Opportun rtunity ty overvi view ew February, 2020 Opport - - PowerPoint PPT Presentation

February, 2020

Opportun rtunity ty overvi view ew

Opport portunity unity Summary ry

Opportunity

◼

Privately held company owned 90% by insiders

◼

Team members with previous experience and success with early stage Duvernay plays

◼

Unique opportunity to be an early stage investor in the most prolific, scalable light oil resource play in Canada

◼

Large contiguous 100% working interest land base in the heart of a significant new oil fairway extension.

◼

Premium reservoir characteristics, low cost early entry and proximity to infrastructure result in top tier full cycle economics that will compete favorably with leading shale plays in North America

◼

Land position being de-risked by offsetting oil production

Financing Strategy

◼

In 2020 will raise capital to fund Duvernay development program

Early – Stage Land Capture Opportunity Prior to Development

1

Source: GLJ Petroleum Consultants

Investm stment ent high ghlight ghts

Opportunity to Invest in an Early Stage Top Tier North American Light Oil Resource Play Prolific Light Oil Resource

• Analogous rock to the Kaybob oil window, significantly over-pressured and highly receptive to fracturing
• Thick reservoir and high TOC content with ideal thermal maturity
• Dense well control and quiet depositional environment creates high predictability and repeatability
• New offset oil well confirms high quality (~40°API) oil production

Large Contiguous Land Base and Inventory Best Netbacks and Premium Economics

• Early entrant establishing a land base of 176 sections in the heart of play
• Drilling inventory of >400 two mile horizontals in upper zone on existing land at 300m inter-well spacing
• Expansion potential to >200 sections and 500 locations with additional upside through down-spacing
• Produces North American leading operating netbacks of ~$50/boe at $60 WTI
• Analogous Kaybob oil window results are industry leading, conservative half cycle IRR’s of >50% and payback
• f <2 years
• Break-even at $35 WTI, 6 years of 5% Crown royalties (13% Avg Lifetime)

Strategic Location

• Close proximity to town of Valleyview and major highways, farmland with year-round access
• 100% crown land and excellent tenure
• Access to well-developed surface infrastructure, oil / gas egress and gas processing, and fresh water for

unconstrained development and strong full cycle returns Experience and Leadership

• Management has a proven track record of identifying and developing high quality resource plays and

extensive Duvernay success

• Management and board heavily invested with 90% insider ownership
• Capturing new industry results and technical learnings at an exponential rate

Outsized Return Potential

• Land position purchased at $42 / acre ($105 / ha), historical land prices in Kaybob at $10,000+/acre
• Early entry, cheap land capture and strategic location translate into top tier full cycle returns
• 10 year plan to grow to $2.5 Billion+ valuation

2

Management agement Tea eam

Team has had significant management and operational experience in successfully prospecting and developing resource plays, including the Duvernay Mapped and evaluated the prospect, internally financed and captured an initial 176 section land position with opportunities to expand to 200+ sections Developed collaborative relationships with leading Duvernay players resulting in free real time capture of information and best practices from >$1 billion of capital expenditures and R&D Larry Evans, Executive Chairman

◼

Engineer, business strategy

◼

32 Degrees Capital, numerous operating companies

Mitch Putnam, Executive Director

◼

Geologist, business strategy

◼

32 Degrees Capital, numerous operating companies

Brad Culver, President

◼

Geophysicist with extensive experience prospecting and developing resource plays including Duvernay

◼

Teine Energy, Birchcliff Energy, Encana Corporation

Melissa Fabreau, VP Engineering

◼

Engineer specializing in resource play development strategy, reservoir evaluation and project management

◼

32 Degrees Capital, Enerplus Corporation

Trent Baker, CFO

◼

Finance/Accountant focused on financial analysis and business strategy

◼

32 Degrees Capital, KPMG

Drilling/Completions (TBD) Operations (TBD) Geoscientist (TBD)

Value creation through proven technical expertise and prudent financial stewardship

3

Posi sitio tioning ning The B-32 32 Land d Base

Land Base

◼

176 sections (>110,000 acres) of 100% crown land

◼

4 year license terms with an extension of a 5 year intermediate term

◼

1 well continues 32 sections Offsetting Activity

◼

$20+ MM currently being spent on 3 offsetting Duvernay HZ wells by Hitic Energy, an early mover in the Kaybob oil window

◼

First well came on production fall 2019 and is a confirmed oil well

◼

Further production data from first well and production results from next two wells will further de-risk B-32’s land base Reservoir Characterization

