H1 2015 Production (1)

Report
CORPORATE PRESENTATION MARCH 2015
TSX-V: MQL
OTCQX: MQLXF
Prudent and Disciplined
0
˃ Forward Looking Statements
This presentation is for information purposes only and is not intended to, and should not be construed to, constitute an offer to sell or the solicitation of an offer
to buy securities of Marquee Energy Ltd. (“Marquee“).
Certain disclosures set forth in this presentation constitute forward-looking information within the meaning of applicable securities laws. Any information
contained herein that is not a statement of historical facts is forward-looking information. Forward-looking information is often, but not always, identified by the
use of words such as “anticipate”, "expect", “believes”, “budget”, “continue”, “could”, “estimate”, “forecast”, “intends”, “may”, “plan”, “predicts”, “projects”,
“should”, “will” and other similar expressions. All estimates and information that describe Marquee's future, goals, or objectives, including management’s
assessment of future plans and operations, constitute forward-looking information under applicable securities laws.
In particular, this presentation includes without limitation forward-looking information pertaining, directly or indirectly, to the following: Marquee's anticipated
production and cash flows in 2014; business strategy; the future benefits of the proposed acquisition of assets from Paramount Resources (the "Transaction"),
including: the number and quality of future potential drilling opportunities, the expectation of reduced operating and capital costs, anticipated production levels,
anticipated debt levels, anticipated reserves, anticipated cash flow, anticipated cash flow per share, anticipated net debt, borrowings under credit facility,
operating netbacks, anticipated capital expenditures, 2014 exit production, 2013 exit debt to 2014 cash flow and 2014 capital budget, receipt of TSXV approval
for the Transaction.
In addition, statements relating to "reserves" are by their nature forward-looking information, as they involve the implied assessment, based on certain estimates
and assumptions that the reserves described can be profitably produced in the future. The recovery and reserves estimates provided herein are estimates only
and there is no guarantee that the estimated reserves will be recovered. The estimated future net revenue from the production of the disclosed oil and natural
gas reserves does not represent the fair market value of these reserves.
Forward-looking information relates to future events and/or performance and, may prove to be incorrect. Actual results may differ materially from those
anticipated in the information provided. Undue reliance should not be placed on forward-looking information because Marquee can give no assurance that such
expectations will prove to be correct. The forward-looking information contained in this presentation is given as of the date hereof and Marquee does not
undertake any obligation to update forward-looking information except as required by applicable securities laws.
Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six Mcf to one bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and do not represent a value equivalency at the wellhead. Given that the value ratio based on the
current price of oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of six to one, utilizing a boe conversion ratio
of six Mcf to one bbl may be misleading as an indication of value.
1
˃ Forward Looking Statements
Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be
incorrect. Although Marquee believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed
on forward-looking information because Marquee cannot give 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 and are implicit in, among other things: cash flow projections
and netbacks; that Marquee will be able to successfully implement its planned capital expenditure program; bank debt levels; field production rates and decline
rates; the ability of Marquee to secure adequate product transportation, and secure such transportation in a timely and cost efficient manner; the ability to
obtain qualified staff, equipment and services in a timely and cost efficient manner to develop its business; the ability to operate its properties in a safe, efficient
and effective manner; the ability to obtain financing on acceptable terms; the ability to replace and expand oil and natural gas reserves through acquisition,
development of exploration; the timing and costs of pipeline, storage and facility construction and expansion; future oil and natural gas prices; currency,
exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters; and the ability 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.
