CANADA SHALE: CHALLENGES & OPPORTUNITIES PRESENTED BY:! JOSHUA SOLOWAY! MANAGING DIRECTOR! RAINMAKER NEW YORK!

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1 CANADA SHALE: CHALLENGES & OPPORTUNITIES PRESENTED BY:! JOSHUA SOLOWAY! MANAGING DIRECTOR! RAINMAKER NEW YORK!

2 WHO IS RAINMAKER? Rainmaker is a recognized leader in market expansion and strategic business development for the energy sector. The Rainmaker team has helped hundreds of companies to access new markets, both domesically and internaionally. Our professionals work closely with clients to develop & implement comprehensive market entry plans, enhance market exposure, and win business.

3 TOPICS CANADIAN ENERGY AT A GLANCE RISE & FALL OF SMALL/MIDMARKET E&PS SHALE & TIGHT OIL & GAS PLAYS ROYALTIES INDUSTRY CHALLENGES OPPORTUNITY ANALYSIS CONVERTING OPPORTUNITIES 3

4 CANADIAN OIL & GAS AT A GLANCE Natural Gas Oil Produc/on bopd Reserves (tcf) ProducIon (bcfd) Export (bcfd) Total Canada 3,742 Western Canada 3,670 - Oilsands 2,305 DomesIc ConsumpIon (bcfd) * Source: CAPP, June Non- oilsands 1 1,365 Eastern Canada 220 Oil Reserves Oilsands Non- oilsands 1 Total bbls 168B 5B 173B 1 Includes light, medium, heavy & condensate * Source: Canadian AssociaIon of Petroleum Producers (CAPP), June 2015

5 REVERSAL OF FORTUNE: JUNIOR & MIDMARKET ATTRITION JUNIOR & MIDMARKET PLAYERS DWINDLING * Number of Canadian E&Ps producing ,000 boepd

6 SHALE & THE RISE OF THE JUNIORS

7 CANADA SHALE/ TIGHT OIL & GAS Key Plays

8 KEY TIGHT OIL PLAYS Sources: June Warren Nickels (JWN), 2015 Canadian Society for UnconvenIonal Resources (CSUR), 2015

9 TIGHT OIL PLAYS BAKKEN / TORQUAY! ProducIon: 8.0% "! New Wells Drilled: 9.8% "! D&C Costs: 20% " CARDIUM! ProducIon: 9.5%"! New Wells Drilled: 65% "! D&C Costs: 15-30%" Source: JWN / CanOils Data, 2015 VIKING! ProducIon: 0.1%#! New Wells Drilled: 38%"! D&C Costs: 22%"

10 TIGHT OIL: TRENDS Noteworthy Trends: Drilling in Ight oil plays has declined rapidly 43% decline in new wells drilled ProducIon in Ight oil plays is slowly declining 7% decline in producion Drilling & CompleIon Costs declining quickly 15-30% lower operaing costs Increasing use of Waterfloods to limit decline rates and improve ulimate recoveries

11 KEY SHALE / TIGHT GAS PLAYS Sources: June Warren Nickels (JWN), Canadian Society for UnconvenIonal Resources, 2015

12 SHALE / TIGHT GAS PLAYS MONTNEY! ProducIon: 16.7% #! New Wells Drilled: 9.8% " DUVERNAY! ProducIon: 24%#! New Wells Drilled: 12.5% #! D&C Costs: 50%" DEEP BASIN (WILRICH / FAHLER)! ProducIon: 34%# Source: JWN / CanOils Data, 2015! New Wells Drilled: 18%"! D&C Costs: 30%"

13 SHALE / TIGHT GAS TRENDS Noteworthy Trends: Drilling in Ight/shale gas plays has declined 29% decline in new wells drilled ProducIon in Ight/shale gas plays is rising 10% increase in total producion 24% increase in gas producion Drilling & CompleIon Costs declining quickly Up to 30% lower operaing costs (50% in Duvernay!) TargeIng dry gas and condensates due to lower NGL prices Driving ProducIvity through Increased length, number, and intensity of fracs

14 CANADA: ROYALTIES RoyalIes vary based on numerous factors (province, producer, prices, stage of producion/development, investment, oil weighing, locaion, etc.) Example: established, convenional well producing 33 bpd AB: 7% (04/2015) / 32% (04/2014) SK: 15% (Today) / 18% (04/2015) ND: 24% TX: 23%

15 CANADA: CHALLENGES INDUSTRY CHALLENGES:! TRANSPORTATION CONSTRAINTS! INFRASTRUCTURE NEEDS! POLITICAL UNCERTAINTY! WATER! COMMODITY PRICES! CAPITAL ACCESS

16 CANADA CHALLENGES: HEALTH, SAFETY, & ENVIRONMENT Health & Safety is a Top Priority $ Increasing alenion on Health & Safety of workers and local communiies Environmental Controversy Heightens AZen/on $ Impact of Environmental Groups varies by jurisdicion $ Government & industry push for more environmental responsibility

17 CANADA: OPPORTUNITIES INDUSTRY OPPORTUNITIES! RECAPITALIZATIONS! DISCOUNTED ASSET ACQUISITIONS! INFRASTRUCTURE PROJECTS! ENVIRONMENTAL SOLUTIONS (WATER, ETC.)! SUPPLY CHAIN DISRUPTION! REWARDING EFFICIENT OPERATORS! CAPITAL PROVIDERS

18 Value proposi/on Product InnovaIon Warranty Design Service Delivery Support Quality Price

19 STRATEGIC MARKET ENTRY PLANNING Market Intelligence Data Test Define Strategy Strategic Market Plan Execute Plan

20 Special Thanks

21 Joshua Soloway Managing Director gbd.com