CORPORATE PRESENTATION NOVEMBER 2014
FirstEnergy’s Energy Growth Conference
TSX-V: MQL
OTCQX: MQLXF
MARQUEE DELIVERS
0
˃ Forward Looking Statements
This presentation is for information purposes only and is not intended to, and should not be construed to, constitute an offer to sell or the solicitation of an offer
to buy securities of Marquee Energy Ltd. (“Marquee“).
Certain disclosures set forth in this presentation constitute forward-looking information within the meaning of applicable securities laws. Any information
contained herein that is not a statement of historical facts is forward-looking information. Forward-looking information is often, but not always, identified by the
use of words such as “anticipate”, "expect", “believes”, “budget”, “continue”, “could”, “estimate”, “forecast”, “intends”, “may”, “plan”, “predicts”, “projects”,
“should”, “will” and other similar expressions. All estimates and information that describe Marquee's future, goals, or objectives, including management’s
assessment of future plans and operations, constitute forward-looking information under applicable securities laws.
In particular, this presentation includes without limitation forward-looking information pertaining, directly or indirectly, to the following: Marquee's anticipated
production and cash flows in 2014; business strategy; the future benefits of the proposed acquisition of assets from Paramount Resources (the "Transaction"),
including: the number and quality of future potential drilling opportunities, the expectation of reduced operating and capital costs, anticipated production levels,
anticipated debt levels, anticipated reserves, anticipated cash flow, anticipated cash flow per share, anticipated net debt, borrowings under credit facility,
operating netbacks, anticipated capital expenditures, 2014 exit production, 2013 exit debt to 2014 cash flow and 2014 capital budget, receipt of TSXV approval
for the Transaction.
In addition, statements relating to "reserves" are by their nature forward-looking information, as they involve the implied assessment, based on certain estimates
and assumptions that the reserves described can be profitably produced in the future. The recovery and reserves estimates provided herein are estimates only
and there is no guarantee that the estimated reserves will be recovered. The estimated future net revenue from the production of the disclosed oil and natural
gas reserves does not represent the fair market value of these reserves.
Forward-looking information relates to future events and/or performance and, may prove to be incorrect. Actual results may differ materially from those
anticipated in the information provided. Undue reliance should not be placed on forward-looking information because Marquee can give no assurance that such
expectations will prove to be correct. The forward-looking information contained in this presentation is given as of the date hereof and Marquee does not
undertake any obligation to update forward-looking information except as required by applicable securities laws.
Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six Mcf to one bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and do not represent a value equivalency at the wellhead. Given that the value ratio based on the
current price of oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of six to one, utilizing a boe conversion ratio
of six Mcf to one bbl may be misleading as an indication of value.
1
˃ Forward Looking Statements
Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be
incorrect. Although Marquee believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed
on forward-looking information because Marquee cannot give assurance that such expectations will prove to be correct. In addition to other factors and
assumptions which may be identified in this presentation, assumptions have been made regarding and are implicit in, among other things: cash flow projections
and netbacks; that Marquee will be able to successfully implement its planned capital expenditure program; bank debt levels; field production rates and decline
rates; the ability of Marquee to secure adequate product transportation, and secure such transportation in a timely and cost efficient manner; the ability to
obtain qualified staff, equipment and services in a timely and cost efficient manner to develop its business; the ability to operate its properties in a safe, efficient
and effective manner; the ability to obtain financing on acceptable terms; the ability to replace and expand oil and natural gas reserves through acquisition,
development of exploration; the timing and costs of pipeline, storage and facility construction and expansion; future oil and natural gas prices; currency,
exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters; and the ability to successfully market its oil and
natural gas products. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.
