EXPERTISE • QUALITY • INCOME TSX: EGL EAGLE ENERGY INC. Investor Presentation | August 2016
Advisories Advisory Regarding Forward Looking Statements: This presentation includes statements that contain forward looking information (“ forward-looking statements ”) in respect of Eagle Energy Inc. ’s (“ Eagle ”) expectations regarding its future operations, including Eagle’s business strategy, and forecast estimates for Eagle’s capital budget, production, drilling plans, operating costs, funds flow from operations, that Eagle’s funds flow from operations will exceed capital expenditures for the second third and fourth quarters of 2016 combined, year end 2016 debt levels, timing and consequent increase in production from bringing “behind - pipe” production on-stream at Dixonville, commodity split, debt to trailing funds flow from operations, basic payout ratios, corporate payout ratios, dividends, tax pools, estimated field netback, hedging, reserves, resources and that the recent changes by the AER to its LMR regime will not be an impediment to future acquisition opportunities. These forward looking statements involve estimates and assumptions including those relating to timing to drill and bring wells on production, production rates, operating and capital costs, marketability of crude oil, natural gas and natural gas liquids, future commodity prices, future currency exchange rates, anticipated cash flow based on estimated production, size of reserves and reservoir performance, among other things. These estimates and assumptions necessarily involve known and unknown risks, delays, challenges and other uncertainties inherent in the oil and gas industry including those relating to geology, production, drilling, technology, operations, human error, mechanical failures, transportation, processing problems and poor reservoir performance, among others things, as well as the business risks discussed in Eagle Energy Trust’s (the predecessor reporting issuer to Eagle Energy Inc.) annual information form (“ AIF ”) dated March 17, 2016 under the headings “Risk Factors” and “Advisory -Forward-Looking Statements and Risk Factors” . The forward-looking statements included in this presentation should not be unduly relied upon. Actual results may differ from the forward-looking information in this presentation, and the difference may be material and adverse to Eagle and its shareholders. No assurance is given that Eagle’s expectations or assumptions will prove to be correct. Accordingly, all such statements are qualified in their entirety by reference to, and are accompanied by, the information and factors discussed throughout this presentation. These statements speak only as of the date of this presentation and may not be appropriate for other purposes. Eagle does not undertake any obligation, except as required by applicable securities legislation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. Eagle’s AIF contains important detailed information about Eagle. Copies of the AIF may be viewed at www.sedar.com and on Eagle’s website at www.eagleenergy.com. Advisory Regarding Non-IFRS Financial Measures: Statements throughout this presentation make reference to the terms “funds flow from operations,” “field netbacks”, ”basic payout ratio” and “corporate payout ratio”, which are non-IFRS financial measures that do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. Investors should be cautioned that these measures should not be construed as an alternative to earnings (loss) calculated in accordance with IFRS. Management believes that these measures provide useful information to investors and management since they reflect the quality of production, the level of profitability, the ability to drive growth through the funding of future capital expenditures and the level of dividends to shareholders. “Funds flow from operations ” is calculated before changes in non-cash working capital and abandonment expenditures. Management considers funds flow from operations to be a key measure as it demonstrates Eagle’s ability to generate the cash necessary to pay dividends, repay debt, fund decommissioning liabilities and make capital investments. Management believes that by excluding the temporary impact of changes in non-cash operating working capital, funds flow from operations provides a useful measure of Eagle’s ability to generate cash that is not subject to short-term movements in non-cash working capital. “ Field netback ” is calculated by subtracting royalties and operating expenses from revenue. “ Basic payout ratio ” is calculated by dividing shareholder dividends by funds flow from operations. “ Corporate payout ratio ” is calculated by dividing capital expenditures plus shareholder dividends by funds flow from operations. See the “Non -IFRS financial measures” section of Eagle’s management discussion and analysis relating to its financial statements for a reconciliation of funds flow from operations and field netback to earnings (loss) for the period, the most directly comparable measures in Eagle’s financial statements. Advisory Regarding Oil and Gas Measures and Estimates This presentation contains disclosure expressed as barrel of oil equivalency (“ boe ”) or boe per day (“ boe/d ”) . All oil and natural gas equivalency volumes have been derived using the conversion ratio of 6:1 Mcf of natural gas: 1 bbl of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalent of six to one, utilizing a boe conversion ratio of 6 Mcf: 1 bbl would be misleading as an indication of value. The estimated values of the future net revenues of the reserves disclosed in this presentation do not represent the market value of such reserves. There is no assurance that such price and cost assumptions will be attained and variances could be material. The recovery and estimates of reserves provided in this presentation are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided. 2
Strategy “Eagle is created to provide investors with a sustainable business while delivering stable production and overall growth through accretive investments and acquisitions. ” Eagle’s trusted management team brings Expertise an average of 25 years of experience in the oil and gas sector. Quality Eagle owns stable petroleum producing assets in Canada and the U.S. Income Eagle strives to deliver a sustainable business to its shareholders. 3
Corporate Profile 3,900 boe/d (1) Current Estimated Production 3,400 to 3,800 boe/d (1) 2016 Full Year Production Guidance Production Split 88% oil, 3% NGLs, 9% gas 3.13 (2) LMR 2016 Ending Debt to Trailing Funds Flow 3.7x (3) from Operations 57% (3) 2016 Corporate Payout Ratio Dividend $0.06 per share (annualized) US Tax Pools $US 173 million CDN Tax Pools $CA 198 million Notes: 1) 2016 full year production guidance and current estimated production include both working interest and royalty interest production. In June 2016, The Alberta Energy Regulator (“AER”) announced that as a condition of transferring existing AER licenses, approvals, and permits, the AER will require all 2) transferees to demonstrate that they have a liability management ratio (“LMR”) of 2.0 or higher immediately following the transfer. LMR is an assets to liabilities comparison to ensure a higher likelihood that energy companies can meet future decommissioning and abandonment liabilities. Following Eagle’s assumption of operatorship of the Dixonville properties, the LMR for Eagle was 3.13 (as of July 22, 2016). As such, Eagle does not expect that the recent changes by the AER to its LMR regime will be an impediment to future acquisition opportunities for Eagle. 3) Based on forecast pricing of $US 47.50 per barrel WTI oil, $CA 2.47 per Mcf AECO gas and $US 16.63 per barrel of natural gas liquids (NGL price is calculated as 35% of the WTI price), a monthly dividend of $0.005 per share ($0.06 annualized), a foreign exchange rate of $US 1.00 equal to $CA 1.30, a 2016 capital budget of $CA 5.0 million, average production of 3,800 boe/d (the upper end of the guidance range) and average operating costs of $CA 2.2 million per month (the mid-point of guidance range). 4
Market Data TSX: EGL Ticker Shares Outstanding (basic) 42.5 million 52 Week Range $0.40 - $2.79 Recent price $0.68 (1) Average daily trading volume (30 day) 79,650 shares Market Cap $27.6 million Acumen Capital Partners Equity Research Paradigm Capital Scotiabank Global Notes : 1) TSX closing price on August 5, 2016. 5
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