Corporate Presentation - Tangle Creek Energy · 2019. 4. 26. · This presentation contains...
Transcript of Corporate Presentation - Tangle Creek Energy · 2019. 4. 26. · This presentation contains...
Corporate PresentationApril 2019
This presentation contains forward-looking statements. More particularly, this presentation contains statements concerning anticipated: business strategies, plans and objectives; potential development opportunities and drilling locations, expectations and assumptions concerning the success of future drilling and development activities, the performance of existing wells, the performance of new wells, decline rates, recovery factors, the successful application of technology and the geological characteristics of our properties; cash flow; oil & natural gas production growth and mix; reserves; debt and bank facilities; amounts and timing of capital expenditures; hedging results; primary and secondary recovery potentials and implementation thereof; and drilling, completion and operating costs.
Statements relating to "reserves" are deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future. Actual reserve values may be greater than or less than the estimates provided in this presentation.
The forward-looking statements are based on certain key expectations and assumptions made by Tangle Creek, including expectations and assumptions concerning the performance of existing wells and success obtained in drilling new wells, anticipated expenses, cash flow and capital expenditures and the application of regulatory and royalty regimes. Although Tangle Creek believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Tangle Creek can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures.
Readers are cautioned that the foregoing list of risk factors is not exhaustive. Furthermore, new risk factors emerge from time to time, and it is not possible for Tangle Creek to predict all of such factors and to assess in advance the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. The above summary of assumptions and risks related to forward-looking statements in this presentation has been provided in order to provide potential investors with a more complete perspective of our current and future operations and as such information may be not appropriate for other purposes. The forward-looking statements contained in this presentation are made as of the date hereof and Tangle Creek 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 so required by applicable securities laws.
Forward-Looking Statement
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Tangle Creek Overview
Private company founded in 2010 Owners include ARC Financial, Wells Fargo and
Camcor Focused on light-tight oil; demonstrated experience
with tight, unconventional reservoirs Concentrated assets – strategically positioned in
West Central Alberta Two high margin light oil properties:
Montney at Waskahigan Dunvegan at Kaybob
Strong organic growth profile Light oil drilling inventory of over 300 locations
Significant infrastructure in place: Owned and operated facilities with low operating
costs
Private growth-oriented oil producer with concentrated land position in West Central Alberta
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1. From December 31, 2018 Sproule year-end reserves evaluation.
30 miles
Production (boe/d)
2018 Production% Liquids
7,86953%
Reserves (mmboe)1
PDPProvedProved + Probable
13.527.251.1
Hwy 43
Hwy 32
Hwy 16
Waskahigan
Kaybob
Windfall
Carrot Creek
Tangle Creek Field Office
Board of Directors
Management Team
Management and Governance
Technical Management Team with extensive oil & gas experience
Experienced Board of Directors provides corporate governance and strategic guidance
Lauchlan CurrieChairman
ARC Financial Corp.
Jeff Prentice
ARC Financial Corp.
Dan Botterill
Independent Director
Jim Pasieka
McCarthy Tetrault.
Ian Fergusson
Camcor Partners Inc..
Glenn Gradeen
Tangle Creek Energy Ltd.
