Jupiter Resources | 1 Jupiter Resources | 1 Corporate Presentation April 2019 The largest Canadian energy producer that nobody has heard of…
Jupiter Resources | 1Jupiter Resources | 1
Corporate PresentationApril 2019
The largest Canadian energy producer that nobody has heard of…
• Canada’s 5th largest gas-weighted producer
• 2nd largest Deep Basin pure play
• Consistently drill some of Canada’s highest productivity gas wells
• Scalable platform with deep inventory of low-risk resource
• Targeting all-in corporate returns on capital investment > 20%
JUPITER PROPERTIES
WESTERN CANADA SEDIMENTARY BASIN
DEEP BASIN FAIRWAY
MAJOR GAS PIPELINES
Why you should care Jupiter Resources | 2
High productivity wells
- Deeper, over-pressured reservoirs
- Higher relative permeability
Why we operate in the deep basin
Large multi-zone
resource potential- Multiple, high quality stacked targets
- Vast database from historical vertical
wells & existing 3D seismic
Technology matters- Leverage strong, integrated technical
team to differentiate our results
- Employ risked innovation and
challenge the status quo
Strong economic returns
- Prolific natural gas wells supported
by significant liquids content
- Low operating costs and good
infrastructure
Jupiter Resources | 3
4Jupiter Resources |
Over 6 Tcfeof recoverable resource identified in proven horizontal target formations alone (Cardium, Dunvegan, Falher C, Falher F, Wilrich)
Significant resource across ~350k net acres
JUPITER KAKWA
C5+60 MMcf/d
PEMBINA RESTHAVEN
Deepcut160 MMcf/d
PEMBINA CUTBANK
C5+ 40 MMcf/d
JUPITER RESTHAVEN
C5+100 MMcf/d
STRATIGRAPHIC LEGEND
FUTURE HORIZONTAL TARGET FORMATION
PROVEN HORIZONTAL TARGET FORMATION
TARGET FORMATION
COMPANY LAND
GAS PROCESSING PLANTS
MAJOR GAS PIPELINES
WOLF CREEK RED ROCK KAKWA RESTHAVEN
PEMBINA MUSREAU
Deepcut150 MMcf/d
>6 TCFE total resourcePROVED 19%
PROBABLE 14%
ADDITIONAL RESOURCE 67%
Creating value in everything we do
From proven formations
FALHER F 35%
WILRICH 27%
DUNVEGAN E 12%
FALHER C 10%
OTHER 9%
CARDIUM 7%
Resource split by areaWOLF CREEK 39%
KAKWA 32%
750 derisked future locations (net) FALHER C 10%
OTHER 9%
CARDIUM 7%
Our diversified, high quality inventory*
RESTHAVEN 21%
RED ROCK 8%
Total Resource includes remaining reserves from 79 wells drilled from 2014 – 2018; Other locations based on preliminary analysis of additional formations including Falher B & Notikewin*As at year-end 2018
FALHER F 35%
WILRICH 27%
DUNVEGAN E 12%
Jupiter Resources | 5
Jupiter is the leader in proppant loading and well length resulting in the out performance of peers within the Deep Basin.
Operators show consistency in cumulative production over time with some noticeable changes in performance
Strategy of longer laterals and larger stimulations
Sequential accumulation of initial productionLateral length and proppant intensity evolution
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0 10 20 30 40 50 60 70 80 10090
IP 18
0 S
EQ
UE
NTI
AL
AC
CU
MU
LATI
ON
(Bcf
/d)
SEQUENTIAL DRILLS
JUPITER
PEER GROUP
2017201620152014201320122011
Post-Acquisition Activity (Jupiter Drills)
TOTA
L LA
TER
AL
LEN
GTH
(M)
500
1,000
1,500
2,000
2,500
3,000
3,500
JUPITER PEER GROUP
Proppant Intensity (tonnes/lateral meter) ≤ 0.5 1.0 ≥ 1.6
SOURCE: GeoScout, GeoLogic Well Completions & Frac Database, Credit Suisse.
