1. No category

Corporate Presentation
November 2014
Disclaimer
This presentation contains “forward-looking” information. These statements express a belief, expectation or intention and are
generally accompanied by words that convey projected future events or outcomes. The forward-looking statements include
statements about Lynden Energy Corp.’s future operations, well counts, drilling and resource locations, anticipated exploration
and production strategies, estimates of oil and natural gas production, reserve volumes and reserve values, projected
expenses, revenue, earnings, cash flow, capital expenditures and other costs, capital raising activities, including potential asset
divestitures, and hedge transactions. We have based these forward-looking statements on our current expectations and
assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and
expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether
actual results and developments will conform with our expectations and predictions is subject to a number of risks and
uncertainties, including the volatility of oil and natural gas prices, our success in discovering, estimating, and developing oil and
natural gas reserves, the availability and terms of capital, our timely execution of hedge transactions, credit conditions of global
capital markets, changes in economic conditions, regulatory changes, including those related to carbon dioxide and
greenhouse gas emissions, and other factors, many of which are beyond our control. We refer you to
www.lyndenenergy.com/riskfactors.html. All of the forward-looking statements made in this presentation are qualified by these
cautionary statements. The actual results or developments anticipated may not be realized or, even if substantially realized,
they may not have the expected consequences to or effects on our company or our business or operations. Such statements
are not guarantees of future performance and actual results or developments may differ materially from those projected in the
forward-looking statements. We undertake no obligation to update or revise any forward-looking statements.
At times we use the term “EUR” (estimated ultimate recovery) and “resources” and “resource locations and potential” to provide
estimates. These estimates are by their nature more speculative than estimates of proved, probably or possible reserves and,
accordingly, are subject to substantially greater risk of being actually realized by the company.
Barrel of equivalent (“boe”) amounts have been calculated using a conversion ratio of six thousand cubic feet of natural gas to
one barrel of oil (6:1) to express quantities of natural gas and crude oil in a common unit. The term “boe” may be misleading,
particularly if used in isolation. The conversion ratio is based on an energy equivalency conversion method primarily applicable
at the burner tip and does not represent a value equivalency at the wellhead.
2
Investment Highlights
• Consolidated land position with a large drilling inventory in the oil-rich
Permian Basin
•
Midland Basin plays rank amongst the most economic plays in North America
• Strong working interest partner in CrownQuest
•
•
Experienced local operator backed by Lime Rock Partners
Strong track record of Wolfberry success
• Successful execution will provide stable production base and cash flow
• Large land position on Eastern Shelf of Permian Basin
•
Mitchell Ranch has huge potential
• Highly reputable Management team and Board
3
Permian Basin
Prolific Permian Geology
•
The Permian Basin is historically
one of the most prolific basins in
North America.
Texas
•
Increasing recoveries of original oil
in place (OOIP)
4
Corporate Overview
Summary
• Permian Basin Oil
• Midland Basin
• ~16,750 gross acres
• ~ 97 producing vertical Wolfberry
wells
• Multi-horizon horizontal potential
• Eastern Shelf
• ~104,000 acres
• Multiple conventional targets
• Multiple resource play targets
Capital Structure
As at November 1, 2014
Shares Outstanding:
Warrants:
Options:
Fully Diluted:
Management, Board and Insiders:
Institutions:
Retail and Other:
~130.2 million
7.5 million
5.7 million
~143.4 million
~5%
~40%
~55%
Significant Shareholders: JVL Advisors, et al.
