LARICINA Strategic Alternatives Information Memorandum I7.

LARICINA
E
N
R
E
G
Y
C
I 0.
Strategic Alternatives
Information Memorandum
CONFIDENTIAL
I
.11
I7.
If
BMO
Capital Markets
Morgan Stan[ey
piIms&Co.
liMITED
Laricina Energy Ltd,I Information Memorandum
CqNFIDENTIAL
I.’
Table of Contents
LARICINA
N
Executive Summary
Opportunity Summary
Corporate Snapshot
Large-Scale Development Platform
Leading Grosmont and Grand Rapids Development
Reserves and Resources Overview
Experienced Leadership Team and Shareholders
1
2
3
4
5
6
Saleski Project Overview
Saleski Commercial and Ready for Phase 1
Saleski Geological Overview
Saleski Pilot Performance
Saleski Phase 1 Development Plan
Saleski Full Development Plan
7
8
9
10
11
—
Germain Project Overview
Germain Commercial and Ready for Expansion
Germain Geological Overview
Germain CDP Performance
Germain Phase 2a Development Plan
Germain Full Development Plan
12
13
14
15
16
—
Process Information
Process and Contact Information
Disclaimer
BMO
0
Capital Markets
17
18
Morgan Stanley
a
Pirrs&Co.
LIMITED
N
E
N
Y
I.
t 0.
•
Laricina Energy Ltd.
I
Information Memorandum
CONFIDENTIAL
II
Opportunity Summary
LARICINA
High-quality, world-scale, and development-ready in situ asset base
Seeking
Strategic
Transaction
Proposals
• Laricina Energy Ltd. (Laricina) has initiated a process to identify strategic alternatives and has
retained BMO Capital Markets, Morgan Stanley, and Peters & Co. Limited as financial advisors
to assist in this process
• Strategic alternatives being considered include: corporate sale, asset sale, joint venture,
and strategic financing
• Access to a virtual data room and technical presentation from management is available upon
execution of a confidentiality agreement
• Transaction proposals will be due in early 2015; detailed instructions for submitting a proposal
will be delivered prior to the due date
High-Quality,
World-Scale
Asset Base
• Large-scale project platform with more than 12.2 bnbbl discovered bitumen initially-in-place
and 487 mmbbl probable reserves and 3.9 bnbbl best estimate contingent resources with
attractive development economics
• Saleski (Grosmont carbonates) has 98 mmbbl of probable reserves and 1,492 mmbbl of best
estimate contingent resources that support net production design capacity of 187,500 bbl/d
(312,500 bbl!d gross)
• Germain (Grand Rapids clastics) has 389 mmbbl of probable reserves and 933 mmbbl of best
estimate contingent resources that support production design capacity of 185,000 bbl/d
• Additional growth properties targeting clastic and carbonate formations contain 1,509 mmbbl of
best estimate contingent resources
Successful
Initial Projects
in Both
Key Assets
• Saleski pilot (1,800 bbl/d gross bitumen treating design capacity, 60% WI.) has been on production
since April 2011 with —480,000 bbl (gross) bitumen produced to October 2014
• Industry first production from a horizontal well in the bitumen-bearing Grosmont carbonates
• First bitumen project in the Grosmont carbonates to be assigned probable reserves
• Commercial production rates achieved (peak well rate over 1,200 bbl/d gross)
• Germain Commercial Demonstration Project (CDP) (5,000 bbl/d bitumen treating design
capacity, 100% WI.) has four wells currently producing with a target average production rate of
1,000 bblld in December2014
• Industry first commercial application of solvent-cyclic steam-assisted gravity drainage
(SC-SAGD) recovery process in the Grand Rapids; ongoing testing is yielding positive results
Commercial
Projects in
Both
Key Assets
Are
Capital-Ready
• Roadmap for the next phases of development at Saleski and Germain is complete and commercial
projects are ready for execution
• Saleski Phase 1 (10,700 bbl/d gross, 6,420 bbl/d net, design capacity) expected to receive
corporate sanction in Q2 2015 with first oil in Q3 2017; once-through steam generators (OTSGs)
completed November 2014; engineering 90% complete prior to sanction
• Germain commercial expansion (150,000 bblld design capacity) expected to receive regulatory
approval in early 2015 with Phase 2a first oil in 2019 (30,000 bblld design capacity)
• Future development supported by access to key infrastructure and pipelines
• High working interest and operatorship across the entire asset base provides complete control
over the pace of development
Unless otherwise noted: production figures represent Ladcina working interest before royalties; reserves and resources figures represent Laricina working
interest before royalties as per the GLJ Report for Germain Grand Rapids and Saleski Grosmont effective September 30, 2074, all other Ladcina assets effective
December 31, 2013; and all amounts are in Canadian dollars
BMO
0
Capital Markets’
Morgan Stan[ey
&
Co.
LIMiTED
I
I
Laricina Energy Ltd.
I
CONFIDENTIAL
J
I’
Corporate Snapshot
LARICINA
E
N
E
N
N
Y
I.
T 0.
Saleski-Germain platform is ready for large-scale commercial development
Corporate Background
• Founded in late 2005, Laricina is a privately-held, Calgary-based
pure-play in situ oil sands development company
Acquired key land positions with a focus on the Grosmont carbonate
and Grand Rapids clastic formations with additional lands in the
McMurray and Winterburn formations
487 mmbbl probable reserves and 3.9 bnbbl best estimate contingent
resources currently assigned to assets, achieved through delineation
and development over the past nine years
$1.3 billion of cash equity and $150 million of debt raised to-date from
experienced energy-focused investors
All-season access roads, electricity, work camps and natural gas
supply are currently in place with third-party crude oil pipeline
infrastructure under construction
•
•
•
•
•
•,,
•
Laricina Asset Overview
.
.
R1V6 R24
•_
RIB
.
R16
RiO
R12
R8
FM
-
194
_L_.
188
-
;Z_1_LU•:_I_
:
cr—I
:
Waa a
Saleski Project Milestones
McMurray
)M,l1li1—
184
L’I.
• First in industry to achieve production from a horizontal well in
bitumen-bearing Grosmont carbonates (April 2011)
• Demonstrated commerciality through cyclic-SAGD (C-SAGD) and
received probable reserves recognition in 2012
• Detailed engineering 60% complete for Saleski Phase 1 (10,700 bblld
gross, 6,420 bbl/d net, design capacity); expect 90% complete by end
of Q1 2015; first oil targeted for Q3 2017
R14
:t
u
4,L
i
.
H
178
175
j
Financial Summary
Germain Project Milestones
• Start-up of facilities at Germain CDP was achieved in 2013
• Four well-pairs currently producing with December 2014 target
average production of 1,000 bblld
• Approval for commercial expansion (150,000 bbl/d design capacity)
is expected in early 2015 with anticipated start-up date for Phase 2a
(30,000 bblld design capacity) in 2019
Capitalization as at September 30, 2014
(MM)
Basic common shares outstanding
Dilutives outstanding
Cash, cash equivalents and short-term investments
Senior secured and payment-in-kind notes principal
70
7
$197
$158
Estimated Tax Pools as at September 30, 2014
UCC and other
Non-capital losses
Resource pools (CDE, CEE & COGPE)
Investment tax credits and_SR&ED
Total
(MM)
$436
422
227
180
Note: The estimated tax pools are preliminaiy and subject to assessment
r
Reserves and Contingent Resources Summary
Asset
Targeted
Formation
Saleski
Germain
Growth Properties
Grosmont
Grand Rapids
Various
Total
Working
Interest
60%
100%
100%
-
2014 Forecasted
Average
Acreage
Production
(net)
(bbl/d)
3201
25,728
5352
39,041
134,426
199,195
-
-
Probable
Reserves
(mmbbl)
98
389
-
Best Estimate
Contingent
Resources
(mmbbl)
1,492
933
1,509
3,934
Ultimate Design
Capacity
(Manaaement)
(bblld)
187,500
185,000
188,000
First
Production
2011
2014
2020+
1
Saleski pilot uses a cyclic process of alternating cycles of steam injection and bitumen production and is expected to be in a producing phase during
December 2014 with target average of 600 bbl/d
2
Gerrnain CDP production is in ramp-up during 2014 with target December 2074 average of 1,000 bbl/d
Unless otherwise noted: production figures represent Ladcina working interest before royalties; reserves and resources figures represent Laricina working
interest before royalties as per the GLJ Report for Germain Grand Rapids and Saleski Grosmont effective September 30, 2014, all other Laricina assets effective
December 31, 2013; and all amounts are in Canadian dollars
BMO
0
Capital Markets’
Morgan StanLey
PniRs&Co.
