Corporate Presentation. June 2012

Transcription

1 Corporate Presentation June

2 Forward Looking Statements This presentation contains projections and forward-looking information that involve various risks and uncertainties regarding future events. Such forward looking information can include without limitation statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance of the Corporation. These risks and uncertainties could cause actual results and the Corporation s plans and objectives to differ materially from those expressed in the forward-looking information. Actual results and future events could differ materially from those anticipated in such information. These and all subsequent written and oral forward-looking statements are based on estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice. The Corporation assumes no obligation to update forward-looking information should circumstances or management s estimates or opinions change. 2

3 Company Overview CE was formed in 2006 IPO Completed in November 2006; TSX-V:CE Aggregated 107 gross sections of oil and gas tenures in NEBC Total Capital Raised $40 million CE closed on 2 stock for stock acquisitions valued at approximately $31 million 82.3 million shares (basic), 89.9 million shares fully diluted Management and Directors own 18.5% on a fully diluted basis Management and Directors comprise 197 years collective, executive oil and gas experience 3

4 Investment Highlights CE has assembled 67,918 gross acres of lands in Northeast British Columbia strategically located on two high impact natural gas resource plays CE and its Principals have effected approximately $100 million of exploration and development expenditures on CE lands. CE has partnered with industry leaders in their respective gas resource play specialties; Crew Energy (TSX: CR) Aduro Resources 42 BCFE (7.0 mmboe) 2P net reserves Dramatically undervalued relative to area comparables CE is extraordinarily leveraged up in resource potential relative to its peers with 2.6 TCF of prospective gas resources. 4

5 Leadership: 164 Years Combined Oil & Gas Executive Experience Management Title Experience John Proust Chairman & CFO President, J. Proust & Associates Inc: 25 years advising public and private companies on debt and equity financing, mergers and acquisitions and corporate restructuring; CEO New Zealand Energy Corp Benjamin M. Jones President & CEO Founder of Peace River Project; 33 years in oil and gas exploration and production, including last 10 years focused on unconventional gas in northeast British Columbia. BS Mechanical Engineering. Eileen Au Roger Hebert Corporate Secretary Senior Geologist Extensive senior management experience in a variety of public companies in the areas of finance, compliance, business development, strategic planning and corporate restructuring. BS MS Geology LSU 38 years experience; Getty Oil 2 yrs, Campbell Energy 4 yrs, partner in Baton Rouge Exploration 4 yrs, President and owner Legacy Energy 28 yrs. Directors Title Experience John Proust Chairman President, J. Proust & Associates Inc.; 25 years advising public and private companies on debt and equity financing, mergers and acquisitions and corporate restructuring; CEO New Zealand Energy Corp. Benjamin M. Jones Director Founder of Peace River Project; 33 years in oil and gas exploration and production, including last 10 years focused on unconventional gas in northeast British Columbia. BS Mechanical Engineering. Pat Bolin Director Chairman, President and Chief Executive Officer of EagleCorp. and Eagle Oil & Gas Co., which have production activities from over 600 wells in ten states. Mr. Bolin is also the Chairman of Beacon National Insurance Corporation, an advisory director of Compass Bank and a director and member of the executive committee of Fidelity Bank, Wichita Falls. Kyle Burnett John Howard Director Director President, Arcadia Exploration & Production Company and Triumph Pacific Oil and Gas Corporation; 27 years in exploration and production of oil and gas. CEO, Carrollton Interests Inc., previously CEO of Summit Energy (acquired by Bayou Bend Petroleum Ltd. (TSX-V: BBP) in January 2007); 23 years in exploration and production of oil and gas. 5

6 CE Land Base & Pipeline Access Gross Acres Net Acres Shallow: 58,613 57,341 Deep: 51,322 27,799 T Pipeline Shallow & Deep Deep Only Shallow Only CE Land Secure to With 1-2 additional wells in 2014, combined with reserves, CBM and First Nation extensions, > 85% of Montney lands should be preserved through 2019(1). 6 (1) Subject to policy changes by British Columbia Energy and Mines

7 Progress Talisman Petronas Cypress Altares Talisman/Sasol Canbriam Farrell Projects Arc & Terra Halfway River Monias Septimus Crew, CNRL Petrobank Saturn Shell, Arc Sunrise Shell, Arc Talisman Montney Trend Reference Canada Energy Dawson Field Encana Arc Groundbirch Shell PetroChina Talisman Swan Field Encana Cutbank Ridge Encana/Mitsubishi Tupper Murphy 7

8 Regional Ownership Map ADURO ARC CEP CNRL CREW CSRI SINOPEC DEVON PACE PENNGROWTH SHELL TALISMAN TERRA TERRA NON MONTNEY 8

9 Well Economics of Emerging Plays Source: Morgan Stanley Research Report August

10 Peace River Block Activity CE Montney Well Talisman Farrell Project 7 bcf/well EUR s indicated by well performance 120 bcf/section 3P+ contingent resources Talisman's Farrell Project >$1 billion CAPEX over the last 24 months $2 billion JV with sasol Average 450 bcf/section gasin-place 3 rigs currently operating CE/Crew c-20-e IP = 4.4mmcf/d 4 stage frac, 1000m lateral, DGIIP=171 bcf/section by Sproule IP = 2.4 mmcf/d CE-Crew 9-23 DGIIP = 207bcf/section Doig/Upper Montney Only by Sproule 10

