Arsenal Energy Inc. May 2014

Transcription

1 Arsenal Energy Inc. May 2014

2 Forward Looking Information Certain information regarding Arsenal Energy Inc. (the Company ) contained in this presentation, including statements regarding management s assessment of future plans and operations, the timing of drilling, tie-in and commencement of production of new wells, productive capacity and economics of new wells and alternatives for increasing liquidity, may constitute forward-looking statements under applicable securities laws. The forward looking statements are based on certain key expectations and assumptions made by the Company, including expectations and assumptions concerning the success of optimization and efficiency improvement projects, the availability of capital, the success of future drilling and development activities, the performance of existing wells, the performance of new wells, prevailing commodity prices, the availability of labor and services, the geological nature of the formations targeted by the Company and the success of completion and recompletion activities. Although the Company believes that the expectations and assumptions on which the forward looking statements are based are reasonable, undue reliance should not be placed on the forward looking statements because the Company can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas in0dustry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations, changes in the regulatory regime applicable to the Company and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in the Company's Annual Information Form will be filed on SEDAR and can be accessed at on filing. The forward looking statements contained in this presentation are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. In this presentation the calculation of barrels of oil equivalent (boe) is calculated at a conversion rate of six thousand cubic feet (Mcf) of natural gas for one barrel (Bbl) of oil based on an energy equivalency conversion method primarily applicable to the burner tip and does not represent a value equivalency at the wellhead. Boes may be misleading particularly if used in isolation. 2

3 Estimated 2014 Payout Ratio 80.00% 70.00% 60.00% Payout Ratio Yield Debt/Cash Flow (% of Cash Flow) Arsenal 8.4% 3.9% 1.4 Group ave 30% 6.1% % 40.00% 30.00% 20.00% 10.00% 0.00% AEI TET LTS LRE PEY ERF BNP PWT TBE WCP CJ VET ARX ZAR SGL SGY PGF CPG BNE BTE EGL AET 3

4 Arsenal Corporate Information Corporate Summary Current Production: 4,000 Boe/d Production Split: Light Oil 40 % Medium Oil 33 % Natural Gas 27 % Shares Issued and Outstanding: 16.1 Million Total Insider Ownership: 27 % Management and Directors (Basic): 14 % Management and Directors (Fully Diluted): 22 % 4

5 Cash Flow ($MM) Cash Flow Growth 60.0 $3.10 per share $2.38 per share 30.0 $1.85 per share $1.99 per share 20.0 $1.37 per share Est Year 5

6 Core Areas of Operation Desan, BC Gas 600Boe/d Alberta Saskatchewan Evi, Alberta Light Oil 150 Boe/d Greater Provost, Alberta Medium Oil: 950 Boe/d Development and Exploration - Dina, Cummings, Sparky Viking, Waseca Columbia Deep Basin, Alberta Liquids Rich Exploration - Cardium and Falher - 50% WI in 48 sections Canada North Dakota Light Oil 1,500 Boe/d Development Stanley and Lindahl -Multi year Inventory -Low risk Exploration Rennie Lake -Adding Additional Acreage USA Princess, Alberta Medium Oil: 1,400 Boe/d Development and Exploration - Mannville channels 6

7 Princess Core Area Legend Producing Wells 2014 Q2 Drills day Avg Prod : 560 Boe/d day Avg Prod: 280 Boe/d day Avg Prod : 585 Boe/d Princess Current Production: 1,400 Boe/d Land Position: 25,603 Net Undeveloped Acres Production Mix: 64 % Oil 36 % Gas 2014 Activity Locations: 10 Planned 2 Complete Exploration Zone: Mannville Multi-Zone 7

8 Princess - Mannville Economics Type Wells 100 % WI / FS Price Mannville Type Well Production and Reserve 30 day Initial Production (boe/d) 140 Full Year Average Production (boe/d) 84 Reserves Mboe 81 Capital Drill / Complete / Equip / Tie In (000 s) 1,600 Metrics F&D Recycle Ratio 2.7 Discounted Cash Flow Before Tax Rate of Return % 82% BT NPV10 (000 s) 1,293 8

9 Bakken / Three Forks Land Position Area Net Mineral Acres Stanley 4,182 Lindahl 743 Regional Permeability Barrier Rennie Lake / Black Slough 7,753 Total: 12,678 Rennie Lake / Black Slough Lindahl Stanley 9