5
Fiscal 2014 PN&G Operations
Summary
Net Revenues
Petroleum revenues
Natural gas revenues
Three months
ended
30/Jun/14
Three months
ended
31/Mar/14
Three months
ended
31/Dec/13
$ 7,342,373
2,403,206
$ 5,604,779
1,814,140
$ 7,530,263
1,775,174
9,745,579
(2,324,405)
(1,454,914)
Royalties
Production and operating
Net back
7,418,919
(1,742,216)
(1,346,208)
Three months
ended
30/Sep/13
$ 10,217,654
1,365,365
9,305,437
(2,174,904)
(1,154,131)
11,583,019
(2,697,354)
(994,679)
$ 5,966,260
$ 4,330,495
$ 5,976,402
$ 7,890,986
78,230
540,297
60,428
280,922
80,284
365,955
101,630
308,749
1,849
1,192
1,536
1,664
Production Volumes and Pricing
Total volumes
Petroleum production (bbl)
Natural gas production (mcf)
Daily production averages (before royalties)
Barrel of oil equivalent (boepd)
Average prices
Petroleum selling price ($/bbl)
Natural gas selling price ($/mcf)
1
$
94
$
93
$
94
$
101
$
4.45
$
6.46
$
4.85
$
4.42
Percentages of Total Revenue
Royalties
Production and operating
Net back
1The
24%
15%
61%
24%
18%
58%
23%
13%
64%
23%
9%
68%
natural gas selling price is reflective of the thermal value of the gas and associated products sold.
6
Fiscal 2015 Capital Plan
Summary
Anticipated drilling activities from July 1, 2014 to June 30, 2015:
•
•
•
•
15 gross Wolfberry vertical wells
3 gross Wolcott horizontal wells
2 gross CrownRock horizontal wells
4 gross Mitchell Ranch vertical wells
~$15.0 million
~$6.3 million
~$9.0 million
~$3.6 million
~$33.9 million
The Company’s capital budget is subject to change depending upon a number of factors, including economic and industry conditions at the
time of drilling, prevailing and anticipated prices for oil and gas, the availability of sufficient capital for drilling prospects and the Company’s
financial results.
7
Corporate Overview
Experienced Management Team
•
Richard Andrews, Chairman and Director
•
•
•
30 years fundraising and building resource companies
Past consultant (strategic direction and fundraising) to Silver Standard, Conquistador
Mines, Canadian Spirit, Western Copper, Victoria Gold
Colin Watt, President, CEO and Director
•
•
•
15 years of public resource company management experience
President of Squall Capital Corp., a private Canadian based company which specializes in
financing, restructuring and providing management services to early stage public
companies
President of Lynden Energy since 2005
8
Corporate Overview
Strong Board of Directors
•
Richard Andrews, Chairman and Director
•
See Management
•
Colin Watt, President, CEO and Director
•
See Management
•
Robert Bereskin, PhD; Director
•
Adjunct Professor at the University of Utah
•
Geologist, over 30 years experience in the oil and gas industry
•
Recent focus on unconventional gas-bearing shale reservoirs in the United States and Canada, where he
has assisted with several international and domestic exploration/ exploitation efforts
•
John McLennan, PhD; Director
•
Associate Professor at the University of Utah, engineer, completion specialist
•
Senior Research Scientist at Energy & Geoscience Institute
•
Former Technical Director with ASRC Energy Services
•
Former Executive Vice President with TerraTek, Inc
•
Derek Michaelis, PhD; Director
•
Equity oil and gas analyst with JVL Advisors, LLC, a private energy investment company in Houston, Texas
•
B.A. in Economics from Rice University
•
Ron Paton, Director
•
Securities lawyer with Owen Bird of Vancouver, British Columbia
9
Corporate Overview
Strong Partner in CrownQuest
•
Midland based CrownQuest Operating LLC is the operator on the vast majority
of our acreage
• Solid history of success (GE partnerships) and substantial backing by Lime
Rock Partners
•
CrownRock LP, a partnership between
Lime Rock Partners and the principals of
CrownQuest, is our working interest
partner in the majority of our leases
•
Well-known, successful, local Permian
Basin operator
•
Top independent Wolfberry driller (footage)
10
Midland Basin
Vertical Wolfberry
•
Originally, operators commingled
production from the Wolfcamp
and Spraberry horizons, and
coined the term “Wolfberry”
•
Wolfberry now refers to any well
with commingled production from
the Mississippian through the
Spraberry
•
Wolfberry completions are
generally undertaken in a 2,500 to
3,000 foot gross interval located
between 7,000 to 11,500 feet
drilling depth typically
Wolfberry
The Wolfberry resource play is pervasive in the Midland Basin
11
Midland Basin
Horizontal Potential in Multiple Horizons
Several horizontal resource plays being delineated
