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Hillcrest Petroleum Corporate Presentation

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Hillcrest Petroleum Ltd., headquartered in Houston Texas, is a publicly traded independent oil and gas production company. Hillcrest announced a partnership with a private Alberta company on February 21, 2017 whereby Hillcrest will earn a minimum 50% Working Interest and become the Operator of record in two petroleum assets located in Western Canada. Hillcrest and their joint venture partner will work together to restore the fields to their immediate production capacity estimated to be over 400 barrels of oil per day. Technical review of the fields indicates they may and should be able to produce multiples of the immediate amount through further work over and development of the acreages. Hillcrest also is a working interest partner in 4 oil and gas wells in Newton County Texas. Hillcrest Petroleum Ltd. is focused on adding, creating and increasing value through the acquisition, development and production of conventional oil and gas assets in the United States and Canada. The Company’s business plan in any acquisition or asset development is to be the operator of the asset or to hold a majority working interest where available. Hillcrest Petroleum Ltd. shares are publicly traded on the TSX.V under the symbol HRH and in the USA under the symbol HLRTF.

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Hillcrest Petroleum Corporate Presentation

  1. 1. May 2017
  2. 2. Forward Looking Statements Certain information regarding the Company contained herein may constitute forward- looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company cautions that actual performance will be affected by a number of factors, many of which are beyond the Company's control, and that future events and results may vary substantially from what the Company currently foresees. Discussion of the various factors that may affect future results is contained in the Company's Annual Report which is available at www.sedar.com. The Company's forward- looking statements are expressly qualified in their entirety by this cautionary statement. 2
  3. 3. Company Summary Hillcrest Petroleum Ltd. is an independent oil and gas production company, publicly traded on the Toronto Venture Stock Exchange Capital Structure Shares Outstanding 68,995,655 Options @ $0.06, $0.20 6,400,000 Warrants @ $0.08 13,412,500 Fully Diluted 88,808,155 Trading Current Price C$ 0.08 Year high/low C$ 0.05–C$ 0.095 Average Daily Volume 88,100 Current Market Cap C$ 5,519,652 US$ 4,080,000 Debt Private Investment Group C$ 179,000 US$ 132,830 3
  4. 4. Portfolio Rationalization - Positioned for Growth • Aggressively pursuing production and development acquisition opportunities onshore Texas, Louisiana and in Western Canada • Captured assets in Western Canada, with production expected to commence mid 2017 • Divested main producing asset offshore Gulf of Mexico, placed Hillcrest GOM Inc. into voluntary liquidation • Removes almost all Asset Retirement Obligation (ARO) from consolidated balance sheet • Eliminates further exposure to expected changes in offshore regulatory environment • Divested declining producing asset at Hartburg (Texas) • Proceeds used to retire debt • Retained high potential exploration acreage • Deferred Northern Louisiana drilling project due to assessed risk profile of specific project • remain keenly interested in overall area Net impacts of portfolio rationalization were to clean up balance sheet, retain high potential projects only, and allocate capital to new projects with significant growth potential 4
  5. 5. Acquire substantial, operated, producing assets with high value growth potential in proven and prolific conventional oil & gas basins • Acquisition of an initial 75% working interest, and Operatorship, of two assets that are capable of a rapid return to production • Assets are located in the prolific Western Canada Sedimentary Basin, and offer a low cost entry point with room to grow Ø Company growth activity is focused on expanding and consolidating the Company’s position with conventional, onshore oil and gas assets in its selected areas of interest. Ø Acquisitions and development primarily funded through relationships with funding parties in Europe, UK, Canada and USA, with minimal Hillcrest equity dilution as the objective. Implementing Hillcrest’s Company Growth Strategy 5
  6. 6. Focus on conventional reservoirs located in major onshore North American Basins Additional opportunities under evaluation in Alberta and Williston basins Promote currently held Hartburg exploration prospects Continued pursuit of distressed assets located onshore Texas and Louisiana Entry into Western Canada Sedimentary Basin. Gross 400 bopd production potential at highly attractive terms 6
  7. 7. 7 Alberta Asset Located in East Central Alberta - 2 wells, ~ 1100m well depth - Conventional reservoir, 27% porosity - Light oil, attracts Edmonton light pricing - 3 additional development locations already defined with 3D seismic - Artificial lift, separators, storage tanks already in place - Existing wells require quality/safety inspection, followed by modest facility upgrades and production re-start - Short distance flow-line to adjacent facility will decrease ongoing operating expense (trucking) and extend field life A Hillcrest subsidiary will earn a 75% working interest (WI) and become the designated operator for the asset by providing the capital required to re-start production. The earned WI will revert to 50% upon project payout. Expected Initial Oil Production 125 bbl/d Gross Production Revenue* C$ 245,000/month Operating Cost C$ 8.00/bbl Costs to restore Production: Wells, Facility upgrades, flow line, other C$ 330,000 LLR bond (refundable) C$ 600,000 Total Cost C$ 930,000 * (Edmonton Light Sweet @ WTI $US50/bbl equivalent)
