CIBC – Whistler Institutional Investor ConferenceWhistler, British ColumbiaJanuary, 2012
NAL Energy Corporation ProfileTSX Symbol                                    NAEMarket Capitalization1                     ...
Strategic Direction – Long Term Sustainability• Dividend paying E&P company  • Maximize cash flow  • Add scalable liquids ...
Key Focus – Grow Liquids Volumes                  16,000                  15,000                  14,000Volumes (Boe/d)   ...
2012 Corporate Plan1. Grow liquids volumes  • Forecast oil volumes up 5% / Liquids mix 47% to 50%2. Capital focused on hig...
Financial Action Plan                           Reduce monthly                          dividend to $0.05                 ...
2012 Full Year Guidance• Production (boe/d)        28,000 – 29,000• Capital ($MM)                  200• Operating Costs ($...
2012 Key AssumptionsWTI ($US/bbl)                                                      85.00                95.00         ...
2012 Financial Forecast  Funds From Operations “FFO” ($MM)   275     265     275  Net Capital Expenditures ($MM)      (200...
2012 Balance Sheet Forecast                                                                                  Year end 2012...
Operate Across Western CanadaBritish Columbia       Alberta% Gas & NGL’s: 100%    % Crude Oil: 45%% of Production: 14%   %...
Operational Strategy• Oil 85% of the capital program• Deliver capital performance• Actively managing execution risk• Enhan...
2012 Capital Allocation                                                   2011e   2012e    Drill, Complete & Tie-in       ...
Capital Allocation By PlayDrill, Complete & Tie-in - $170 MM                                                              ...
Cardium Oil: West Central AB                                                       • Developing selectively to 3-4 wells/s...
New Cardium Land Deal Increases Inventory• New four year deal finalized January 2012• Net $6MM commitment per year• Access...
Cardium Oil: Cochrane / Lochend AB                        •                                Sweet spot outperforming region...
Lochend Cardium Exceeding Expectations                                                       Lochend     W5M          3-17...
Mississippian Oil – Greater Hoffer                                                          • Multiple play trends now pro...
Emerging Tight Oil Play – Sawn Lake                                     •   Scalable, repeatable oil resource play        ...
Montney – Fireweed - NE British Columbia                      • Scalable liquids-rich gas discovery in H2/11 NAL Access La...
Significant Potential To Increase Oil Reserves                                                       Gross                ...
Extensive Land Base     NAL Access Lands (Gross Acres)                                         NAL Undeveloped Access Land...
Summary & Key Messages           Attractive   Sustainable            relative     business           valuation      model ...
Disclaimers•   Forward Looking Statements•   This document contains statements that constitute “forward-looking informatio...
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NAL Energy - 2012 CIBC Presentation

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Andrew Wiswell, NAL Energy's President and CEO, presents at the CIBC 2012 Whistler Institutional Investor Conference at Whistler, B.C., at 8 a.m. PST (9 a.m. MST, 11 a.m. EST).

