Raisa Energy LLC. DJ Basin Non-Op WI / Minerals Asset Divestiture. Executive Summary

Transcription

1 Raisa Energy LLC DJ Basin Non-Op WI / Minerals Asset Divestiture Executive Summary February 2018

2 Raisa DJ Basin Non-Op WI / Minerals Asset Divestiture ~10,700 Net Acres Total PV 10 of $603.5 mm 1 Net Production of ~1,900 boepd 2 Net Cash Flow of $2.0 mm/month 2 Raisa Energy LLC ( Raisa ) is offering for sale certain mineral and working interests primarily located in Adams and Weld counties, Colorado and Laramie County, Wyoming. Raisa has retained UBS Securities LLC ( UBS ) as the exclusive financial advisor for this transaction. The divestiture is offered in several working interest and mineral interest packages, however, Raisa will consider other non-conforming proposals. Raisa management is willing to manage assets for new owners. Investment Considerations Reserve Table 1 Divestiture and Horizontal Activity Map Core Non-Op Position in the DJ Basin Oil-Weighted Production Increasing Activity In Highly Economic Basin Multi-Zone Development Opportunities Diverse self-funding portfolio consisting of ~10,700 net acres located in the core of the DJ Basin ~4,900 net working interest acres ~5,800 net mineral / ORRI acres Strong production base of ~1,900 boepd net 2 (73% liquids) from 457 horizontal PDP wells growing to ~6,500 boepd net 3 from ~800 wells by year-end 2018 Total net PV 10 of $603.5 mm 1 with total net reserves of 88.8 mmboe 1 Reserve Net Reserves Net PV 10 Category (mmboe) ($mm) PDP 3.1 $45.9 Current Activity 33.7 $272.6 Total Locations 52.0 $284.9 Grand Total 88.8 $603.5 Rapid development of working and mineral/orri interests creates a unique selffunding cash flow generating asset of $2.0 mm/month 2 Raisa's active operating partners spent nearly $4 billion in capital expenditures in the basin in 2017 with Raisa participating in ~37% of all wells in the DJ Basin in 3Q 2017 DJ operators have announced 2018 capital budgets >15% above 2017 levels Raisa has 50+ AFEs and 650+ permits (~37% of Wattenberg permits) Focus will be on pad drilling and infill development leading to predictable production and cash flow growth Access to a diversified set of key DJ Basin operators including Anadarko, Noble, Extraction, Great Western, SRC Energy, EOG, PDC and Crestone Peak Deep inventory of proven Codell and Niobrara (A, B & C) drilling locations, with up to 26 wells per section Over 5,000 gross drilling locations with industry leading economics on Raisa's position Notes: 1. Effective Date as of 01/01/2018; 01/12/2018 NYMEX Strip (2018: $62.87, $2.90; 2019: $58.40, $2.81; 2020: $55.24, $2.82; 2021: $53.45, $2.85; 2022+: $52.66, $2.88) 2. Estimated January Estimated December

3 Offering Consists of Multiple Packages Raisa acreage position built from over 200 unique transactions focused on the best areas and operators Package Summary 1 Raisa Packaging Map and Units Working Interest Packages E. Central North L. South U. South W. Central Total Net Acres 1,066 1,126 1, ,907 8/8ths Royalty Burden 19% 20% 22% 20% 20% 20% Average WI 4% 5% 7% 4% 3% 5% PDP PV 10 ($mm) $9.1 $0.5 $5.1 $11.4 $9.2 $35.3 Total PV 10 ($mm) $42.9 $77.0 $223.8 $29.7 $56.4 $ E OCF ($mm) $6.8 $11.7 $11.1 $5.8 $10.4 $45.7 Well Count: PDP WIP AFE Permits Pre-Permits Locations ,308 Mineral / ORRI Interest Packages E. Central North L. South U. South W. Central Total Net Acres 1, ,389 2,276 5,832 Weighted Average Royalty 2 15% 17% 13% 13% 17% 15% Royalty Acres 1, ,489 3,127 6,983 PDP PV 10 ($mm) $0.8 $0.3 $0.3 $1.1 $8.0 $10.6 Total PV 10 ($mm) $22.5 $5.4 $27.4 $40.8 $77.5 $ E OCF ($mm) $0.5 $0.1 $0.7 $3.6 $5.7 $10.6 Well Count: PDP WIP Permits Pre-Permits Locations ,865 Notes: 1. Effective Date as of 01/01/2018; 01/12/2018 NYMEX Strip (2018: $62.87, $2.90; 2019: $58.40, $2.81; 2020: $55.24, $2.82; 2021: $53.45, $2.85; 2022+: $52.66, $2.88) 2. Assumes unleased acreage is leased at a 20% royalty 3. Includes 156 vertical wells 2