10 Stanley North Dakota Craig Allen and Allison Ann Drilled WOC Legend Producing Wells 2014 Drills Operations Future Drills Current production: 970 boe/d Remaining locations: 24 gross 8 net 31.27% Field netback: $55 / boe 2014 Activity 3 Gross wells % 59.38% 1.81 Net wells Jon R On Flow Back 13.99% 3.13% 20.31% 35% 80.14% 31.25% Dylan 225 BBL/d Sauber WO Rig, Q4 EOG location

11 Lindahl Bakken & Three Forks Legend Producing Bakken Producing Three Forks Planned 2014 drills Jerol 2-27H Threeforks IP: ~1200 BBL/d Apr 16, % 6.30% Operations Current production: 260 Boe/d Net Mineral Acres: 743 Average working interest: 7.5% Identified locations: 42 gross 3 net Field netback: $52.00 / Boe 2014 Planned Activity 8.0 Gross wells 1.0 Net wells XTO Lyla Pad: Drilled, WOC 3 Well Pad 15.2% 11.47% XTO Blikrie Pad: Drilled, WOC 6.25% 11

12 North Dakota Bakken Economics Figures presented are on a per well basis Production and Reserves Economics Stanley & Lindahl Initial Production (30 day) (Boe/d) 632 Full Year Average Production (Boe/d) 267 Reserves ( P+P MBoe) 515 Decline Rate first year 60% second year 30% third year 15% Drill / Complete / Equip / Tie-In (000 s) $8,400 Field net back ($/bbl) $56.75 Capital efficiency (well cost/ 12 month average production) $31,500 Finding & Development Cost (per well cost/per well reserve) $16.57 Recycle Ratio (netback/finding and development cost) 3.4X Before Tax Rate of Return 35% BT NPV10 (000 s) (1) $4,800 Drilling Inventory Gross 70 Net 11 1) Economics are based on a 2 mile horizontal type well at a 100% working interest. 12

13 Columbia Area Play Overview AEI Fahler Drill Arsenal Energy Land: 12,760 Net Acres (Cardium and Wilrich rights only) AEI Cardium Drill Industry Cardium Drill W5 Vertical Completion W5/2 Volumetric Parameters Cardium Porosity (%): 9 Water Saturation (%): 25 Thickness (m): 12 Area (acres): 640 Recovery Factor(%): 75 Liquid Content (Bbl/MMcf): 50 Original Raw Gas in Place / section (Bcf): 17.6 Rec. Reserves / well (2 well/section) Gas (Bcf): 3.9 Liquids (MBbl): 227 Volumetric Parameters Fahler Porosity (%): 12 Water Saturation (%): 30 Thickness(m): 5 Area(acres): 640 Recovery Factor(%): 50 Liquid Content (Bbl/mmcf): 39 Original Raw Gas in Place / section (Bcf): 11.5 Rec. Reserves / well (1 well/section) Gas(Bcf): 6.4 Liquids(Mbbl):

14 Arsenal - Drilling Inventory Drill Locations: Bakken / ThreeForks Gross Locations Net Locations Gross UERR/well (Boe) Development Time Frame Estimate 1280 Acre Stanley (oil) Acre Lindahl (oil) Acre Rennie Lake (oil) Southeast Alberta Columbia Princess (oil) Provost (oil) Cardium (liquids rich gas) Fahler (liquids rich gas) Total In House Locations:

15 Capitalization and Valuation Valuation Summary (as at May 2, 2014) Capitalization Share Price $ 6.65 Shares Outstanding (basic MM) 16.1 Market Capitalization ($MM) 107 Bank Debt ($MM) 70 Credit Facility ($MM) 90 Enterprise Value ($MM) 177 Net Debt/2014 CF 1.4 Hedges ,500 bbl/d Trading Metrics Q bbl/d est. Cash Flow ($MM) 50.0 P+P Reserves (MMBoe) est. CFPS $ 3.10 EV/P+P Reserves ($/Boe) P/CF E 2.1X EV/CF 2013E 3.5X Proven Reserves (MMBoe) 8.8 Current yield 3.9% EV/Proven Reserves ($/Boe) Current Production (Boe/d) 4,000 EV/boe/d - current ($/Boe/d) $44,000 15

16 Arsenal Energy Inc. May 2014