Corporate Presentation

Transcription

1 TSX: VII.TO Corporate Presentation May 2017

2 Overview & 2017 Guidance Ticker symbol Capitalization TSX: VII 2017 Guidance Production (% Liquids) (Mboe/d) (55-60%) Average Daily Trading Volume (1) 1.8 million shares Rig Count (#) 9 10 Basic Market Cap (2) $8.5 billion New Producing Wells H1 (#) 35 Enterprise Value (3) $10.2 billion New Producing Wells H2 (#) 70 Available Funding (4)(5) $1.5 billion 2017 Capital Investments Drilling & Completions ($MM) Operating Highlights Facilities & Infrastructure ($MM) Production Mboe/d Other ($MM) Funds From Operations (5) $733 MM Total ($MM) 1,500 1,600 (1) 2016 average daily trading volume aggregated across exchanges. (2) Based on April 28, 2017 share price of $24.17 and million common shares. (3) Basic Market Cap + US$ 1.575B in senior unsecured notes converted at $0.73 USD/CAD less adjusted net working capital as of March 31,2017 of $501MM. (4) Adjusted net working capital as of March 31, 2017 of $501MM plus available credit facility capacity of $1.04B. (5) Non-IFRS Financial Measure. For additional information see Non-IFRS Measures Advisory in the Important Notice that appears at the end of the presentation. 2

3 7G Investment Highlights High Quality Asset Large Resource Base Location and Market Access Control Over Operations Proven Execution Ability Corporate liquids yields of approximately 230 bbls/mmcf locations within priority development block ( Nest 2 ) 2 with supply costs less than US$0.00/MMBtu at US$50/bbl WTI net Montney sections of land with ~4,500 potential undeveloped locations MMboe of PDP reserves (53% liquids), 825 MMboe of 1P reserves (54% liquids) and 1,535 MMboe of 2P reserves (53% liquids) km south of Grande Prairie, a major Canadian natural gas industry service, supply and expertise hub Available nearby access to rail and two transcontinental gas pipelines, major liquids gathering pipeline, local sweet and sour gas gathering and processing facilities Average 96% working interest in Montney assets 100% working interest in 510 MMcf/d of processing capacity, and access to third party capacity to support profitable production growth A proven management team with a track record of rapid, well-managed, profitable resource play development within a competitive environment Successful value growth through operating efficiency and continued innovation 1) Average corporate liquids yields for the year ended December 31, ) For important supplemental information regarding the company s estimated number of potential drilling opportunities, please refer to the Note Regarding Potential Drilling Opportunities in the Important Notice at the end of this presentation. 3) Assuming 20% IRR and 0.77 CAD/USD; based on half-cycle economics as shown on the individual well economics slide (slides 10 and 21). Management estimate. 4) Based upon: (i) the reports provided by McDaniel dated March 7, 2017 evaluating the Company s reserves, contingent resources and prospective resources as at December 31, 2016, For important additional information, please refer to the Important Notice at the end of this presentation and to the Company s Annual Information Form dated March 7, 2017, which is available on SEDAR at 3

4 The Seven Generations Strategy STAKEHOLDER SERVICE SUPPLY COST FINANCIAL SUSTAINABILITY MARKET ACCESS Differentiate in the service of all stakeholders Enhance social license by adhering to 7G s Level 1 Policy Statement In a competitive world, only those who best serve their stakeholders can expect long term survival Combine resource selection with innovation, technology and efficiency to remain among North America s lowest supply cost gas developers Continued profitable growth to achieve cash flow self sufficiency Earn full cycle returns on capital employed across the entire commodity cycle Focused capital deployment on high return opportunities with hedged economics Seek out and position in gathering, processing, transportation and marketing opportunities to expand market access Leverage market access to capture premium markets for the Company s production The strategic cornerstones of the 7G business model 4

5 Consistent Growth & Cost Reductions Production (boe/d) Funds From Operations ($MM) (1) 2P Reserves (MMboe) (2) 250, , , ,000 50, ,403 31,136 4,180 7, , , , E $800 $700 $600 $500 $400 $300 $200 $100 $0 $733 $415 $328 $36 $ ,800 1,600 1,400 1,200 1, , $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 Drilling Costs per Lateral Metre ($/Metre) $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 Completion Costs per Tonne ($/Tonne) $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 Average Drilling & Completion Costs ($MM) Drilling Cost Completion Cost A demonstrated track record of profitable growth (1) Non-IFRS financial measure. Please refer to Non-IFRS Measures Advisory in the Important Notice at the end of the presentation. (2) Based upon McDaniel s reports with effective dates: March 31, 2013; December 31, 2013; December 31, 2014; December 31, 2015; and December 31, Please refer to the Important Notice at the end of the presentation for additional information pertaining to the reserves evaluations. 5

6 BOE/d per MM Shares $ per Share BOE per Share Significant Per Share Growth in 2016 Production per Share (1) Funds Flow per Share (1)(2) 2P Reserves per Share (3) Debt Adjusted $3.00 $2.50 $2.00 $1.50 $1.53 $2.30 $2.22 Debt Adjusted Debt Adjusted $1.00 $ $ (1) Based on annual weighted average fully diluted shares outstanding (2) Non-IFRS Financial Measure. For additional information see Non-IFRS Measures Advisory in the Important Notice that appears at the end of the presentation (3) Based on year-end fully diluted shares outstanding and the reserve reports prepared by McDaniel, as at December 31, 2015 and December 31, Please refer to the Important Notice at the end of the presentation for additional information pertaining to the reserves evaluations (4) Debt adjusted per share metrics assume 11.2 MM share dilution based on a $278 MM change in net debt and a $24.79 average 2016 share price Creating shareholder value through per share growth across all aspects of the business 6