◼

3 Hitic Energy wells drilled, 8 cored wells and 11 wells with oil shows within to define the sweet spot

◼

Black oil window

◼

> 15 MMbbl OOIP

◼

Tmax of 443°C – 450°C

◼

Confirmed 38°- 40° API light oil

◼

4-6% TOC

◼

Confirmed 15 kPa/m (50% over-pressured) Duvernay penetrations in Blue Hitic Wells in Blue Bounding depths 2500m to 2900m

Hitic Energy B-32 Exploration

B-32 offers a unique opportunity to invest into a large contiguous land position currently being de-risked by offsetting activity

4

Producing Oil Well 2 well Pad Drilled May/June 2019

Strateg tegic ic locat ation ion & In & Infrastr astruct ucture ure

Oil Egress

◼

Proximal to oil terminals for initial trucking and potential future connections for pipelines

◼

Pipeline options to underutilized existing infrastructure

◼

Pembina Phase VII expansion onstream in 2021

Gas Processing

◼

TCPL receipt points with available firm service

◼

Two under-utilized active gas plants reducing need to build out new infrastructure

Water Sourcing

◼

Numerous surface sources with no water restrictions in the area

◼

Ability to add storage and water recycling to support future growth

Location/Access

◼

Proximal to Valleyview on well developed roads

◼

Farm land with year round access

Multiple Trucking Options in Area

• Pembina Valleyview Truck Terminal
• Tervita Disposal Facility
• Plains Midstream Facility

Scalable infrastructure in place for future expansion CNRL Sturgeon Lake Gas Plant @10% utilization TCPL Receipt Point Sufficient capacity to meet 10-year plan

B-32 Basin is located around legacy infrastructure with excess gathering, egress and water supply for future development ➢ Result is <$10 operating costs, modest facility/pipeline capital spending, and manageable firm commitments

5

Reser ervoir voir Compara arativ tive

Pressure Maturity

0% 1% 2% 3% 4% 5% 6% 7% 8% B-32 Vesta Kaybob Oil Window Permian Wolfcamp "B" TOC (%)

Storage

0.05 0.1 0.15 0.2 0.25 0.3 B-32 Vesta Kaybob Oil Window Permian Wolfcamp "B" Possion's Ratio

Fracability Reservoir Parameters in Line With Leading Duvernay and North American Oil Plays Thickness Depth

400 410 420 430 440 450 460 B-32 Vesta Kaybob Oil Window Permian Wolfcamp "B" TMax°C

6

5 10 15 20 25 30 35 40 45 B-32 Vesta Kaybob Oil Window Permian Wolfcamp "B" Net Pay (m)

• 500

1,000 1,500 2,000 2,500 3,000 3,500 B-32 Vesta Kaybob Oil Window Permian Wolfcamp "B" Drilling Depth (m) 2 4 6 8 10 12 14 16 18 20 B-32 Vesta Kaybob Oil Window Permian Wolfcamp "B" Pressure Gradient (KPa/m)

Industry ustry develo elopments ents

Kaybob Oil Window Development

◼

Analogous reservoir and geo-mechanical properties to B-32

◼

Hundreds of millions of dollars spent on R&D throughout the basin

◼

Productivity has continued to increase with evolving completion design and longer laterals as industry moves towards the optimal frac recipe

◼

A number of cost savings initiatives including switching to slickwater (from hybrid fluids) and using lower cost domestic brown sand

◼

Oil window is moving from delineation into development, which will drive considerable further cost savings Emerging As The Premier Scalable Light Oil Play In Canada

◼

“Two Creeks Outperforming East Shale Basin”

B-32 Northern Extension

KAYBOB Analogous to Murphy’s Kaybob Oil wells, the B-32 Type Curve has room for improvement

7

Murphy Oil Window Dataset 147 Duvernay Wells Drilled in 2019

(50% Drilled In Liquids Window)

Source: Athabasca Oil

Two Creeks

Analog

• g & T

& Typ ype e Curve ve Compari pariso son

Calendar Daily Oil Production Cumulative Oil Production to Date ◼ The B-32 Type Curve of 570 bbl/d

(89% Liquids) and an EUR of 400 mbbl

◼ Type curve has been developed

based on the Murphy oil window dataset

◼

Active 2019 drilling will lead to new wells brought on production in 2020

–

14 – 2019 Murphy Drills

–

4 – 2019 Shell Drills

–

5 – 2019 Hitic Energy Drills

◼

B-32 will incorporate the learnings and advancements from industry activity into our first well

