Pace, AvenEx and Charger to Merge and Form Spyglass Resources Corp
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Pace, AvenEx and Charger to Merge and Form Spyglass Resources Corp

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    Pace, AvenEx and Charger to Merge and Form Spyglass Resources Corp Pace, AvenEx and Charger to Merge and Form Spyglass Resources Corp Presentation Transcript

    • Combination of pace, avenex and charger toform a dividend paying corporation JANUARY 2013
    • Advisory statementsThis presentation contains forward-looking information within the meaning of applicable securities laws and is based on the expectations, estimates and projections of management of each of Charger, Pace and AvenEx asof the date of this presentation, unless otherwise stated. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" andsimilar expressions are intended to identify forward-looking information. More particularly and without limitation, this presentation contains forward-looking information concerning: the anticipated benefits of the Merger tothe shareholders of each of Charger, Pace and AvenEx, including anticipated synergies; anticipated future production, operating netbacks, cash flow, capital expenditures, dividends, payout ratios, decline rates,development capital efficiencies, net debt to cash flow, reserve life index, credit facility availability and years of sustaining development available; the timing and anticipated receipt of required regulatory, court andshareholder approvals for the transaction; the ability of each of Charger, Pace and AvenEx to satisfy the other conditions to, and to complete, the Merger including the Elbow River Sale; the anticipated timing of the jointinformation circular regarding the Merger; the holding of the shareholder meetings of each of Charger, Pace and AvenEx; the anticipated dividend payments of Spyglass following closing and the closing of the Merger.Such forward-looking information is provided for the purpose of providing information about managements current expectations and plans relating to the future. Investors are cautioned that reliance on such information maynot be appropriate for other purposes, such as making investment decisions.In respect of the forward-looking information and statements concerning the anticipated benefits and completion of the proposed Merger and the anticipated timing for completion of the Merger, each of Charger, Pace andAvenEx has provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the time required to prepare and mail shareholder meeting materials, including therequired information circular; the ability of each of Charger, Pace and AvenEx to receive, in a timely manner, the necessary regulatory, court, shareholder, stock exchange and other third party approvals, including but notlimited to the receipt of applicable competition approvals; the ability of each of Charger, Pace and AvenEx to satisfy, in a timely manner, the other conditions to the closing of the Merger; and expectations and assumptionsconcerning, among other things: commodity prices and interest and foreign exchange rates; planned synergies, capital efficiencies and cost-savings; applicable tax laws; future production rates; the sufficiency of budgetedcapital expenditures in carrying out planned activities; and the availability and cost of labour and services.The anticipated dates provided may change for a number of reasons, including unforeseen delays in preparing meeting materials, inability to secure necessary shareholder, regulatory, court or other third party approvals inthe time assumed or the need for additional time to satisfy the other conditions to the completion of the Merger. Accordingly, readers should not place undue reliance on the forward-looking information contained in thispresentation. In respect of the forward-looking information, including the anticipated dividend payments of Spyglass following closing, each of Charger, Pace and AvenEx has provided such in reliance on certainassumptions that it believes are reasonable at this time, including assumptions in respect of: prevailing commodity prices, margins and exchange rates; that each of Chargers, Paces and AvenExs future results ofoperations will be consistent with past performance and management expectations in relation thereto; the continued availability of capital at attractive prices to fund future capital requirements relating to existing assets andprojects, including but not limited to future capital expenditures relating to expansion, upgrades and maintenance shutdowns; the success of growth projects; future operating costs; that counterparties to materialagreements will continue to perform in a timely manner; that there are no unforeseen events preventing the performance of contracts; and that there are no unforeseen material construction or other costs related to currentgrowth projects or current operations.Since forward-looking information addresses future events and conditions, such information by its very nature involves inherent risks and uncertainties. Actual results could differ materially from those currently anticipateddue to a number of factors and risks. These include, but are not limited to the risks associated with the industries in which each of Charger, Pace and AvenEx operates in general such as: operational risks; delays orchanges in plans with respect to growth projects or capital expenditures; costs and expenses; health, safety and environmental risks; commodity price, interest rate and exchange rate fluctuations; environmental risks;competition; failure to realize the anticipated benefits of the Merger and to successfully integrate each of Charger, Pace and AvenEx; ability to access sufficient capital from internal and external sources; and changes inlegislation, including but not limited to tax laws and environmental regulations. Risks and uncertainties inherent in the nature of the Merger include the failure of each of Charger, Pace and AvenEx to obtain necessaryshareholder, regulatory, court and other third party approvals, or to otherwise satisfy the conditions to the Merger, in a timely manner, or at all. Failure to so obtain such approvals, or the failure of each of Charger, Paceand AvenEx to otherwise satisfy the conditions to the Merger, may result in the Merger not being completed on the proposed terms, or at all.Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on other factors that could affect the operations or financial results of each of Charger, Pace and AvenEx, and the combinedcompany, are included in reports on file with applicable securities regulatory authorities, including but not limited to; the Annual Information Form for the year ended December 31, 2011 for each of Charger, Pace andAvenEx which may be accessed on their respective SEDAR profiles at www.sedar.com.Any financial outlook or future oriented financial information in this presentation, as defined by applicable securities legislation, has been approved by management of Charger, Pace and AvenEx. Such financial outlook orfuture oriented financial information is provided for the purpose of providing information about managements reasonable expectations as to the anticipated results of Spyglass and its anticipated business activities for thetwelve months following the closing of the Merger.The forward-looking information contained in this presentation is made as of the date hereof and each of Charger, Pace and AvenEx undertake no obligation to update publicly or revise any forward-looking information,whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.The production type curves used in this presentation are constructed from well data representing only those wells deemed to be most indicative of the go-forward wells which Spyglass intends to develop. These typecurves are for illustrative purposes of potential future performance only and do not constitute a guarantee of future well performance in the areas which they describe.Boes are presented on the basis of one Boe for six Mcf of natural gas. Disclosure provided herein in respect of Boes may be misleading, particularly if used in isolation. A Boe conversion ratio of 6 Mcf:1 Bbl is based on anenergy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency 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 anindication of value. 2
    • Creating a balanced dividend-paying producer The combination of Pace (“PCE”), AvenEx (“AVF”), and Charger (“CHX”) will create a cash distributing producer with a balanced commodity portfolio Spyglass will implement a $0.03 monthly cash dividend upon closing • Creates long term value for shareholders through cash distributing model • Initial implied yield – 10.8% based on AvenEx closing share price prior to announcement ($3.32) – 13.0% based on AvenEx closing share price on January 5, 2013 ($2.77) • Additional value potential with yield compression Balanced commodity portfolio, a strong management team and a sustainable yield model • 12-month production averaging ~18,000 boe/d (~52% oil and liquids) (1) • Management team with a track record of creating shareholder value in a dividend model • Mature, low decline (~20%) producing assets coupled with capital efficient light oil development (~$25,000 / boe/d) provide the scale, stability and low-risk running room to support a sustainable yield model Spyglass is well positioned with strong financial flexibility • ~$120 million of available credit capacity upon closing (~30% availability) • Potential to monetize non-core assets with minimal impact on cash flow Spyglass will have an extensive inventory of low-risk, high-return drilling opportunities (1) Based on management estimates pro forma the transaction and implementation of a cash distributing model. First 12-months commencing on the closing date of the Merger. 3
    • Strategic Rationale• Low decline light & medium oil assets• Size and efficient operating scale• Undervalued as a growth entity• Diverse asset base • Sustainable dividend paying corp. with an attractive total return proposition • Low decline base production, balanced commodity profile • Large inventory of capital efficient light oil• Cash and balance sheet capacity after development opportunities $80 mm sale of Elbow River Marketing• Low decline oil assets • Proven management team• Gas growth inventory • G&A synergies • Liquidity, with $120 mm of unused bank lines • Diverse, low risk, efficient asset base • Potential for asset rationalization• Low risk, large scale light oil development • Implement DRIP program• Large land base• Management with yield experience• Experience with Pace assets 4