Larry Jones
Independent Director
CEO
Glenn GradeenBerkana, Rosetta, Ocelot
Vice President,Exploration
Alison EsseryConoco-Burlington, Shell
Vice President,Engineering
Ben MakarCenovus, Encana
Vice President,Production
Greg KondroRosetta, Ocelot
Director, Business Development
Robyn LoreBerkana, Rosetta, Kallisto
Vice President, Land
Jim JunkerNordegg, Burmis, Wascana,
Shell
CFO
J.P. BuyzeTrident, UBS Securities
Strong leadership from highly experienced management team and board of directors
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The Vision – Create a High-Quality, High-Growth BusinessFocused on high-margin, high-growth business with significant running room
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Focus on top-tier, high margin, light-tight oil plays Deliver 10-20% per year production and CFPS growth Sustainable Growth – 10+ years of light oil drilling inventory Demonstrable well design efficiency gains using modern drilling and
completion techniques High working interest ownership in infrastructure enables low operating
costs, control of pace and development strategies Maintain low financial leverage
• Capital program scalable depending on market conditions (pricing and differentials)• Capital and growth is funded by internally generated cash flow
Maintain high Environmental, Social and Governance standards Liquidity for investors within 24 to 36 months
Key Strengths
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1. Large Inventory of Highly Economic Drilling Locations More than 300 oil-weighted locations (10+ years) Potential to double production by 2022 at current strip prices Light oil wells have demonstrated to be amongst the best returns in Canada Shallower well depths of less than 2,500 m provide lower drilling capital costs
2. Strong Technical Expertise Developing and Operating Unconventional Reservoirs Track record of driving down drilling and completion costs while improving well performance Successful application of new technologies to optimize drilling and completion techniques
3. High working interest ownership in infrastructure Existing infrastructure ready to accommodate growth in production Provides low operating costs and accommodates future development
4. Egress Oil – 100% firm service on Pembina Natural gas – 55% of gas to Chicago via Alliance, 25% of gas to ATP and 20% to AECO via TCPL
5. Active Hedging Program Significant hedging to protect cash flows, capital programs and balance sheet Target up to 65% of gross “blowdown” production hedged over next 12 months, up to 40% hedged over 12-24 months
6. Maintain Strong Financial Position Crucial in volatile commodity pricing environment Syndicated credit facility of $130.0 million
Tangle Creek Operating Areas
22%
51%
27%
PDP 44%
33%
23%
P+P
22%
44%
34%2018E
70%
23%
7%
2023E2
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Production Profile1
Reserve Split by Area Production Split by Area
Kaybob
Waskahigan
Other
Legend
13.8 mmboe 51.4 mmboe 7,869 boe/d
1. Production for ‘Other’ has been adjusted for the Pembina property disposition closed August 2018.2. Based on management forecast assuming strip pricing and capital expenditures equal to cash flow.
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2012 2013 2014 2015 2016 2017 2018
Prod
uctio
n (b
oe/d
)
Core Operating Area – Kaybob Dunvegan
Key Statistics
2018 Production 3,450 boe/d 2018YE Reserves
PPDP 9.6 mmboe PPUD 7.5 mmboe (44 wells)
2018 NOI % ~60% of Total 2018 Netback ~$33/boe 106.5 (66.5 net) sections with Dunvegan rights Total Inventory of ~120 net locations Light oil – API Gravity 36°
Low risk, free cash flow generating light oil asset which funds corporate growth
Key Characteristics
Shallow depth wells (1,600 m / 5,250 ft); high chance of success
Low operating costs, high netbacks Established infrastructure – new drilling off existing pads Drilling inventory in place to maintain flat production for ~7
years while generating significant free cash flow Demonstrated improvement in type curves from evolving
completion techniques Waterflood proving effective in increasing recovery and value OOIP = 460 mmbbl. 99 net horizontal wells drilled since 2011 PPDP Ultimate Recovery Factor only 4%
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2017 drilling program (9 wells) 2018 drilling program (4 wells)
Maintaining production
~ 3,000 boe/d
Track Record of Well Performance Improvements…
Kaybob Dunvegan Annual Drilling Programs
Historical DC&T Costs
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Historical Days Drilling
Cum
ulat
ive
Prod
uctio
n -b
oe
Days on Production
Advancing completion techniques have improved IP365s and EURs beyond type curve expectations
Continuous improvement of
drilling and completions
Lower DC&T costs Improved recoveries and reserves Faster payout times Better IRRs
2017 9 2592016 4 2042015 1 1332014 18 1732013 13 131
2011 - 2012 27 115Total 76
New Completion DesignTarget Well Cost
… And Strong Well Economics
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Dunvegan Well Inputs
Dunvegan Well Economics1
Kaybob Dunvegan Type CurvesTC129 TC155
DCET Capital ($MM) 2.5 2.5
EUR (Oil) (mbbl) 129 155
EUR (mboe) 162 194
IP90 (bbl/d) 163 195
Measured Depth (m)(feet)
3,30010,800
3,30010,800
Stage Count 25 25
Frac Intensity (T/m)(lbs/ft)
0.4270
0.4270
TC129 TC155
NPV-10 ($MM) 1.8 2.6
P/I Ratio 1.7x 2.0x
IRR% 46% 73%
Payout (Months) 23 16
F&D ($/boe) 15.43 12.89
3mo Capital Efficiency ($/boe/d) 12,438 10,373
Netback ($/boe) 33.41 33.92
Economic Sensitivity Tables1
At US$50 Edmonton pricing, type curves generate 45% to 75% IRRs and payouts of 1 to 2 years
