MARQUEE ENERGY CORPORATE PRESENTATION MARCH 2018

Transcription

1 MARQUEE ENERGY CORPORATE PRESENTATION MARCH 2018

2 CORPORATE SNAPSHOT Michichi Calgary Corporate Profile Stock Symbol: Q Production: Shares Outstanding: Market Cap: MQX (TSX Venture) 2,874 boe/d (49% oil and liquids) >96% of corp. production is at Michichi million (basic) $ 22 million (@ $0.05/share) Net Debt 3 : $ 29 million (@ Sept. 30, 2017) Net Total Acres 1 : Net Michichi Acres 1 : 281,967 (~440 sections) 212,187 (76% of total) Calgary 120 km Drumheller 10 km Marquee land Marquee Banff horizontal wells Marquee pipeline Net Undeveloped Acres 1 : 119,983 Reserves 2 and Net Asset Value WI mboe BT NPV10 NAV / Share 4 Proved Developed Producing 5,270 $ 66,995 $0.11 Total Proved 13,915 $153,801 $0.31 Total Proved plus Probable 22,643 $262,246 $0.56 Gross Booked Proved and Probable Undeveloped Locations 2 : Land total as of January 17, Reserves values and drilling locations are derived from the independent engineering evaluation of the oil and natural gas reserves attributable to the properties of Marquee prepared by Sproule Associates Ltd. ("Sproule") dated March 7, 2018 and effective December 31, 2017, prepared in accordance with National Instrument Standards of Disclosure for Oil and Gas Activities. See "Advisories - Drilling Locations" herein. 3. See "Advisories - Non-GAAP Measures" herein. 4. Net Asset Value per share is calculated as BT NPV10 reserve value less net debt at Q plus management s $10.0 million estimate for undeveloped land (avg. $200/ha) divided by the total basic shares outstanding. 2

3 MARQUEE INVESTMENT HIGHLIGHTS Why own Marquee Energy Ltd.? TSXV: MQX Proven, high quality light oil asset, with significant development drilling inventory and waterflood upside Predictable well results Robust half cycle well economics at US$60/bbl Continued focus on cost and productivity improvements 3

4 MMBOE BT NPV10, $M YEAR-END 2017 RESERVES Marquee Energy Historical Reserve Summary : Record TPP reserves and value 25 $300, $250, $200,000 $150,000 $100,000 $50, $- PDP TP TPP TPP Value Historical Reserves Year End Sproule Price Forecasts FD&A ($/boe) WI Year End Reserves (mmboe) Before Tax NPV 10 (M$) Year over Year Reserve Growth TP TPP PDP TP TPP PDP TP TPP PDP TP TPP $ 41,369 $ 65,557 $ 113, $ 69,709 $ 74,880 $ 140,534 87% 28% 10% $ 96,762 $ 138,234 $ 209,849 72% 77% 44% $ 129,912 $ 174,275 $ 257,942 39% 12% 16% $ 63,400 $ 139,700 $ 232,300-9% 19% 13% $ 2.45 $ $ 54,834 $ 131,187 $ 202,855-41% -20% -22% 2017 $ $ $ 66,995 $ 153,801 $ 262,246 9% 15% 28% 1. Reserve data included for 2011 to 2015 includes reserve information from Marquee Energy. Alberta Oil Sands acquired Marquee Assets in December 2016, and subsequently renamed the combined entity Marquee Energy. 2. The 2016 FD&A values reflect Alberta Oil Sands acquisition of Marquee Assets. The historical values are not directly comparable to the 2016 values (AOS acquired Marquee on December 6, 2016). 4

5 MICHICHI H CAPITAL GUIDANCE A A) Five well program, within the Michichi development fairway The wells offset existing producing horizontal wells within the fairway Locations (Status as of March 6, 2018): 100/ W4 (Drilled) 102/ W4 (Drilled) 100/ W4 (Drilled) 102/ W4 (Drilled) 102/ W4 (On production) The wells have been drilled using monobore technology in an average of 9 days, and will be completed with fracture stages DCE&T Capital: $9.3 million Capitalized G&A: $0.4 million H1 Capital: $9.7 million Marquee land Marquee Q Development wells Marquee Q Development wells Marquee Q Exploration wells Marquee Q Development wells Other Marquee Horizontal wells 5