7 Ranking North American Natural Gas Projects NYMEX (US$/MMbtu) Breakeven* Price by Play 2016 NYMEX Henry Hub Price Range Combining high quality resources with technology to be among the lowest cost supply * Assumes a 15% IRR, US$50/bbl WTI, WTI less US$5/bbl for Edmonton Par, US$0.75/MMbtu AECO basis and FX of 0.80 (US$/C$) Source: Credit Suisse Equity Research August 22,

8 Capacity (MMcf/d) Production (BOE/d) Production Growth Plans Transportation and Processing Capacity 1,100 1,050 1, E: MBOE/d , , , , , ,000 50,000 0 * Alliance firm capacity TCPL NGTL firm capacity (acquired) TCPL NGTL firm capacity Processing capacity Production/Guidance *Note: BOE/d capacity assumes a 15% shrink on raw gas production and sales gas represents 45% of total corporate production Firm transportation and processing capacity paving the way to profitable growth 8

9 Market Access Initiatives Current Montney Access Options Market Access 7G is committed to finding new markets for its production to facilitate growth beyond current commitments By pledging a portion of 7G s low cost supply to market access initiatives, 7G hopes to secure premium pricing and/or an option to own an interest in these initiatives Projects being considered include: Petrochemical manufacturing LNG/LPG exports Gas fired power generation 7G has a preference to commit resource instead of capital to these initiatives Financial commitments are budgeted within the other category of disclosed guidance and are expected to be less than 5% of capital invested Opportunity to use low supply cost natural gas to underpin market expansion 9

10 Nest 2 Well Economics & Budget Assumptions Assumes: US$50/bbl WTI, US$3.00/MMbtu NYMEX, $0.77 USD/CAD Production Budget Capital Budget 2015 Type Curve 2016 Type Curve 2017 program (high intensity) Nest 2 Nest 2 Nest 2 Well/Capital Assumptions IP 365 Inputs Lateral length (m) 2,450 2,700 2,700 Stage count (#) Tonnage (Tonnes/stage) Total well cost (DCET) ($MM) $11.0 $11.0 $12.3 Production Condensate gas ratio (bbls/mmcf) Condensate production (bbls/d) NGL production (bbls/d) Raw gas production (mcf/d) 3,984 4,573 5,855 Recoveries Condensate recovery (mbbls) NGL recovery (C2-C4) (mbbls) Natural gas recovery (bcf) Total EUR (mboe) 1,945 2,122 2,122 EUR Economics Half Cycle Full Cycle IRR (%) 98% 138% 184% NPV10 ($MM) $13.6 $17.1 $19.4 Natural gas supply cost (US$/MMBTU) $0.24 -$0.22 -$0.33 IRR (%) 52% 77% 103% NPV10 ($MM) $7.3 $10.1 $11.6 Natural gas supply cost (US$/MMBTU) $1.70 $1.23 $1.11 1) Price Assumptions: $50 US/bbl WTI, $3.00 US/MMBtu NYMEX HH and 0.77 USD/CAD FX. NGLs as % of WTI: C3 35%, C4 50%, C5 90%. Chicago gas discount $0.01 to NYMEX HH. Unit transportation costs: sales gas US$0.92/Mcf. Recovered liquids: $5.80/bbl. Average opex (first 3 years) = ~3.70 $/boe for sweet gas, ~$6.00 for sour gas (Wapiti Curve only). ~15% raw gas shrink. Fixed well operating cost = $20,000/mo. for half cycle, $30,000/mo. for full cycle. 2) Recoveries: NGL recoveries are based on a best estimate of the liquids to be extracted at 7G s wholly owned plants in Alberta and the liquids to be processed by Aux Sable at its facilities near Chicago, Illinois pursuant to the terms of the rich gas premium agreement between 7G and Aux Sable, which depends upon an assumed heating value and has been assumed to extend for the entire productive life of the wells. 3) Other Type-curve Assumptions: For a description of the assumptions that have been made by the company in preparing its type-curves and in determining the estimated number of potential drilling opportunities, and for important additional information about the company s type-curve forecasts and estimates of potential drilling opportunities, please refer to the Important Notice at the end of this presentation. 4) Half-Cycle economics: includes only the cost to drill, complete, tie, and equip well. Does not include all costs for Super Pad infrastructure, central processing, regional gathering, condensate stabilization, other infrastructure, land acquisition, corporate overhead (G&A), financing or corporate taxes. These economics are intended to represent the marginal return of a single well investment on an existing Super Pad. No adjustments have been made for downtime or facility constraints. 5) Full-cycle economics: Include a $4.10/boe burden to carry infrastructure costs including central plant processing (NGL extraction), Super Pad build, regional gathering and sales pipelines and condensate stabilization. A $0.90/boe burden to carry corporate overhead (G&A). Land acquisition, financing costs and corporate taxes have been excluded. Sunk investments to test, demonstrate, delineate and commercialize plays has also been excluded; the period of time (and related capital carrying costs) required to acquire, test and delineate the lands prior to commercial development has not been factored into this analysis. It assumes a forward-looking development with existing knowledge of the risk profile of 7G s Nest lands, including but not limited to reservoir deliverability, liquid-gas ratios, H2S content, gas and liquids compositions, and also assumes available pipeline transportation capacity with firm gas and liquids transportation. 10

11 Individual Well Economics: IRR Sensitivities (half-cycle, pre-tax) Assumptions: - NGLs as % of WTI: C3 35%, C4 50%, C5 90%. Chicago gas discount $0.01 to NYMEX HH. Unit transportation costs: sales gas US$0.92/Mcf. Recovered liquids: $5.80/bbl. Average opex (first 3 years) = ~3.70 $/boe, ~15% raw gas shrink. Fixed well operating cost = $20,000/mo. for half cycle economics. FX rate is on a sliding-scale based on WTI price used. - Half-cycle economics: include only the cost to drill, complete, tie & equip a well. No costs for central processing, regional gathering, condensate stabilization, other infrastructure, land acquisition, corporate overhead (G&A), financing or corporate taxes are included. 11

