CORPORATE UPDATE Managing Volatili lity Wit ith Strength & Bala lance December 2018
Modern rn Elem lements of f Valu lue Success in a Low Price Environment Modern Environmental Leader ✓ Clean, safe, low liability NuVista LMR of 18 WCP Commodity & Play Premium resource plays: ✓ Diversification Spirit River gas, Cardium oil Wapiti 2P reserves = 222 mmboe ✓ Significant Resource 1 2P BTNPV10 = ~$1.1 billion 274,000 net acres, Scalable, Focused Asset ✓ 7 Gen 541 gross locations, ~100% Husky WI 2 Cenovus $0.57/mcfe Spirit River Rich ✓ Greater Kakwa Top Tier F&D 3 $9.35/boe Cardium Tier 1 $4.36/boe corporate Jupiter ✓ Low Operating Cost 4 $0.39/mcfe Spirit River Tou Strong Balance Sheet 4 ✓ $90mm available capital (ELOC + bank line) Market Pipelines (NGTL, Alliance) ✓ 125 mmcf/d processing Pembina Peace Owned Infrastructure capacity Liquids Pipeline Firm NGTL calibrated to ✓ Modern Pipelines Access to Market production 1 12/31/17 McDaniel reserves report; Forecast pricing Designed to Prosper in the ‘Modern’ Resource World 2 2 Effective WI for active development areas – actual avg. WI ~85% 3 Half cycle economics – see pgs. 10 & 12; Cardium is midpoint 4 Q3/18 financial results
Envir ironmental l Advantage – Low Carbon In Intensit ity Gas Plays Oil Plays Modern Cardium Natural Gas Production Conventional Offshore Norway Ekofysk Modern Resources Field Transport and Texas Spraberry Processing Conventional Associated Unconventional Coal Bed Methane Kuwait Burgan U.S. Average Domestic Natural Gas (2010) Iran Abuzar Conventional Onshore Production and Upgrading Unconventional Barnett Shale Oil and Product Transport and Refining Unconventional Tight Gas Unconventional Marcellus Shale Venezuela Merey Blend Imported LNG California Midway Sunset 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 100 300 gCO2e/MJ 200 0 KgCO2e/barrel Source: ARC Financial Low Emissions = Carbon Security 3
Envir ironmental l Le Leadership ip OLD – Methane Emitting Devices NEW – 100% Electric Drive Modern Ultra-Low E mission Sites (“MULE”) All Electric Equal to 30 0 m 3 methane m 3 methane taking 30 emissions emissions per day cars off the road 1 1 Per EPA guidelines Moving Toward Zero Methane Emissions 4
Deep Basin in Growth with ith Runnin ing Room 541 Gross Undrilled Locations 1 Production Growth Cardium – Spirit River – 16,810 Undrilled Drilled boe/d 24 324 10,969 8,776 boe/d boe/d 3,741 boe/d 217 Cardium – Spirit River – 26 Drilled Q4/15 Q4/16 Q4/17 Q1/18 Undrilled Oil & Liquids Natural Gas Proved + Probable Reserves Growth 2 Gas Processing Capacity 125 222 mmboe mmcf/d 60 119 mmboe 50 mmcf/d mmcf/d 69 mmboe 18 mmboe 0 mmcf/d 2014 2015 2016 2017 Q4/15 Q4/16 Q3/17 Q4/17 Oil & Liquids Natural Gas 1 Includes a mixture of 1.0, 1.5 and 2.0 mile lateral lengths Premium Resource Supports Significant Growth 5 2 McDaniel & Associates reserves as at year-end with forecast pricing
Cost St Stru ructure to Th Thri rive in in All ll Envir ironments Decreasing Cash Costs – Leading Peers Historical Modern Cash Costs (C$/boe) Peer Group 2019E Cash Costs (C$/boe) 1 $21 ~$15 $19 $16 /boe $15 $15 $15 $14 $14 $13 ~$7.50 $11 $10 ~$5.70 ~$5.60 /boe $8 $7 /boe /boe $6 $5 2015 2016 2017 2018F Capital Efficiencies – Continuous Improvement D&C Cost Improvements (C$mm) 2 Peer Group 2017 1-Yr 2P FD&A Costs (C$/boe) 1 2015 2016 2017 2018 Current 2015 $11. 2016 3 $11 2017 $10 $10 $9 $3.6 $8 $7 $7 $7 $6 $6 $5 $5 $6.9 $6.6 $4 $2.9 $4 $2.6 $5.5 $5.5 $1 $2.2 Spirit River Cardium 1 Peers include AAV, ARX, BIR, BNP, BXE, CQE, CR, DEE, KEL, NVA, PEY, PMT, POU, SRX, TOU & VII and based on Peter’s Low Cost Supplier Wins 6 & Co. estimates November 5, 2018; cash costs include opex, G&A & interest 2 Years represent winter drilling seasons (i.e. 2017 = Q2 2016-2017 Breakup); well costs normalized to 1.0 mile (1,600m) lateral length on a $/m basis
Evolu lutio ion of a Versatil ile Asse sset Base Resource Capture Validation Spirit River Infrastructure Spirit River Development Cardium Piloting & Development Land / A&D % of Capital Expenditures Cardium Spirit River Infrastructure Spirit River 2013 2014 2015 2016 2017 2018 F Note: Spirit River represents Kakwa CGU, Cardium Spirit River At Critical Mass – Switching to Liquids Focus 7 represents Wapiti CGU