•
Horizontal development in the Midland
Basin is exceeding original expectations
•
Increasing industry activity de-risking
play
•
Production data from these wells
supports strong EURs and returns
•
Vertical Wolfberry confirms quality of
acreage
•
Prospective in 8+ separate horizons
12
Midland Basin
Acreage Position
County
Martin
Midland
Glasscock
Howard
Total:
Gross
Acres
Net
Acres
Lynden
Net %
Interest
Lynden
Net
Acres
2,043
1,757
43.75
769
1,127
1,127
20.00
225
640
640
43.75
280
5,900
4,480
43.75
1,960
6,388
6,121
40.625
2,487
640
640
25.39
162
16,738
14,765
5,883
All acreage numbers and interests are approximate and subject to revision
•
High net revenue interest leases (75%+)
•
Lynden provides proportional carry on initial D&C costs
(e.g. Lynden funds 50% of costs to receive 43.75%
working interest)
•
Production of oil and gas at the wellhead for the 14 days
ended October 28, 2014: ~ 1,250 BOE/day net to
Lynden (after royalties) 1
1
Lynden Energy news release dated October 28, 2014
13
Development Model
960 acres (1 ½ sections)
Locations
Vertical
40 Acre
Vertical
20 Acre
Horizontal
24
48
4 per horizon
Prospective Horizons
• Clearfork
• Lower Spraberry
• Middle Spraberry
• Wolfcamp A, B, and C
• Wolfcamp D (Cline)
• Atoka / Mississippian
14
Martin County
Vertical Wolfberry
Gross Acres: 3,170
Net Acres: 2,884
Lynden’s Net Interest: 20.00 - 43.75%
Well Spacing
Potential Locations
40 Acre
72
20 Acre
144
•
Original Lynden Wolfberry development
area
•
Vertical development ongoing
15
BreitBurn Asset Sales
Value Realization
•
Effective December 30, 2013, Lynden sold to BreitBurn Energy Partners L.P. its
interest in:
•
•
•
•
Effective December 1, 2012, Lynden sold to BreitBurn Energy Partners L.P. its
interest in:
•
•
•
•
12 gross (4.7 net) West Martin area Wolfberry Project Wells
1,000 gross acres (403 acres net to Lynden)
Total consideration: US$19.3 million
16 gross (7.0 net) West Martin area Wolfberry Project Wells
1,440 gross acres (630 acres net to Lynden)
Total consideration: US$25 million
Lynden sold its interest along with working interest partner CrownRock L.P.
16
Martin County
Horizontal Potential
Lynden’s first horizontal well development area:
•
1,127 acre Wolcott lease
•
20% working interest (24.375% funding)
•
Operated by Midland, Texas based company
•
Wolcott 253 – 1H on production
•
•
•
Wolfcamp “B” horizon
•
~6,200 foot lateral length
Diamondback Energy
Northern Martin County
Wolfcamp B Development
253 - 1H - Producing
253 – 3H - Permitted
Wolcott Lease
253 – 2H – Drilled
Wolcott 253 – 2H currently drilled
•
Lower Spraberry horizon
•
~6,200 foot lateral length
Lynden Producing Vertical Well
8 gross potential horizontal locations for each
prospective horizon
•
Example: three prospective horizons = 3 x 8
= 24 horizontal locations
17
Martin County
Industry Reported Horizontal Well Economics
Pioneer Natural Resources1
Athlon Energy2
Diamondback Energy3
Lower
Spraberry
Wolfcamp
D
Wolfcamp
B
Wolfcamp
B
Wolfcamp
B
Lower
Spraberry
575 - 1,000
650 - 800
800
720
550 - 650
550 - 650
D&C Cost
$7.5M
$8.5M
$8.0M
$8.5M
N/A
N/A
Lateral
Length
7,000’
7,000’
7,000’
7,500’
7,500’
7,500’
EUR (MBOE)
Source:
1 Pioneer Natural Resources May 2014 Investor Presentation
2 Athlon Energy September 2014 Investor Presentation
3 Diamondback Energy March 2014 Investor Presentation
18
Midland County
Miller Trust
Gross Acres: 640
Pioneer Texas Ten Y
Net Acres: 640
Lynden’s Net Interest: ~43.75%
Well Spacing
Potential Locations
40 Acre
16
20 Acre
32
5,000’ Lateral
(4 per section)
4 per horizon
Miller Trust
Chevron
Midland AC/AF
4H
3H
Pioneer Natural Resources DL Hutt C1,2
1
2
Well
Name
Target
Length
Cumulative
Production
(May 2014)
%
oil
Targeted
EUR
(7,000’)
C #1H
Wolfcamp B
7,380’
217 MBOE
73
1,000
C #2H
Wolfcamp A
7,380’
174 MBOE
76
800
C #3H
Wolfcamp B
7,142
122 MBOE
73
1,000
C #4H
Wolfcamp D
6,962’
95 MBOE
71
650-800
Source: Pioneer Natural Resources May 2014 Investor Presentation
Lynden does not have any interest in these wells
Pioneer DL Hutt C
2H
1H
Lynden producing well
Potential well location
This analogous information is derived from publicly available information sources which the Company believes are independent but may not have been prepared by qualified reserves evaluators or in accordance with the
Canadian Oil & Gas Evaluation Handbook. There is no certainty that development on the Company’s properties will be successful to the extent to which the development on the analogous lands was successful, or at all.
