SLIDE 32 Advisory
Forward-looking Statements This presentation contains certain statements or disclosures relating to, among other things, SDX Energy Inc. (“SDX”), its proposed private placement (“Private Placement”) and its proposed listing of its common shares on AIM (“AIM Admission”) and, together with the Private Placement, the “Transaction”) which constitute “forward-looking statements” as such term is used in applicable Canadian securities laws. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or are not statements of historical fact should be viewed as forward-looking statements. In particular, statements concerning SDX, the Transaction, the anticipated benefits that will result from the Transaction and the key characteristics of SDX should be viewed as forward-looking statements. The forward-looking statements contained in this document are based on certain assumptions and although management of SDX consider these assumptions to be reasonable based on information currently available to them, undue reliance should not be placed on the forward-looking statements because SDX can give no assurances that they may prove to be correct. This includes, but is not limited to, assumptions related to the ability of SDX to receive, in a timely manner, the necessary regulatory, stock exchange and other third party approvals, the ability of SDX to satisfy, in a timely manner, the other conditions to the closing of the Transaction and expectations and assumptions concerning, among other things: commodity prices and interest and foreign exchange rates; planned capital efficiencies and cost-savings; applicable tax laws; future production rates; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services; the production capacity
- f SDX’s current and future assets; the reserves and resources potential of SDX’s current and future assets; future
cash flow projections; the exploration potential of SDX’s current and future assets; expectations for being paid in full and on time in the future; future operating expenditures; near-term, medium-term and long-term projections for SDX; the benefits of the Transaction; future cost reductions; the economic and political environment in Egypt and Cameroon; oil and gas commodity prices; SDX’s development and exploration potential, including the success of workover, infill drilling and waterflood extraction techniques and the costs and benefits related to same; risk and success potential related to future drilling locations; Egyptian demand for oil, gas and LNG products; timing of capital expenditures including the drilling of wells and costs associated with same; results of seismic programs; the relative price of assets and the financial status of buyers and sellers in the Egyptian market; opportunities related to legacy payment issues; the timing of the Private Placement and AIM Admission; and completion of the Private Placement and AIM Admission. The anticipated dates provided may change for a number of reasons, including unforeseen delays in preparing materials, investor demand, inability to secure necessary regulatory, stock exchange or other third party approvals in the time assumed or the need for additional time to satisfy the other conditions to the completion of the Transaction. By their very nature, forward-looking statements are subject to certain risks and uncertainties (both general and specific) that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. Such risks and other factors include, but are not limited to the timing of the Transaction, requisite approvals of the TSX Venture Exchange, political, social and other risks inherent in daily operations of SDX, risks associated with the industries in which SDX operates in general, such as: operational risks; delays or changes in plans with respect to growth projects or capital expenditures; costs and expenses; health, safety and environmental risks; commodity price, interest rate and exchange rate fluctuations; environmental risks; competition; failure to realize the anticipated benefits of the Transaction; ability to access sufficient capital from internal and external sources; and changes in legislation, including but not limited to tax laws and environmental regulations. There is a risk that SDX fails to satisfy the conditions to the Transaction which may result in the Transaction not being completed on the proposed terms, or at all. Readers are cautioned that the foregoing list of risk factors is not exhaustive and are advised to reference SDX’s Annual Information Form for the year ended December 31, 2015 for a description of additional risks and uncertainties associated with SDX’s business, including its exploration activities, which can be found on SDX’s SEDAR profile at www.sedar.com. The forward-looking statements contained in this presentation are made as of the date hereof and SDX does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.
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Reserves Data The determination of oil and natural gas reserves involves the preparation of estimates that have an inherent degree of associated uncertainty. Categories of proved, probable and possible reserves have been established to reflect the level of these uncertainties and to provide an indication of the probability of recovery. The estimation and classification of reserves requires the application of professional judgment combined with geological and engineering knowledge to assess whether
- r not specific reserves classification criteria have been satisfied. Knowledge of concepts including uncertainty and risk,
probability and statistics, and deterministic and probabilistic estimation methods is required to properly use and apply reserves definitions. The recovery and reserve estimates of oil reserves provided herein are estimates only. Actual reserves may be greater than or less than the estimates provided herein. Terms related to reserves classifications referred to herein are based on definitions and guidelines in the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”) and are in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities. “Proved reserves” are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. “Probable reserves” are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. The qualitative certainty levels referred to in the definitions above are applicable to “individual reserves entities”, which refers to the lowest level at which reserves calculations are performed, and to “reported reserves”, which refers to the highest level sum of individual entity estimates for which reserves estimates are presented. Reported reserves should target the following levels
- f certainty under a specific set of economic conditions:
- at least a 90 percent probability that the quantities actually recovered will equal or exceed the estimated proved
- reserves. This category of reserves can also be denoted as 1P;
- at least a 50 percent probability that the quantities actually recovered will equal or exceed the sum of the estimated
proved plus probable reserves. This category of reserves can also be denoted as 2P; and
- at least a 10 percent probability that the quantities actually recovered will equal or exceed the sum of the estimated
proved plus probable reserves. This category of reserves can also be denoted as 3P. Additional clarification of certainty levels associated with reserves estimates and the effect of aggregation is provided in the COGE Handbook. The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties, due to the effects of aggregation. Use of the term “boe” may be misleading, particularly if used in isolation. A “boe” conversion ratio of 6 Mcf: 1 bbl is based
- n an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead. Certain volumes provided in this presentation represent a pro forma arithmetic sum of multiple estimates of proved plus probable reserves, or proved plus probable plus possible reserves, which statistical principles indicate may be misleading as to volumes that may actually be recovered. Readers should give attention to the estimates of individual classes of reserves and appreciate the differing probabilities of recovery associated with each class as explained in the annual oil and gas disclosure filings of SDX (available on www.sedar.com) and the effects of arithmetic aggregation. Factors that could affect the accuracy of the reported pro forma aggregated reserves estimates include company level differences in evaluation effective dates, reservoir characteristics and pricing assumptions. Reserves information in this presentation are based on the independent reserves evaluation of the Preliminary Competent Person’s Report as of December 31,2015 on certain properties owned by SDX Energy Inc. in Egypt prepared by DeGolyer and MacNaughton Canada Limited .
