Investor Presentation December 2017
Forward Looking Statement Certain statements included in this presentation constitute forward-looking statements or forward-looking information under applicable securities legislation. Such forward looking statements or information are provided for the purpose of providing information about management s current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward-looking statements or information typically contain statements with words such as anticipate, believe, expect, plan, intend, estimate, propose, project, or similar words suggesting future outcomes or statements. Forward-looking statements or information in this presentation include, but are not limited to, statements or information with respect to: business strategy and objectives; and development and exploration plans. Forward-looking statements or information are based on a number of factors and assumptions which may prove to be incorrect. Although the Company believes that the expectations reflected in such forward looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Company can give no assurances that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involved a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Company and described in the forward-looking statements or information. These risks and uncertainties include, among other things: the ability of management to execute its business plan; general economic and business conditions; the risks of the gas industry and fluctuations in commodity prices; risks and uncertainties involving geology of gas deposits; the uncertainty of development and exploration activities; the uncertainty of estimates and projections relating to production, costs and expenses; the uncertainty of obtaining regulatory, including environmental approvals and uncertainties as to the availability and cost of financing. The foregoing list is not exhaustive of all possible risks and uncertainties. The forward-looking statements or information contained in this presentation are made as of the date hereof and the Company undertakes no obligation to update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise unless required by applicable securities laws. This presentation is for general background information purposes only and does not constitute an offer to sell or a solicitation to buy the securities referred to herein. 2
Ukraine Recent Developments Royalty rates were reduced from 55% to 29% effective January 1, 2016 Cub was opportunistic in acquiring three key 20-year production licence Cub partners with Slovakian operator on one of its new production licences. Received cash of 1.5 million and work program consisting of seismic and up to three wells. Increased its interest in KUB-Gas from 30% to 35% for no additional consideration in Q1 2016 Ukraine currency (UAH) stabilized in 2017 3
Ukraine - Regional pricing dynamics are excellent Q3 2017 average sales price of $6.02/Mcf and a corporate netback of $3.92/Mcfe (1) Q2 2017 average sales price of $5.71/Mcf and a corporate netback of $3.59/Mcfe (1) Q1 2017 average sales price of $6.88/Mcf and a corporate netback of $4.58/Mcfe (1) Royalty rate reduced from 55% to 29% effective January 1, 2016 Ukraine has one of the most energy intensive economies in the world with unmet demand Cub has 9 licenses in Ukraine representing 311,000 gross acres (142,000 net) Ukraine Gas Price ($/mcf) $9 $8 $7 $6 $5 $4 $3 $2 $1 $- $6.02 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 (1) Average net gas price and netback for the respective quarters from all fields 4
Ukraine Production Net Production (boe/d) 1,004 boe/d 936 boe/d O & M Fields O & M Fields Q2 2017 average Q3 2017 average 5
Board of Directors Mikhail Afendikov Chairman & CEO Founder & CEO of Gastek LLC. and former CEO of KUB-Gas Over 20 years of experience in oil and gas, mining, shipping and financial markets Founder and partner in several resource business in Ukraine J. Frank Mermoud Director President of Orpheus International More than 30 years of experience in public and private international business Senior international, economic and commercial policy positions within the United States Government Dr. Timothy R. Marchant Director 30 years of petroleum experience in Canadian and international exploration, development, production and business development Prior senior executive positions with BP and Amoco Director of Vermilion Energy and Valeura Energy John Booth Director Qualified lawyer (Ontario, NY and DC), 25 years experience as banker, broker and fund manager in global capital markets Previously worked for firms including Merrill Lynch International, ICAP, CEDEF, ABN AMRO Bank, World Bank and Climate Change Capital 6
Experienced In-Country Leadership Mikhail Afendikov Chairman & CEO Founder & CEO of Gastek LLC. and former CEO of KUB-Gas Over 20 years of experience in oil and gas, mining, shipping and financial markets Founder and partner in several resource businesses in Ukraine Kerry Kendrick COO 30 years of experience as a petroleum engineer Former COO of Urals Energy, an independent oil and gas producer in Russia Former General Director of Occidental s Russian Operations Extensive experience in project management, facilities and infrastructure Patrick McGrath CFO Over 15 years experience, including 10 years in senior management positions, in international oil and gas and mineral exploration and development Recently CFO of Anatolia Energy, focused on shale oil development in Turkey Served as CFO of Porto Energy Corp and VP Finance Adriana Resources Rebecca Gottsegen General Counsel, Corporate Secretary & Chief Compliance Officer 20 years of legal experience representing private and public companies as inside and outside counsel Worked in a variety of areas, including labor and employment legal compliance, risk management, corporate governance, compensation, due diligence and talent acquisition and succession planning 7
