I nvestor Update December 2012 Cautionary Statements Certain - - PowerPoint PPT Presentation

I nvestor Update

December 2012

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Certain statements contained in this presentation include statements which contain words such as “anticipate”, “could”, “should”, “expect”, “seek”, “may”, “intend”, “likely”, “will”, “believe” and similar expressions, statements relating to matters that are not historical facts, and such statements of our beliefs, intentions and expectations about development, results and events which will or may occur in the future, constitute “forward-looking information” within the meaning of applicable Canadian securities legislation and are based on certain assumptions and analysis made by us derived from our experience and perceptions. Forward-looking information in this presentation includes, but is not limited to: the timing of the Skope process under CCAA; management's current expectations regarding the ability of Pine Cliff to realize on the debt; expected cash provided by operations; future capital expenditures, including the amount and nature thereof; oil and natural gas prices and demand; expansion and other development trends of the oil and gas industry; business strategy and outlook; expansion and growth of our business and operations; and maintenance of existing customer, supplier and partner relationships; supply channels; accounting policies; credit risks; and other such matters. All such forward-looking information is based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the

• circumstances. The risks, uncertainties, and assumptions are difficult to predict and may affect operations, and may include, without limitation:

foreign exchange fluctuations; equipment and labour shortages and inflationary costs; general economic conditions; industry conditions; changes in applicable environmental, taxation and other laws and regulations as well as how such laws and regulations are interpreted and enforced; the ability of oil and natural gas trusts to raise capital; the effect of weather conditions on operations and facilities; the existence of

• perating risks; volatility of oil and natural gas prices; oil and gas product supply and demand; risks inherent in the ability to generate sufficient

cash flow from operations to meet current and future obligations; increased competition; stock market volatility; opportunities available to or pursued by us; and other factors, many of which are beyond our control. The foregoing factors are not exhaustive. Actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits will be derived therefrom. Except as required by law, Pine Cliff disclaims any intention or obligation to update

• r revise any forward-looking information, whether as a result of new information, future events or otherwise. Statements regarding the past

performance of Bonterra Energy Corp. and Comaplex Minerals Corp. are illustrative only and are not indicative of Pine Cliff’s future results. The forward-looking information contained herein is expressly qualified by this cautionary statement. This presentation contains the term barrels of oil equivalent (BOE) which has been calculated on the basis of six thousand cubic feet of gas to

• ne barrel of oil. This conversion ratio is based on energy equivalence primarily at the burner tip and does not represent a value equivalency at

the wellhead. The term BOE may be misleading, particularly if used in isolation.

Cautionary Statements

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Corporate Profile

Listing TSX Venture: PNE Shares Issued 153.3 million Market Capitalization $111.9 million (as at December 3, 2012; close of $0.73) Insider Ownership Directors and Officers own ~25% Credit Facility $15 million Net Debt < $1 million Value of Liquid Securities (Long-term Asset) ~ $9 million

Current Snapshot

Key Personnel Board of Directors

Philip B. Hodge, President and CEO

Formerly VP Business Development, Penn West Exploration

George F. Fink, Executive Chairman of the Board

Chairman and CEO, Bonterra Energy; Director, Raging River Exploration

Robb D. Thompson, CFO and Secretary

CFO and Secretary, Bonterra Energy; formerly CFO, Sonde Resources Corp.

Gary J. Drummond

Director, Bonterra Corp. and Universal Energy Group Ltd.; Trustee, Heating Oil Partners Income Fund

Kristi L. Barr, Controller

Formerly Corporate Controller, Orion Oil & Gas Corp.

Philip B. Hodge

President and CEO of Pine Cliff; Director, Westport Innovations Inc.

Chris S. Lee, Senior Geologist

Formerly Senior Geologist, Bonavista Energy Corp.

Randy M. Jarock

Director, Bonterra Energy Corp.; formerly COO, Pine Cliff, President, Bonterra Energy

Joe R. Swift, Land Manager

Formerly Senior Landman, Nuvista Energy Ltd.