Forward-looking information involves known and unknown risks and uncertainties that could cause actual results to differ materially from those anticipated and
described in the forward-looking information, which include, but are not limited to: exploration, development and production risks; assessments of acquisitions;
anticipated success of resource prospects and the expected characteristics of resource prospects; the validity of analogues to other properties and projects; the
effectiveness of the application of certain drilling and completion technologies; reserve measurements; availability of drilling equipment; access restrictions;
permits and licenses; aboriginal claims; title defects; commodity prices; commodity markets, transportation and marketing of crude oil, liquids and natural gas;
reliance on operators and key personnel; competition; lack of diversification; corporate matters; funding requirements; access to credit and capital markets;
market volatility; cost inflation; foreign exchanges rates; general economic and industry conditions; health, safety and environmental risks; climate control
legislation; failure to obtain regulatory approvals; government regulation and taxation; and those other risks described in Marquee’s Annual Information form
dated March 20, 2014 filed under Marquee’s profile on www.SEDAR.com. Readers are cautioned that the foregoing list is not exhaustive of all factors and
assumptions which have been used.
The forward-looking information contained in this presentation is given as of the date hereof and Marquee does not undertake any obligation to update forwardlooking information except as required by applicable securities laws.
Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six Mcf to one bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and do not represent a value equivalency at the wellhead. Given that the value ratio based on the
current price of oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of six to one, utilizing a boe conversion ratio
of six Mcf to one bbl may be misleading as an indication of value.
2
˃ Corporate Direction
Identify
Consolidate
Position
100
boe/d
• Acquired assets and infrastructure
at Michichi from Sonde Resources
to double corporate production
• Acquired high quality
Lloydminster oil property
• Purchased gas plant and
gathering system at Michichi
• Built team
5,600-5,800
boe/d
forecast exit
3,700
boe/d
exit
2,300
boe/d
exit
2011
Recap
2014
Capitalize on
experience &
assets
2013
Strategic Business
Combination
2012
First Michichi
horizontal oil
production
Exploit
• Used 3D & 2D seismic to aid
mapping and high-grade oil
locations at Michichi
• Acquired contiguous land, infrastructure and
production from Paramount Resources in the heart
of the Michichi fairway
• Plan to drill 27 net wells at Michichi and
Lloydminster in 2014
• De-levered balance sheet with May financing and
sale of non core gas weighted Pembina property
• $17 million financing
• Acquired Michichi property
2011
2012
2013
2014E
Debt/Cash Flow
2.9x
5.1x
6.1x
1.4x
EV/DACF
8.1x
8.4x
9.7x
3.5x
3
˃ Corporate Strategy
Marquee plans to develop and expand its core oil plays to generate superior, risk-adjusted
returns for shareholders.
Production Growth
•
Company has grown from 100 boe/d to 5,000+ boe/d since 2011
Improving Netbacks
•
Reduced Q3 operating and G&A costs per BOE by 37% and 35%,
respectively, year-over-year
Outstanding Resource Play
•
•
•
•
~175 drilling locations at Michichi
Significant upside across ~215 net sections (92% W.I.)
Downspacing and waterflood potential exists
Marquee owns infrastructure at Michichi, including a 2,000 bbl/d
battery
Management and Board
•
•
Seasoned management team and board
Management team has an abundance of resource-play successes
Strengthening Balance Sheet
•
•
1.4x projected 2014 YE net debt to Q4 annualized cash flow
>$30 mm of room projected at YE 2014 on $95 million credit facility
4
˃ Marquee Profile
Market Profile (TSXV:MQL)
Shares Outstanding (MM)
Insider Ownership (basic/fully diluted)
Liquidity (shares/day YTD) (1)
120.3
14.9%/18.1%
519,071
Operations
Average Production Q3 (boe/d) (2)
Forecast 2014 Exit production (boe/d)
5,143/42% oil & liquids
