SLIDE 31 Saguaro Resources | Private and Confidential | February 2019 31 Forward Looking Statements. Certain statements included in this investor presentation (the "Presentation") constitute forward looking statements or forward looking information under applicable securities legislation. Such forward looking statements or information are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward looking statements
- r information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward looking statements or information in this
Presentation include, but are not limited to, statements or information with respect to: Saguaro Resources Ltd.'s ("Saguaro" or the "Corporation") business strategy and objectives; statements with respect to the performance characteristics of Saguaro’s oil and natural gas properties and wells; statements with respect to reserves growth; potential drilling locations; development plans including development in the upper and middle Montney targets, optimization plans, maintaining a strong balance sheet and effect on costs and production; exploration plans; expectations regarding target and peak production; the Corporation’s focus, including capital discipline, budgeted and forecasted drilling and completion costs per well, low risk development, maintaining a strong balance sheet and cost reductions; anticipated belief that development plan is executable with cash flow and reasonable leverage; production including production mix; estimated recoverable resources; the Corporation's risk management strategy and the benefits derived therefrom; proposed drilling locations; potential short and long term
- ptions for development and expansion of infrastructure; anticipated well development program, including number of wells and anticipated timing of completions; development plans with respect to pipeline projects; benefits derived from Saguaro's infrastructure; expected timing of
certain pipelines to be in service; the Corporation's expectations regarding receipt of future royalty credits; forecasted pricing; actual and estimated internal rates of return, which include assumptions respecting operating and other costs, pricing, well depths, royalty rates and taxes; and economic metrics of our full development plan, including capital, IRR, net present values, free cash flow, debt to EBITDA, PIR, production rates, and anticipated debt and private equity drawn. In addition, the statements contained herein relating to "reserves" and "resources" are by their nature forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the reserves or resources described can be can be profitably produced in the future. Type Well Production and Economics. This Presentation contains references to type well, or “type curve”, production and economics, which are derived, at least in part, from available information respecting the well economics of other companies and, as such, there is no guarantee that Saguaro will achieve the stated or similar results, capital costs and return costs per well. Any references to peak rates, test rates, IP30 or initial production rates or declines are useful for confirming the presence of hydrocarbons, however, such rates and declines are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long term performance or ultimate recovery. In addition, such rates or declines may also include recovered fluids used in well completion stimulation. Readers are cautioned not to place reliance on such rates in calculating aggregate production for the Corporation.
- Assumptions. Forward looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although the Corporation believes that the expectations reflected
in such forward looking statements or information are reasonable, undue reliance should not be placed on forward looking statements because the Corporation can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this Presentation, assumptions have been made regarding, among other things: commodity prices; the accuracy of geological and geophysical data and its interpretations of that data; estimated decline rates; the impact of increasing competition; the general stability of the economic and political environment in which the Corporation operates; the timely receipt of any required regulatory approvals; the ability of the Corporation to obtain qualified staff, equipment and services in a timely and cost efficient manner; the ability of the Corporation to operate in a safe, efficient and effective manner; the ability of the Corporation to obtain financing on acceptable terms; that the Corporation will have sufficient cash flow, debt or equity or other financial resources to fund its capital and operating expenditures as needed; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development or exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Corporation to secure adequate product transportation; availability of pipelines; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Corporation operates; that the estimates of the Corporation’s reserve volumes and assumptions related thereto are accurate in all material respects; and the ability of the Corporation to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used. Risks and Uncertainties. Forward looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Corporation and described in the forward looking statements or information. These risks and uncertainties which may cause actual results to differ materially from the forward looking statements or information include, among other things: the ability of management to execute its business plan; general economic and business conditions; the risk of instability affecting the jurisdictions in which the Corporation operates; the risks of the oil and natural gas industry, such as operational risks in exploring for, developing and producing crude oil and natural gas and market demand; the possibility that government policies or laws may change or governmental approvals may be delayed or withheld; risks and uncertainties involving geology of oil and natural gas deposits; the uncertainty of reserves estimates and reserves life; the ability of the Corporation to add