Corporate Presentation August, 2018

Transcription

1 Corporate Presentation August, 2018

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, type curve production estimates and the Company s 2018 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. Finding and Development Costs Finding and development costs are calculated based on working interest gross reserves. Capital expenditures incurred in the year are aggregated with the change in estimated future development costs and are then divided by the applicable reserves additions. Finding and development costs do not have standardized methods of calculations and therefore may not be comparable to similar measures used by other companies. Non-IFRS Measures In this presentation references are made to certain financial measures such as adjusted funds flow, operating netback and net debt 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 cash from operating activities, which are determined in accordance with IFRS, as indicators of the Company s performance. 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 volumes for the applicable period. The calculation of the Company s operating netback is detailed under the heading Netback within Highlights. The Company defines net debt as outstanding bank debt plus or minus working capital. Adjusted funds flow represents cash from operating activities prior to changes in non-cash working capital and settlement of decommissioning obligations as detailed below: ($ Thousands) months Cash from operating activities 1,624 3,420 2,247 Decommissioning expenditures Change in non-cash working capital (769) 640 (617) Adjusted funds flow 1,033 4,238 1,723

4 Corporate Market Summary TSXV: TVL Basic shares outstanding million Fully diluted million Insider ownership basic 24.5% Insider ownership fully diluted 28.9% Corporate Strategy Growth through the dill 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 Focus on southern and central Alberta Corporate Summary P+P Reserves 1 2,227 Mboe Undeveloped land 196,900 net acres (99.6% working interest) LMR August 4, Exit Net Debt $4.9 million Bank line $9 million 2018 capital program $3 million 1 Independent reserves evaluation prepared by Sproule & Associates Limited dated February 20, 2018, effective December 31, 2017

5 Highlights months Financial ($ thousands) Petroleum and natural gas revenue 3,758 10,023 7,220 Adjusted funds flow 1,033 4,238 1,723 Net loss (8,303) (5,006) (3,434) Capital expenditures 1,989 17,706 6,613 Working capital (deficiency) (6,028) (4,894) 1,717 Average production (units as noted) Natural gas (Mcf per day) 1,899 2,358 2,107 Oil and NGL (bbls per day) Total (BOE per day) Average sales price Natural gas ($/Mcf) Oil and NGL ($/bbl) Netback ($/BOE) Petroleum and natural gas revenue Royalties Operating Transportation Operating netback

6 Reserves Reserves Summary 1 Oil Gas NGLs Total % Oil & NGLs RLI Mbbl Mmcf Mbbl Mboe % years Proved developed producing (PDP) 526 3, , Total proved 978 4, , Total proved and probable (P+P) 1,222 5, , PDP/Total proved 54% 67% 67% 60% PDP/ P+P 43% 53% 54% 48% Total proved/p+p 80% 79% 79% 80% Finding and Development Costs (F&D) years Capital expenditures ($ thousands) 17,706 6,613 11,444 35,763 Change in future development costs ($ thousands) 580 (303) 3,125 3,402 Total capital, including 2017 Duvernay costs ($ thousands) 18,286 6,310 14,569 39,165 Proved reserves additions 2 (Mboe) ,316.7 Proved F&D per boe $53.53 $44.66 $17.47 $29.75 Proved and probable reserves additions 2 (Mboe) ,192.1 Proved and probable F&D per boe $52.54 $53.52 $20.06 $32.85 Proved and probable F&D per boe excluding 2017 $22.23 $53.52 $20.06 $24.00 Duvernay costs 2 1 Independent reserves evaluation prepared by Sproule & Associates Limited dated February 20, 2018, effective December 31, No Duvernay reserves assigned at December 31, 2017

7 Areas of Activity Undeveloped Land Holdings (June 30, 2018) Gross Net Acres Acres Greater Coyote 98,500 98,500 Duvernay Shale Oil 90,100 90,100 Non Core 7,000 6,400 Turin 1,900 1, , ,900 TVL land holdings are 86% Crown and 14% Freehold Land expiring in 2018: 22,450 net acres

