Corporate Presentation
February 2015
DISCLAIMER
Forward-Looking Statements
Certain information contained in this presentation of Toro constitutes forward-looking information or forward-looking statements (collectively, "forward-looking statements") under
applicable securities laws. All statements other than statements of historical fact are forward‐looking statements. Forward‐looking statements typically contain words such as
"anticipate", "believe", “confirms”, "continuous", "estimate", "expect", "may", "plan", "project", "should", "will", or similar words suggesting future outcomes. More specifically, forwardlooking statements contained herein include statements with respect to: Toro’s acquisition of the assets and projects described in this presentation; the private placement financing
and the intended use of proceeds; management of Toro’s go-forward business strategy; management's assessment of future plans and operations; the potential for increased
reserves and greater production and the timing and costs from the proposed assets to be acquired; development and expenditure plans in respect of the proposed projects; and
Toro’s anticipated capital structure. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Toro's control, including the
impact of general economic conditions, industry conditions, volatility of commodity prices, risks associated with oil and gas exploration, development, exploitation, production,
marketing and transportation, loss of markets, delays resulting from or the inability to obtain required regulatory approvals, inability to retain and delays in retaining drilling rigs and
other services, currency fluctuations, imprecision of reserve and resource estimates, environmental risks, competition from other industry participants, the lack of availability of
qualified personnel or management, stock market volatility, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions and the ability to
access sufficient capital from internal and external sources. The foregoing list is not exhaustive. In addition to other factors and assumptions which may be identified in this
presentation assumptions have been made regarding, among other things: Toro’s ability to complete the proposed acquisitions of the assets described in this presentation; Toro’s
ability to complete the private placement financing; the general stability of the economic and political environment; the ability to obtain qualified staff, equipment and services in a
timely and cost efficient manner; Toro's ability to obtain financing on acceptable terms; the ability to find and expand oil and natural gas reserves through acquisition, development or
exploration; 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 oil and natural gas products. Readers are cautioned that the foregoing list of factors is not exhaustive. Forward-looking statements contained in this presentation
are made as at the date of this presentation and Toro disclaims any intent or obligation to update or to revise any of the included forward-looking statements, whether as a result of
new information, future events or otherwise, except as may be required by applicable securities laws.
Market and Industry Data
In addition, certain information contained in this presentation is based upon information from press releases, independent industry sources and other publications and websites. None
of these sources have provided any form of consultation, advice or counsel regarding any aspect of, or is in any way whatsoever associated with, Toro. Actual outcomes may vary
materially from those forecast in such press releases, reports or publications, and the prospect for material variation can be expected to increase as the length of the forecast period
increases. While Toro believes this data and information to be reliable, such data and information is subject to variations and cannot be verified with complete certainty. Toro has not
independently verified any of the data or information from third party sources referred to in this presentation or ascertained the underlying assumptions relied upon by such sources.
NI 51-101 Advisory
In conformity with NI 51-101, natural gas volumes have been converted to barrels of oil equivalent (“boe”) using a conversion rate of six thousand cubic feet of natural gas to one
barrel of oil. In certain circumstances, natural gas liquid volumes have been converted to a thousand cubic feet equivalent (“mcfe”) on the basis of one barrel of natural gas liquids to
six thousand cubic feet of gas. Boes and mcfes may be misleading, particularly if used in isolation. A conversion ratio of one barrel to six thousand cubic feet of natural gas is based
on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the
current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion ratio on a 6:1 basis may be misleading as an
indication of value.
Original Oil in Place (OOIP) is the equivalent to Discovered Petroleum Initially In Place (DPIIP) for the purposes of this presentation. DPIIP is defined as that quantity of petroleum that
is estimated, as of a given date, to be contained in known accumulations prior to production. There is no certainty that it will be commercially viable to produce any portion of the
resources. A recovery project cannot be defined for this volume of DPIIP at this time, and as such it cannot be further sub-categorized.
