Corporate Presentation, November 2017

Transcription

1 Corporate Presentation, November 2017

2 Advisory This presentation is for informational purposes only and is not intended as a solicitation or offering of securities of Traverse Energy Ltd. ( Traverse or TVL ) in any jurisdiction. The material presented is not intended to modify, qualify, supplement or amend information disclosed under corporate and securities legislation of any jurisdiction applicable to Traverse and should not be used for the purpose of making investment decisions concerning Traverse securities. Forward Looking Information Certain statements contained in this presentation constitute forward-looking information and are based upon the estimates and opinions of the Company s management at the time the statements are made. The use of any of the words could, expect, believe, will, projected, estimated and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on Traverse s current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. These statements relate to the Company s corporate strategy, reserves and resources estimates, the Company s 2017 exploration and development program including the planned completion of a Duvernay well at Chigwell, type curve production estimates for the Duvernay project, the planned recompletion of a well at Watts and the Company s 2017 capital program. Traverse s Annual Information Form filed with securities regulatory authorities (accessible through the SEDAR website describes the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. Traverse disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws. Barrels of Oil Equivalent Natural gas reserves and volumes contained herein are converted to barrels of oil equivalent (BOE) on the basis of six thousand cubic feet (mcf) of gas to one barrel (bbl) of oil. The term barrels of oil equivalent may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 mcf to 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Original Oil in Place ( OOIP ) OOIP is equivalent to Total Petroleum Initially-In-Place ( TPIIP ). TPIIP, as defined in the Canadian Oil and Gas Evaluations (COGE) Handbook, is that quantity of petroleum that is estimated to exist in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, at a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered. A portion of the TPIIP is considered undiscovered and there is no certainty that any portion of such undiscovered resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of such discovered resources. A significant portion of the estimated volumes of TPIIP will never be recovered. Due to the uncertainty as to how the Duvernay will be developed and the lack of definition of a recovery project for the OOIP at this time, the OOIP estimates disclosed herein are the most specific assignable category that can be provided at this time. Type Curves Certain type curve disclosure presented herein represents estimates of the production decline and ultimate volumes expected to be recovered over time. Type curves are useful in confirming and assessing the potential for the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter and are not necessarily indicative of long-term performance or long term economics of the relevant well or fields or of ultimate recovery of hydrocarbons. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production or performance of Traverse.

3 Advisory Analogous Information Certain information in this presentation may constitute analogous information as defined in NI , including, but not limited to, information relating to the areas in geographical proximity to lands held or to be held by Traverse. Traverse believes this information is relevant as it helps to define the reservoir characteristics in which Traverse may hold an interest. Traverse is unable to confirm that the analogous information was prepared by a qualified reserves evaluator or auditor or in compliance with the COGE Handbook. Such information is not an estimate of the reserves or resources attributable to lands held or to be held by Traverse and there is no certainty that the reservoir data and economics information for the lands held or to be held by Traverse will be similar to the information presented herein. The reader is cautioned that the data relied upon by Traverse may be in error and/or may not be analogous to such lands held or to be held by Traverse. Non-IFRS Measures In this presentation references are made to certain financial measures (such as funds from operations and operating netback) which do not have standardized meanings prescribed by IFRS and therefore may not be comparable to the calculation of similar measures by other entities. Management uses certain industry benchmarks such as operating netback to analyze financial and operating performance. There are no comparable measures in accordance with IFRS for operating netback. Management believes that in addition to net income (loss), these non- IFRS measures are useful supplemental measures as they assist in the determination of the Company's operating performance, leverage and liquidity. Investors should be cautioned however, that these measures should not be construed as an alternative to both net income (loss) and net cash from operating activities, which are determined in accordance with IFRS, as indicators of the Company's performance. Funds from operations - Funds from operations represents net cash from operating activities prior to changes in non-cash working capital and settlement of decommissioning obligations as detailed below: (in $ thousands) Q Net cash from operating activities 1,081 2,247 7,598 Decommissioning expenditures Change in non-cash working capital (362) (617) (479) Funds from operations 769 1,723 7,262 Operating netback - Operating netback represents revenue, less royalties, operating and transportation expenses. Operating netback per BOE is the operating netback divided by barrels of oil equivalent production volume for the applicable period. The calculation of Traverse s operating netback is detailed under the Commodity Pricing, Production and Operating Netbacks slide.

