EXPERTISE QUALITY INCOME TSX: EGL EAGLE ENERGY INC. CAPP SCOTIABANK INVESTMENT SYMPOSIUM APRIL 2016

Transcription

1 EXPERTISE QUALITY INCOME TSX: EGL EAGLE ENERGY INC. CAPP SCOTIABANK INVESTMENT SYMPOSIUM APRIL 2016

2 Advisories Advisory Regarding Forward Looking Statements: This presentation includes statements that contain forward looking information ( forward-looking statements ) in respect of Eagle Energy Inc. s ( Eagle ) expectations regarding its future operations, including Eagle s business strategy, and forecast estimates for Eagle s capital budget, production, drilling plans, operating costs, commodity split, debt to trailing cashflow, corporate payout ratio, dividends, tax pools, hedging and reserves. These forward looking statements involve estimates and assumptions including those relating to timing to drill and bring wells on production, production rates, operating and capital costs, marketability of crude oil, natural gas and natural gas liquids, future commodity prices, future currency exchange rates, anticipated cash flow based on estimated production, size of reserves and reservoir performance, among other things. These estimates and assumptions necessarily involve known and unknown risks, delays, challenges and other uncertainties inherent in the oil and gas industry including those relating to geology, production, drilling, technology, operations, human error, mechanical failures, transportation, processing problems and poor reservoir performance, among others things, as well as the business risks discussed in Eagle Energy Inc. s annual information form ( AIF ) dated March 17, 2016 under the headings Risk Factors and Advisory-Forward-Looking Statements and Risk Factors. The forward-looking statements included in this presentation should not be unduly relied upon. Actual results may differ from the forward-looking information in this presentation, and the difference may be material and adverse to Eagle and its shareholders. No assurance is given that Eagle s expectations or assumptions will prove to be correct. Accordingly, all such statements are qualified in their entirety by reference to, and are accompanied by, the information and factors discussed throughout this presentation. These statements speak only as of the date of this presentation and may not be appropriate for other purposes. Eagle does not undertake any obligation, except as required by applicable securities legislation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. Eagle s AIF contains important detailed information about Eagle. Copies of the AIF may be viewed under Eagle s issuer profile at and on Eagle s website at Advisory Regarding Non-IFRS financial measures: Statements throughout this presentation make reference to the terms corporate payout ratio and funds flow from operations, which are non-ifrs financial measures that do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. Investors should be cautioned that these measures should not be construed as an alternative to earnings (loss) calculated in accordance with IFRS. Management believes that these measures provide useful information to investors and management since they reflect the quality of production, the level of profitability, the ability to drive growth through the funding of future capital expenditures and the sustainability of dividends to shareholders. Corporate payout ratio is calculated by dividing capital expenditures plus shareholder dividends by funds flow from operations. Funds flow from operations is calculated before changes in non-cash working capital and abandonment expenditures. Management considers funds flow from operations to be a key measure as it demonstrates Eagle s ability to generate the cash necessary to pay dividends, repay debt, fund decommissioning liabilities and make capital investments. Management believes that by excluding the temporary impact of changes in non-cash operating working capital, funds flow from operations provides a useful measure of Eagle s ability to generate cash that is not subject to short-term movements in non-cash working capital. Advisory Regarding Oil and Gas Measures and Estimates This presentation contains disclosure expressed as barrel of oil equivalency ( boe ) or boe per day ( boe/d ). All oil and natural gas equivalency volumes have been derived using the conversion ratio of 6:1 Mcf of natural gas: 1 bbl of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of 6 Mcf: 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. In addition, given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalent of six to one, utilizing a boe conversion ratio of 6 Mcf: 1 bbl would be misleading as an indication of value. The estimated values of the future net revenues of the reserves referred to in this presentation do not represent the market value of such reserves. There is no assurance that such price and cost assumptions will be attained and variances could be material. The recovery and estimates of reserves referred to in this presentation are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided. 2

3 Strategy Eagle is created to provide investors with a sustainable business while delivering stable production and overall growth through accretive investments and acquisitions. Expertise Eagle s trusted management team brings an average of 25 years of experience in the oil and gas sector. Quality Eagle owns stable petroleum producing assets in Canada and the U.S. Income Eagle strives to deliver sustainable monthly dividends to its shareholders. 3

4 Corporate Profile Current Estimated Production 3,600 boe/d (1) 2016 Full Year Working Interest Production Guidance 3,200 to 3,600 boe/d (1) Production Split 87% oil, 3% NGLs, 10% gas 2016 Ending Debt to Trailing Cashflow 6.0x (2) 2016 Corporate Payout Ratio 93% (2) Dividend US Tax Pools CDN Tax Pools $0.12 per share (annualized) $US 173 million $CA 198 million Notes: 1) Including the working interest production related to the January 2016 acquisition of Maple Leaf. Royalty interest production of 235 boe/d is not included in this volume figure. 2) Based on forecast pricing of $US per barrel WTI oil, $US 3.16 per Mcf NYMEX gas, $CAD 2.57 per Mcf AECO gas and $US per barrel of natural gas liquids (NGL price is calculated as 35% of the WTI price), a monthly dividend of $0.01 per share ($0.12 annualized) and a foreign exchange rate of $US 1.00 equal to $CA

