All Information Contained in this Presentation is Confidential and for Internal Purposes Only EAGLE ENERGY INC. Eagle Presentation | October 3, 2018
Upside in Eagle Eagle is well positioned to benefit from a rebound in oil prices 87% of production is liquids. Stable asset base with low decline. Total Proved Net Asset Value Per Share Potential to unlock significant value in our assets We have identified a number of potential horizontal drilling opportunities on Eagle owned acreage across seven different geographic areas within our North Texas operating region. Management’s core competencies are directly aligned with maximizing the probability of success of these opportunities . 2
Eagle’s Strategy Low Decline Horizontal Wells in (Corporate Decline 13%) Conventional Plays Liquids Production (87% Liquids) TOTAL SHAREHOLDER RETURN Build Inventory of Focus on Return to Low Risk Locations Low Leverage for Growth Balance Sheet 3
Eagle Summary Eagle operates 230 active wells (1) in Alberta and Texas Corporate decline rate of 13% Q2 2018 Field Netback of $29.26 per barrel of oil equivalent (“ boe ”) Symbol: TSX:EGL Long Term Debt: $US 30.4 million Shares Outstanding (basic): 44.2 million Market Cap: $9.7 million (2) Notes: (1) Includes producing wells and injectors. (2) Based on closing share price of $0.22 / share at October 1, 2018. 4
Sale of Twining Assets “Since the end of 2017, Eagle has reduced its debt by 48%” On August 28, 2018, Eagle announced that it has closed the sale of its entire interest in its oil and natural gas properties near Twining, Alberta to a third party for cash consideration of $CA 13.82 million before customary post ‐ closing adjustments. As planned, Eagle has used $US 8.1 million of the net proceeds from the sale to reduce its outstanding long term debt to $US 30.4 million and intends to use the remaining net proceeds to further fund its North Texas development program. The following are the transaction metrics associated with the sale: Percentage of Production that is Liquids: 65% (1) $CA 27,400/boe/d (2) Production Metric: 4.2x (3) Field Netback Multiple: Notes : (1) Based on July 2018 working interest average daily production of crude oil and natural gas liquids for the Twining assets. (2) This metric has been calculated by dividing the July 2018 working interest average daily production of 505 boe/d for the Twining assets into the $CA 13.82 million sale price. (3) This metric has been calculated by dividing twice the second half forecast 2018 field netback of $1.65 million for the Twining assets into the $13.82 million sale price. Field netback is calculated as revenue less royalties less operating expenses. 5
Operational Update “Eagle continues to execute its previously announced plan to reduce debt and corporate costs, including interest costs, to better position itself to capitalize the North Texas development program.” Eagle’s horizontal drilling play in North Texas. Eagle is pleased to report that it has finished drilling and casing its third North Texas horizontal well at a location approximately one mile from its initial horizontal well, which is a well that continues to exceed production expectations. 4,000 feet of liner was cemented in the lateral section of the target zone of this third well. While still early days, the shows of hydrocarbons and formation samples obtained along the lateral length of this third well appear to be very similar to what was seen while drilling the initial well. Fracking operations are scheduled with a major pressure pumping provider and the well is expected to come on production no later than the middle of December. Over 25,000 net acres on contiguous leases held in seven different geographic areas across Hardeman county that are prospective for horizontal development. North Texas oil sells at par to WTI. 6
Q2 2018 Highlights “2018 G&A year over year reduction of 34% to the end of June.” Field netback improved by 28% on a per boe basis (from $22.94 to $29.26 per boe) when compared to the second quarter of 2017. General and administrative expenses to the end of June 2018, excluding one ‐ time costs associated with the Salt Flat disposition were 34% lower than 2017. Long term debt at the end of the second quarter was 34% lower than at 2017 year end ($US 35 million compared to $US 58.2 million). To mitigate the effects of fluctuating prices on a portion of its 2018 production, Eagle entered into a fixed price financial swap on October 1 for 650 barrels of oil per day at $US 75.08 per barrel WTI for the months of October through December 2018. 7