LIMITED
2
I
Laricina Energy Ltd.
I
Information Memorandum
CONFIDENTIAL
I.
-
I’
Large-Scale Development Platform
LARICINA
E
N
E
R
N
Y
I.
T
0.
Concentrated growth platform with development synergies and efficiencies
Saleski (Grosmont) and Germain (Grand Rapids) Highlights
• Significant near-term cash flow from one of the industry’s largest
Production and Cash Flow Growth Profile
combined oil sands asset bases
• The Saleski and Germain projects are only —30 km apart and are
• 487 mmbbl probable reserves and 2.4 bnbbl best estimate
Germain CDP total 1,600 bblld
$6.0
200
$4.0
100
$2.0
‘
2
0
E
• Medium-term target of 42,500 bbl/d design capacity
• High working interest and operatorship across asset base
$-
• Majority of infrastructure in place with third-party pipeline under
TransCanada’s Grand Rapids Pipeline (Phase I
300
0
.
• Target December 2014 average production from Saleski pilot and
Key Infrastructure in Place
$8.0
U
contingent resources
construction to support long-term growth
.0
.0
E
joined by an access road
Germain Production
Saleski Production
—Operating Cash Flow
400
2015 2020 2025 2030 2035 2040 2045 2050
Source: Management estimates; Operating cash flow shown on
an escalated basis (2% per annum)
Key Infrastructure
i3’
expected completion in early 2016) will offer direct
access from Saleski to the market hubs in Fort
Saskatchewan, Edmonton and beyond
• Laricina owns the permits and approvals for the
only pipeline terminal in the area at Saleski, offering
potential for crude aggregation and blending
opportunities
• Laricina owns a 40% working interest and is the
operator of the only transportation corridor in
the region, a strategic infrastructure position that
provides third-party revenue
• Production from the Saleski pilot and the Germain
CDP is currently trucked to regional oil pipeline or
rail terminals in the greater Slave Lake region
• Local pipeline and rail-connected terminals offer
Laricina sufficient take-away capacity through
Saleski Phase 1 start-up
• Industry activity in the area by Royal Dutch Shell,
Husky Energy, Cenovus Energy, Canadian Natural
Resources, and Osum Oil Sands, combined with
the close proximity to key infrastructure, is likely to
promote future development of additional third-party
infrastructure, including co-generation
• Laridna Land
ri OIl Sands Leases
—Oil Pipelines
—Access Road
Pnmaiy Roads
—Railway
—
Power lines
Refinery
DOil Terminal
(Approved)
•‘-
0 Rail Terminal
OTruck Terminal
Condensate Source
Unless otherwise noted: production figures represent Ladcina working interest before royalties; reserves and resources figures represent Ladcina working
interest before royalties as per the GLJ Report for Gerrnain Grand Rapids and Saleski Grosmont effective September 30, 2074, all other Ladcina assets effective
December 37, 2073; and all amounts are in Canadian dollars
BMO
Q
‘N
Capital Markets’
Morgan Stantey
I
Piirns&Co.
U1.UTED
3
.
—,
--
Laricina Energy Ltd.
-
I Information Memorandum
CONFIDENTIAL
-
Ii
Leading Grosmont and Grand Rapids Development
LARICINA
E
N
E
N
6
6
I.
T
D.
Industry leader in development of the Grosmont and Grand Rapids formations
Saleski Project (Grosmont Carbonates)
• 60% working interest and operatorship
Germain Project (Grand Rapids Clastics)
Saleski Reserves and Resources Overview
2.0
U
100% working interest
• Germain CDP, a small-scale project, has refined understanding of
recovery from the Grand Rapids Formation
• Comparable geological properties to McMurray sands leading to
comparable SAGD performance
• First commercial application of SC-SAGD in Grand Rapids currently
being tested
• Currently producing from four well-pairs and targeting December 2014
average production of 1,000 bblld
• Performance observations at Germain CDP will confirm the
commercial development strategy
• Phases 2-3: 90,000 bbl/d per phase, each staged in 30,000 bbl/d sub
phases; total 180,000 bbl/d design capacity
• Approval for commercial expansion (150,000 bbl/d design capacity)
is expected in early 2015
• —$570 million invested in development to Q3 2014
I
• Pilot has provided insight into the Grosmont geology and exploitation
strategy, specifically the high permeability and rapid mobilization of
bitumen from fractured carbonate reservoirs
• Results indicate that recovery by gravity drainage is viable in the
Grosmont Formation through C-SAGD
• Saleski pilot has demonstrated commercial production rates,
steam-to-oil ratios (SOR) and drilling costs that are competitive with
McMurray projects
• Saleski Phase 1(10,700 bbl/d gross, 6,420 bblld net, design capacity)
sanctioning is expected Q2 2015; engineering is 60% complete and
targeting 90% complete prior to sanction
• Phases 2-5: 75,000 bbl/d gross (45,000 bblId net) per phase, each
staged in 25,000 bbl/d gross (15,000 bbl/d net) sub phases; total
300,000 bbl/d gross (180,000 bbl/d net) design capacity
• —$240 million invested in development to Q3 2014
.
2.0
Best Estimate Contingent Resources
Probable Reserves
1.5
,
‘—
,., .
U’
..
S’
• Best Estimate Contingent Resources
•Probable Reserves
1.5
.0
EtPII
.0
• 1.0
1.0
.0
.0
0.5
0.5
200620072008200920102011
201220132014
2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: GLJ reports effective in periods indicated
Source: GLJ reports effective in periods indicated
Industry Activity in the Grosmont
Royal Dutch Shell
Industry Activity in the Grand Rapids
North Field (Ireton)
• Invested $468 million to acquire 220,000 acres in the Grosmont
trend in 2006
• Began construction at North Field pilot test in 2012
• Husky Energy Saleski
S
ff9%::
Germain Reserves and Resources OvervIew,,
—
—
• Filed regulatory application for a 3,000 bbl/d pilot in Qi 2013
• Osum Oil Sands Saleski East
• Regulatory approval for a 60,000 bbl/d project expected in 2015
—
• Canadian Natural Resources Wolf Lake
• Producing since 1997 from four pads and 26 well-pairs
• Cenovus Energy Pelican Lake
• Completed a two well-pair pilot and announced the first phase
(10,000 bblld) of its 180,000 bbl/d regulatory approved project in
April 2014
• BlackPearl Resources Blackrod
• Second well-pair of a two well-pair pilot is currently producing 375
bbl/d (Q3 2014) and is continuing to ramp up
• Regulatory approval for 80,000 bbl/d project expected in 2014
• Two private companies received regulatory approval for separate
10,000 bbl/d Grand Rapids projects in Q2 2014
—
—
—
Unless otherwise noted: production figures represent Ladcina working interest before royalties; reserves and resources figures represent Laricina working
interest before royalties as per the GLJ Report for Gennain Grand Rapids and Saleski Grosmont effective September 30, 2074, all other Laricina assets effective
December 37, 2073; and all amounts are in Canadian dollars
BMO
Q
‘N
Capital Markets’
Morgan Stan tey
PirERs&Co.
liMfl’ED
4
I
Laricina Energy Ltd.
I
Information Memorandum
CONFIDENTIAL
II
Reserves and Resources Overview
LARICINA
E
N
E
S
S
Y
I.
T S.
Material reserves and resources have been assigned to the asset base
Kt;h P%á
Reserves and Resources Summary
Before Tax 10% Net Present Value
Reserves
Contingent Resources
2P +
2P
Best Est.
High Est.
Best Est.
