CORPORATE PRESENTATION April 2017
Corporate Information Current Production 2,700 boepd • • Estimated Cash and working capital as of March 31, 2017 $12 million • New gas plant and other equipment held for future expansions $15 million Doe/Mica Montney land – Gross (Net) sections 157 (141) • Stoddart Montney land – Gross (Net) sections 27 (27) • Potential Doe/Mica Lower Montney Turbidite locations – net (1) • 740 Potential Doe Upper Montney locations – net (1) • 40 Average Montney horizontal drill and complete cost $3.8 million • Capacity of operated facilities (connected to Alliance) 25 mmcf/d • • Capacity including installation of new gas plant equipment above 85 mmcf/d • Shares outstanding (diluted) 165.3 (189.3) • Management & directors shareholdings (diluted) 7.8% (16.2%) (1) See discussion on “Potential drilling locations” in the Advisories section of this presentation. Page 2
Upper & Lower Montney Play Both Upper & Lower Montney BC AB productive in area Area characteristics include: Two Rivers • Liquids-rich gas and high GOR light oil 16-30 MICA • High deliverability (500 – 2,000 4-30 boe/d IP30) • Shallow depth (1,800 – 2,300 13-7 8-4 meters) Tower • High liquids yield Doe • Drill costs < $4 million 8-22 • Many companies continue to 8-18 actively drill both Upper and Lower Montney 12-6 Parkland 13-19 a/b/c b4-19 Gordondale Sunrise Legend Dawson Leucrotta Land Q3/Q4 2016 Drill Program Page 3
Lower Montney Turbidite Play NW Alberta – NEBC Characteristics of Doe/Mica area: BC AB . Liquids-rich gas and high GOR light oil • Two Rivers Shallow depth (1,800 – 2,300 meters) • Drill & Complete costs < $4 million • Access to major pipelines (NGTL, • Alliance, Pembina) 16-30 Easy surface access (predominately • 4-30 farmland) Increasing activity by competitors • 13-7 8-4 Mica Leucrotta Activity: 8-22 8-18 • Drilled 8 successful hztl wells to date (3 liquids-rich gas and 5 light oil) 12-6 • 3 delineation wells drilled Q4/16 • Expansion of gathering system and gas Parkland plant upgrades completed in Q1/17 13-19 Doe b/c 4-19 Gordondale Legend Sunrise Leucrotta Land P. Coupe Lower Montney Producers Q3/Q4 2016 Drill Program Page 4
Lower Montney High GOR Light Oil GLJ Average Type Curve Montney Oil Hz Well Performance Indicator Type Well Drill & Case ($K) 1,800 Complete ($K) 2,000 Tie-in ($K) 400 Total ($K) 4,200 Liquids Gas Total 384 Year 1 Avg. Q (boe/d) 142 242 EUR (3) (mboe) 213 457 669 GLJ Pricing (2) NPV10 ($K) (3) 7,149 PV10 ($K) (3) 11,349 IRR (%) (3) 91 Payout (yrs) 1.3 F&D ($/boe) 6.28 Cap. Eff. Q-12mo. ($/boe/d) 10,938 Notes: (1) See “Type curves” in the Advisories section of this presentation (2) Economics based on a Jan 2017 start date using GLJ Q1 2017 price forecast ($US 55.00/bbl WTI; $3.28/GJ AECO; FX 1.33 for 2017). (3) For definitions, see “Oil and Gas Metrics” in the Advisories section of this presentation. (4) See the Advisories section of this presentation for details on test rates. Page 5
Lower Montney Gas GLJ Average Type Curve (1) Lower Montney Type Curve Montney Oil Hz Well B4-19 Actual C4-19 Actual Performance Indicator Type Well GLJ Avg Type A13-19 IP Drill & Case ($K) 1,800 1000 Complete ($K) 2,000 Tie-in ($K) 400 Total ($K) 4,200 Boe Rate (boe/d) Liquids Gas Total 561 Year 1 Avg. Q (boe/d) 149 412 EUR (3) (mboe) 217 838 1055 100 GLJ Pricing (2) NPV10 ($K) (3) 8,662 PV10 ($K) (3) 12,862 IRR (%) (3) 223 Payout (yrs) 0.7 F&D ($/boe) 3.98 10 Cap. Eff. Q-12mo. ($/boe/d) 7,487 0 6 12 18 24 30 36 Months on Production Notes: (1) See “Type curves” in the Advisories section of this presentation (2) Economics based on a Jan 2017 start date using GLJ Q1 2017 price forecast ($US 55.00/bbl WTI; $3.28/GJ AECO; FX 1.33 for 2017). (3) For definitions, see “Oil and Gas Metrics” in the Advisories section of this presentation. Page 6