Forward-looking information involves known and unknown risks and uncertainties that could cause actual results to differ materially from those anticipated and
described in the forward-looking information, which include, but are not limited to: exploration, development and production risks; assessments of acquisitions;
anticipated success of resource prospects and the expected characteristics of resource prospects; the validity of analogues to other properties and projects; the
effectiveness of the application of certain drilling and completion technologies; reserve measurements; availability of drilling equipment; access restrictions;
permits and licenses; aboriginal claims; title defects; commodity prices; commodity markets, transportation and marketing of crude oil, liquids and natural gas;
reliance on operators and key personnel; competition; lack of diversification; corporate matters; funding requirements; access to credit and capital markets;
market volatility; cost inflation; foreign exchanges rates; general economic and industry conditions; health, safety and environmental risks; climate control
legislation; failure to obtain regulatory approvals; government regulation and taxation; and those other risks described in Marquee’s Annual Information form
dated March 20, 2014 filed under Marquee’s profile on www.SEDAR.com. Readers are cautioned that the foregoing list is not exhaustive of all factors and
assumptions which have been used.
The forward-looking information contained in this presentation is given as of the date hereof and Marquee does not undertake any obligation to update forwardlooking information except as required by applicable securities laws.
Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six Mcf to one bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and do not represent a value equivalency at the wellhead. Given that the value ratio based on the
current price of oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of six to one, utilizing a boe conversion ratio
of six Mcf to one bbl may be misleading as an indication of value.
2
˃ Strategic Acquisition at a Glance
Marquee has expanded the scope of its Michichi drilling inventory along a high-productivity
Banff oil fairway
•
•
•
•
•
Marquee will acquire the Michichi assets of a senior Canadian
producer which include 330 boed (79% oil & NGLs) and a
significant land position comprised of 37.5 total net sections of
land for $16.5 million before closing adjustments.
The total consideration includes a non-core Central Alberta gas
property valued at $2 million. In a separate transaction Marquee
recently sold a non core property at Weyburn for $3.5 million.
Acquisition Metrics
Purchase Price
Current Production (1)
Expands inventory of superior quality oil prospects with a high
chance of success and high net present value, >40 locations
identified offsetting recent drilling successes with well control
and 3D seismic.
Synergy with existing Marquee assets and infrastructure will
result in no change in G&A and a reduction in OPEX on a $/boe
basis.
330 boe/d (79% oil & ngls)
Proved Reserves (2)
2,403 Mboe
Proved + Probable Reserves (2)
3,694 Mboe
Proved NPV 10% (2)(3)
Continued consolidation of Marquee control in an area where
competitors have made significant Banff oil discoveries and
where Marquee owns infrastructure.
$16.5 million
$29.9 million
$/boe Proved Reserves
$6.87/boe
$/boe P+P Reserves
$4.58/boe
Current Run Rate Cashflow
Undeveloped Land
$3.6 million
21,000 net undeveloped acres
Notes:
(1) Estimated annualized production
(2) Based on Sproule reserve evaluations prepared for Marquee effective Dec.31, 2014
(3) Before tax, net present value based on a 10% discount
3
˃ Strategic Consolidation Acquisition
Type Curve: MQL vs. 9-16 Well at Michichi
300.0
BOE/D
250.0
9-16 Well
200.0
Marquee Energy
150.0
100.0
50.0
0.0
1
3
5
7
9 11 13 15 17 19 21 23 25 27 29 31 33 35 37
Month
•
•
•
•
34 Net Sections with Banff rights
5 Producing Banff HZ Wells
~330 boed, 79% Oil & NGLs
TP 2,403 MBOE, $29.9MM PV10
•
•
9-16 HZ well encountered both Banff
Sand and Carbonate
Completed with 14x22T/Stage Borajet
frac with N2
4
˃ Near-term Corporate Strategy
In response to a low commodity pricing environment, Marquee plans to remain disciplined and conservative with
its capital spending. The Company will continue to strengthen and protect its balance sheet, optimize its superior
asset base and focus on sustainable shareholder value creation.
