A PREDICTABLE LOW COST NATURAL GAS MODEL INVESTOR UPDATE SEPTEMBER 2016 TSX: PNE
CORPORATE PROFILE POSITIONED FOR SUSTAINABLE CASH FLOW Listing TSX: PNE Market Capitalization(1) 341 MM Average Daily Volume(2) 0.7 MM 52-Week Trading Range 0.61 to 1.36 Shares Issued(3) 307.0 MM Directors and Officers Ownership 13.5%…
FOCUS ON PER SHARE VALUE CREATION Acquisition Priorities Focused on Value Accretive acquisitions of high-quality natural gas assets offering low operating costs, low decline production, and increasing drilling inventories; nine…
A UNIQUE, COUNTER-CYCLICAL STRATEGY BUILDING A FREE CASH FLOW MODEL IN A VOLATILE COMMODITY PRICE ENVIRONMENT PNE has been uniquely focused on a low-risk, natural gas asset consolidation strategy in Western Canada Weak commodity…
SUCCESSFUL EXECUTION OF THE STRATEGY TRACK RECORD SINCE JANUARY 2012 488,000,000 2.70 Market Cap 11 448,000,000 Share Price 10 408,000,000 9 12 2.20 368,000,000 328,000,000 13 14 288,000,000 1.70 8 248,000,000 7 4 6…
HISTORY OF ACCRETIVE ACQUISITIONS ACQUISITION METRICS REFLECT DISCIPLINED VALUE FOCUSED STRATEGY (1) Transaction Metrics Announcement Transaction Value Production P+P Reserves Flowing Barrel P+P Reserves P+P Reserves Transaction Date…
WHAT WE HAVE BUILT THREE MAJOR OPERATED CORE AREAS Base Production of over 22,600 boe/d Weighted 92% towards natural gas Low Decline Rate Corporate decline rate on base production of 10% High Working Interest and Operatorship…
LOW CORPORATE BREAK EVEN KEY TO CASH FLOW BUILT FOR SUSTAINABILITY IN A VOLATILE COMMODITY PRICE ENVIRONMENT At 1.75 per mcf, PNE has one of the lowest all-in corporate break even gas prices in the industry(1) 82% of PNEs production…
HIGHLY LEVERAGED TO NAT GAS PRICING ONE OF THE STRONGEST EXPOSURES TO NATURAL GAS PRICES IN THE INDUSTRY PNE offers one of the highest exposures to movements in natural gas pricing given low operating expenses and overhead, low…
FREE CASH FLOW SENSITIVITY(1) LOW MAINTENANCE CAPITAL YIELDS HIGH FREE CASH FLOW With annual maintenance capital averaging 24.5 MM over the next 5 years(3), PNE can maintain its production base at 22,750 boe/d Average annual…
FUTURE DRILLING OPPORTUNITIES EXTENSIVE INVENTORY OF LOCATIONS TO SUPPLY LONG TERM MODEL PNE currently has 1,345 gross Gross Undrilled Locations(1) (872 net) drilling and 1,600 recompletion locations(1) 1,400 Five years of…
NATURAL GAS OUTLOOK - DEMAND U.S. Annual LNG Exports U.S. Natural Gas Demand Growth in Electric Power Sector bcf/d bcf/d Forecast 8.0 7.0 5.0 4.0 Forecast Coal to gas LNG from 6.0 3.0 shifting Gulf of 5.0 2.0 continues Mexico…
NATURAL GAS OUTLOOK - SUPPLY Monthly Dry Shale Gas Production U.S. HDDs 1931-2015 (Nov Mar) bcf/d 50 HDDs 45 Marcellus (PA,WV,OH & NY) 4,500 Haynesville (LA & TX) 40 4,000 Short term Natural gas Eagle Ford (TX) Fayetteville (AR)…
DEMONSTRATED PER SHARE VALUE GROWTH Production (boe/d)Mid-point of Reserves (Mboe)(2) 2016 Guidance 25,000 80 22,750 80,000 300,000 BOE/D per million shares 72% 70 70,000 39% 250,000 Daily Production per million shares…
COMPELLING VALUATION STRONG EMPHASIS ON GROWTH OF SUSTAINABLE NATURAL GAS ASSETS PNE generates one of the PNEs valuation is attractive highest free funds flow yields from a PDP reserves in the industry perspective 2017 FCF Yield…