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NAL Energy - 2012 CIBC Presentation

  1. 1. CIBC – Whistler Institutional Investor ConferenceWhistler, British ColumbiaJanuary, 2012
  2. 2. NAL Energy Corporation ProfileTSX Symbol NAEMarket Capitalization1 $1.1 BillionMonthly Dividend $0.05/shareNet Debt2 $376 MillionCurrent Shares Outstanding2 150.4 Million Convertible DebenturesTrading Symbol NAE.DB NAE.DB.ACoupon 6.75% 6.25%Principal Outstanding ($MM) 80 115Conversion Price ($/Share) 14.00 16.50Maturity Date 31AUG12 31DEC14Notes:1) As at January 10, 20122) As at Q3/11 2
  3. 3. Strategic Direction – Long Term Sustainability• Dividend paying E&P company • Maximize cash flow • Add scalable liquids opportunities • Utilize new tools and technologies • Deliver operating and capital cost efficiency • Actively manage business risk • Disciplined acquisition focus • Balance dividend with sustaining capital 3
  4. 4. Key Focus – Grow Liquids Volumes 16,000 15,000 14,000Volumes (Boe/d) 13,000 12,000 11,000 10,000 9,000 8,000 Q1/11 Q2/11 Q3/11 Q4/11E Q1/12E Q2/12E Q3/12E Q4/12E NAL Liquids Volumes 4
  5. 5. 2012 Corporate Plan1. Grow liquids volumes • Forecast oil volumes up 5% / Liquids mix 47% to 50%2. Capital focused on high ROR and recycle ratio projects • Oil focused capital projects / higher liquids yields3. Higher proportion of low risk development capital4. Continued appraisal activity in new oil resource plays5. Maintain financial flexibility 5
  6. 6. Financial Action Plan Reduce monthly dividend to $0.05 per share Maintain credit Refinance 2012 lines by convertible focusing capital maturity ($80 on oil and MM) with debt Financial liquids plays Flexibility Term out a Converted bank portion of existing line from one to bank line with three year term high yield in 2011 6
  7. 7. 2012 Full Year Guidance• Production (boe/d) 28,000 – 29,000• Capital ($MM) 200• Operating Costs ($/boe) 11.50 – 12.00 7
  8. 8. 2012 Key AssumptionsWTI ($US/bbl) 85.00 95.00 105.00AECO ($C/GJ) 2.50 3.00 3.50FX (CAD/US) 1.00 0.98 0.96Monthly Dividend ($) 4.7 0.05 4.7Volume (boe/d) 28,500G&A ($/boe)2 3.00 2.50 3.00Royalties (%) 17 18 19Oil Differential (%)3 90 90 90DRIP Participation (%) 23 23 23Weighted Avg Shares O/S (MM) 152.3 152 152.3Note: 1) Commodity, FX and Royalty assumptions are held constant through the year; 2) G&A excludes Unit BasedCompensation (UBC); 3) NAL forecast price differential to C$ WTI . 8
  9. 9. 2012 Financial Forecast Funds From Operations “FFO” ($MM) 275 265 275 Net Capital Expenditures ($MM) (200) (200) (200) Dividends ($MM) (90) (92) (90) Payout Ratios (% of FFO): Basic 46 35 46 Basic + Capital 122 110 122 Basic + Capital, net of DRIP 117 102 117 9
  10. 10. 2012 Balance Sheet Forecast Year end 2012e ($MM) Bank Debt at Year-end 2012e 412 305 412 Working Capital Deficit 72 70 72 Net Debt 484 375 484 Convertible Debentures1 115 195 115 Total Debt 599 570 599 Net Debt/2012e Cash Flow 1.8x 1.4x 1.8x Total Debt/2012e Cash Flow 2.2x 2.2x 2.2x Available Capacity ($550MM bank line) 138 245 138Notes: 1) Assumes 2012 convertible maturity ($80MM) is refinanced with either high yield or convertibledebenture. 2015 maturity shown at face value and assumes no conversion in 2012. 10
  11. 11. Operate Across Western CanadaBritish Columbia Alberta% Gas & NGL’s: 100% % Crude Oil: 45%% of Production: 14% % of Production: 59% SE Saskatchewan % Crude Oil: 93% % of Production: 25% Cardium Oil Mississippian Oil Natural Gas 11
  12. 12. Operational Strategy• Oil 85% of the capital program• Deliver capital performance• Actively managing execution risk• Enhance capital / operational efficiency• High grade opportunity inventory• Farm-out unproven acreage 12
  13. 13. 2012 Capital Allocation 2011e 2012e Drill, Complete & Tie-in 200 170 Plant & Facilities 18 10 Land & Seismic 18 10 Subtotal E&D 236 190 Other 10 10 Total 246 200Note: Net dispositions totaled ~($29) MM in 2011 13
  14. 14. Capital Allocation By PlayDrill, Complete & Tie-in - $170 MM $79 Cardium Oil $73 $51 $39Mississippian Oil $51 $40 2012 $26 2011 Other Oil $34 $23 2010 $26Liquids Rich Gas $42 $26 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 (Millions)Note: Does not include G&A, Facilities, Land & Seismic. 14