Discipline
•
H1 2015 capital spending is less than 50% of estimated cashflow
Prudence & Positioning
•
•
Continue to improve efficiencies in operating, capital and G&A costs
Plan to use excess cashflow to organically reduce debt
Financial Flexibility
•
•
H1 2015 Exit D/CF is 2.1 times
Current hedges support 2015 cashflow – approximately 30% of oil
production hedged through to end of Q2 2015
•
Current Board and management team have grown a number of junior oil
and gas companies through volatile phases of the commodity price cycle
•
Continued improvement in drilling results will drive value recognition,
increase share price and produce multiple expansion
Marquee can grow value during a low commodity price environment
through optimization, strategic acquisitions and organic business
development
Experienced Team/ Proven
Track Record
Build Value
•
5
˃ Marquee Profile
Market Profile (TSXV: MQL)
Current
Shares Outstanding (MM)
120.3
Insider Ownership (basic/fully diluted)
15.3%/19.5%
Operations
Estimated Average Production Q4 2014 (boe/d)
5,240/46% oil & liquids
Proforma Production (boe/d)
5,630/50% oil & liquids
Production/Share Growth (2014/2013)
Undeveloped Land
>12%
~260,000 acres/345 sections
Drilling Inventory (100% oil focused)
>265 net
2015 Corporate Decline
~22%
Finances
2015 H1 Forecast Cash Flow ($MM)
~$14.8
2015 H1 Capital Expenditure Program ($MM)
2014 Estimated Debt Adjusted Cash Flow/Share ($/share)
$6.2
$0.37 (1.6 times 2013)
2014 Estimated Exit Net Debt ($MM)
Credit Facility ($MM)
$61.3
$95
Tax Pools
Tax Pools ($MM)
$226.9
 Outstanding Production Results and Financial Performance in 2014
6
˃ Marquee Reserves Highlights – December 31, 2014
• The Company’s Proved Developed Producing (“PDP”) reserves increased by 39% to 8.9 mmboe (41% oil and NGLs and proved plus
probable (“2P”) reserves rose by 16% to 20.0 mmboe (55% oil and NGLs).
• Marquees NPV10 value of its PDP reserves grew by 34% to $129.9 million, 1P reserves value by 26% to $173.6 million and 2P reserves
value by 23% to $257.9 million
• Net of acquisitions, dispositions and production, 1P reserves increased by 3.7 mmboe and 2P reserves increased by 6.0 mmboe, due to
successful drilling programs at Michichi and Lloydminster.
• Finding, development and acquisition costs, including the increase in FDC are $14.76 per boe on a 1P basis, and $14.12 per boe on a 2P
basis.
• The 1P and 2P reserves additions net of acquisitions and dispositions replaced 2014 production by 2.1X and 3.4X, respectively.
• The Company’s Reserve Life Index (“RLI”) improved to 11.7 years using 2P reserves and Sproule forecast 2P 2015 average production
rate.
• Marquees PDP reserves now comprise 70% of its 1P reserves and 1P reserves represent 64% of 2P reserves as at December 31, 2014.
• The Company’s 2P Net Asset Value (“NAV”) per fully diluted share calculated on a present value before tax discounted at 10% is
approximately $1.93 per share at December 31, 2014 inclusive of an internal land value of $37 million.
• Michichi now represents 74% of Marquee’s 1P NPV10 reserve value and on a combined basis the Company’s 2 core areas of Michichi
and Lloydminster represent more than 90% of its total reserve volumes and value.
7
˃ Reserves Growth
Reserves Category
Effective Date: December 31, 2014
Light & Medium Oil
(Mbbl)
Heavy Oil
(Mbbl)
Natural Gas
(MMcf)
NGL
(Mbbl)
Total
(Mboe)
2,529
858
2,025
712
31,678
1,003
5,459
277
1
79
8,944
168
3,726
Probable
Developed Producing
Developed Non-Producing
Undeveloped
556
15
2,843
297
51
535
6,112
1,384
8,717
52
2
123
1,925
299
4,954
Total Proved
Total Probable
Total Proved plus Probable
4,554
3,414
7,967
1,570
883
2,454
38,137
16,224
54,363
358
177
535
12,838
7,178
20,016
Proved
Developed Producing
Developed Non-Producing
Undeveloped
Notes:
(1) Based on Sproule December 31, 2014
forecast prices.