5,600-5,800/52% oil & liquids
Undeveloped Land (net acres)
~240,000
Drilling Inventory (100% oil focused)
>225 net
2014 Corporate Decline
22%
Finances
2014 Forecast Cash Flow ($MM)
2014 Capital Expenditure Program ($MM)
$38
$62.2 ($46.5 net of dispositions)
2014 Forecast Cash Flow/Share ($/share)
$0.34
Net Debt ($MM) (3)
$54.7
Credit Facility ($MM) (4)
$95
Tax Pools
Tax Pools ($MM)
(1)
(2)
(3)
(4)
$226.9
As of October 31, 2014
Q3 sales volumes
At September 30, 2014
Includes $80mm revolving line of credit and $15mm A&D line of credit
5
˃ Balance Sheet Performance
Cash Flow & D/CF
12000
8
Debt to Cash Flow Ratio
10000
 Maintained a pristine balance sheet and
increased financial flexibility
7
8000
5
6000
4
4000
Debt/CF (x)
6
3
Opex and G&A
0
0
Q4 2013
Q1 2014
Q2 2014
Q3 2014
 Lowered G&A costs by ~50% on a per BOE
basis since 2013
OPEX
$8.00
Q4 2014E
Quarter
$25.00
$10.00
1
G&A
$20.00
$6.00
$4.00
$15.00
$2.00
$-
$10.00
Q1 2013 Q2 2013 Q3 2013 2013 Q1 2014 Q2 2014 Q3 2014 2014E
Quarter
6
OPEX
2
2000
G&A Costs
Cash Flow ($000)
9
Cash Flow
˃ Q4 2014 Pricing Scenarios
 Strong balance sheet and hedging program insulates Marquee from potential price volatility
Fixed $CAD 3.50 Gas
2.5
2
10,000
1.5
8,000
6,000
1
4,000
0.5
2,000
0
0
$70.00
$75.00
$80.00
$85.00
$90.00
2
12,000
Q4/2014 Cash Flow ($M)
12,000
1.5
10,000
8,000
1
6,000
4,000
0.5
2,000
0
0
$3.00
$3.25
$3.50
$3.75
$4.00
Natural Gas Price
$US WTI
Q4/14 CF (Hedged)
Q4/14 D/CF (Hedged)
Fixed $US 80 WTI
14,000
Q4/2014 Debt/ Cash Flow Ratio
Q4/2014 Cash Flow ($M)
14,000
Gas Sensitivity
Q4/2014 Debt/Cash Flow Ratio
Oil Sensitivity
Q4/14 CF (Unhedged)
Q4/14 D/CF (Unhedged)
MQL has hedged 35% of its projected Q4 2014E oil
volumes at an average of CAD $ 100.94/bbl
Q4/14 CF (Hedged)
Q4/14 CF (Unhedged)
Q4/14 D/CF (Hedged)
Q4/14 D/CF (Unhedged)
MQL has hedged 60% of its projected Q4 2014E gas
volumes at an average of CAD $ 4.08/mcf
7
˃ The Michichi Advantage
Extensive Oil Potential
• >10 million barrels of oil in place per
section combined for the Banff and
Detrital zones in the focus area
Dominant Land Base
• ~215 net undeveloped sections
• Crown land, 92% avg. W.I.
Extensive Inventory
• >175 horizontal oil focused inventory
identified to date (16 proven and 14
probable locations booked)
Operational Strength
• 2 gas plants (28 mmcf/d total capacity)
• 2,000 bbl/d oil battery and terminal and
new 1,000 bbl/d multi-well battery
 Land Base Offers High Netback, Multi-Year Oil Focused Drilling Inventory
8
# of Wells Drilled
˃ Drilling Success at Michichi
45
40
35
30
25
20
15
10
5
0
Horizontal Wells Drilled at Michichi by Operator*
Drilled
MQL*
BNP
*Includes Sonde & Paramount horizontal wells
*As of Aug 30, 2014
•
Michichi production ~4,200 boe/d
•
Since December 2011, Marquee has drilled 31 HZ wells at
Michichi
HUSKY
Licensed
CNQ
DIRECT
Operator
 Superior Results Generated From Marquee Assets and Experience
9
˃ 2014 Michichi Drilling Plans
• 100% success rate on 13 HZ oil wells
drilled in 2014
• Production results continue to
improve based on technical and
drilling/completion optimization
• Extensive use of 3D seismic database
to target new drilling locations acquisition of new 3D seismic
underway to aid expansion of focus
area
 Focus area combines best results and access to Marquee infrastructure
10
˃ Michichi Economics
ECONOMIC POTENTIAL
Michichi Focus Area Well Production Forecast*
Peak IP 30 Rate
186 boe/d
IP 90 Rate
165 boe/d
Reserves
174 mboe
160.0
DCET
$2.3 MM
140.0
Operating Netback
200.0
BOE/D
180.0
120.0
$47.11/boe
WELL ECONOMICS
100.0
NPV @10% (BTax)
80.0
60.0
$2.3 MM
ROR
68%
Recycle Ratio
3.5X
40.0
Payout Period (years)
1.4
20.0
Finding Cost
$13/boe
0.0
0
2
4
6
8
10
12
14
16
18
20
22
24
26
Months
Pricing Assumptions
28
30
32
34
36
WELL COST (DCET)
Drill & Case
($K)
$1,300
Complete
$700
 70% Oil & NGLs
Equip & Tie-in
$300
 Crown Royalty Reduction: 24 months or 60 mstb
TOTAL
 November 2014 Sproule Pricing
$2,300
 Top tier rate of return economics based on Marquee well results
*Well production forecast is based on selected Marquee producing wells within the focus area
11
˃ Michichi – Improvement of Capital Cost Structure
Infrastructure enhancements have significantly
reduced tie-in times.