WHY INVEST IN PINE CLIFF High-quality assets with industry leading operating costs and decline rates Executing on a vision to assemble an asset base to deliver sustainable cash flow back to its shareholders One of the strongest per…
APPENDIX -18-
BUILDING A FAMILIAR MODEL A CLEAR VISION FOR LONG-TERM GROWTH WITH PROVEN EXPERIENCE Pine Cliff management has a long-term view of value creation, with a counter-cyclical focus to acquire natural gas assets that are non-core to their…
RESERVE REPORT (1) Summary of Remaining Oil and Gas Reserves as of December 31, 2015 Natural Gas and Coal Bed Natural Gas Light , Medium and Heavy Oil Methane Liquids Total Oil Equivalent Gross Gross Gross Gross Reserve Category:…
CENTRAL ASSETS AREA OVERVIEW PINE CLIFFS NEWEST AND LARGEST CORE AREA - DEC 11 15 Gas weighted, low decline assets in the Ghost Pine and Viking areas of Central Alberta Q2 2016 production of 10,777 boe/d (88% natural gas), 48% of…
SOUTHERN ASSETS AREA OVERVIEW LOW DECLINE, LOW COST PRODUCTION Q2 2016 production of 9,402 boe/d (mostly natural gas), 42% of Pine Cliffs production 100% Ownership of a key NEB regulated pipelines in Montana and Saskatchewan…
EDSON AREA OVERVIEW PINE CLIFFS FIRST CORE AREA, ACQUIRED IN Q1 2012 Q2 2016 production of 2,193 boe/d (77% natural gas), 10% of Pine Cliffs production Drilled three gross (one net wells) in Q1 2016, all of which are performing at…
SIGNIFICANT LOW RISK DEVELOPMENT SIGNIFICANT UPSIDE POTENTIAL IN GHOST PINE HORSESHOE CANYON COAL BED METHANE(1) Attractive and predictable low-cost production with long reserve life CBM infill drilling opportunities plus…
EMERGING COLORADO SHALE PLAY SIGNIFICANT UPSIDE POTENTIAL COLORADO SHALE(1) Industry was drilling this area using horizontal drilling technology in 2014 138 gross (138 net) locations have been identified as economic (IRR10%)…
2014 SHALLOW GAS ACQUISITION UPDATE In the first 19 months following the 2014 Acquisition: OPEX was reduced by 6,000 14% to 7.37/boe (1.22/mcfe) from 8.54/Boe (1.42/mcfe) 5,000 TCPL Only 650,000 in capital Outage was spent in low…
UNDERSTANDING ARO AND LLR With increasing attention on future abandonment liabilities in the oil and gas industry, it is important for investors to know how companies intend to manage their future asset retirement obligations. Two key…
PNE LIABILITY PROFILE Over 85% of PNE Well Count Are Producing Wells Producing Well Count By Year* 120% Percent of Producing Wells 7,000 Net PNE Producing Wells Gross Net 6,000 100% Producing Wells 8,871 6,281 5,000 80%…
PNEs LLR and ARO As of September 1, 2016, PNE had an Alberta LLR Rating of 1.52 and a Saskatchewan LLR rating of 1.17 62% of licensees have a lower Alberta LLR rating than PNE As at June 30, 2016, PNE recorded an ARO of 302.0 million…
ANALYST COVERAGE The following analysts provide research report coverage on Pine Cliff: COMPANY ANALYST AltaCorp Capital Patrick ORourke Canaccord Genuity Anthony Petrucci CIBC World Markets Dave Popowich Clarus Securities Inc.…
CORPORATE INFORMATION BOARD OF DIRECTORS HEAD OFFICE STOCK EXCHANGE LISTING Gary J. Drummond 850, 1015 4th Street SW TSX Exchange George F. Fink Calgary, Alberta T2R 1J4 Trading Symbol: PNE Philip B. Hodge Phone: (403) 269-2289 Randy M.…
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