(2) Gross Company reserves are the
Company’s total working interest share
before the deduction of royalties
(3) Totals may not add due to rounding.
8
˃ The Michichi Advantage
Extensive Oil Potential
• >10 million barrels of oil in place per
section combined for the Banff and
Detrital zones in the focus area
Dominant Land Base
• ~215 net undeveloped sections
• Crown land, 92% avg. W.I.
Extensive Inventory
• >215 horizontal oil focused inventory
identified to date, before downspacing
Operational Strength
• 2 gas plants (28 mmcf/d total capacity)
• 2,000 bbl/d oil battery and terminal and
new 1,000 bbl/d multi-well battery
 As a First Mover in the Area, Marquee is Positioned for Dominance and Strategic Control
9
˃ Drilling Success at Michichi
2014 Michichi Wells Performing Above Type Curve
Peak Weekly
Peak Monthly
Budgeted IP 30 Rate
450
•
Michichi production >4,600 boe/d (79% of total production)
on closing of acquisition
•
Since December 2011, Marquee has drilled 32 HZ wells at
Michichi
150
•
2014 IP 30 rates are 20% higher than forecasted well guidance
100
•
Current well cost = $2.3 million, MQL expects a 20-30%
reduction in service costs in 2015 (based on current commodity
400
350
BOE/D
300
250
200
50
0
1
2
3
4
5
6
7
8
9
10
11
12
pricing)
13
Wells (Chronologically Ordered)
Type Curve: MQL vs. Industry Wells at Michichi
Horizontal Wells Drilled at Michichi by Operator*
40
Licensed
30
BOE/D
# of Wells Drilled
50
20
10
0
MQL*
BNP
HUSKY
Operator
*Includes Sonde & Paramount horizontal wells
*As of January 1, 2015
CNQ
DIRECT
200.0
180.0
160.0
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
Competitors
Marquee Energy
0
2
4
6
8 10 12 14 16 18 20 22 24 26 28 30 32 34 36
 Superior Results Generated Through Experience and Strong Technical Skills
Month
10
˃ 2014 Michichi Capital Program
• 100% success rate on 13 HZ oil
wells drilled in 2014, average peak
IP30 >220 boe/d
• Production results continue to
improve based on technical and
drilling/completion optimization
• Extensive use of 3D seismic
database to target new drilling
locations - acquisition of new 3D
seismic completed to aid
expansion of focus area
• Employ microseismic technology
to enhance completions and
optimize well spacing
 Focus Area Combines Best Results and Access to Marquee Infrastructure
11
˃ Michichi – Improvement of Capital Cost Structure
$2,500
Drilling Cost per Meter
$2,000
Infrastructure enhancements have significantly
reduced tie-in times.
COST
$1,500
$1,000
$500
Rig Release to On Production
160
$0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
140
WELL COUNT
120
80
Advancements to Marquee’s drilling design and
operations process have successfully decreased
drilling costs over time.
60
Infrastructure ownership generates dramatic
reduction in tie-in times and acceleration of cash
flow
DAYS
100
40
20
0
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
WELL COUNT
12
˃ Lloydminster Performance
2014 Lloydminster Well Results
100
Regional/Sparky
90
McLaren
80
HZ
BOE/D
70
*
60
+
50
To be optimized
Well bore damage
40
30
20
10
0
+
*
*
*
Wells (Chronologically Ordered)
*
*
•
Lloydminster current production ~800 boe/d
•
Low risk drilling inventory >50 locations (19 proven, 7 probable
booked)
•
Significant production growth upside
•
Marquee drilled 5 vertical and 3 net HZ wells in 2014
•
2014 well cost: $0.6 million (vert), $1.1 million (hz); expect 20-30%
reductions with low oil prices in Q3
 Low Capital Cost and Compelling Economics
13
˃ 2015 First Half Guidance
Marquee has issued guidance for the first half of 2015. The Company will continue to act with discipline
and prudence in its approach to capital spending, acquisition opportunities and with respect to its
overall balance sheet management.