Advancements to Marquee’s drilling design
and operations process have successfully
decreased drilling costs over time.
Infrastructure ownership generates dramatic
reduction in tie-in times and acceleration of
cash flow
12
˃ Lloydminster
• Average October production: 640 bbls/d
• Low-risk drilling inventory >50 locations
(6 proven, 4 probable booked)
• Significant production growth upside
Vertical Wells
Sparky/GP
HZ wells
Peak IP 30 Rate
35 bbls/d
90 bbls/d
Reserves*
42 mstb
70 mstb
DCET
$0.60 MM
$0.95 MM
Operating Netback
$40.20/bbl
$45.60/bbl
$0.46 MM
$1.03 MM
ROR
60%
105%
Recycle Ratio
2.8X
3.4X
Payout Period (years)
1.6
1.1
$14.20/bbl
$13.60/bbl
ECONOMIC POTENTIAL
WELL ECONOMICS
NPV @10% (BTax)
Finding Cost
Pricing Assumptions
 November 2014 Sproule Pricing
 Blend 50% Crown/50% freehold royalties
 Low Capital Cost and High Rate of Return
*Lloydminster economics are based on Marquee well results that management believes
are representative of future drilling opportunities in the area
13
˃ 2014 Guidance
Marquee’s 2014 capital program is committed to continued production and
cash flow growth at Michichi and Lloydminster. More than 85% of the
overall budget will be spent at Michichi.
Updated Capital Budget
•
•
•
•
•
13 horizontal and 1 vertical well at Michichi
3 (net) horizontal and 6 vertical wells at Lloydminster
Infrastructure, land & seismic
Well optimization and exploitation
Active program for non-core dispositions
Exit Production
$46.5 MM(1)
5,600 - 5,800 Boe/d (2)
Cash Flow (3)
Debt (Exit 2014)
$38 MM
$62 MM
2014 Exit Debt to 2014 Cash Flow (4)
1.4 times
(1)
(2)
(3)
(4)
Net of dispositions
Reflects sale of 425 boed non core production to date in 2014
Based on 2014E CAD $103.17 WTI, $4.28 AECO, -$21.45 heavy oil differential
Q4 2014 cash flow annualized
 2014 Capital Program Designed to Build on Recent Drilling Success
14
˃ Why own shares in Marquee today?