($mm)
($mm)
f$mm)
($mm)
Bitumen Volume
Reserves
2P
(mmbbl)
Saleski (Grosmont)
Germain (Grand Rapids)
Subtotal
Growth Properties
Boiler Rapids (McMurray & Wabiskaw)
Burnt Lakes (Grosmont)
Conn Creek (McMurray)
House River (McMurray)
Germain (Winterbum & Wabiskaw)
Poplar Creek (McMurray)
Portage (Grand Rapids)
Thornbury (McMurray)
Thornbury West (McMurray)
Subtotal
Total
98
389
487
-
-
-
-
-
-
-
-
-
487
Contingent Resources
Best Eat.
High Est.
(mmbbl)
(mmbbl)
2P +
Best Est.
(mmbbl)
1,492
933
2,425
2,443
1,099
3,542
1,590
1,322
2912
62
573
85
1,328
62
573
195
243
195
93
433
133
1,167
150
76
77
93
433
-
58
37
58
1,509
,.934
79
3,338
Ø,88O
-
58
t 37
58
1 509
4,421
‘
$52
168
$220
$2,702
3,544
$6,246
-
-
-
-
$6,292
4,508
$1 0,800
-
-
20
373
1,404
685
$2,754
3,712
“ $6466
‘
-
20
373
-
-
-
25
25
3
1,475
164
112
-
-
-
-
-
-
-
-
-
-
-
-
$421
$,667
•
-
3
$83a $421
j!Øj6,887
Note: Columns may not add due to rounding
Reserves and Resources Volumes
Overview of Laricina’s Projects and Industry Oil Sands Leases
3,934
mmbbl
487 mmbl
2P Reserves:
Best Est.
Saleski and Contingent Resources:
Germain
Saleski, Germain
and Growth
Properties
Best Est
Prospective
Resources:
Growth
Properties
Unless otherwise noted: production figures represent Laricina working interest before royalties; reserves and resources figures represent Laricina working
interest before royalties as per the GLJ Report for Germain Grand Rapids and Saleski Gmsmont effective September 30, 2014, all other Laricina assets effective
December37, 2073; and all amounts are in Canadian dollars
BMO
Q
‘N
Capital Markets
Morgan Stan[ey
I
PimRs&Co.
LIMITED
4
Laricina Energy Ltd.
I
Information Memorandum
CONFIDENTIAL
Experienced Leadership Team and Shareholders
LARICINA
I
N
E
R
G
V
C
1
0.
Leading oil sands senior management team with average experience of 28 years
h..
Senior Management
Officer
Background
Glen C. Schmidt
President & Chief Executive Officer
James R. Hand
Sr. VP & Chief Operating Officer
Derek A. Keller
VP Production
Previously President & Chief Executive Officer, Deer Creek Energy Ltd.; Prior experience with Torex
Resources Ltd., Pioneer Natural Resources Canada Inc., Chauvco Resources Ltd. and Mark Resources Ltd.
Previously Vice President Oil Sands Operations of ConocoPhillips Canada; Previously held various roles at
ConocoPhillips beginning in 1983
Previously Business Development Manager of Murphy Oil Corporation; Prior experience with Amoco Canada
Petroleum Company Ltd.
Previously Chief Financial Officer for MarkWater Handling Systems Ltd.; Prior experience with Questor
Technology Inc., AltaGas Ltd., TransCanada Corporation and Gulf Canada Resources
Diane T. Koenig
VP Finance & Controller
David Safari
VP Facilities
Maria A. Van Gelder
VP Corporate Development
.
.
.
.
.
.
Previously Senior Project Director of Statoil Canada Ltd.; Prior experience with Kellog Joint Venture
Previously Manager, Financial Analysis of Deer Creek Energy Limited; Prior experience with Canadian
Hunter Exploration, Manulife Financial and CIBC
Board of Directors
Director
Brian K. Lemke (Chairman)
I an D B ruce
.
Jonathan C. Farber
S. Barry Jackson
Gordon J. Kerr
Robert A. Lehodey, Q.C.
W Glen Russell
Glen C. Schmidt
Adam D. Vigna
Background
Independent investor; Director, NAL Resources Management Limited; Founder of Resolute Energy Inc.
Director, Cameco Corporation, Logan International Inc., Northern Blizzard Resources Inc., TriAxon Oil Corp.
and PumpWell Solutions Ltd.; Previously Chief Executive Officer and Co-Chairman, Peters & Co. Limited
Co-founder and Managing Director of Lime Rock Partners; Director, Augustus Energy Partners II LLC,
CrownRock L.P., Imaginea Energy Corp., and Vantage Energy LLC
Chairman, TransCanada Corporation; Director, WestJet Airlines Ltd.
Independent businessman; Previously President & Chief Executive Officer, Enerplus Corporation; Chairman,
Canadian Association of Petroleum Producers; Director, Deer Creek Energy Limited
Partner, Osler, Hoskin & Harcourt LLP
Principal, Glen Russell Consulting; Chairman, Accolade Capital Inc.; Previously President & Chief Operating
Officer, Chauvco Resources Ltd.; Chief Operating Officer, Gulf Canada Resources
President & Chief Executive Officer, Laricina; Director, Argent Energy Trust and Whitehorn Resources Inc.
Vice-President, Head of Private Debt, CPPIB Credit Investments Inc.; Director, Teine Energy Ltd. and
Blackhawk Mining LLC
.
.
.
Shareholders (September 30, 2014, Fully Diluted)
-
-
k’-
•Pension Funds
C??
INVESTMENT
BOARD
Kayne Anderson
•Energy PE Funds
Capital Advisors, Li?
Other PE Funds
Large Global Funds
• Management and Directors
LIME ROCK
PARTNERS
• Retail and Others
i MOUNT KELLETT
Unless otherwise noted: production figures represent Ladcina working interest before royalties; reserves and resources figures represent Lancina working
interest before royalties as per the GLJ Report for Germain Grand Rapids and Saleski Gmsmont effective September 30, 2074, all other Laricina assets effective
December 37, 2073; and all amounts are in Canadian dollars
b.A4
BMO
0
..,.
Capital Markets
Morgan Stan[ey
I
‘i,,.
& Co.
PEmRsLIMITED
[
Laricina Energy Ltd
I
Information Memorandum
CONFllJENTI
-
Saleski
—
Commercial and Ready for Phase I
Asset Quality &
Scale Validated
Asset Overview
Saleski Highlights
• Saleski lands are located in the Grosmont ‘sweet spot”
• Excellent pay thickness up to 50 metres
I High permeability offers well productivity that could potentially exceed
average McMurray in situ projects
• First production achievable after one month of steaming
• Significantly delineated land base
• 61 delineation wells (48 with cores)
• 197 km 2-D seismic
• 42 km2 3-D seismic
• 1.1 km2 4-D seismic (1 baseline and 3 subsequent monitors)
• Expect more than $30 million of investment tax credits from scientific
research and experimental development (SR&ED) claims
• First and only commercial bitumen carbonate oil sands project to
receive regulatory approval
• First bitumen project in the Grosmont carbonates to be assigned
probable reserves
Grosmont Trend & Activity Map
R5 R4 R3
F’
R1
R23
R21
R19
E
Commercial ity
Demonstrated by
Production
N
R
N
Y
C
1
0.
Development
Saleski Development Tirneilne
‘06
‘07
‘08
10
‘11
‘12
‘13
‘14
‘15
R17
LARICINA
R15
Acquired land and mineral rights
Conducted first delineation drilling program
• Performed cold solvent test in vertical well
• Submitted application for 1,800 bbl/U (gross) pilot
• Drilled first horizontal well (1 D)
• Initiated steam injection (SAGD) in Grosmont C and D zones
• Produced first bitumen from the Grosmont C and D zones
• Advanced process to C-SAGD injection
• Drilled 2r generation horizontal well (2C)
• Demonstrated commerciality through C-SAGD
Probable reserves recognition (76 mmbbl, GLJ 2012)
• Regulatory approval for Phase 1; commenced engineering
• Commenced production from 3D well
• Cumulative production of -480,000 bbl (gross) at October 2014
• Phase 1 engineering 60% complete at the end of Q3 2014
• OTSG5 completed November 2014
• Continue to produce from IC-s and 2C wells after block
steaming phase and continue production and injection cycles
forDwells
• Phase 1 engineering 90% complete at end of Q1 2015
• Sanction Phase
Key Stats (Full Development)
Working Interest
Primary Formation
Probable Reserves
Best Estimate Contingent Resources
Recovery Methodology
Design Capacity
Phase 1 Sanction April 2015
Phase 1 Approved
3.3
Regulatory Status
Design SOR
Unless otherwise noted: production figures represent Laricina working interest before royalties; reserves and resources figures represent Laricina working
interest before royalties as per the GLJ Report for Germain Grand Rapids and Saleski Grosmont effective September 30, 2074, all other Laricina assets effective
December 37, 2013; and all amounts are in Canadian dollars
‘N
BMO
Capital Markets
Morgan Stanley
PgniRs&Co.