    • Transaction overview  The combination of AvenEx, Charger and Pace will create a cash distributing producer with a balanced commodity portfolio Transaction  Spyglass will implement a $0.03 monthly cash dividend at closing Overview • Target dividend payout of 35% to 40% of cash flow (100-115% all-in payout) • Considering implementing a dividend reinvestment plan (DRIP)  1.30 Spyglass shares for each outstanding common share of PaceShare Exchange  1.00 Spyglass share for each outstanding common share of AvenEx  0.18 Spyglass shares for each outstanding Class A share of Charger  Spyglass will be led by the current Charger team • Tom Buchanan, CEO & DirectorManagement & • Dan O’Byrne, President Board  The Board will consist of 8 existing directors from the parties • Randy Findlay will serve as an Independent Chair  Customary approvals required, including the approval of at least 662/3% of Approvals & shareholders voting at each of the parties’ respective meetings Timing  Anticipated to close in mid February 2013  Subject to closing the sale of AvenEx’s Elbow River Marketing business  Break fee of 2.5% of enterprise value payable to other two parties  Credit facility of $400 million (~$280 million drawn)Other Key Terms  In conjunction with the Merger, AvenEx has reached a binding agreement for the cash sale of its Elbow River Marketing business • Expected to close in February 2013 5
    • Management TEAM  30+ years of experience in the oil and natural gas sector  Recently as President & CEO and Director of Provident Energy Trust Tom Buchanan  Co-founder, President & CEO of Founders Energy Ltd., which was converted to CEO & Director Provident Energy Trust in 2001  Currently a Director of Pace Oil & Gas Ltd. , Pembina Pipeline Corporation, Athabasca Oil Corp., and Hawk Exploration Ltd  30+ years of diverse experience in the oil and natural gas sector Dan O’Byrne  Recently as Executive VP & COO of Provident Energy Trust President  Served as Division VP for Nexen Inc. and numerous executive positions with Canadian Occidental Mark Walker  23+ years of experience in oil and gas finance and accountingVP, Finance & CFO  Recently as SVP Finance & CFO of Provident Energy Trust  30+ years of experience in the oil and gas sector Kelly Cowan  Recently as CEO of Churchill Energy Inc. VP, Corporate  Co-founder, SVP & COO of Founders Energy Ltd., which was converted to ProvidentDevelopment & Land Energy Trust in 2001 John Milford  30+ years of experience as a petroleum geologist VP, Exploration &  Founded and served in a Director / Executive role for a number of private oil and gas Development companies including Predator Corporation, Primal Energy, and Mojo Energy Dan Fournier  30+ years as a Partner with Blakes Calgary office, and is currently a member ofGeneral Counsel & Blakes energy financial services groupCorporate Secretary  Advised on the structuring of numerous private and public energy financings 6
    • BOARD OF DIRECTORS Randy Findlay  Director of Charger Energy Corp., Canadian Helicopters Group Inc., PembinaIndependent Chair Pipeline Corporation, Superior Plus Corp., Whitemud Resources Inc., EllisDon Inc., - Charger - Summerland Energy Inc. and SeaNG Ltd. Tom Buchanan  Chairman & CEO of Charger Energy Corp. CEO & Director  Director of Pace Oil & Gas Ltd., Pembina Pipeline Corporation, Athabasca Oil Corp.,- Charger & Pace - and Hawk Exploration Ltd. Mike Shaikh  Director of Charger Energy Corp., Pace Oil and Gas Ltd. and Hawk Exploration Ltd.;- Charger & Pace - Former member of the board of the ASC (2003-2006)  President, CEO and Director of Petrobank Energy and Resources Ltd., Chairman John Wright and CEO of PetroBakken Energy Ltd. and Chairman of Petrominerales Ltd., Director - Charger- of Hawk Exploration Ltd., and Director of Charger Energy Corp. Jeff Smith  Director of Pace Oil & Gas Ltd. and Pembina Pipeline Corporation - Pace -  Director, President & CEO of Pace Oil & Gas Ltd. Fred Woods  Former Director, President & CEO of Midnight Oil Exploration Ltd., Daylight Energy - Pace - Ltd. (Chairman) and TriOil Resources Ltd.  VP, Finance & CFO of AvenEx Energy Corp. Gary Dundas  Director of Avenex Energy Corp., Direct Cash Payments Inc., Athabasca Oil - Avenex - Corporation, Canadian International Oil Corp. Fraction Energy ServicesDennis Balderston  Director of AvenEx Energy Corp, Condor Petroleum Inc. and Suroco Energy Inc. - Avenex - 7
    • Key attributes & sustainability features Pro Forma OperationalCurrent Production [boe/d] 18,000% Oil & Liquids [%] 45%Total Proved Reserves (1) [MMboe] 57.5Total Proved plus Probable Reserves (1) [MMboe] 93.9Undeveloped Land (Net) [Acres] 645,000 Pro Forma FinancialShares Outstanding [MM] 129Net Debt and Working Capital (2) [$MM] $280Credit Facility Capacity [$MM] $400Estimated Tax Pools [$MM] $900 (1) Reserves from reserve reports for each company as of December 31, 2011 and the updated GLJ report on certain properties for Charger as of May 31, 2012 adjusted for AvenEx and Charger minor dispositions in 2012 and adjusted for 2012 production to October 31, 2012 as forecast in the December 2011 reserve reports. (2) Pro forma net debt and working capital incorporates cash proceeds from the disposition of Elbow River Marketing and estimated transaction costs and excludes risk management assets and liabilities 8 as of the closing date of the transaction.
