1 February 26, 2018 Oil ended last week up as OPEC leaders highlighted a quicker than expected draw down of supply. Additionally, there was a bit of a jolt in oil prices following the EIA release reporting yet another inventory draw of 2.66 mmbo on Cushing inventories, along with 867 mbo lower imports, and 722 mbo higher exports. The near term contract closed up $1.87, or 3.0%, at $63.55 Natural gas ended last week up. There was a slightly bullish EIA report showing an inventory draw of 124 bcf as compared to the estimated draw of 122 bcf. The near-term contract closed up $0.06, or 2.5%, at $2.63 Debt Markets S&P E&P (2) underperformed last week (0.5%) vs. SPX (2) 0.6% The major US equity indexes finished higher last week (with help from a Friday rally). Tech was a standout while consumer staples came under pressure. Treasuries were mixed in choppy trading with some curve steepening. The 10-year yield ended below 2.90% after hitting a four-year high of 2.95% earlier in the week. The dollar index gained 0.9%. Gold lost 1.7%. The S&P 500 consensus 2018 EPS estimate is $157.0 for an implied P/E multiple of 17.5x (the 5-year historical average is 16.1x) Eight issuers priced 11 issues to raise $7.2 billion last week Year-to-date volume stands at $56.3 billion, compared to $57.9 billion in year-to-date 2017 Retail cash outflows from US high yield mutual funds totaled $335 million last week, compared to the prior week’s outflows of $6.3 billion. This brings year-to-date outflows for 2018 to $12.5 billion, compared to $1.6 billion of inflows in year-to-date 2017 No E&P HY issuances priced last week Three Rivers Operating Company III, backed by Riverstone Holdings, announced that it entered into an agreement to be sold to Admiral Permian Resources Concho Resources announced that it completed the sale of ~20,000 net acres in the Delaware Basin to Luxe Energy II and Colgate for $280 million Concho concurrently announced that it completed an acreage swap (traded its Culberson County position for Midland Basin assets) with Chevron WPX Energy announced that in January it signed an agreement to divest non-op mineral interests in the Williston Basin for $20 million EQT Corporation announced that its Board of Directors approved a plan to separate its upstream and midstream businesses, creating a standalone publicly traded corporation that will focus on midstream operations Source: BMO Transaction Database, Baker Hughes, BMO Commodity Products Group, Bloomberg, EIA, PLS Note: Current quarter’s data is through the week covered by this issue. 1. EIA U.S. natural gas gross withdrawals and production reported monthly as of November 2017. 2. S&P E&P = S&P Oil & Gas E&P Select Industry, SPX = S&P 500 Index. Key Industry Indicators Quarterly Deal Activity Equity Markets Commodities $2.2 $8.1 $10.2 $10.0 $4.7 $17.2 $21.0 $20.5 $24.0 $19.4 $9.6 $9.4 $6.6 -- 50 100 150 200 250 300 -- $5 $10 $15 $20 $25 $30 $35 $40 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 61% 82% 76% 79% 52% 55% 56% 71% 91% 31% 75% 78% 96% Number of Transactions Transaction Value ($bn) Asset Corporate Number of Transactions % Oil Indicator Current Value Week's Change % Change Direction Prompt Oil Price ($/bbl) $63.55 $1.87 3.0% Prompt Gas Price ($/mmbtu) $2.63 $0.06 2.5% Wkly Trans. Value ($mm) $280 ($786) (74%) Wkly Trans. Count 7 3 75% US Rig Count 978 3 0.3% US Oil Prod'n (mmbbl/d) 10.3 (0.0) (0.0%) US Gas Prod'n (bcf/d) (1) 95.8 -- -- US Oil Storage (mmbbl) 420.5 (1.6) (0.4%) US Gas Storage (tcf) 1.8 (0.1) (6.6%) Week in Review Covering the Week of February 17 to February 23, 2018
16
Embed
Prompt Oil Price ($/bbl) $63.55 $1.87 3.0% Prompt Gas ... Page Document Library/ADLibrary... · 05-Feb-18 Enduring Resources IV LLC WPX Energy Inc Other Rockies 105,000 net acres
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1
February 26, 2018
Oil ended last week up as OPEC leaders highlighted a quicker than expected draw down of supply.