  8. 8. 8 Saskatchewan Asset Located in Western Saskatchewan, near Alberta Border -4 SI producing oil wells, 1 suspended well, 1 water injector - ~ 800m well depth - Multiple conventional reservoirs, >20% porosity - Behind pipe re-completion potential - Heavy oil (12 to 16 API), WCS pricing - 5 additional development locations defined based on subsurface mapping, may consider 3D seismic prior to drilling - Artificial lift, separators, storage tanks already in place - Existing wells require quality/safety inspection, followed by modest facility upgrades and production re-start - Potential to reduce operating expense, increase production and extend field life by optimizing the production system A Hillcrest subsidiary will earn a 75% working interest (WI) and become the designated operator for the asset by providing the capital required to re-start production. The earned WI will revert to 50% upon project payout. Expected Initial Oil Production 200 bbl/d to 350 bbl/d Gross Production Revenue* C$ 290,000 to C$ 500,000 /month Operating Cost C$ 9.50/bbl Costs to restore Production: Wells, Facility upgrades, other C$ 535,000 LLR bond (refundable) C$ 740,000 Total C$ 1,275,000 * (WCS @ WTI $US50/bbl equivalent)
  9. 9. 9 Alberta/Saskatchewan Value Metrics Alberta Saskatchewan Total Expected initial oil production 125 bbl/d 200 bbl/d to 350 bbl/d 325 bbl/d to 475 bbl/d Gross Monthly Revenue $260,000/mo $290,000 to $500,000 $550,000 to $760,000 (@ WTI $US 50/bbl equivalent) Operating cost $8.00/bbl $9.50/bbl opex less than $10/bbl Cost to Restore Production: wells, facilities, other $330,000 $535,000 $865,000 LLR Bonds (refundable) $600,000 $740,000 $1,340,000 Total $930,000 $1,275,000 $2,205,000
  10. 10. 10 Hartburg, Texas Located in Eastern Texas, near Louisiana Border -Undrilled lease in highly prospective area -Extensively mapped down-to-the basin fault provides dip closure for prospect, strike closure provided by fault relays or splay faults off of main fault line -Multiple potential horizons, well depth < 8000’ -Mean resource case for oil reservoirs is 131 Mbbls per well -Mean resource case for gas reservoirs is 1.3 bcf per well -3D seismic available in the area, to be used to define drilling location A Hillcrest subsidiary owns an 85% working interest (WI) and is the designated operator for the asset. Estimated project costs Licence 3D seismic US$ 50,000 Additional leases US$ 60,000 G&G studies US$ 50,000 Total cost to drill decision point US$ 160,000 Exploration well (contingent) US$ 220,000 Well completion & tie-in upon success US$ 300,000 Total Drill & Complete Costs US$ 520,000
  11. 11. 11 • Acquired assets assigned into a trust and will be used as security for the full benefit of the funding party until the debt is retired • Funding party provides debt funding for acquisition + potential start up costs with a retained GORR o Acquisition cost – debt with a reasonable agreed term, principal and interest o Loan secured against 100% JV equity, i.e. all acquired oil and gas assets o debt repayment schedule to be agreed o early repayment permitted o operating profits (after debt payments) distributed monthly o Funding Party retains 5% GORR on Hillcrest’s WI upon full repayment of debt Current Funding Terms for Western Canada
  12. 12. 12 • Transitioned from predominantly non-operating, offshore producing entity to dominantly operating and onshore focused entity. • Exited offshore Gulf of Mexico • Divesting low value Hartburg producing assets and concentrating on potentially higher value exploration/appraisal assets • Western Canada entry achieved on attractive terms, leveraging management expertise and value creation history • Abundant growth opportunities available in core areas of interest • Company costs reduced in line with exit from offshore enterprise Positioned for production, cash flow, and earnings growth, with ability to take advantage of cyclically low supply and services costs and purchased asset valuations Company Outlook
  13. 13. Management Team Hillcrest Petroleum’s experienced management team is comprised of energy industry professionals with a proven track record in oil and gas exploration & development and company management. Executive Chairman – Michael Krzus (BSc Petroleum Engineering, Tulsa University) Former CEO and Director of NYSE listed Oil company with over 30 years oil & gas experience including senior technical and executive management positions with both large international and small listed oil and gas companies. Chief Executive Officer – Donald J. Currie 30 years of experience building and financing both private and public companies in Canada and the United States. Chief Operating Officer – Jason P. Oden (BSc Geophysics, University of Alberta) Over 25 years of technical and management experience worldwide in exploration, appraisal, development and production operations. Vice – President Land & Contracts – Susan L. Weber (BBA – Finance, Texas A&M University) Over 30 years of land management and contract negotiations experience in domestic and international oil and gas exploration and development. Chief Financial Officer – Sean C. McGrath (BComm (Hons) Memorial Univ of Newfoundland) Over 18 years of accounting/finance experience with publicly traded petroleum and mineral resource companies. 13
