Canadian Oil Sands Summit February 2014
Forward-Looking Statements Certain statements, estimates and financial information contained in this presentation ("Estimates") constitute forwardlooking statements or information. Such forward-looking statements or information involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from the Estimates or results implied or expressed in such forward-looking statements. While presented with numerical specificity, the Estimates are based (i) on certain assumptions that are inherently subject to significant business, economic, regulatory, environmental, seasonal, and competitive uncertainties, contingencies and risks including, without limitation, assumptions of resource, ability to obtain debt and equity financing, capital costs, construction costs, well production performances, operating costs, commodity pricing, differentials, royalty structures, regulatory approvals, and other known and unknown risks, all of which are difficult to predict and many of which are beyond the control of ULC ("Grizzly"); and (ii) upon assumptions with respect to future business decisions that are subject to change. There can be no assurance that the Estimates or the underlying assumptions will be realized and that actual results of operations or future events will not be materially different from the Estimates. Under no circumstances should the inclusion of the Estimates be regarded as a representation, undertaking, warranty or prediction by Grizzly, or any other person with respect to the accuracy thereof or the accuracy of the underlying assumptions, or that Grizzly will achieve or is likely to achieve any particular results. The Estimates are made as of the date of this presentation and Grizzly disclaims any intent or obligation to update publicly or to revise any of the Estimates, whether as a result of new information, future events or otherwise. Recipients are cautioned that forward-looking statements or information are not guarantees of future performance and, accordingly, recipients are expressly cautioned not to put undue reliance on forward-looking statements or information due to the inherent uncertainty therein. There are significant differences in the criteria associated with the classification of reserves, prospective resources and contingent resources. Contingent resources and prospective resources estimates involve additional risks, specifically the risk of not achieving commerciality and exploration risk, respectively, not applicable to reserves estimates. No adjustments for these risks have been made in the groupings of reserves and recoverable resources. All reference to dollars in this presentation should be assumed to refer to Canadian dollars, unless otherwise noted. All references to reserves and or resources represent Grizzly s interest in reserves and resources prior to the deduction of Crown royalties, unless otherwise noted. 2
Investment Highlights One of the Largest Oil Sands Land Positions in Alberta > 800,000 net acres in the Athabasca and Peace River oil sands regions (100% operated, nearly 100% WI) focused on SAGD development ~ 3.4 billion bbls of 2P+Contingent Resources (1) across more than 30 project areas Significant exploration and exploitation technology upside potential Privately owned by Wexford Capital and Gulfport Energy Corporation Repeatable & Scalable Development Model Plan to have > 20 projects ready for development in the next 5 years, with bitumen production potential of ~170,000 bbbls/d Grizzly s ARMS development model enables repeatable and scalable project development, reducing execution and financing risk Steam injection at Algar Lake Phase 1 has commenced Using Rail to Consistently Access Premium Markets Windell truck-to-rail terminal at Conklin, Alberta will be ready to ship Algar Lake and 3 rd party oil and receive diluent Rail car fleet has been leased to handle Algar Lake production Paulina rail-to-barge terminal project design and permitting on the lower Mississippi River in Louisiana is advanced 1. Source: GLJ Petroleum Consultants Ltd., as at December 31, 2013 3