production and reserves through acquisition, development and exploration activities; the Corporation's ability to enter into or renew leases; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of estimates and projections relating to production (including decline rates), costs and expenses; fluctuations in oil and natural gas prices, foreign currency exchange rates and interest rates; risks inherent in the Corporation's marketing operations, including credit risk; uncertainty in amounts and timing of royalty payments; health, safety and environmental risks; risks associated with potential future lawsuits and regulatory actions against the Corporation; uncertainties as to the availability and cost of financing; changes in income tax rates; changes in incentive programs related to the oil and gas industry; failure of investors to fund capital calls; availability of pipelines; that legal actions may have an adverse effect on Saguaro’s financial position or operations; and financial risks affecting the value of the Corporation’s investments. Readers are cautioned that the foregoing list is not exhaustive of all possible risks and uncertainties. No Obligation to Update. The forward looking statements or information contained in this Presentation are made as of the date hereof and the Corporation undertakes no obligation to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise unless required by applicable securities laws. The forward looking statements or information contained in this Presentation are expressly qualified by this cautionary statement. Future Oriented Financial Information. This Presentation, in particular the information contained in the slides entitled, “Drilling: Efficiencies Offset Cost of Longer Laterals”, “Completions: Evolving Design Enhances Recoveries and Reduces Costs”, “Competitive Single Well Economics at Flat Prices”, “Funding Long Term Growth While Maintaining Reasonable Debt Metrics”, “Extensive Natural Gas Risk Management Program” and “Risk Management Hedging and Marketing Contracts” contains Future Oriented Financial Information ("FOFI") within the meaning of applicable securities laws. The FOFI has been prepared by Saguaro’s management to provide an outlook of the Corporation's activities and results. The FOFI has been prepared based on a number of assumptions including the assumptions discussed under the heading "Forward Looking Statements" and assumptions with respect to the costs and expenditures to be incurred by the Corporation, capital equipment and operating costs, foreign exchange rates, taxation rates for the Corporation, general and administrative expenses and the prices to be paid for the Corporation's production. Management does not have firm commitments for all of the costs, expenditures, prices or other financial assumptions used to prepare the FOFI or assurance that such operating results will be achieved and, accordingly, the complete financial effects of all
- f those costs, expenditures, prices and operating results are not objectively determinable. The actual results of operations of the Corporation and the resulting financial results will likely vary from the amounts set forth in the analysis presented in this Presentation, and
such variation may be material. The Corporation and its management believe that the FOFI has been prepared on a reasonable basis, reflecting management’s best estimates and judgments. However, because this information is highly subjective and subject to numerous risks including the risks discussed under the heading "Forward Looking Statements", it should not be relied on as necessarily indicative of future results. Except as required by applicable securities laws, Saguaro undertakes no obligation to update such FOFI and forward looking statements and information. This presentation includes “EBITDA” and “operating netback” which are non-GAAP measures, as further described herein. Non-GAAP measures do not have standardized meaning prescribed by International Financial Reporting Standards and therefore may not be comparable with the calculation of similar measures by other companies. “EBITDA” represents earnings before interest, tax, depreciation and amortization. See on page 22 under the heading “Definitions” for further information on netback. Oil and Gas Advisories Future Drilling Locations. Unless otherwise expressly stated, the information in this Presentation pertaining to future drilling locations or drilling inventories is based solely on internal estimates made by management and such locations have not been reflected in any independent reserve or resource evaluations prepared pursuant to National Instrument 51-101 ("NI 51-101"). Similarly, unless otherwise expressly stated, the information in this Presentation pertaining to targeted reserve volumes from future drilling is intended to indicate that in making its internal drilling decisions, the Corporation seeks to target drilling locations that, based on previous drilling results and its own internal assessments, it believes will on average ultimately generate the indicated volumes. This document discloses drilling locations which are unbooked locations and are internal estimates based on Saguaro's prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review. Unbooked locations do not have attributed reserves or resources and have been identified by management as an estimation of multi-year drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves information. There is no certainty that Saguaro will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves, resources or production. The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital, regulatory approvals, oil and natural gas prices, costs, actual drilling results, additional reservoir information that is obtained and other factors. While certain of the unbooked drilling locations have been de-risked by drilling existing wells in relative close proximity to such unbooked drilling locations, other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves, resources or production. Finding and Development Costs. The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year.
Advisories