  14. 14. Board of Directors Don Currie, CEO § Held the offices of CEO & Chairman commencing February 2010; over 20 years experience in finance, development & operation of various North American resource properties Michael Krzus, Executive Chairman § 30+ years oil & gas experience including senior technical/executive mgt. positions in ASX listed Woodside Petroleum Ltd., CEO/Director of NYSE listed Emerald Oil Inc., CEO/Managing Director of ASX listed Emerald Oil and Gas NL David Stone, Director (Independent) § Professional engineer with 30+ years in mining evaluating projects; holds Bachelor of Applied Science from the University of British Columbia, Ph.D. in Civil Engineering from Queens University & Executive Masters of Business Administration from Queens University Tom Milne, Director (Independent) § Senior financial executive with extensive international experience in energy E&P, pipelines, oil sands & communication technology; served as Director of both public & private companies including Chairman of Audit Committee for AMEX-listed oil sands company L. Edward Parker, Director (Independent) § 45+ years of oil and gas industry experience in executive and director positions with companies including El Paso Corp., Burlington Northern and Burlington Resources, where he held executive positions in finance, mergers and acquisitions, strategy and planning. 14
  15. 15. Appendix 15
  16. 16. • Hillcrest GOM Inc. • Company acquisition provided entry into potential growth area at minimal initial cost • Forward obligations underpinned by Proved (1P) asset value, including producing (PDP), behind pipe (PDNP) and Proved Undeveloped (PUD) reserve classes • Cyclical low in product price environment during 2015-2016 forced curtailment of capital spending on planned production enhancements • Production declined more rapidly than expected • Operating expenses did not keep pace with reductions in realized product prices • Proposed changes in regulatory framework further diminished business conditions for small, non-operating entities with offshore interests • It was deemed appropriate to place Hillcrest GOM Inc. into voluntary liquidation. This liquidation has the effect of removing substantial forward asset retirement obligations (ARO) from the consolidated balance sheet • Hartburg • Production from one producing well, with three additional wells shut in • Decision to divest of producing assets in order to retire remaining debt • Adjacent, and high potential, exploration acreage (85% WI) is retained and will be further evaluated with 3D Seismic. Drill, farm-out or drop decision expected in late 2017 Extract Maximum Value from Existing Assets
  17. 17. What makes Hillcrest Petroleum attractive? Management Team and Board of Directors • Experienced management team with proven track records building small oil companies • Aligned and committed Board and Management owning approximately 34% of the outstanding Company shares. • Demonstrated ability to manage difficult circumstances - managed Company through extended low oil prices, while increasing share price and positioning for compelling growth, in a business environment where many peer oil companies simply failed or are barely surviving (“zombies”) Delivering maximum value from current assets while positioning for the next phase of Company development • Divesting current producing assets to improve Company balance sheet • Implementing development plans on newly acquired assets Executing a clearly defined Company Growth Strategy • Established operating position in chosen area with near term production potential • Actively pursuing addtional acquisitions in area to expand and consolidate operated position for rapid and substantial value growth • Communicate traction on Company Growth strategy to increase Hillcrest’s market profile 17
  18. 18. Management Team Michael Krzus, Executive Chairman (BSc Petroleum Engineering, Tulsa University) Company Director, former CEO and Senior Executive, with 32 years oil and gas industry experience in the US, Australia, The Netherlands and Canada, including unconventional and conventional oil and gas, large integrated offshore developments including LNG projects, M&A and business dealings. • Founding CEO and Director of New York Stock Exchange listed Emerald Oil Inc, (NYSE: EOX). Founded EOX in July 2012 through the merger of a US subsidiary of Emerald Oil and Gas NL and a NYSE listed company with large non-operated acreage holdings in Bakken shale oil play in the Williston Basin. On retirement from Emerald in December 2013 (17 months after listing) EOX had drilled 15 Bakken wells, was operating 2 rigs with plans to add a third, was producing 2,630 BOE per day of operated production with several more wells awaiting completion, and had a market cap of approximately US$500M. § CEO and Managing Director of Australian listed Emerald Oil and Gas NL (ASX: EMR), an oil and gas exploration/production company with onshore assets in the USA and offshore exploration permits in NW Australia 2009 to 2012. Transitioned Emerald's business from disparate, small exploration ventures in the USA and Australia to substantial acreage positions in an emerging unconventional oil plays and proved Bakken shale oil plays in the USA, and then divested US shale oil assets to effect a reverse merger with a NYSE listed company. § Various technical, managerial and executive positions over a 22 year career (1986 to 2007) at Woodside Petroleum Ltd (Australia’s largest oil and gas company). § Managed integrated oil and gas field appraisal, production forecasting and development planning for the North West Shelf Project, Australia’s largest LNG and domestic gas development § Field development planning for other, non-LNG related offshore oil and gas with development capex ranging between $200 million to $1 billion. § Company-wide responsibility for subsurface (geoscience and petroleum engineering) development capability, technology/IP plans, technical assurance and capital gating processes oil and gas developments. § Various Joint Venture and Company level business dealings. 18