11 Peace River Cross Section South-North CE CE Talisman Talisman 11

12 Talisman s Farrell Creek Type Curve Average OGIP/Section = 450 Bcf From Talisman s November 2011 Corporate Presentation 12

13 Talisman Altares Analysis Conventional core confirming that the Lower Montney has equivalent or better productive characteristics than the Upper Montney despite poorer log characteristics. 13

14 Monias Activity Map 5 Permits vertically stacked at 5 horizons 14

15 Shell Completion Test Summaries 15

16 Monias Montney Cross Section Pengrowth Shell CE

17 CE s Total Prospective Gas Resource CE s lands are bracketed by Talisman/Canbriam on the northwest and PennGrowth/Shell/PetroChina on the southeast. Talisman estimates 450 BCF gas-in-place per section at Farrell. PennGrowth had ascribed 132 BCF gas-in-place per section by GLJ on their first 5 sections in the Upper Montney only. CE has an average gas-in-place of 189 BCF/section between its first 2 wells at Peace River in the Doig Phosphate and Upper Montney only. Talisman estimates 26% recovery factors in the Doig/Montney. Talisman estimates 7 BCF/well EUR Assuming an equivalent recovery factor yields 2.1 TCF prospective resource net to CE from the Doig & Upper Montney alone. 500 BCF gas resource potential from the CBM Project 2.6 TCF (*) total prospective resource net to CE. * Prospective resources are those quantities of oil and gas estimated on a given date to be potentially recoverable from undiscovered accumulations. If discovered, they would be technically and economically viable to recover. There is no certainty that the prospective resources will be discovered. 17

18 Raw Acreage Valuation 18

19 Reserve/Resource Evaluation 19

20 Strategic Acquisition Hudson s Hope Gas Ltd. ( HHG ) CE acquired all the outstanding shares of HHG in June 2012 for 2 million shares of CE stock. This acquisition was strategic for the following reasons: 1. Consolidated ownership and operations of the CBM project in CE. 2. Consolidated ownership and control of the Peace River CBM Gas Plant which as a $8 million (100%) replacement cost. This gas plant is a key asset in both the CBM and Montney developments. 3. Consolidated ownership and control of the only water disposal wells within 35 miles of the Peace River Project. These disposal wells are critical to the commercial development of both the CBM and the Montney Shale. 20

21 Total US and Canadian Natural Gas Supply 21

22 US Lower 48 States Natural Gas Withdrawals Probable tipping point corroborated by the 25% net gas price increase since April low. 22

23 Canadian Gas Production; Gulf of Mexico Gas Production; Louisiana Haynesville Production 2012 Estimate by Arc Financial 23

24 Crude Oil to Natural Gas Price Ratio An unprecedented price ratio blowout! Clearly unsustainable long-term. This has led to a massive redeployment of capitol to crude and liquids-rich plays. 24

25 Gas Directed Rig Count Gas Rigs The US rig count has gone from 15% oil-directed to 71% oildirected and the inversion trend continues Currently, 29% of rigs are gas directed. Source: Baker Hughes Oil Rigs This trend will impact North American gas supply; the question is when and how sharply. A Henry Hub price of $US 4.00/MMbtu is not a price that is sustainable in North America.the long-term marginal cost of maintaining production is between $5.00 and $6.00, if not higher. What we do know is that the annual decline rate on all US gas production has steepened from 21% in 2003 to over 30% now. So, when change comes it will come quickly, which always seems to be the case in this business. Peter Tertzakian, Calgary Herald, Jan 10 & 18,

26 Summary CE is an emerging Canadian exploration & production company 107 gross sections strategically located on 2 major gas resource plays Approximately $100 million historical investment in exploration & development on CE lands 2 strategic/technical joint ventures with industry leaders 42 BCFE (7.0 mmboe) 2P Reserves 2.6 TCF of prospective gas resources 26

27 Go Forward CE Market View Gas Markets will strengthen Unleveraged balance sheet with staying power The Company s land base has long tenures Offset activity continues to de-risk and strengthen the merits of the Company s resource base. Exercise patience and fiscal discipline while pursuing: Farmout Joint Venture Partial Asset Sale Merger Equity 27

28 Tt CONFIDENTIAL CE/Crew s Portage on the cover of Oil & Gas Journal

29 Stratigraphic Overview Shallow Targets Other Potential Deep Targets Deep Rights Targets A-1 7

30 Appendix B: Peace River CBM Project Summary 78 Gross Sections of CBM Rights; 22 wells drilled to date on Project Gas Plant & Pipeline Constructed in wells put on production at end of 2008 Preliminary Netherland Sewell Resource Assessment in June 2012 ascribed 497 BCF net to CE of P4 * Resources Field currently shut-in pending better gas prices Currently researching new horizontal drilling and completion techniques which could potentially make the CBM competitive with shale gas economics. * Includes proved, probable, possible, & contingent resources B-1

31 Regional Gething Structure Map All CE lands strategically situated on a major 5 positive structural feature on the Peace River Arch B-2

32 Peace River CBM Project Area Area of Initial Development Gas Plant B-3

33 Net Coal Isopach Net Coal Thickening Southwesterly B-4

34 Total Gas & Water Production Total Gas & Water Production, US units Normalized Average Production per well= 71 mcf/d & 168 bw/d Production Normalized 52%/Yr Incline Gas Volumes, Mcf Water Volume, bbls Field Shut in April 16, Pump Replacement/ Workover 0 0 Gross Gas Produced Net Gas Sales Total Produced Water Linear (Gross Gas Produced) B-5