1. ABSOLUTE STATE ENERGY
CORPORATION: CHALLENGE
INTO OPPORTUNITY
Jillian Noort | Joseph Wierenga | Kayli Drinkwater | Tyler Garrison

2. Short Term Goal
• Achieve 15% return on investment
Long Term Goal
• Capture 5-10% market share of North American
oil production
• Requires production of 611,000 barrels of oil
equivalent ("BOE") per day. Current opportunity:
working interest in 2,000 BOE/d
INTRODUCTION
ABSOLUTE STATE ENERGY CORPORATION

3. CURRENT SITUATION
ABSOLUTE STATE ENERGY CORPORATION
• China's oil reserves are diminishing
• Negative international experiences
• Oil prices have dropped significantly

4. Short Term (6-12 months)
• Market Entry Strategy: Joint venture participation
in three producing fields in Alberta, Canada.
• Offer to purchase 49% of all three fields
Long Term (20+ years)
• Acquire 5 - 10% of overall North American
volumes
RECOMMENDATION
ABSOLUTE STATE ENERGY CORPORATION

5. 15%
ROI
15%
Annual
decline rate
Steady
costs
Net back =
$20/BOE
15%
Discount
rate
NPV of
$14/BOE
ACHIEVING ROI
ABSOLUTE STATE ENERGY CORPORATION

6. Price
recovery
Price
trends
Marginal
cost of
production
Drilling
reduction
in Canada
PRICE RECOVERY
ABSOLUTE STATE ENERGY CORPORATION

7. RIG COUNT VS. PRICE
ABSOLUTE STATE ENERGY CORPORATION
Figure 1: U.S Crude Oil and Rigs and Oil Price Relationship

8. EXAMPLE OF SUCCESS
ABSOLUTE STATE ENERGY CORPORATION
Sinopec
• Sinopec's Canadian production in 2013 was
41,000 BPD
40% stake
in Northern
Lights oil
sands
Additional
10% stake
in Northern
Lights oil
sands
Syncrude
Oil Sands
joint
venture
Daylight
Energy
acquisition
2005 2010 20112009

9. RISKS AND MITIGATION
ABSOLUTE STATE ENERGY CORPORATION
Risk MitigationRisk Mitigation
Reluctance to work with
China impedes negotiations
Clearly communicate goals
via partnership terms
Risk Mitigation
Reluctance to work with
China impedes negotiations
Clearly communicate goals
via partnership terms
Loss of operational control Negotiate fair control via
partnership terms
Risk Mitigation
Reluctance to work with
China impedes negotiations
Clearly communicate goals
via partnership terms
Loss of operational control Negotiate fair control via
partnership terms
Changes to Investment
Canada Act
Become member of CAPP
and hire lobbying company

10. TIMELINE
ABSOLUTE STATE ENERGY CORPORATION
2015 20172015 2016
1/3/2015
1/4/2015
1/6/2015
1/9/2015
Close joint venture agreement
Generate cash flow
1/3/2016
1/3/20181/3/2016
Begin
negotiations
Following
negotiations
Cultivate further
investment opportunities
Satisfy legal and regulatory requirements
2017

11. Short Term
Achieve 15% return on joint venture investment
Long Term
Develop relationships in North American oil and
gas industry
Begin aggressive expansion plan
SUMMARY
ABSOLUTE STATE ENERGY CORPORATION

12. QUESTIONS?
ABSOLUTE STATE ENERGY CORPORATION

14. SENSITIVITY ANALYSIS
ABSOLUTE STATE ENERGY CORPORATION
Scenario Summary
Changing Cells:
Price Change -50% -15% 0% 10% 20%
Revenue/BOE 2016 $ 19 $ 32 $ 38 $ 42 $ 46
Result Cells:
Total Value $ 6,743,552 $ 41,267,882 $ 56,064,024 $ 65,928,118 $ 75,792,213
Value/BOE $ 2.39 $ 14.60 $ 19.83 $ 23.32 $ 26.81
NPV $ 5,403,035 $ 28,744,419 $ 38,747,870 $ 45,416,837 $ 52,085,804

