All Information Contained in this Presentation is Confidential and for Internal Purposes Only EAGLE ENERGY INC. Eagle Presentation | March 26, 2018
Upside in Eagle Eagle is well positioned to benefit from a rebound in oil prices 80% percent 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 218 potential horizontal drilling opportunities on existing Eagle lands in North Texas. We have identified greater than 80 potential horizontal drilling opportunities at Twining. Management’s core competencies are directly aligned with maximizing the probability of success of these opportunities. 2
Eagle Summary Eagle operates 300 active wells (1) in Alberta and Texas Corporate decline rate of 14% Q4 2017 Field Netback of $22.47 barrels of oil equivalent (“boe”) Symbol: TSX:EGL Long Term Debt (after sale of Salt Flat): $US 38.5 million Shares Outstanding (basic): 43.3 million Market Cap: $16.9 million (2) Notes: (1) Includes producing wells and injectors. (2) Based on a share price of $0.39 / share at March 22, 2018. 3
2017 Highlights & Operational Update “Eagle closed out 2017 with strong reserve metrics, production and monthly operating costs within its guidance range and capital expenditures as planned.” Successfully drilled, completed and brought on production Eagle’s first horizontal well on its North Texas property, with production results exceeding expectations. At present, we are drilling a second horizontal location over ten miles from the first horizontal well. Success on this second well would prove up additional leased acreage in the area. A third horizontal well is planned for late 2018. Posted reserve replacement ratios of 274% and 227% on a proved plus probable and proved basis, respectively. Reduced general and administrative costs by 25% year ‐ over ‐ year, including reductions in executive compensation. Grew funds flow from operations excluding risk management gains (losses) by 49% year ‐ over ‐ year (from $9.7 million to $14.5 million). Recorded 2017 funds flow from operations of $12.7 million. 4
Sale of Salt Flat Field in Texas and Reduction of Debt On February 8, 2018, Eagle announced that it sold its oil and gas interests in the Salt Flat field located in Caldwell County, Texas for approximately $33.3 million cash, subject to customary post ‐ closing adjustments. Eagle used the net proceeds from the sale to reduce its term loan by 34% (from $US 58.2 million to $US 38.5 million) and to further fund its drilling program in North Texas. 5
2018 Plan Continue to focus on drilling wells on our North Texas property due to its high netbacks and opportunities for meaningful growth. The first North Texas well drilled continues to perform above expectations. At present, Eagle is drilling a second horizontal location over 10 miles from the first horizontal well. Success on this second well would prove up additional leased acreage in the area. A third horizontal well is planned for late 2018. Reduce debt and corporate costs, including interest costs, in order to better position Eagle to capitalize the North Texas opportunity. Alternatives for funding growth potentially include asset sales. The February 8, 2018 sale of assets in the Salt Flat field was an initial step towards achieving our overall goals. Sustaining 2018 average corporate production at post-Salt Flat disposition levels with low capital expenditures made possible due to an improved corporate decline of 14% (after the sale of Salt Flat). The sale of the Salt Flat field reduced Eagle’s total corporate production by approximately 1,200 boe per day (“ boe/d ”). Reduced our term loan by 34% (from $US 58.2 million to $US 38.5 million). On a go-forward basis, and excluding one-time interest charges relating to the Salt Flat field sale, lower debt at current interest rates will result in reduced monthly interest costs. Reduce general and administrative expenses by continuing our focus on efficiencies and cost reduction. 6
2018 Plan cont. To advise us on our plan, Eagle retained Tudor, Pickering, Holt & Co. Securities – Canada, ULC (“TPH”) to act as a financial advisor to Eagle’s board of directors. TPH is an independent investment bank with extensive financial and technical knowledge of the energy sector. Eagle’s Board and management are committed to acting in the best interest of Eagle and believe this will ultimately benefit Eagle. While all transaction alternatives will be evaluated, the Board and management are encouraged by the potential for the North Texas asset to deliver attractive returns to Eagle with continued development. Eagle intends to disclose developments with respect to specific transactions, if any, only when they are approved by the Board, unless disclosure is otherwise necessary and appropriate. 7
2017 Year End Reserves (1) Grew year ‐ over ‐ year proved reserves by 11% and proved plus probable reserves by 10%. Achieved year ‐ end proved plus probable reserves of 23.2 million boe (68% total proved, 47% proved developed producing). Crude oil comprises 92% of proved developed producing reserves. Posted reserve replacement ratios of 274% and 227% on a proved plus probable and proved basis, respectively. Increased the reserve life indices to 17.7 years and 12.1 years on a proved plus probable and proved basis, respectively. Reserves by Category PV10 Value ($MM) $89 32% 47% $159 $40 20% $8 2% 1 2 3 4 1 2 3 4 Notes: 1. Per McDaniel & Associates Consultants Ltd., and Netherland Sewell & Associates, Inc., Eagle’s independent reserve evaluators, with an effective date of December 31, 2017. 8
Eagle’s US Assets North Texas : • 96% liquids • Substantial core growth area with ~ 25,000 acres Concentrated • 218 horizontal drilling opportunities on existing land • 100% operated • Applying new horizontal well technology in existing High Quality conventional reservoir • North Texas is a light oil development asset and provides Eagle Asset Base with 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 High Netback Oil • Significant geological and geophysical work over the with Significant last two years has resulted in the accumulation of Growth land and opportunities in North Texas Development • 218 potential horizontal drilling opportunities to be Opportunities developed on existing acreage in North Texas • Horizontal wells with capital costs in the $US 3.5 million range in North Texas 9
Eagle’s Canadian Assets • 80% liquids • 90% operated Concentrated • Dixonville is a premier Montney light oil waterflood in High Quality Western Canada Asset Base with • Twining is a large conventional Pekisko light oil pool with a Operational low recovery factor where new horizontal well technology Control Dixonville : has unlocked significant additional reserves • Decline < 6% • Large discovered oil initially in place • Future waterflood enhancement and drilling Low Decline • Low decline rate Production, High • PDP reserves 72% of 1P and 51% of 2P PDP Reserves • Greater than 80 potential horizontal drilling with Significant opportunities at Twining in addition to the 12 horizontal Growth wells that Eagle or its predecessors have drilled Development Twining : • Decline 17% Opportunities • On ‐ going Conventional Horizontal Development Current LMR is 3.24 (1) • Low Near–Term • Low inactive well count Abandonment • Low abandonment liability over the next 10 years Liability, • Our Canadian asset base therefore positions us favourably to High LMR changes to the abandonment regulations in Alberta Notes: (1) At December 4, 2017. 10
Eagle’s Strategy Horizontal Wells in Low Decline (Corporate Decline 14%) Conventional Plays Liquids Production (30% of Eagle Production from Horizontal Wells) (80% Liquids) TOTAL SHAREHOLDER RETURN Build Inventory of Focus on Return to Low Risk Locations Low Leverage for Growth Balance Sheet ( 218 Potential Horizontal Drilling Opportunities in North Texas) 11
Eagle’s Operational Core Competencies and Successes Proven success year ‐ over ‐ year in operational efficiency of conventional assets Proven driller and operator of horizontal wells in conventional fields Highly successful, focused and disciplined operating team Strong geological and geophysical capability with proven track record of developing successful plays Effective and efficient operator in multi ‐ jurisdiction and regulatory environments Skilled at operating waterfloods and fields with high water cuts Have implemented operating cost optimization projects Strong reservoir management team Detailed understanding of fields and reserve drivers Excellent reservoir management process and execution 12
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