Additionally, there was a bit of a jolt in oil prices following the EIA release reporting yet another inventory
draw of 2.66 mmbo on Cushing inventories, along with 867 mbo lower imports, and 722 mbo higher
exports. The near term contract closed up $1.87, or 3.0%, at $63.55
Natural gas ended last week up. There was a slightly bullish EIA report showing an inventory draw of 124
bcf as compared to the estimated draw of 122 bcf. The near-term contract closed up $0.06, or 2.5%,
at $2.63
Debt
Markets
S&P E&P(2) underperformed last week (0.5%) vs. SPX(2) 0.6%
The major US equity indexes finished higher last week (with help from a Friday rally). Tech was a
standout while consumer staples came under pressure. Treasuries were mixed in choppy trading with
some curve steepening. The 10-year yield ended below 2.90% after hitting a four-year high of 2.95%
earlier in the week. The dollar index gained 0.9%. Gold lost 1.7%. The S&P 500 consensus 2018 EPS
estimate is $157.0 for an implied P/E multiple of 17.5x (the 5-year historical average is 16.1x)
Eight issuers priced 11 issues to raise $7.2 billion last week
Year-to-date volume stands at $56.3 billion, compared to $57.9 billion in year-to-date 2017
Retail cash outflows from US high yield mutual funds totaled $335 million last week, compared to the prior
week’s outflows of $6.3 billion. This brings year-to-date outflows for 2018 to $12.5 billion, compared to
$1.6 billion of inflows in year-to-date 2017
No E&P HY issuances priced last week
Three Rivers Operating Company III, backed by Riverstone
Holdings, announced that it entered into an agreement to be
sold to Admiral Permian Resources
Concho Resources announced that it completed the sale of
~20,000 net acres in the Delaware Basin to Luxe Energy II
and Colgate for $280 million
Concho concurrently announced that it completed an
acreage swap (traded its Culberson County position for
Midland Basin assets) with Chevron
WPX Energy announced that in January it signed an
agreement to divest non-op mineral interests in the Williston
Basin for $20 million
EQT Corporation announced that its Board of Directors
approved a plan to separate its upstream and midstream
businesses, creating a standalone publicly traded corporation
2. Calculated as percentage of total LTM transaction count.
3. 100 transactions from June 2013 to 2017YTD with transaction value >$20mm. Adjusted for changes in price outlooks. Recalculated boe reserves are on a 15:1
(gas:oil) basis. Acreage transactions excluded by using deals with PDP of >= 40% of total proved.
Permian25%
Rockies (ex. Bakken)
17%
Bakken8%
Appalachia13%
Mid-Con10%
Eagle Ford7%
Ark-La-Tex4%
Gulf of Mexico1% Other
15%
LTM By Region
Oil62%
Gas38%
LTM By Commodity
Public Company
46%
PE / PE-Backed
21%
Private11%
MLP1%
Other21%
LTM By Buyer Type
R / P
Sales Value /
Proved Reserves
(15:1)
(ratio) ($ / boe) ($ / mcfe)
8x $21.90 $1.46
10x $18.99 $1.27
15x $13.30 $0.89
20x $9.31 $0.62
y = 38.733e-0.071x
R² = 0.3766
--
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
-- 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x
Sa
les
Pri
ce /
Pro
ve
d
Re
serv
es (
$/b
oe
@ 1
5:1
)
R / P
Asset descriptions are all hard-coded and need to be
adjusted if new deals are added
(2) (2) (2)
3
February 26, 2018
Select Significant Deals on the Market
Disclaimer: The foregoing links are for convenience only and relate to materials that were not prepared or reviewed by BMO Capital Markets. BMO Capital Markets takes
no responsibility for and makes no representations with respect to the contents thereof. These materials may be inconsistent with the views of BMO Capital Markets.
Source of Select Significant Deals on the Market: BMO Transaction Database
Industry Headlines
Riverstone Energy Limited Announces Sale
of Three Rivers III
Concho Resources Inc. Reports Fourth-
Quarter and Full-Year 2017 Results and
Provides 2018 Outlook (includes A&D
activity)
WPX Energy Reports 4Q and Full-Year 2017
Results (includes A&D activity)
Bakken
4 Deals Appalachia
4 Deals
Mid-Con
16 Deals
Eagle Ford
12 Deals
Permian
15 Deals
Other
10 Deals
Ark-La-Tex
5 Deals
Rockies
9 Deals
2/23/2018
Appalachia 4
Ark-La-Tex 5
Bakken 4
Eagle Ford 12
Mid-Con 15
Other 10
Permian 15
Rockies 9
74
BMO Deals (Status)
Texas American Eagle Ford (In Market) – See Page 4
9703) to request a Confidentiality Agreement, access to the VDR,
and/or a data room presentation
ASSET OVERVIEW
PACKAGE HIGHLIGHTS
Source: Texas American Resources 2018 Eagle Ford Divestiture announcement. https://datarooms.us.bmo.com/_layouts/15/Petris/LoginPageBMOUS.aspx?ClientId=79
1. NYMEX strip pricing as of 2-Feb-18. WTI oil price of $63.18, $57.95, $54.38, $52.29, $51.34 per bbl and Henry Hub gas price of $2.87, $2.84, $2.82, $2.86, $2.89 per
mmbtu for 2018, 2019, 2020, 2021, 2022 respectively. Prices are held flat thereafter.