1. Assumes natural gas prices, net of transportation, of C$2.00/mcf and FX of $0.75.
Optimization efforts have aligned 2018 program with current Dunvegan type curves
40.00$ 50.00$ 60.00$ 40.00$ 50.00$ 60.00$ 40.00$ 50.00$ 60.00$ $2.25MM 51% 97% 166% $2.25MM $1.7 $2.8 $3.8 $2.25MM 21 13 9$2.50MM 39% 73% 122% $2.50MM $1.5 $2.6 $3.6 $2.50MM 26 16 11$2.75MM 30% 56% 93% $2.75MM $1.2 $2.3 $3.3 $2.75MM 32 19 13
40.00$ 50.00$ 60.00$ 40.00$ 50.00$ 60.00$ 40.00$ 50.00$ 60.00$ $2.25MM 31% 61% 102% $2.25MM $1.0 $2.0 $2.9 $2.25MM 31 19 13$2.50MM 24% 46% 77% $2.50MM $0.8 $1.8 $2.6 $2.50MM 39 23 15$2.75MM 18% 36% 59% $2.75MM $0.5 $1.5 $2.4 $2.75MM 49 28 18
Edmonton (US$) Edmonton (US$) Edmonton (US$)
CAPE
X /
Wel
l
CAPE
X /
Wel
l
CAPE
X /
Wel
l
IRR PV-10 ($MM) Payout (mo)
Dunvegan P90 Risked Type Curve - 1.0 Mile Wells - TC129 mbbl / 162mboe EUR
Edmonton (US$) Edmonton (US$) Edmonton (US$)
CAPE
X /
Wel
l
CAPE
X /
Wel
l
CAPE
X /
Wel
l
IRR PV-10 ($MM) Payout (mo)
Dunvegan P50 Type Curve - 1.0 Mile Wells - TC155 mbbl / 194mboe EUR
Waskahigan Property Acquisition (Acquired October 2017)Tangle Creek acquired RMP’s Waskahigan Montney light oil Assets for C$80 million in October 2017 Established new growth engine and core area Light oil production – API gravity 36˚ to 38˚ Acquisition primarily funded through equity financingRationale for Montney Oil Acquisition Over 500 million barrels Original Oil In Place Clear opportunity to implement new completion methods and
technologies to extract greater value (validated through 2018/19 program results)
Acquisition Included Infrastructure Control 100% working interest ownership of key facilities and
infrastructure to support future growthDevelopment Plan Seeking to more than double corporate production through
Waskahigan Montney oil development Initial 6 Montney wells drilled by H1 2019 with enhanced
completion practices
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Recent ECA and POU
Montney drills
Active Duvernay Fairway
Initial 6 Tangle Creek wells have already increased field production by ~ 150 %
Core Operating Area – Waskahigan Montney
Key Statistics 2018 Production 1,731 boe/d 2018YE Reserves
PPDP 3.8 mmboe PPUD 18.4 mmboe (59 wells)
2018 NOI % ~30% of Total 2018 Operating Netback ~$26/boe 80.0 gross/net core Montney sections (100% WI) Inventory of ~ 200 locations OOIP = 565 mmbbl 65 net horizontal wells drilled. PPDP Ultimate Recovery Factor only 1%
Tangle Creek’s growth engine with significant drilling inventory
Upside Characteristics
Existing infrastructure can manage near-term growth with minimal additional capital investment required
Opportunity to materially reduce operating costs
Higher intensity fracturing to unlock additional reserves; Sproule bookings based on oil technology
Full field development plan built and cost savings opportunities identified
Over 12 pad sites have being surveyed and readied with produced water and infrastructure strategy
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Remaining Recoverable Locations EUR (mmboe)
Sproule PPDP 76 3.8
2018 YE Sproule PPUD 59 18.4
Unbooked locations 122 38.0
100% WI ownership in infrastructure provides low operating costs and competitive advantage area
Infrastructure in Place Supports Growth Plan
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12-07-064-23W5 Battery Volumes