  19. 19. Management Team Don Currie, Chief Executive Officer Company Director and founder with 30 years experience building and financing both private and public companies in Canada and the US. Primary focus has been the oil and gas industry from 1993 to the present. § Founding CEO, Chairman and Director of Hillcrest Petroleum Ltd (TSX.V: HRH US Symbol HLRTF). Founded Hillcrest Petroleum Ltd. (formerly Hillcrest Resources Ltd) in 2010 and completed the IPO in March of 2011. The Company has drilled and completed 4 conventional wells in Newton County Texas and has identified multiple additional targets within the lease area. Further expansion into the shallow waters of the Gulf of Mexico was completed by way of the purchase of a US subsidiary of an international oil company in December 2014. § Director, VP and officer of Enhanced Oil Resources Inc. (TSX.V: EOR) from 1993 to 2014. Enhanced Oil Resources found the 2nd largest CO2 field in the US located in Apache County Arizona. The field had reserves in excess of 6 trillion cubic feet of CO2 and over one billion cubic feet of helium. Directly responsible for the raising of over $100,000,000 through the tenure with the Company with investment contributed from the US, Canada, Britain and Europe. Market cap grew from modest levels to peak at approximately $200,000,000. § Director and management of various other listed and private entities involved in the oil and gas and other resource industries. § Funds raised to date, either directly or indirectly in excess of $125,000,000 19
  20. 20. Management Team Jason P. Oden, Chief Operating Officer (BSc Geophysics, University of Alberta) Former Company Director and Senior Executive with over 25 years of progressive technical and management experience in domestic and international oil & gas exploration, appraisal and development projects. § Vice President Exploration of Gulfsands Petroleum plc. Successful projects include discovery, appraisal and development of two onshore fields with total reserves in excess of 100 million barrels. Multiple discoveries in the shallow water/shelf region of the Gulf of Mexico. § Exploration Manager with BHP Billiton Petroleum. Successful projects include exploration for, appraisal and development of two significant offshore discoveries with total reserves of approximately 200 million barrels. Primary areas of focus were Latin America and Australia/Asia. § Principal Geophysicist with BHP Petroleum. Successful projects include exploration and appraisal of multiple discoveries in the deep water and ultra-deep water regions of the Gulf of Mexico. Responsible for other development projects in the Atlantic margins of Africa and South America as well as multiple basins located offshore Australia and Southeast Asia. § Progressive technical roles with Suncor Inc., primarily responsible for exploration and development projects in the Western Canada sedimentary basin. 20
  21. 21. Management Team Susan L. Weber, V.P. - Land & Contracts (BBA – Finance, Texas A&M University) Over 30 years of land management and contract negotiations experience in domestic and international oil and gas exploration and development. § Vice President, Land with Gulfsands Petroleum USA, Inc., providing for the management of a variety of corporate functions vital to the successful achievement of the company’s goals in the US Gulf Coast region, including land management, regulatory compliance, contract negotiation, risk management and acquisitions and divestments. Successfully negotiated, documented and closed several key divestments of Gulf of Mexico assets. § Progressed through a number of staff and management roles including those with TransAtlantic Petroleum, El Paso Production Company and BHP Petroleum (later BHP Billiton Petroleum). Provided a complete range of land management and contract negotiation expertise in support of the exploration and development of oil and gas assets in the shallow and deep water areas of the Gulf of Mexico while also gaining experience in lease/license acquisition and contract negotiation in the domestic onshore and international arenas. Sean McGrath, Chief Financial Officer (BComm (Hons) from Memorial University of Newfoundland) A senior executive with more than 18 years of accounting/finance experience with publicly traded petroleum and mineral resource companies. § Designated Chartered Professional Accountant in Canada and a Certified Public Accountant in the United States of America. § He has held director and officer positions in a number of TSX and AIM listed companies including; General Manager of Finance for Minera IRL Ltd, an AIM and TSX listed gold producer based in Lima, Peru, from 2011 to 2013. Chief Financial Officer of Columbus Gold Corp. from initial public offering through to the acquisition of the 5M oz Paul Isnard gold deposit in French Guiana. 21

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