4 Avg. D&C Costs ($mm) Oil EUR (mbo) WTI Breakeven at 15% IRR (US$/bbl) WTI Breakeven at 15% IRR (US$/bbl) DJ Basin is One of the Most Economic Plays in the U.S. Niobrara and Codell horizontal plays have some of the best returns of US unconventional plays Significant improvements in well costs and EURs have driven strong returns even in times of low prices Mature basin with operators focused on efficiency and returns; pad drilling lead to an average spud-to-spud of seven days Industry Leading Economics 1 $100 $80 $60 $100 $80 $60 Raisa's acquisition efforts are focused on premier areas and operators which result in EURs in the upper quartile of all DJ Basin horizontal wells $40 $20 Asset Breakeven Wolfcamp Bone Spring DJ Niobrara Eagle Ford $40 $20 SCOOP/ STACK Weighted Average Breakeven by Play Bakken/ Wolfcamp Powder Bone Three River Spring Forks Average Raisa Well DJ Niobrara Eagle Ford Weighted Improved Well Performance and Operational Efficiencies in the DJ Focused Acquisition Efforts Lead to Premium Locations 2 $12.0 1, $10.0 $8.0 $6.0 $ Average EUR (mboe) P25 P50 P75 Raisa P50 is in the top quartile of DJ Basin wells P25 P50 P75 $ $ Average D&C Average EUR - Raisa PDP Wells All DJ Basin Wells Note: 1. WoodMackenzie 2. Scaled to 10,000' laterals 3

5 DJ Basin Operators Continue to Ramp Investment DJ Basin operators are expected to have >15% capital budget increase in 2018 with ~$4 billion in development capital Company Active / 2018 DJ Basin Rigs DJ Basin Capex Guidance ($mm) $0 $200 $400 $600 $800 $1,000 Raisa Gross Well Count Key Initiatives / Company Commentary Extraction 3 Extraction +5% Completed 200+ wells in 2017 and 2016 Rapid growth projections going into 2018 Noble 2 Noble Announce 2018 guidance on February 20, Completed 200+ wells in 2016 and 2017 Key Wattenberg Extension operator (Noble's East Pony) Deployed $850 mm in the DJ Basin in 2017 Anadarko 5 Anadarko +13% Completed 400+ wells in 2017 and 2016 Announced $950 mm 2018 capex budget planning on drilling 290 wells with five to six rig program Synergy 2 Synergy +28% Completed ~100 wells in 2017 and 2016 Drilled 100+ wells in 2017 with $400 mm net capex Announced strong well performance from tight cluster/stage spacing with surfactant and engineered completions PDC 2 PDC +7% % production growth and 15% drilling efficiency gains in Wattenberg in 2017 Plan 131 spuds and 139 TILs with $425 mm in capex in 2018 Bill Barrett 1 Bill Barrett Announce 2018 guidance on close of Fifth Creek acquisition Recently acquired Fifth Creek Energy for $649 mm Will disclose 2018 guidance upon closing of Fifth Creek transaction Recently divested Uinta Basin assets make the company a solely DJ Basin focused company Other Private Companies Bonanza 4 Creek Three key active operators are Great Western, Ward Petroleum and Crestone Peak All are actively developing the position in 2018 Source: 1. Baker Hughes as of 12/29/ COGCC as of 10/31/ PDP New Drills 4

6 Annualized Development Rate (wells per year) Number of Wattenberg Permits Number of Wells Accelerating Production Growth Raisa acreage concentrated in premier areas results in a continuous increase in development pace as operators concentrate on core areas of the basin to maximize returns 3Q 2017 Raisa had interest in 37% of DJ activity annualized rate of 359 new wells-to-production per year Raisa also holds an interest in ~37% of the current permits (650+ permits) in the core of the Wattenberg Field 131 current work in progress wells (drilling, completing, awaiting TIL) and 53 current AFEs on Raisa acreage Outstanding growth profile set to continue to increase, delivers significant production increases throughout 2018 Consistent permit-to-spud of less than 100 days in the DJ Basin With >$4 billion being invested in the DJ in 2018, Raisa s assets will deliver significant production growth throughout 2018 and beyond Raisa Development Raisa's 2018 Well Activity 1,200 1, Q Raisa wells to production annualized rate of 360/year 3Q 2017 ~37% of DJ Basin Activity 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q % 75% 60% 45% 30% 15% DJ Basin Hz. Wells Raisa Wells % of DJ Wells with Raisa Interest 0% DJ Wells with Raisa Interest (%) Permits on Raisa acreage are 37% of permits in the Wattenberg 2,000 1,500 1, Raisa 1, Total ~180 "active" wells AFE WIP 5