15. REFERENCES
ABSOLUTE STATE ENERGY CORPORATION
About the Office of General Counsel (OGC) (EPA)
http://www.epa.gov/ogc
Alberta Energy: (Alberta Energy:)
http://www.energy.alberta.ca
Alberta First Nation signs oil and gas deal with Chinese firm (Financial Post Alberta First Nation signs oil and gas
deal with Chinesefirm Comments)
http://business.financialpost.com/2014/07/29/alberta-first-nation-signs-oil-and-gas-deal-with-chinese-
firm/?__lsa=fa37-38de
Alberta Oil in China: Concerns over Canadian investment regulation linger (Alberta Oil Magazine Canadas leading
source for oil and gas news)
http://www.albertaoilmagazine.com/2014/01/seekingthedragon-going-up/
Alberta Oil in China: Concerns over Canadian investment regulation linger (Alberta Oil Magazine Canadas leading
source for oil and gas news)
http://www.albertaoilmagazine.com/2014/01/seekingthedragon-going-up/
Alberta says federal rules discourage oilpatch investment (CBCnews) Alberta, Canada (Industry reports)
http://www.albertacanada.com/business/industries/industry-reports.aspx
Alberta, Canada (Reasons to invest)
http://www.albertacanada.com/business/invest/Reasons-to-invest.aspx
Alberta: Boundless opportunity in Alberta (Government of Canada, Foreign Affairs Trade and Development
Canada, Deputy Minister of International Trade, International Business Development and Innovation Chief Trade
Commissioner, Invest in Canada, Investor Outreach)
http://www.international.gc.ca/investors-investisseurs/cities-villes/west-ouest/alberta.aspx?lang=eng

16. REFERENCES
ABSOLUTE STATE ENERGY CORPORATION
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1.2720827
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The.http://www.cbc.ca/news/business/petrochina-buys-entire-alberta-oilsands-project-1.1234007
By: Weissmann, Jordan.
http://www.slate.com/blogs/moneybox/2014/12/11/oil_falls_below_60_a_barrel_who_s_in_trouble.html
Canadian Economic Impacts of New and Existing Oil Sands ...
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berta_-_November_2014_-_Final.pdf
China Broadens Oil Reach With Deal (WSJ)
http://www.wsj.com/articles/SB20001424052702303828304575180033730459718
China decries Canada's 'negative' investment rules (The Globe and Mail)
http://www.theglobeandmail.com/report-on-business/international-business/asian-pacific-business/china-decries-
negative-investment-rules/article18548197/
China faces buyer's remorse in Canada's oil patch (The Globe and Mail)
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/china-faces-oil-patch-
buyers-remorse/article20090355/

17. REFERENCES
ABSOLUTE STATE ENERGY CORPORATION
China faces buyer's remorse in Canada's oil patch (The Globe and Mail)
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/china-faces-oil-patch-
buyers-remorse/article20090355/
China Outbound Investment Guideline (PWC). (n.d.). Retrieved fromhttp://www.pwc.com/en_CA/ca/china-
business-network/publications/pwc-doing-business-and-investing-in-canada-2012-10-en.pdf
Chinese arrest of former PetroChina Canadian chief casts shadow over Athabasca Oil projects (Financial Post
Chinese arrest of former PetroChina Canadian chief casts shadow over Athabasca Oilprojects Comments)
http://business.financialpost.com/2014/07/16/petrochina-arrest-zhiming-li/?__lsa=7373-2894
Chinese take helm of MacKay River oil sands project (Financial Post Chinese take helm of MacKay River oil
sandsproject Comments)
http://business.financialpost.com/2012/01/03/chinese-take-helm-of-mackay-river-oil-sands-project/?__lsa=0d73-
854f
Conventional Oil Statistics (Alberta Energy:)
http://www.energy.alberta.ca/Oil/763.asp
Days after Nexen approval, PetroChina invests big in AB natural gas | The Hook (The Tyee)
http://thetyee.ca/Blogs/TheHook/Labour-Industry/2012/12/14/petrochina-natural-gas-nexen/
DOING BUSINESS IN CANADA (Gowlings – Doing Business in Canada: Regulation of foreign investment)
http://www.gowlings.com/services/dbic/?p=10

