SLIDE 28 IMPORTANT NOTICE
General Advisory The information contained in this presentation does not purport to be all- inclusive or contain all information that readers may require. Prospective investors are encouraged to conduct their own analysis and review of Seven Generations Energy Ltd. (“Seven Generations”, “7G”, “VII”, the “company” or the “Company”) and of the information contained in this presentation. Without limitation, prospective investors should read the entire record of publicly filed documents relating to the Company, consider the advice of their financial, legal, accounting, tax and other professional advisors and such other factors they consider appropriate in investigating and analyzing the Company. An investor should rely only on the information provided by the Company and is not entitled to rely on parts of that information to the exclusion of others. The Company has not authorized anyone to provide investors with additional or different information, and any such information, including statements in media articles about Seven Generations, should not be relied upon. In this presentation, unless otherwise indicated, all dollar amounts are expressed in Canadian dollars, and per share amounts are presented on a diluted basis. An investment in the securities of Seven Generations is speculative and involves a high degree of risk that should be considered by potential investors. Seven Generations’ business is subject to the risks normally encountered in the oil and gas industry and, more specifically, the shale and tight liquids-rich natural gas sector of the oil and natural gas industry, and certain other risks that are associated with Seven Generations’ stage of development. An investment in the Company’s securities is suitable only for those purchasers who are willing to risk a loss of some or all of their investment and who can afford to lose some or all of their investment. Non-IFRS Measures Advisory In addition to using financial measures prescribed by International Financial Reporting Standards (“IFRS”), references are made in this presentation to “available funding”, “adjusted working capital”, “operating netback” (also referred to herein as “netback”), “funds from operations” (also referred to herein as “funds flow”), “net debt”, “adjusted EBITDA”, “return on capital employed” (or “ROCE”), “Factset EBITDA” and “cash return on invested capital” (or “CROIC”), which are measures that do not have any standardized meaning as prescribed by IFRS. Accordingly, the Company’s use of such terms may not be comparable to similarly defined measures presented by
- ther entities and comparisons should not be made between such measures
provided by the Company and by other companies without also taking into account any differences in the way that the calculations were prepared. For further details about “available funding”, “adjusted working capital”, “operating netback” (also referred to herein as “netback”), “funds from operations” (also referred to herein as “funds flow”), “net debt”, “adjusted EBITDA”, “return on capital employed” (or ROCE), and reconciliations between those measures and the most directly comparable measures under IFRS for the most recently completed quarter, see “Non-IFRS Financial Measures” in the Company’s Management’s Discussion and Analysis dated May 2, 2018 for the three months ended March 31, 2018 and 2017, which is available on the SEDAR website at www.sedar.com. “FactSet EBITDA” is calculated by a third party and differs from adjusted EBITDA primarily through the exclusion of realized hedging gains and losses. “Cash return on invested capital” (or “CROIC”) is FactSet EBITDA divided by the average unamortized cost of developed and producing oil and natural gas assets and is a performance measure of a company’s ability to generate returns on capital investments. The 2017 CROIC of 19% reflects FactSet EBITDA of $1,341.5 million divided by the average cost of oil and natural gas assets of $7,213.5 million. The 2016 CROIC of 15% reflects FactSet EBITDA
- f $757.9 million divided by the average cost of oil and natural gas assets of
$5,104.6 million. The 2015 CROIC of 12% reflects FactSet EBITDA of $334.2 million divided by the average cost of oil and natural gas assets of $2,769.9 million. Forward-Looking Information Advisory This presentation contains certain forward-looking information and statements that involve various risks, uncertainties and other factors. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “should”, “believe”, “plans”, “outlook”, “forecast” and similar expressions are intended to identify forward-looking information or statements. This presentation contains certain forward-looking information and statements that involve various risks, uncertainties and other factors. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "should", "believe", "plans", and similar expressions are intended to identify forward looking information or
- statements. In particular, but without limiting the foregoing, this presentation
