Investor DayCalgary, AlbertaJanuary 11, 2012
Disclaimers• Forward Looking Statements• This document contains statements that constitute “forward-looking informatio...
ScheduleIntroductionStrategic Direction & Guidance 10 minFinancial Plan 10 minAssets Overvie...
NAL Energy Corporation ProfileTSX Symbol NAEMarket Capitalization1 ...
Strategic Direction and Guidance
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 cash flow and liquids volumes • Targeting cash flow increase of 3% • Forecast oil volumes inc...
2012 Corporate Plan3. Higher proportion of development capital • Represents 95% of 2012 program – up 11% • Lower risk im...
2012 Full Year Guidance• Production (boe/d) 28,000 – 29,000• Capital ($MM) 200• Operating Costs ($...
Financial Plan
Financial Strategy Maintain Financial Flexibility Maintain an optimal capital Target total debt ...
Financial Action Plan Reduce monthly dividend to $0.05 ...
2012 Key AssumptionsWTI ($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...
Quality Asset Base
Operate Across Western CanadaBritish Columbia Alberta% Gas & NGL’s: 100% % Crude Oil: 45%% of Production: 14% %...
Reserves Profile• P+P reserves: 104 MMBoe – 109% total production replacement• Pro...
Increasing RLI & Stable Reserves Per Share 10 9 ...
2012 Operating Plan
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 ...
Drilling 62 Net Wells (124 Gross) 24 Cardium Oil ...
Focusing Development on Best of Inventory Title: Plot of Attribute A ve...
Lower Risk Profile in 2012 Drilling Program 2011 Program 2012e Program Proof ...
Actively Managing Execution Risks• Contracted equipment & core services• Continuous programs to retain experienced crews• ...
Cardium Oil
Cardium Oil: West Central AB • Developing selectively to 3-4 wells/s...
Cardium Oil: Cochrane / Lochend AB • Sweet spot outperforming region...
Lochend Cardium Exceeding Expectations Lochend W5M 3-17...
Production (Boe/d) 1000 1500 ...
Mississippian Oil
SE Saskatchewan - Mississippian Chapleau Lake Greater Williston Area ...
Mississippian Oil – SE Saskatchewan Chapleau Lake • Greater Williston area ...
Mississippian Oil – Greater Hoffer • Multiple play trends now pr...
Mississippian Oil Volume ProfileStrong cash generator with volumes returning to 2010 levels Production (Boe/d) ...
Emerging Prospect Inventory
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
Summary & Key Messages Attractive Sustainable relative business valuation model ...
Appendix
Experienced Management Team Andrew Wiswell ...
Strategic Partnership with Manulife Manulife: • Direct investor ...
Non-Taxable For Many YearsAvailable Tax Pools $ MMCanadian Exploration Expense 91Canadi...
NAL Shareholder Analysis Income Focused High Canadian Ownership ...
Available Credit Lines Credit Lines ($MM) ...
Hedging Programs Manage Risk• Objective - Protect cash flow for the purposes of sustaining dividends and maintaining an ac...
2012 Hedging Program• Crude oil hedges: • 67% of 2012 oil volumes • Average floor price of US$ 97.42/bbl• Natural gas he...
Crude Oil Hedge Positions C...
Natural Gas Hedge Positions Natural Gas Hedge Contracts as ...
Interest Rate Hedge Positions Financial Interest Rate Swap Contrac...
Foreign Exchange Hedge Positions Notional (US) per Term...
Foreign Exchange Hedge Positions Fixed Rate Notional (US) Term ...
2012 Program: Half Cycle Play Metrics ...
Understanding Our Inventory Geoscience Professionals fee...
Understanding Our Inventory• Drillable Inventory equals • 100% of Tier 1 Locations• Total Risked Inventory equals • 90% o...
2010 – Stable Reserves Performance• Reserves performance in the McDaniel report was stable and predictable• 109% total pr...
Reserves & Capital Efficiency Summary 2010 2009Reserves (MMboe)Proved...
Conservatively Booked Reserves PDP reserves represent a high percentage of total proved 80,000 ...
Conservatively Booked Reserves Probables represent a low percentage of total P+P reserves 120,000 ...
Stable Reserves Per Share PerformanceStable reserves per share performance reinvesting approximately 59% of cash flow ...
Stable Production Per Share Performance Stable production per share performance reinvesting ...
2012 Sensitivities on FFO Impact on FFO – Excluding Hedges ...
2012 Sensitivities on FFO Impact on FFO – Including Hedges ...
Economic Evaluation Price Assumptions Edmonton Par ($C/bbl) AECO Gas ($C/GJ) 2012 88.95 ...
Sell-side Research Analyst Firm Recommen Gordon Tait BMO Capital Markets ...
New Cardium Land Deal Increases Inventory• New four year deal finalized January 2012• Net $6MM commitment per year• Access...
Corporate InformationEXECUTIVE TEAM TRUSTEE AND TRANSFER AGENTAndrew Wiswell Pr...
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Nal 2012 investor day and guidance presentation

