cac investor presentation august 2014

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Corporate Presentation TSX.V AUGUST 2014 TSXV.CAC Consolidating Micro Caps, Exploiting Quality Assets

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Canamax Investor Presentation - August 2014

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Page 1: Cac investor presentation   august 2014

Corporate Presentation TSX.V AUGUST 2014

TSXV.CAC

Consolidating Micro Caps, Exploiting Quality Assets

Page 2: Cac investor presentation   august 2014

Certain statements contained in this Presentation constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities legislation. All statements otherthan statements of historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", “opinion", "continue", "estimate", "expect","may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", “plans” and similar expressions. These statements involve known and unknown risks, uncertainties and other factorsfacing the Corporation. Risks, uncertainties and other factors may be beyond the Corporation's control and may cause actual results or events to differ materially from those anticipated in such forward-looking statements.Canamax believes that the expectations reflected in these forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statementsincluded in this Presentation should not be unduly relied upon by investors. These statements speak only as at the date of this Presentation and are expressly qualified, in their entirety, by this cautionary statement. Inparticular, this Presentation contains forward-looking statements pertaining to the following: future plans and operations; reserve estimates; expectations of initial and future production; cash flow; capital expenditures;production targets; drilling inventory; netbacks; development potential; production acquisition costs; and acquisitions.

With respect to forward-looking statements contained in this Presentation, Canamax has made assumptions regarding, among other things, results of future operations, the legislative and regulatory environments of thejurisdictions where Canamax carries on business or has operations, the impact of increasing competition and Canamax’s ability to obtain additional financing on satisfactory terms. Canamax’s actual results could differmaterially from those anticipated in these forward-looking statements as a result of the risk factors included in this Presentation such as: the impact of general economic conditions; industry conditions; volatility in the marketprices for natural gas and crude oil; currency fluctuations; uncertainties associated with estimating reserves; geological, technical, drilling and processing problems; liabilities and risks, including environmental liabilities andrisks inherent in natural gas and crude oil operations; stock market volatility; the ability to access sufficient capital; incorrect assessments of the value of acquisitions; and, competition for, among other things, capital,acquisition of reserves, undeveloped lands, equipment, services and skilled personnel.

This forward-looking information represents Canamax’s views as at the date of this Presentation and such information should not be relied upon as representing its views as of any date subsequent to the date of thisPresentation. Canamax has attempted to identify important factors that could cause actual results, performance or achievements to vary from those current expectations or estimates expressed or implied by the forward-looking information. However, there may be other factors that cause results, performance or achievements not to be as expected or estimated and that could cause actual results, performance or achievements to differmaterially from current expectations. There can be no assurance that forward-looking information will prove to be accurate, as results and future events could differ materially from those expected or estimated in suchstatements. Accordingly, readers should not place undue reliance on forward-looking information.

The forward-looking statements contained in this Presentation speak only as of the date of this Presentation. Canamax does not undertake any obligation to publicly update or revise any forward-looking statements, whetheras a result of new information, future events or otherwise, unless required by applicable securities laws.

Undue reliance should not be placed on management's assessment of reserve estimates, resource potential drilling locations and initial and potential production rates. All references to such information contained herein arebased upon internal targets as prepared by management of Canamax and are not an estimate of reserves, resources or of production rates that may actually be achieved. Such information has been provided to assist thereader in understanding certain principal factors upon which management has relied in making capital investment decisions and for internal budget preparation. Reserve potential information provided in this Presentationincludes both discovered and undiscovered resources and recoverable reserve characteristics, and there is no certainty that any portion of the undiscovered resources will be discovered and, if discovered, that any volumeswould be economically viable or technically feasible to recover or produce. Undue reliance should not be placed on estimates of reserve potential in terms of assuming Canamax's reserves or recoverable resources. Allestimates of reserve potential contained herein are based upon internal estimates of management of Canamax.

This Presentation contains references to Original Oil in Place ("OOIP") which is equivalent to estimates of oil and gas classified as Discovered Petroleum initially in Place ("DPIP") which are not, and should not be confused withoil and gas reserves. "Discovered Petroleum Initially in Place" is defined in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") as the quantity of hydrocarbons that are estimated, as of a given date, to becontained in known accumulations. DPIP is divided into recoverable and unrecoverable portions, with the estimated future recoverable portion classified as reserves and Contingent Resources, as defined in the COGEHandbook. There is no certainty that it will be economically viable or technically feasible to produce any portion of the DPIP except to the extent identified as proved or probable reserves. Resources do not constitute, andshould not be confused with, reserves. It should be noted that given the current early stage of development of Canamax's properties, estimates of DPIP potential might change significantly in the future with furtherdevelopment activity and the amount of Contingent Resources has yet to be estimated. The resource potential estimates provided herein are estimates only and the actual resources may be greater than or less than theestimates provided herein. A recovery project cannot be defined for these volumes of DPIP at this time. There is no certainty that it will be economically viable or technically feasible to produce any portion of these potentialresources.