18. REFERENCES
ABSOLUTE STATE ENERGY CORPORATION
Doing the deal: Joint ventures in the oil patch tough to pull off (The Globe and Mail)
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/doing-the-deal-joint-
ventures-in-the-oil-patch-tough-to-pull-off/article549262/
Facts and Statistics (Alberta Energy:)
http://www.energy.alberta.ca/oilsands/791.asp
Foreign direct investment rising in the mining, oil and gas industry (Foreign direct investment rising in the mining,
oil and gas industry)
http://www.statcan.gc.ca/pub/11-402-x/2011000/chap/econo/econo01-eng.htm
Foreign investment rules hurting oil sands, especially small players: study (Financial Post Foreign investment rules
hurting oil sands especially small playersstudy Comments)
http://business.financialpost.com/2014/06/13/foreign-investment-rules-hurting-oil-sands-especially-small-players-
study/?__lsa=64be-432b
How oil and gas tech and service businesses stand to gain from a new Chinese currency hub (Alberta Oil
Magazine Canadas leading source for oil and gas news)
http://www.albertaoilmagazine.com/2015/02/delayed-gratification/
International Energy Statistics - EIA (International Energy Statistics - EIA)
http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=5&pid=53&aid=1&cid=regions,&syid=2009&eyid=2014&u
nit=TBPD
International investment position, Canadian direct investment abroad and foreign direct investment in Canada, by
North American Industry Classification System (NAICS) and region(Government of Canada, Statistics Canada)
http://www5.statcan.gc.ca/cansim/pick-choisir?lang=eng&p2=33&id=3760052

19. REFERENCES
ABSOLUTE STATE ENERGY CORPORATION
In The News - Southern Energy Group (Southern Energy Group)
http://www.segiusa.com/in-the-news
Jack M. Mintz: Canada's 'strategic asset' tactic makes for bad foreign investment policy (Financial Post Jack M
Mintz Canadas strategic asset tactic makes for bad foreign investmentpolicy Comments)
http://business.financialpost.com/2014/07/10/jack-m-mintz-canadas-strategic-asset-tactic-makes-for-bad-foreign-
investment-policy/
Legal Guide (The Investment Canada Act)
http://www.doingbusinessincanada.com/legal-guide-0/regulation-of-foreign-investment-1/the-investment-canada-
act-105
Life after CNOOC's Nexen deal: Is China's honeymoon with Canada's oil patch over? (Financial Post Life after
CNOOCs Nexen deal Is Chinas honeymoon with Canadas oil patchover Comments)
http://business.financialpost.com/2013/12/07/life-after-cnoocs-nexen-deal-is-chinas-honeymoon-with-canadas-oil-
patch-over/?__lsa=7373-2894
Natural Gas Liquids (Government of Canada, National Energy Board)
http://www.neb-one.gc.ca/nrg/sttstc/ntrlgslqds/index-eng.html
Natural gas liquids prices decline from propane and butane price (Yahoo Finance)
http://finance.yahoo.com/news/natural-gas-liquids-prices-decline-130015088.html
Nexen deal comes back to haunt CNOOC (The Globe and Mail)
http://www.theglobeandmail.com/report-on-business/international-business/asian-pacific-business/nexen-
acquisition-hurting-cnoocs-performance/article15742860/