Q1 Capital Budget
•
•
•
1 delineation HZ well at Michichi
1 delineation vertical well at Lloydminster
Facility infrastructure enhancements
$6.2 MM
H1 2015 Production (1)
~5,300 BOE/D
H1 2015 Cashflow (1)(2)
$14.8 MM
Debt (Exit H1 2015)
$64.5 MM
Debt to Cashflow (Exit H1 2015)(1)
~2.1 times
(1)
(2)
Proforma acquisition announced February 25, 2015
Based on WTI US$50/bbl and AECO CAD $2.65/gj with an exchange rate of US$0.86/C$1.00
 2015 H1 Capital Program Focused on Protecting the Balance Sheet
14
˃ Why own shares in Marquee today?
•
There is distinct value at the current share price as the company
trades below its peers with financial flexibility
•
The company continues to reduce operating, capital and G&A
costs, thereby increasing margins and extending the economic
life of its assets
•
Few juniors boast a comparable scalable, low risk, developmentstage, oil-prone asset base with a clearly delineated drilling
inventory capable of supporting many years of profitable growth
•
Over the last year, the company has shown strong and
repeatable drilling results highlighted by a step-change in
deliverability.
•
The company is focused on delivering debt-adjusted per share
growth in production, reserves, NAV, CF and FCF that will be
increasingly attractive to a wide spectrum of investors
 Solid Platform for Per-Share Growth
15
˃ Contact Us
For more information, please contact:
Richard Thompson
President, CEO & Director
Email: [email protected]
Direct: (403) 817-5561
Main:
Fax:
403-384-0000
403-265-0073
Address: 1700, 500-4th Ave SW Calgary, AB T2P 2V6
Investor Inquires: [email protected]
Web: www.marquee-energy.com
Corporate Information:
Trading Symbols:
Legal: Norton Rose Fulbright LLP
Reserve Evaluators: Sproule Associates Limited
Auditor: Collins Barrow Calgary LLP
Transfer Agent: Computershare Trust Company of Canada
Commercial Lender: National Bank Financial, HSBC
TSX Venture Exchange
MQL.V
OTCQX Marketplace
MQLXF
16
˃ Analyst Coverage
Peters & Co.
DALE LEWKO
E: [email protected]
P: 403-261-2215
Acumen Capital
TREVOR REYNOLDS
E: [email protected]
P: 403-410-6842
Haywood Securities Inc.
DARRELL BISHOP
E: [email protected]
P: 403-509-1938
Canaccord Genuity Corp.
ANTHONY PETRUCCI
E: [email protected]
P: 403-691-7807
National Bank Financial
DAN PAYNE
E: [email protected]
P: 403-290-5441
FirstEnergy Capital Corp.
ROBERT FITZMARTYN
E: [email protected]
P: 403-262-0648
Macquarie Equity Research
BRIAN BAGNELL
E: [email protected]
P: 403-539-8540
Dundee Capital Markets
CHAD ELLISON
E: [email protected]
P: 403-509-2663
Octagon Capital
NAV MALIK
E: [email protected]
P: 416-306-2510
GMP Securities
AARON SWANSON
E: [email protected]
P: 403-543-3563
 Independent analysis provides research and perspective
17
Appendix
18
˃ Experienced Management Team
Richard Thompson, President & CEO
•
Mr Thompson has been the President and CEO at Marquee Energy since 2011. Previously, he served as an Executive Vice-President of Cequence Energy Ltd. from 2008 to 2010 and
as Vice-President of Exploration of Cyries Energy Inc. from 2004 to 2008. Earlier, he was Manager of Geophysics of Cequel Energy Inc. from 2001 to 2004 and Chief Geophysicist of
Cypress Energy from 1997 to 2000. He has been a Director of Marquee Energy since 2011. He previously served as a Director of Cequence Energy Ltd. from 2008 to 2010.
