POSITIONED FOR SUCCESS CORPORATE PRESENTATION November 2018 TSX: BNE 1
Forward Looking Information Certain statements contained in this Presentation include statements which contain words such as anticipate, could, should, expect, seek, may, intend, likely, will, believe and similar expressions, statements relating to matters that are not historical facts, and such statements of our beliefs, intentions and expectations about development, results and events which will or may occur in the future, constitute forward-looking information within the meaning of applicable Canadian securities legislation and are based on certain assumptions and analysis made by us derived from our experience and perceptions. Forward-looking information in this Presentation includes, but is not limited to: expected cash provided by continuing operations; future capital expenditures, including the amount and nature thereof; oil and natural gas prices and demand; expansion and other development trends of the oil and gas industry; business strategy and outlook; expansion and growth of our combined business and operations; and maintenance of existing supplier and partner relationships; supply channels; accounting policies; credit risks; and other such matters. Forward-looking information in this Presentation also includes, but is not limited to, the timing and amount of future dividend payments by Bonterra. All such forward-looking information is based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. The risks, uncertainties, and assumptions are difficult to predict and may affect operations, and may include, without limitation: foreign exchange fluctuations; equipment and labour shortages and inflationary costs; general economic conditions; industry conditions; changes in applicable environmental, taxation and other laws and regulations as well as how such laws and regulations are interpreted and enforced; the ability of oil and natural gas companies to raise capital; the effect of weather conditions on operations and facilities; the existence of operating risks; volatility of oil and natural gas prices; oil and gas product supply and demand; risks inherent in the ability to generate sufficient cash flow from operations to meet current and future obligations; increased competition; stock market volatility; opportunities available to or pursued by us; and other factors, many of which are beyond our control. The foregoing factors are not exhaustive. Actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits will be derived there from. Except as required by law, Bonterra disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. The term barrels of oil equivalent (BOE) may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet per barrel (6mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All BOE conversions in the report are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil. The forward-looking information contained herein is expressly qualified by this cautionary statement. 2
Forward Looking Information DRILLING LOCATIONS: This presentation discloses drilling locations in three categories: (i) proved locations; (ii) probable locations; and (iii) unbooked locations. Proved locations and probable locations, which are sometimes collectively referred to as booked locations, are derived from the Company s most recent independent reserves evaluation as prepared by Sproule as of December 31, 2017 and account for drilling locations that have associated proved or probable reserves, as applicable. Unbooked locations are internal estimates based on the Company s prospective acreage and an assumption 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 or resources. Of the 1,051 Cardium drilling locations identified herein, 317 are proved locations, 10 are probable locations and 724+ are unbooked locations. Unbooked locations have specifically been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic, seismic, and engineering, production and reserves data on prospective acreage and geologic formations. There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves, resources or production. The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results and other factors. While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations, the majority of 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, resources or production. 3
