NAL Resources Management Limited EPAC Oil & Gas Investor Showcase June 12, 2013
Disclaimers Forward Looking Statements This document contains statements that constitute forward-looking information within the meaning of applicable securities legislation as to NAL Resources Management Limited ( NAL s ) internal projections, expectations and beliefs relating to future events or future performance. This forwardlooking information includes, among others, statements regarding: NAL s strategic focus, business strategy and plans and budgets; business plans for drilling, exploration and development, including drilling locations; estimates of production and operations performance; forecasted commodity price estimates of future sales; estimated amounts, allocation and timing of capital expenditures; estimates of operating costs and unit operating costs; the estimated timing and results of new development programs; estimates of anticipated funds from operations, cash flow, netbacks, dividends, working capital and debt levels; estimated rates of return; the anticipated results of NAL s divestiture program; various tax matters related to NAL; NAL s hedging program; NAL s prospect inventory; and other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. Various assumptions were used in drawing the conclusions or making the forecasts and projections contained in the forward-looking information contained in this presentation including, without limitation, with respect to commodity prices, interest rates, exchange rates, royalty rates, general and administrative expenses, the success of NAL's drilling programs and the production profile of NAL's oil and natural gas reserves. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by NAL and described in the forward-looking information contained in this document. Undue reliance should not be placed on forward-looking information. The material risk factors include, but are not limited to: the risks of the oil and gas industry, such as operational risks in exploring for, developing and producing oil and natural gas, market demand and unpredictable facilities outages; risks and uncertainties involving the geology of oil and gas deposits; the uncertainty of estimates and projections relating to production, costs and expenses; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; risk that adequate pipeline capacity to transport oil and natural gas to market may not be available; fluctuations in oil and gas prices, foreign currency exchange rates and interest rates; the outcome and effects of any future acquisitions and dispositions; safety and environmental risks; uncertainties as to the availability and cost of financing and changes in capital markets; competitive actions of other industry participants; changes in general economic and business conditions; the possibility that government policies or laws may change or governmental approvals may be delayed or withheld; changes in tax laws; changes in royalty rates; the results of NAL s risk mitigation strategies, including insurance; and NAL s ability to implement its business strategy. Readers are cautioned that the foregoing list of risk factors is not exhaustive. Forward-looking information is based on the estimates and opinions of NAL s management at the time the information is released. Boe Conversion All dollar amounts in Canadian dollars, unless otherwise stated. 2
Our Strategic Focus Maximizing Value From Existing Assets and New Acquisitions Continue to Grow Manulife s Business Establish Additional Partnerships Attract Investors for Direct Investment Invest an additional $2-3B in WCSB over next five years Entry into the US Entry into midstream sector Operational JV partnerships Exploration JV partnerships Farm-ins / Farmouts Allows direct ownership in assets Provides on-theground management Manulife prepared to co-invest 3
Who We Are Who We Are What We Do Areas of Focus Western Canadian convention upstream oil & gas company 20+ years experience managing private assets Subsidiary of Private Asset Management arm of Manulife Find, buy, exploit and produce oil & gas assets in a cost effective and efficient manner Provide an investment vehicle for investors who do not have on-the-ground management capacity Key areas include Central Alberta, Plenty/Dodsland and SE Saskatchewan Mandate to acquire and manage U.S. assets 4
Our Relationship with Manulife Private Asset Management (PAM) PAM s Assets Under Management (AUM) exceeds C$85 billion NALRM is PAM s best performing asset over the past 10 years 20+ years of experience Owner/operator of oil & gas properties for private investors World s largest manager of institutional timber assets Manage timberland assets on three continents Manages farmland in the U.S., Canada, and Australia Oil & Gas Timberland Farmland Dedicated investment group with over 30 years of experience On-site management of virtually all of our properties Real Estate Over 20 years of experience Manage mezzanine strategies Private Equity & Mezzanine Active in commercial mortgages since 1887 Private placement bonds Alternative Fixed Income 5