19
Glasscock County
Wind Farms Area Vertical Wolfberry
Gross Acres: 4,077
Net Acres: 2,657
Lynden’s Net Interest: ~ 43.75%
Well Spacing
Potential Locations
40 Acre
66
20 Acre
132
•
Vertical development ongoing
•
Significant uphole Clearfork adds
(e.g. McDaniel 13 #1)
•
Significant potential for high EUR wells
•
Impact of improved stimulation
procedures
20
Glasscock County
Broughton South Area Vertical Wolfberry
Gross Acres: 1,823
Net Acres: 1,823
Lynden’s Net Interest: ~43.75%
Well Spacing
Potential Locations
40 Acre
45
20 Acre
90
5,000’ lateral
(4 per section)
~8
• Vertical development ongoing
• Significant potential for uphole adds
(e.g. Annalee 18 #1)
21
Glasscock County
Horizontal Potential
Horizontal Development Exceeding Expectations
SELECTED INDUSTRY BEST HORIZONTAL WELL RESULTS1
#
Well Name
Operator
24 Hr
IP
BOED
30Day IP
BOED
ATHL
1,734
1,562
69
7,132
%
Oil
Lateral
Length
Midland
County
Wolfcamp A
1
Wilkinson 31 #8H
2
Lan Trust-C/E-421HU
LPI
1,374
1,391
76
7,185
3
Sugg A 143-2HU
LPI
1,783
1,351
NA
7,200
4
Lavaca 38 #101H
EGN
861
709
60
4,250
Broughton
South
Wolfcamp B
5
ET O’Daniel #1H
PXD
2,801
NA
75
9,229
6
Flanagan 14 Lloyd B # 1H
PXD
1,460
843
NA
9,542
Wind Farms
Wolfcamp C
7
Lane Trust C/E 42-2HL
LPI
2,147
1,406
79
7,571
8
Sugg-D-106-2HL
LPI
1,325
1,172
66
6,928
Wolfcamp D
1
9
ET O’Daniel #2H
PXD
3,156
NA
75
9,112
10
Glass-Glass 10-153H
LPI
1,886
1,331
NA
6,933
Lynden does not have any interest in these wells
This analogous information is derived from publicly available information sources which the Company believes are independent but may not have been prepared by qualified reserves evaluators or in accordance with the
Canadian Oil & Gas Evaluation Handbook. There is no certainty that development on the Company’s properties will be successful to the extent to which the development on the analogous lands was successful, or at all.