5 Market Data Ticker Shares Outstanding (basic) TSX: EGL 42.5 million 52 Week Range $ $3.40 Recent price $0.73 (1) Average daily trading volume (30 day) Market Cap 153,504 shares $31 million Directors & Officers Ownership 2.3% basic, 10.0% fully diluted (2) Equity Research Acumen Capital Partners Paradigm Capital Scotiabank Global Notes: 1) TSX closing price on April 7, ) Weighed average exercise price of options = $5.54.

6 2016 Guidance Eagle s 2016 capital budget of $CA 5.0 million consists of $US 3.0.million for Eagle s operations in the United States and $0.8 million for Eagle s operations in Canada. Guidance Capital Budget $5.0 mm (1) Working Interest Production 3,200 to 3,600 boe/d (2) Operating Costs per month $2.2 to $2.6 mm Notes: 1) At an assumed $US per barrel WTI oil price, Eagle s 2016 capital budget of $5.0 million and dividend of $0.01 per common share of Eagle per month ($0.12 per share annualized) results in a corporate payout ratio of 93%. 2) 2016 production is forecast to consist of 87% oil, 10% natural gas and 3% NGLs. These numbers are working interest production numbers only and exclude 235 boe/d of royalty interest volumes from the acquisition of Maple Leaf that was completed on January 27,

7 Our Properties Eagle owns stable, oil producing properties with development and exploitation potential located in Canada (Alberta) and in the US (Texas and Oklahoma). Twining Field Properties, AB: Located in the Pekisko oil pool formation at the Twining field in East-Central Alberta 57 gross (33 net) producing oil wells, 9 gross (2 net) producing gas wells Approximately 41,500 gross (32,650 net) acres Dixonville Properties, AB: Non-operated Located 50 kms northwest of Peace River 78 gross (39 net) producing oil wells 81 gross (41 net) water injectors 19,520 gross (7,900 net) acres Salt Flat Properties, TX: Located in Salt Flat field in Caldwell County, TX 54 gross (41 net) producing oil wells 3,200 (2,600 net) acres Hardeman Properties, TX & OK: Located in Hardeman Basin in Hardeman County, TX, and Greer, Harmon and Jackson Counties, OK 44 gross (34 net) producing oil wells 28,000 acres (18,000 held by production plus 10,000 undeveloped) 7

8 2015 Year-End Reserves Highlights +10% Increase in year-over-year proved developed producing (PDP) reserves +14% Increase in year-over-year total proved reserves +16% Increase in year-over-year total proved plus probable reserves volumes 234% (1) Stability reflected in total proved reserves replacement ratio 307% (1) Strong total proved plus probable reserves replacement ratio Note: 1) The reserves replacement ratios are calculated by dividing total reserve additions by total working interest production for the year. 8

9 Hedging Program Eagle s 2016 hedging program is well above the 16% weighted average hedge position of its junior peers (1) 51% of production hedged (based on mid-point production guidance) An average of 1,500 bbl/d of oil hedged at an average WTI price of $US 52.30/bbl 1,430 Mcf/d (240 boe/d) of natural gas hedged at $CAD 3.00/Mcf A differential hedge between the Edmonton Light Sweet oil price and the WTI oil price at $US 3.65 per barrel on 1,000 bbl/d For 2017, hedges are in place covering 750 barrels of oil per day at $US 45.00/bbl BOE/D % 60% 50% 40% 30% 20% 10% 0% % Hedged Q $US Q $US Q $US Q $US Avg Hedged Oil Price = $US Avg Hedged Gas Price = $CAD $3.00/Mcf Average % Hedged Note: 1) Source: Company Reports; National Bank of Canada, Producer Q3 Hedge Positions issued on December 4,

10 Value Proposition Why Invest in Eagle? Strong balance sheet Stable production base Capital discipline Experienced management team Sustainable monthly dividends 10

11 Contact Kelly Tomyn, Chief Financial Officer Tel: (403) Eric McFadden, Vice President, Capital Markets & Business Development Tel: (587) Richard W. Clark, President and Chief Executive Officer Tel: (403) Eagle Energy Inc. Eagle Hydrocarbons Inc. 2710, th Avenue SW 3005, 333 Clay Street Calgary, AB T2P 2V6 Houston, TX info@eagleenergy.com TSX: EGL 11