Capacity Q1 – 2019E Throughput
Current % Utilization
Oil Treating (bbl/d) 3,500 1,061 30%
Water Handling (bbl/d) 9,000 2,007 22%
Compression (mmcf/d) 17.0 9.01 53%
Refridge (mmcf/d) 20.0 9.01 45%
Oil Storage (bbl/d) 6,000 N/A
Water Storage (bbl/d) 6,000 N/A
1. Includes sales gas and volumes utilized for fuel gas and gas lift.
12-07-64-23W5 Battery
Significant Upside Relative to Current Reserve Bookings
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Growth is achieved by expanding play out in the West and “filling in” / infilling within the previously under-stimulated Montney to the East
Evolving area strategy unlocks significantly more value:1. Increased capital efficiencies through 1.5 mile wells2. Ability to implement modern, higher frac intensity
completion techniques (increased proppant intensity, increased pumping rates, reduced stage spacing, etc.)
3. OOIP supports densifying development beyond its original 4 well per section design – increased inventory and ultimate recovery at 5 wells per section
4. Significant infrastructure now in place to more efficiently execute the growth plan:
• Produced water piped to pads for frac’ingoperations – no fresh water use or hauling costs
• Growth capacity in place for emulsion treating, gas compression, and water disposal
Large inventory of future locations enables continuous reserve growth:
UnbookedAreas
Tighter Well Spacing =20% More Locations =
Increased RF
Higher Completion Intensity Enhances Productivity
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Waskahigan Montney Hz ResultsBy Completion Generation (Rate-Time)
___________________________________________________Source: geoSCOUT, Frac Database.
Waskahigan Montney Hz ResultsBy Completion Generation (Rate-Cum)
Dramatic increase in performance as the play moved to higher intensity water
based fracs and longer wells
Higher intensity fracs will extend the life of Generation 4 wells. An infill opportunity exists in
the under-exploited Generation 1 area
Generation 1 2 3 4 Forward Plan
Years 2011-2014 2014-2016 2014-2017 2014-2018 2019 +
# of Wells 50 8 4 6
Average Lateral Length (m) 1,442 1,851 1,462 2,293 2,300
Average # of Stages Per Well 18 20 19 30 - 50 50 – 65
Average Stage Spacing (m) 80 94 74 45 - 75 35 - 45
Average Proppant Intensity (T/m) (lb/ft) 0.20 (133) 0.52 (347) 0.71 (473) 0.63 – 1.1 (576) 0.90 - 1.1 (667)
Average Fluid Intensity (m3/m) 0.52 2.31 3.02 4.20 4.50 - 5.50
Demonstrating Enhanced Completions on Montney Oil
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Predecessor Company’s Completion Practices: Initially oil based fracs and low proppant
intensity (<20T) Evolved to cross-linked gels
(reduced near well-bore perms) Wide frac spacing, 1 mile laterals
Enhanced Frac Spacing: Historically: 70-120 m
(<30 stages) Tangle Creek: ~35-45 m
(50-65 stages)
Enhanced Proppant Intensity: Historically: 0.2T to 0.6 T/m (133 – 400
lb/ft) with oil or cross-linked gels Tangle Creek: 0.9 - 1.1 T/meter with
slickwater (667 lb/ft)
Other Enhancement Initiatives: Evolved to 1.5 mile or longer laterals Opportunity for infilling or EOR in
legacy under-stimulated areas
Generation 1: Oil based fracs, 12-20 stages, 10-15 T/stage, 70-120 m inter-frac spacing
Generation 2 & 3: Hybrid Slickwater fracs, 17-30 stages,
50 T/stage, 80 m inter-frac spacing
Tangle Creek: Slickwater fracs, 50 stages, 50T+/stage, 40-50 m inter-frac spacing.
