Strategic Services

M&A Technical Assessments

Independent Information For Decision Makers• Geological Assessments• Production Assessments• Economic Assessments• Due Diligence

Abridged Presentation for Website(Contact CDL for the Full Presentation)

September 2016

Canadian Discovery Ltd.

Advisors to the Resource Sector. . . Leading with Ideas! Innovative, client-driven E&P solutions since 1987.

• Over 300 clients worldwide, from juniors to super-majors • 60 interdisciplinary staff, including over 20 technical professionals• A long history of research and development • Independent, third-party analysis and business-oriented solutions• Three service-oriented divisions: Data, Intelligence, Expertise

www.canadiandiscovery.com

Value Proposition

How can CDL increase your ROR by a modest 5% on a $100MM investment or acquisition?

• Supply G&G knowledge on identified opportunities from broad regional picture to detailed in-depth analysis

• Reduce risk and assess upside on targeted assets using deep G&G expertise and area knowledge

• Benchmark drilling and completions practices for area of interest using best-in-class big data

What’s the cost?

Probably less than 0.5%, ROR on the incremental capital 1,000%

Leaders in M&ATechnical Evaluations

Mark Lenko, P.Eng.

Engineering Director

• Over 25 years of industry experience

• Focus on evaluations, exploitation and reservoir engineering

• B.Sc. (Petroleum Engineering) University of Alberta

• M.A. (Economics) University of Calgary

Neil Watson, P.Geol.

Geology Director

• Over 30 years of industry experience

• Focus on exploration and development geology

• 5-year Principal at Canadian Discovery

• B.Sc. (Geology) University of Alberta

M&A Technical AssessmentsCore Offerings

CDL has experience assisting financial firms, A&D and investment houses,current operators and international energy players.

Geological Assessments

• Reservoir characterization

• Play validity

• Vetting of drilling locations

Production Assessments

• Type curve verification

• By-product yields

Economic Assessments

• Cost assumption verification

• Processing and take-away capacity

Due Diligence

• To “truth” inputs for major decisions

• Presentation and report

Process

1. Engagement Agreement Outlines:

• Scope of Work

• Deliverables

• Timelines

• Confidentiality provisions

• Budget

2. Deliverables

• Presentation of findings

• Report of findings

TYPICAL SCOPE OF WORK

• Geological assessment

• Reservoir characterization

• Type curve development/ comparison

• By-product estimates

• Cost comparisons

• Resource assessment

• Technical assessment is based on the geological and engineering merits.

• Able to deliver high level technical assessment on tight timelines

• Ability to draw on the knowledge and experience of 50 technical professionals from a range of disciplines.

• CDL’s optimal outcome:

Providing high-quality technical assessment within the clients desired time frame.

Value of Independent Assessment by CDL

Deliverables

Overview

Sample Geological Assessment

Hydrogeological Investigation

• Hydro-structural cross-section

• What are the implications for the play of interest?

Sample Geological Assessment

Pressure Regime Analysis

• Pressure vs elevation plot

• Is the area of interest over-, under- or normally pressured.

Sample Geological Assessment

Reservoir Characterization

• Mineralogy and petrophysical analysis.

• Contrast within the section of interest.

• Impact on the reservoir within the area of interest.

Sample Production Assessment

Probabilistic Type Curve Development

• PTC`s developed using SPEE and USGS methodology

• Type curves can be normalized for a variety of parameters

• Profiles are the basis for economic evaluations

• Provides a basis of comparisons for opportunities

Regional EstimatedRecovery

• CDL has forecast EURs for each unconventional producer

• Highlights areas of best expected performance

Sample Production Assessment

Well Performance (1of 2)

• Comparative well performance

• Target company wells had median 12 month cumulative production 127% above the median for the area.

Sample Production Assessment

Well Performance(2 of 2)

• Comparison of IP(90) for all area operators.

• Majority of target company’s wells were in the top quartile

Sample Production Assessment

By-Product Yields

METHODOLOGY• CDL conducted the Gas Liquids & Light Oil Study (GLLO) in 2013

• GLLO examined analysis from 530,000 gas and 250,000 oil wells to map liquid trends in 24 formations across Western Canada.

• Controlling factors are formation temperature, facies and pressure.

• GLLO study data were extracted for area of interest

• Theoretical liquid yield was based on gas analysis and Gas Processor’s Handbook calculation

• P50 value was used for the type curves and EURs

Sample Economic Assessment

Cost Comparisons Operating and Capital

TYPICAL METRICS

• Completion Types

• Drilling/Completion Costs

• Operating/Capital Costs

• Efficiency/Recovery

• Benchmarking/peer review

Sample Assignment

Resource Assessment

TYPICAL DELIVERABLES

• EUR (P50)

• Total OOIP/OGIP Estimates

• Condensate/Gas Ratio Expectations in the Area of Interest

Assignment Findings

Key Findings

• Conclusions that the technical data have highlighted

• Summary of potential

• Potential challenges

Presentation Follow-Up

• Quick turnaround of additional items of interest

Technical Assessment Letter

• Written assessment of findings

Contact Information

For inquiries with respect to this presentation, please contact:

Mark Lenko, Managing Director (Interim) and Engineering Director

mlenko@canadiandiscovery.com

Neil Watson, Geology Director

nwatson@canadiandiscovery.com

Kaush Rakhit, President

kaush@canadiandiscovery.com

Canadian Discovery Ltd.300, 706 – 7 Avenue SW Calgary, AB T2P 0Z1

For general inquiries, please contact info@canadiandiscovery.com

403.269.3644

mailto:mlenko@canadiandiscovery.commailto:nwatson@canadiandiscovery.commailto:kaush@canadiandiscovery.com

Notes

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