The information contained in this Presentation does not purport to be all-inclusive or to contain all information that a prospective investor may require. Prospective investors are encouraged to conduct their own analysis andreviews of Canamax and of the information contained in this Presentation and the public record. Without limitation, prospective investors should consider the advice of their financial, legal, accounting, tax and other advisorsand such other factors they consider appropriate in investigating and analyzing Canamax. Additional information relating to Canamax is available on the Canadian System for Electronic Document and Analysis and Retrieval(“SEDAR”) at www.sedar.com

Any financial outlook or future-oriented financial information, as defined by applicable securities legislation, has been approved by management of Canamax. Such financial outlook or future-oriented financial information isprovided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for otherpurposes.

2

Reader Advisory and Cautionary Statements

Page 3: Cac investor presentation   august 2014

•Corporate and property acquisitions at accretive financial metrics

•Exploit low risk development opportunities

•Top tier technical and financial competence

The Opportunity

•Completed 4 accretive deals and 1 farm-in in last 11 months

• July exit production – 1200 boe/d (61% Oil & NGL’s)

•Closed 3 financings - $20mm gross proceeds since Sept 2013

•Strong balance sheet – No debt

Continuous Execution

•Focus on consolidation in core areas

•Targeting 2,000-3,000 boe/d in 12-24 months

•Combination of acquisition and exploitation

•Multi-year inventory of low risk drilling locations

Visible Growth

3

Growing shareholder value

Page 4: Cac investor presentation   august 2014

Fall 2013

• Brazeau River – Acquired 100% working interest in 2.25 sections – no up front investment, Recompleted 2 wells in Cardium and commingled 1 well

• Flood - Expand Energy acquisition for net $0.7mm, Large Montney Oil play 100% working interest, 37 sections, 3D Seismic, drilled water disposal well and upgraded battery for injection

• Wapiti - Completed farm-in - drilled horizontal Cardium well for gross $3.5mm – Stabilized current gross production rate of 115 boe/d

Q1 - 2014

• Acquisition of Ki Exploration for $6.2mm (3.0mm shares and assumed net debt)

• 330 boe/d production and 2P reserves of $16.6mm

• Metrics - $19,000 boe/d or 3.0x trailing cashflow

• Completed financing for $13.0mm to fund Ki acquisition and Capex

• Purchased additional Flood assets – 5.0 additional net sections, 50 boe/d and gas pipeline with sales point and compressor – cost of $1.1mm

Q2-Q3

2014

• Announced capital budget for remainder of 2014

• Develop Flood (8 wells, recomplete 3 wells & infrastructure)

• Drill 1 well (0.7 net) at Wapiti and recomplete 4 wells in Retlaw/Brazeau River

• Rounded out management and operations team capable for expansion to 3000 - 5000 boe/d

• Commenced drilling and recompletion program with better than expected results

4

Acquisition & Exploration to date

Targeted calendar 2014 exit production rate of 1,500-1,600 boe/d (65% Oil & NGL’s)

Page 5: Cac investor presentation   august 2014

5

Corporate Snapshot

Stock Exchange TSX.V – Symbol CAC

Current share price – at August 7, 2014 $1.57

Capital StructureCommon stock (basic)

(fully diluted)(Insider ownership – fully diluted)

Market Capitalization - BasicCash and working capital – May 31, 2014 Enterprise value – BasicBank lines

41.3mm57.6mm

15%$64.8mm$6.7mm

$58.1mm$6.0mm

(1) Lower netback due to one time maintanence costs on newly acquired Ki Exploration wells

Production and ReservesProduction – (as at July 25, 2014)

Oil & NGL’s %1P Value (as at Feb 28, 2014)

2P Value (as at Feb 28, 2014)

Undeveloped land (Net acres)Field Net Back (quarter ended May 31, 2014) (1)