    • Key attributes & sustainability features (Cont’d) (1)(2) 12-Month Outlook12-Month Production Forecast [boe/d] 18,000% Oil & Liquids [%] 52%Operating Netback [$/boe] $21 - $23 (3)(4)12-Month Cash Flow Forecast [$MM] $115 - $130Capital Expenditures [$MM] $80 - $90 Dividend Features & Sustainability CriteriaAnnualized Dividend per Share [$/share] $0.36Payment Frequency [Period] MonthlyDividend Payout Ratio [%] 35% - 40%All-In Payout Ratio [%] 100% - 115%Base Decline Rate [%] 20%Development Capital Efficiencies [$/boe/d] $25,000Pro Forma Net Debt to Cash Flow [x] 2.2x - 2.4xReserve Life Index [Years] 14Expected Credit Facility Availability ($400 MM Capacity) [$MM] $120Light Oil Drilling Inventory (Halkirk, Matziwin, Pembina, Randell, etc.) [Locations] >1,000Years of Sustaining Development Available [Years] >20 (1) 12-months commencing from closing date of the Merger, currently anticipated to be in mid-February 2013. (2) Commodity price assumptions: Edm Light C$80.00 to C$86.00, corporate realized crude oil and liquids price C$71.36 to C$76.80 at the wellhead, AECO $3.30 / Mcf (3) Commodity price sensitivities: a $1.00/bbl change in realized crude oil prices, results in a $2.2 million change in annualized cash flow; a $0.50/Mcf change in natural gas 9 prices, results in an $6.0 million change in annualized cash flow. (4) Commodity price sensitivities: a $1.00/bbl change in realized crude oil prices, results in a $2.2 million change in annualized cash flow; a $0.50/Mcf change in natural gas prices, results in a $6.0 million change in annualized cash flow.
    • Peer Benchmarking all-in payout 2013E All-In Payout Ratio (1)(2)(3)(4) 180% 160% 140% Average: 122%2013E All-In Payout Ratio (%) 120% 100% 80% 60% 40% 20% 0% ZAR BNP PGF ERF LNV SPY TBE RPL WCP Dividends Capex Range (1) Capex consensus estimates per Capital IQ (2) Dividend and cash flow estimates per First Call consensus, as available (3) Assumes Spyglass commences operations on January 1, 2013 10 (4) Average excludes Spyglass
    • Peer Benchmarking capital efficiency & decline rates Capital Efficiency (1)(2)(3) Decline Rate (1)(2)(3) $50,000 35% $45,000 30% $40,000 Average: 25% $35,000 25%Capital Efficiency ($ / boe/d) Average: $30,392 Decline Rate (%) $30,000 20% $25,000 15% $20,000 $15,000 10% $10,000 5% $5,000 na na $0 0% A D G E H SPY B F C H B F G A E SPY D C Exploiting low-risk, light-oil development plays Stable, mature, low-decline base supports key to long-term value dividend model (1) Peer estimates per TD research (2) Assumes Spyglass commences operations on January 1, 2013 (3) Average excludes Spyglass 11
    • Peer Benchmarkingcurrent yield & Implied Trading Levels Current Yield 12% 10% Average: 8.8% 8%Yield (MRA) 6% 4% 2% 0% LNV BNP PGF RPL ZAR ERF TBE WCP Implied Share Price $6.00 $5.32 Current Share Price $5.00 Highest Peer Yield $4.09 $4.09 $4.00 Avg Peer YieldShare Price $3.00 $2.00 $3.22 $3.45 $2.77 $0.74 $1.00 $0.48 $0.00 SPG PCE AVF CHX An analysis of dividend paying peer yields would suggest an implied Spyglass share price in the range of $3.22 to $4.09 per share 12