PROCESS OVERVIEW
Growing
Production and
Cash Flow with
Advantaged
Position for Full
Development
April 2018E net production of 5,100 boe/d (83% oil) from 22 operated wells; rapid growth from January 2017 production of <300
boe/d
High degree of control as asset is 100% operated with easily managed continuous development obligations
NTM cash flow projected to be approximately $87 million at strip pricing(1)
Very favorable marketing contracts relative to other Eagle Ford operators; no minimum volume commitments
Extensive infrastructure with proximity to Gulf Coast refineries and international export markets
Premium oil price realizations with LLS pricing – positive differentials of ~$3.00 compared to WTI over the last three months
Positioned for full field development with company-owned gathering system and access to electricity and SWD systems
Largely
Undeveloped
Contiguous Eagle
Ford Position
Attractive entry vehicle or bolt-on acquisition with exposure to a highly economic part of the Eagle Ford Play
Contiguous 23,164 net acre position in the prolific black oil window located in southwest Atascosa and southeast Frio counties,
Texas ideal for future development
100% operational control with average working interest of ~94%
Optimal maturity and shallow depth to Eagle Ford target of 7,800’ to 8,700’ allows for lateral lengths in excess of 10,000’
Extensive and
Highly Economic
Drilling Inventory
through Modern
Completions
171 gross operated Lower Eagle Ford drilling locations at 500’ lateral spacing providing ample running room for years of
development
Assuming tighter well spacing, an optimized plan at 400’ supports 214 gross Lower Eagle Ford locations
Entire position de-risked by existing wells and extensive data gathering and seismic surveys
100% of locations have IRRs over 30% at strip pricing(1)
Significant performance uplift over historical results in the area due to modern completions
Lateral targeting, higher proppant/fluid loading, and tighter cluster spacing are resulting in 66% EUR/ft uplift over legacy
wells with continual improvement
High Quality
Subsurface
Attributes
Compact and well-contained 100’ to 80’ thick Lower Eagle Ford quality source rock with oil in place sufficient to fully support
significant uplifts in EUR and recovery per foot
Proven development plan supported by 70 square miles of 3-D seismic and 385’ of proprietary whole core through the entire
prospective Eagle Ford and Austin Chalk reservoir intervals
Favorable structural, fracture setting, high matrix porosity, and oil saturation of the Austin Chalk across TAR’s position supports
a viable secondary target with ~85 locations at 800’ spacing
Austin Chalk in Frio County is prolific in numerous offsets
Oil saturated proprietary core in Atascosa County
Austin Chalk well performance in Sugarkane Field a direct analog
Note: Current quarter’s data is through the week covered by this issue.
1. Represents total enterprise value. Excludes transactions with deal value <$20 million. 2. $/acre multiple not adjusted for value associated with production.
3. Red line denotes average since 1-Jan-15. Calculated as the weighted average of each quarter’s transactions.
4. Production valued at $45,000/boepd in 2014, $30,000/boepd in 2015, $35,000/boepd in 2016 & 2017, and $40,000/boepd in 2018.
0%
10%
20%
30%
40%
50%
--
100
200
300
400
Jan-14 Jan-15 Jan-16 Jan-17 Jan-18
H V+D % of Total Rigs
-$1.20
-$0.60
$0.00
$0.60
Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18
-$4.00
-$2.00
$0.00
$2.00
$ /
mm
btu
$ /
bb
l
Midland Waha
--
$100,000
$200,000
$300,000
$400,000
1Q
14
2Q
14
3Q
14
4Q
14
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16
3Q
16
4Q
16
1Q
17
2Q
17
3Q
17
4Q
17
1Q
18
3 7 9 6 1 3 8 8 5 9 12 14 15 8 0 1 5
$ /
bo
e/d
# Deals
$168,768
Item Value Wkly Change Last Week Item Value Wkly Change Last Week
Note: Current quarter’s data is through the week covered by this issue.