1200 boe/d61%

$34mm$55mm53,000

$26/boe

Page 6: Cac investor presentation   august 2014

6

Experienced Management and Board

MANAGEMENT

Brad Gabel – President & CEO and Director• Involved in numerous acquisitions and divestitures (private and

public companies) - $360mm

• President of Pure Energy Services (TSX Listed sold for $280m),

• Founder & CEO of Canadian Sub-Surface (was TSX listed)

Jeremy Krukowski, P.Eng – Chief Operating Officer• VP Operations for Rimfire Energy Inc. start-up to 600 boe/d,

Manager of Operations at Onyx (2006) Inc. – start-up to 600 boe/d, Manager of Operations at Onyx O&G Ltd. – start-up to 1,600 boe/d

Chris Martin, C.A. – VP Finance and CFO• VP Finance and CFO of Pure Energy Services, Canadian Sub-

Surface Energy Services, Jet Energy and Calvalley Petroleum

• Involved in numerous acquisitions and divestitures

Karen Genoway – Landman• VP Land at Onyx O&G Ltd. and Rimfire Energy Inc., VP Land at

Enerplus Corp.

Nabil Khouri, P. Geol – Geologist • Over 45 years experience in WCSB. Worked with Pan Canadian,

Amerada Hess, Onyx, Ascot and Rimfire

BOARD OF DIRECTORS

Kevin Adair – Executive Chairman

Hugh Ross – Director

Mark Shilling – Director

Stuart McDowall – Director

Allan King – Director

Kevin Delaney - Director

OPERATIONAL & EXECUTIVE TEAM

Ian Buchanan – Internal legal counsel and corporate secretary

Jeremy Yee – Land Manager

Jeff Lane, P.Eng – Operations & Production Manager

Bonnie Lamming CA - Controller

Gary Sveinson – Production manager

Page 7: Cac investor presentation   august 2014

7

Canamax Core Areas

Alberta

Edmonton

Calgary

Grand Prairie

FLOOD

WAPITI

BRAZEAU RIVER

RETLAW

Brazeau River (100%)• Cardium and Belly river light oil• 4 producing vertical wells• Multi-zone development (2 sections)

NORTH WEST ALBERTA

WEST CENTRAL ALBERTA

SOUTHERN ALBERTA

Retlaw (Approx 75% WI)• Mannville medium gravity oil & shallow cretacious gas; 32 net

sections; good seismic coverage• Increased production from 170 boe/d to net 300 boe/d since

April 30, 2014 acquisition with minimal capital

Flood (100% WI)• Montney Oil; large land position (42 sections); • 28.5km 3D seismic, • 7,500 bbl battery, gas sales line; water disposal facilities• Large vertical well development property• 11 producing vertical wells

Wapiti (70% WI)• Cardium light oil• Farm-in earning well drilled• Horizontal well development property

Page 8: Cac investor presentation   august 2014

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Flood – Large OOIP Montney oil development play

July 25, 2014 production 350 boe/d (85% liquids)

Total of 42 net sections with 28.5km2 of 3D seismic

7,500 Bbl/d oil battery, gas sales line and water disposal

Development potential continues to increase based on recent success

Low decline rates, Water floodable, vertical wells

Drill, complete and tie-in cost of less than $1.0mm

Similar economics to Saskatchewan “Viking oil play”

Acreage is on trend with Worsley, Dixonville

and GrimshawMontney oil fields

Major activity in the area with the majority

of the discoveries in mid-2000’s

3D Seismic Coverage

Oil Battery Injector WellLEGEND

Canamax 100% Lands

Recent Asset Purchase

Montney Production

Canamax Well

Montney Oil Offsetting ProductionPool Montney A Montney C Triassic D Montney F TBD

Operator CNRL Spyglass Storm Petrus Canamax

Founder Blue Mt Trigger Belamont Devon Expand

Strike Area Worseley Dixonville Grimshaw Tangent Flood

Discovered 2004 2004 2007 2006 2011

Producers 37 111 11 22 8

Injectors 9 81 1 0 1

Production (bbl/d) 576 2,687 241 215 150

Cumulative Oil (bbl) 1,751,657 8,305,576 460,155 936,457 186,000

Worlsey

Dixonville

Grimshaw

Information as of March 2014 (Accumap)

Page 9: Cac investor presentation   august 2014

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Flood - Comparison to Viking play