PAGE 1
TORO ADVANTAGE
Management Team – management has a strong track record of building
companies and creating shareholder value
Solid Financial Position – no debt, cash reserves and extensive credit
facilities in place for junior oil and gas company of our size
Substantial Drilling Inventory – significant inventory in the Viking light oil
fairway positions the company for future growth
Acquisition Focused – pursue strategic acquisitions to continue to build
inventory in volatile commodity price environments
PAGE 2
TORO OIL & GAS PROFILE
STOCK SYMBOL
TOO.V
BASIC SHARES
55.5 million
DILUTIVE SECURITIES
17.2 million
FULLY DILUTED SHARES
72.7 million
INSIDER OWNERSHIP
17.6% (basic)
31.6% (fully diluted)
MARKET CAPITALIZATION(1)
NET DEBT (CASH)(2)
DILUTIVE PROCEEDS (out-of-themoney)
ENTERPRISE VALUE (basic shares)
CURRENT PRODUCTION
OIL & LIQUIDS WEIGHTING
TAX POOLS
C$37.2 million
(C$12.0) million
C$0.0 million
C$26.9 million
550 boepd
60%
C$79 million
Notes:
(1) Based on a February 24, 2015 Closing Price
(2) Net cash position as at January 31, 2015 (unaudited)
(3) Current production as at December 31, 2014
PAGE 3
TORO FUNDING AND FINANCING
Recapitalization proceeds of $25 million of non
brokered private placement funds, of which $10
million invested by officers and directors
Completed $21 million equity offering in
December 2014 amidst challenging market
conditions
$15 million prospectus filing
$5.7 million flow through CEE private
placement
$12 million in current cash reserves
$25 million in undrawn credit facility
Over $37 million in current funding capacity
$46 million raised
and 3 acquisitions in
less than 3 months
With its balance sheet strength, Toro is well positioned to weather volatile
commodity prices and current market conditions
PAGE 4
ALBERTA VIKING LIGHT OIL
AB
SASK
Anchor asset is a low
decline, large oil in place
pool with significant
near term development
opportunities
Toro currently
positioned with 93 net
sections of 100% WI
operated lands in the
Viking Light Oil Fairway
Significant resource
base combined with
extensive drilling
inventory position Toro
for future growth and
shareholder return
Halkirk
Provost
Hamilton Lake
Consort
Prairiedale
Kerrobert
Plenty
Dodsland
Esther
Lucky
Hills
Plato
Toro Lands
Oil Fairway
Viking Oil Producers
PAGE 5
TORO ALBERTA VIKING ASSETS
Hamilton Lake
•
300 MMbbls OOIP
Consort
•
•
60 MMbbls potential
additional recoverable
100 hz drilling locations
Toro Lands
Oil Fairway
•
150-180 MMbbls OOIP(2)
•
•
Low risk exploration upside
3-4 hz wells in H2 2015
Viking Oil Producers
Highlights:
Operated asset with low
decline production base
~360 boepd of current
production(1) including
unitized Viking light oil
production
93 net sections of land
100 development locations
identified
2P reserves of 1.21MMboe
(60% crude oil)
Unit OOIP of ~300 MMbbl
with only 5% recovered to
date
Target D,C,E&T costs at
~C$950K per well
Goal to improve netbacks
through development
optimization and waterflood
reactivation
(1) Based on January 19, 2015 production reports.
(2) Internal management estimate
PAGE 6
HAMILTON LAKE VIKING UNIT
100% working interest in Viking
Unit
Very low drilling density – on
average 2 oil wells per section
Only 8 horizontals drilled to date
Waterflood optimization upside
potential
Reservoir has conventional
porosity and permeability in two
stacked marine sands = regionally
extensive deposits
Excellent log and core control
over lands (70 cores in unit)
All facilities, pipelines, road
access currently in place with
year round access
Type log – Viking
B
C
B & C sands: 4-6m total 18-22% porosity
PAGE 7
VIKING TYPE WELL AND ROR
140
Low Cost of Capital
Drill, Case, Complete,
Tie-in cost of ~$950K
Oil Production Rate (bopd)
120
100
Break even economics
support drilling in spite
of weak commodity
price cycles
80
60
40
20
0
0
6
12
18
24
Months on Production
Tier 1 Type Well
Tier 2 Type Well
Unit HZ Well #1
Break Even
IP30 Reserve Capital
boe/d s kboe
$k
NPV 10%
$US/bbl
Unit HZ Well #2
Flat $70 WTI and $3.00
Recycle BT NPV
ROR
Ratio
10%
%
10%
$k
High rate of return
inventory of both Tier 1
and Tier 2 type wells
provide flexibility in
low commodity price
environments
Unit HZ Well #3
Flat $60 WTI and $3.00
Recycle BT NPV
ROR
Ratio
10%
%
10%
$k
Flat $50 WTI and $3.00
Recycle BT NPV
ROR
Ratio
10%
%
10%
$k
Tier 1 Type Well 100
100 $950
$40.54
112%
2.5
1,375
70%
1.6
910
37%
1.5
440
Tier 2 Type Well 60
75
$50.72
45%
1.7
660
27%
1.3
320
9%
1.0
0
$950
PAGE 8
2015 CAPITAL PLAN AND STRATEGY
Limiting spending in H1 2015 due to low commodity prices with limited
visibility on time for recovery
Conservative capital program of $12 million
Plans for 6-7 wells to be drilled in Hamilton Lake and Consort in H2 2015
Anticipating significant reductions in service and drilling costs to
achieve enhanced project economics
Plans to provide revised guidance prior to the end of H1 2015
PAGE 9
VALUE PROPOSITION
Why Toro over other opportunities?