contains forward-looking information and statements pertaining to the following: the Company’s strategies, objectives and competitive strengths; the Company’s development plans; the Company’s goal of having a balanced budget in 2019; plans to grow cash flow with improved execution and market access; planned production, including production per share, production growth and production guidance; targeted ROCE of 10%-15%; expectation that compensation will be tied to corporate returns; the maintenance of a strong balance sheet; targeted debt to funds flow ratio of below 2.0 times; expected long-term value creation; profitable future growth expected; forecasted future revenues and future funds from operations; anticipated liquids yields; future capital investments and allocation of capital; the number of wells to be drilled, completed and brought on production; expected well costs; forecasted NPVs and IRRs; estimated future costs, supply costs, break-even prices, cost reductions and cost performance; transportation and processing capacity, including third party gas processing and condensate stabilization capacity; expectation that the pace of growth will be dictated by the Company’s balance sheet and funds flow; expectation that strategic investments in growth and infrastructure will enhance the value of the Company’s Montney asset base; expectation that funds flow will surpass capital investments by 2020; processing capacity expected from the Gold Creek gas plant that is currently under construction; type-curve estimates; forecast revenue by product type; the estimated number of drilling locations or drilling opportunities; the expectation that the Company has decades of Montney drilling opportunities; expectation that consistent execution of the Company’s risk management program will lock in returns; forecasted royalties costs, operating costs, transportation costs, interest expenses and G&A expenses; commingling potential from secondary targets; planned water pipeline and disposal infrastructure; and pressure and temperature estimates within the Montney
- formation. In addition, information and statements in this presentation relating
to reserves and resources and the estimated net present value of future cash flows to be generated from reserves are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated, and that the they can be profitably produced in the future. With respect to forward-looking information contained in this presentation, assumptions have been made regarding, among other things: future oil, NGLs and natural gas prices being consistent with current commodity price forecasts after factoring in quality adjustments at the company’s points of sale; the company’s continued ability to obtain qualified staff and equipment in a timely and cost-efficient manner; third party transportation and processing facilities will be operated in an efficient and reliable manner; drilling and completions techniques and infrastructure and facility design concepts that have been successfully applied by the Company elsewhere in its Kakwa River Project may be successfully applied to other properties within the Kakwa River Project; that wells drilled in the same fashion in the same formations in proximity to the type-wells that were used in 7G’s type-curve forecasts will deliver similar production results, including liquids yields; the geology and reservoir quality being relatively consistent within each of the Company’s separate asset areas; well results from future wells to be drilled in the Company’s asset areas being similar to wells that have been drilled in those areas to date, as well as the type-curve estimates for those areas; the consistency of the current regulatory regime and legal framework, including the laws and regulations governing the company’s oil and gas operations, royalties, taxes and environmental matters in the jurisdictions in which the Company conducts its business and any other jurisdictions in which the Company may conduct its business in the future; the company’s ability to market production of oil, NGLs and natural gas successfully to customers; that the company’s future production levels, amount of future investment, costs, royalties, unabsorbed demand charges, facilities downtime and development timing will be consistent with the company’s current development plans and budget; the applicability of new technologies for recovery and production of the company’s reserves and resources may improve capital and operational efficiencies in the future; the recoverability of the company’s reserves and resources; sustained future capital investment by the company; future cash flows from production; the Company’s future sources
funding; the Company’s future debt levels; geological and engineering estimates in respect
- f the Company’s reserves and resources; the geography of the areas in
which the Company is conducting exploration and development activities, and the access, economic, regulatory and physical limitations to which the Company may be subject from time to time; the impact of competition on the Company; and the Company’s ability to obtain financing on acceptable terms. Assumptions made in the calculation of forecasted half-cycle and full-cycle economics, including forecasted NPVs, IRRs, price sensitivities, commodity prices and recovery factors are provided in footnotes proximate to those
- disclosures. Assumptions made in connection with the Company’s budget and
related forecasts are provided in footnotes proximate to those disclosures and
An assumption has also been made that further well delineation activities will confirm management’s estimates regarding reservoir quality of its properties that fall outside of the Company’s core development areas. With respect to the estimated number of drilling locations or potential drilling opportunities that are referenced herein, various assumptions have been made. These assumptions are described under the heading “Note Regarding Potential Drilling Opportunities” below. Actual results could differ materially from those anticipated in forward-looking information as a result of the risks and risk factors that are set forth in the Company’s Annual Information Form dated March 13, 2018 (the “AIF”), which is available on SEDAR at www.sedar.com, including, but not limited to: volatility in market prices and demand for oil, NGLs and natural gas, and hedging activities related thereto; general economic, business and industry conditions; variance of the Company’s actual capital costs, operating costs and economic returns from those anticipated; the ability to find, develop or acquire additional reserves and the availability of the capital or financing necessary to do so on satisfactory terms;
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