2013 Accomplishments Algar Lake Phase 1 construction is complete. Reservoir steam injection commenced in January 2014 May River Completed a 29 well delineation drilling program last winter Filed a 12,000 bbl/d development application in Q4 2013 Cadotte Evaluated results of preliminary delineation work and acquired land on this 345 mmbbl Contingent Resource (1) Peace River play Thickwood Advanced the 12,000 bbl/d development application filed in Q4 2012 Rail Strategy Constructed Windell truck to rail terminal near May River Completed design engineering and filed permits for Paulina rail-to-barge terminal Contracted 10 year rail rates with CN and leased rail cars Began discussions for 3 rd party business for both terminals 1. Source: GLJ Petroleum Consultants Ltd., as at December 31, 2013 4
800,000+ Net Acres of Alberta Oil Sands Leases Lease Other Oil Sands Lease Alberta Oil Sands Areas Producing Thermal Project Under Construction Thermal Project City of Fort McMurray City of Peace River 5
Grizzly Assets Grizzly has a high quality resource based on Steam Assisted Gravity Drainage ( SAGD ) with additional upside using other reservoir recovery processes 3.4 billion bbls of 2P + Contingent Resources (1) Resources primarily located in low risk clastic reservoirs, with some exposure to the carbonates Two thirds of current lease position remains unexplored, which provides upside potential Proved Reserves (mmbbls) 2P Reserves (mmbbls) Contingent Resources (mmbbls) 2P Reserves + Contingent Resources (mmbbls) Potential (1) Plateau Production (bbls/d) Clastics (Existing Technologies) (1) Operating Algar Lake Phase 1 67 114 35 149 21,000 Near-Term Development Projects May River 0 157 662 819 120,000 Cadotte 0 0 345 345 34,000 Thickwood 0 0 114 114 18,000 Other Projects Additional Growth Properties 0 0 1,769 1,769 230,000 Total Existing Technologies 67 271 2,925 3,196 423,000 Carbonates (Technology under Development) (1) Additional Growth Properties 0 0 187 187 17,000 TOTAL 67 271 3,112 3,383 440,000 1. Source: GLJ Petroleum Consultants Ltd. as at December 31, 2013; All Contingent Resources herein refer to Best Estimate. 6
Grizzly s ARMS Development Model Grizzly s innovative Advanced, Relocatable, Modular, Standardized (ARMS) Development Model uses proven technologies in a more flexible, compact form to generate 20,000 bbls/d of steam ARMS will allow Grizzly to exploit smaller bitumen pools and accelerate production from larger pools by scaling steam capacity to match reservoir development requirements Repeatable and manageable project size allows Grizzly to drive down costs and reduce financing risk Reduced cost Shop focused construction vs. field 50% smaller footprint vs. typical SAGD facility Fewer pipe racks less steel Advanced communications Re-use plants to reduce average cost over time Assembly in 3 months Reduced downtime Production trains can operate independently Self-generated power Advanced centralized process controls Reduced risk Portability allows Grizzly to manage production levels over the life of a reservoir GRIZZLY S ARMS PLANT CORE 7
Grizzly Project Development Portfolio Property # ARMS Plants Production Potential (bbls/d) (1) 2P Reserves + Contingent Resources (2) (mmbbls) Status Algar Lake 1 1 6,000 50 Producing Algar Lake 2 1 6,000 50 Regulatory Approval Received May River Phase 1 2 12,000 157 Regulatory Application filed December 2013 May River Full Field 12 90,000 662 Cadotte 7 50,000 345 Plan to file Regulatory Application by December 2016 Plan to file Development Application by December 2016 Thickwood 1 5,000 50 Regulatory Application filed December 2012 Total 24 170,000 1,314 Attractive Project Portfolio ready for scalable development 1. Management Estimates; 2. Source: GLJ Petroleum Consultants Ltd., as at December 31, 2013 8
Algar Lake Property ~ 12,000 bbls/d 100% W.I. in 56,960 contiguous acres of oil sands leases in the southern Athabasca region T88 GLJ has assigned 114 mmbbls of 2P Reserves and 35 mmbbls of Contingent Resources The Algar development area has been extensively explored 65 cored delineation wells and an additional 16 appraisal exploration core holes outside of the initial development area Reservoir characteristics T87 T86 T85 Up to 22 metres thick bitumen pay No bottom water or top gas T84 Continuous caprock over 40 metres thick Expansion potential: T83 18+ metre thick bitumen pay outside of the initial development area T82 Reservoir steam injection commenced in January 2014 Ramp to full production by mid 2015 Phase 2 regulatory approval is in hand R14 R13 R12 R11 R10 R8W4 T81 9
Algar Lake Reference Well AB-16-10-85-12W4 Wabiska Wabiskaw-D 5m McMurray Devonian Devonian 10
Algar Lake Reservoir Quality Gamma Ray Logs Over Horizontal Production Well Trajectories Excellent Reservoir Quality over Entire Well Length 11