Default to 1.5 mile long wells
Generation 2: Continued use of gelling agents, short laterals,
and low frac-intensity
2018 – 2019 Tangle Creek Design
Target Tangle Creek Type Curve (220 mbbl)
Generation 1
Generation 3: Generally slickwater, 50 T/stage but
low stage count
Generation 4
Generation 4
P25 P50 P75P10
TCE Waskahigan Relative to Other AB Montney Oil
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Year On Stream
Cum
ulat
ive
3-m
onth
initi
al w
ell p
rodu
ctio
n (b
bl/d
)
285 bbl/d type curve = 26,000 bbl/d first 3 months
Tangle Creek is getting significantly higher initial production performance than what RMP accomplished Waskahigan TC180 type curve (285 bbl/d IP90) is equivalent to a P25 well amongst all Montney hz oil
wells drilled in Alberta since 2011 (~1,200 wells)• Key for Tangle Creek is to keep refining
completions design with optimal execution and cost reduction as a paramount objective
• TCE wells rank very high amongst top Montney oil wells drilled in last several years
1. Cum IP90 for 10-15 was 26,000 bbl over 1,102 hrs, much less than typical 1,700 – 1,800 hrs over the first 3 months of production. 10-15 production was pro-rated up to 1,700 hrs to better represent this well’s IP.
Cum IP90 for 100/04-23 (2,191 hrs)
Roadmap to Reduce Per Well Capital
Phase 1 : Recipe Development ($6.8 to $5.8 MM) Frac Optimization ($650 K)
Frac Program Design / Pricing Utilization of produced water and setup of central
infrastructure 5.5” Monobore Drilling ($600 K)
Based on 102/11-15 Drill Cost Phase 2 : Recipe Refinement ($5.8 to $5.1 MM) Additional infrastructure development – water ($100 K)
optimization- compression – water disposal Pad construction Optimization ($100 K) Flow back Optimization ($300 K)
Reduction in cleanouts, swabbing, drillouts Using Resin sand and N2 on fracs
Phase 3 : Recipe Fine Tuning ($5.1 to $4.5 MM)• Logistics optimization – seasonal – pad selection – multi
pad drilling - water optimization ($200 K)• Existing infrastructure utilization ($100 K)• Economies of Scale – Program drilling ($200 K)• On Stream Time initiatives; reduced from 3 to 1.5
months Optimize inline flow back – equipping with
Blowcase, Pump, Gas Lift Pipeline prior to completion/drill
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Continue completion optimization 2019-H2 plan is 65 stages (1.5mi laterals) and
35T fracs Frac intensity: ~1.0 T/m
$6.8 MM
$4.5 MM$5.1 MM
12$5.8 MM
3
Highly Attractive Well Economics (1.5 mile wells)
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Waskahigan Montney Well Inputs
Waskahigan Montney Well Economics1
Waskahigan Montney Type CurvesTC195 TC220
DCET Capital ($MM) 5.0 5.0
EUR (Oil) (mbbl) 195 220
EUR (mboe) 378 425
IP90 (bbl/d) 315 354
Measured Depth (m)(feet)
4,70015,400
4,70015,400
Stage Count 50 - 65 50 - 65
Frac Intensity (T/m)(lbs/ft)
~1.0700
~1.0700
TC195 TC220
NPV-10 ($MM) 2.0 2.9
P/I Ratio 1.6x 1.8x
IRR% 54 75
Payout (months) 17 13
F&D ($/boe) 13.22 11.76
3 mo Capital Efficiency ($/boe/d) 15,873 13,227
Netback ($/boe) 25.66 25.98
Economic Sensitivity Tables1
At US$50 Edmonton pricing, type curves generate 50% to 75% IRR with payouts less than 1.5 years