B-32 Type Curve B-32 Type Curve Analogous to Murphy’s Kaybob Oil wells the B-32 Type Curve has room for improvement

8

6 Month Cumulative Production Murphy wells - 79 Mbbl Type curve – 69 Mbbl

B-32 Type Curve

Half f Cyc ycle le Econo

• nomics

mics

Source: RBC Capital Markets Based on flat prices: $60 WTI, US$5.50/bbl diff, $3/mcf Nymex, $0.8 USD/CAD

Light oil, 5% Royalty for first 5 years, sub-$10 operating costs to create industry leading netbacks

Development Base Case Assumptions

◼ Type curve IP30 of 570 bbl/d, EUR 400 Mbbl, GOR 800

scf/bbl

◼ 2,800 m (9000 ft) depth, 2 mile lateral length ◼ DCT $7.00 MM development well cost ◼ Pipeline connected

At $7.0 MM NPV10% per well the full development value of 400 locations is ~$2.8 Billion with further expansion potential

9

$0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00

First 12 Month Netback ($/boe) at US$60 WTI

Rates & Costs Base Case IP30 Rate

bbl/d

570 IP 365

bbl/d

248 EUR/Well

Mbbl

400 % Liquids ¹ 89 Total Costs

$MM

7.00 Average Royalty Rate

%

14 Operating Costs (lifetime)

$/boe

9.50 Payback

years

1.73 IRR BT

%

57 NPV 10 BT

$MM

7.0 Netback

$/boe

50.43 F&D Costs

$/boe

15.56 Recycle Ratio

x

3.24 Capital Efficiency (IP365)

$/boed

$25,098

¹GOR of 800scf/bbl ²Flat pricing using $60 WTI, Strip FX & AECO, Flat $10.00 CLS Diff Economic assumptions: -$1.50 Diff (incl pipeline tariff) to CLS, 10% Gas Shrinkage

Type Well Economics at US$60 WTI²

Summa mmary ry

Proven Productivity

◼

Offset high quality oil production creates a low risk repeatable and scalable project

◼

Confirmed overpressure analogous to Murphy’s Kaybob North oil window

◼

All key reservoir parameters including pressure, storage, maturity, thickness of pay and fracability compare favorably to North America’s top oil plays Very large, scalable light oil project

◼

+176 sections, ability to acquire 100+ sections of additional Crown land

◼

Currently >400 locations, upside to 500+ with additional land capture Attractive Economics

◼

Strong half cycle economics with conservative half cycle IRR’s >50% and payback <2 years

◼

Great full cycle economics due to early low cost entry, strong half cycle economics, and availability of egress and infrastructure

◼

Break even @$35 WTI, 6 years of 5% Crown royalties (13% Avg Lifetime) Risk/Reward

◼

Offsetting high quality oil production has confirmed productivity and further de-risked the opportunity

◼

Capturing exponential learnings through peer data and science with third parties’ capital

◼

Minimal capital exposure with large upside and project scalability

◼

10 year plan to grow valuation to $2.5+ Billion and generate exceptional free cash flow

10

B-32 Exploration represents a unique ground floor opportunity to capture an extremely large position in an emerging world class resource play that is being de-risked through offset production and continuously improving analog data.

ManageMent Bio’s

Larry Evans, P.Eng. - Executive Chairman As Executive Chairman, Larry brings over 40 years of relevant energy company experience to B-32 Exploration. His breath of experience includes business strategy, corporate finance, merger and acquisitions and all engineering disciplines. Larry is a founding and Managing Partner of 32 Degrees Capital which has been focused on the Duvernay since

• 2016. Prior to founding 32 Degrees Capital, he was the founder and Chairman of Glacier Energy Ltd.; the founder, Chief Executive Officer and President of Ice Energy Ltd; the

founder, Chief Executive Officer and President of Avalanche Energy Ltd.; and the Chief Executive Officer and President of Colony Energy Ltd. All of the companies Larry founded exhibited significant growth, generated superior returns for investors and were focused on resource play development. He currently serves on the Board of Directors of Artis Exploration Ltd. a Duvernay focused company and Corval Energy Ltd. Larry holds a Bachelor of Science Degree in Engineering from the University of Manitoba and is a member

• f the Association of Professional Engineers and Geoscientists of Alberta.