12 Gas Rate (Mcf/d) Condensate Rate (bbl/d) Improving Type Curves & Well Results 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Raw Gas Type Curve 2014 Nest 2 Type Curve 2015 Nest 2 Type Curve 2016 Nest 2 Type Curve Producing Days 2,000 1,800 1,600 1,400 1,200 1, Wellhead Condensate Curve 2014 Nest 2 Type Curve 2015 Nest 2 Type Curve 2016 Nest 2 Type Curve Producing Days Number of Nest Wells Gas (MMcf/d) Condensate (bbls/d) Total (boe/d) C5+ Yield (bbls/mmcf) Rate Apr 17 Nov 14 Apr 17 Nov 14 Apr 17 Nov 14 Apr 17 Nov 14 Apr 17 Nov 14 IP ,605 1, IP ,448 1, IP ,237 1, IP , IP , Key assumptions: Non-producing days have been removed. Wells with significant deviation in completions techniques have been excluded. All data is raw well head data; condensate has been adjusted for composition. For important information regarding type curves shown in this presentation please refer to the Important Notice at the end of this presentation. Rates reflect historical results of wells drilled by 7G and excludes the wells acquired from Paramount. 7G recently tied in a six-well pad where wells had an average 30-day, initial production rate of 2,000 boe/d 12

13 Converting Resource to Reserve to Production Resource to Reserve Conversions MMBOE (Unrisked) Reserve and Resource Land Base December 31, 2014 December 31, 2015 December 31, 2016 (C50) December 31, 2016 December 31, 2015 YoY Category % NPV10 % NPV10 NPV10 MMBOE MMBOE MMBOE Liquids ($MM) Liquids ($MM) ($MM) PDP % $1, % $ % 127% 1P % $5, % $2,937 95% 75% 2P 1,535 53% $9, % $6,507 79% 54% Best Est. Cont. - Risked 1,391 44% $3, % $2,790 80% 10% Best Est. Prosp. Res. - Risked % $ % $1,071 34% -33% 2P = 176 Sections (22%) 2P + C50 = 356 Sections (44%) Reserves booked to 22% of land with significant resource potential (1) Based upon reports prepared by McDaniel, the company s independent qualified reserves evaluator, evaluating the reserves, contingent resources and prospective resources, attributable to the Company s properties effective as at December 31, 2014, December 31, 2015 and December 31, 2016, respectively. Un-risked volumes have been provided herein for comparison purposes. For details regarding the risked and un-risked estimates that are provided herein and for other important information regarding the Company s independently evaluated reserves, contingent resources and prospective resources, please refer to the Important Notice at the end of this presentation. 13

14 Montney Inventory by Development Area Nest 2 ~ 800 locations (1) <$0.00/MMbtu supply cost (2) Majority of 2017 activity Nest 1 ~ 500 locations (1) $1.47/MMbtu unoptimized supply cost (2) Wapiti & Rich Gas ~ 1,000 locations (1) <$2.25/MMbtu unoptimized supply cost (2) Testing/delineation in 2017 Deep SW ~ 2,300 locations (1) Significant unverified resource Testing/delineation in 2017 Lower Montney 800 net sections 100 m thick Significant unverified resource Testing/delineation in 2017 Cretaceous 215 net sections Multiple target zones Significant unverified resource Decades of liquids rich Montney drilling inventory, future upside in Deep SW, Wapiti, Rich Gas & shallower targets (1) For important supplemental information regarding the company s estimated number of potential drilling opportunities, please refer to the Note Regarding Potential Drilling Opportunities in the Important Notice at the end of this presentation. (2) NYMEX Henry Hub price required for 20% pre-tax IRR. Assumes US$50/bbl WTI, US$3.00/MMbtu NYMEX. Half-cycle economics. 14

15 The Infrastructure Advantage More than $1 billion of 7G infrastructure investments 510 MMcf/d of processing capacity through 2 gas plants 9 Super Pads currently on production 60,000 bbls/d of condensate stabilization capacity by Q Continued growth through infrastructure and facilities investments 15

16 APPENDIX 16

17 Code of Conduct & Stakeholder Differentiation We believe that companies have only the rights given to them by society. While people have a natural entitlement to basic rights, corporations are an instrument created by society to provide its needs and ought to have no expectation of basic entitlements other than equitable rights with other corporations, including those wholly owned by a person. We recognize that rights, sufficient to build and operate an energy project, can be granted and taken away by society. Over the longer term, companies can only expect to thrive if they serve the legitimate needs of society in which they exist. To thrive, companies must differentiate, rise above the pack, standout as being among the best with all of their stakeholders. At Seven Generations Energy Ltd., we acknowledge this granted entitlement and accept from our stakeholders a duty to thrive and an understanding of the need to differentiate. Specifically, in acceptance of this challenge to differentiate with all stakeholders, we acknowledge: The need of society for us to conduct our business in a way that protects the natural beauty of the environment and preserves the capacity of the earth to meet the needs of present and future generations; The need of our business partners and infrastructure customers to be treated fairly and attentively; The need of Canada and Alberta for us to obey all regulations and to proactively assist with the formulation of new policy that enables our company and our industry to better serve society; The need of our suppliers and service providers to be treated fairly and paid promptly for equipment and services provided to us and to receive feedback from us that can help them to be competitive and thrive in their businesses; The need of the communities where we operate to be engaged in the planning of our projects and to participate in the benefits arising from them as they are built and operated; The need of our employees to be compensated fairly and provided a safe, healthy and happy work environment including a healthy work life outside life balance; and The need of our shareholders and capital providers to have their investment managed responsibly and ethically and to earn strong returns. We see ourselves as being in the service business, serving the needs of our stakeholders. We seek satisfaction for all stakeholders. Differentiation is imperative. We support an open and competitive business environment, recognizing in the competitive world that we envision, only those who best serve their stakeholders can expect the support required to survive for the longer term. 17