Mr Thompson is a geophysicist and graduated from the University of Manitoba in 1979 with a BSc in Geophysics (with honours).
Roy Evans, CA, VP Finance & CFO
•
Mr Evans has been the CFO and Vice-President of Finance at Marquee Energy since 2011. He was previously the CFO at Marquee Petroleum Ltd. (previously Base Oil & Gas Ltd. and
Torrential Energy Ltd.). He was associated with KPMG for 23 years, where he was a partner for 15 years. He is a Chartered Accountant with memberships in both the Saskatchewan
and Alberta institutes. He currently serves as the Director of Operations for the Alberta Adolescent Recovery Centre. Mr Evans holds a Bachelor of Commerce degree from the
University of Saskatchewan.
Dave Washenfelder, P. Geol, VP Exploration
•
Mr. Washenfelder has served as the Vice President, Exploration of Marquee since October 2012. Prior to joining Marquee, he served as Manager, Exploration at Tamarack Valley
Energy Ltd. Prior thereto he held positions of increasing responsibility with Saskoil, Wascana Energy and Apache Canada. Mr. Washenfelder is a Professional Geologist with more
than 34 years of related experience and graduated from the University of Manitoba in 1980 with a BSc in Geology (honours).
Sam Yip, P. Eng, VP Engineering
•
Mr. Yip is currently the Vice President, Engineering of Marquee, and has served in an executive capacity with Marquee March 2012. Prior thereto he was a Founder, Director and
Vice President, Production of Teague Exploration Inc. from 2003 until 2012. Previously with Atco Gas, Webex and Mark Resources. Mr. Yip is a Professional Engineer with more
than 30 years related experience and graduated from the University of Calgary in 1982 with a degree in Chemical Engineering.
Rob Lemermeyer, VP Operations
•
Mr. Lemermeyer has served as the Vice President, Production of Marquee since September 6, 2013. Mr. Lemermeyer was the Vice President, Operations since December 5, 2011.
Prior thereto he was the Vice President Production for Canadian Coyote Resources from January 2011 to December 2011 and Manager of Production Operations of Base Resources
Inc. from October 2007 to December 2010.
Steve Bradford, VP Land
•
Mr. Bradford is the Vice President, Land of Marquee and has served in that capacity since September 6, 2012. Prior to joining Marquee, he served as VP Land with Milestone
Exploration Inc. from May 2010, and prior thereto served in progressively senior roles in land with West Energy Ltd., Encana Corporation, and Twin Butte Energy Ltd.
19
˃ Strong Governance
Dennis Feuchuk, BBM, CMA, Chairman
•
Richard
Mr. Feuchuk has served as a Director of Marquee since June 22, 2010. Prior thereto he was President and Chief Executive Officer of Base Oil & Gas Ltd. from
October 2009 to May 2011. He was Vice President, Finance and Chief Financial Officer of PrimeWest Energy Trust (an oil and gas trust) from October 2001
to June 2007.
Alexander, CMA, CFA 2, 3
•
Glenn
Mr. Alexander is the President and Chief Executive Officer and a Director of Parallel Energy Trust, and has served as a Director of Marquee since December
5, 2011. From January 2008 to June 30, 2011, he was President and Chief Operating Officer of AltaGas Ltd. Prior thereto he was the Executive Vice
President, Chief Operating Officer and Chief Financial Officer of AltaGas Ltd. from January 2007 to January 2008. Mr. Alexander was Vice President Finance
and Chief Financial Officer of Niko Resources Ltd. from October 2003 to April 2006.
Carley, BA, LLB., MBA, ICD.D 2, 3
•
Jim
Mr. Carley is the President of Selinger Capital Inc., a private investment company and has served as a Director of Marquee since December 5, 2011. Mr.