Pre 2014 Acquisition
2014+ Completions
Jupiter Resources | 6
Operating performance — top wells
“Jupiter Resources took the top spot in monthly and daily gas rates with its 02-22 well producing 489 mmcf during the month at a daily rate of 15.9 mmcf/d”
Company Well Name FormationMonthly Vol
mmcfAssociated
Liq bblsMth Daily
Gas mmcf/dMonthly
HoursFirst Month On Well ID
1 Jupiter Resources Inc JUPITER HZ Smoky 2-22-59-1 Kfalher 489 0.0 15.9 741 2018/11 100/02-22-059-01W6/00
2 Jupiter Resources Inc JUPITER ET AL HZ RESTHA 9-3-6 Kfalher 465 0.0 15.3 729 2018/07 100/09-03-060-01W6/00
3 Jupiter Resources Inc JUPITER HZ SMOKY 1-22-59-1 Kfalher 464 12.6 15.1 739 2018/11 100/01-22-059-01W6/00
4 Jupiter Resources Inc JUPITER HZ SMOKY 10-24-58-2 Kspirit_r 450 3.1 18.7 577 2018/12 100/10-34-058-02W6/02
5 Jupiter Resources Inc JUPITER HZ SMOKY 4-34-59-1 Kfalher 444 0.0 Conf. Conf. 2018/11 100/04-34-058-02W6/02
6 Jupiter Resources Inc JUPITER HZ SMOKY 12-24-59-1 Kfalher 437 0.0 Conf. Conf. 2018/11 100/12-34-059-01W6/00
7 Jupiter Resources Inc JUPITER HZ SMOKY13-3—59-1 Kfalher 432 0.0 Conf. Conf. 2018/11 100/13-34-059-01W6/00
/8 Tourmaline Oil TOURMALINE HZ SUNDANCE 3-2 Kspirit_r 427 0.0 14.7 696 2018/12 100/03-25-054-23W5/00
9 Jupiter Resources Inc JUPITER ET AL HZ RETHA 8-3-6 Kfalher 400 0.0 13.3 719 2018/07 100/08-03-060-01W6/00
10 Seven Generations 7GEN HZ 102 KAKWA 9-2-63-5 TRmontney 389 11.317 Conf. Conf. 2018/03 102/09-02-063-05W6/00
Source: GeoSCOUT, AltaCorp Capital Inc. Top AB Gas Well Results for the month of
December (for wells brought on production in the last 12 months)
Top ‘gas’ monthly volumes seen in December 2018
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Shut-in production exposed to daily AECO pricing
Midstream capacity supports 20% growth
800
600
500
400
300
200
100
0
700
JAN-15 JAN-16 JAN-17 JAN-18 JAN-19 JAN-20 JAN-21
RA
W G
AS
VO
LUM
E (m
mcf
/d)
MUSREAU
KAKWA
CUTBANK
RESTHAVEN
JUPITER RESTHAVEN
PROCESSING CAPACITY
NGTL (raw gas eq)
Jupiter Resources | 8
Jupiter has sufficient capacity to support planned production growth
Natural Gas transportation capacity secured through long term agreements
~ 510 MMcf/d firm sales gas transportationAdditional future capacity:
2019: +65 MMcf/d2020: +130 MMcf/d
Primarily exposed to AECO (NIT) pricingVery liquid market with growing Intra-AB demand50,000 GJ/d optionality to Malin
Securing market access
JUPITER MARKET EXPOSURE
KEY MARKET POINTS
MAJOR GAS PIPELINES
Jupiter Resources | 9
• The NGTL system (in blue) is the primary natural gas gathering network in Alberta and relies on TransCanada to balance supply and demand
• Historically, TransCanada maintained supply / demand balance by limiting gas receipts accepted onto NGTL
• In August 2017, TransCanada changed its approach and allowed unlimited gas receipts onto NGTL, flooding the market with gas, similar to OPEC with oil in 2014
• With NGTL reaching maximum utilization, intra-Alberta bottlenecks emerged, particularly at East Gate and West Gate, and gas was unable to leave the NGTL system as alternative channels away from Alberta remained full
• In anticipation of increased oil sands and LNG growth to the northeast and west, TransCanada limited maintenance / expansion on the AECO/Empress corridor resulting in further bottlenecks emerging
• Limitations on gas storage capacity and access further exacerbated price volatility
AECO supply/demand overview
Western Canadian Major Gas Pipeline Network
AECOEmpress
Station 2
Sumas
AB / BC / SK
Net Production: ~14 Bcf/d
Regional Demand: ~5 Bcf/d
TRP Mainline to Eastern Canada
(Dawn, ON) / U.S.