6 OIL FOCUSED ASSET IS DELINEATED Proven, high quality light oil asset with significant development location inventory Trade 3D Seismic Significant Resource Dominant high working interest land position Delineated by 200 vertical and 86 horizontal Banff producers and extensive 3D seismic 281 net internally identified drilling opportunities includes 110 gross (107 net) proved and probable drilling locations 1 Waterflood upside Robust Economics 2 BT NPV10 $1.55 million per well 80% IRR Marquee land Vertical Banff Penetrations 2018 Horizontal wells Operational Strength Corporate base production decline of ~22% Control of infrastructure,100% operated at Michichi Gas sales capacity (~16 mmcf/d capacity; 50% utilized) 2,500 bbl/d pipeline connected oil battery (40% utilized) Abundant oil and gas transportation and sales capacity 1. See "Advisories - Drilling Locations" herein. 2. Capital: $2.0 million, based on $60 WTI/bbl, $1.75/GJ AECO, Currency Exchange Rate 0.78 USD/CAD, and the Sproule generated Michichi Banff type well. See page eight. 6

7 FOCUS ON ENHANCING WELL PRODUCTIVITY Michichi Completion Evolution Enhancing New Well Economics Current: Q Frac Spacing: 50 m, one mile lateral length 28 stage x tonnes per stage 87% increase in stages over previous design Positive production results to date Future Extended Reach Horizontals ( mile lateral length) Frac Spacing: 50 m tonnes per stage Waterflood potential 2013: Experimentation Phase Dual and single leg unstimulated horizontal wells Learnings: wells require proppant fracs to produce consistent results 2014 Q1 2017: Development phase: Frac Spacing: 100 m, one mile lateral length 15 stage x 22 tonnes per stage cross-linked water frac Successful and repeatable : Exploration Phase Attempted three different completion styles Open Hole, Acid Frac, Multi Stage Frac Produced varying degrees of success 7

8 Calendar Day Rate, BBL/D MICHICHI WELL PERFORMANCE IS PREDICTABLE Robust new well economics, backed by predictable well results. Economic Parameters 2 Sproule Michichi Banff Core Type Well 250 Sproule Michichi Banff Type Well 1 Oil (bbl/d) DCE&T (millions) $2.0 IP365 Oil: BOE: 98 bbl/d 151 boe/d 200 EUR 3 Oil: BOE: 130 mbbl 200 mboe 150 First year Capital Efficiency ($ per boe/d) $13,245 BT NPV10 (millions) $1.55 IRR 80% Payout 1.2 years GOR: Sales: 3,250 scf/bbl 28 bbl NGL / mmscf 70% Oil and Liquids 30% Sales Gas 1 st Year Operating Netback 4 $36.01 per boe Months on Production 1. Sproule Total Proved plus Probable Type Well was created by Sproule and Associates ( Sproule ) by a qualified reserve evaluator, with an effective date of December 31, 2017, in accordance with National Instrument Standards of Disclosure for Oil and Gas Activities. Such disclosure is based on information that includes wells with similar reservoir parameters and completion type. 2. WTI US$60/bbl, FX: $1.28 USD/CAD, AECO $1.75/GJ. 3. As used by Marquee, estimated ultimate recovery (EUR) has the meaning set out jointly by the Society of Petroleum Engineers and World Petroleum Congress in the year 2000, being those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from an accumulation, plus those quantities already produced therefrom. 4. See "Advisories - Non-GAAP Measures" herein. 8

9 MICHICHI READY FOR DEVELOPMENT Marquee owns a large, proven and high working interest resource play at Michichi Wells have attractive economics at US$60/bbl and $1.75/GJ AECO pricing There is ample facility capacity at the operated infrastructure to support further growth in the area The management team continues to enhance economics by reducing costs and increasing productivity Photo: Marquee Oil Battery 9

10 MARQUEE HEDGES As of March 6, 2018 Term Hedge Type Counterparty Volume Pricing Jan 1, 2018 to March 31, 2018 AECO fixed price National Bank 3,000 GJ/d Cdn $3.05/GJ April 1, 2018 to Sep 30, 2018 AECO costless collar National Bank 3,000 GJ/d Cdn $ $2.53/GJ Oct 1, 2018 to Dec 31, 2018 AECO costless collar National Bank 3,000 GJ/d Cdn $ $2.715/GJ Jan 1, 2019 to March 31, 2019 AECO costless collar National Bank 3,000 GJ/d Cdn $ $2.915/GJ April 1, 2019 to June 30, 2019 AECO costless collar National Bank 3,000 GJ/d Cdn $ $2.14/GJ Oct 1, 2017 to June 30, 2018 WTI costless collar National Bank 400 bbls/d USD $ $56.25/bbl January 1, 2018 to December 31, 2018 Crude Oil Swap National Bank 150 bbl/day Cdn$69.00 January 1, 2018 to December 31, 2018 Crude Oil Swap National Bank 250 bbl/day Cdn$70.52 July 1, 2018 to June 30, 2019 WTI Crude Oil Put National Bank 400 bbls/d USD $45.00/bbl ($4.95/bbl premium) January 1, 2019 to December 31, 2019 Crude Oil Swap National Bank 150 bbl/day Cdn$66.35 July 1, 2019 to December 31, 2019 WTI Crude Oil Put National Bank 450 bbl/day USD $55.00 ($6.29/bbl premium) July 1, 2019 to December 31, 2019 NYMEX fixed price National Bank 3000 GJ/d Cdn $3.15/GJ 10