  15. 15. Cardium Oil: West Central AB • Developing selectively to 3-4 wells/section Garrington/ • Local sweet-spots emerging - focus on high- Westward Ho graded lands in Garrington/Westward Ho • De-risking non-core through farm-outs • New land deal completed in January 2012 Lochend NAL Access Lands Tier 1 Halo Tier 2 Halo Tier 3 Halo Conventional Gross Risked Locations assuming up to 4 wells/ sec (see Appendix)**Resource Halo Areas provided by Canadian Discovery 15
  16. 16. New Cardium Land Deal Increases Inventory• New four year deal finalized January 2012• Net $6MM commitment per year• Access to 280 (182 net) sections of Cardium prospective land directly offsetting existing Garrington/Westward Ho acreage• Adds 50 new drillable Cardium locations plus future upside 16
  17. 17. Cardium Oil: Cochrane / Lochend AB • Sweet spot outperforming regional type curve by 2-3 times • New 3D applied to delineate sweet spot • Solution gas infrastructure added 500 Lochend Sweet Spot 3D 450 Lochend Normal 400 WWHO Production Volumes (Boe/d) 350 Garrington 300 250 200 150 100NAL Access LandsKey Penetrations 502012 Program 02011 Program 1 13 25 37 49 Month 17
  18. 18. Lochend Cardium Exceeding Expectations Lochend W5M 3-17-027-03 1-17-027-03 1-18-027-03 16-19-027-03 14-20-027-03 16-20-027-03 8-33-027-03 August 27, December 1, November 3, November 3, September December 1, August 6,On Production 2010 2011 2011 2011 5, 2011 2011 201130 day IP 335 310 588 840 770 300 172(boe/d)90 day IP 268 - - - - - 162(boe/d)Current (boe/d) 174 153 258 660 234 167 100Formation Cardium A Cardium A Cardium A Cardium A Cardium A Cardium A Cardium AFrac Fluid Type Water Water Water Water Water Water WaterNumber of Fracs 10 15 11 13 14 14 12Lateral length 1,082 1,179 1,024 1,260 1,132 1,276 1,000(m) • Q4 2011 results set-up active program for 2012 • Liquids and solution gas handling facilities added in 2011 18
  19. 19. Mississippian Oil – Greater Hoffer • Multiple play trends now proven • Infrastructure in-place to: Neptune o Facilitate pressure maintenance New Pool Discovery o Minimize production down-time o Reduce operating costs Beaubier New Pool Discovery • Land position increasing through strategic farm-ins completed in Q4/11 Oungre Pool ExtensionNAL Access Lands Mississippian ProspectMSSP Producers2012 Program Hoffer 2009 Pool Discovery Inventory: n=1142011 ProgramMSSP Oil Pools 2012 Program3D Seismic Outline 30 39 Area Play-Types Schematic Drillable Inventory 45 Contingent Locations Gross Risked Locations assuming 300 m inter-well spacing (see Appendix) 19
  20. 20. Emerging Tight Oil Play – Sawn Lake • Scalable, repeatable oil resource play targeting Slave Point Platform Carbonates – positioned in 2010 - 2011 3D • OOIP of up to 6 mmboe/section • Ave 50% WI in 32 gross sections • Analogous development at 8 wells/ sec • Play de-risked by offsetting industry activity 1-26-91-13W5IP: 445 bopd Slave Point Prospect & 2%WC Inventory: n=48 16-35-91-13W5 2IP: 380 bopd & 7%WC 2012 Program 20 NAL Access Lands 26 Drillable Inventory SLVP Penetrations 2012 Program 2011 Program Contingent Locations Gross Risked Locations assuming 4 wells/ sec (see Appendix) 20
  21. 21. Montney – Fireweed - NE British Columbia • Scalable liquids-rich gas discovery in H2/11 NAL Access Lands MNTY Penetrations • Initial production – 1,000 boe/d @ 100 2012 Program 2011 Program bbls/mmcf of liquids • EUR - 630 mboe per well • 100% WI in 21 gas spacing units (sections) • Second earning well drilled Q1/12 Montney Prospect Inventory: n=20 1 2012 Program 8 11 Drillable Inventory Contingent Locations Gross Risked Locations assuming 3 wells/ sec (see Appendix) 21
  22. 22. Significant Potential To Increase Oil Reserves Gross Net Upside Upside Total EUR per Drillable Contingent Reserve Average Reserve Risked Well Inventory Inventory Potential WI% Potential Locations (mboe) (mmboe) (mmboe)Cardium 151 191 342 170 58.1 65 37.8Mississippian – 75 39 114 65 7.4 50 3.7EastMississippian – 74 37 111 85 9.4 50 4.7WestSlave Point 28 20 48 170 8.2 100 8.2CarbonateMontney 12 8 20 630 12.6 100 12.6 635 95.7 67.0**Note: includes 9.2 mmboe of booked reserves• Non-contingent development drilling inventory is drill-ready• Well defined production and capital profiles• Third Party activity is actively de-risking off-setting contingent locations• Incremental potential exists at Fireweed and Sawn Lake to double location tallies beyond that represented above 22