7 Net Production (boepd) Cumulative Free Cash Flow ($mm) Net Production (boepd) Op Op Cash Cash Flow Flow & Capex & Capex ($mm) ($mm) Unique Self-Funding Financial Asset Raisa's portfolio is comprised of a mix between mineral and working interest ownership that offers a unique cash flow generating investment opportunity Production ramps dramatically over the next few years with cumulative cash flow expected to exceed $250 mm over the next five years As part of the investment considerations, the Raisa team is willing to manage the asset for potential acquirers that are interested in asset level exposure but do not have the staff to manage day-today oil and gas operations Net Operating Cash Flow and Capex Profile 1 $ ,000 $150 $175 10,000 1,000 $150 $150 $125 $120 $120 $150 $100 $125 $90 $90 $75 $100 $60 $60 $50 $75 $30 $25 $30 $ $0 $0 $0 $ $0 Capex Mineral Package Working Interest Package Mineral Interest Working Interest Capex Net Production Profile 1 20,000 Cumulative Free Cash Flow $1,000 5,000 15,000 $800 4,000 10,000 5,000 $600 $400 $200 3,000 2,000 1,000 Gross Well Count 0 $0 0 Mineral Interest Working Interest Cumulative Free Cash Flow Gross Well Count Notes: 1. Effective Date as of 01/01/2018; 01/12/2018 NYMEX Strip (2018: $62.87, $2.90; 2019: $58.40, $2.81; 2020: $55.24, $2.82; 2021: $53.45, $2.85; 2022+: $52.66, $2.88) 6

8 Portfolio Concentrated in the Core of the Basin Asset packages focused in areas of high in-place volumes, strong well performance and highly active operators North Package: Exceptional Codell performance demonstrated by EOG EOG's "Premier Play" Anadarko actively permitting across oil-rich reservoir East Central Package: Core area for Noble Thick net pay; high in-place (hyrdocarbon volumes) Includes 100% Noble-operated "East Pony" acreage (eastern extension of the play); strong well results and low D&C costs demonstrated in the Niobrara West Central Package: Core area for several DJ Basin pure-play companies including Extraction, Great Western and SRC Energy Thick net pay; high in-place (hydrocarbon volumes) Strong production from Niobrara A, B and C benches Best-in-basin Codell well performance Upper South Package: Highly-active operators including Anadarko and Crestone Peak Most mature area with operators focused on low-risk pad drilling Lower South Package: Emerging area with superb initial Codell results Niobrara OOIP (mmbo/section) COLORADO WYOMING NEBRASKA Thickest Niobrara section allows operators to develop at 26+ wells per section in the Niobrara A, B and C and Codell Codell OOIP (mmbo/section) WYOMING COLORADO NEBRASKA 7

9 Lower Cretaceous Upper Cretaceous Stacked Pay Development Opportunities Potential for up to 26 wells per section with strong results from the Niobrara A, B and C, and Codell benches Stratigraphic Column Focus on Key Horizontal Plays Pierre Shale Sussex Sandstone Pierre Shale Shannon Sandstone Sharon Springs Shale Niobrara A Chalk Niobrara B Chalk Raisa acreage located in highest producing Niobrara and Codell fairways Extensive technical analysis leveraged to identify premium acres exhibiting large in-place volumes, high well performance and active operators Stacked pay with operators currently co-developing Niobrara and Codell Prolific development of the Niobrara B and C interval regionally, with more recent expansion into the Niobrara A Codell sandstone extensively developed across Raisa position Acreage benefits from the effects of the Wattenberg thermal anomaly (hydrocarbon maturity/mobility and significant overpressure) Reserve Report quantifies the Niobrara and Codell ~1,200 Codell and ~3,500 Niobrara gross drilling locations Additional unquantified upside potential in the Greenhorn and J Sands Niobrara C Chalk Fort Hays Dirty Lime Fort Hays Clean Lime Codell Sandstone Development Model DJ Basin Hydrocarbon Phase Windows Laramie County, WY Carlile Shale Greenhorn Graneros Shale D Sand J Sand Skull Creek Shale Quantified Dakota Sandstone Unquantified 1 mile Development Bench Unquantified 8

10 Summary Reserves and Cash Flows Raisa Reserve Report 1 as of 01/01/2018 Working Interest Packages Mineral Interest Packages Reserve Count Total 6:1 Net Capex Net PV 10 Count Total 6:1 Net Capex Net PV 10 Category (#) (mmboe) ($mm) ($mm) (#) (mmboe) ($mm) ($mm) PDP $ $10.6 WIP $3.5 $ $14.6 AFE $5.8 $ Permit $87.9 $ $36.4 Pre-Permit $98.6 $ $27.9 Total Proved 1, $195.8 $ , $89.4 Locations 1, $315.8 $ , $84.1 Grand Total 2, $511.7 $ , $173.5 Net PV 10 by Working Interest / Mineral Interest Net PV 10 by Package Net PV 10 by Operator 29% 71% Working Interest Mineral Interest 12% 22% 14% 11% 41% E. Central Lower South North Upper South W. Central 3% 14% Notes: 1. Effective Date of 01/01/2018; 01/12/2018 NYMEX Strip (2018: $62.87, $2.90; 2019: $58.40, $2.81; 2020: $55.24, $2.82; 2021: $53.45, $2.85; 2022+: $52.66, $2.88) 5% 6% 8% 13% 19% 14% 18% Extraction Crestone Peak Ward Anadarko Great Western Noble SRC Energy EOG Other 9

