August 2012 Matziwin Update

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August 2012 Matziwin Update

  1. 1. BUILDING A TOP TIER ENERGY COMPANY, SOLID RESULTS, GREAT EXECUTION, EXCELLENT POTENTIALInvestor Update | AUGUST 2012 An Intermediate-Sized Oil-Weighted Company Matziwin Resource Play
  2. 2. Forward Looking Statements Forward-Looking Statements: This presentation contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "believes", "expects", "intends", "projects", "plans", "anticipates", “positions”, “potential”, “objective”, “continuous”, “ongoing”, "estimates" or "contains" or similar words or the negative thereof. In particular, this presentation contains forward-looking statements relating to: the estimated production of Pace Oil & Gas Ltd. (“Pace”), the estimated reserves of Pace Oil & Gas Ltd., the estimated pro-forma funds from operation of Pace Oil & Gas Ltd., the expected credit facility available to Pace Oil & Gas Ltd., the anticipated number of wells and completions to be carried out, the anticipated replacement production from our new completions, the expected reserve additions, future plans and expenditures of Pace Oil & Gas Ltd., the forecasted commodity prices. These statements represent managements expectations or beliefs concerning, among other things, future capital expenditures and future operating results and various components thereof or the economic performance of Pace and include, without limitation, statements with respect to the future financial position, business strategy, budgets, projected costs and plans, objectives of or involving Pace or any of its respective affiliates; access to credit facilities; capital taxes; income taxes; commodity prices; administration costs; commodity price risk management activities; expectation of future production rates and components of cash flow and earnings. Actual events or results may differ materially. The projections, estimates and beliefs contained in such forward-looking statements are based on managements estimates, opinions and assumptions at the time the statements were made including assumptions relating to the production performance of Pace’s oil and gas assets, the cost and competition for services throughout the oil and gas industry in 2012 and beyond and the continuation of the current regulatory and tax regime in Canada, and necessarily involve known and unknown risks and uncertainties which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted. Pace does not undertake to update any forward-looking information contained in this presentation whether as to new information, future events or otherwise except as required by securities rules and regulations. Barrels of Oil Equivalency: Barrels of oil equivalent (BOEs) may be misleading, particularly if used in isolation. In accordance with NI 51-101, a BOE conversion ratio for natural gas of 6 Mcf:1 bbl has been used, which is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.PACE OIL & GAS | AUGUST 2012 UPDATE 2
  3. 3. Corporate Highlights Current – June 30, 2012 Basic Shares Outstanding (mm) 47.0 FD Shares Outstanding (mm) 50.6 Bank Debt (mm) $200 Net Debt (mm) $211 Credit Facility (mm) (1) $300 Proved Reserves (mmboe) (2) 44.4 2P Reserves (mmboe) (2) ~50% Oil 69.6 2012 Q2 YTD Outlook Oil & NGLs (bbls/d) 6,784 ~ 6,700 Natural Gas (mmcf/d) 44.3 41 - 44 CapEx 2012 (mm) 55.4 ~ $80 Production Mix ~ 48% Oil ~ 50% Oil 1. Banking syndicate - CIBC, NBF, BMO, BNS, HSBC, ATB – renewed June 2012 2. Reserves December 31, 2011 evaluated by McDaniel & Associates Consultants Ltd.PACE OIL & GAS | AUGUST 2012 UPDATE 3
  4. 4. Corporate Strategy  Exploit and develop existing oil resource inventory Near Term (1-2 years)  Divest non-core assets, reduce leverage & generate freeOil Focused – maintain Gas option cash flow  Identify new oil resource plays/concepts  Engineered oil enhancements – Waterflood/ASP Mid Term (2-4 years)  Acquire strategic synergetic opportunities Advance Oil add Gas/Liquids  Expand resource opportunity base  Full scale development of resource assets Long Term (5+ years)  Apply technology to enhance recovery and production Balanced Oil & Gas/Liquids  Monitor and identify the key innovative technologiesPACE OIL & GAS | AUGUST 2012 UPDATE 4
  5. 5. Low Finding Costs with Strong Oil Additions 90 90 2011 2010 WFE 80 LEG 80 70 70 BNE 60 60 LEG TP F&D ($/boe) CKETP F&D ($/boe) 50 TT 50 POU PBN CPG 40 CPG 40 PXX WFE NVA POU 30 PBN 30 BTE NGL PGF CQE CLT NVA PGF BNE TOU ARX CLT TET PXX 20 PRQ PCE 20 TT ARX NGL BXE CKE BTE PCE BIR AAV BXE AAV PRQ TET BIR TOU 10 10 0 0 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% % TP Oil & NGL Additions % TP Oil & NGL Additions Below line = high recycle ratios Oil weighted adds delivered “Best in Class” recycle ratios * Data from Canoils PACE OIL & GAS | AUGUST 2012 UPDATE 5
  6. 6. Top Quality Reserves – Oil Weighted 30 PDP Oil & NGLs 25 20  Large and growing oil 15 reserves are low risk Proved Developedmmbbls 10 5 - Producing100% Value Oil % of TP80%60%  Large Proved Developed40% Producing is increasingly20% oil weighted 0% 50% Base Decline % 40%  Large legacy oil pools - 30% existing waterflood & 20% EOR potential are 10% 0% platform for low base decline now and future * Data from Canoils PACE OIL & GAS | AUGUST 2012 UPDATE 6
  7. 7. Significant Upside & Visible Long Term Growth Areas Key Attributes  Large and growing oil opportunity base  Matziwin - new resource development area Play Type Project Gross Net Wells Capital Operated MM$ WellsSouthern Pekisko $35 13 12.4Alberta Glauconite Lithic WaterfloodDixonville Montney C $15 - - WaterfloodRed Earth Slave Point $2.5 - -Northwest Pekisko $15 4 4AlbertaTotal Oil $67.5 17 16.4Deep Basin $2.5 - - MatziwinLand, $10 - -Seismic, G&AotherGrand Total $80 17 16.4  Balance of 2012 CapEx funded by Cash Flow  2012 CapEx directed towards oil program PACE OIL & GAS | AUGUST 2012 UPDATE 7
  8. 8. Southern Alberta Multi-Zone Oil Potential  325,000 net acres land  Multiple prospective oil zones Pace Matziwin  Extensive oil drilling inventory - Matziwin 60-100 locations - SAB Glauc/Lithic 50 locations Pace  Well cost: $1.7 to $2.5 MM SAB Glauc/Lithic  EUR per well: 80 to 150Mboe  Oil gravity: 15 – 30 API Pace Land Current Pace Key Oil ZonesPACE OIL & GAS | AUGUST 2012 UPDATE 8
  9. 9. Matziwin Pekisko – New Resource Development Area Resource  65,000+ net acres – 100% working interest  20-28º API oil gravity  60 – 100 net well locations  160 acre well spacing – may be downspaced  Limited regional aquifer identified at Matziwin Current Activity/Future Plans  5 Hz wells drilled to date  20 – 25 wells planned for 2012 – 2013  Step out delineation & reservoir characterization Pace Wells  Design and install oil handling Industry Pekisko Wells facilities Pace LandPACE OIL & GAS | AUGUST 2012 UPDATE 9

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