Current Snapshot Financial Common shares outstanding 33.3 million Insider ownership 12% Current monthly dividend $0.01 per share Current annualized yield (1) 2% Tax pools at Dec 31, 2017 $423 million Tax horizon 2019 2018 Q3 Exit Net Debt $328 million Bank Line $380 million ($293 million drawn at 2018 Q3 exit) Operational Oil and liquids weighting 69% (62% oil + 7% liquids) Natural Gas weighting 31% Reserve life index (PDP) 9 years Reserve life index (1P) 17 years Reserve life index (2P) 20 years (1) Based on Share Price of $7.46 4
Bonterra: Focused on Fundamentals Bonterra is a dividend paying oil & gas company focused on the development of its low-risk, oil-weighted asset base concentrated in the Cardium field in Alberta. Sustainable Yield Low Corporate Decline: ~22% Low Cost Producer: Annual All-in costs ~$24.00 CDN / boe (royalties, operating costs, G&A, and interest expense) Concentrated Asset Base: Light oil focused with Pembina & Willesden Green Areas representing ~97% of production Disciplined Growth Significant Low Risk Drilling Inventory: 1,051 (738 net) total Cardium locations identified and 327 (278 net) locations booked (38%) Established and Controlled Infrastructure: Minimal facility capital required to scale up production; 92% of production is operated Focus on Balance Sheet Free Cash Flow Generation: Efforts to reduce debt to funds flow ratio are ongoing 5
BOE/d 2018 Production Forecast 16,000 14,000 12,000 10,000 8,000 6,000 ~22% Corporate Decline Rate ~21% Corporate Decline Rate 4,000 2,000 0 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Vertical Wells Horizontal Wells 2018 Capital Program Low decline rate means less capital is required to maintain production, contributing to free cash flow growth over time 6
Edmonton Light ($/bbl) & BNE Share Price ($/share) Dividend History Cumulative Dividends Paid $1.1 Billion Cumulative Dividends Paid Per Share (1998 Feb 2018): $42.48 $160.00 $0.30 $140.00 $120.00 Dividend ($/month) $0.20 $0.10 $100.00 $80.00 $60.00 $40.00 $20.00 $- $0.00 Dividend EDM Light Share Price 7
Production Managed to Optimize Value Annual Production (BOE per day) 12,190 13,195 12,656 12,650 12,827 13,400 5,628 6,322 6,703 2010 2011 2012 2013 2014 2015 2016 2017 2018 (1) OIL & NGL GAS 8 (1) 2018 Guidance Successfully maintaining production levels through a challenging commodity price environment
Consistent Reserves Growth Gross Reserves Growth (MBOE Proved plus Probable year over year) 90,621 94,905 99,840 74,981 80,248 39,371 41,149 45,032 2010 2011 2012 2013 2014 2015 2016 2017 Proved Probable 9 Our asset base is lower risk (78% total proved), supporting P+P growth under a disciplined capital plan due to the predictable and reliable nature of the Cardium
Building per Share Value Production per Share (BOE per share) Reserves per Share (BOE per share) (P+P) 3.00 2.85 2.78 2.50 2.47 2.28 2.13 2.09 0.147 0.141 0.140 0.139 0.150 0.147 0.124 0.119 0.109 2010 2011 2012 2013 2014 2015 2016 2017 2018(1) 30% Production per share 2010 2011 2012 2013 2014 2015 2016 2017 44% Reserves per share Continuous value creation achieved from 2010 to 2017 10 (1) 2018 Guidance
Pembina Cardium Overview Original Oil in Place per Section Recovery Factor 0 to 5,000 Mbbl 5,000 to 10,000 Mbbl 10,000 to 20,000 Mbbl 20,000 to 25,000 Mbbl 25,000+ Mbbl 0% 5% 10% 15% 20% 25% Pembina is the largest conventional oilfield in Canada with large oil-in-place, low recovery to date, longterm stable production, high-quality oil and attractive netbacks Majority of Bonterra land covers areas with large original-oil-in-place, offering significant potential to increase recovery factors resulting in sizable increases in reserves and production 11
Concentrated Asset Base Cardium Lands by the Numbers Cynthia West Pembina Keystone 353 gross Sections of land (239 net) 92% Operated Production Blue Rapids Rose Creek Carnwood 1,051 gross Total Cardium locations (738 net) 327 gross Booked Cardium locations (279 net) Willesden Green 20 years Reserve Life Index (P+P) 99.8 MBOE P+P Reserves 12