4 The Company Recapitalization of Firstland Energy Ltd. June, 2009 New management & name changed to Traverse Energy Ltd. June, million shares issued million shares fully diluted Management and directors: 23.6% (27.3% fully diluted) ownership Private placement October 2017 for gross proceeds of $5.4 million

5 Corporate Strategy & Management Growth through the drill bit (predominantly 100% working interest) Exploring for new oil pools that can be exploited by vertical and horizontal drilling Maintain a significant undeveloped land base Focused on oil in southern and central Alberta Management Team Laurie Smith, P. Geol., President & CEO David Erickson, P. Geol. Vice President & COO Sharon Supple, CA, CFO Management History 25 years together as senior management (Petromet Resources Limited, Raven Energy Ltd., Traverse Energy Ltd.)

6 Financial Highlights (in $ thousands except where stated) Q Petroleum & natural gas revenue $2,173 $7,220 $12,882 Net loss (538) (3,434) (2,762) Funds from operations 769 1,723 7,262 Expenditures before disposition 2,024 6,613 11,444 Working capital (deficiency) (286) 1, Credit facility of $7 million

7 Annual Reserves, Production and Land As at December 31, *Proved reserves (mboe) 1, , ,343.8 *Proved + probable reserves (mboe) 2, , ,920.4 Production (BOE/d) 690 1, *F & D Costs (Proven/BOE) $44.66 $17.47 $59.59 *F & D Costs (P + P/BOE) $53.52 $20.06 $41.12 Undeveloped land holdings: Net acres (000 s) Average working interest (%) *2014 restated to exclude GORR

8 Commodity Pricing, Production and Operating Netbacks Q Average Sales Price Natural gas ($/Mcf) $2.25 $2.37 $3.09 Oil and NGL ($/bbl) $53.27 $43.51 $49.54 Average daily production (BOE) ,011 Netback per BOE ($/BOE) Petroleum & natural gas revenue $32.42 $28.60 $34.90 Royalties $0.82 $0.80 $1.13 Operating $14.83 $15.14 $10.96 Transportation $1.69 $1.69 $1.73 Operating netback $15.08 $10.97 $21.08

9 Areas of Activity Undeveloped Land Holdings (November, 2017) Gross Acres Net Acres Duvernay Shale Oil 64,500 64,500 Greater Coyote 125, ,600 Turin 2,860 2,860 Non-Core 5,760 5, , ,095 Average Working Interest: ~100%

10 Duvernay East Shale Basin The East Shale Basin is a light oil resource play in the initial phases of evaluation and relatively unexplored. Potential of 7 to 16 MMbbls of original oil in place per section. Drilling and land sale activity has significantly increased. Active players are Vesta, Artis, Raging River, Rife and InPlay. Traverse drilled its first Chigwell Duvernay well in October The Duvernay well will be fracture treated in late November. Duvernay Formation Gross Isopach East Shale Basin (ERCB/AGS Open File Report )

11 Traverse Chigwell Land Position and First Location TVL W4 =Deep Control Wells 27,840 Net Acres (43.5 sections) Crown and Freehold, 100% working interest. 1,840 Net Acres (2.875 sections) Freehold options, 100% working interest.

12 Duvernay East Shale Basin Log Comparison Traverse will be targeting the thick Upper Duvernay zone at Chigwell.

13 Chigwell HZ Duvernay Well Schematic The first well uses existing pilot holes drilled in 1964 and 1971 for horizontal well control. Logs indicate 24 meters (average) of organic rich Upper Duvernay.

14 Chigwell Upper Duvernay Original Oil In Place (OOIP) Well Depth Net Pay 2050 meters TVD 24 meters Water Saturation 10% Porosity 6% Shrinkage 0.74 OOIP 15.4 MMbbls per section

15 Creating Reservoir in Brittle Duvernay Shale All rock composition data gathered at Chigwell plots within ellipse. Upper Duvernay falls in the field of higher brittleness similar to the Eagleford and Bakken resource plays. Mineralogy is ideal for horizontal drilling and multi-stage fracturing.

16 Calendar Oil Production (bbls/d) East Duvernay Oil Production Significant Improvement in Recent Wells - More frac sand per meter - Closer perforation spacing - Longer lateral length Months of Production TVL High Type Curve TVL Medium Type Curve TVL Low Type Curve Vesta 00/ W4 Vesta 00/ W4 Vesta 00/ W4 Artis 02/ W4 Artis 03/ W4 Vesta Historical Production

17 Calendar Oil Production (bbls/d) East Duvernay Cumulative Oil Production and Costs Cumulative Oil Production (bbls) Traverse First Well Capital Costs: Drilling = $2.3mm Completion = $3.7mm Tie-In = $0.5mm Total = $6.5mm TVL High Type Curve TVL Medium Type Curve TVL Low Type Curve Vesta 00/ W4 Vesta 00/ W4 Vesta 00/ W4 Artis 02/ W4 Artis 03/ W4 Vesta Historical Production