18 Selected Financial and Operational Information VII - Recent Quarterly Results OPERATING Q Q Q Q Q YE 2016 YE 2015 Average daily production Condensate & oil (mbbls/d) NGLs (mbbls/d) Natural gas (MMcf/d) Total (mboe/d) CGR Ratio (bbls/mmcf) LGR Ratio (bbls/mmcf) Realized prices Condensate & oil (C$/bbl) NGLs (C$/bbl) Natural gas (C$/mcf) FINANCIAL Condensate & oil revenues ($MM) NGLs revenues ($MM) Natural gas revenues ($MM) Total revenues ($MM) , Royalties ($MM) (16.8) (11.9) (0.4) 18.6 (13.0) (6.7) (57.9) Operating expense ($MM) (68.8) (59.1) (47.0) (44.8) (31.0) (181.9) (101.2) Transportation expense (3) ($MM) (72.0) (72.0) (74.7) (56.2) (35.7) (238.6) (59.0) Netback prior to hedging (1) ($MM) Realized hedging gain (loss) ($MM) (7.2) Netback after hedging (1) ($MM) General and administrative expense (3) ($MM) (10.9) (10.8) (14.7) (10.0) (8.1) (43.5) (24.3) Interest, processing and other (3) ($MM) (41.4) (42.1) (39.4) (27.0) (26.0) (134.4) (85.4) Funds from operations (1) ($MM) Netbacks (1) Oil and natural gas revenue ($/boe) Royalties ($/boe) (1.22) (0.98) (0.03) 1.74 (1.61) (0.98) (2.63) Operating expense ($/boe) (4.99) (4.86) (3.85) (4.20) (3.85) (4.86) (4.59) Transportation and processing expense(3) ($/boe) (5.22) (5.92) (6.12) (5.26) (4.43) (5.92) (2.68) Operating netback prior to hedging ($/boe) Realized hedging gain (loss) ($/boe) (0.52) Operating netback (1) ($/boe) General and administrative expense (3) ($/boe) (0.79) (1.18) (0.76) (0.93) (1.00) (1.09) (1.10) Interest, processing and other(3) ($/boe) (3.03) (3.18) (3.71) (2.59) (3.23) (4.14) (3.87) Funds flow netback (1) ($/boe) Capital investments Land ($MM) Drilling and completions ($MM) Facilities and equipment ($MM) Other ($MM) Total capital investments (2)(3) ($MM) , ) See Non-IFRS Measures advisory in the Important Notice at the end of this presentation. 2) Before acquisitions. 3) Certain comparative figures have been reclassified to conform to current period presentation. 18

19 Current Hedge Position ROY H Q Q Q FY 2017 Q Q Q Q FY 2018 Q Q Q Q FY 2019 Q Q H Liquids Hedging WTI Hedged - bbl/d 24,000 24,000 24,000 24,000 28,000 28,000 27,000 26,000 27,250 26,000 18,000 14,000 8,000 16,500 4,000 2,000 3,000 Average Bought Put (Floor) - CAD/bbl $61.29 $61.21 $61.21 $61.24 $60.14 $60.14 $58.52 $58.27 $59.29 $58.27 $58.61 $59.29 $60.00 $58.79 $60.00 $60.00 $60.00 Average Sold Call (Ceiling) - CAD/bbl $78.52 $77.18 $77.18 $77.62 $76.76 $76.76 $77.33 $77.38 $77.05 $77.38 $78.29 $79.44 $79.52 $78.33 $77.86 $75.78 $77.17 WTI Puts Sold - bbl/d* 9,000 9,000 9,000 9,000 12,000 12,000 12,000 12,000 12,000 12,000 8,000 4, , Average Sold Put - CAD/bbl* $41.11 $41.11 $41.11 $41.11 $40.83 $40.83 $40.83 $40.83 $40.83 $40.83 $41.25 $42.50 $0.00 $41.25 $0.00 $0.00 n/a Gas Hedging Total Gas Hedged - MMbtu/d 217, , , , , , , , , , , ,391 97, ,391 20,000 10,000 15,000 Gas Hedged - AECO - GJ/d 50,000 50,000 60,000 53,333 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50, Average AECO Bought Put (Floor) - CAD/GJ $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $0.00 $0.00 n/a Average AECO Sold Call (Ceiling) - CAD/GJ $3.04 $3.04 $3.03 $3.03 $2.99 $2.99 $2.99 $2.99 $2.99 $2.99 $2.99 $2.99 $2.99 $2.99 $0.00 $0.00 n/a Gas Hedged - Chi CG - MMbtu/d 170, , , , , , , , , ,000 90,000 60,000 50,000 75,000 20,000 10,000 15,000 Average Chi CG Swap - USD/MMbtu $3.10 $2.98 $2.97 $3.01 $2.92 $2.89 $2.89 $2.89 $2.90 $2.92 $2.93 $2.91 $2.90 $2.92 $2.85 $2.83 $2.84 Average Swap - CAD/MMbtu** $3.98 $3.92 $3.91 $3.94 $3.87 $3.85 $3.84 $3.83 $3.85 $3.84 $3.84 $3.85 $3.85 $3.84 $3.79 $3.77 $3.78 FX Hedging USD Notional Hedged (MM) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 5.19 $ 2.58 $ 7.76 Average Rate $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ *Represents volumes and prices for additional puts sold for 3-way CAD WTI collars **Chi CG converted to average CAD/USD hedge rate Hedge Position April 30,