Alliance Pipeline to
Chicago, IL
Northern Border Pipeline
to Chicago, IL
GTN System
to Malin, OR
3.0 Bcf/dEnbridge
BC Pipeline
to Sumas, WA
East Gate
West Gate
Montney &
Duvernay Basins
(Supply Growth)
Legend
Westcoast System (ENB)
Alliance (ENB/PPL)
NGTL System (TRP)
Mainline (TRP)
Other Pipelines
Export Routes
AECO supply/demand overview Jupiter Resources | 10
Consolidated existing equity into 10 million common shares plus warrants
Converted 100% of existing bonds (US$1.1 billion 8.5% notes) into equity
Notes exchanged pro rata for 78,235,294 common shares; plus
Option to subscribe pro rata for 11,764,706 common shares in exchange for US$50 million (US$4.25/share); backstopped by Noteholder Group
Total of 100 million common shares outstanding, excluding Management Incentive Plan (TBD)
Completed effective December 19th, 2018
Simon Bregazzi (Jupiter CEO)
Rakesh Wilson (Apollo) – Chairman
Wilson Handler (Apollo)
Robert Pearce (Designated Party)
Eugene Davis (Designated Party)
Recapitalization transaction completed
New Board of Directors comprised of:Recapitalization Summary
Company leverage less than 1.5x trailing EBITDA
Jupiter Resources | 11
12
Geology- Fuller understanding of petrophysics
and reservoir analysis
- Matching predictive models to results
Operations
- Process, cost & efficiency improvements
- Drilling longer laterals with
optimized spacing
Team
- Built and fostered a highly integrated
operations & technical team
- Established strong platform for growth
Results- Improved economics
- Larger recoverable resource
- Higher quality inventory
What we’ve learnt to date (2014 – 2018) Jupiter Resources | 12
What we have done since 2014
We have spent $890 million in capital, generated $1.1 billion in EBITDA (including hedging) and averaged
13% annual production growth.
Wells Drilled by Area (gross)
RESTHAVEN
KAKWA
REDROCK
WOLF CREEK
Capital by Cost Type
DRILLING
COMPLETIONS
EQUIP & TIE
FACILITIES
OTHER
Production (mmcfe/d)
Unit Operating Costs ($/mcfe)
PROCESSING FEES - CAPITAL
PROCESSING FEES - OPERATING
JUPITER OPEX
UNUTILIZED PROCESSING
Jupiter Resources | 13
($M
ILLI
ON
S)
14
Technology Leader
Set the bar higher
Challenge the status quo
Invest in innovation
Invest In Progress – The Returns Are Worth It
We are committed to providing strong returns through disciplined, focused investment of the shareholder capital entrusted to us. We measure our success by all-in cash-on-cash returns
targeting corporate level returns in excess of 20%.
Returns Focused
Faster – efficiency boost returns
Higher – lower costs drive profits
Stronger – reduced risk strengthens capital
Striving to be one of Canada’s premier natural gas producers
Jupiter Resources | 14Jupiter DNA
Supplemental Materials
16
At Jupiter, we…
Strive to be extraordinary
Create value in everything we do
Are committed to conducting
business in a responsible manner
Are responsible stewards of the
shareholder capital entrusted to us
Are proud to be a Canadian
energy provider
Treat our communities with respect
and dignity
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Simon brings over 20 years of experience in the energy industry in corporate finance and mergers & acquisitions. Simon holds a BSc (Hons) in Actuarial Science from the University of Western Ontario.
Prior Companies:Canbriam EnergyGoldman SachsCIBC World Markets
Patrick brings over 20 years of experience in the oil and gas industry in North America, in both unconventional and conventional resources. Patrick holds a BSc (Hons) in Geology from the University of Western Ontario.