18 Greater Coyote Area Land Holdings 125,600 Acres 2016 Activity 2 exploratory wells drilled in Q3-1 oil well and 1 dry hole Recompleted 2 wells in Q3 in new natural gas zones; placed on production in Q4 Additional recompletion and re-entries were done in Q4 resulting in 2 natural gas wells 2017 Activity Drilled 3 wells (2 vertical and 1 horizontal) in Q1 1 horizontal well in the Coyote Mannville pool on production in February 1 vertical well drilled at Watts in Q1 will be recompleted uphole for potential gas zone 1 vertical well at west Coyote was production tested and will be abandoned One development oil well at Watts drilled in November

19 Coyote, Watts and Michichi Areas Land Holdings 64,300 acres 2016 Activity Re-entry and recompletion of several existing wells Recompleted 4 wells for natural gas production Drilled 2 wells resulting in 1 oil well at Watts and 1 dry hole at Coyote 2017 Activity Drilled 1 Hz well at Coyote in Q1 Drilled 2 wells in Q1 (1 at Coyote,1 at Watts) Drilled a development oil well at Watts in Q4

20 Coyote Area Land Holdings 27,600 acres 2016 Program Re-entry and recompletion of several existing wells 2016 production 411 BOE/day (59% oil & NGL) Recompleted 2 wells for gas production in Q3 Drilled 1 dry hole in Q3 on a Banff exploration target Q4 activities included recompletions on existing and recently acquired wells 2017 Activities Drilled one horizontal development well in the Coyote Mannville pool Drilled and production tested a vertical exploratory well that is uneconomic and will be abandoned Q production 388 BOE/day (51% oil & NGL)

21 Coyote Area Detail 2016 Activity Water disposal well and facility operational in Q2 Several recompletions completed in existing well bores for Q Activity 1 horizontal development well drilled in Q1 into the Mannville oil pool 1 horizontal development well that was to be drilled in the Ellerslie oil pool deferred due to current commodity prices

22 Coyote Ellerslie Pool Cumulative pool production to September 30, 2017 was 311 MSTB oil and 561 mmcf natural gas Future development of the pool will utilize horizontal wells First 2 horizontal wells placed on production mid November, /09-36 Hz production to September 30, 2017 was 40 MSTB and 54 mmcf sales gas Hz production to September 30, 2017 was 77 MSTB and 134 mmcf sales gas

23 Coyote Mannville Pool Mannville oil pool to be developed using horizontal wells; 3 horizontal wells drilled to date First horizontal well (11-36) placed on production mid August, Hz production to September 30, 2017 was 39 MSTB oil and 247 mmcf sales gas 02/11-36 Hz was drilled and completed in November, /11-36 Hz production to September 30, 2017 was 22 MSTB oil and 121 mmcf sales gas 03/9-36 Hz was drilled in Q and placed on production in February, /9-36 HZ production to September 30, 2017 was 26 MSTB oil and 46 mmcf sales gas

24 Watts Area Land Holdings 18,880 acres 2016 Activity Oil well drilled Q3 on production February 2017 Re-entered wellbore Q3, completed for natural gas 2017 Activity Oil well produced 78 BOE/day (61% oil and NGL) 1 vertical well drilled Q1 will be recompleted uphole for potential gas zone 3D seismic completed in July to delineate development oil locations in Q4 Development oil well drilled in November utilizing the 3D seismic

25 Turin Area Land Holdings 4,480 acres all rights 320 acres rights below Mannville 2016 Activity 2016 production of 253 BOE/day (35% oil and NGL) Completed 2 acquired wells resulting in 1 oil well and 1 gas well 2017 Activity 1 oil well placed on production January 1 gas well placed on production in January is currently shut in Q production 257 BOE/day (41% oil & NGL)

26 Summary 2016 program Expenditures of $6.6 million, 2 wells in East Central Alberta, water disposal facilities and recompletion of several existing wells 2016 production 690 BOE/day (49% oil & NGL) Q4 production 605 BOE/day (43% oil & NGL) 2017 program Q production 729 BOE/day (48% oil & NGL) Q expenditures of $2.0 million Budget revised to $15 million The budget includes the drilling of 5 wells and was revised upwards to accommodate Duvernay land purchases and the Chigwell Duvernay well

27 Corporate Information Evaluation Engineers: Bank: Auditor: Solicitor: Transfer Agent: Sproule Associates Limited Alberta Treasury Branch KPMG LLP Osler Hoskin & Harcourt LLP Computershare Board of Directors Laurie Smith: David Erickson: Daniel Kolibar: David Van Der Lee: Adam Wells: Robert Libin: Reid Hutchinson: President Vice President Partner, Osler Hoskin & Harcourt LLP Former President, Firstland Energy Director, PWC LLP Independent Businessman Independent Businessman For further information: Tel: ,

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