Company Raging River Whitecap Beaumont Canamax

Asset Dodsland Lucky Hills Kerrobert Flood

Assumptions

Well Cost ($MM) $0.90 $0.93 $0.90 $0.85

IP 30 (boe/d) 60 120 85 50

Liquids (%) 95% 80% 96% 90%

Yr1 Decline (%) 60% 80% 80% 50%

Yr2 Decline (%) 10% 20% 8% 10%

Yr3 Decline (%) 5% 5% 3% 6%

Yr4 Decline (%) 5% 5% 3% 6%

EUR (mboe) 49.5 80.0 56.5 96.0

Liquids Content (%) 96% 80% 98% 90%

Economics 1 2 3 4

IRR (%) 85.0% 127.4% 121.9% 74.6%

NPV(10%) ($MM) $1.2 $1.8 $1.9 $1.6

Payout (years) 1.0 0.5 0.7 1.3

F+D ($/boe) $18.18 $11.63 $15.93 $8.85

Recycle (netback/F+D) 2.8x 3.9x 4.1x 5.0x

Investment Ratio (inv./NPV10) 129% 188% 210% 193%

0

20

40

60

80

100

120

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35

RRX - Dodsland WCP - Lucky HillsBeaumont - Kerrobert CAC - Flood

Key assumptions include:

• Commodity prices have been kept flat at $90/bbl Edmonton par with at $10 quality differential and $4.00/mcf AECO

• Canamax cash flows include $17.00/boevariable opex

• EUR of 96mboe is based on primary of 60mboe and secondary of 36mboe per well

• Secondary recovery is based on waterflood of similar formations

Months on production

Dai

ly P

rod

uct

ion

(b

oe

/d)

Page 10: Cac investor presentation   august 2014

10

Flood – Potential development plan

Phase 2 - 2015• Second phase drilling

commences Q1 of 2015• Drill and complete an additional

11 vertical wells• Capex spend $9.9mm

Phase 1 - 2014 Bring on water disposal facility

and reactivate 4 wells Recomplete acquired wellbores• Drill and complete 8 vertical wells• Complete infrastructure including

pipeline to injection facility, and tie in to gas sales line

• Capex spend $10.7mm

Reserve Parameters Unit Montney Oil

OOIP (* per section) MMbls 3.7

API Degree 29.5

Recovery Factor % 10.8

Recoverable Oil * MMbls 0.4

Recoverable Gas BCF Flared

Recoverable Boe * MMBOE 0.4

Single well economics NPV10 $1.6mm

Second Phase 2015

• 11 Vertical WellsFirst Phase 2014

• 8 Vertical Wells

LEGEND

Canamax Lands

Phase 1 Location

Phase 2 Location

Work-over Well

• Pool size and future development will likely increase based on delineation and operational success

• Phase 3 development will include more locations to the southwest and may begin waterflood process

Page 11: Cac investor presentation   august 2014

11

Management internal reserve estimates @ 100% WI

Wapiti – Cardium Oil

Newly Acquired Section

New 9-21 Hz Cardium Well on Production

Ki Acquisition

Reserve Parameters Unit Wapiti

OOIP (per section) MMbls 4.7

API Degree 42.0

Recovery Factor % 8.1

Recoverable Oil MMbls 0.5

Recoverable Gas BCF 1.5

Recoverable Boe MMBOE 0.8

Single well economics NPV10 $3.2mm

LEGEND

Producing Well

Horizontal Location

• Farm-in – net interest 70% in 2.25 sections• Earning well at 9-21-67-8W6 has been drilled & completed as Cardium

oil well – on production March 25 • IP 30 rate 405 BOE/d (net 284 boe/d - 86% Oil & NGL)• Stabilized production of gross 115 boe/d

• 7 additional development locations – all horizontal wells• Gross cost to drill, complete and equip - $3.5mm• 2014 Capex budget = 1 Hz well $2.5mm net

Page 12: Cac investor presentation   august 2014

Canamax holds 100% WI in 2.25 sections

4 Producing wells

1,320 mmcf gas production (220 boe/d)

120 bbls per day oil production

Gas compressor installed to improve efficiency and remove third party fees

Canamax owns drilling pads and pipelines

Multi-zone potential

Proven Cardium Oil

Belly River – “G” & Basal Zones

8 potential locations

12

Brazeau River – multi-zone potential

Management internal reserve estimates @ 100% WI

Multi-Zone Potential Reserve Parameters Unit

Middle Belly River (G

Zone) Basal Zone Cardium

OOIP (per section) MMbls 8.1 6.1 4.5

API Degree 42.0 42.0 45.0

Recovery Factor % 3.7% 4.9% 5.3%

Recoverable Oil MMbls 0.3 0.3 0.2

Recoverable Gas BCF 0.7 0.7 1.5

Recoverable Boe MMBOE 0.5 0.5 0.4

Canamax Lands

Deethree Lands

Belly River Production

Cardium Production

Mannville Production

Belly River G

Basal Belly River

Belly River Play

Vertical Well Locations

Cardium Play Upper Mannville (Wilrich) Play

Wilrich Recomplete

Page 13: Cac investor presentation   august 2014

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Retlaw area

Producing net 300 boe/d (40% Liquids)

