In Investor Update Ju June 2017
What is is Modern? Success in a Low Modern GRANDE PRAIRIE Market Pipelines Price Environment (NGTL, Alliance) Pembina Peace Clean, safe, low liability HS&E Leadership Liquids Pipeline HWY 40 Resource Diversification 2 Top Plays - Spirit River gas, Cardium oil Scalable, Focused Asset 296,000 net acres 689 Locations ~$0.54/mcfe Spirit River Top Tier F&D 1 Wapiti ~$9.94/boe Cardium ~$4.69/boe 2 Corporate Low Operating Cost ~$2.00/boe 3 Spirit River ~100% working interest Control of Asset Material ELOC remaining Strong Balance Sheet Greater Kakwa 50 mmcf/d processing Owned Infrastructure capacity expanding to 125 mmcf/d by Q4 2017 Firm NGTL calibrated to Access to Market production (1) Half cycle development economics Designed to Prosper in the ‘Modern’ Resource World 2 (2) Q1/17 Corporate Opcost (3) Dec 2016/Jan 2017 actuals for Kakwa UOA
Who is is Modern rn? Board of Directors Brian Boulanger - Chairman ARC Financial Corp. John Dielwart ARC Financial Corp. Hilary Foulkes Tudor, Pickering, Holt & Co. Keith MacPhail Bonavista Energy Corporation David Miller EnCap Investments L.P. Mark Welsh, IV EnCap Investments L.P. Management President, CEO & Director (OPTI, Scotia Chris Slubicki, MBA, P. Eng. Waterous) Mike Belenkie, P. Eng. VP Engineering (Painted Pony, Talisman) Jason Chadwick, B. Comm., PLM VP Land (Mancal, Rio Alto) Francois Legault, P. Geol. VP Geosciences (Vermilion, Talisman) CFO (Ensign, Genuity Capital, RBC Capital Derek Mendham, CA, CFA Markets) Experienced and Invested Team 3
Envir ironmental l Advantage – Ca Carbon In Intensit ity Gas Plays Oil Plays Eagle Ford VO Offshore Modern Cardium Modern Saudi Ghawar Associated US Gulf Thunderhorse Coal Bed Methane Domestic Average US Refined Average Conventional Iraq Kirkuk Barnett Shale Tight Gas US California Marcellus Indonesia 0 2 4 6 8 0 50 100 150 200 250 gCO 2 e/MJ kgCO 2 e/barrel Extraction and Processing Oil Production and Upgrading Field Transport and Processing Oil Transport, Refining, Refined Product Transport Amongst the Lowest Carbon Intensity in the World = Carbon Security 4
Modern rn La Landscape Operations Update Growth 1 Cardium Oil: 19 HZs 2016 production 7,892 boe/d 197% Wapiti ~10,500 boe/d April production 78% (~15% liquids 2 ) Behind pipe prod. 4,000 boe/d n/a Q1/18F production ~20,800 boe/d 84% Wells drilled to 33 37% date Red Rock 7 Gen Full time Conoco 25 8% employees (Cenovus) Tourmaline Spirit River Gas: 13 HZs and 1 strat test Route Jupiter (1) Relative to respective prior year period Rapid Growth – Value Driven 5 (2) Substantial oil production shut in due to road conditions reduced liquids percentage in April
