Corporate Presentation December 2016 · Corporate Presentation December 2016. 2 ... ¹Based on...

For discussion purposes only and does not constitute an offer to sell – Past performance is not indicative of future results – Actual production may not be as projected

Corporate Presentation December 2016

2For discussion purposes only and does not constitute an offer to sell – Past performance is not indicative of future results – Actual production may not be as projected

Forward Looking Statement

Presentation and Reader Advisory

This presentation includes certain statements that may be deemed forward-looking statements. All statements in this presentation, other than statements of historical facts, that address future events or developments that Jericho Oil Corporation (“JCO”) expects are forward-looking statements. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. In particular, forward-looking statements in this presentation include, but are not limited to, statements with respect to timing and completion of JCO’s exploration and development program on its Kansas and Oklahoma oil and gas leases. JCO participates in said oil and gas leases as a partner with a private family entity. Please refer to the titled slide “Acquisition Partnership” in the Appendix for additional information on net ownership interests. Net production figures are quoted at the Partnership level throughout the presentation.

Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. Some of the risks and other factors could cause results to differ materially from those expressed in the forward-looking statements include, but are not limited to: general economic conditions in Canada, the United States and globally; industry conditions, including fluctuations in commodity prices; governmental regulation of the oil and gas industry, including environmental regulation; geological, technical and drilling problems; unanticipated operating events; competition for and/or inability to retain drilling rigs and other services; the availability of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; stock market volatility; volatility in market prices for commodities; liabilities inherent in oil and gas exploration, development and production operations; changes in tax laws and incentive programs relating to the oil and gas exploration industry; and the other factors described in our public filings available at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.Although JCO believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Other than as required under applicable securities laws, JCO does not assume a duty to update these forward-looking statements. For more information on JCO, Investors should review JCO’s filings that are available at www.sedar.com.

Information and facts included in this presentation have been obtained from publicly available and published sources and where appropriate those sources have been cited in this presentation. JCO does not assume a duty to independently verify publicly available and published sources of information provided by arms length third parties.

http://www.sedar.com/

http://www.sedar.com/


Long-Term Strategy

Target Fractured and Dislocated Markets

Long-Life Conventional and Unconventional Producing Oil Assets

Modern Development and Recovery Techniques to Underperforming Assets and Basins

Repeatable and Consistent Acquisition and Development Strategy

Positive Cash Flow with “Option Value” Through Stacked-Pays


Portfolio of High-Quality Assets for Long-Term Growth

- Current Operations

Symbol/Exchange - JCO/TSX.V & JROOF/OTC

Shares Outstanding - 75,112,027

Equity Capitalization¹ - CAD $34,927,092

Inside Ownership - 19.3%

Average WI / NRI² - 38% / 30%

Hunton, Miss Lime, Woodford Acreage - ~75,000 acres Legacy Waterfloods

¹Based on December 01, 2016 market close price of CAD 0.465 per share and pro-forma for December 2016 equity raise

² For Jericho Ownership breakdown please see appendix slide “Acquisition Partnership”


Recent Highlights

Record Growth Through Acquisitions…

…With a Focus on Cost Control

o Jericho’s ‘patient’ capital base has allowed the Company to take advantage of the historically low oil price

environment and financial stress in the oil & gas space – creating value through the cycle

o Jericho has raised C$11.50mm through private placements in 2016 demonstrating its ability to fund

growth despite challenging capital markets for junior companies – differentiated story

o New - Entered into Joint USD$30mm Senior Secured Revolving Credit Facility in August 2016

o Acquisitions in Jericho’s core Central, NE OK platform over last eighteen months:

o Continue to achieve recurring field-level cash flow neutrality at/or less than $20 / bbl WTI

o Integrate new acquisitions, take advantage of economies of scale, and drive operational efficiencies at the field-

level

o Negotiated new Purchaser agreements which lowered differential by avg. of $2 / bbl

o Re-engineer field operations / infrastructure

o On-going workover program initiated in March ’16 driven by efficient capital allocation decisions

Note: For Jericho Ownership breakdown please see appendix slide “Acquisition Partnership”

¹ Reserve data based on reserve reports by Cawley, Gillespie & Associates, Inc. at date of acquisition


168

742 753

616

946

-

100

200

300

400

500

600

700

800

900

1,000

Q3-15 Q4-15 Q1-16 Q2-16 Q3-16

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

Q3-15 Q4-15 Q1-16 Q2-16 Q3-16

Recurring $ Opex / BOE Realized $ / BBL Recurring Operating Margin

Continued Execution of Strategy



Partnership Gross Production (BOE/D)¹

Recurring Cash Operating Metrics ($/BOE)¹

Well Downtime


¹ Average NRI ~78% to Partnership; Pro-forma for recent Enervest Acquisition in Pawnee & Noble Co.