Prior Companies:Canbriam EnergyCapitol EnergyEncanaPanCanadian Energy
Brad brings over 20 years of energy industry experience in a wide range of operational and technical roles. Brad holds a Mechanical Engineering Technology Diploma from the Saskatchewan Institute of Applied Sciences and Technology.
Prior Companies:Centrica EnergyTalisman Energy
Marian brings over 30 years of experience in the energy industry in economic evaluations, business development, investor relations and marketing. Marian holds a BComm from the University of Calgary.
Prior Companies:Canbriam EnergyNorthwest UpgradingEsprit ExplorationCanadian Hunter
Shyla brings over 15 years of oil and gas experience to the Company in a broad range of corporate finance and accounting activities. Shyla is a CPA, CA and holds a Bachelor of Commerce degree from the University of Saskatchewan.
Prior Companies:BOS Solutions Ltd.Welton Energy Esprit Exploration
Executive team
Patrick ElliottEVP
Brad WakefieldSVP Operations
Marian Kanik BasilisSVP Planning
Shyla StinsonCFO
Simon BregazziCEO
Jupiter Resources | 17
Jupiter Resources | 18Jupiter Resources | 18
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
0 6 12 18 24 30 36 42 48 54 60
Monthly Raw Gas Production (mcf/d)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
0 6 12 18 24 30 36 42 48 54 60
Monthly Raw Gas Production (mcf/d)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
0 6 12 18 24 30 36 42 48 54 60
Monthly Raw Gas Production (mcf/d)
Well-level economics: 5 year plan
Wolf Creek Wilrich
Locations: 25
DCT Capital ($MM): 9.8
Avg. Lateral Length (m): 2,700
EUR (Bcfe): 10.6
NGL Yield (Bbls/MMcf): 3
IRR (%): 27
Kakwa Spirit River
Locations: 47
DCT Capital ($MM): 9.4
Avg. Lateral Length (m): 2,670
EUR (Bcfe): 12.6
NGL Yield (Bbls/MMcf): 61
IRR (%): 38
Locations: 62
DCT Capital ($MM): 8.6
Avg. Lateral Length (m): 2,390
EUR (Bcfe): 10.9
NGL Yield (Bbls/MMcf): 25
IRR (%): 68
Resthaven Spirit River
• IRR assumes $2.25/GJ, USD60.00/bbl WTI and exchange rate of 0.77 USD/$; weighted average based on locations.
• Type curves are internal estimates based on analog wells and reservoir modelling. Individual well type curves may differ due to factors including lateral length, completion technique and reservoir quality.
• Kakwa Spirit River incudes Red Rock Spirit River locations
Jupiter’s top tier inventory is more than sufficient to support planned growth
Jupiter Resources | 18
Jupiter Resources | 19Jupiter Resources | 19
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
0 6 12 18 24 30 36 42 48 54 60
Monthly Raw Gas Production (mcf/d)
0
2,000
4,000
6,000
8,000
10,000
12,000
0 6 12 18 24 30 36 42 48 54 60
Monthly Raw Gas Production (mcf/d)
0
2,000
4,000
6,000
8,000
10,000
12,000
0 6 12 18 24 30 36 42 48 54 60
Monthly Raw Gas Production (mcf/d)
Well-level economics: additional inventory
Resthaven Cardium
Locations: 47
DCT Capital ($MM): 5.8
Avg. Lateral Length (m): 2,250
EUR (Bcfe): 5.6
NGL Yield (Bbls/MMcf): 76
IRR (%): 57
Resthaven Other
Locations: 55
DCT Capital ($MM): 8.1
Avg. Lateral Length (m): 2,110
EUR (Bcfe): 8.6
NGL Yield (Bbls/MMcf): 68
IRR (%): 28
Wolf Creek Other
Locations: 173
DCT Capital ($MM): 9.1
Avg. Lateral Length (m): 2,680
EUR (Bcfe): 6.9
NGL Yield (Bbls/MMcf): 7
IRR (%): 21
Kakwa Falher C
Locations: 24
DCT Capital ($MM): 8.2
Avg. Lateral Length (m): 2,650
EUR (Bcfe): 11.4
NGL Yield (Bbls/MMcf): 65
IRR (%): 48
• IRR assumes $2.25/GJ, USD60.00/bbl WTI and exchange rate of 0.77 USD/$; weighted average based on locations.