2018 Plan Continue to focus on drilling wells on our North Texas property due to its high field netbacks and opportunities for meaningful growth. Continue to reduce debt and corporate costs, including interest costs, in order to better position Eagle to capitalize the North Texas project. The February 8, 2018 Salt Flat field disposition and the August 28, 2018 Twining field disposition are steps towards achieving our overall goals. Since the end of 2017, Eagle has reduced its debt by 48% (from $US 58.2 million to $US 30.4 million), which will result in lower interest charges. Continue to reduce general and administrative expenses by focusing on efficiencies and cost reduction. To advise Eagle on its plan, Eagle retained Tudor, Pickering, Holt & Co. Securities – Canada, ULC (“TPH”) to act as a financial advisor to Eagle’s board of directors. 8
Eagle’s US Assets North Texas : 86% liquids • • Substantial core growth area with ~ 25,000 acres Concentrated • Applying new horizontal well technology in existing • 100% operated conventional reservoir High Quality • Conventional vertical opportunities in additional North Texas is a light oil development asset and provides Eagle • Asset Base with formations across our acreage opportunities for meaningful growth through existing Operational production, infrastructure and land holdings of approximately Control 25,000 net acres Low differential to WTI and low operating • costs Significant geological and geophysical work over the • High Netback Oil last two years has resulted in the accumulation of with Significant land and opportunities in North Texas Growth Horizontal wells program targets capital costs below • Development $US 3.5 million. Opportunities • Multiple geologic targets for horizontal wells. • North Texas oil sells at par to WTI. 9
Eagle’s Canadian Assets Concentrated • 87% liquids High Quality • 80% operated Asset Base with • Dixonville is a premier Montney light oil waterflood in Operational Western Canada Control • Decline ~6% Low Decline Production, High Large discovered oil initially in place • PDP Reserves • Future waterflood enhancement and drilling Current LMR is 3.2 (1) • Low Near–Term • Low inactive well count Abandonment Low abandonment liability over the next 10 years • Liability, • Canadian asset base positions Eagle favourably in the event High LMR of changes to the abandonment regulations in Alberta Notes: (1) At August 7, 2018, and after the removal of the Twining field. 10
North Texas Approximately 25,000 net acres in our core area. Focused and well supported by offset production and 3D seismic. We have identified a number of potential horizontal drilling opportunities on Eagle owned acreage across seven different geographic areas within our North Texas operating region. Not a high risk exploratory play. A development drilling project with solid well control and production history. We have completed the technical subsurface and engineering work, giving us a significant competitive advantage , including approximately 250 square miles of seismic data, with processing and interpretation complete and proprietary to Eagle and Eagle ‐ owned infrastructure including facilities, pipeline and gathering lines. Multiple geologic targets for horizontal and vertical wells. Cleveland* Cleveland* North Texas North Texas (TX Panhandle Area) (TX Panhandle Area) Age of Formation Age of Formation Middle Pennsylvanian Middle Pennsylvanian Upper Pennsylvanian Upper Pennsylvanian • Core growth area with approximately 25,000 Depth Range Depth Range 6800’ – 7700’ MD 6800’ – 7700’ MD 7000’ – 9000’ MD 7000’ – 9000’ MD net acres Rock Type Rock Type Sandstone Sandstone Sandstone Sandstone • Potential horizontal drilling opportunities Matrix Porosity Matrix Porosity 12 – 14% 12 – 14% 14 – 16% 14 – 16% identified across seven geographic areas Production Type Production Type Light Oil Light Oil Oil/Higher GOR Oil/Higher GOR Extensive seismic and geological database • Matrix Permeability Matrix Permeability Low Low Low Low Play Area (Counties) Play Area (Counties) 4+ 4+ 6 6 North Texas development similar to highly successful Cleveland play in the Texas Panhandle. 11
Dixonville • Horizontal well waterflood on production 2003 Montney oil zone is a multi ‐ layered turbidite • deposit with porosity of 18 to 22% and permeability of 12 to > 100 md Eagle operates at 50% working interest • • Decline ~6% • Discovered oil initially in place of 147 Mmbbls (6% recovery to date, 16% 1P recovery factor) Future waterflood enhancement and drilling • (Ultimate recovery target of 25 to 30% ) 12
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