Reserve Growth



o Jericho deployed $6.29mm of capital in 2015

(~90% Acquisitions / ~10% Capex)

o Incremental Proved Developed barrels

of oil equivalent: 760k

o Distressed marketplace has driven

down Company F&D costs

o Growing option value on PUD, PROB

upside with higher prices


¹ Reserve data based on 12/31/2015 reserve report by Cawley, Gillespie & Associates, Inc. Sproule Forecasted Price Deck: 2016: $45, 2017: $60, 2018: $70, 2019+: $80

Excludes recent 7/1/2016 Enervest acquisition (Pawnee & Noble Co.)


Significant Financial Strength

Total Debt to Partnership¹

¹ For Jericho Ownership breakdown please see appendix slide “Acquisition Partnership”

² Estimated percent hedged based on Cawley, Gillespie & Associates projected engineered volumes as of 6.30.2016 for collateralized assets

$- $-

$5.4

$4.6

$-

$2.0

$4.0

$6.0

$8.0

$10.0

Q1-16 Q2-16 Q3-16

$m

m

Debt Outstanding Borrowings Available

Oil Hedge Profile²

New – USD$30mm Joint Revolving Credit Facility:

o In conjunction with Private Family Partner, JCO entered into a

USD$30mm Joint Revolving Credit Facility (Aug-16)

o Initial Borrowing base: USD$10mm

o Interest Rate bears at WSJ Prime (3.50%) plus 0.75%

o Subject to customary financial covenant tests

o Sole Arranger: EastWest Bank

o Tier 1 Bank with $33bn in total assets

o Entered into hedging contracts covering ~75% of forecasted

engineered oil and natural gas volumes for 24 month period

o Proceeds to be used for working capital, capex, acquisitions

and general corporate purposes

35%29% 30% 31% 32%

50% 56% 55%

40%33% 65% 65%

22%

$35

$45

$55

$65

$75

$85

$95

0%

20%

40%

60%

80%

100%

4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18

Ave

rage

Hed

ge F

loo

r ($

/ b

bl)

% H

edge

d

WTI Swap Volume (% Hedged) Put Volume (% Hedged) Floor Price ($ / bbl) WTI Futures


Jericho’s Go-Forward Strategy

o Disciplined growth based on sustainable crude oil supply/demand fundamentals and price

o WTI above $35 - Maintain flexibility

o Mid-to-Upper $40s - Arrest decline rates and continue workover Program targeting low-risk up-hole

completions, re-fracs etc.

o At $60+ - Consider adding drilling rigs

Maintain Financial Flexibility & Target Opportunistic Acquisitions

Initiate Drilling Program

Incremental Production Growth through low-risk shut-in wells

$25 W

TI (c

ash

flo

w n

eu

tral)

$50 $40 $60 $70


2016 Jericho’s Opportunity


Where do we find (option) value: Central Oklahoma

o Capital flight is swiftest from the upper level, higher-cost basins: The Mississippian Basin has seen the steepest year

over year decline (%) in the Baker Hughes Rotary Rig Count compared to other Major On-Shore basins, a function of capital

flight from the region…Sellers seem most distressed in this basin, increasing asset supply and lowering bid-ask spreads

o Where Jericho does NOT want to be: Distressed companies and buyers of assets (PE) alike, have sought shelter in the

basins offering the most current, compelling drilling economics;

o As a result, there is a scarcity premium being placed on these basins; don’t follow ‘capital’ into crowded basins where

valuations remain high (e.g., Permian acreage valuations have not declined despite the collapse in commodity prices)

o Unfavorable drilling economics at current strip have no relation to operating economics (which underwrite JCO deals)