20 Individual Well Economics Assumes: US$50/bbl WTI, US$3.00/MMbtu NYMEX, $0.77 USD/CAD 2015 Type Curve 2016 Type Curve 2017 program (high intensity) Nest 2 Nest 2 Nest 2 SENSITIVITIES - SPENDING FOCUS IN program (delineation & future development) Nest 1 (2014 Prospectus) Wapiti & Rich Gas INDIVIDUAL WELL ECONOMICS Half-Cycle IRR Half-Cycle NPV10 Half-Cycle Supply cost (20% IRR) Full-Cycle IRR Full-Cycle NPV10 Full-Cycle Supply cost (20% IRR) (%) 98% 138% 184% 41% 44% ($MM) $13.6 $17.1 $19.4 $5.5 $4.6 (US$/MMBTU) $0.24 -$0.22 -$0.33 $1.47 $2.17 (%) 52% 77% 103% 18% 12% ($MM) $7.3 $10.1 $11.6 $1.5 $0.3 (US$/MMBTU) $1.70 $1.23 $1.11 $3.19 $3.36 WELL ASSUMPTIONS EUR Average 1st Inputs Year Lateral length (m) 2,450 2,700 2,700 2,200 2,200 Stage count (#) Tonnage (Tonnes/stage) C* value ($MM) $14.3 $16.6 $18.9 $14.1 $11.7 Well cost (drill & complete) ($MM) $10.0 $10.0 $11.3 $8.5 $7.0 Well cost (tie & equip) ($MM) $1.0 $1.0 $1.0 $1.0 $1.0 Total well cost (DCET) ($MM) $11.0 $11.0 $12.3 $9.5 $8.0 Condensate gas ratio (bbls/mmcf) Condensate production (bbls/d) NGL production (bbls/d) Raw gas production (mcf/d) 3,984 4,573 5,855 2,232 3,862 Condensate recovery (mbbls) NGL recovery (C2-C4) (mbbls) Natural gas recovery (bcf) Total EUR (mboe) 1,945 2,122 2,122 1,317 1,200 Inventory of drilling locations # ,000 1) Price Assumptions: $50 US/bbl WTI, $3.00 US/MMBtu NYMEX HH and 0.77 USD/CAD FX. NGLs as % of WTI: C3 35%, C4 50%, C5 90%. Chicago gas discount $0.01 to NYMEX HH. Unit transportation costs: sales gas US$0.92/Mcf. Recovered liquids: $5.80/bbl. Average opex (first 3 years) = ~3.70 $/boe for sweet gas, ~$6.00 for sour gas (Wapiti Curve only). ~15% raw gas shrink. Fixed well operating cost = $20,000/mo. for half cycle, $30,000/mo. for full cycle. 2) Recoveries: NGL recoveries are based on a best estimate of the liquids to be extracted at 7G s wholly owned plants in Alberta and the liquids to be processed by Aux Sable at its facilities near Chicago, Illinois pursuant to the terms of the rich gas premium agreement between 7G and Aux Sable, which depends upon an assumed heating value and has been assumed to extend for the entire productive life of the wells. The Wapiti & Rich Gas Type Curve is based upon the type-curve that was used by McDaniel in its report dated March 7, 2016 evaluating 7G s reserves as at December 31, ) Other Type-curve Assumptions: For a description of the assumptions that have been made by the company in preparing its type-curves and in determining the estimated number of potential drilling opportunities, and for important additional information about the company s type-curve forecasts and estimates of potential drilling opportunities, please refer to the Important Notice at the end of this presentation. 4) Half-Cycle economics: includes only the cost to drill, complete, tie, and equip well. Does not include all costs for Super Pad infrastructure, central processing, regional gathering, condensate stabilization, other infrastructure, land acquisition, corporate overhead (G&A), financing or corporate taxes. These economics are intended to represent the marginal return of a single well investment on an existing Super Pad. No adjustments have been made for downtime or facility constraints. 5) Full-cycle economics: Include a $4.10/boe burden to carry infrastructure costs including central plant processing (NGL extraction), Super Pad build, regional gathering and sales pipelines and condensate stabilization. A $0.90/boe burden to carry corporate overhead (G&A). Land acquisition, financing costs and corporate taxes have been excluded. Sunk investments to test, demonstrate, delineate and commercialize plays has also been excluded; the period of time (and related capital carrying costs) required to acquire, test and delineate the lands prior to commercial development has not been factored into this analysis. It assumes a forward-looking development with existing knowledge of the risk profile of 7G s Nest lands, including but not limited to reservoir deliverability, liquid-gas ratios, H2S content, gas and liquids compositions, and also assumes available pipeline transportation capacity with firm gas and liquids transportation. 20 Note: For important supplemental information please refer to the Important Notice at the end of this presentation.

21 Drilling Cost & Efficiency Improvements Drilling Days vs. Depth Drilling Cost vs. Depth m m 1000 m 1000 m 2000 m 2000 m 3000 m 3000 m 4000 m 4000 m 5000 m m m 7000 m v Pacesetter v Pacesetter 2015 v 2013 v First MNTN Hz m 7000 m Pacesetter 2015 v- Pacesetter v 2015 v First MNTN Hz. Potential to offset cost inflation through continued efficiency gains 21

22 Inventory of Nest 1 & Nest 2 Montney Wells Nest 1 Drilling Phase Completion Phase Tie-in Phase In In Progress Well Inventory Producing Wells Wells down due due to to Concurrent Ops October July 1, 1, January October 1, 1, January April 1, 1, April July 1, 1, Nest 2 Drilling Phase Completion Phase Tie-in Phase In Progress Well Inventory Producing Wells Wells down due to Concurrent Ops July 1, October 1, January 1, April 1, Total Nest Drilling Phase Completion Phase Tie-in Phase In Progress Well Inventory Producing Wells Wells down due to Concurrent Ops July 1, October 1, January 1, April 1, *Well activity shown includes only Upper/Middle Montney wells in the Nest Area. 22