• Carl. R. Jonsson

Principal of Tupper, Jonsson & Yeadon LLP; Director, Bonterra Energy and several other companies

• F. William Woodward

Director, Bonterra Energy

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Experienced Leadership Team

$0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 $90.00 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Dec-12 Combined Share Price Cumulative Dist./Div.

$69.56

$26.76 $42.80

* Based on December 3, 2012 closing price of $42.80

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Bonterra IPO Closed: July 28, 1998 Shares issued: 15,755,953 Price: $0.20 per share Proceeds: $3,151,190

BNE: Superior long-term returns to shareholders Value of a $20,000 investment 09/28/98 would equate to $2,650,000 in dividends and a share value of $4,281,000 at 12/03/12

$0.00 $10.00 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Share Price

Comaplex IPO Closed: June 8, 1994 Shares issued: 3,500,000 Price: $1.20 per share that was reduced to $0.30 per share due to two stock splits on a 1 for 1 basis shortly after the IPO Proceeds: $3,830,000

$10.32

CMF: Superior long-term returns to shareholders Value of a $20,000 investment 06/08/94 would equate to value of $688,000 at 07/09/10 (date of sale)

BNE/CMF

Superior Historical Growth Success

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Assembling a Portfolio of High Return Assets for Long-term Value:

• Acquire material asset positions to create core area(s) of production along with

sustainable cash flow, significant reserves or drilling inventories

• Maintain a strong balance sheet for more potential counter cyclical acquisitions
• Accelerate near term oil and liquids drilling and optimization opportunities
• Strong focus on minimizing overhead and operational expenses

Building a Familiar Model

Innovatively pursue opportunities that provide above average industry returns for short-term investors and high rates of returns for long-term investors

$- $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 $1.00 $- $40,000,000 $80,000,000 $120,000,000 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Market Cap Share Price

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Revitalized Strategic Focus

Acquired the Carrot Creek assets for $23.5 million Completed a rights offering and private placement for gross proceeds of ~$2.9 million Closed the acquisition of Geomark Exploration Ltd. Phil Hodge appointed President and CEO; George Fink appointed Executive Chairman of the Board Purchased the debt and security of Skope Energy Partners and announces private placement $8,000,000 - Closed private placement for net proceeds of ~$5.4 million

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Valuation Metrics $/BOE per day(2) $21,368 $/BOE 1P Reserves $11.49 $/BOE 2P Reserves $7.57 Purchase Price/1P NPV (10%) 87% Purchase Price/2P NPV (10%) 59% Key Highlights Closing Date March 1, 2012 Total Cost $23.5 million Production Approximately 950 BOE per day Production Profile 77% natural gas, 4% oil and 19% liquids 1P Reserves(1) 2,045 MBOE 2P Reserves(1) 3,105 MBOE 1P Net Present Value (10%) $27.0 million 2P Net Present Value (10%) $39.6 million

(1) An independent reserve evaluation was prepared by McDaniel and Associates Consultants Ltd. effective January 1, 2012 in respect of the Carrot Creek Assets (2) Purchase price does not include land value of approximately $3.2 million; 4,025 hectares at $800 per hectare

Carrot Creek Assets Acquisition

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Carrot Creek Assets Acquisition

First Core Area

• Multi-Zone Area

Targeting Viking, Gething/Ellerslie, Wilrich, Notikewin, Ostracod, Lower Mannville, Fernie Sand & Rock Creek

• Average Working Interest

31%; Production is 90% operated

• Land Acquired

49 gross sections; 4,035 net hectares (9,970 acres)

• High Quality Liquids Production

NGLs pricing was 72 percent of oil pricing (Edmonton Par) in Q3 2012

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Carrot Creek Assets

• 2012 / 2013 Drilling Program
• Pine Cliff recently (November 16) spudded one gross (0.30 net) Rock Creek well
• Plan to drill up to three additional gross wells in 2013
• Extensive Prospect Inventory
• Four (0.8 net) drill ready targets
• Significant natural gas prospects will be inventoried until natural gas prices recover (> 50 gross potential locations)
• Oil drilling anticipated to offset natural gas and NGLs natural production declines
• Significant recompletion inventory

Capital Development Program

Strategic Partnerships

• Velvet Energy
• Non-producing land ownership shared 50:50 between Pine Cliff and Velvet
• Pine Cliff owns 100% of existing wellbores and production
• All existing and future gathering systems shared on a 50:50 basis; Pine Cliff took ownership of 100% of field compression

interests purchased.