Carley currently serves as the Chairman of Painted Pony Petroleum Ltd. Mr. Carley had been Executive Chairman of Galleon Energy until August, 2011, and
Chairman of Culane Energy Corp. until February, 2011.
Riddell, B.Sc, M.Sc (Geology) 1
•
Dr.
Mr. James Riddell joined Marquee Energy as a Director in December of 2013. Mr. Riddell is the President and COO of Paramount Resources Ltd. and has
held the position since June 2002. Mr. Riddell has been the CEO of Trilogy Energy Corp. since February 2005. He serves as Executive Chairman for Cavalier
Energy Inc. and as a Director for Great Prairie Energy Services Inc., MGM Energy Corp., Strategic Oil and Gas Ltd., Big Rock Brewery, DevCorp Capital Inc.
(now Great Prairie Energy) and Paxton Corporation.
William Roach, B.Sc, Ph.D, C.Eng, MIM, PEng 1
•
Richard
•
Will Roach joined Marquee Energy as Director in December of 2013. Since January 2012 Will Roach has served as the President and CEO of Cavalier Energy
Inc., a privately held Oil Sands company. From October 2010 to December 2011 he served as the CEO of Calera, a green energy start-up, in Los Gatos,
California. Between 2004 and 2010 he served as the President and CEO of UTS Energy. Prior thereto, managed Husky Energy’s operations on the East coast
of Canada, British Borneo’s projects in Houston and worked internationally for Shell. In addition to Marquee, Dr. Roach also serves on the Board of Directors
for Sonde Resources, Tervita, Calera and SeaNG
Thompson, B.Sc Honours (Geophysics) 1
See management page
Greg Turnbull QC, BA, LLB 2, 3
•
(1)
(2)
(3)
Mr. Gregory Turnbull joined Marquee Energy as a Director in December 2013. Mr. Turnbull is a partner with McCarthy Tetrault LLP Calgary, which he joined
in 2002 following his position as partner of Donahue Ernst and Young LLP. Mr. Turnbull is also a Director of Crescent Point Energy, Storm Resources Ltd.,
Hyperion Exploration Corp. and Oyster Oil and Gas Ltd. Mr. Turnbull is also currently a Director of a number of private companies.
Reserves committee
Audit committee
Corporate Governance & Compensation committee
20
˃ Marquee Hedges as of January 15, 2015
28% of Marquee’s production is hedged through to the end of Q2 2015
Term
Hedge Type
Counterparty
Volume
Pricing
January 1, 2015 to March 31, 2015
WTI fixed price
National Bank
500 bbls/d
CDN $104.00/bbl
January 1, 2015 to March 31, 2015
AECO fixed price
National Bank
4,000 GJ/d
CDN $4.465/GJ
WTI fixed price
National Bank
250 bbls/d
CDN $103.00/bbl
500 bbls/d
CDN $105.00/bbl
January 1, 2015 to June 30, 2015
April 1, 2015 to June 30, 2015
WTI fixed price
National Bank
21
˃ 2014 Production and Netbacks
Q1
Q2
Q3
4024
48%
5,035
43%
5143
42%
BOE/D
$
59.57
5.37
18.92
4.18
55.93
7.31
16.15
3.51
49.97
6.54
11.67
3.23
/BOE
/BOE
/BOE
/BOE
Field Operating Netback
Commodity contract settlement
$
31.10
3.59
28.96
3.01
28.53
0.93
/BOE
/BOE
Operating Netback
$
27.51
4.54
2.56
25.95
3.79
1.92
27.60
3.87
1.89
/BOE
/BOE
/BOE
$
20.41
20.24
21.84
/BOE
Average Production
Liquid Content
Sales Price
Royalty Expense
Production Costs
Transportation Costs
G&A and other (excludes non-cash items)