8 Development of the Duvernay Shale Oil Window The Duvernay East Shale Basin is a light oil resource play in the initial phase of development. West Shale Basin Edmonton Estimated potential of 7 to 18 MMbbls of original oil in place per section (BMO Capital Markets PADA Society Presentation March 12, 2018). The major players developing the East Shale Basin oil window are Vesta Energy and Artis Exploration Ltd. Chigwell (Traverse) Vesta has drilled 55+ horizontal Duvernay wells in the Joffre area south of Chigwell. Joffre (Vesta) Artis has drilled 20+ horizontal Duvernay wells in the Huxley-Twining area. Huxley- Twining (Artis) In the Pigeon Lake area of the West Shale Basin, several new wells have recently been completed and are on production. Duvernay Formation Gross Isopach East Shale Basin (ERCB/AGS Open File Report )

9 Duvernay Shale Oil Focus Area R03W5 R02W5 R01W5 R27W4 R26W4 R25W4 R24W4 R23W4 R22W4 R21W4 R20W4 R19W4 T52 Core Land Positions: T51 Chigwell 38, 739 Net Acres Crown and Freehold 1, 868 Acres Freehold Options T50 T49 T48 Pigeon Lake 20,455 Net Acres Crown and Freehold T47 Buffalo Lake 27,704 Net Acres Crown and Freehold T46 T45 Traverse s core land positions target three prospective oil prone Duvernay areas at Chigwell, Pigeon Lake and Buffalo Lake. T44 Multiple exploratory horizontal Duvernay wells are being completed near Traverse land which will provide significant information to further de-risk the play. T42 T43 T41 T40 T39 Traverse Energy Ltd. Land Producing Hz Duvernay Well Deep Control Wells Hz Duvernay Well Awaiting Completion Licensed Duvernay well Leduc Reef

10 Chigwell Duvernay Shale Oil Development Land Position: 38, 739 Net Acres Crown and Freehold 1, 868 Net Acres Freehold Options Large continuous land base acquired in Chigwell area. T43 RRX W4 R25W4 R24W4 R23W4 Traverse s well at Chigwell was drilled in October, 2017 and has been in production testing since December 21, Load recovery on July 31, 2018 was 35% (91,100 barrels). Oil cut for the month of July was 10%. TVL W4 Raging River (RRX) drilled a horizontal Duvernay well 8 miles west of Traverse s well. This well has been completed and is currently on production as of July T42 Traverse Energy Ltd. Lands Deep Control Wells TVL Producing Hz Duvernay Well Completed Hz Duvernay Well Awaiting Production Information Leduc Reef

11 Duvernay East Shale Basin Log and Maturity Comparison Raging River Ferrybank Traverse Chigwell Vesta Joffre FERRYBANK AREA CHIGWELL AREA JOFFRE AREA Total Organic Content (TOC) wt.% Total Organic Content (TOC) wt.% Total Organic Content (TOC) wt.% Thermal Maturity (Tmax) C Thermal Maturity (Tmax) C Thermal Maturity (Tmax) C 02/ W4 Tmax 448 C

12 Traverse Duvernay Drilling and Completion Information TVL Chigwell 02/ W4 Total Well Length Well Depth Drilling Period 4410 m MD 2025 m TVD 15 days Frac Stages 44 Stimulated Length of Horizontal Leg Sand Placed Open Hole Logs Recorded Through Horizontal Leg 2172 m 1.6 tonnes/m (3414 tonnes) Density-Neutron, Resistivity, and Spectral Gamma Porosity (LS Scale) 6% Water Saturation 10% Average Net Pay 24 m

13 Total Fluid Rate (bbl/d ) 1000 Duvernay East Shale Basin Normalized Fluid Rates * * Months of Production TVL 02/ W4 Average Fluid Rate (Vesta Joffre wells) * Fluid rate average adjusted for partial production period