• Non-producing land ownership shared 50:50
• Pine Cliff receives preferential processing pricing at Velvet’s Edson gas plant up to 30% of current plant capacity
• No gas drilling before November 30, 2013 without consent of both partners or unless notice is served within 30 days of any

consecutive 30-day period where the AECO 6-month forward strip average price is greater than Cdn $4.25 per Mmbtu

• Bonterra Energy
• Bonterra has significant operations in the area which creates potential operational synergies

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The acquisition of Geomark resulted in Pine Cliff having:

• A strong balance sheet with no debt, approximately $22 million of cash and cash

equivalents and approximately $9 million of liquid securities

• The ability to continue ongoing development of its existing commodity assets and

provide increased financial flexibility to acquire additional assets

• An ongoing gold mineral exploration project in Kings Canyon, Utah

The Geomark Combination

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Key Highlights

• On November 9, 2012, Pine Cliff purchased all of the outstanding indebtedness,

liabilities owing and security documents granted to a Canadian financial institution by Skope Energy Partners for $28 million

• On November 28, 2012, Pine Cliff announced that Skope filed a court application under

CCAA for proceedings aimed at maximizing the value of Skope’s assets and enabling Pine Cliff to realize on its debt.

• In connection with the debt purchase, Pine Cliff closed a brokered private placement
• n November 30, 2012 for 8.0 million common shares at a price of $0.70 per share for

net proceeds of ~$5.4 million

• Proceeds of the financing were used to pay down the credit facility that was partially

used to fund a portion of the debt purchase

Skope: An Innovative Transaction

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• Skope’s assets include an 80% working

interest in a package of high-quality, low decline, producing shallow gas assets located in SE AB and SW SK. The assets are currently producing approximately 3,500 BOE per day (100% natural gas)

• Total Proved plus Probable reserves

associated with the properties are estimated to be 10.5 MBOE effective March 31, 2012(1)

Skope: The Assets

(1) Based on an independent reserves evaluation performed by McDaniel and Associates Consultants Ltd. prepared for Skope

Monogram Vidora Eagle Butte Cadillac Wymark Pendor / Black Butte

Sensitivity Analysis (3,500 BOE per day)

Gas Price $3.00 $3.50 $4.00 Annual Sales $22,995,000 $26,827,500 $30,660,000

For every $0.50 increase in gas prices, annual sales would increase by $3.8 million

AB SK

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Market Environment

• Potential acquisitions available of both corporate entities and assets as a result of debt

pressures and distressed sellers. There are a limited number of potential buyers with access to capital

• Pine Cliff believes it can continue to capitalize on opportunities in this environment to

deliver value to its shareholders

• We believe natural gas prices will recover, but we also see a ceiling on that recovery, so we

must remain disciplined in our acquisitions

Outlook

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Next Steps

• Realize on the security purchased in the Skope transaction
• Maintain balance sheet strength and flexibility for future transactions
• Continuation of the Geomark drill program on its Kings Canyon project in Utah. Initial gold

results were encouraging and Pine Cliff expects additional program results to be available in early 2013

• Will manage capital requirements to opportunities

Outlook

Pine Cliff is well-positioned to capitalize

• n its growth strategy and is poised

to provide shareholders with increased value and returns

HEAD OFFICE 901, 1015 – 4th Street SW Calgary, Alberta T2R 1J4 Phone: (403) 269-2289 Fax: (403) 265-7488 Email: info@pinecliffenergy.com