11 Investment Considerations Portfolio of Highly Economic DJ Basin Assets DJ Basin is one of the most economic basins in the US Diversified portfolio concentrated in the core areas of the Wattenberg Field with additional exposure to Noble's East Pony and EOG's "Premier" Wyoming Codell Play Acreage position in operators' core areas with ~37% of DJ Basin activity on Raisa's acreage in 3Q 2017 Unique Self-Funding Financial Asset Cash flow positive, self-funding asset with a rapid growth profile due to continued operator focus Significant 2018 growth anticipated, exiting 2018 with ~6,500 boepd 1 and 800 wells Mix of mineral and working interest assets generates over $250 mm in free cash flow over the next five years Exposure to Rapid Growth Under Leading Operators Diverse asset with exposure to several DJ Basin focused operators that includes Anadarko, Noble, Extraction, Great Western, SRC Energy, EOG, PDC and Crestone Peak 2018 capital guidance up 15% from 2017 with ~$4 billion in capital deployment planned in 2018 by Raisa operators Operators highly focused on Raisa's acreage with 131 wells currently in progress, 53 current AFEs and 1,000+ permits across Raisa acreage Notes: 1. Estimated December

12 Process / Contact Information Process Transaction effective date of January 1, 2018 Timing Online VDR currently available Data room presentations available February 22 March 19 Bids due on or before March 27, 2018 ("Bid Date") Bid instructions will be provided approximately 10 days prior to Bid Date Evaluation materials will include: Raisa reserve report in ARIES and PHDWin Supporting financial, technical and land data Information on key upsides Send executed confidentiality agreement and Q&A regarding the assets to raisadjbasin@ubs.com Visit our website at Timeline February 2018 S M T W T F S March 2018 S M T W T F S Data Room Presentations Bid Date Holiday Key Contacts Miles Redfield David Edwards Daniel Kohl Philip Pavlich Brian Telesmanich Managing Director miles.redfield@ubs.com Executive Director david.edwards@ubs.com Executive Director daniel.kohl@ubs.com Senior Director philip.pavlich@ubs.com Director brian.telesmanich@ubs.com 11

13 Disclaimer This Executive Summary ( Document ) contains selected information pertaining to the business and operations of Raisa Energy LLC (the Company ). This Document has been prepared by the Company and is being furnished by UBS Securities LLC ( UBS ), the Company s exclusive financial advisor, to selected parties that may be interested in a potential transaction involving the Company (the Transaction ). UBS has not independently verified any such information. The sole purpose of this Document is to assist recipients in deciding whether they wish to proceed with a further investigation of a possible Transaction. It is not intended to form the basis of any investment decision or any decision to effect a Transaction with the Company. This Document does not constitute an offer or invitation for the sale or purchase of securities. This Document is for distribution only to persons reasonably believed to be sufficiently expert to understand the risks involved. This Document may include certain statements, estimates or projections with respect to the anticipated future performance of the Company. Such statements, estimates or projections are based on assumptions or judgments about future events and Company actions that may or may not be correct or necessarily take place and are by their nature subject to significant uncertainties and contingencies, many of which are outside the control of the Company. There can be no assurance, therefore, that any estimates or projections will be realized. The information contained herein speaks as of the date hereof and does not purport to contain all information that the recipient may require. The Company and UBS undertake no obligation to provide additional, updated or corrected information. No representation or warranty is made and no responsibility or liability is accepted by the Company or UBS or by any of their respective officers, directors, employees, agents or affiliates and all are hereby disclaimed. The Company will be under no obligation to treat interested persons equally or provide the same information and it reserves the right at any time to (i) terminate further discussions with any party; (ii) request the return or destruction of this Memorandum; (iii) modify any procedures; and (iv) reject any and all proposals. The contents of this Document shall not be construed as legal, tax, regulatory, accounting or investment advice or a recommendation. Any recipient should consult its own counsel, tax and financial advisors. Any proposal regarding a possible Transaction will be deemed accepted only when a definitive transaction agreement has been executed by all parties thereto. This Document must not be copied, reproduced, distributed or passed to others at any time without the prior written consent of the Company and UBS. You should communicate only with UBS regarding the Transaction or with questions concerning the Company. The existence of this Document is subject to confidentiality. UBS The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved. 12