75% of Production is Operated

Large land position of 51.1 Gross Sections (31.9 Net)

Good Seismic coverage on Upside lands; 56km2 of 3D and 116 km of 2D

Pipelines with access to facilities

Year round access

Glauconite channel well with additional follow-up wells pending results

Multi-zone potential

Shallow low cost targets <1200 m depth

RETLAW FOCUS AREA MAP

Many acquisitions in the area, followed up by successful drilling

Horizontal Glauconite channels being targeted with results over 200 boe/d IP30 rates in the direct area

Good divestment candidate once developed, many active suitors

Area Activity Heating Up

Re-evaluate seismic data

Low cost recompletions to test concepts

Upcoming drilling location Q3-Q4 2014

Near Term Development PlanLEGEND

Canamax Lands

Canamax Wells

Page 14: Cac investor presentation   august 2014

2014 Capital Budget - $14.0mm

Flood $10.7mm

Wapiti $2.5mm

Brazeau $0.5mm

Retlaw $0.3mm

14

2014 Capital Budget

• Recomplete 3 wells

• Drill and complete 8 wells

• Tie-in’s and infrastructure

• Drill, complete and equip 1 well (0.7 net)

• Recomplete 1 Wilrich well

• Recomplete and equip 3 wells

Estimated incremental production range for 2014 Capital Budget 850-950 boe/d (IP 90)

Resulting flowing efficiency rate between $15,000 and $16,500 per boe

Canamax may make changes to its capital expenditure budget depending on a number of factors, including drilling and and completion results, business conditions, commodity

Prices and prospective acquisitions and divestitures.

Page 15: Cac investor presentation   august 2014

400

600

800

1000

1200

1400

1600

1800

Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14

High Case

Low Case

15

Production Summary – Actual & Forecast

Estimated production additions in second half of 2014 reflect capital budget

BO

E/D

June ProductionNote: Brazeau River production was

shut in due to plant turnaround

from June 15 to July 7

Target Exit Production Target 65% Oil

& NGL’s

Page 16: Cac investor presentation   august 2014

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Exploitation program – Low risk development

(1) Management estimates

Total Development Potential (1)

Area Description ZoneWorkingInterest

Net CapitalRequiredLow Case

Net CapitalRequired High Case

Est NetProduction

IP (365) Low Case

Est Net Production

IP (365) High Case

% ($mm) ($mm) (Boe/d) (Boe/d)

Flood40 – 150 Vertical wells Montney

100$38.0 $140.0 1,480 5,550

Brazeau 2 – Hz wells Belly River G 100 $9.0 $9.0 300 375

2 – Hz wells Basal Belly River 100 $9.0 $9.0 300 375

2 – Vertical wells Cardium 100 $3.5 $3.5 170 265

2 – Hz wells Wilrich 100 $17.0 $17.0 1,000 1,790

Wapiti 7 – HZ wells Cardium 70 $14.7 $14.7 700 1,050

Hines Creek 1 – Hz well Montney 75 $1.5 $1.5 60 100

Retlaw 1 – Recompletion Glauconite 100 $0.3 $0.3 20 40

Retlaw 2 – Vertical wells Glauconite 100 $2.0 $2.0 150 200

Retlaw 1 – HZ well Glauconite 100 $2.0 $2.0 60 160

Totals 60-170 Wells $93.5 $195.5 4,240 9,905

Page 17: Cac investor presentation   august 2014

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Investment highlights

•Little or no competition in microcap space.

•Management, top tier technical and financial competence –demonstrated by recent optimization and recompletion programs

•Low cost, no-nonsense decision making

How we are different

•Relationships with financial institutions to access potential acquisition targets

•Additional prospects identified

Acquisition Pipeline

•Focus on consolidation of quality assets in core areas

•Maintain strong balance sheet

•Acquisition, low risk exploitation, and asset optimization

•Multi year inventory of drilling locations

Disciplined & Focused

Page 18: Cac investor presentation   august 2014

June 2014Appendix

Page 19: Cac investor presentation   august 2014

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Dilutive Equity Instruments