    • Light Oil focus areas $80 - $90 Million Capital Program Legend Proposed Capex Area Allocation Halkirk-Provost Viking 30%Pace Southern Alberta Multiple Zones (Pekisko and Other) 20% Randell Slave Point and Gilwood 20% Pembina Cardium 10%AvenEx Other 20% Total 100% DixonvilleCharger Montney Randell Slave Point & Gilwood Halkirk- Pembina Provost Cardium Viking Southern Alberta Multi-zone File: SPYGLASS_v2.0.MAP Datum: NAD27 Projection: Stereographic Center: N54.61689 W113.26251 Created in AccuMap™, a product of IHS 13
    • Underpinning the Model –Low Decline, Balanced Production Base Q3-2012 Production Q3-2012 Q3-2012 Q3-2012 Est. Base DeclineCompany Core Area (boe/d)(1) Oil & Liquids Op Costs ($/boe) Netback ($/boe)(2) RatePCE Southern AB 4,591 48% 19.76 16.76 25%PCE Dixonville 3,185 89% 12.53 29.71 11%PCE Northwest AB 3,065 19% 13.39 5.91 18%PCE Deep Basin 1,206 5% 6.95 6.29 22%PCE Peace River Arch 634 55% 21.83 15.94 30%AVF BC 930 1% 9.39 2.13 13%AVF Northern AB 1,131 67% 16.22 25.77 20%AVF Southern AB(3) 667 83% 33.84 21.18 12%AVF Saskatchewan 404 99% 26.78 33.03 10%AVF Royalty Volumes 36 86% - - -CHX Halkirk-Provost 1,106 65% 21.95 26.86 34%CHX Peace River Arch 1,481 17% 10.62 12.40 23%CHX Drumheller 441 8% 6.40 8.65 16%CHX Royalty Volumes 111 95% - - -Pro Forma Total / Weighted Avg 18,988 47% 15.65 16.74 20%(1) Pro forma current production estimated at approximately 18,000 boe/d, 45% oil and liquids.(2) Excludes hedging gains and losses.(3) AVF production excludes central AB disposition in Q4 2012. Southern AB production includes remaining 99 boe/d (31% liquids) of remainingcentral AB production. 14
    • Sustaining the Model – Low Risk, High Return Development PortfolioDevelopment Plays 1st yr Op 1st yr Capital F&DUnrisked Single Well Economic Prospective EUR Capex 30 day IP Costs Netback NPV at 10% Efficiency IRR CostsIndicators(1) Locations(2) (Mboe) ($MM) % Oil (boe/d) ($/boe) ($/boe) ($MM) ($/boed)(5) (btax) ($/boe) Provost Viking Long Reach(3) 425 143 1.8 70% 128 7.95 38.99 2.2 22,397 53% 12.24 Provost Viking Short Reach(3) 106 107 1.4 70% 85 8.38 40.80 1.6 27,389 46% 13.32 Twining Pekisko 7 191 3.0 65% 168 8.33 34.14 1.6 28,511 27% 15.74 Pembina Cardium 11 60 2.3 100% 169 12.17 75.67 1.2 30,417 69% 38.33 Randell Slave Point 22 90 2.6 100% 138 13.03 72.43 1.4 31,988 54% 28.89 Randell Gilwood 16 70 1.7 100% 135 13.37 72.09 1.5 22,500 146% 23.57 Noel Cadomin 93 448 5.0 0% 982 4.16 15.96 1.1 8,995 27% 11.17 Matziwin Pekisko 78 134 2.3 93% 103 7.23 64.80 2.0 31,186 56% 17.18 Elmworth Commingled 5 467 5.0 0% 641 2.56 14.87 0.6 14,205 14% 10.70 Other(4) 281Total 1,044(1) Economic indicators based on evaluations at consultants average October 2012 price forecasts with an effective date, investment date and start of production date of January 1, 2013.(2) Includes all primary, secondary and prospective (gross) drilling locations.(3) Provost Viking economics weighted 75% freehold and 25% crown.(4) Includes Bellshill Ellerslie, Red Earth, Cranberry, Kitty and Lubicon Slave Point, Wapiti Cardium, Sutton Montney, Southern AB Glauconite and Mannville and others.(5) Based on 1st year average production. 15