11 ANALYST COVERAGE Acumen Capital Trevor Reynolds E: P: Cormark Securities Inc. Garett Ursu E: P: Beacon Securities Limited Lyndon Dunkley E: P: GMP FirstEnergy Robert Fitzmartyn E: P: Haywood Securities Inc. Darrell Bishop E: P: Peters & Co. Dale Lewko E: P:

12 MARQUEE MANAGEMENT AND DIRECTORS Management: Directors: Dr. William Roach, B.Sc, Ph.D, C.Eng, MIM, Peng. Interim Chief Executive Officer Howard Bolinger, CA Executive Vice President Finance & CFO Adam Jenkins, P.Eng Vice President Corporate Development Rob Lemermeyer Vice President Production Dave Washenfelder, P. Geol Vice President Exploration Sam Yip, P. Eng. Vice President Engineering Dr. William Roach, B.Sc, Ph.D, C.Eng, MIM, Peng Chairman Adrian Goodisman, B.Sc., M.Sc. Eng. Stephen J. Griggs, BA, LD Paul Moase, B.Comm, MBA Leonard Sokolow, B.Econ., J.D., LL.M., CPA Robert Waters, BBA MBA, CA 12

13 CONTACT INFORMATION Howard Bolinger, CFO P: (403) Adam Jenkins, VP Corporate Development P: (403) ww.marquee-energy.com 1700, 500 4th Avenue SW Calgary, AB T2P 2V6 (403) Photo: Marquee Michichi wellsite 13

14 ADVISORIES Forward-Looking Information This presentation is for information purposes only and is not intended to, and should not be construed to, constitute an offer to sell or the solicitation of an offer to buy securities of Marquee Energy Ltd. ("Marquee"). Certain disclosures set forth in this presentation constitute forward-looking information within the meaning of applicable securities laws. Any information contained herein that is not a statement of historical facts is forwardlooking information. Forward-looking information is often, but not always, identified by the use of words such as "anticipate", "expect", "believes", "budget", "continue", "could", "estimate", "forecast", "intends", "may", "plan", "predicts", "projects", "should", "will" and other similar expressions. All estimates and information that describe Marquee's future, goals, or objectives, including management's assessment of future plans and operations, constitute forward-looking information under applicable securities laws. In particular, this presentation includes, without limitation forward-looking information pertaining, directly or indirectly, to the following: anticipated production, internal rates of return (IRR), net present value, netbacks, recycle ratios, finding costs and time to payout derived in the future from existing and new wells; the expectation that Marquee's drilling locations will be economic at strip commodity prices; the number of potential additional drilling locations and well inventory; potential additional production and recovery factors resulting from waterflood; the anticipated growth of Marquee's production and asset base; and Marquee's anticipated production and cash flows in In addition, statements relating to "reserves" are by their nature forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions that the reserves described can be profitably produced in the future. The reserves estimates provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered or recoverable, as applicable. Any estimated future net revenue from the production of the disclosed oil and natural gas reserves does not represent the fair market value of these reserves. Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect. Although Marquee believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because Marquee cannot give assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this presentation, assumptions have been made regarding and are implicit in, among other things: that Marquee will be able to successfully implement its planned capital expenditure program; that historic drilling and well results will be representative of future drilling and well results; bank debt levels and borrowing capacity of Marquee; those assumptions noted with respect to well economics on the page entitled "Michichi Well Performance is Predictable"; cash flow projections and netbacks; field production rates and decline rates; the ability of Marquee to secure adequate product transportation, and secure such transportation in a timely and cost efficient manner; the ability to obtain qualified staff, equipment and services in a timely and cost efficient manner to develop its business; the ability to operate its properties in a safe, efficient and effective manner; the ability to obtain financing on acceptable terms; the ability to replace and expand oil and natural gas reserves through acquisition, development of exploration; the timing and costs of pipeline, storage and facility construction and expansion; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters; and the ability to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used. Forward-looking information involves known and unknown risks and uncertainties that could cause actual results to differ materially from those anticipated and described in the forward-looking information, which include, but are not limited to: declines in commodity prices; exploration, development and production risks; assessments of acquisitions; the validity of analogues to other properties and projects; the effectiveness of the application of certain drilling and completion technologies; the accuracy of reserve measurements; availability of drilling equipment; access restrictions; the inability to secure permits and licenses; aboriginal claims; title defects; impediments to the transportation and marketing of crude oil, liquids and natural gas; reliance on operators and key personnel; competition; lack of diversification; funding requirements; the ability access to credit and capital markets; market volatility; cost inflation; foreign exchanges rates; general economic and industry conditions; health, safety and environmental risks; climate control legislation; failure to obtain regulatory approvals; government regulation and taxation; and those other risks. Forward-looking information relates to future events and/or performance and, may prove to be incorrect. Actual results may differ materially from those anticipated in the information provided. Undue reliance should not be placed on forward-looking information because Marquee can give no assurance that such expectations will prove to be correct. The forward-looking information contained in this presentation is given as of the date hereof and Marquee does not undertake any obligation to update forward-looking information except as required by applicable securities laws. References to BOEs Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six Mcf to one bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and do not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of six to one, utilizing a boe conversion ratio of six Mcf to one bbl may be misleading as an indication of value. Drilling Locations Marquee has three categories of drilling locations: (i) proved locations; (ii) probable locations; and (iii) unbooked locations. Proved locations and probable locations are derived from Marquee's most recent independent reserves report prepared by Sproule as at December 31, 2017 and account for drilling locations that have associated proved and/or probable reserves, as applicable. Unbooked locations are internal estimates based on the Company s prospective acreage and assumptions as to the number of wells that can be drilled per section based on industry practice and internal review. Unbooked locations do not have attributed reserves. Of Marquee s 281 (net) drilling locations, 58.5 are proved locations, 43.3 are probable locations, and the remaining 179 are unbooked locations. Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves information. There is no certainty that Marquee will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves or production. The drilling locations on which Marquee will actually drill wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results, additional reservoir information that is obtained and other factors. While certain of the unbooked drilling locations have been de-risked by drilling existing wells in relative close proximity to such unbooked drilling locations, other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production. Unbooked locations were evaluated as of March 7, Initial Production Rates Any references herein to production rates, test rates or initial production rates (including IP 30) are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter. Readers are cautioned not to place reliance on such rates in calculating the aggregate production for Marquee. Initial production or test rates may be estimated based on other third party estimates or limited data available at this time. Well flow test result data should be considered to be preliminary until a pressure transient analysis and/or well test interpretation has been carried out. In all cases herein, initial production or test results are not necessarily indicative of long term performance of the relevant well or fields or of ultimate recovery of hydrocarbons 14