LIMITED
•
LaridnaEnergyLtd.
I
Information Memorandum
CONFIDENTIAL
Ii
Saleski Geological Overview
Asset Overview
Asset uaIit &
Discussion
a The Grosmont at Saleski comprises a bitumen saturated dolomite
LARICINA
N
Commerciality
Demonstrated by
N
N
N
N
Y
I.
I
N.
Development
Grosmont Cand D Bitumen Net Pay
reservoir with porosity averaging 22%, ranging upward to >33%, and
fracture permeability >10 Darcy
• The Grosmont reservoir interval is up to 50 metres in thickness,
subdivided into the upper Grosmont D (30 metres) and the lower
Grosmont C (20 metres) by a 1-2 metre thick fractured marl zone
• Located in the Grosmont “sweet spot”
a Maximizes Grosmont D thickness which thins to east of Laricina’s
lease where it is eroded
a At subcrop edge with highest exposure to karst (enhanced porosity
and permeability)
a Down dip of gas cap and up dip of basal water
• Highly fractured reservoir; fracture network enhances vertical and
horizontal permeability (effectively connecting the C and D zones)
Grosmont Cand D Type Well Log
Source: Management estimates
Grosmont Reservoir Charactenstics
L
Full Field
Phase I
Zone
C
C
D’
D
Net Pay
18.5 m
27.0 m
16.0 m
28.5 m
Porosity
18%
24%
19%
25%
Bitumen Saturation
83%
85%
83%
82%
Permeability
Viscosity
Exploitable
Bitumen (net)
>
3.0 million cP
10 Darcy
@ 15°C;
245 mmbbl
10 cP
200°C
4,232 mmbbl
Source: Management estimates; excludes Ireton
045 3) 15
0
DIN POROSITY % tOOL)
Unless otherwise noted: production figures represent Ladcina working interest before royalties; reserves and resources figures represent Lancina working
interest before royalties as per the GLJ Report for Germain Grand Rapids and Saleski Grosmont effective September 30, 2014, all other Laricina assets effective
December 31, 2013; and all amounts are in Canadian dollars
bAd
BMO
Q
Capital Markets’
Morgan StanLey
PErERs&Co.
LnNIrrED
Laricina Energy Ltd.
I
Information Memorandum
CONFIDENTIAL
F’
Saleski Pilot Performance
LARICINA
E
Asset Quality &
Scale Validated
Asset Overview
Pilot Performance
• The pilot has demonstrated that single horizontal well C-SAGD
development of Grosmont C is economically viable at a commercial scale
• Approximately 480,000 bbl (gross) of bitumen has been produced to
October 2014, indicating a mature pilot
• Interaction between the C and D zones is expected to reduce SOR
through combined operations and heat transfer
• Average year-to-date production of 526 bbl/d (gross) as at end of
Q3 2014
• Continue to track and validate commercial design; matching CU
type curves
• Well 2C (450 metres)
• Pioneered successful drilling and completions design for Grosmont C
• Current SOR at 4.5 with operational optimization which is expected
to achieve an SOR of 3.5
• 23% recovery to date demonstrating commercial performance and
tracking of CU and management type curves
• Well iC-s (800 metres)
• Sidetrack of 1C using 2 generation drilling practices
• Began production in QI 2014 achieving peak rate of 479 bbl/d (gross)
where a progressive SOR reduction (7.6 to 2.2) has been observed
• Well 3D (800 metres) began production in Q2 2014; reached peak
production rate of 820 bbl/d (gross) with SOR of 6.3 and calendar
day oil rate (CDOR1) of 120 bblld over first three production cycles
up to November 5, 2014
• Well 1 D (800 metres) has been on production (with intermittent small
steam slugs) for more than 600 days at a CDOR of —110 bbl/d (gross)
and cycle SOR of 2.1, harvesting passive heating from C zone below
• Excellent steam conformance along the full length of wells
Corn mercial ity
Demonstrated by
Production
N
E
N
C
Y
—
T
D.
Development
;lir
Grosmont 2C Gross Cumulative Production
200
L
Cumulative Production
FE
May-12
Dec-12
Jul-13
Feb-14
Oct-14
Pilot Well Configuration
1CDOR is the average production overcombined steam and production days
Forecasted Gross Production Rate Per Well (C aid D)
Pilot to Commercial Target
Commercial Improvements:
800
700
.0
.0
600
•
•
•
•
Increased steam injection rate
Longer laterals (up to 7,000 m)
Improved artificial lift reliability
Continued improvement of Grosmont D
due to 2nd generation drilling practices
500 bblld
500
400
‘t 300
750 bbl/d
250 bblld
500 bbl/d
250 bblld
250 bbl/d
V
2 200
a-
110 bbl/d
100
Key Learnings Drive to Commercial Production
a Results indicate recovery by gravity drainage is viable
• Operating practices for the Grosmont Formation are modified to single
well C-SAGD from conventional dual well SAGD
• C-SAGD uses alternating cycles of steam injection below fracture
pressure using fractures to contact the reservoir and drain bitumen
through matrix via gravity followed by bitumen production
• Fractures enable drainage and peak production early in life of well,
contributing to cash flow sooner
• The combination of excellent heat distribution through the fracture
system and the high heat capacity of the rock delivers sustainable
drainage rates
• Second generation drilling practices (returns to surface, balanced,
staged acid, open hole) have been proven effective in well 2C
• SOR and production rate improvements are expected through
• Well lengths of 800 1,000 metres
• Steam injection rates at 1,500 m3/d (up from 400 m3Id at the pilot) per well
a Block steaming (i.e. simultaneous well steaming)
a Improved artificial lift reliability
—
0
2C Cyclic
to Date
C
Commercial
Improvement
D Cyclic
to Date
D
C+ D
Commercial Commercial
Improvement
Rate
Unless otherwise noted: production figures represent Laricina working interest before royalties; reserves and resources figures represent Laricina working
interest before royalties as per the GL] Report for Germain Grand Rapids and Saleski Grosmont effective September 30, 2074, all other Laricina assets effective
December 37, 2073; and all amounts are in Canadian dollars
‘
BMO
Capital Markets
Morgan Stan[ey
l,_
9
-__.-r—
Laricina Energy Ltd.
Information Memorandum
CONFIDENTIAL
Li
Saleski Phase I Development Plan
LARICINA
8
Commerciality
Demonstrated by
Production
&
Scale Validated
Asset Quality
Asset Overview
• Saleski Phase 1(10,700 bbl/d gross, 6,420 bbl/d net, design capacity)
is field execution ready
a Commercial project site cleared
• OTSGs completed in November 2014
a Engineering at 90% by end Q1 2015
a 21 month construction period (piling to mechanical completion)
a First oil in Q3 2017
a Target production of 500 bblld (gross) from each Grosmont C well
and 250 bbl/d (gross) from each Grosmont D well
a Planning a two-leg multilateral well (Grosmont C) which has the
potential to reduce well capital costs for the project going forward
• De-bottlenecking bitumen treating capacity takes advantage of surplus
steam capacity to achieve net production of 7,500 bbl/d (12,500 bblld
gross) in 2018
• Phase 1 will advance commercial, operational and reservoir
understanding for future development of the Grosmont with a multiwell field development through multiple phases
Production
—
8.0
CSOR
CS
cs
.0
.0
7.5
6.0 9
0
5.0
4.0
2.5
2.0
—
2025
2030
2035
2040
2045
2050
z
E
0
Source: Management estirnates
Phase I Capital Expenditures and Cash Flow
E
$120
Operating Cash Flow
CAPEX
—Cumulative Free Cash Flow (FCF)
Well Spacing
6
3.9
2.6
Solvent C-SAGD
—
4
UnleveredlRR7
WTI Breakeven Price8
1
3.9
3,4
C-SAGD
16 (C zone2
4 fD zone)
800 1,000 metres per lateral3
120 metres (C zone)
60 metres (D zone)
42%
60%
$315 mm
$330 mm
$42,000IbblId
$35,500IbblId
$255 mm
$365 mm
$3.2OIbbI
$3.80/bbl
18%
21%
‘U5$72/bbl
US$66/bbl
Recovery Factor
Capital Cost5
Capital Efficiency56
2
4,800 bblld
32 wells
Well Length
.