23 Woodbend Fernie Smoky Sch ool er Ck. Mesozoic Paleozoic Cretaceous Jurrassic Triassic Devonian Fort St. John Diaber Bullhe ad Upside Potential Upper Montney Extension and Secondary Targets Badheart Muskiki Cardium Kaskapau (1WS + 2WS) Dunvegan* Base of Fish Scales Paddy Cadotte* Harmon Notikewin Falher* Wilrich Bluesky Gething* Cadomin* Nikanassin* Fernie Nordegg Charlie Lake* Halfway* Doig Upper Montney Lower Montney Ireton Duvernay Majeau Lake Note: For illustrative purposes, not to scale. Cardium 1WS 2WS Dunvegan* Cadotte* Falher* Wilrich Gething* Cadomin* Nikanassin Nordegg Zone Charlie Lake* Upper Lower Gross Acres Net Acres Gross Sections Net Sections Average WI 167, , % 178, , % 178, , % 170, , % 169, , % 171, , % 167, , % 175, , % 172, , % 431, , % 435, , % 514, , % Duvernay 290, , % (1) Totals are not additive due to overlapping rights. *Commingling Potential 7G ACREAGE HELD BY ZONE (December 31, 2016) Montney 538, , % TOTAL ACREAGE (1) 585, , % Sandstones/Siltstones Organic Rich Shales/Shales Carbonates 23

24 Sweet Spot of the Montney Over Pressured High Productivity Brittle Rock High Recovery Factor Thickness Large Resources in Place Lower Temperature High Liquids Content Sources: Canadian Discovery Ltd. & Graham Davies Geological Consultants Ltd. (2008, 2011), & Steven Burnie (2011), BC Ministry of Energy & Mines, Alberta Geological Survey (modified by RBC & 7G) Lands as of 4/30/15 24