•
Few juniors boast a comparable scalable, low risk, developmentstage, oil-prone asset base with a clearly delineated drilling
inventory capable of supporting many years of profitable growth
•
Over the last year, the company has shown strong drilling results
highlighted by a step-change in deliverability that supports
compelling economics
•
The company is focused on delivering debt-adjusted per share
growth in production, reserves, NAV, CF and FCF that will be
increasingly attractive to a wide spectrum of investors
•
The company continues to reduce operating and G&A costs,
thereby increasing margins and extending the economic life of
its assets
•
There is distinct value at the current share price as the company
trades below its peers with financial flexibility
 Solid platform for per-share growth
15
˃ Contact Us
For more information, please contact:
Richard Thompson
President, CEO & Director
Email: [email protected]
Direct: (403) 817-5561
Main:
Fax:
403-384-0000
403-265-0073
Address: 1700, 500-4th Ave SW Calgary, AB T2P 2V6
Investor Inquires: [email protected]
Web: www.marquee-energy.com
Corporate Information:
Trading Symbols:
Legal: Norton Rose Fulbright LLP
Reserve Evaluators: Sproule Associates Limited
Auditor: Collins Barrow Calgary LLP
Transfer Agent: Olympia Trust Company
Commercial Lender: National Bank Financial, HSBC
TSX Venture Exchange
MQL.V
OTCQX Marketplace
MQLXF
16
Appendix
17
˃ Experienced Management Team
Richard Thompson, President & CEO
•
Mr Thompson has been the President and CEO at Marquee Energy since 2011. Previously, he served as an Executive Vice-President of Cequence Energy Ltd. from 2008 to 2010 and
as Vice-President of Exploration of Cyries Energy Inc. from 2004 to 2008. Earlier, he was Manager of Geophysics of Cequel Energy Inc. from 2001 to 2004 and Chief Geophysicist of
Cypress Energy from 1997 to 2000. He has been a Director of Marquee Energy since 2011. He previously served as a Director of Cequence Energy Ltd. from 2008 to 2010.
Mr Thompson is a geophysicist and graduated from the University of Manitoba in 1979 with a BSc in Geophysics (with honours).
Roy Evans, CA, VP Finance & CFO
•
Mr Evans has been the CFO and Vice-President of Finance at Marquee Energy since 2011. He was previously the CFO at Marquee Petroleum Ltd. (previously Base Oil & Gas Ltd. and
Torrential Energy Ltd.). He was associated with KPMG for 23 years, where he was a partner for 15 years. He is a Chartered Accountant with memberships in both the Saskatchewan
and Alberta institutes. He currently serves as the Director of Operations for the Alberta Adolescent Recovery Centre. Mr Evans holds a Bachelor of Commerce degree from the
University of Saskatchewan.
Dave Washenfelder, P. Geol, VP Exploration
•
Mr. Washenfelder has served as the Vice President, Exploration of Marquee since October 2012. Prior to joining Marquee, he served as Manager, Exploration at Tamarack Valley
Energy Ltd. Prior thereto he held positions of increasing responsibility with Saskoil, Wascana Energy and Apache Canada. Mr. Washenfelder is a Professional Geologist with more
than 34 years of related experience and graduated from the University of Manitoba in 1980 with a BSc in Geology (honours).
Sam Yip, P. Eng, VP Engineering
•
Mr. Yip is currently the Vice President, Engineering of Marquee, and has served in an executive capacity with Marquee March 2012. Prior thereto he was a Founder, Director and
Vice President, Production of Teague Exploration Inc. from 2003 until 2012. Previously with Atco Gas, Webex and Mark Resources. Mr. Yip is a Professional Engineer with more
than 30 years related experience and graduated from the University of Calgary in 1982 with a degree in Chemical Engineering.
Rob Lemermeyer, VP Operations
•
Mr. Lemermeyer has served as the Vice President, Production of Marquee since September 6, 2013. Mr. Lemermeyer was the Vice President, Operations since December 5, 2011.
Prior thereto he was the Vice President Production for Canadian Coyote Resources from January 2011 to December 2011 and Manager of Production Operations of Base Resources
Inc. from October 2007 to December 2010.
Steve Bradford, VP Land
•
Mr. Bradford is the Vice President, Land of Marquee and has served in that capacity since September 6, 2012. Prior to joining Marquee, he served as VP Land with Milestone
Exploration Inc. from May 2010, and prior thereto served in progressively senior roles in land with West Energy Ltd., Encana Corporation, and Twin Butte Energy Ltd.
18
˃ Strong Governance
Dennis Feuchuk, BBM, CMA, Chairman
•
Richard
Mr. Feuchuk has served as a Director of Marquee since June 22, 2010. Prior thereto he was President and Chief Executive Officer of Base Oil & Gas Ltd. from
October 2009 to May 2011. He was Vice President, Finance and Chief Financial Officer of PrimeWest Energy Trust (an oil and gas trust) from October 2001
to June 2007.