14 Greater Coyote Area Undeveloped Land position: Coyote 35,310 Net Acres Michichi 18,080 Net acres Watts 23,680 Net Acres Other 21,280 Net Acres R20W4 R19W4 R18W4 R17W4 R16W4 R15W4 R14W4 R13W4 T32 T31 T30 Medium oil (34 API o ) focus area. T29 Oil production in development phase at Watts and Coyote. T28 Michichi has potential for horizontal development. Large land base with developed infrastructure and Coyote oil battery easily accessible within focus area. T27 T26 Traverse Energy Ltd. Land Mannville Pekisko Banff

15 Coyote Ellerslie Development Two horizontal wells and four vertical wells on production with 4 more horizontal locations identified. R16W4 R15W4 T29 T28 3D seismic coverage delineates pool. Existing infrastructure for continued development. 00/15-36 B Oil Battery has emulsion treating gas compression, oil storage, on-site power generation and water disposal. 02/09-36 Traverse Energy Ltd. Land Control Point Well TVL Producing Ellerslie Horizontal Well TVL Ellerslie Horizontal Well Location Ellerslie Pool Boundary TVL Producing Ellerslie Vertical/Directional Well B TVL Battery TVL Suspended Ellerslie Well

16 Oil Production, Barrels/Day Coyote Ellerslie Oil Type Curve 120,000 barrels oil, 333 MMscf sales gas Type Curves Reflect: Optimal placement of horizontal wells within reservoir. Increased length of planned wells. Improved frac techniques Months of Production Type Curve 00/ /09-36

17 Coyote Mannville Lithic Channel Development Mannville Lithic Channel pool is being developed using horizontal wells. R16W4 R15W4 T29 T28 3D seismic coverage and well control delineates pool. 03/09-36 B New wells will access existing infrastructure. 02/ /11-36 Traverse Energy Ltd. Land Control Point Well TVL Producing Mannville Horizontal well TVL Mannville Horizontal Well Location Mannville Channel Pool Boundary B TVL Battery

18 Oil Production, Barrels/Day Coyote Mid Mannville Oil Type Curve 80,000 barrels oil, 436 MMscf sales gas Type Curves Reflect: Optimal placement of horizontal wells within reservoir. Increased length of planned wells. Improved frac techniques Months of Production Type Curve 00/ / /09-36

19 Watts Ellerslie Development Ellerslie oil production from unstimulated reservoir. R15W4 High permeability and excellent porosity. 3D seismic shot in 2017 compliments existing 2D seismic coverage and delineates pool for further development. Two TVL wells on production in oil zone. T30 Partially depleted oil pool due to gas cap drainage. 00/07-29 Third Party reservoir study identified remaining reserves in the oil dominant portion of the reservoir. 00/03-29 Traverse Energy Ltd. Land Control Point Well TVL Producing Ellerslie Oil Well TVL Ellerslie Location Ellerslie interpreted Pool Boundary

20 Oil Production, Barrels/Day Watts Ellerslie Oil Type Curve Barrels Oil, 140 MMscf Sales Gas Months of Production Type Curve 100/ /07-29

21 Turin Low decline production from Sunburst sands. R19W4 Existing infrastructure with an oil battery equipped with water disposal, sweetening, gas compression, a sales gas line and gathering system. Conducting seismic and geological review for additional development drilling locations. T11 B Traverse Energy Ltd. Land TVL Suspended Well TVL Oil Pipeline TVL Water Pipeline Control Point Well TVL Producing Oil Well TVL Natural Gas Pipeline Water Disposal Well TVL Producing Gas Well TVL Sales Gas line B TVL Battery

22 Corporate Information Management Bank Laurie J. Smith Alberta Treasury Branch President & Chief Executive Officer Auditor David H. Erickson KPMG LLP VP and Chief Operating Officer Legal Counsel Sharon A. Supple Osler, Hoskin & Harcourt LLP Chief Financial Officer Independent Reserve Engineer Sproule Associates Limited Directors Transfer Agent David H. Erickson Computershare J. Reid Hutchinson Corporate Office Daniel G. Kolibar Suite 780, th Avenue S.W. Robert M. Libin Calgary, AB T2P 3C8 Laurie J. Smith T: (403) A. David van der Lee Adam O. Wells

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