Finance Expenses
Cash Flow Netback
22
˃ Balance Sheet Performance
CASHFLOW
 Lowered G&A costs by ~50% on a per BOE
basis since 2013
DEBT/CF
12000
7
Debt to Cash Flow Ratio
6
5
6000
4
4000
3
G&A
$10.00
2
2000
OPEX
Debt/CF (x)
$25.00
OPEX
1
0
$8.00
0
Q4 2013
Q1 2014
Q2 2014
Q3 2014
G&A
Q4 2014E
Quarter
$20.00
$6.00
OPEX
8000
8
Cash Flow
G&A/BOE
Cash Flow ($000)
10000
9
$4.00
$15.00
 Maintained a strong balance sheet and
increased financial flexibility
$2.00
$-
$10.00
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014E
 Continuous Improvement in Cost Structure and Balance Sheet
Quarter
23
˃ Marquee History
Entered into a
reorganization and
recapitalization
with Base Oil
and Gas
Closed property
acquisition at
Michichi to further
expand its core
area
Received
shareholder approval
for the business
combination with
SkyWest Energy
MAY 19
SEPT. 17
DEC. 5
2011
2011
2011
2011
2011
Acquired gas plant,
gathering system
and associated
production at
Michichi
OCT. 4
2012
2012
2013
Closed transaction to
acquire Western
Canada assets of
Sonde Resources
Closed bought deal
financing with
exercise of over
allotment for total of
~$20.1 MM
Announced strategic
acquisition to further
consolidate core Michichi
area; Closed sale of noncore asset for $3.48 MM
DEC. 31
MAY 2
FEB. 25
2013
2014
2014
2014
2015
AUG. 31
NOV. 18
MAR. 16
NOV. 5
MAR. 6
SEPT. 30
Closed financing
with exercise of
over allotment
for total
of ~$17 MM
First horizontal
well spud at
Michichi
Closed corporate
acquisition of
focused high net
back heavy oil
assets at
Lloydminster
Closed bought deal
flow through
financing with net
proceeds of $7.6 MM
Closed agreement to
acquire Michichi
property from
Paramount Resources
Closed sale of noncore gas weighted
assets at Pembina for
$14 MM
24
24
˃ Michichi vs. Mississippi Lime
Mississippian Paleo Geography
Play Attributes
Average Drill Depth
Rock Type (Carbonates)
Rock Type (Erosional Fill)
Average Thickness
API Gravity
Average IP (BOE/D)
Average EUR (MBOE)
Average Cost/Well
HZ Wells Drilled To Date
Major Operators
Michichi
Lime
Michichi
Mississippi Lime
1300
Limestone, Dolomite, Chert
“Detrital” – Chert Conglomerate
15m
32
225
174
$2,200,000
<100
MQL, CNRL, Husky, Bonavista
1700
Limestone, Dolomite, Chert
“Chat”- Chert Conglomerate
15m
30
297
222
$3,000,000
>1000
Devon, Chesapeake, Repsol, Sandridge
Detrital
Chat
Banff
Lime
Blakey, 2010
Michichi Geological Model
Michichi
Lime
25
˃ Michichi – Geological Model
W
E
Bantry
Ellerslie
Detrital
Middle Banff
Fracturing
Middle Banff Sand
Lower Banff
Fracturing
MIDDLE BANFF
DETRITAL
BANFF SAND
API (°)
30-36
30-36
30-36
Pay (m)
2-10
3-8
3-8
Perm (md)
0.1-30
100-300
10-100
Porosity (%)
4-9
15-25
10-24
DPIIP (sec)
6-12
1-3
RF (%)*
 Model Indicates Significant Oil in Place in Banff and Detrital Zones
10
15
15
Depth (m)
1200-1300
1200-1300
1200-1300
Reservoir
Limestone Shoals
locally enhanced through
fracturing
Sandstone,
Siltstone, Pebble
Conglomerate
Channels
Dolomitic
Sand
* Recovery information is based on average AER published recovery factors for analogous pools in
the area
26

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