1. Represents total enterprise value. Excludes transactions with deal value <$20 million. 2. $/acre multiple not adjusted for value associated with production.
3. Red line denotes average since 1-Jan-15. Calculated as the weighted average of each quarter’s transactions.
4. Production valued at $45,000/boepd in 2014, $30,000/boepd in 2015, $35,000/boepd in 2016 & 2017, and $40,000/boepd in 2018.
Asset descriptions are all hard-coded and need to be
adjusted if new deals are added
TRANSACTION PRODUCTION MULTIPLES(3) TRANSACTION ADJUSTED NET ACRE MULTIPLES(3,4)
9
February 26, 2018
Item Value Wkly Change Last Week Item Value Wkly Change Last Week
Note: Current quarter’s data is through the week covered by this issue.
1. Represents total enterprise value. Excludes transactions with deal value <$20 million. 2. $/acre multiple not adjusted for value associated with production.
3. Red line denotes average since 1-Jan-15. Calculated as the weighted average of each quarter’s transactions.
4. Production valued at $3,000/mcfepd in 2014, and $2,000/mcfepd in 2015, 2016, 2017, and 2018.
Asset descriptions are all hard-coded and need to be
adjusted if new deals are added
TRANSACTION PRODUCTION MULTIPLES(3) TRANSACTION ADJUSTED NET ACRE MULTIPLES(3,4)
10
February 26, 2018
-$3.00
-$2.00
-$1.00
$0.00
$1.00
$2.00
$3.00
Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18
-$15.00
-$10.00
-$5.00
$0.00
$5.00
$10.00
$15.00
$ /
mm
btu
$ /
bb
l
Brent Dominion
Item Value Wkly Change Last Week Item Value Wkly Change Last Week
Note: Current quarter’s data is through the week covered by this issue.
1. Represents total enterprise value. Excludes transactions with deal value <$20 million. 2. $/acre multiple not adjusted for value associated with production.
3. Red line denotes average since 1-Jan-15. Calculated as the weighted average of each quarter’s transactions.
4. Production valued at $3,000/mcfepd in 2014, and $2,000/mcfepd in 2015, 2016, 2017, and 2018.
Asset descriptions are all hard-coded and need to be
adjusted if new deals are added
TRANSACTION PRODUCTION MULTIPLES(3) TRANSACTION ADJUSTED NET ACRE MULTIPLES(3,4)
11
February 26, 2018
Item Value Wkly Change Last Week Item Value Wkly Change Last Week
Note: Current quarter’s data is through the week covered by this issue.
1. Represents total enterprise value. Excludes transactions with deal value <$20 million. 2. $/acre multiple not adjusted for value associated with production.
3. Red line denotes average since 1-Jan-15. Calculated as the weighted average of each quarter’s transactions.
4. Production valued at $45,000/boepd in 2014, $30,000/boepd in 2015, $35,000/boepd in 2016 & 2017, and $40,000/boepd in 2018.
Asset descriptions are all hard-coded and need to be
adjusted if new deals are added
TRANSACTION PRODUCTION MULTIPLES(3) TRANSACTION ADJUSTED NET ACRE MULTIPLES(3,4)
12
February 26, 2018
-$0.90
-$0.45
$0.00
$0.45
Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18
-$9.00
-$4.50
$0.00
$4.50
$ /
mm
btu
$ /
bb
l
Clearbrook CIG
Item Value Wkly Change Last Week Item Value Wkly Change Last Week
Note: Current quarter’s data is through the week covered by this issue.
1. Represents total enterprise value. Excludes transactions with deal value <$20 million. 2. $/acre multiple not adjusted for value associated with production.
3. Red line denotes average since 1-Jan-15. Calculated as the weighted average of each quarter’s transactions.
4. Production valued at $45,000/boepd in 2014, $30,000/boepd in 2015, $35,000/boepd in 2016 & 2017, and $40,000/boepd in 2018.
Asset descriptions are all hard-coded and need to be
adjusted if new deals are added
TRANSACTION PRODUCTION MULTIPLES(3) TRANSACTION ADJUSTED NET ACRE MULTIPLES(3,4)
13
February 26, 2018
Ann'd
Date Buyer Seller Asset Description Value(1)
Proved
Multiple
Prod.