Algar Lake Construction Pictures Evaporator Tower & Construction Office / Phase 2 Site Central Processing Facility Tank Farm Well Pad 12
May River Property ~ 100,000 bbls/d 46,720 acres of of 100% working interest oil leases located in one of the most attractive areas of the Athabasca oil sands GLJ has assigned 157 mmbbls of 2P reserves and 662 mmbbls of Contingent Resources Adjacent to industry leading SAGD projects including Statoil KKD project and close to Jackfish, Christina Lake and CNRL Kirby projects Located ~130 km southeast of the city of Fort McMurray and 14 km from the town of Conklin. Adjacent to Windell rail terminal and other infrastructure 122 stratigraphic wells have been drilled and logged down to the McMurray Formation Initial 12,000 bbls/d regulatory development application was filed in Q4 2013 80 km 2D full field seismic program is underway in Q1 2014 13
819 MM Barrels of High Quality Recoverable Bitumen GLJ Best Estimate Net Continuous Bitumen Pay 08-18-077-08 40 metres Net Continuous Pay Multiple stacked channel system Analogous to nearby Cenovus, Devon, MEG and Statoil projects Up to 40 metres thick bitumen pay with continuous cap rock High permeability sands should deliver bitumen at steam-oil ratios in the 2.2 to 2.8 range 14
Cadotte Property ~ 50,000 bbls/d 100% W.I. in 48,960 acres GLJ has assigned 345 mmbbls of Contingent Resources Up to 18 meters metres net continuous pay in lower formation Delineation program planned in 2015 15
Thickwood Hills ~ 12,000 bbls/d 100% W.I. interest in 38,400 acres 59 cored delineation wells drilled T92 GLJ has assigned 114 mmbbls of Contingent Resources Reservoir characteristics (Wabiskaw D): Bitumen sand covers entire land block Clean, blocky sand up to 20 metres thick No bottom water or top gas Technology upside in Wabiskaw A: Thinner, laterally extensive resource with excellent properties and less viscous bitumen 1.1 billion barrels of bitumen initially-in-place (13 mmbbls included in contingent resources) Area competitors plan to pilot CSS and conductive heating 12,000 bbls/d regulatory development application filed in Q4 2012 T91 T90 T89 T88 R16 R15 R14 R13W4 16
Rail Transportation Strategy Rail provides consistent and flexible access to U.S.Gulf Coast and other markets offering Brent pricing Rail diluent requirements are 50% lower than pipeline requirements U.S.Gulf Coast refiners want minimum diluent, as shale gas condensate supply has saturated the market Condensate back-haul opportunities from the U.S.Gulf Coast are available to resource diluent requirements at lower cost Potential Rail Transportation Routes Potential markets for bitumen transport via rail 17
Grizzly s Rail Transportation Strategy Windell Terminal Site Conklin, AB Developing a rail loadout facility in Conklin, AB (Windell Terminal) and a rail to barge off-load facility on the lower Mississippi River (Paulina Terminal) Both terminals are located on CN main line. Grizzly has a 10-year rate contract with CN. Windell Terminal 18,000 bbls/d capacity located adjacent to our May River site. 160,000 bbls/d of existing and 1.5 MMbbls/d of planned industry bitumen production in Windell s service area Will be operational to handle Algar Lake oil production Capacity is expandable Paulina Terminal Site - Louisiana Paulina Terminal 40,000 bbls/d capacity located in proximity to 8 complex refineries in the Mississippi River with refining capacity of 2.4 MMbbls/d permitting is underway and expected to be completed in 6 months Grizzly has initiated discussions to handle 3rd party volumes at both facilities 18
2014 Business Plan Highlights Algar Lake Demonstrate Algar Lake reservoir and ARMS plant performance by executing a successful production ramp Achieve positive cash flow by year end May River Advance the 12,000 bbls/d May River development application Conduct 2D seismic program to direct future core hole drilling to support the filing of a full field development application Prepare ARMS design and execution plan based on Algar project experience Cadotte Conduct detailed reservoir physical and simulation studies Delineation and regulatory work plans for 2015 execution Thickwood Advance Thickwood regulatory development application Rail Strategy Establish rail transportation capability, efficient blending metrics and access to markets that transact based on world oil prices Receive development permits, sanction and construct Paulina 19