    • Pro Forma Reserves Summary as at October 31, 2012 (1) Total Proved plus Probable Reserves by CategoryPro Forma Selected ReservesInformation(1) Nat. Gas NGL Total Oil (Mbbl) (MMcf) (Mbbl) (Mboe)(2)Proved Developed Producing 20,921 105,746 798 39,345 % by Product 53% 45% 2%Total Proved 28,459 166,800 1,240 57,499 % by Product 49% 48% 2%Total Proved plus Probable 43,059 290,923 2,312 93,858 % by Product 46% 52% 2% Probable, 39% Proved(1) Working interest reserves from reserve reports for Pace, AvenEx and Charger as of Developed December 31, 2011 and the updated GLJ report on certain properties for Charger as of Producing, 42% May 31, 2012 adjusted for AvenEx and Charger minor dispositions in 2012 and adjusted for 2012 production to October 31, 2012 as forecast in the December 2011 reserve reports.(2) The Company has adopted the standard of 6 Mcf to 1 boe when converting natural gas to barrels of oil equivalent. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf :1 boe is based on an energy equivalency conversion method Proved primarily applicable at the burner tip and does not represent a value equivalency at the Undeveloped & wellhead. PDNP, 19% 2P RLI: ~14 years (based on 18,000 boe/d production) 16
    • Pro forma Hedging SummaryCommodity Term Type Volume Price [Floor] [Ceiling]Oil (C$ WTI) 2013 Fiscal Call (Sold) 100 bbl/d $88.25Oil (US$ WTI) 2013 Fiscal Call (Sold) 200 bbl/d $72.50Oil (C$ WTI) 2013 Fiscal Call (Bought) 100 bbl/d $105.00Oil (US$ WTI) 2013 Fiscal Call (Bought) 200 bbl/d $105.00Oil (US$ WTI) Jan - Jul 2013 Swap 150 bbl/d $101.05 - $101.05Oil (C$ WTI) 2013 Fiscal Swap 500 bbl/d $97.00 - $97.00Oil (C$ WTI) Jan - Mar 2013 Swap 150 bbl/d $101.12 - $101.12Oil (US$ WTI) Jan - Jul 2013 Swap 200 bbl/d $105.75 - $105.75Oil (C$ WTI) Feb - Dec 2013 Swap 1,000 bbl/d $92.97 - $92.97Oil (C$ WTI) Feb - Dec 2013 Swap 1,000 bbl/d $93.49 - $93.49Natural Gas (C$ AECO) 2013 Fiscal Call (Sold) 3,000 gj/d $7.40Natural Gas (C$ AECO) 2013 Fiscal Collar 5,000 gj/d $2.75 - $3.38Natural Gas (C$ AECO) Jan - Mar 2013 Put 3,000 gj/d $1.80Natural Gas (C$ AECO) 2013 Fiscal Put 1,850 gj/d $2.80Natural Gas (C$ AECO) 2013 Fiscal Put 1,650 gj/d $3.10Natural Gas (C$ AECO) Jan - Apr 2013 Swap 5,000 gj/d $2.06 - $2.06Natural Gas (C$ AECO) 2013 Fiscal Swap 5,000 gj/d $3.06 - $3.06Natural Gas (C$ AECO) 2013 Fiscal Swap 2,000 gj/d $3.00 - $3.00 Active hedging strategy designed to protect capital program and dividend with up to 60% of production hedged by volume 17
    • Investment Highlights Creation of a Balanced, Dividend-Paying Producer • $0.03 Monthly Cash Dividend Implemented Upon Closing Proven Management Team with Track Record of Creating Shareholder Value Sustainable Dividend-Paying Model • Target Dividend Payout of 35% to 40% of Cash Flow (100-115% All-In Payout) • Mature, Low Decline Producing Assets Coupled With Capital Efficient Light Oil Development Potential • Extensive Inventory of Low-risk, High-Return Drilling Opportunities Pro Forma Growth Entity Well Positioned With Strong Financial Flexibility • ~$120 million of Available Liquidity Upon Closing 18
    • Contact informationSuite 1700, 250 – 2nd Ave. SW Suite 300, 808 – 1st St. SW Suite 2500, 500 – 4th Ave. SWCalgary, AB T2P 0C1 Calgary, AB T2P 1M9 Calgary, AB T2P 2V6Tel: (403) 303-8500 Tel: (403) 237-9949 Tel: (403) 457-1612 Fax: (403) 237-0903 Fax: (403) 457-1613Email: ir@paceoil.ca Email: info@avenexenergy.com Email: info@chargerenergy.com 19