Red Rock Sp Spir irit it Riv iver Gas Pla lay Spirit River Fairway 09-30: Peak Month 6.4 mmcf/d 13-18: Peak Month 8.4 mmcf/d 16-17: Peak Month 16-11: Peak Month 10.7 mmcf/d 16.4 mmcf/d 102/01-08: First 30 days 11.0 mmcf/d 01-07: Peak Month 13.0 mmcf/d 16-32: Tested (5 days) 01-10: First 30 days Averaged 15.1 mmcf/d 10.9 mmcf/d 01-02: Peak Month 14.1 mmcf/d 01-11: Falher Pilot Over-pressured Peak Month 19.0 mmcf/d 1.75 Tcf net OGIP 08-32: Tested (16 days) 230+ locations Averaged 13.8 mmcf/d MRI 10” Pipeline To MRI Gas Plant 1. Except for 16-11 and 09-30, all wells were restricted 2. All wells to date have targeted the Wilrich with exception of 01-11 Falher Regional Deep Basin Resource with Outlier Results In Stacked Zones 6
Route Sp Spir irit it Riv iver Gas Pla lay MRI 10” Pipe Over-pressured from Red Rock Market gas and 0.75 Tcf net OGIP liquids lines 80+ locations 02/04-06: Drilled and Cased MRI 50 mmcf/d Gas Plant Frac’ing in June ‘17 Expanding to 115 mmcf/d Spirit River Fairway 13-04: Peak Month 8.2 mmcf/d (restricted) MRI 10 mmcf/d Gas Plant MRI joint-owner Online June ‘ 17 12” gas sales line Spirit River Fairway 05-34: Wilrich/Dunvegan Recompletion producing 0.5 mmcf/d with 15 bbls/mmcf C5+ Emerging Prolific Resource Adjacent to Modern Plant 7
Sp Spir irit it Riv iver r Well ll Perf rform rmance – Red Rock Co Core Well 1 Well 2 MRI 2016 Well 5 Type Well Well 6 Well 7 Well 8 Well 9 Well 10 Well 11 (1) Excludes 13-04 well at Route and 09-30 well drilled in Type 2 rock. Repeatable - Predictable - Prolific 8
Sp Spir irit it Riv iver r Well ll Dis istrib ibutio ion P1 Modern First 8 Wells P2 All AB Deep Basin Spirit River Wells (post P5 18 mmcf/d Jan 1, 2015) P10 Percentile >>> P20 Facility Restricted Rates 16 mmcf/d P30 P40 P50 Half Cycle Economics, May 31 2017 Strip Price (2) P60 P70 EUR mboe 1,839 5 (3) Liquids Ratio C5+ bbls/mmcf P80 Well Costs $MM (gross) 6.0 NPV10% $MM (gross) 6.4 P90 DPI 10% Discount Rate 1.1 Payout yrs 1.5 P95 IRR % 63 Capital Cost (IP6) $/boe/d 4,699 P98 F&D $/boe 3.32 P99 100 1,000 10,000 100,000 Peak Month Gas Rate mmscf/d (1) Source: geoScout and Modern data Modern Wells Among the Best in the Basin 9 (2) Strip price as per Bloomberg (3) Liquids ratio range 3.5 to 18.0 bbls/mmcf
Spir Sp irit it Riv iver r Se Sensit itiv ivit itie ies 130 C5+ bbl/mmcf Sensitivity 120 110 100 ROR % 90 80 70 60 50 40 0 2 4 6 8 10 12 14 16 18 20 C5+ Yield (bbl/mmcf) 100 Capital Sensitivity (5 bbls/mmcf C5+) 90 80 ROR % 70 60 50 40 5.5 6.0 6.5 Capital - $MM Impact Of Liquids Yields and Well Costs is Meaningful 10
Sp Spir irit it Riv iver r H2/17 Pla lan * MRI proposed wells: Red = Gas Rig 1, Blue = Gas Rig 2, Brown = Oil Rig (Dunvegan target; moves to Cardium in Wapiti after) • Program is a blend of richer and leaner locations (3-18 bbls/mmcf) • Piloting of longer wells and larger fracs anticipated to yield stronger results • Most locations selected to leverage existing infrastructure (existing pads on main trunklines) Low-Risk Development Program Designed to Maximize Returns 11
