Eagle Energy Trust VISION GROWTH INCOME Investor Presentation June 2014
Disclaimers Disclaimer Regarding Forward Looking Statements: This presentation includes statements that contain forward looking information (“forward -looking statements”) in respect of Eagle Energy Trust’s expectations regarding its future operations, drilling program, production, reserves, well type curves, corporate decline rates, operating costs, capital expenditures, debt, credit facility, payout and recycle ratios, funds flow from operations, field netbacks, hedging, the amount and sustainability of distributions, tax pools, business strategy and plans for growth, among other things. 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, 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 the Trust’s annual information form dated March 20, 2014 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 the Trust and its unitholders. No assurance is given that the Trust’s expectations or assumptions will prove to be correct. In addition, this presentation contains forward-looking statements attributed to third party industry sources. 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’s annual information form dated March 20, 2014 contains important detailed information about Eagle and its trust units. Copies of the annual information form may be viewed at www.sedar.com and on Eagle’s website. Disclaimer Regarding Oil and Gas Measures: 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 Mcf of natural gas: 1bbl 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. 2
Mission Statement VISION We create wealth for investors by combining innovation, expertise and opportunity. GROWTH We target a capital spend and payout ratio that sustains moderate growth and distributes income. INCOME We strive to deliver predictable monthly distributions. 3
Overview • Eagle Energy Trust provides investors with a publicly traded, oil focused reliable distribution paying investment, with favourable tax treatment relative to taxable Canadian corporations. • Investors receive a portion of Eagle’s available cash on a monthly basis to provide attractive income to unitholders. • All of Eagle’s production is in Texas and Oklahoma. • 93% of Eagle’s production is light oil and NGLs. 4
Corporate Overview 3,010 boe/d Q1 2014 Working Interest Production: Production Guidance – full year 2014 : 3,250 - 3,450 boe/d (average) 93% light oil and NGLs Production Split: $US 90 million Credit Facility: $1.05 per unit Annual Distribution: Current Yield (1)(2) : 16.5% approx. $306 million Tax Pools: 1. Based on the closing price of $6.37 on June 16, 2014. 2. Unlike fixed income securities, the Trust has no obligation to distribute any fixed amount, and reductions in, or suspension of, cash distributions may occur that would reduce yield. 5
Market Data TSX: EGL.UN Ticker Symbol: Units Outstanding (basic): 33.4 million 52 Week Range: $4.92 - $9.05 Recent price (June 16/14 close): $6.57 Average daily trading volume (30 day): 192,485 units 30 day VWAP: $6.04 Market Cap (June 16/14): $207.6 million Directors’ & Officers’ Ownership: 2.2% basic, 10% fully diluted Equity Research: Scotia NBF Acumen TD 6
Q1 2014 Highlights • Average working interest sales volumes of 3,010 boe/d and on track to meet 2014 full year production guidance of 3,250 to 3,450 boe/d. • Top quartile field netbacks of $54.29/boe, up 14% from Q4 2013. • Canadian dollar realized oil prices of $109.00/bbl, giving Eagle a substantial revenue advantage over producers of Canadian oil. • Funds flow from operations of $10.3 million, up 18% from Q4 2013. • Unitholder distributions maintained at $0.26 per unit ($0.0875 per unit per month). • Increased our presence in our most recently established Hardeman core area, through a tuck-in acquisition of approximately 130 boe/d for cash consideration of $5.3 million ($US 4.7 million). • Executed 55% of our capital program, with success to date. • Took steps in early May to assure the market that we intend to lower our sustainability ratio (corporate payout ratio) while maintaining our distribution. 7
Hedging Program Hedging Summary 3400 3200 $87.90 Fixed Price 3000 2800 $90.50 x $94.35 Costless Collar 2600 $90.10 x $92.00 Costless Collar 2400 2200 $85.40 Fixed Price 2000 BBL/D - OIL 1800 $93 x $95.35 Costless Collar 1600 $90 x $94.95 Costless Collar 1400 1200 $91.15 Fixed Price 1000 $91.15 Fixed Price 800 600 $98 Fixed Price 400 200 0 • Current hedges lock in 1,650 bbl/d at US$90.00 - $98.00 WTI and account for 49% of 2014 production guidance. 8
2014 Capital Budget • Eagle’s 2014 capital guidance is $US 28.0 million consisting of: • $US 3.8 million towards land acquisition and seismic evaluation of future opportunities in Eagle’s areas; • $US 24.2 million base investment used to replace declines and grow 2014 average working interest production and funds flow by approximately 10% over 2013; • Execute a 7 (6.2 net) well drilling program on our Salt Flat, Permian and Hardeman properties • Embark on recompletions, facilities upgrades and debottlenecking across our portfolio • $US 4.7 million February 2014 producing property tuck-in acquisition in Hardeman County 9
2014 Guidance and Capital Budget (cont.) Eagle’s 2014 guidance with respect to its capital budget, production, operating costs and funds flow from operations is as follows: 2014 Guidance Notes Capital Budget $US 28.0 mm (1) Working Interest Production 3,250 - 3,450 boe/d Operating Costs (inclusive of transportation) $12.50 - $14.50 per boe Funds Flow from Operations $49.1 mm (2) Notes: 1. As a result of its February 2014 tuck-in acquisition for $US 4.7 million, the Trust has kept the capital budget unchanged and has reduced its planned drilling program by the amount of the acquisition. With the incremental production from this acquisition replacing the production from those wells that were removed from the drilling program, 2014 guidance for average working interest production, operating costs and cash flow remain unchanged. 2. 2014 funds flow from operations of $49.1 million has been estimated using the following assumptions: a. Average working interest production at the mid-point of guidance at 3,350 boe/d; b. Pricing at $US 95.00 per barrel WTI oil, $US 3.35 per Mcf NYMEX gas and $US 33.25 per barrel NGLs (NGLs price is calculated as 35% of the WTI price); c. Differential to WTI (excluding transportation) is $1.17 discount per barrel in Permian, $2.52 discount per barrel in Salt Flatand $2.40 discount per barrel in Hardeman; d. Operating costs (inclusive of transportation) of $13.50 per boe; and e. Foreign exchange at $CAD 1.05 = $US 1.00. 10
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