1. Assumes natural gas prices, net of transportation, of C$2.00/mcf and FX of $0.75.
40.00$ 50.00$ 60.00$ 40.00$ 50.00$ 60.00$ 40.00$ 50.00$ 60.00$ $4.5MM 54% 101% 160% $4.5MM $2.8 $4.5 $6.0 $4.5MM 17 11 9$5.0MM 40% 75% 120% $5.0MM $2.3 $4.0 $5.5 $5.0MM 21 13 10$5.5MM 29% 57% 92% $5.5MM $1.8 $3.5 $5.0 $5.5MM 27 16 12
40.00$ 50.00$ 60.00$ 40.00$ 50.00$ 60.00$ 40.00$ 50.00$ 60.00$ $4.5MM 38% 73% 119% $4.5MM $1.9 $3.5 $4.9 $4.5MM 22 14 10$5.0MM 27% 54% 89% $5.0MM $1.4 $3.0 $4.4 $5.0MM 29 17 12$5.5MM 19% 40% 67% $5.5MM $0.9 $2.5 $3.9 $5.5MM 38 21 14
Edmonton (US$) Edmonton (US$) Edmonton (US$)
CAPE
X /
Wel
l
CAPE
X /
Wel
l
CAPE
X /
Wel
l
IRR PV-10 ($MM) Payout (mo)
Waskahigan P50 Type Curve - 1.5 Mile Wells - TC220mbbl / 425mboe (IP90= 354bbl/d flat)CA
PEX
/ W
ell
CAPE
X /
Wel
l
CAPE
X /
Wel
l
Edmonton (US$) Edmonton (US$) Edmonton (US$)
Waskahigan P90 Risked Type Curve - 1.5 Mile Wells - TC195mbbl / 378mboe (IP90= 315bbl/d flat)
IRR PV-10 ($MM) Payout (mo)
03/11-15-064-23W5 Drill Feb – On stream
March 18, 2019
Benchmarking North American Resource Plays
0%
25%
50%
75%
100%
125%
150%
Top
Qua
rtile
Dela
war
e
VII N
est
2
Top
Qua
rtile
Mid
land
TCE
220
Mbb
l Oil
Chev
ron
Duve
rnay
250
bbl/
MM
cfEC
A Pi
pest
one
Very
Rich
Gas ST
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Aver
age
Mid
land
TCE
190
Mbb
l Oil
Eagl
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Pipe
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NVA
Bilb
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Pipe
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bbl/
MM
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POU
Sm
oky
Duve
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Duve
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50 b
bl/M
Mcf
Half Cycle IRR’s (US$60 WTI / US$3 NYMEX)1
Source: TPH, Company Disclosure.1. WTI of US$60/bbl. Ed. Par differential of US$8.00/bbl. NYMEX of US$3.00/mmbtu.
AECO differential of US$1.25/mmbtu. USD/CAD of 1.30x.
First 24 Month Royalty
5%
18%
8%
28%
0%
5%
10%
15%
20%
25%
30%
Montney U.S. Plays
On average, Crown royalties for new
Montney wells are 5% while freehold
royalties for most U.S. plays average
18% to 28%
Benchmark Prices (US$)
$52 $6
0
Mon
tney
U.S
.
Oil Price
$1.7
5
$3.0
0
Mon
tney
U.S
.
Gas Price
Top U.S. Plays
Select Canadian Plays
Tangle Creek
Tangle Creek @ US$10/bblEdmonton Par Differential
DCET(US$MM) $7.7 $8.5 $6.8 $3.9 $7.7 $7.2 $3.9 $6.1 $3.9 $7.2 $5.2 $7.2 $7.2 $7.9 $7.7 $7.2 $8.6 $9.0 $8.5 $7.3 $9.7 $9.0 $8.3 $9.8 $9.7 $6.5 $7.7
Raw IP30(boe/d) 1,922 2,001 1,800 819 1,198 1,843 355 1,024 694 1,566 1,450 1,566 1,511 1,603 851 1,511 546 1,871 1,988 1,122 1,477 2,049 1,634 1,799 1,101 1,635 504
Sales EUR
(Mboe)1,464 1,725 1,200 422 1,479 1,143 582 924 358 1,021 1,159 1,021 1,273 1,092 1,118 1,246 1,260 827 1,892 894 1,199 1,121 1,166 1,368 851 1,263 758
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Tangle Creek –Montney Economic Range of Results
Who should be the supplier of choice for the world’s100-million-barrel-a-day oil needs? Should there be a merit order ascribed to producers?Canada’s oil and gas industry, the world’s fifth largest, ranks highly on many performance dimensions, including corporate governance, transparency, environmental stringency, and innovation.