• Type curves are internal estimates based on analog wells and reservoir modelling. Individual well type curves may differ due to factors including lateral length, completion technique and reservoir quality.
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
0 6 12 18 24 30 36 42 48 54 60
Monthly Raw Gas Production (mcf/d)
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Guidance
2018 FY Actuals 2019F Original 2019F Revised
Capital ($millions) (1)
Wells drilled (net)16312.5
190 - 21018
150 - 16011
Production (net before royalties)Natural Gas (MMcf/d)Crude Oil & NGLs (Mbbl/d)Total production (MMcfe/d) (2)
29220.6416
295 - 30520 - 21
415 – 430
295 - 30520 - 21
415 – 430
Expenses ($/Mcfe)OperatingProcessing: Capital fee
Flow-through plant operatingTransportation(3)
0.210.490.290.42
0.23 – 0.250.45 – 0.500.29 – 0.31
0.45 – 0.50
0.23 – 0.250.45 – 0.500.29 – 0.31
0.45 – 0.50
G&A ($/Mcfe) 0.08 0.09 – 0.10 0.09 – 0.10
Average royalty rate (%) 3 5 - 6 5 - 6
(1) Includes approximately $35 million (2018A) and $50 million (2019F) of facility and other capital in support of future development.
(2) Includes voluntary production curtailments due to weak local natural gas prices.
(3) Includes transportation of 50,000 GJ/day to Malin (offset by higher revenue).
Jupiter Resources | 20
Forward-looking statements and advisories
Forward-looking statements
This presentation of Jupiter Resources Inc. ("Jupiter") contains forward-looking statements within the meaning of applicable securities laws. The use of any of the words "believe," "project," "might," "expect," "may," "will," "should," "seek," "approximately," "intend," "plan," "estimate," or "anticipate" or similar expressions are intended to identify forward-looking statements. In particular, but without limiting the foregoing, this presentation contains forward-looking statements pertaining to the following: 2019 capital budget, expected well-level economics, and midstream processing, gas take-away and natural gas liquids capacity.
The forward-looking statements contained in this presentation are not a guarantee of future performance and should not be unduly relied upon. Such information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements including, without limitation: changes in commodity prices; changes in realized prices for Jupiter's products; changes in the demand for or supply of Jupiter's products; unanticipated operating results, results from development plans or production declines; changes in tax or environmental laws, royalty rates, incentive programs or other regulatory matters; inaccurate estimation of Jupiter's oil and gas reserves volumes; increased costs; the impact of competitors; and certain other risks detailed under “Part V - Risk Factors Relating to our Business and Industry" contained in our December 31, 2018 Annual Report.
The forward-looking information contained in this presentation reflects several material factors, expectations and assumptions made by Jupiter as described herein and including, without limitation: that we will conduct our operations and achieve results of operations as anticipated; that our development plans will achieve the expected results; the general continuance of current or, where applicable, assumed industry conditions; the continuation of assumed tax, royalty and regulatory regimes; the accuracy of the estimates of our reserve volumes; commodity price and cost assumptions; and the availability of third party services.
The forward-looking information contained in this presentation speaks only as of the date of this presentation, and Jupiter does not assume any obligation to publicly update or revise such forward-looking statements to reflect new events or circumstances, except as may be required pursuant to applicable laws.
Oil and gas equivalency
This report presents certain production and reserves-related information on an "equivalency" basis. Equivalent volumes are computed with oil and natural gas liquids quantities converted to Mcfe at a ratio of one Bbl to six Mcfe and natural gas converted to BOE at a ratio of six Mcf to one BOE. These conversions are based on energy equivalency conversion methods primarily applicable at the burner tip and do not represent value equivalencies at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Other advisories
None of the estimates, evaluations, projections or assessments prepared by Jupiter and contained in this presentations has been audited by an independent evaluator.
These materials must not be disclosed, copied, reproduced, distributed or passed to others at any time without the prior written consent of Jupiter.
Unless specified as “USD”, all “$” are in CAD.
Jupiter Resources | 21