Why Partner with Us What We Offer Investors Superior long-term rate of return Strong strategic focus that generates value Proven ability to effectively acquire, exploit and operate assets Experienced Board and management team Exceptional financial partner through Manulife Alignment of investment objectives amongst investors 6
Annual Rate of Return (%) Our Historical Rate of Return Rate of Return(%) and NAV Growth ($) Annual Rate of Return Net Asset Value Net Asset Value ($) Average three year IRR over 18% over last 12 months (Standard deviation just over 10%) 7
Our Operational Focus Exploration Development of new opportunities enhances overall return A&D Active portfolio management requires a disciplined approach Target Rate of Return Production Optimization Improve production efficiencies Reservoir Management Optimize existing reservoirs by exploiting existing pools 8
Our Current Area Map Alberta Business Unit Production (as % of total) - 63% Liquids (as % of BU production) 47% Operated (as % of BU production) - 52% Saskatchewan Business Unit Production (as % of total) - 35% Liquids ( as % of BU production) 95% Operated (as % of BU production) 95% Kakwa Pine Creek Key Metric Daily Production (boed) 18,193 Liquids Production (%) 63.0 Acreage (acres 000 s) - Gross developed / net - Gross undeveloped / net 919 / 229 1,054 / 285 2013 Capital Spend ($ MM) 211 Producing Wells (gross/net) 2,133 / 835 (39.1% WI) Netback ($/boe) 39.88 Lochend Nottingham Midale Elswick Non-operated Lake Erie Production (as % of total) - 2% Liquids (as % of BU production) 0% Operated (as % of BU production) 0% Production, capital, operating costs, and net back figures are based on 2012 year-end results Reserves figures are based on 2012 McDaniel year-end evaluation 9
Our Historical Growth Through Acquisition Production profile (boed) 1997-2012 NAL Energy 28,500 boe/d Seneca Resources 4,400 boe/d Addison Energy 11,000 boe/d Plenty Meridian 300 boe/d Alberta Clipper 3,100 boe/d Nexen SK 8,700 boe/d Breaker Energy 6,700 boe/d Draig Energy 2,100 boe/d Acquisition Divestiture 10
Board Our Board of Directors William Eeuwes Chairman Senior Vice President and Global Head Private Equity, Manulife Kevin Adolphe Donald Driscoll Brian Lemke Jeff Smith Kevin Stashin President & CEO Ken Pogrin - Secretary Chief Operating Officer of Investments, and President and CEO of Manulife Real Estate, Manulife President, Chief Executive Officer and Director, NAL Resources from 1989 to 2005 Independent investor and corporate director. Chairman of the Board of Laricina Energy Ltd., a private oil sands company Independent businessman and investor. Board member of Pembina Pipeline Corporation and Pace Oil and Gas President and Chief Executive Officer, NAL Resources Chief Legal Counsel Manulife Asset Management and Private Asset Management, Manulife 11
Senior Management Team Our Senior Management Team Kevin Stashin President and CEO Keith Steeves CFO Experience 32 years 36 years Darcy Redding Vice President, Operations Kevin Christie Vice President, Exploration Paul Kunkel Vice President, Finance Cory Bergh Vice President, Operations Accounting & IT John Kanik Director, Marketing Angele Mullins Director, Human Resources 20 years 30 years 19 years 19 years 20 years 25 years 12
Our Future What We Are Looking For New opportunities to support growth - Supported by $1B acquisition investment fund - Corporate and/or asset acquisitions - Public and/or non-public processes Investors for direct investment - Stand-alone investments - Investments with Manulife as partner JV partnerships, farm-ins, etc. 13
Appendix
NALRM Company History and Overview 20 1998 1989 WTI hits US$12.50/bbl NALRM was lowest in 12 formed years + years (of income) 2001 Global economic crisis - natural gas prices as high as $12/mcf 2003 SE Sask Nexen acquisition - adds 4,100 boe/d - production exceeds 10,000 boe/d 2005 Acquired Addison Energy - added core Cardium acreage 2012 Pengrowth purchased NAL Energy for $1.9 billion 1996 NAL Energy IPO valued at $138.4 MM 2000 Acquired Draig Energy first corporate acquisition 2002 Two asset acquisitions add 2,900 boe/d to core areas 2004 Enhanced 3D seismic imaging introduced at Star Valley, SE Sask 2010 Acquired Plenty Energy/ Meridian Exploration in SW Sk. 15
Operating Metrics (Year-end 2012) Daily Production (boed excluding royalties) - Oil - NGLs - Gas - Total Key Metric 9,584 1,816 6,793 18,193 Liquids Production (%) 63.0 Booked Reserves - Total Proved (Mboe/NPV10 ($MM)) - P+P (Mboe/NPV10 ($MM)) Acreage (acres 000 s) - Gross developed / net - Gross undeveloped / net Seismic - Total 3D (kms 2 ) - Total 2D (kms) 40,541 / 732 59,794 / 966 919 / 229 1,054 / 285 8,350 24,200 2013 Capital Spend ($ MM) 211 Producing Wells (gross/net) 2,133 / 835 (39.1% WI) Average Production per Well (boed) 21.8 Average Base Decline (%) 21 Operating Costs ($/boe) 13.48 Netback ($/boe) 39.88 16