15 ADVISORIES Well Economics Certain information contained herein sets forth the well economics utilized by management of Marquee in analyzing various opportunities of Marquee. The presentation of such well economics does not represent an estimate of reserves or the net present value of such reserves. Such economics were prepared on the assumptions set forth herein and also make certain other assumptions with respect to initial production levels, the type of commodity that may be produced, commodity prices, well depths, capital expenditures that may be incurred in drilling, completing and in the tie in of wells, operating costs related to the wells and royalties. The well economics are partially based on certain historic results received by Marquee and other producers in the area to date and certain production profiles based on area production and other assumptions as set forth, which may prove to be inaccurate. Capital costs to drill, complete and tie in wells and operating costs in each area are also based on management's experience and not on historical data. In addition, such costs are based on management's estimates when the estimates were prepared and have not been escalated notwithstanding that certain wells are planned to be drilled in the future or that operating costs may increase in the future, including during the period that wells are projected to be drilled. Target volumes are volumes of oil and natural gas that management is targeting and in respect to which management is basing its decision to pursue the opportunity in a particular prospect. Actual reserves recovered from any prospect may be different than management's expectations utilized for planning purposes as provided herein and such difference may be material and would impact on the economics of each particular play. Non GAAP Measures This presentation contains the term net debt, which does not have any standardized meaning under International Financial Reporting Standards (IFRS) representing generally acceptable accounting principles for publicly accountable enterprises in Canada (GAAP) and, therefore, may not be comparable with the calculation of similar measures presented by other companies. Net debt is calculated as net debt, defined as current assets less current liabilities (excluding fair value of commodity contracts and flow-through share premiums). Marquee considers net debt as an important additional measure to monitor debt repayment requirements and track the financial viability of Marquee. This presentation also contains the term operating netbacks which does not have any standardized meaning under IFRS representing GAAP and, therefore, may not be comparable with the calculation of similar measures presented by other companies. Marquee uses field operating netbacks to analyze operating performance. Marquee believes this benchmark is a key measure of profitability and overall sustainability and this term is commonly used in the oil and natural gas industry. Field operating netbacks are not intended to represent operating profits, net earnings or other measures of financial performance calculated in accordance with IFRS. Operating netbacks are calculated by deducting royalties, production and operating and transportation expenses from revenues before other income (losses), and adding (deducting) commodity contract gains (losses). 15