20. REFERENCES
ABSOLUTE STATE ENERGY CORPORATION
NORTH AMERICAN NATURAL GAS MARKET: 2014-2015 HEATING SEASON OUTLOOK (NORTH AMERICAN
NATURAL GAS MARKET: 2014-2015 HEATING SEASON OUTLOOK)
http://www.nrcan.gc.ca/sources/natural-gas/16781
Oil Fell Below $60 a Barrel Today. So Which Countries Are in Trouble? Oil plunges to six-year low as demand
forecast cut, supply grows (Financial Post)
http://www.financialpost.com
PetroChina buys control of Canada oil sands project (Reuters) By: Jones, Jeffrey.
http://www.reuters.com/article/2012/01/03/us-athabasca-idUSTRE8020OW20120103
PetroChina buys entire Alberta oilsands project (CBCnews) PetroChina learning to get along in oil patch, says it
will fulfill deal with Athabasca Oil (Financial Post PetroChina learning to get along in oil patch says it will fulfill deal
with AthabascaOil Comments)
http://business.financialpost.com/2013/10/22/petrochina-learning-to-get-along-in-oil-patch-says-it-will-fulfill-deal-
with-athabasca-oil/?__lsa=7373-2894
PetroChina learning to get along in oil patch, says it will fulfill deal with Athabasca Oil (Financial Post PetroChina
learning to get along in oil patch says it will fulfill deal with AthabascaOil Comments)
http://business.financialpost.com/2013/10/22/petrochina-learning-to-get-along-in-oil-patch-says-it-will-fulfill-deal-
with-athabasca-oil/?__lsa=ffcb-ae7f

21. REFERENCES
ABSOLUTE STATE ENERGY CORPORATION
PetroChina nears finish line on Alberta oil sands project (The Globe and Mail)
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/alberta-gives-go-ahead-
to-dover-oil-sands-project/article17476747/
PetroChina probe raises new worries over Dover payment (The Globe and Mail)
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/petrochina-probe-raises-
new-worries-over-dover-payment/article20071592/
Process of Fracking (Shale Industry News and Shale Information)
http://shalestuff.com/education/fracking/fracking
Publications (Publications)
http://www.torys.com/Publications/Publications/AR2013-1
RBN Energy (The Gas is Hot Tonight – Spiking Ethane into LNG Exports – Part 2)
https://rbnenergy.com/the-gas-is-hot-tonight-spiking-ethane-into-lng-exports-part2
Red Alert for Chinese SOEs? (Alberta Oil Magazine Canadas leading source for oil and gas news)
http://www.albertaoilmagazine.com/2014/12/red-alert-china-soe/
Secret Canadian security panel said to review foreign investment - BNN News (Secret Canadian security panel
said to review foreign investment - BNN News)
http://www.bnn.ca/News/2014/8/27/Secret-Canadian-security-panel-said-to-review-foreign-investment.aspx

22. REFERENCES
ABSOLUTE STATE ENERGY CORPORATION
Short-term Canadian Natural Gas Deliverability 2013-2015 - Energy Market Assessment (Government of Canada,
National Energy Board)
https://www.neb-one.gc.ca/nrg/sttstc/ntrlgs/rprt/ntrlgsdlvrblty20132015/ntrlgsdlvrblty20132015-eng.html#lft
Stoney Nakoda First Nation signs 'huge' oil deal with Chinese firm (CBCnews) Svarte cuts ties with Athabasca Oil
Corp, the company he co-founded nine years ago
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Top News (OPEC says low oil prices may hit U.S. output by late 2015)
http://mobile.reuters.com/article/idUSKBN0MC15F20150316?irpc=932
Traditional Factors Driving Oil Prices (Traditional Factors Driving Oil Prices)
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still a tough swallow for stateownedCNOOC Comments)
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cnooc/?__lsa=7373-2894
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trend down since the start of 2012)
http://www.eia.gov/todayinenergy/detail.cfm?id=12291#

23. REFERENCES
ABSOLUTE STATE ENERGY CORPORATION
U.S Crude Oil and Rigs and Oil Price Relationship
http://marketrealist.com/2015/01/2014-crude-oil-prices-rig-counts-parallel-2008-crash/
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http://www.eia.gov/forecasts/steo
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(Dollars per Million Btu))
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Warren Buffett’s 6 best investments of all time (Fortune Warren Buffetts 6 best investments of alltime Comments)
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Investment, Innovation and Sectors, Invest in Canada, International Business Development and Innovation Chief
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