22
Glasscock County
Horizontal Potential
•
Wind Farms area scheduled to be initial horizontal appraisal area on CrownQuest operated
Lynden acreage
•
Success would be followed by horizontal development program
•
18 gross potential short horizontal locations at 4 per section for each prospective horizon
• Example: four perspective horizons = 4 x 18 = 72 short (5,000’) horizontal locations
•
Contiguous acreage block allows for efficient
layout of long lateral
•
Operators in the Midland Basin are developing
up to 10 horizontal wells per section
•
Industry Horizontal Well Economics:
• Athlon Energy1
Initial horizontal locations
(7,500’)
Targeted EUR: 625 MBOE
D&C Cost: $8.0M
Lateral Length: 7,500’
PV(10): $5.8M
1
Source: Athlon Energy September 2014 Investor Presentation
This analogous information is derived from publicly available information sources which the Company believes are independent but may not have been prepared by qualified reserves evaluators or in accordance with the
Canadian Oil & Gas Evaluation Handbook. There is no certainty that development on the Company’s properties will be successful to the extent to which the development on the analogous lands was successful, or at all.
23
Howard County
Tubb Prospect Area
Gross Acres: 7,028
Net Acres: 6,761
Lynden’s Net Interest: ~25.39 – 40.63%
•
Well Spacing
Potential Locations
40 Acre
169
20 Acre
338
5,000’ lateral
40 per horizon
(4 per section)
Contiguous acreage block allows for efficient
layout of long laterals
•
Operators in the Midland Basin are developing
up to 10 horizontal wells per section
•
Industry Horizontal Well Economics:
• Athlon Energy1
Targeted EUR: 625 MBOE
D&C Cost: $8.0M
Lateral Length: 7,500’
PV(10): $7.0M
1
Source: Athlon Energy September 2014 Investor Presentation
Athlon Energy
Tubb 39 #5H
24 hr IP 2,351 boe/d
30 day IP 1,594 boe/d
73% oil, 6,705’ lateral
This analogous information is derived from publicly available information sources which the Company believes are independent but may not have
been prepared by qualified reserves evaluators or in accordance with the Canadian Oil & Gas Evaluation Handbook. There is no certainty that
development on the Company’s properties will be successful to the extent to which the development on the analogous lands was successful, or at all.
24
Howard County
Horizontal Potential
SELECTED INDUSTRY BEST HORIZONTAL WELL RESULTS1
#
Well Name
Operator
24 Hr IP
BOED
30-Day
IP BOED
%
Oil
Lateral
Length
Wolfcamp A
1
Abel 18 #3H
ATHL
1,364
1,063
85
7,822
2
SFH Unit 23 #1H
ELMT
1,086
715
84
7,268
3
Gardner Unit 1510 #2H
ELMT
927
772
86
7,283
4
Williams 17 #3H
ATHL
1,415
1,234
84
7,688
5
Tubb 39 #5H
ATHL
2,351
1,594
77
6,705
6
Garrett-Reed Unit 37-48 #4H
ELMT
1,247
1,084
85
7,500
Other
1
7
Hamlin 19-18 #1H
Tall City
Testing
7,522
8
Hamlin 20-29 #1H
Tall City
Drilling
7,500
9
Middleton 47-38 #1H
OXY
Drilling
7.500
10
Hendrix #1H
OXY
Permitted
7,500
11
Smith 48-37 #101H
EGN
Permitted
7,500
Tubb
Lynden does not have any interest in these wells
This analogous information is derived from publicly available information sources which the Company believes are independent but may not have been prepared by qualified reserves evaluators or in accordance with the
Canadian Oil & Gas Evaluation Handbook. There is no certainty that development on the Company’s properties will be successful to the extent to which the development on the analogous lands was successful, or at all.