25 Important Notice General Advisory The information contained in this presentation does not purport to be allinclusive or contain all information that readers may require. Prospective investors are encouraged to conduct their own analysis and review of Seven Generations Energy Ltd. ( Seven Generations, 7G, the company or the Company ) and of the information contained in this presentation. Without limitation, prospective investors should read the entire record of publicly filed documents relating to the Company, consider the advice of their financial, legal, accounting, tax and other professional advisors and such other factors they consider appropriate in investigating and analyzing the Company. An investor should rely only on the information provided by the Company and is not entitled to rely on parts of that information to the exclusion of others. The Company has not authorized anyone to provide investors with additional or different information, and any such information, including statements in media articles about Seven Generations, should not be relied upon. In this presentation, unless otherwise indicated, all dollar amounts are expressed in Canadian dollars. An investment in the securities of Seven Generations is speculative and involves a high degree of risk that should be considered by potential purchasers. Seven Generations business is subject to the risks normally encountered in the oil and gas industry and, more specifically, the relatively new shale and tight liquids-rich natural gas sector of the oil and natural gas industry, and certain other risks that are associated with Seven Generations stage of development. An investment in the Company s securities is suitable only for those purchasers who are willing to risk a loss of some or all of their investment and who can afford to lose some or all of their investment. Non-IFRS Measures Advisory In addition to using financial measures prescribed by International Financial Reporting Standards ( IFRS ), references are made in this presentation to netbacks, operating netback, available funding, funds from operations and/or adjusted working capital, which are measures that do not have any standardized meaning as prescribed by IFRS. Accordingly, the Company s use of such terms may not be comparable to similarly defined measures presented by other entities and comparisons should not be made between such measures provided by the Company and by other companies without also taking into account any differences in the way that the calculations were prepared. For further details about operating netback, available funding and funds from operations, see Non-IFRS Financial Measures in the Company s Management s Discussion and Analysis for year ended December 31, 2016, which is available on the SEDAR website at Operating netback is calculated on a per boe basis and is determined by deducting royalties, operating and transportation expenses from oil and natural gas revenue and, except where otherwise indicated, after adjusting for realized hedging gains or losses. Operating netback is utilized by the Company and others to better analyze the operating performance of its oil and natural gas assets. Forward-Looking Information Advisory This presentation contains certain forward-looking information and statements that involve various risks, uncertainties and other factors. The use of any of the words anticipate, continue, estimate, expect, may, will, should, believe, plans, and similar expressions are intended to identify forwardlooking information or statements. In particular, but without limiting the foregoing, this presentation contains forward-looking information and statements pertaining to the following: the Company s objectives, strategies and competitive strengths; the Company s planned capital investments and allocation of capital; profitable growth; achievement of free cash flow; ability to earn full cycle returns across the entire commodity cycle; application of resources selection, innovation, technology and efficiency to remain among North America s lowest supply-cost unconventional gas developers; forecast production, production sustainability, production growth and liquids yields; rig counts; estimated number of wells to be drilled and new producing wells to be tied in; anticipated drilling and completion costs, facilities costs, and other costs; market access options; forecasted half-cycle and full-cycle economics, including forecasted NPVs, IRRs, price sensitivities and break-even prices; estimated future costs, supply costs, cost reductions and cost performance; forecasted well economics; type curves; forecasted decline rates; estimated number of undeveloped drilling opportunities or drilling locations; opportunities for optimization, innovation and increased efficiency; estimated recoveries; planned development activities; expectation that 7G s current inventory of potential drilling opportunities will provide for multiple decades of growth and development; resource potential from various areas and formations within 7G s development properties; ability to commercialize assets outside of the Company s Nest area; expected condensate stabilization capacity; continued growth through infrastructure and facilities investment; future transportation and processing capacity, and production growth plans; focusing capital deployment on high return opportunities with hedged economics; ability to secure premium pricing and find new markets for the Company s production; commitments to be made in connection with market access initiatives; opportunities to use low supply cost natural gas to underpin market expansion; and pressure, thickness, geology and temperature estimates in the Montney formation. In addition, references to reserves and resources are deemed to be forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated. With respect to forward-looking information contained in this presentation, assumptions have been made, regarding, among other things: that wells drilled in the same fashion in the same formations in proximity to the typewells that were used in 7G s type-curve forecasts will deliver similar production results, including liquids yields; future oil, natural gas liquids and natural gas prices; the Company s ability to obtain qualified staff and equipment in a timely and cost efficient manner; the Company s ability to market production of oil, NGLs and natural gas successfully to customers; the Company s future production levels; the applicability of technologies for the Company s reserves; future capital investments by the Company; future cash flows from production; future sources of funding for the Company s capital program; the Company s future debt levels; geological and engineering estimates in respect of the Company s reserves and resources estimates; the Company s production growth will be sufficient to meet firm transportation and processing capacity; the geography of the areas in which the Company is conducting exploration and development activities, and the access, economic and physical limitations to which the Company may be subject from time to time; the impact of competition; the regulatory framework governing royalties, taxes, and environmental matters in the jurisdictions in which the Company conducts its business and any other jurisdictions in which the Company may conduct its business in the future; and the Company s ability to obtain financing on acceptable terms. Specifically, for the forward-looking statements regarding the Company s ability to achieve profitable growth and cash flow sustainability and the ability to earn full cycle returns across the entire commodity cycle, key assumptions were made, including: the anticipated impact of the acquisition of assets from Paramount Resources Ltd. ( Paramount ) in 2016 on the Company and its reserves, production and financial and operating results; the Company s ability to successfully integrate the assets acquired from Paramount; the Canadian tax regime; international trade arrangements; and the U.S. regulation of oil and gas imports from Canada. Assumptions made in the calculation of forecasted half-cycle and full-cycle economics, including forecasted NPVs, IRRs, price sensitivities and break-even prices, and in the preparation of typecurves, are provided in footnotes proximate to those disclosures. With respect to statements regarding the Company s intention to secure premium pricing and find new markets for the Company s production, commitments to be made in connection with market access initiatives and opportunities to use low supply cost natural gas to underpin market expansion, a number of assumptions have been made, including: the laws and regulations governing such initiatives relating to tax, the environment and Aboriginal peoples, Crown royalty rates, incentive programs relating to the oil and gas industry, and general economic, market and business conditions. An assumption has also been made that further well delineation activities will confirm management s estimates regarding reservoir quality of the properties that were acquired from Paramount and in the properties that fall outside of the Company s core development areas. With respect to the estimated number of drilling locations or potential drilling opportunities that are referenced herein, various assumptions have been made. These assumptions are described under the heading Note Regarding Potential Drilling Opportunities below. Actual results could differ materially from those anticipated in forward-looking information as a result of the risks and risk factors that are set forth in the Company s Annual Information Form dated March 7, 2017 (the AIF ), which is available on SEDAR at including, but not limited to: the possibility of failure to realize the anticipated benefits from the 2016 acquisition of assets from Paramount (the Acquisition ); volatility in market prices and demand for oil, NGLs and natural gas and hedging activities related thereto; general economic, business and industry conditions; variance of the Company s actual capital costs, operating costs and economic returns from those anticipated; the ability to find, develop or acquire additional reserves and the availability of the capital or financing necessary to do so on satisfactory terms; risks related to the exploration, development and production of oil and natural gas reserves and resources; negative public perception of oil sands development, oil and natural gas development and transportation, hydraulic fracturing and fossil fuels; actions by governmental authorities (in Canada and internationally), including changes to the application, interpretation and enforcement of applicable laws and regulations; the rescission, or amendment to the conditions of, groundwater licenses of the Company; management of the Company s growth; the ability to successfully identify and make attractive acquisitions, joint ventures or investments, or successfully integrate future acquisitions or businesses; the availability, cost or shortage of rigs, equipment, raw materials, supplies or qualified personnel; adoption or modification of climate change legislation by governments; the absence or loss of key employees; uncertainty associated with estimates of oil, NGLs and natural gas reserves and resources and the variance of such estimates from actual future production; dependence upon compressors, gathering lines, pipelines and other facilities,