Significant Cardium Location Inventory Total Inventory (1) Booked Locations 2018 Program Area Name Avg WI% Gross Net Gross Net Gross Net Rose Creek 97.1% 240 233 51 48 8 8 Keystone 94.9% 175 166 97 93 2 2 Carnwood 87.2% 133 116 54 52 17 17 West Pembina 95.8% 95 91 37 35 0 0 Blue Rapids 85.9% 71 61 30 25 4 2 Willesden Green 100.0% 19 19 18 17 0 0 Total Operated 93.6% 733 686 287 270 31 29 Total Non-operated 16.4% 318 52 40 9 13 2 Grand Total 70.2% 1,051 738 327 279 44 31 This significant inventory of identified, undrilled locations supports Bonterra s continued development for over 20 years (2) 13 (1) Estimates based on BNE s current internal development plan (2) Based on the 2018 capital budget
BOE/D Average BNE Cardium Full Cycle Economics 300.00 250.00 200.00 150.00 100.00 50.00 Reserves per well (MBOE) 165 IP (12 months) (boe/d) 112 14-1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Month BNE Type Curve: Full Cycle Price and Capital Sensitivities WTI $USD/bbl $ 55.00 $ 60.00 $ 65.00 $ 70.00 $ 75.00 Differential $USD/bbl $ (3.50) $ (4.25) $ (4.25) $ (5.00) $ (5.00) Foreign Exchange $USD/CAD $ 0.77 $ 0.77 $ 0.78 $ 0.78 $ 0.78 Quality Adjustment $CAD/bbl $ (3.25) $ (3.25) $ (3.25) $ (3.25) $ (3.25) BNE Realized Price (1) $CAD/bbl $ 63.63 $ 69.15 $ 74.63 $ 80.08 $ 86.49 Capital (2) M$C $ 2,155 $ 2,265 $ 2,265 $ 2,265 $ 2,375 BT Payout Yrs 1.3 1.2 1.0 0.9 0.8 IRR % 78% 85% 106% 130% 141% BT NPV 10 M$C $ 1,759 $ 1,953 $ 2,233 $ 2,509 $ 2,715 Capital Efficiency (3) S/boepd $19,250 $20,210 $20,210 $20,210 $21,175 Recycle Ratio 2.5 2.6 2.7 2.9 3.0 Cardium wells are repeatable, predictable and generate strong returns even in a weak commodity price environment (1) Flat Oil & Liq. Pricing Oil and Liquid Prices are not escalated over time; Gas Forecast = Sproule 2018 Q1 (2) Full Cycle - Drill, Complete, Equip, Tie-In, Facilities (3) IP365
Why Bonterra Focus on Balance Sheet Disciplined Growth Sustainable Yield Free Cash Flow Generation Concentrated Asset Base Significant Low Risk Economic Drilling Inventory Established and Controlled Infrastructure Low Corporate Decline Low Cost Producer 15
16 Appendix
Cash Flow Sensitivities Sensitivity Analysis (1) (estimate for 2018) Cash Flow Per Annum Cash Flow Per Share (2) Change of Canadian $1.00 per barrel of oil and NGLs $2,814,000 $0.08 Change of Canadian $0.10 per MCF of natural gas $ 929,000 $0.03 Change of Canadian $0.01 / U.S.$ exchange rate $1,520,000 $0.05 17 (1) This analysis uses current royalty rates, annualized estimated average production of 13,400 BOE per day and no changes in working capital (2) Based on annualized basic weighted average shares outstanding of 33,310,796
Pembina Cardium Development R6W5 Conventional Vertical Development Estimated ultimate oil recovery: 196,000 Bbl Recovery factor: ~4% T48 T48 Horizontal Development: Primary Depletion Estimated horizontal ultimate oil recovery: 264,000 Bbl (~90 Mbbl/ hz well) Recovery factor: ~9% (including verticals) Number of wells per section on primary is dictated by quality of the reservoir Secondary and Enhanced Recovery Upside Possible Recovery factor: 20+% Number of wells on secondary recovery is dictated by number of injectors required Horizontal waterflood pilot commenced in 2014 18 Horizontal Waterflood Pilot: 102/14-12-048-06W5/0 Estimated Original Oil in Place: 5,260,000 Bbl
BOPD Cardium Horizontal Waterflood Pilot Primary vs. Waterflood 1000 Start of injection Horizontal Production Horizontal Primary Horizontal Waterflood 100 Based on production and numerical reservoir simulation RF = 15% 10 RF = 9% 1 6% Recovery Factor increase equates to an additional 337 Mbbl of recoverable oil from waterflood 19
Corporate Information OFFICERS G. F. Fink CEO & Chairman of the Board R. D. Thompson CFO & Corporate Secretary A. Neumann Chief Operating Officer B. A. Curtis Senior VP, Business Development DIRECTORS G. F. Fink G. J. Drummond R. M. Jarock R. A. Tourigny A. M. Walsh D. Reuter HEAD OFFICE Bonterra Energy Corp. Suite 901, 1015 4 th St SW Calgary, AB T2R 1J4 Phone: 403.262.5307 BANKS CIBC National Bank of Canada The Toronto Dominion Bank Alberta Treasury Branches Business Development Bank of Canada INDEPENDENT RESERVE ENGINEER Sproule Associates Limited LEGAL COUNSEL Borden Ladner Gervais LLP AUDITORS Deloitte LLP REGISTRAR & TRANSFER AGENT Odyssey Trust Company of Canada STOCK EXCHANGE LISTING TSX: BNE 20