Thankfully, some credible institutions take time to evaluate countries by their virtues, or lack thereof. For example, every year Berlin-based Transparency International (TI) scores and ranks countries by perceived levels of public-sector corruption.
TI gives Canada top marks for low corruption.
Among 28 oil-producing countries that fill 90% of the world’s oil tanks, Canada ranks number 2 (yellow end of spectrum on figure). The only supplier that ranks slightly cleaner is Norway which has a state owned industry.It will take time for consumers to kick the 100-million-barrell-a-day habit. Until such time…
…the world needs more – not less – from transparent, accountable Canada
Canada – Responsible Production and Low CorruptionWhy are we filling our tanks with foreign sourced oil? Canada is ranked as one of the top jurisdictions in the world having transparent and responsible regulations and production.
Figure 1: World Oil Producers Ranked by Corruption and Volume
21
Environmental, Social & Governance Performance
Tangle Creek 2017
US Average
US Average
Tangle Creek in relation to Energy Industry
Tangle Creek production emissions rank well below the average for crude oil consumed in the United States in 2014 (the most recent baseline). Innovations & Programs include: Vapor recovery units (VRU’s) installed and
operational on all major facilities – ongoing program to add VRU’s to smaller facilities
Fugitive emissions and leak detection processes – ongoing program of detection and repair and replace
Ongoing program to reduce producing site visits through technology applications
Ongoing program to electrify multi-well pads Program to reduce field gathering system
pressures in conjunction with VRU’s Integrate and upgrade new assets Continuous improvement and upgrading of
emissions detection technology
Tangle Creek was one of the first producers to use up to 100% produced (versus fresh) water in its completions systems.
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Environmental, Social & Governance Performance
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Tangle Creek – Committed to reducing emissions intensity
Tangle Creek – Summary
High Quality – High Margin Assets – Light oil focus with running room• Material drilling inventory to drive long-term growth• Top tier returns• Strong technical expertise• Own and control the infrastructure• Egress secured• Strong financial position
Consolidation Opportunities – further expand light oil drilling inventory• Waskahigan is considered non-core to other players in the area• Seeking opportunistic acquisitions – taking advantage of the depressed
Canadian energy sector
Strong shareholder returns – targeting liquidity event in 24-36 months• Further multiple expansion through consolidation and growth
24
Contact Information
Tangle Creek Energy Ltd.2100, 715 – 5th Avenue SWCalgary, Alberta T2P 2X6Main: +1 (403) 648-4900www.tanglecreekenergy.com
Glenn GradeenPresident & CEOd: +1 (403) 648-4901m: +1(403) [email protected]
Jean-Pierre (J.P.) BuyzeChief Financial Officerd: +1 (403) 648-4903m: +1 (403) [email protected]
Ben MakarVice President Engineeringd: +1 (403) 648-4905m: +1(403) [email protected]
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Additional Corporate InformationAppendix 1
26
ARC-backed private company started late 2010 Management team – technical, experienced and
driven to quality Two high margin light-tight oil plays – Montney and
Dunvegan Industry leader – light-tight oil
• 1st to drill multistage horizontal – 1st ball drop system – 1st cemented liner system
• 1st approval for Dunvegan water flood• 1st Dunvegan slick-water completion• Motivated management team (30+ deals to “own our plays”)• 35% compound annual production growth from 2012-2017+