Mississippian Basin: Knowledge is PowerDay After the Game: Understanding What Went Wrong (and Right!) (2009 – 2015):

o Current acreage delineated over six years of development (2009 – 2015) with highly mixed and variable results

o Timeline is important: Bakken-players and those who got locked out of Bakken land-grab (2009-2011)

flocked to Mississippian (2012) as “next” horizontal shale play

o Early results challenged with a focus on holding acreage and limited understanding of formation and lack of

optimized completion practices

o Death of the basin has been greatly exaggerated but has allowed cheap entry as oil prices collapsed

o Learned knowledge and data gleamed from ~1,100 HZ wells drilled to date in Mississippian Lime and

Woodford Shale formations

o Ability to ‘Monday Morning Quarterback’ and enhance future well performance through best practices

o ‘15 and ‘16 vintage results show strong well-over-well economics

Opportunity to Utilize Enhanced Drilling and Completions Practices (2016+):

0

50

100

150

200

250

Mississippian Oil Rigs Bakken Oil Rigs

Design & Drilling:

o Short radius curves

o Casing designed for higher pressure

fracturing

o Upper two Mississippian depositional

packages exhibit best matrix

porosities and most open natural

fractures

o Uncemented Packer & Sleeve (Miss)

Completion:

o Tighter frac stage spacing to utilize

entire formation (~100ft stage

spacing)

o 28+ stages vs. 13 stages historically

o Enhanced diversion techniques

o Ideal cluster amount (5-6 / stage)

o Modify completion fluids to eliminate

formation damage

o Increase proppant up to 1,200 lbs / ft

Source: Baker Hughes North America Weekly Rig Count as of 11/01/2016


Mississippian Basin: Notable Historical Activity Across Position

Jericho OilNix 12-2H

30-Day Oil: 4,388365Day Oil: 34,529

Jericho OilColclazier 29-2H

30-Day Oil: 18,123365Day Oil: 44,377

Jericho OilGilbert 1H-29

30-Day Oil: 15,232365Day Oil: 34,644

Jericho OilYerbic 1H-21

30-Day Oil: 6,943365Day Oil: 25,523

Jericho OilRipley 1H-31

30-Day Oil: 7,322365Day Oil: 47,140

BASIN PEERTYPE CURVE

30-Day Oil: 8,173365Day Oil: 39,289

Jericho OilWheeler 1-20H

30-Day Oil: 5,547365Day Oil: 29,883

Jericho OilGWH 1H-4

30-Day Oil: 5,619365Day Oil: 24,935

Devon EnergyWiseman 1WH-2630-Day Oil: 7,467

365Day Oil: 42,166

Devon EnergyDixie 1MH-32

30-Day Oil: 8,836365Day Oil: 28,274

Mississippian Woodford

Devon EnergyHightower 1MH-1230-Day Oil: 9,862

365Day Oil: 48,717

Devon EnergyHightower 1MH-730-Day Oil: 6,057

365Day Oil: 38,657


Potential for Strong Mississippian Performance Across Position

Key Points:

o Mississippian has been a proven formation with

excellent results across core acreage position

o While results historically have been variable due to

high activity, strong repeatability with new enhanced

completions are possible

o Latest completion designs allow more rock to be

contacted closer to wellbore

o CWC ~$2mm per well for 4,500’ lateral

o Incremental drillable inventory to acquisition case of

assets

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

0 1 2 3 4 5 6 7 8 9 10 11 12

Bar

rels

of

Oil

Months

132MBO Peer Type Curve Gilbert 1H-32 RIPLEY 31 1H

Select Operated Mississippian Wells

Well Name 30day Oil (bbls) 365day Oil (bbls)

Peer Type Curve 8,173 39,289

Ripley 1H-31 7,322 47,140

Gilbert 1H-32 15,232 34,644

Nix 12-2H 4,388 34,529

Yerbic 21-1H 6,943 25,523

Colclazier 29-2H 18,123 44,377

Mississipian Well Performance (Vintage Completion Design)

Selected Top Mississippian Wells Across Position


Mississippian Basin: Peer / Area Type Curve

$5.0 $4.4

$2.1 $1.9

2013 2014 2015 2016

Mississippian Basin D&C Cost Evolution ($MM)²

27%33%

39%46%

52%

$45 $50 $55 $60 $65

Single Well Economic Sensitivity (% IRR)¹

$787 $1,043

$1,298 $1,554

$1,809

$45 $50 $55 $60 $65

Single Well Economic Sensitivity (NPV-10 $M)¹

¹ Type curve calculated using $55 WTI and $2.75 NYMEX fixed for life of well; IRR and NPV sensitivities calculated using $2.75 NYMEX fixed for life of well.