1,800 bblld
Economics based on total design capacity including de-bottlenecking
Includes 15 surface wells and one two-leg multilateral in the C zone
Eight of the initial C zone wells are 800 metres per lateral
Future C zone wells in the Upside case are two-leg multllaterals at
120 metre spacing
Shown on a real (2014 dollars), unescalated basis; Laricina WI. including
sunk capital
Initial capital cost divided by net production design capacity including
de-bottleneck capacity
Effective Sep. 30, 2074, shown on an escalated basis (2% per annum)
Breakeven price is calculated as the U.S. dollar WTI oil price that is
required for the project to generate a 10% return on capital on a real
(2014 dollars) unescalated basis
Phase I Key Milestones and Timeline,4
$2,400
E
$1,800 E
$1,200
0
-
7 0.
—
x
0
L
Upside
Grosmont C I D
60%
10,700 bblld
10,700 bblld
Initial Wells (gross)
CS
-
$160
V
Base
Primary Targeted Formation
Laricina Working Interest
Design Capacity (gross)
De-boilleneck Production
Additions (gross)
Design SOR
Target Operating SOR
Recovery Method
Initial Well Pad
Design (gross)
0
2020
5
Key Economic Assumptions (Management Estimates)
-
0?
t
2015
5
Development
NPV ( Bt ax, 10°!o)
Phase I Production and CSOR
0
°-
8
.1
Phase I Overview
10.0
N
$40
$600
(6
U
(a
C
(S
0 $f40)
$(600)
2015 2020 2025 2030 2035 2040 2045 2050
Source: Management estimates; shown on an escalated basis
(2% per annum)
Current Schedule
Public consultation
Regulatory review & approval
Engineering
Procurement & fabrication
Field construction
Drilling & completions
Phase 1 commissioning & start-up
2013 2014 2015 2016 2017
J 1
* Regulatory approval
A Start-up
Unless otherwise noted: production figures represent Laricina working interest before royalties; reseives and resources figures represent Laricina working
interest before royalties as per the GLJ Report for Germain Grand Rapids and Saleski Grosmont effective September 30, 2074, all other Laricina assets effective
December 31, 2013; and all amounts are in Canadian dollars
BMO
Q
‘N
Capital Markets’
Morgan Stanley
I
Thrims&Co.
LIMiTED
Laricina Energy Ltd.
I
Information Memorandum
CONFIDENTIAL
El
Saleski Full Development Plan
Asset Overview
LARICINA
S
CornmerciaIity
Demonstrated by
Production
Asset Quality &
Scale Validated
Full Development Plan Overview
• Full development (five phases) is planned to increase total design
capacity to 312,500 bbl/d gross (187,500 bbl/d net) by 2030
• Phase 1: 12,500 bbl/d gross (7,500 bbl/d net) including
de-bottlenecking capacity
• Phase 2-5: 75,000 bbl/d gross (45,000 bbl/d net) per phase, each
staged in 25,000 bbl/d gross (15,000 bbl/d net) sub phases; total
300,000 bbl/d gross (180,000 bbl/d net) design capacity
• Phases 2 and 3 design based on 3.3 SOR with first oil expected in
2022 and 2024, respectively
• Upside potential to drive SOR to 2.5 and debottleneck all future plants
bitumen treating to achieve higher long-term production rates
• Pre-fabrication facility design to reduce total installation costs
• 3,300 total wells across all phases
• Upside case will incorporate two-leg multilateral wells and solvent
• Recovery factor expected to be 35-45% prior to injection of solvent;
conservatively expect 15% improvement in production and 15%
reduction in SOR with solvent
• Environmental impact assessment required for Phases 2+
• Staged growth helps to manage capital needs and costs
Full Development Production
Pilot & Phase 1
Phase 3
Phase 5
.o200
E
150
‘
Phase2
iPhase4
)R
.2
8.0
E
N
N
Y
C
1
0.
Development
Key Economic Assumptions (Management Estimates)
Base
Upside
Grosmont C I D
Primary Targeted Formation
Laricina Working Interest
60%
Design Capacity (gross)
312,500 bblld
527,500 bbl/d
Number of Phases
5
5
Design SOR
33
25
Recovery Method
C-SAGD
Solvent C-SAGD
Well Length
1.000 metres er lateral1
120 metres (C zone)
Well S 3 acm g
60 metres (D zone)
Multilateral Well C Zone
No
Yes
500 bblld (C zone) 1.150 bblld (C zone)2
Well Production Rate
250 bblld (D zone) 290 bbl/d (D zone)
(gross)
750 bbl/d
1.440 bbl/d
Recovery Factor
39%
60%
Solvent
No
Yes
SOR Improvement
15%
Production Improvement
15%
Solvent % Steam Vol.
5%
Solvent Recovery
80%
Solvent Retention
2%
$6.3 bn
$7.5 bn
Capital Cost3
$33,400/bbl/d
$23,700/bblld
Capital Efficiency34
$3,780 mm
$5,875 mm
‘°V ‘B-5a X, l)I\5
°
$2.451bb1
$2.55Ibbl
19%
20%
Unlevered IRR5
“-US$68/bbl
—US$651bb1
WTI Breakeven Price6
Eight of the Phase I initial C zone wells are 800 metres per lateral
‘
-
-
-
-
-
2
6.0
100
4.0
50
2.0
9
,
Cl)
E
N
-
2015 2020 2025 2030 2035 2040 2045 2050
E
Source: Management estimates
Based on production from a two-leg multilateral weil
Shown on a real (2074 doilars) unescalated basis, Ladcina WI.
Initial Q4 2074 go fo,ward capital costs divided by production design
capacity
Effective Sep. 30, 2014, shown on an escalated basis (2% per annum)
6
Breakeven price is calculated as the U.S. doilar t4ffl oil price that is
required for the project to generate a 1 0% return on capital on a real
(2014 dollars) unescalated basis
Full Field Development
Full Development Capital Expenditures and Cash Flow
x
w
0-
<
o
.2
Operating Cash Flow
CAPEX
—Cumulative Free Cash Flow (FCF)
$3.6
$3.0
$2.4
$1.8
$1.2
$0.6
$60.0
$50.0 .o
$40.0 “
0
$30.0 u
CI
$20.0
$10.0
s
sf10.0)
D Laricina Land
Laricina Wells
1 All Wells
Phase 1
Phase 2
I Phase 3
• Phase 4
• Phase 5
.
-
$(0.6)
2015 2020 2025 2030 2035 2040 2045 2050
Source: Management estimates; shown on an escalated basis
(2% per annum)
Unless othetwise noted: production figures represent Ladcina working interest before royalties; reserves and resources figures represent Laricina working
interest before royalties as per the GLJ Report for Germain Grand Rapids and Saleski Grosmont effective September 30, 2014, ail other Laricina assets effective
December 31, 2013; and ail amounts are in Canadian doilars
BMO
Q
I
Capital Markets
Morgan Stanley
PKims&Co.
LIMITED
11
I Iac
Energy Ltd.
Germain
I
Commercial and Ready for Expansion
—
Corn mercia I ity
Demonstrated by
Production
Asset Quality &
Scale Validated
Asset Overview
[.