Scalable, high value, light-tight oil producer via strategic acquisition and innovation
• Waskahigan Montney oil acquisition – October 2017 Financed with 88% new equity ½ of which came from existing
shareholders. New equity investor support from Wells Fargo
Positioning – consolidator of Montney oil play • Development inventory through mid-2020s• Focused operations on high margin light sweet oil• Infrastructure in place to double production without facilities capital• Follow-on acquisitions identified and negotiated
Dec 2010 – Formation, Q1 2011 initial capital
raised at $1/sh
2013 – Acquisition of Talisman Dunvegan
assets, equity raise at $1.25/share; enables 2014 organic growth
to 5,000 boe/d
Q4 2011 – Initial Kaybob test well leading to 2012
concept development
2015 – Acquisition of Trilogy Dunvegan
assets, equity raise at $1.25/sh; Windfall well
2016 – Beringer acquisition to capture
Rock Creek oil and Mannville liq. rich gas, Dunvegan waterflood
implementation
Tangle Creek History, Background and Drive to QualityTCE Corporate Events Business Strategy
Assemble experienced technical team, seek
shallow oil exploration-oriented asset base
Demonstrate Dunveganeconomics
Seek acquisitions to consolidate economic inventory; focus on oil-
weighted assets -economic at or below strip prices; maintain
geographic concentration
Consolidate leading Dunvegan land
position; de-risk inventory; advance well design and completion
practices
Slow capital investment to maintain balance
sheet strength during commodity price
downturn
2017 –Transformational
acquisition of Montney oil assets
2011
2012
2013
2014
2015
2016
2017
20182018 – Organic growth
and Consolidation
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Production and Reserves HistoryProduction Profile
2018 Reserves SummaryLiquids
(mmbbl)Gas
(bcfe)Total
(mmboe)PV-10%(C$MM)
ProvedPDPPDNPPUD
7.10.27.8
38.31.0
32.9
13.50.4
13.3
$222.03.9
126.3
Total Proved 15.1 72.2 27.1 352.2
Probable 12.6 67.8 23.9 314.5
Total Proved + Probable 27.7 140.0 51.1 $666.7
Reserves History
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Production Weighting
834 1,947
2,923 2,582 2,493 3,542
4,189
411
825
1,008 1,088 1,663
2,648
3,675
67%70%
74%70%
60%57%
53%
0%
10%
20%
30%
40%
50%
60%
70%
80%
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2012 2013 2014 2015 2016 2017 2018
Oil and NGL weighting
Oil & NGL (bbl/d) Gas (boe/d) Liquids (%)
Summary of Hedging Portfolio – Crude Oil (4/15/2019)
29
Hedging Volumes Hedging Prices
Nearly all of our oil is hedged at Edmonton (MSW) for 2019 but still at WTI for 2020.
0%
10%
20%
30%
40%
50%
60%
70%
80%
-
500
1,000
1,500
2,000
2,500
3,000
Q118
Q218
Q318
Q418
Q119
Q219
Q319
Q419
Q120
Q220
Q320
Q420
MSW - Swaps (bbl/d) MSW - Collars (bbl/d)
WTI - Swaps (bbl/d) WTI - Collars (bbl/d)
% of Blowdown
$40.00
$45.00
$50.00
$55.00
$60.00
$65.00
$70.00
$75.00
$80.00
$85.00
Q118
Q218
Q318
Q418
Q119
Q219
Q319
Q419
Q120
Q220
Q320
Q420
WTI - Swaps (C$/bbl) WTI - Ceiling (C$/bbl)
WTI - Floor (C$/bbl) MSW - Swaps (C$/bbl)
MSW - Ceiling (C$/bbl) MSW - Floor (C$/bbl)
Summary of Hedging Portfolio – Natural Gas (4/15/2019)
30
Hedging Volumes Hedging Prices
Nearly all of our hedged gas is priced at Chicago for 2019 and 2020.
Chicago Collars converted at strip F/X rates
0%
10%
20%
30%
40%
50%
60%
70%
80%
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Q118
Q218
Q318
Q418
Q119
Q219
Q319
Q419
Q120
Q220
Q320
Q420
Chicago - Swaps (mmbtu/d) Chicago - Collars (mmbtu/d)
AECO - Swaps (Gj) AECO - Collars (Gj)
% of Blowdown
$2.00
$2.20
$2.40
$2.60
$2.80
$3.00
$3.20
$3.40
$3.60
$3.80
$4.00
Q118
Q218
Q318
Q418
Q119
Q219
Q319
Q419
Q120
Q220
Q320
Q420
Chicago - Swaps (C$/mmbtu) Chicago - Ceiling (C$/mmbtu)
Chicago - Floor (C$/mmbtu) AECO - Swaps (C$/Gj)
AECO - Ceiling (C$/Gj) AECO - Floor (C$/Gj)