  23. 23. Extensive Land Base NAL Access Lands (Gross Acres) NAL Undeveloped Access Lands (Gross Acres) 195,000 294,000 Developed BC 271,000 955,000 Undeveloped Alberta 919,000 747,000 JV Saskatchewan• 2.2 million gross acres • 1.2 million gross acresNote: Excludes Approx 950,000 Acres (Gross) of undifferentiated Developed and Undeveloped Lands 23
  24. 24. Summary & Key Messages Attractive Sustainable relative business valuation model Increasing Capital liquids focused in volumes core areas 24
  25. 25. Disclaimers• Forward Looking Statements• This document contains statements that constitute “forward-looking information” within the meaning of applicable securities legislation as to NAL Energy Corporation’s (“NAL’s”) internal projections, expectations and beliefs relating to future events or future performance. This forward-looking information includes, among others, statements regarding: NAL’s strategic focus, business strategy and plans and budgets; business plans for drilling, exploration and development, including drilling locations; estimates of production and operations performance; forecasted commodity price estimates of future sales; estimated amounts, allocation and timing of capital expenditures; estimates of operating costs and unit operating costs; the estimated timing and results of new development programs; estimates of anticipated funds from operations, cash flow, netbacks, dividends, working capital and debt levels; estimated rates of return; the anticipated results of NAL’s divestiture program; various tax matters related to NAL; NAL’s hedging program; NAL’s prospect inventory; and other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance.• Various assumptions were used in drawing the conclusions or making the forecasts and projections contained in the forward-looking information contained in this presentation including, without limitation, with respect to commodity prices, interest rates, exchange rates, royalty rates, general and administrative expenses, the success of NALs drilling programs and the production profile of NALs oil and natural gas reserves. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by NAL and described in the forward-looking information contained in this document. Undue reliance should not be placed on forward-looking information. The material risk factors include, but are not limited to: the risks of the oil and gas industry, such as operational risks in exploring for, developing and producing oil and natural gas, market demand and unpredictable facilities outages; risks and uncertainties involving the geology of oil and gas deposits; the uncertainty of estimates and projections relating to production, costs and expenses; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; risk that adequate pipeline capacity to transport oil and natural gas to market may not be available; fluctuations in oil and gas prices, foreign currency exchange rates and interest rates; the outcome and effects of any future acquisitions and dispositions; safety and environmental risks; uncertainties as to the availability and cost of financing and changes in capital markets; competitive actions of other industry participants; changes in general economic and business conditions; the possibility that government policies or laws may change or governmental approvals may be delayed or withheld; changes in tax laws; changes in royalty rates; the results of NAL’s risk mitigation strategies, including insurance; and NAL’s ability to implement its business strategy. Readers are cautioned that the foregoing list of risk factors is not exhaustive. Additional information on these and other factors which could affect NAL’s operations or financial results are included in NAL’s most recent Annual Information Form and Annual Financial Report. In addition, information is available in NAL’s other filings with Canadian securities regulatory authorities.• Forward-looking information is based on the estimates and opinions of NAL’s management at the time the information is released.• Boe Conversion• Throughout this press release, the calculation of barrels of oil equivalent (boe) is based on the widely recognized conversion rate of six thousand cubic feet (mcf) of natural gas for one barrel (bbl) of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalence conversion method primarily applicable at the burner tip and does not represent a value equivalence at the wellhead.• All dollar amounts in Canadian dollars, unless otherwise stated. 25

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