CONFIDENT1Afr
Information Memorandum
Germain Highlights
• The Grand Rapids Formation offers a consistent reservoir with
predictable pay thickness driving commerciality
• Grand Rapids porosity and bitumen saturations are comparable to
the mote variable McMurray channel reservoir
• The Grand Rapids at Germain is well delineated with
• 175 vertical delineation wells (102 core wells)
• 12.8 km2 3-D seismic
• 1.6 km2 4-D seismic over Germain CDP (baseline and one
subsequent monitor)
• 2.8 wells/section delineation density
• Germain CDP is the largest producing project in the Athabasca
Grand Rapids
• Germain CDP started up in 2013
• 5,000 bbl/d bitumen treating design capacity with 3,500 bbl/d
operating potential at 2.7 target SOR with solvent
• First commercial application of SC-SAGD recovery process in the
Grand Rapids Formation
• Infrastructure in place with roads, camps, gas and power to support
Phase 2 and beyond
• Approval for 150,000 bbl/d expansion expected in early 2015
LARICINA
E
N
E
R
Y
‘07
‘10
‘11
‘12
‘13
‘14
‘15
T 0.
Development
Germain Development Timeline
‘06
C
:
Acquired land and mineral rights
Conducted first delineation drilling program
• Built 21 kilometre all-weather road to Germain
• Received regulatory approval; began construction of
Germain CDP
• Probable reserve recognition (36 mmbbl, GLJ 2010)
• Filed expansion application
• Drilled six horizontal well-pairs at Germain CDP
• Increased probable reserve recoqnition (387 mmbbl, GLJ 2011)
• Drilled next four horizontal well-pairs at Germain CDP
• CDP construction complete
• Started steam injection; commenced converting well-pairs to
production
• Production ramping up targeting December 2014 average rate
ofl,000bbl/d
• Commenced solvent injection in four well-pairs
• Re-drill select well-pairs to allow ramp up production to
achieve 3,500 bblld plateau rate
• Receive 150,000 bbl/d expansion approval and begin
front-end engineering design on Phase 2a
Grand Rapids Trend and Producing Projects
R24
F3
t
R21
RZ
R19
1EtíT
R18
R17W4
AJiSKI
;_.-_—
T83
182
,“‘0’’
181
•
V
Key Stats (Full Development)
Acreage
39,041 acres1
100%
Working Interest
Primary Formation
Grand Rapids
Probable Reserves
389 mmbbl
Best Estimate Contingent Resources
933 mmbbl
Recovery Methodology
SC-SAGD
Design Capacity
185,000 bbl/d
Next Expansion
Phase 2a
Regulatory Status
Expansion application submitted
Design SOR
2.8
T
179
178
1
176
In addition to the Germain lands of 39,047 where Lancina holds
Grand Rapids and Wintethum rights, Lancina holds an additional
5, 720 acres of Wintethum nqhts only
Unless othe,wise noted: production figures represent Ladcina working interest before royalties; reserves and resources figures represent Ladcina working
interest before royalties as per the GLJ Report for Gennain Grand Rapids and Saleski Grosmont effective September 30, 2074, all other Laricina assets effective
December 37, 2073; and all amounts are in Canadian dollars
BMO
C
•,‘N
Capital Markets’
Morgan Stanley
• PiriRs&Co.
UMIITD
Laricina Energy Ltd.
I
Information Memorandum
CONFIDENTIAL
fl
Germain Geological Overview
Asset Quality &
Scale Validated
Asset Overview
Discussion
• The Grand Rapids Formation is a regional shoreface deposit
ill
LARICINA
E
Commerciality
Demonstrated by
Production
N
E
N
N
Y
C
T N.
Development
Grand Rapids Bitumen Net Pay
consisting of a clean homogenous and laterally continuous sandstone,
lending itself to having a predictable and consistent reservoir
• Grand Rapids at Germain consists of a bitumen saturated sandstone
reservoir
• Average porosity of 34%
• Vertical permeability ranging from 2 to 5 Darcy
• The net bitumen pay map highlights net pay, up to 20 metres, across
Laricina’s entire lease lending to years of go-forward development
• Top portion of reservoir is characterized by a thin upper transition
zone (UTZ) with decreasing bitumen saturation towards the top of
the reservoir
• The resource is overlain by —7 metres of Joli Fou shale which is a
competent caprock for thermal recovery processes
Grand Rapids Type Well Log
Source: Management estimates
Laricina CDP
Hz Well-Pair
4;
Grand Rapids Clastics vs. McMurray Clastics
Grand Rapids
McMurray
10—25 mthickness
• 34% porosity
• 65 75% bitumen saturation
• 9— 11.5 weight% bitumen
• 2 5 Darcy permeability
• Shoreface sands with large
areal extent
• Predictable distribution of
porosity and bitumen thickness
—
—
0
IL)
GAMMA RAY
45 a
15
DIN POROSITY % (SS)
Grand Rapids
Net Pay
Porosity
Bitumen Saturation
Permeability
Viscosity
Exploitable
Bitumen
o
1
10
1_
RESIS1I 11W
-
Grand Rapids Core Photo
10—50 mthickness
32% porosity
• 70
85% bitumen saturation
• 10—13 weight% bitumen
• 3— 7 Darcy permeability
• Stacked fluvial channels
• Prevalent vertical flow baffles
• Variable distribution of porosity
and bitumen thickness
•
—
McMurray Core Photo
jb
CDP
Full Field
17.0 m
15.5 m
34%
65 75%
34%
65 75%
-
-
2 5 Datcy
2.0 million cP @ 15.0°C; 12.5 cP @200°C
-
72 mmbbl
2,500 mmbbl
Source: Management estimates
Unless otherwise noted: production figures represent Ladcina working interest before royalties; reserves and resources figures represent Laricina working
interest before royalties as per the GLJ Report for Germain Grand Rapids and Saleski Gmsmont effective September 30, 2014, all other Laricina assets effective
December 31, 2013; and all amounts are in Canadian dollars
BMO
C
‘
Capital Markets’
Morgan Stan[ey
PgrEis&Co.
LIMfrED
13
I
LaridnaEnergyLtd. Information Memorandum
ii
Germain CDP Performance
LARICNA
N
Commerciality
Demonstrated by
Production
Asset Quality &
Scale Validated
Asset Overview
CONFIDENTIAL
-
Germain CDP Performance
• Germain Phase 1 reached steady operations in January 2014
following initial disruption at the facility as a result of a third-party
natural gas line break and subsequent process upset
I Operating capacity of 3,500 bbl!d with a target SOR of 2.7 by end of
2016 using solvent
• Ten initial well-pairs drilled and tied-in
• Six well-pairs with producers located in the basal water zone (three
not completed)
• Four well-pairs with producers located in the bitumen zone
• November 9, 2014 month-to-date average production of 857 bblld
from four well-pairs with the producer in the bitumen zone
• Detailed review of well-pairs in the basal water zone show a thin tight
streak of mudstone between the producer and injector wells preventing
the flow of bitumen to the producers
I Well-pairs 3, 5 & 6 suspended in May 2014
• Well-pairs 1, 2 & 4 left standing
• Two to three basal well-pairs need to be re-drilled to utilize excess
plant capacity to increase production to 3,500 bblld by end of 2016
for an estimated cost of $1 2-si 8 million
,
E
N
N
Y
C
Development
T N.
A
Grand Rapids Type Curves and Production Data
Well-Pair 7
Well-Pair 9
Well-Pair 8 CSOR
‘v
600
.0
a
a
500
Well-Pair 8
Well-Pair 10
Well-Pair 9 CSOR
18 .2
“.
a
SAGD
15
type curve
12 .i
400
a
‘N4
300
Co
200
6
a
3z
E
00
CSOR type curve
100
2
o0
0.0
1.0
Time (years)
2.0
3.0
Existing Well Configuration
..
Forecasted Production Rate Per Well
CDP to Commercial Target
i.
,
945 bbl/d
1,000
800
.0
.0
.