Alexander, CMA, CFA 2, 3
Mr. Alexander is the President and Chief Executive Officer and a Director of Parallel Energy Trust, and has served as a Director of Marquee since December
5, 2011. From January 2008 to June 30, 2011, he was President and Chief Operating Officer of AltaGas Ltd. Prior thereto he was the Executive Vice
President, Chief Operating Officer and Chief Financial Officer of AltaGas Ltd. from January 2007 to January 2008. Mr. Alexander was Vice President Finance
and Chief Financial Officer of Niko Resources Ltd. from October 2003 to April 2006.
Carley, BA, LLB., MBA, ICD.D 2, 3
•
Glenn
Mr. Carley is the President of Selinger Capital Inc., a private investment company and has served as a Director of Marquee since December 5, 2011. Mr.
Carley currently serves as the Chairman of Painted Pony Petroleum Ltd. Mr. Carley had been Executive Chairman of Galleon Energy until August, 2011, and
Chairman of Culane Energy Corp. until February, 2011.
Riddell, B.Sc, M.Sc (Geology) 1
•
Jim
Mr. James Riddell joined Marquee Energy as a Director in December of 2013. Mr. Riddell is the President and COO of Paramount Resources Ltd. and has
held the position since June 2002. Mr. Riddell has been the CEO of Trilogy Energy Corp. since February 2005. He serves as Executive Chairman for Cavalier
Energy Inc. and as a Director for Great Prairie Energy Services Inc., MGM Energy Corp., Strategic Oil and Gas Ltd., Big Rock Brewery, DevCorp Capital Inc.
(now Great Prairie Energy) and Paxton Corporation.
William Roach, B.Sc, MSc, PEng 1
•
Dr.
•
Richard
Dr. William Roach joined Marquee Energy as Director in December of 2013. Dr. Roach became the President and CEO of Cavalier Energy Inc. in 2011 He
previously served as the CEO of Calera in Los Gato, California and of SilverBirch Energy Corporation. He also served as the President and CEO of UTS Energy
between 2004 and 2010. Prior thereto, he held various positions at Husky Energy on the East coast. In addition to Marquee, Dr. Roach serves on the Board
of Directors for UTS Energy, Sonde Resources and Sea NG Corporation.
Thompson, B.Sc Honours (Geophysics) 1
•
See management page
•
Mr. Gregory Turnbull joined Marquee Energy as a Director in December 2013. Mr. Turnbull is a partner with McCarthy Tetrault LLP Calgary, which he joined
in 2002 following his position as partner of Donahue Ernst and Young LLP. Mr. Turnbull is also a Director of Crescent Point Energy, Storm Resources Ltd.,
Heritage Oil PLC, Hawk Exploration Ltd., Hyperion Exploration Corp., Oyster Oil and Gas Ltd.and Sunshine Oilsands Ltd. Mr. Turnbull is also currently a
Director of a number of private companies.
Greg Turnbull QC, BA, LLB 2, 3
(1)
(2)
(3)
Reserves committee
Audit committee
Corporate Governance & Compensation committee
19
˃ History of Value Creation
• Over the same period, Cequel Energy’s share
price grew by 518%
• Cequel was acquired by Progress Energy in July
2004 at a price of $10.45 per share
$12.00
2,000
$9.00
1,500
$6.00
1,000
$3.00
500
$0.00
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Volume (000s)
• Richard Thompson acted as Manager of
Geophysics for Cequel Energy Inc. from 2001 to
2004
Price per share
Cequel Energy Performance
0
Jul-04
Cypress Energy Performance
• Cypress was later acquired by Primewest Energy
in April 2001 at a price of $12.71 per share
$15.00
2,000
$12.00
1,600
$9.00
1,200
$6.00
800
$3.00
400
$0.00
Jan-97
Volume (000s)
• Over the same period, Cypress Energy’s share
price grew by 343%
Price per share
• Mr. Thompson was Chief Geophysicist of Cypress
Energy Inc. from 1997 to 2000
0
Jul-97
Jan-98
Jul-98
Jan-99
Jul-99
Jan-00
Jul-00
Jan-01
20
˃ Analyst Coverage
National Bank Financial
DAN PAYNE
E: [email protected]
P: 403-290-5441
Peters & Co.