Wapit iti i Ca Cardiu ium Lig Light Oil il Develo lopment • >500 MMBbl Oil in Place (Net) • Two tiers of locations; top tier 13-15 Central Tank has best-in-class Cardium EURs Treating Facility (up to 174 Mbbl oil) MRI wells IP30 1 rates up to • ~350 bbls/d oil Pool Limit 3 rd generation frac design • resulting in stronger IPs • Latest D&C < $2.0MM • 2018 program development focussed, but includes delineation wells and frac pilot 1 Calendar daily rate Commanding Position in a Leading Light Oil Play 8
La Latest Ca Cardiu ium Wells lls – Oil il Rate vs. s. Cu Cum November 1, 2018 Effective Date Price Forecast - October 31, 2018 Strip Tier 1 1 Tier 2 2 Half Cycle IP30 (Restricted) bbls/d 200 125 IP30 (Restricted) boe/d 300 271 Technical Type Curve Primary product 178 mmbls 159 mmbls GOR scf/bbl 2500 5000 EUR mboe 259 308 Liquids Ratio C2+ bbls/mmcf 79% liquids 70% liquids Well Costs $MM (gross) 2.425 2.425 NPV10% $MM (gross) 2.3 1.9 DPI 10% Discount Rate 0.9 0.8 Payout yrs 1.3 1.6 Q3/18 IRR % 65 50 Drills (3) IP6 boe/d 249 250 Oil Rate bbls/d Capital Cost (IP6) $/boe/d 9,739 9,700 F&D $/boe 9.35 7.86 Q4/17 Q1/18 Drills (3) Drills (4) Tier 1 1 Area Tier 2 2 Area 1. Revised type curve formally referred to as “Northern Type Curve” 2. Formally referred to as “Southern Type Curve” (unchanged) 40 Wells Drilled to Date – Two Tiers of Type Curves Based on Geological Mapping 9
Red Rock Sp Spir irit it Riv iver Gas Pla lay MRI 10” Pipeline To MRI Route Gas Plant Latest Pad (06-08): 08-09 testing in-line; 01-09 fracking 1 st week Dec • 21 wells currently producing into MRI’s Route gas plant • Owned infrastructure (roads, pipe, water) keep DCTE costs down • Latest pad is MRI’s longest laterals to date (up to 2.4km) Limited Gas Program for 2H 2018; Drilled Locations with Resilient Economics 10
Sp Spir irit it Riv iver r Perf rform rmance - Most Recent Drill rills Type Curve - 1.5 Mile Spirit River Nov 1,’18 Effective date Price Forecast October 31, 2018 Strip Rich Lean Spirit River Economics Half Cycle IP30 (Unrestricted) mcf/d 13,350 16,260 IP30 (Unrestricted) boe/d 2,410 2,577 Technical Type Curve Primary product 11 bcf 13 bcf EUR (Economic) mboe 2,015 2,104 Liquids Ratio C5+ bbls/mmcf 25 2 Well Costs 1 $MM (gross) 6.9 6.9 Opex $/Mcfe 0.41 0.25 Latest Rich NPV10% $MM (gross) 7.6 2.5 Gas Wells (4) DPI 10% Discount Rt 1.1 0.4 Payout yrs 1.8 3.9 Gas Rate mmcf/day IRR % 53 21 IP6 boe/d 1,470 1,572 Latest Lean Capital Cost (IP6) $/boe/d 4,694 4,389 Gas Wells (7) F&D $/boe 3.42 3.28 Lean Rich Cumulative Gas bcf Wells drilled before Q2 2017 shown in grey 24 Wells Drilled to Date – Results Warrant Lean/Rich Type Curves 11
Co Competit itiv ive Advantage - Owned In Infr frastructure • Owned & operated infrastructure - the backbone of Modern 13-15 Central Tank • Route plant - 115 mmcf/d Treating Facility 11-25 Wapiti Compressor • Lynx plant - 10 mmcf/d 13-35 & 04-09 Batteries • Extensive network of pipelines (~230km) • 13-15 central oil-treating facility - 2500bbl/d • 3 water handling hubs • 80,000 m 3 fresh water storage • 40,000 m 3 produced water storage Modern 10” Pipeline • 100% recycling, no disposal required Red Rock Water Hub • Diverse, secure water sources • Low-cost advantage is structural Copton Sales Line Modern Route Gas Plant • No take-or-pays Lynx Gas Plant • No material midstream fees 1 Market Pipelines (NGTL, Alliance) • Low operating & capital costs Pembina Peace Liquids Pipeline 1 Midstream fees are paid occasionally prior to Strategic Control & Sustainable Top Decile Op Costs pipeline construction or in non-core areas 12
Risk isk Management Winter 2018/19F Natural Gas Coverage November 2018 – December 2019 Oil Coverage Fixed Fixed Floating Price Price Gas Swaps Swaps 44% 53% 41% Floating Oil 59% AECO Basis Swaps 3% • • • 53% of winter gas Growing Cardium oil 18% of revenue through production hedged at production reducing gas YE 2019 exposed to C$2.33/mcf exposure floating AECO pricing 1 Coverage levels are net of royalties. Active Hedging Program Mitigates Volatility 13
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