25
Midland Basin Vertical (Wolfberry) Wells
A Rapidly Advancing Oil and Gas Development Program
BreitBurn
Asset Sale
Actual
Jun 30
2013
Sep 30
2013
Projected
Dec 30
2013
31 Dec
2013
Mar 30
2014
Jun 30
2014
Sep 30
2014
Dec 30
2014
Mar 30
2015
Jun 30
2015
Producing Wolfberry Well
Gross
Net
67
76
-12
72
78
91
95
103
104
109
27.93
31.68
-4.73
29.69
31.72
37.18
38.87
42.06
42.46
44.29
Well spud or drilled awaiting completion and/or tie in
Gross
6
4
-
3
7
4
5
1
4
1
Net
4
1.78
-
1.27
2.87
1.68
1.97
0.41
1.07
0.44
Repeatable nature of Wolfberry allows for conservative use of debt financing
Texas Capital Corp. (lead lender) $100 million Reducing Revolving Line of Credit in Place
26
Key Midland Basin Industry Trends
•
Increasing Recoveries of OOIP
•
Ability to exploit multiple
hydrocarbon formations at depth
and along strike
•
Efficiency gains from pad drilling
and stacked horizontals
•
Internal rates of return
•
Vertical vs. horizontal wells
27
Eastern Shelf
Mitchell Ranch Overview
•
Unique opportunity in terms of size,
contiguous nature and potential
•
Covers 165 square miles on Eastern
Shelf
•
50% working interest in ~104,000
gross and net acre lease
•
Several pay zones
•
Typically shallower than 8,000 feet
•
Favorable land terms
Mitchell
Ranch
28
Mitchell Ranch
Tremendous Geological Potential
• Several High-Impact
Resource Play Targets
•
•
•
Wolfcamp
Cline shale
Mississippian
Midland Basin to Eastern Shelf
Simplified Stratigraphic Section
Mitchell Ranch
29
Mitchell Ranch
Targets
•
•
•
Vertical Wolfcamp, commingled zones
•
Analogous to the Wolfberry approach
•
Targeting 100-125 MBOE per well
•
Multiple Wolfcamp intervals
•
Located between 3,400 and 7,300 feet
•
Addition of other zones below the Wolfcamp
Horizontal Wolfcamp
•
Multiple intervals in Wolfcamp (A,B,C,D) being tested
throughout the Permian Basin
•
Increasing industry activity unlocking well design and
completion recipe in some areas
Mississippian Centered Resource Plays
•
Located between 7,200 and 7,800 feet
•
3 horizontals and 2 verticals drilled on acreage by
Chesapeake
30
Mitchell Ranch
Seismic
A’
A
•
3D seismic across ranch currently being processed and interpreted
•
Identification of anomalies, dipping beds, general stratigraphy, and structure
•
Debris flow and reef targets identified within Wolfcamp
•
Mississippian / Ellenburger interpretation and target refinement
Mitchell Ranch
A
A’
2000’
Clearfork
3700’
WFMP
Reef
4500’
WFMP
Detrital
6000’
WFMP
Base
7300’
Cline
8600’
GRNT
31
Mitchell Ranch
Measured 2015 Capital Program
•
4 vertical well program underway
•
Spade 17 #3 – testing
•
Spade 1 #1 – drilled
•
Spade 18 #1 – drilled
•
Spade 5 #1 – drilled
Purvis Operating
9+ Wolfcamp wells
~500 bopd
•
Leveraging knowledge
• Multiple completions in
Spade 17 #1
• 5 Chesapeake drilled wells
• Offsetting drilling activity
•
3D seismic target generation
Producing Spade 17 #1
•
Significant potential to add
production and reserves
New locations:
Spade 17 #3, 1 #1 , 18 #1
Chesapeake
5 wells (3 Hz)
New location Spade 5 #1
Rose Creek Field
Wolfcamp debris flow
32
Opportunity Overview
Summary
• Midland Basin
•
•
•
•
•
Operator has drilled or participated in several hundred Wolfberry wells
Established land position
Opportunity to execute drilling inventory quickly
Predictable nature allows for debt financing
Industry rapidly delineating horizontal plays
• Eastern Shelf
•
•
•
•
Very large acreage position
Multiple zones of interest
Play supported by extensive technical work-up
Opportunity to leverage the success of others
33
Attractive Valuation Equation
Summary
• Consolidated land position with a large drilling inventory in the oil-rich
Permian Basin
• Midland Basin plays rank amongst the most economic plays in North
America
• Strong working interest partner in CrownQuest
• Experienced local operator backed by Lime Rock Partners
• Strong track record of Wolfberry success
• Successful execution will provide stable production base and cash flow
• Large land position on Eastern Shelf of Permian Basin
• Mitchell Ranch has huge potential
• Highly reputable Management team and Board
34
Contact Information
Lynden Energy Corp.
Suite 1200
888 Dunsmuir Street
Vancouver, British Columbia
Canada V6C 3K4
Tel: 1 604-629-2991
TSX Venture Exchange: LVL
35