compensation in respect of the directors of the Corporation, other than the Named Executive officers, during the fiscal year ended December 31, 2014. For details of the compensation for the Named Executive Officers who are also directors of the Corporation, see disclosure in " Summary Compensation Table for Named Executive Officers ".

Note:

(1) The value of option-based awards was calculated based on the grant date fair value of the award. See the section entitled " Summary Compensation Table for Named Executive Officers " for an explanation of the methodology used to calculate the dollar amount of option-based awards.

Material Factors Necessary to Understand Director Compensation

Directors who are not executive officers of the Corporation are not currently paid any fees for their services as directors; however, such directors are entitled to receive compensation from the Corporation to the extent that they provide services to the Corporation. Any such compensation is based on rates that would be charged by such directors for similar services to arm's length parties at fair market rates. Other than as disclosed herein, during the fiscal year ended December 31, 2014, no remuneration was paid to such directors by the Corporation. The directors are also entitled to receive stock options under the Corporation’s Amended and Restated Stock Option Plan. No stock options were granted to any directors of the Corporation during fiscal year 2014.

Incentive Plan Awards for Directors

Outstanding Share-Based Awards and Option-Based Awards

The following table shows all outstanding share-based and option-based awards held by each director (other than the directors who were also Named Executive Officers and for whom identical information is shown in the comparable table for Named Executive Officers set out above) as at December 31, 2014.

Note:

(1) The value of unexercised in-the-money options was calculated based on the difference between the closing price of the shares underlying the options as at December 31, 2014, which was $0.05, and the exercise price of each option.

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Incentive Plan Awards – Value Vested or Earned During the Fiscal Year Ended December 31 , 2014

The following table provides information concerning the incentive plan awards of the Corporation with respect to each director of the Corporation during the fiscal year ended December 31, 2014.

Notes:

(1) The value of option-based awards was calculated based on the difference between the closing price of the Shares underlying the options as at the vesting date and the exercise price of each option.

(2) During the financial year ended December 31, 2014, the Corporation granted Mr. Patterson 2,000,000 options at an exercise price of $0.05 and Fletcher 1,250,000 options at an exercise price of $0.05.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER THE EQUITY COMPENSATION PLAN

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth aggregated information as at December 31, 2014 with respect to the Corporation’s Amended and Restated Stock Option Plan, which is the only compensation plan under which equity securities of the Corporation are authorized for issuance to employees or non-employees such as directors and consultants.