DALE LEWKO
E: [email protected]
P: 403-261-2215
Haywood Securities Inc.
DARRELL BISHOP
E: [email protected]
P: 403-509-1938
Acumen Capital
TREVOR REYNOLDS
E: [email protected]
P: 403-410-6842
Canaccord Genuity Corp.
ANTHONY PETRUCCI
E: [email protected]
P: 403-691-7807
FirstEnergy Capital Corp.
ROBERT FITZMARTYN
E: [email protected]
P: 403-262-0648
Macquarie Equity Research
BRIAN BAGNELL
E: [email protected]
P: 403-539-8540
Dundee Capital Markets
CHAD ELLISON
E: [email protected]
P: 403-509-2663
Octagon Capital
NAV MALIK
E: [email protected]
P: 416-306-2510
GMP Securities
AARON SWANSON
E: [email protected]
P: 403-543-3563
 Independent analysis provides research and perspective
21
˃ 2014 Production and Netbacks
Average Production
Liquid Content
Q1
Q2
Q3
4024
48%
5,035
43%
5143
42%
BOE/D
Sales Price
$
59.57
5.37
18.92
4.18
55.93
7.31
16.15
3.51
49.97
6.54
11.67
3.23
/BOE
/BOE
/BOE
/BOE
Field Operating Netback
Commodity contract settlement
$
31.10
3.59
28.96
3.01
28.53
0.93
/BOE
/BOE
Operating Netback
$
27.51
4.54
2.56
25.95
3.79
1.92
27.60
3.87
1.89
/BOE
/BOE
/BOE
Cash Flow Netback
$
20.41
20.24
21.84
/BOE
Royalty Expense
Production Costs
Transportation Costs
G&A and other (excludes non-cash items)
Finance Expenses
22
˃ Marquee Undervalued Relative to Peers
EV / Production 2015E
EV / P+P Reserves
1)
2)
$4.07
$5.48
$8.37
$9.17
$9.46
$9.61
5.2x
4.0x
4.0x
3.0x
2.0x
2.1x
1.9x
1.5x
1.3x
1.3x
1.1x
0.0x
0.7x
1.0x
0.9x
Average: 1.8x
0.6x
2.5x
2.6x
2.9x
3.2x
3.2x
3.6x
3.8x
4.3x
4.4x
5.1x
5.7x
5.0x
0.6x
0.0x
5.8x
EV / DACF 2015E
1.0x
Average: $3.9x
Net Debt 2014 Exit /
Cash Flow 2015E
6.0x
6.0x
2.0x
$10.82
$5.00
Net Debt 2014 Exit / Cash Flow 2015E
7.0x
3.0x
$10.95
$10.00
EV / DACF 2015E
4.0x
Average: $11.89
$0.00
$0
5.0x
$17.93
$15.00
$13.86
$20.00
$19.15
EV / P+P Reserves
$27,414
$10,000
$27,433
$37,874
$20,000
$38,765
$40,786
$40,984
$41,435
$42,394
$30,000
Average: $42,025
$43,986
$40,000
$50,512
$50,000
$53,668
$59,050
EV / Production 2015E
$60,000
$23.81
$25.00
$70,000
Estimates as per NBF or Industry Research; includes the following companies: AEI, DEE, HYX, MEI, MQL, OIL, PRY, RMP, RTK, SOG, TVE, YGR
Estimates adjusted to reflect NBF commodity pricing based on the October 1, 2014 forward strip (2015E: WTI – US$87.00/bbl, Natural Gas – C$3.90/mcf, $US/$CAD – 1.1267)
23
˃ Play Type Comparison
Play Type Economics Comparison: Half Cycle Payouts
Number
of Years 13.0
6.0
5.0
4.0
3.0
2.0
4.9
Oil Plays
Natural Gas Plays
Michichi and
Lloydminster Payouts
3.7
3.0 2.9
2.8
Median: 1.3
2.4 2.3
2.2
1.8 1.8 1.8
1.6 1.6 1.6 1.5
1.4 1.4 1.3 1.3 1.3
1.2 1.1 1.1 1.0 1.0 1.0 1.0 1.0 1.0 1.0
1.0
0.9 0.9 0.9 0.9 0.8
0.7 0.6
0.0
(1) Michichi Horizontal and Lloydminster Vertical as per Marquee estimates. All other estimates as per Peters & Co. Limited research October, 2014.