640 bbl/d
600
475 bbl/d
t
C)
400
200
I
I
•j
Key Learnings Drive to Commercial Production
• Performance of well-pairs with producers in basal water indicated that
Commercial improvements:
• Increase well length up to 1,200 m
CDP
SAGD
Peak
CDP
SC-SAGD
Uplift
Commerical
SC-SAGD
(1,200 m
well-pair &
total resource)
producers are located below an extensive mudstone barrier
• The barrier is laterally extensive across the lease area and results in a
reduced thickness of basal water zone to manage, thereby improving
overall bitumen recovery
• Operationally, gas co-injection has been successful in managing
interaction with the UTZ
• Increasing production with SC-SAGD whereby solvents are applied
to the steam in base SAGD over certain time intervals
• Results on well-pair 10 have shown >25% rate uplift and
instantaneous SOR reduction as compared to SAGD trend
• Based on these results well-pairs 8, 9 and 7 were converted to
SC-SAGD in Q4 2014 (in order of conversion)
• Artificial lift (electrical submersible pump) optimization has improved
production through better handling of produced gas
Unless otherwise noted: production figures represent Ladcina working interest before royalties; reserves and resources figures represent Laricina working
interest before royalties as per the GLJ Report for Germain Grand Rapids and Saleski Grosmont effective September 30, 2014, all other Laricina assets effective
December 31, 2013; and all amounts are in Canadian dollars
BMO
0
‘
Capita[ Marketw
Morgan Stan[ey
I,..
PETERsLIMITED
&Co.
14
Laricina Energy Ltd.
I
I
Information Memorandum
CONFIDENTIAL
Li
Germain Phase 2a Development Plan
Asset Overview
• Approval for 150,000 bbl/d commercial expansion expected in
early 2015 with Phase 2a first oil in 2019 (30,000 bbl/d design capacity)
• Performance and operational learnings from Germain CDP will set
the design basis for Phase 2a
• Phase 2 will be constructed using Laricina’s progressive build strategy
in three sub-phases
• Initial phase capex will be similar to other new build projects;
however, each sub-phase will result in a 10-20% improvement in cost
• Sub-phase 2a will include some prebuild and allowance for
subsequent 2b & 2c phases
• Phase 2a capital cost estimate is $1.2 billion
• Improvements to subsurface design include extending well lengths
to 1,200 metres and inflow/outflow control devices to assure optimal
conformance
a Project will have pipeline infrastructure in place prior to start-up
• Application of solvent are expected to reduce SOR and increase
bitumen recovery by 35%
8.0
30.0
6.0
20.0
4.0
o. 10.0
a
2.0
—
.g
‘
o
E
0
E
a
S
S
Y
C
T S.
Base
Upside
Grand Rapids
100%
30,000 bbl/d
2.8
34,000 bbl/d
2.4
SC-SAGD
32
Initial Wells
Well Length
Well Spacing
Recovery Factor
1,200 metres
80 metres
61%
80%
$1.2 bn
67%
65%
$1.2 bn
$38,600Ibbl/d
$795 mm
$3.30/bbl
17%
$34,200/bbl/d
$1,090 mm
$4.1 0/bbl
19%
US$72/bbl
US$66/bbl
Solvent Recovery1
Capital Cost2
Capital Efficiency2’3
NPV (B-tax 10%)
Unlevered IRR4
WTI Breakeven Price5
See Germain Full Development Plan (page 16) for 501 vent details
Shown on a real (2014 dollars) unescalated basis
Initial Q4 2014 go forward capital costs divided by production design
capacity
Effective Sep. 30, 2014, shown on an escalated basis (2% per annum)
Breakeven price is calculated as the U.S. dollar VVTI oil price that is
required for the project to generate a 10% retum on capital on a real
(2014 doilars) unescalated basis
Ca
-
-
2015 2020 2025 2030 2035 2040 2045
Source: Management estimates
*
Initial operating SOR is 36 due to production ramp up timing
E
‘u
Phase 2a Capital
E $600
S
Development
Primary Targeted Formation
Laricina Working Interest
Design Capacity
Design SOR
Recovery Method
2
a
N
Key Economic Assumptions (Management Estimates)
Phase 2a Production and CSOR
40.0
S
Commerciality
Demonstrated by
Production
Asset Quality &
Scale Validated
Phase 2a Overview
‘
LARICINA
Expenditures and Cash Flow
Operating Cash Flow
CAPEX
—Cumulative Free Cash Flow (FCF)
n r’ y’
w
“,
m’
Phase I Key Milestone and Timeline
£
Current Schedule
2015 2016 2017 2018 2019
Public consultation
$8,000
Regulatory review & approval
$6,000
$450
Engineering
U-
$300
a
$2,000
$150
0
u.
a
Procurement & fabrication
$4,000
0
$$(150)
$(2,000)
2015 2020 2025 2030 2035 2040 2045
Source: Management estimates; shown on an escalated basis
(2% per annum)
Field construction
a
Drilling & completions
E
Commissioning &
* Regulatory approval
A Start-up
Unless otherwise noted: production figures represent Laricina working interest before royalties; reserves and resources figures represent Laricina working
interest before royalties as per the GL] Report for Germain Grand Rapids and Saleski Grosmont effective September 30, 2074, all other Laricina assets effective
December 31, 2013; and all amounts are in Canadian dollars
BMO
Q
‘
Capital Markets’
Morgan Stanley
1,,
PrniRs&Co.
LIMITED
15
Laricina Energy Ltd,
I
Information Memorandum
CONFIDENTIAL
1,
Germain Full Development Plan
IARICINA
N
Commerciality
Demonstrated by
Production
Asset Quality &
Scale Validated
Asset Overview
Full Development Plan Overview
• Phase I (CDP) has 5,000 bbl/d bitumen treating design capacity;
3,500 bbl/d operating potential
• Phases 2-3: 90,000 bbl/d per phase, each staged in 30,000 bbl/d
sub phases; total 180,000 bbl/d design capacity
• Upside potential to drive SOR to 2.4
• 1,100 total well-pairs across all phases
• Staged growth helps to manage capital needs and costs
• Focused on advancing alternative recovery techniques
Full Development Production
Phase 1 (CDP)
Phase 3
200
.
Phase 2
—CSOR
.0
150
6.0
100
‘+.u
2
50
r1rm,,,,,,, r r—r,
-
2015
2020
2025
2030
-r-r-’
,,,,,,,,,,,,
2035
2040
.0
2045
Source: Management estimates
$3.0
Operating Cash Flow
CAPEX
—Cumulative Free Cash Flow (FCF)
T N.
Upside
Grand Rapids
100%
209000 bbl/d
185,000 bbl/d
3
3
2.8
I
SC-SAGD
1,200 metres
80 metres
945 bbl/d
1,050 bbl/d
Bitumen Zone Bitumen/Water Contact
61%
67%
35%
35%
10%
80%
6%
$6.4 bn
$34,400lbblId
$4700 mm
$3.I5lbbl
18%
-US$691bb1
45%
45%
3.5%
65%
3%
$6.4bn
$30,800IbbIld
$6.llOmm
$3.70/bbl
20%
US$65/bbl
Shown on a real (2014 dollars) unescalated basis
Initial Q4 2014 go forward capital costs divided by production design
capacity
Effective Sep. 30, 2014, shown on an escalated basis (2% per annum)
“Breakeven price is calculated as the U.S. dollar WUI oil price that is
required for the project to generate a 10% return on capital on a real
(2014 dollars) unescalated basis
J
,‘,.
Full Field Development
Full Development Capital Expenditures and Cash Flow
C
2
aG)
Cl)
E
Y
Base
Primary Targeted Formation
Laricina Working Interest
Design Capcity
Number of Phases
Design SOR
Recovery Method
Well Length
Well Spa
Well Production Rate (Peak)
Producer Location
Recovery Factor
Solvent
SOR Improvement
Production Improvement
Solvent % Steam Vol.
Solvent Recovery
Solvent Retention
Capital Cost1
NPV (B-tax, 10k) 3
Unlevered IRR3
WTI Breakeven Price4
a
N
Development
Capital Efficiency1’2
8.0
N
Key Economic Assumptions (Management Estimates)
• Full development (three phases) is planned to increase total design
capacity to 185,000 bbl/d by 2024
E
.,
.Jri
.
$50.0
C
.0
_.
$2.4
$40.0
$1.8
$30.0
$1.2
$20.0
$0.6
$10.0
:‘
L
5-
s
.
E
0
$(0.6)
sf10.0)
2015 2020 2025 2030 2035 2040 2045
Source: Management estimates; shown on an escalated basis
(2% per annum)
Unless otherwise noted: production figures represent Lancina working interest before royalties; reserves and resources figures represent Ladcina working
interest before royalties as per the GLJ Report for Gennain Grand Rapids and Saleski Grosmont effective September 30, 2014, all other Laricina assets effective
December 31, 2073; and all amounts are in Canadian dollars
‘N
BMO
Capital Markets’
Morgan StanLey
‘
I
Pgims&Co.