Capital Structure Capital Structure (Million) Shares Outstanding 314.2 Stock Options 17.5 Restricted Stock Units (RSUs) 1.2 Fully Diluted Shares Outstanding 332.9 Major Shareholders % Shares (Million) Pelicourt Ltd. 39.6 124.3 Fergava Finance 14.1 44.4 8
Ukraine Assets 1 3 Transcarpathian Sedimentary Basin (West) 3 licenses 100% and 50% owned by Cub 108,000 gross acres (70,500 net) Dnieper-Donets Sedimentary Basin (East) 6 licenses 35% owned by Cub 203,000 gross acres (71,000 net acres) 9
RK Field Western Ukraine RK Field: Asset Overview W.I. 100% owned by Cub Operator Cub Contract 20 year special production permit (expires 2030) Production 2.6 MMcf/d in Q1 2016 (suspended on April 1, 2016) Area 2,000 acres Transcarpathian Sedimentary Basin U Field RK Field S Field Highlights Purchase and installation of new Nitrogen Rejection Unit Goal of resuming production in Q2 2018 Adjacent to producing fields in Hungary, Romania and Slovakia 10
Uzhgorod Field Western Ukraine U Field: Asset Overview Transcarpathian Sedimentary Basin W.I. 50% owned by Cub Operator Joint Contract 20 year special production permit (expires 2036) Production No current production U Field RK Field S Field Area 75,000 acres Highlights The Company partnered with a Slovakian based company with extensive experience in E&P The partnership included a sale of 50% ownership in Uzhgorod. Pursuant to the agreement, the partner is to: Pay Cub 1.5 million (paid) Fund a 100 square kilometer 3D seismic survey Fund the drilling and tie-in of the first three wells The licence is on the border with Slovakia, Hungary and Romania. Adjoining producing or past producing fields Work Plan In 2017, a 118 square kilomtere 3D seismic survey was completed which has identified drilling prospects. Plan is to drill the first well in 2018 11
Stanivske Field Western Ukraine S Field: Asset Overview Transcarpathian Sedimentary Basin W.I. 100% owned by Cub Operator Cub Contract 20 year special production permit (expires 2036) Production No current production U Field RK Field S Field Area 31,000 acres Highlights Recently granted 20 year production licence A 45 square kilometer 3D seismic survey was acquired by the company in 2013 Gas was discovered on the field in 1990 by a prior operator Work Plan The company is currently evaluating its 2018 work program 12
M Field Eastern Ukraine M Field: Asset Overview W.I. Operator 35% owned by Cub KUB-Gas Contract 20 year special production permit (expires 2032) Production Area 7.4 MMcf/d gross (2.6 MMcf/d net) 18,000 acres gross Highlights Upgraded processing facility brought on line and boosts throughput capacity Work Plan 2018 work plan is currently being evaluated and may include workovers or fracture stimulations. One new wells on either M or O field in 2018 13
O Field Eastern Ukraine O Field: Asset Overview W.I. 35% owned by Cub 1 Operator KUB-Gas Contract 20 year special production permit (expires 2032) 1 Production Area 9.4 MMcf/d gross (3.3 MMcf/d net) 22,000 acres gross Highlights 100% success rate on five O wells prior to 2107 All five wells tied in for commercial production Successful fracture stimulations performed in prior years Tie-in of O-28 Work Plan 2018 work plan is currently being evaluated and may include workovers or fracture stimulations. One new wells on either M or O field in 2018 14
West O Field Eastern Ukraine WO Field: Asset Overview W.I. 35% owned by Cub Operator KUB-Gas Contract 20 year special production permit (expires 2035) Production No current production Area 111,000 acres gross West Olgovskoye North Makeevskoye Highlights 111,000 Net acres Olgovskoye The licence immediately offsets the O and NM licences 22,000 Net acres It surrounds (but does not include) the existing Druzhelyubovskoe gas/condensate field, which has produced gas from the same zones that produce in the O and M fields. Makeevskoye Completed 26 km of 2D seismic in 2016; Completed150 km 2D seismic survey in 2017. Interpreting results to identify drill targets. Work Plan 2018 work plan to include 3D seismic survey and first well on the field 15
Mcf/d Past Hydraulic Fracturing Results Fracture stimulation services are available locally (Belarus providers) Two wells performed well after fracture stimulation (see O-4 & O-5 below) Performed fracture stimulation of M-22, O-11 and O-15 in 2015 Inventory of other fracture stimulation candidates 3500 3000 2500 2000 1500 1000 O-4 and O-6 Before and After Frac 500 0 O-4 O-5 Fracs Temporary government decrees 15
O-6 Vertical Well in Ukraine - Hydraulic Frac, Single Stage, 25 Tonnes Proppant 06 Well Head The Blender: M-60 capable of 8 m 3 /min 3 x 2250 bhp Belarus pump unit - 2250 bhp 17
Asset Description Field W.I. Stage Product Royalty Income Tax Ukraine Dneiper-Donets Basin O 35% Production Gas 29% 18% M 35% Production Gas K 35% Exploration Gas V 35% Exploration Gas NM 35% Exploration Gas West O 35% Exploration Gas Ukraine Transcarpathian Sedimentary Basin U 50% Exploration Gas 29% 18% RK 100% Production Gas S 100% Exploration Gas 18
Cub Energy Inc. 5120 Woodway Drive Suite 10010 Houston, Texas 77056 Patrick McGrath Chief Financial Officer Tel: +1.713.577.1948 Email: patrick.mcgrath@cubenergyinc.com Mikhail Afendikov Chief Executive Officer Tel: +1.713.677.0439 Email: mikhail.afendikov@cubenergyinc.com TSX-V: KUB