Multiple Net Acres
($mm) ($/boe) ($/boe/d) ($/acre)(2)
06-Feb-18 Camino; Mach Resources Chesapeake 238,000 net acres in Anadarko Basin $500 n.a. $21,739 $2,101
25-Jan-18 Revolution Resources LLC Gastar Exploration Inc 26,100 net acres in the Anadarko Basin $108 $5.60 $37,906 $4,119
27-Dec-17 Chaparral Energy Multiple 7,000 net acres in STACK $60 n.a. n.a. $8,500
14-Nov-17 Exponent Energy III Mid-Con Energy Partners LP 6,591 net acres in Southern Oklahoma $22 $8.09 $40,741 $3,338
Note: Current quarter’s data is through the week covered by this issue.
1. Represents total enterprise value. Excludes transactions with deal value <$20 million. 2. $/acre multiple not adjusted for value associated with production.
3. Red line denotes average since 1-Jan-15. Calculated as the weighted average of each quarter’s transactions.
4. Production valued at $45,000/boepd in 2014, $30,000/boepd in 2015, $35,000/boepd in 2016 & 2017, and $40,000/boepd in 2018.
Asset descriptions are all hard-coded and need to be
adjusted if new deals are added
TRANSACTION PRODUCTION MULTIPLES(3) TRANSACTION ADJUSTED NET ACRE MULTIPLES(3,4)
14
February 26, 2018
--
$2.00
$4.00
$6.00
$8.00
$10.00
Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18
--
$2.00
$4.00
$6.00
$8.00
$10.00
$ /
mm
btu
$ /
bb
l
LLS Henry Hub
Item Value Wkly Change Last Week Item Value Wkly Change Last Week
29-Aug-16 EnVen Energy Ventures Shell Brutus and Glider fields $425 n.a. $17,000 n.a.
09-Nov-15 EnVen Energy Ventures Marathon Petronius and Neptune fields $205 n.a. $20,500 n.a.
11-Aug-15 Energy XXI M21K GOM Shelf assets $25 $1.94 $4,582 n.a.
Mean $673 $16.23 $20,516 $2,996
Median $425 $15.88 $20,500 $2,996
Blue = BMO provided transaction advisory services Green = BMO provided acquisition financing or related services
Purple = BMO provided both transaction advisory services and acquisition financing or related services
15
February 26, 2018
Upcoming Industry Events
February 2018 Feb 26 DUG Executive
Feb 28 SPE Business Development Study Group
March 2018
Mar 5-9 CERA Week
Mar 6-8 IADC/SPE Drilling Conference
Mar 14 IPAA Leaders in Industry Luncheon
Mar 16 ADAM-Houston Monthly Luncheon
Mar 20 Houston Producers Forum Luncheon
Disclaimer: The foregoing links are for convenience only and relate to materials that were not prepared or reviewed by BMO Capital Markets. BMO Capital Markets takes
no responsibility for and makes no representations with respect to the contents thereof. These materials may be inconsistent with the views of BMO Capital Markets.
Click event to open
April 2018 Apr 9-10 OGIS New York
Apr 11 IPAA Leaders in Industry Luncheon
Apr 14-18 SPE Improved Oil Recovery Conference
Apr 17 Houston Producers Forum Luncheon
Apr 20 ADAM-Houston Monthly Luncheon
Apr 24-25 DUG Rockies
Apr 25 SPE Business Development Study Group
Apr 30-May 3 Offshore Technology Conference
May 2018 May 7 Energy Capital Conference
May 9 IPAA Leaders in Industry Luncheon
May 15 Houston Producers Forum Luncheon
May 17 IADC Drilling Onshore Conference & Exhibition
May 18 ADAM-Houston Monthly Luncheon
May 20-23 AAPG 2018 Annual Convention & Exhibition
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May 30 SPE Business Development Study Group
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September 2018 Sep 5-6 A&D Strategies & Opportunities
Sep 11-12 IADC Advanced Rig Technology Conference
Sep 12 IPAA Leaders in Industry Luncheon
Sep 18 Houston Producers Forum Luncheon
Sep 19-21 DUG Eagle Ford
Sep 21 ADAM-Houston Monthly Luncheon
Sep 24-26 SPE Annual Technical Conference and Exhibition
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Nov 14 IPAA Leaders in Industry Luncheon
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Jun 13 IPAA Leaders in Industry Luncheon
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Jun 19-20 IADC World Drilling Conference & Exhibition
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Jun 25-27 IPAA Midyear Meeting
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