LIMITED
--
Laricina Energy Ltd.
I
Information Memorandum
CONFIDENTIAL
Li
Process and Contact Information
LARICINA
N
N
E
ft
N
High-quality, world-scale, and development-ready in situ asset base
Process Information
• Laricina has initiated a process to identify strategic alternatives and has retained BMO Capital Markets, Morgan Stanley, and
Peters & Co. Limited as financial advisors (the ‘Financial Advisors”) to assist in this process
• Strategic alternatives being considered include: corporate sale, asset sales, joint ventures, and strategic financings
(each a “Transaction”)
• Upon the execution of the confidentiality agreement, access will be provided to a virtual data room containing confidential
technical and economic information
• To receive the confidentiality agreement, please contact a representative from one of the Financial Advisors listed below
• Management presentations will be conducted by Laricina personnel in Calgary
• Transaction proposals will be due in early 2015; detailed instructions for submitting a proposal will be delivered prior to the
due date
• All inquiries and requests shall be submitted or directed to a representative from one of the Financial Advisors listed below;
Laricina, its subsidiaries and affiliates should not be contacted
Contact Information
BMO
BMO
Q
CapitaI Marketw
Morgan Stan[ey
PERs&Co.
LIMITED
,4
Tim Lisevich
Managing Dire cto, Global Energy Group
Tel: 403.515.1575
[email protected]
Aaron Papps
Managing Directo, Head of Canadian Energy
Tel: 403.509.1160
[email protected]
Christopher S. Potter
President & Chief Executive Officer
Tel: 403.261.2206
[email protected]
Wendy Smith Low
Managing Director, A&D Advisony
Tel: 403.515.1528
[email protected]
Patrick Read
Woe President
Tel: 403.509.1161
[email protected]
Shane R. Hutzal
Principal, Corporate Finance
Tel: 403.261.2289
shutzalpetersco.com
0
Capital Markets
Morgan Stanley
4
I
•: Pims&Co.
LIMITED
Y
C T N.
CONFIDENTIAL
Laricina Energy UU.lnto
c
•
ii
Disclaimer
LARICINA
E
This information memorandum (the Information Memorandum’) is based on information provided by Laricina Energy Ltd. (uLaricina
or the Company”) from its own records and from other sources. The Information Memorandum is being distributed, on behalf of the
Company, by BMO Nesbitt Burns Inc., Morgan Stanley Canada Limited, and Peters & Co. Limited, the Company’s financial advisors
(collectively, the ‘Financial Advisors”), solely for the use by certain qualified interested parties who may be interested in a transaction
with the Company and should not be used for any other purpose. The Information Memorandum has been prepared for information
purposes only and is being delivered for the sole purpose of providing such recipients with certain preliminary information with respect
to a potential transaction with the Company (Transaction’).
This document has not been filed, lodged, registered or approved in any jurisdiction and recipients of this document should keep
themselves informed of and comply with and observe all applicable legal and regulatory requirements. Recipients of this document
represent that they are able to receive this document without contravention of any unfulfilled registration requirements or other legal
restrictions in the jurisdiction in which they reside or conduct business.
The information contained herein (the “Information”) has been prepared to assist interested parties in completing their own independent
evaluation of the Company, but does not purport to be all inclusive or to contain all of the information that an interested party may
desire or that may be required by applicable law or by an interested party to properly evaluate the business, prospects or value of the
Company. The Information and this Information Memorandum is being provided on a confidential basis for use by qualified interested
parties. The Information does not purport to be comprehensive and is subject to change and updating without notice. Neither the
Financial Advisors nor the Company accepts any responsibility to inform any interested party of any matter arising or coming to their
notice, which may affect any Information provided to an interested party. Neither the Financial Advisors nor the Company undertakes
any obligation to provide the recipient with access to any additional information or to update or correct the Information. In all cases,
the interested parties should conduct their own independent investigation and analysis of the Company and the data set forth in this
Information Memorandum.
This Information Memorandum may include certain statements, estimates, forecasts and projections provided by and with respect to
the anticipated future performance of the Company. Such statements, estimates, forecasts and projections reflect various assumptions
made by the Company and/or the Financial Advisors concerning anticipated results, which may or may not prove to be correct. The
Financial Advisors have not independently verified any of the Information contained herein. Neitherthe Financial Advisors, the Company
nor their respective affiliates, directors, officers, employees, advisors or agents make any representation or warranty (expressed or
implied) as to (i) the achievement or reasonableness of future projections, management targets, estimates, prospects or returns
contained in this Information Memorandum, if any, or (ii) the quality, accuracy or completeness or materiality of the Information or
made available in connection with any further investigation of the Company. Each of the Financial Advisors, the Company and their
respective affiliates, directors, officers, employees, advisors and agents expressly disclaims any and all liability which may be based
on such Information, errors therein or omissions therefrom, misstatements, negligent or otherwise relating thereto, the interested
parties’ use of this Information Memorandum or any other oral, written or other communication transmitted to the interested parties
during the course of its evaluation of the Company.
The interested party will conduct its own independent evaluation and analysis of the Information and satisfy itself as to the quality,
accuracy completeness and materiality of the same. The interested party will rely solely on its own independent evaluation and
analysis of the Information when deciding whether or not to submit a bid, enter into a definitive purchase agreement and consummate
a Transaction. The provision of this Information Memorandum does not place the Company or the Financial Advisors under any
obligation to consider or accept any offer, irrespective of whether such offer is the only offer or one of a number of offers representing
the highest price.
This Information Memorandum: (i) is not an offer or invitation by the Financial Advisors or the Company to purchase or sell securities
or assets, whether in relation to this Transaction or otherwise nor any form of commitment or recommendation by the Financial
Advisors or the Company; (ii) will not, and nor will any other oral or written information made available to a prospective purchaser,
other than a definitive and binding transaction agreement, form the basis of any contractual or other agreement in relation to this
Transaction; and (iii) does not contain all the information that a prospective purchaser may wish to have in determining whether to
enter into the Transaction. The Company will only accept obligations in relation to the Transaction that arise out of a definitive and
binding transaction agreement. Furthermore, the recipient shall be entitled to rely solely on the representations and warranties made
to it by the Company in any definitive and binding transaction agreement. The only Information that will have any legal effect will be
that specifically represented or warranted in a definitive purchase agreement, when, as and if executed, with respect to a possible
Transaction and executed on behalf of the Company and the purchaser or investor.
The Financial Advisors are acting as financial advisors to the Company in relation to the proposed Transaction, will not regard any
other person (whether a recipient of this Information Memorandum or not) as a client in relation to the proposed Transaction and will
not be responsible to anyone other than the Company for providing the protections afforded to clients of the Financial Advisors nor
for providing advice to any such other person. Any person considering entering into the proposed Transaction: (i) may not rely on this
Information Memorandum in determining any course of action in relation to the proposed Transaction or otherwise; and (ii) must seek
its own independent financial, business, legal, tax or other advice.
This Information Memorandum is delivered on the condition that it is held in strict confidence by the recipient and its directors, officers,
employees, representatives and agents and for the internal use of the recipient only. Save as expressly permitted in writing by the
Company or the Financial Advisors, this document must not be photocopied or reproduced in any other electronic or physical form
and must not be excerpted from, summarized, communicated, disclosed or distributed to any other person in whole or in part.
NEITHER THIS INFORMATION MEMORANDUM NOR ITS DELIVERY TO AN INTERESTED PARTY SHALL CONSTITUTE OR BE CONSTRUED
TO BE AN OFFER TO SELL ANY SECURITIES OF THE COMPANY. THIS INFORMATION MEMORANDUM SHALL NOT BE DEEMED AN
INDICATION OF THE STATE OF AFFAIRS OF THE COMPANY NOR CONSTITUTE ANY INDICATION THAT THERE HAS BEEN NO CHANGE
IN THE BUSINESS OR AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
BMO
Q
Capital Markets”
Morgan Stanley
i
‘
1,_.
PimRs&Co.
UMrrED
N
E
R
N
V
C
T
N.