24
˃ Marquee History
Entered into a
reorganization and
recapitalization
with Base Oil
and Gas
MAY 19
2011
2011
Closed property
acquisition at
Michichi to further
expand its core
area
SEPT. 17
2011
2011
Received
shareholder approval
for the business
combination with
SkyWest Energy
DEC. 5
2011
Acquired gas plant,
gathering system
and associated
production at
Michichi
OCT. 4
2012
2012
2013
Closed transaction to
acquire Western
Canada assets of
Sonde Resources
DEC. 31
2013
2014
Closed bought deal
financing with
exercise of over
allotment for total of
~$20.1 MM
MAY 2
2014
2014
AUG. 31
NOV. 18
MAR. 16
NOV. 5
MAR. 6
SEPT. 30
Closed financing
with exercise of
over allotment
for total
of ~$17 MM
First horizontal
well spud at
Michichi
Closed corporate
acquisition of
focused high net
back heavy oil
assets at
Lloydminster
Closed bought deal
flow through
financing with net
proceeds of $7.6 MM
Closed agreement to
acquire Michichi
property from
Paramount Resources
Closed sale of noncore gas weighted
assets at Pembina for
$14 MM
25
24
˃ Marquee Hedges as of October 3, 2014
Term
Hedge Type
Counterparty
Volume
Pricing
July 1, 2014 to December 31, 2014
WTI fixed price
National Bank
400 bbls/d
Cdn $96.00/bbl
March 1, 2014 to December 31, 2014
WTI fixed price
National Bank
500 bbls/d
Cdn $104.90/bbl
January 1, 2015 to March 31, 2015
WTI fixed price
National Bank
500 bbls/d
Cdn $104.00/bbl
January 1, 2015 to June 30, 2015
WTI fixed price
National Bank
250 bbls/d
Cdn $103.00/bbl
April 1, 2015 to June 30, 2015
WTI fixed price
National Bank
500 bbls/d
Cdn $105/bbl
February 1, 2014 to December 31, 2014
WCS Differential to WTI
National Bank
400 bbls/d
Cdn -$21.30/bbl
January 1, 2015 to March 31, 2015
WCS Differential to WTI
National Bank
300 bbls/d
Cdn -$20.70/bbl
April 1, 2014 to December 31, 2014
AECO fixed price
National Bank
2,000 GJ/d
Cdn $3.50/GJ
January 1, 2014 to December 31, 2014
AECO fixed price
National Bank
3,000 GJ/d
Cdn $3.725/GJ
March 1, 2014 to December 31, 2014
AECO fixed price
National Bank
1,500 GJ/d
Cdn $4.28/GJ
January 1, 2015 to March 31, 2015
AECO fixed price
National Bank
5,000 GJ/d
Cdn $4.465/GJ
March 1, 2014 to December 31, 2014
PUT*
National Bank
4,000 GJ/d
Cdn $4.00/GJ
* The PUT contract is subject to a monthly premium of approximately $32,000.
26
˃ Michichi – Geological Model
Banff
Detrital
W
Target oil
bearing zone
Target oil
bearing zone
E
Bantry
Ellerslie
Detrital
Middle Banff
Fracturing
Lower Banff
Fracturing
MIDDLE BANFF
DETRITAL
API (°)
30-36
30-36
Pay (m)
5-20
3-8
Perm (md)
0.1-30
100-300
Porosity (%)
4-9
15-25
DPIIP (sec)
6-12
1-3
10
15
Depth (m)
1200-1300
1200-1300
Reservoir
Limestone Shoals (Packstone
& Grainstone) locally
enhanced through fracturing
Sandstone,
Siltstone, Pebble
Conglomerate
Channels
RF (%)*
 Model Indicates Significant Oil in Place in Banff and Detrital Zones
* Recovery information is based on average AER published recovery factors for
analogous pools in the area
27