Co Competit itiv ive Advantage- Owned In Infr frastructure Project Cost Completed 11-25 Wapiti Cutbank Crossing $2.5 MM Oct 2015 Compressor RRR 1 pipeline $11.5 MM Mar 2016 Pembina Route Phase 1 $48.0 MM April 2016 Liquids Line Route Phase 2 $25.0 MM Oct 2017 Future RR Copton sales line Land Swap March 2016 Trunk Lines Lynx Plant Upgrade $1.1 MM July 2017 Cutbank Crossing 227 km (gross) owned pipeline network RRR 10” Pipeline 50mmcf/d Route plant; Phase 2 expansion Red Rock Water Hub NGTL Cutbank to 115mmcf/d underway Lateral 4 compressor stations Modern Route Gas Plant Lynx plant upgrade underway – 10mmcf/d Copton Sales Line NGTL Narraway Lateral Lynx Plant Cutpick Compressor/Dehy 1 RRR = Red Rock to Route 10” pipeline Strategic Control Established – Top-Tier Opcosts Accomplished 12
Ca Cardiu ium Update Whitecap Wells (red): Strong early • 2,500 boe/d production >500 MMbbl results (190-449 bbls/d IP30). net OOIP • MRI wells with IP30 rates up 350+ locations to 342 bbls/d oil 16-15 pad: >230,000 bbls • Low well costs Produced in 18 months • 42 API sweet oil • Strong solution gas drive • No formation water risk Oil Pool • Drill depths less than Outline 1,600m • Conducted a broad delineation program (19 100/11-03 and 102/11-03: wells to date) Producing on clean-up • Latest wells are 1.5 mile HZs Commanding Position in a Leading Light Oil Play 13
Ca Cardiu ium Oil il Delin lineatio ion Program High Graded Type Curve >200 locations 2015 Delineation Program Average Unique 100% WI Block, Extensive Inventory of High Graded Locations 14
Cardiu Ca ium Be Benchmarkin ing P1 Modern Wapiti Cardium Wells (17) P2 Modern 04/16-15-67-8W6 2014+ Wapiti Cardium Wells P5 2014+ All Pembina Cardium Wells Percentile >>> P10 Pembina Median: 134 bbls/d P20 P30 P40 Wapiti Median: 164 bbls/d P50 P60 P70 Half Cycle Economics, May 31, 2017 Strip Price (2) P80 EUR mboe 252 Well Costs 1 $MM (gross) 3.0 P90 NPV10% $MM (gross) 1.6 DPI 10% Discount Rate 0.6 P95 Payout yrs 2.0 IRR % 39 Capital Cost (IP6) $/boe/d 12,987 P98 F&D $/boe 11.89 P99 10 100 1000 Peak Month Oil Rate (bbls/d, normalized per 1,600m of lateral) (1) Development costs assuming multi-well pads Wapiti Cardium is a Leading Light Oil Play in Canada 15 (2) Strip Pricing per Bloomberg (3) Source: geoScout and Modern data
Cardiu ium Pric rice Se Sensit itiv ivit ity Cardium Projected Play Type Well ROR vs. Production, Capital Sensitivity Strip Price - May 31, 2017 100 90 80 70 60 ROR % 50 40 30 20 10 0 75% 100% 125% Variance to Base Assumptions Production Capital Development Drilling to Begin in 2H 2017 = Reduced Variability, Reduced Costs 16
Cardiu ium H2/17 Plan lan 1 st Pad : Development + step-out 2 nd Pad : Development 3 rd Pad : Development 4 th Pad : Step-out + expiry • 11 wells proposed through from Oct 2017 to Feb 2018 (seven are during Q4 2017) • Most proposed wells offset existing producers, on existing infrastructure Low-Risk Development Program Builds Oil Production to >2,200 bbls/d by Q1 2018 17
Fin inancia ial l Hig ighli lights Independent Reserve Estimates (1) 140,000 PDP 120,000 Proven (net of PDP) 100,000 Probable 80,000 Mboe 60,000 40,000 20,000 - 2013 2014 2015 2016 (1) McDaniel & Associates Consultants Ltd. Steady Growth Through Disciplined Execution 18
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