² D&C costs from third-party AFE’s and public filings.


Stacked Pays: Stratigraphic Column and Type Log

Key Points:

o Multiple productive zones in entire

stratigraphic column

o Historic vertical production largely

targeted Pennsylvanian stratigraphic

plays or Ordovician structural traps

o Significant remaining upside for

horizontal development for

Mississippi Lime and Woodford Shale

o Multiple zones for water disposal

injection


Acreage Position Overview


Northern Position: Multiple Targets of Opportunity

2,250’

Current Target

Future Target

Key Points:

o 30,000 net acres HBP on

Northern Position prospective

in multiple liquids-rich

geological horizons

o Current producing horizontal

wells in Miss Lime and

Woodford shale

o Current producing vertical

wells in Cleveland and

Redfork

o Potential for multiple wells

per DSU (1mile x 1mile)


Southern Position: Multiple Targets of Opportunity

Current Target

Future Target

Key Points:

o 15,000 net acres HBP on

Southern Position prospective

in multiple liquids-rich

geological horizons

o Current producing horizontal

wells in Woodford and

Hunton

o Current producing vertical

wells in Wilcox and Penn

Sands

o Potential for multiple wells per

DSU (1mile x 1mile)

1,650’

For discussion purposes only and does not constitute an offer to sell – Past performance is not indicative of future results – Actual production may not be as projected

The Appendix


o Acquisitions will be largely underpinned by PDP value at current strip pricing with limited PUD, Probable or Possible

value

o Producing assets with positive field level cash flow

o Incremental PDP return through operational enhancements and cost reductions

o Constrained capital structures, mis-management and poor drilling have been exposed by low oil

prices

o Jericho is uniquely positioned with ample cash flow and liquidity to take advantage of this market

o Jericho seeks assets with “option value” through stacked–pays that become economic at higher prices or that have

the potential to become economic at current prices through efficiency realizations

o Focus on plays that have strong vertical and horizontal drilling economics at marginally higher prices

o Single-zone mind-set of shale boom left behind many by-passed zones

o Market for larger deals and within lowest break-even basins is very efficient – not going to be able to ‘steal’ assets

o Continue to focus on rolling up low-middle market (too big for individuals yet too small to build scale for

Mid/ Large-cap Companies and PE funds) opportunities with cash flow positive production and high-quality

development opportunities

o Willingness to be creative to narrow the bid-ask spread (use of Jericho stock to eliminate ‘binary’ cash-only

outcome giving hope to sellers)

Capital Allocation: Jericho Acquisition Drivers


2015 Reserves Overview

Year End 2015 Reserves¹


¹ Reserve data based on 12/31/2015 reserve report by Cawley, Gillespie & Associates, Inc. Sproule Forecasted Price Deck: 2016: $45, 2017: $60, 2018: $70, 2019+: $80; Excludes

7/1/2016 Enervest Acquisition (Pawnee & Noble Co.)


Acquisition Partnership (Illustrative Ownership)

Jericho Oil (“JCO”) Private Family (“PF”)

“AcquisitionCo”

~WI/NRI – Asset ‘A’

50% 50%

100%

o Strategic Partnership Advantages:

o Accelerate growth strategy during current low-oil price environment

o Target of 50%/50% PF ownership of ‘asset’ aligns interest

¹ Approximate ownership split as of 9/30/2016 weighted by Gross BOEPD to Working Interest for Q32016

² JCO has the option to purchase up to 50% interest


o Corporate Headquarters

604.343.4534

750 W Pender Street, Suite 350

Vancouver, BC, V6C 2T7

o Regional Headquarters

321 South Boston, Suite 301

Tulsa, OK 74103

918.986.7611

o [email protected]

www.jerichooil.com

o Land Owner Relations

[email protected]

Contact Us

o Director, Acquisitions & Divestitures

Ryan Breen

918.986.7617

o Director, Investor Relations

Tony Blancato

918.986.7616

o Director, Corporate

Communications

Adam Rabiner

604.343.4534

o

http://www.jerichooil.com/

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