Montney Resource In Place Original Gas Original Oil Solution Gas Original Gas Original Oil Solution Gas in Place (OGIP) in Place (OOIP) in Place # of in Place (OGIP) in Place (OOIP) in Place BCF MM Barrels BCF Net BCF MM Barrels BCF per section per section per section sections LXE lands LXE lands LXE lands Lower Montney - Gas Window 46.3 25 1,158 Lower Montney - Oil Window 30.6 24.7 80 2,448 1,976 Upper Montney 29.8 10 298 1,456 2,448 1,976 Notes: (1) See “Oil and Gas Metrics” in the Advisories section of this presentation. (2) Table does not include recovery of approximately 35 barrels of Ngls per mmcf of natrual gas produced (3) Only includes sections within LXEs high confidence area at Doe/Mica (excludes 40 additional net section of Montney prospective lands in area plus 27 sections of Montney land at Stoddart). (4) Includes volumes for rock porosity greater than 4% based on core analysis Page 7
Montney Stacked Zones Additional Exploration Potential Doe Mica • Leucrotta has started the delineation of 2 of possible 5 zones Upper Montney (Doig) Other operators have • Middle Montney (D5) drilled wells in general vicinity in 3 other zones • Leucrotta has started to Middle Montney (D3-D4) collect data to evaluate additional zones Lower Montney (D1) Lower Montney (C1) Existing Wells Future Potential Page 8
Infrastructure and Take-Away INFRASTRUCTURE • 25 mmcf/d sweet gas plant Spectra/Westcoast • 63 mmcf/d Alliance meter Gathering Line station • Licensed salt water disposal well • Licensed acid gas inj. Well • Owned 60 mmcf/d sweet gas plant (not installed) Leucrotta TAKE-AWAY Gathering Lines • 5 year firm transportation on Alliance (15 mmcf/d escalating to 33 mmcf/d) • Up to 60 mmcf/d AECO based Spectra gas purchase arrangement AltaGas McMahon Plant • Aux Sable contract for Pouce Coupe Plant NGL’s • Potential both NGTL and Pembina pipelines accessible Spectra Alliance Pipeline Doe Plant NGTL Westcoast Legend Transmission Leucrotta Leucrotta Land 13-24 Plant Spectra Gas Plant Pouce Coupe Plant Page 9
Why Leucrotta? • Low capital costs combined with high IPs and high EURs make the Lower Montney Turbidite play one of the highest ROR projects in North America (1) • High GOR light oil and liquids-rich gas places Leucrotta’s lands in the sweet spot of the play • Over 780 possible Upper and Lower Montney locations (2) • High production rates per well will allow rapid growth • Extensive land base (168 net Montney sections) with potentially over 2.5 billion barrels of OOIP (3) and 3.5 tcf of OGIP (3) (plus NGLs) • Fully funded to carry out delineation and development programs (1) Source: RBC Capital Markets: “North American Resource Play Economics”. (2) See “Potential drilling locations” in the Advisories section of this presentation. (3) See “Oil and Gas Metrics” in the Advisories section of this presentation. Page 10
Management & Directors Directors Management Robert J. Zakresky, CA Robert J. Zakresky, CA - President and CEO John A. Brussa, B.A., LL.B. Terry L. Trudeau, P. Eng. - VP Operations and COO Donald Cowie Nolan Chicoine, MPAcc, CA - VP Finance & CFO Daryl H. Gilbert, P. Eng. R.D. (Rick) Sereda, M.Sc., P. Geol. - Sr. VP Exploration Kelvin B. Johnston, P. Geol. Helmut R. Eckert, P. Land - VP Land Brian Krausert, B.Sc. Peter Cochrane, P. Eng. - VP Engineering Tom J. Medvedic, CA Page 11
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