26 Important Notice certain of which the Company does not control; the ability to satisfy obligations under the Company s firm commitment transportation arrangements; the uncertainties related to the Company s identified drilling locations; the highrisk nature of successfully stimulating well productivity and drilling for and producing oil, NGLs and natural gas; operating hazards and uninsured risks; the possibility that the Company s drilling activities may encounter sour gas; execution risks associated with the Company s business plan; failure to acquire or develop replacement reserves; the concentration of the Company s assets in the Kakwa River Project area; unforeseen title defects; Aboriginal claims; failure to accurately estimate abandonment and reclamation costs; development and exploratory drilling efforts and well operations may not be profitable or achieve the targeted return; horizontal drilling and completion technique risks and failure of drilling results to meet expectations for reserves or production; limited intellectual property protection for operating practices and dependence on employees and contractors; third-party claims regarding the Company s right to use technology and equipment; expiry of certain leases for the undeveloped leasehold acreage in the near future; failure to realize the anticipated benefits of acquisitions (including the Acquisition) or dispositions; failure of properties acquired now or in the future to produce as projected and inability to determine reserve and resource potential, identify liabilities associated with acquired properties or obtain protection from sellers against such liabilities; restrictions on drilling intended to protect certain species of wildlife; potential conflicts of interests; actual results differing materially from management estimates and assumptions; seasonality of the Company s activities and the Canadian oil and gas industry; alternatives to and changing demand for petroleum products; extensive competition in the Company s industry; changes in the Company s credit ratings; dependence upon a limited number of customers; lower oil, NGLs and natural gas prices and higher costs; failure of 2D and 3D seismic data used by the Company to accurately identify the presence of oil and natural gas; risks relating to commodity price hedging instruments; terrorist attacks or armed conflict; cyber security risks, loss of information and computer systems; inability to dispose of non-strategic assets on attractive terms; security deposits required under provincial liability management programs; reassessment by taxing authorities of the Company s prior transactions and filings; variations in foreign exchange rates and interest rates; third-party credit risk including risk associated with counterparties in risk management activities related to commodity prices and foreign exchange rates; sufficiency of insurance policies; potential litigation; variation in future calculations of non-ifrs measures; sufficiency of internal controls; breach of agreements by counterparties and potential enforceability issues in contracts; impact of expansion into new activities on risk exposure; inability of the Company to respond quickly to competitive pressures; and the risks related to the Common Shares that are publicly traded and the Company s senior notes and other indebtedness, including the potential inability to comply with the covenants in the credit agreement related to the Company s credit facilities and/or the covenants in the indentures in respect of the Company s senior unsecured notes. Financial outlook and future-oriented financial information contained in this presentation regarding prospective financial performance, financial position, cash flows or well economics is based on assumptions about future events, including economic conditions and proposed courses of action, based on management s assessment of the relevant information that is currently available. Projected operational information also contains forward-looking information and is based on a number of material assumptions and factors, as are set out herein. Such projections may also be considered to contain future oriented financial information or a financial outlook. The actual results of the Company s operations for any period will likely vary from the amounts set forth in these projections, and such variations may be material. Actual results will vary from projected results. Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein. The forward-looking statements included in this presentation are expressly qualified by the foregoing cautionary statements and are made as of the date of this presentation. The Company does not undertake any obligation to publicly update or revise any forward-looking statements except as required by applicable securities laws. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this presentation should not be unduly relied upon. Certain information contained herein has been prepared by third-party sources (and is identified as such) and has not been independently audited or verified by the Company. Presentation of Oil and Gas Information Estimates of the Company s reserves, contingent resources and prospective resources and the net present value of future net revenue attributable to the Company s reserves, contingent resources and prospective resources are based upon the reports prepared by McDaniel & Associates Consultants Ltd. ( McDaniel ), the Company s independent qualified reserves evaluator, as at the effective dates that are specified in this presentation. The estimates of reserves, contingent resources and prospective resources provided in this presentation are estimates only and there is no guarantee that the estimated reserves, contingent resources and prospective resources will be recovered. Actual reserves, contingent resources and prospective resources may be greater than or less than the estimates provided in this in this presentation and the differences may be material. Estimates of net present value of future net revenue attributable to the Company s reserves, contingent resources and prospective resources do not represent fair market value and there is uncertainty that the net present value of future net revenue will be realized. There is no assurance that the forecast price and cost assumptions applied by McDaniel in evaluating Seven Generations reserves, contingent resources and prospective resources will be attained and variances could be material. There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources. There is also uncertainty that it will be commercially viable to produce any part of the contingent resources. Risked and un-risked estimates of net present value of future net revenue from contingent resources and prospective resources are preliminary in nature and are provided to assist the reader in reaching an opinion on the merit and likelihood of the Company proceeding with the required investment. Such estimates include contingent resources and prospective resources that are considered too uncertain with respect to the chance of development and chance of discovery to be classified as reserves. Readers should refer to the AIF for a discussion of the significant factors relevant to the estimates of prospective resources and contingent resources, a description of the Kakwa River Project, including estimated costs and timelines and the specific contingencies which prevent the classification of the Company s contingent resources as reserves. This presentation includes contingent resources estimates that are un-risked as to chance of development and prospective resources estimates that are unrisked as to both chance of discovery and chance of development (i.e. the level of risk associated with the chance of discovery and chance of development was not assessed by McDaniel as part of the evaluations that were conducted effective as at December 31, 2014 and for earlier periods). Such un-risked estimates have been provided herein for comparison purposes. This presentation also includes estimates of contingent resources and prospective resources, as at December 31, 2015 and December 31, 2016, that have been risked by McDaniel for the probability of loss or failure in accordance with the COGE Handbook. For contingent resources, the risk component relating to the likelihood that an accumulation will be commercially developed is referred to as the chance of development. For contingent resources the chance of commerciality is equal to the chance of development. The contingent resources evaluated by McDaniel, as at December 31, 2015 and December 31, 2016, were classified in the development pending project maturity sub-class and are considered to have the highest chance of commerciality of all resources other than reserves. In its December 31, 2015 and December 31, 2016 evaluations, McDaniel evaluated the risks and contingencies that were relevant to the contingent resources, as are described herein and in the AIF, and determined that a 95% chance of development was appropriate for the contingent resources that were assigned to the development pending project maturity sub-class. The risked contingent resource volumes and associated net present value, as at December 31, 2015 and December 31, 2016 were determined by multiplying the un-risked volumes and values by the associated chance of development that was estimated by McDaniel (i.e. 95%). Prospective resources have both an associated chance of discovery and a chance of development. Not all exploration projects will result in discoveries. The chance that an exploration project will result in the discovery of petroleum is referred to as the chance of discovery. Thus, for an undiscovered accumulation, the chance of commerciality is the product of two risk components the chance of discovery and the chance of development. McDaniel has sub-classified the prospective resources that were evaluated, as at December 31, 2015 and as at December 31, 2016, by maturity status, consistent with the requirements of the COGE Handbook. The prospective resources associated with the upper Montney, as at December 31, 2015 and as at December 31, 2016, were subclassified as prospect and the prospective resources associated with the lower Montney were sub-classified as lead. The evaluation of the risks and the risking process relevant to the upper Montney prospective resources and the lower Montney prospective resources as at December 31, 2016 are described in the AIF, and the evaluation of the risks and the risking process relevant to the upper Montney prospective resources and the lower Montney prospective resources at December 31, 2015 are described in the annual information form dated March 8, 2016 (the 2015 AIF ) that are available on SEDAR at