•
•
•
•
High torque entity
Opportune time to grow
Toro financially positioned to
aggressively grow
Commodity upside
Existing 2P
Reserves
2.6MMbbls
PAGE 10
SUMMARY
Inventory of high-quality, low decline, large light oil in place pool
93 net sections of land in the prolific Alberta Viking fairway
Upside potential includes horizontal drilling of Viking Unit, waterflood
optimization
Significant resource base combined with extensive drilling inventory position
Toro for future growth and shareholder return
Remain conservative in volatile commodity price environments to preserve
shareholder value
Positioned for positive reserve additions, production and cash flow per share
growth
PAGE 11
APPENDIX
TORO MANAGEMENT TEAM
Barry Olson, President & CEO, Director
30+ years of engineering and senior management experience in the oil & gas industry
Founder, President & CEO of Orleans Energy Ltd.: A TSX – listed company that grew to 4,700 boepd prior to merging with RMP Energy Ltd.
Country Manager, Pacific Oil & Gas Ltd., building the upstream strategy and assets to feedstock a proposed Westcoast LNG facility
Don Sabo, P. Geol., Executive Vice President, Director
30+ years of geological and senior management experience in the oil & gas industry
Founder, Director, and Executive Vice President, Red River Oil Inc., President & CEO, Director, DS Oil Ltd., Founder, Director, Executive
Vice President, Plenty Energy Inc., Founder, Chairman, President & CEO, Gibraltar Energy Inc., Founder, Chairman, Executive Vice
President, Genesis Exploration Ltd.
Greg Phaneuf, CA, CFA, Vice President Finance & Chief Financial Officer
23+ years of financial, capital markets, M,A&D execution experience
Senior Vice President & Chief Financial Officer of Ivanhoe Energy Inc., Founder, Vice President, Finance and Chief Financial Officer of
Seven Generations Energy Ltd., Vice President, Corporate Development for The Churchill Corporation, Treasurer, Western Oil Sands
Elizabeth More, P.Geol., Vice President Exploration/Geology
30+ years technical and management experience in the Western Canadian Sedimentary Basin
Vice President, Exploration, Angle Energy Inc. Vice President, Exploration, Flagship Energy ;Prior to Toro, most recent mandate was with
Pacific Oil & Gas Ltd
Neil Wilson, P.Eng., Vice President Engineering
20+ years of experience in field operations, reservoir engineering, A&D, and other senior management roles
Independent Engineering Consulting, providing engineering support to western Canadian operators, Founder, Vice-President
Engineering/Exploitation Manager, Cordero Energy Inc.; Prior to Toro, most recent mandate was with Pacific Oil & Gas Ltd
Kellie D’Hondt, Vice President Land & Business Development
10+ years of experience in land negotiations and business development
Team Lead of Business Development for Crescent Point US Corp (Denver), Senior Land Negotiator, and Investor Relations Representative,
Crescent Point Energy Corp, Various land negotiating roles with Starpoint Energy Trust, Bonavista Energy Trust and CNRL
Paul Storey, P.Eng., Vice President Operations
29+ years of operations and management experience including field work in the Beaufort Sea and Russia
Management of all aspects of Drilling, Completions and Facilities including recent Alberta Cardium and Viking HZ programs for Equal Energy
PAGE 13
BOARD OF DIRECTORS
Chris Seasons
Independent Businessman
30 years of oil and gas technical management experience
Past President of Devon Canada Corp.
Former Chairman of the Canadian Association of Petroleum Producers
(CAPP)
James Mahoney
President and Founder of Horizon One Asset Management Inc.
25+ years experience in the investment management and energy sectors
Registered Investment Fund Manager, Portfolio Manager & Exempt
Market Dealer in Ontario, Alberta & Quebec
Former President of Lehman Brothers Canada
Dean Bernhard
VP Finance and CFO of RMP Energy Inc.
23+ years of upstream oil and gas experience in Western Canada
Founder, VP Finance and CFO of Orleans Energy Ltd.
Founder, VP Finance and CFO of E3 Energy Inc. (Sold to StarPoint
Energy Ltd. in December 2004)
ADVISOR
BANKER
NATIONAL BANK
EVALUATION ENGINEERS
SPROULE ASSOCIATES LTD.
REGISTRAR & TRANSFER AGENT
ALLIANCE TRUST COMPANY
LEGAL COUNSEL
TORYS LLP
Scott Saxberg
President, CEO and Director of Crescent Point Energy Corp.
Mr. Saxberg is acting as a special advisor to the management team and
board of Toro Oil & Gas
PAGE 14
CONTACT INFORMATION
TORO OIL & GAS LTD.
2200, 250 5th Street SW
Calgary, AB
T2P 0R4
Phone: 403-237-9996
Fax: 403-264-0416
Emergency phone: 403- 770-6832
Barry Olson
Don Sabo
President & CEO, Director
Executive Vice President, Director
Phone: 403-686-6801
Phone: 403-686-6802
Email: [email protected]
Email: [email protected]
Greg Phaneuf, CA,CFA
Vice President Finance & CFO
Phone: 403-686-6803
Email: [email protected]
PAGE 15