Mitch Putnam, P.Geol. - Executive Director As Executive Director, Mitch Putnam brings over 35 years of relevant energy company experience to B-32 Exploration. He is one of the Founding Partners of 32 Degrees

• Capital. Prior to founding the Firm, he was the founder and Director of Glacier Energy Ltd.; the founder, Director and Vice President Exploration of Ice Energy Ltd.; the founder

and Vice President Exploration of Avalanche Energy Ltd.; and Vice President Exploration of Colony Energy Ltd. All of the companies Mitch founded exhibited significant growth, generated superior returns for investors and were focused on resource play development. He currently serves on the Board of Directors of Canamax Energy Ltd., Summerland Energy Inc., Karve Energy Inc., Rising Star Resources Ltd. and Sitka Exploration Ltd. Mitch holds a Bachelor of Science Degree in Geology from the University of Alberta and is a member of the Association of Professional Engineers, Geologists, and Geophysicists of Alberta. Brad Culver, P.Geoph. - President Brad Culver is a professional geophysicist with 30 years of experience in exploration and development. Brad started his career in the geophysical services business and founded his first company in 1995. In 2000, he transitioned into an interpretation role with Alberta Energy Company, and then Encana for a decade. Prior to founding B-32 Exploration in 2018, Brad worked as a senior Geophysicist with Birchcliff Energy, and more recently as a Director of New Play Development with Teine Energy, where he was instrumental in acquiring its initial position in the Duvernay West Shale play. Brad holds a Bachelor of Sciences (Hons) in geological sciences from Queen’s University and is a member of the Association of Professional Engineers, Geologists, and Geophysicists of Alberta. Melissa Fabreau, P.Eng., ICD.D – Vice President Engineering Melissa Fabreau joined 32 Degrees Capital in 2014. She is primarily responsible for technical and engineering due diligence, monitoring of E&P portfolio companies and deal sourcing, with a significant focus since 2016 on the Duvernay. Prior to joining the Firm she was a Senior Development and Reservoir Engineer at Enerplus Corporation focused

• n developing resource plays in Western Canada. She has significant experience running project economics, reserve evaluations, reservoir characterization and developing long

term strategic plans. Melissa holds a Bachelor of Science in Mechanical Engineering with a minor in Petroleum Engineering from the University of Calgary (2003) and is a member of the Association of Professional Engineers, Geologists and Geophysicists of Alberta. She is also a member of the Institute of Corporate Directors (ICD.D). Trent Baker, CPA, CA, ICD.D – Chief Financial Officer Trent Baker has been with 32 Degrees Capital since 2007, beginning as an analyst and assuming increasing levels of responsibility until becoming a managing partner. He has been responsible for deal sourcing, financial analysis, investment due diligence, accounting and back office support for investor relations, with a significant focus since 2016 on the Duvernay. Prior to joining the Firm he worked in the audit and assurance department for KPMG. He currently serves on the Board of Directors for Vertex Resource Group Ltd., CORE Linepipe, Inc., Vertex Downhole Ltd., and Sphere Energy Corp. Trent holds a Bachelor of Commerce degree from Queen’s University, is a member of the Chartered Professional Accountants of Alberta and is a CFA charter holder. He is also a member of the Institute of Corporate Directors (ICD.D).

11

Disc sclai laimer er

This presentation is confidential and for discussion purposes only. The contents are not to be reproduced, summarized or distributed. These materials have been prepared for information purposes only in relation to B32 exploration and are not, under any circumstances, to be construed as an offering of any securities for sale. No prospectus has been or will be filed in connection with an offering in Canada and the shares have not been registered under the United States Securities Act of 1993, the securities laws of any state thereof or the securities of any other jurisdiction, nor is such registration contemplated, and this presentation is not and under no circumstances should be construed as a prospectus or other offering document. No securities commission or similar regulatory authority has passed on the merits of the shares or reviewed these information materials and any representation to the contrary is an offence. The information presented in this document is considered to be accurate, however there is no expressed or implied representation or warranty as to the accuracy or completeness of any such information and does not constitute investment advice. This presentation may contain forward–looking statements, including forward–looking statements regarding management’s assessment of future plans and operations, business and investment strategies, expectations of returns, cash flow and earnings. Forward-looking statements are based on current assumption, beliefs, internal expectations, estimates and projections of management. Such forward- looking statements are based on information currently available to management. No person should rely on these forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are, in many cases, beyond the control

• f management and may cause actual results, performance or achievements to differ materially from anticipated future results,

performance or achievements expressed or implied by the forward-looking statements. The market and industry data contained in this presentation are based upon information from independent sources and other publications. While management believes this data to be reliable, market and industry data is subject to variations and cannot be verified with complete

• certainty. Management has not independently verified any of the data from third party sources referred to in this presentation or

ascertained the underlying assumptions relied upon by such sources.

12