Published on: Mar 3, 2016
Source: www.slideshare.net


Transcripts - Nal 2012 investor day and guidance presentation

  • 1. Investor DayCalgary, AlbertaJanuary 11, 2012
  • 2. 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. 2
  • 3. ScheduleIntroductionStrategic Direction & Guidance 10 minFinancial Plan 10 minAssets Overview 5 minOperational Plan & Core Area Review 15 minEmerging Prospect Inventory 10 minSummary/Key Messages 10 min 3
  • 4. 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 ($/Share) 14.00 16.50Maturity Date 31AUG12 31DEC14Notes:1) As at January 10, 20122) As at Q3/11 4
  • 5. Strategic Direction and Guidance
  • 6. Strategic Direction – Long Term Sustainability• Dividend paying E&P company • Maximize cash flow • Add scalable liquids opportunities • Utilize new tools and technologies • Deliver operating and capital cost efficiency • Actively manage business risk • Disciplined acquisition focus • Balance dividend with sustaining capital 6
  • 7. Key Focus – Grow Liquids Volumes 16,000 15,000 14,000Volumes (Boe/d) 13,000 12,000 11,000 10,000 9,000 8,000 Q1/11 Q2/11 Q3/11 Q4/11E Q1/12E Q2/12E Q3/12E Q4/12E NAL Liquids Volumes 7
  • 8. 2012 Corporate Plan1. Grow cash flow and liquids volumes • Targeting cash flow increase of 3% • Forecast oil volumes increasing 5% • Liquids mix increasing from 47% to 50%2. Capital focused on high ROR and recycle ratio projects • Oil focused capital projects • Higher liquids yields on selected gas projects • Less focused on delivering gas volumes (6:1 Boe) 8
  • 9. 2012 Corporate Plan3. Higher proportion of development capital • Represents 95% of 2012 program – up 11% • Lower risk improves volume certainty4. Continued appraisal activity in new oil resource plays5. Maintain financial flexibility 9
  • 10. 2012 Full Year Guidance• Production (boe/d) 28,000 – 29,000• Capital ($MM) 200• Operating Costs ($/boe) 11.50 – 12.00 10
  • 11. Financial Plan
  • 12. Financial Strategy Maintain Financial Flexibility Maintain an optimal capital Target total debt Total payout to cash flow ratio ratios between structure and at 2x and not to strong balance exceed 2.5x 100% and 120% sheet Maintain Minimizes appropriate mix financing charges Provide access to of debt (term/mix of multiple markets instruments fixed vs floating) Capital Systematic investment that hedging of Increase liquids Sustain cash flows replaces weighting commodities, FX production at 2x and interest recycle ratio rates 12
  • 13. Financial Action Plan Reduce monthly dividend to $0.05 per share Maintain credit Refinance 2012 lines by convertible focusing capital maturity ($80 on oil and MM) with debt Financial liquids plays Flexibility Term out a Converted bank portion of existing line from one to bank line with three year term high yield in 2011 13
  • 14. 2012 Key AssumptionsWTI ($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 . 14
  • 15. 2012 Financial Forecast Funds From Operations “FFO” ($MM) 275 265 275 Net Capital Expenditures ($MM) (200) (200) (200) Dividends ($MM) (90) (92) (90) Payout Ratios (% of FFO): Basic 46 35 46 Basic + Capital 122 110 122 Basic + Capital, net of DRIP 117 102 117 15
  • 16. 2012 Balance Sheet Forecast Year end 2012e ($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. 16
  • 17. Quality Asset Base
  • 18. 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 18
  • 19. Reserves Profile• P+P reserves: 104 MMBoe – 109% total production replacement• Proved reserves: 68% of total P+P• Current RLI: 9.4 years• Mix: 50% Liquids – 50% Natural gas• 3 yr average F&D of $18.80/boe; FD&A of $21.86/boe 120,000 100,000 Natural Gas Reserves @ Jan 1 2011 Oil & LiquidsP+P Reserves (Mboe) 80,000 PROBABLE 60,000 32% PROVED 40,000 PRODUCING 58% 20,000 PUDs 10% 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 19
  • 20. Increasing RLI & Stable Reserves Per Share 10 9 • Production growth of 44% over the same time RLI (Years) 8 frame 7 6 5 2007 2008 2009 2010 0.70 0.60 • Stable reserves per share 0.50 performance reinvesting approximately 59% of Mboe / 000 units 0.40 0.30 cash flow 0.20 0.10 0.00 2007 2008 2009 2010 20
  • 21. 2012 Operating Plan
  • 22. 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 22
  • 23. 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 23
  • 24. 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 $90 (Millions)Note: Does not include G&A, Facilities, Land & Seismic. 24
  • 25. Drilling 62 Net Wells (124 Gross) 24 Cardium Oil 22 17 24 Mississippian Oil 30 30 2012 9 2011 Other Oil 13 12 2010 5 Liquids Rich Gas 9 8 0 10 20 30 40 (Net Wells) 25
  • 26. Focusing Development on Best of Inventory Title: Plot of Attribute A vesus Attribute B Plot of Production Efficiency versus Recycle Ratio - Capital Efficiency ($/boed) 10,000 20,000 Increasing 30,000 Production Volume Potential 40,000 Greater Hoffer MSSP Oil 50,000 Increasing Cash Flow Potential 60,000 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Recycle Ratio • 2012 program designed to drive cash flow 26
  • 27. Lower Risk Profile in 2012 Drilling Program 2011 Program 2012e Program Proof of Concept Development Proof of Concept Development 5% 17% 83% 95%• A number of projects moving from positioning and appraisal phase in 2011 to development phase in 2012 (Neptune, Sawn Lake, Cochrane, Fireweed) 27
  • 28. Actively Managing Execution Risks• Contracted equipment & core services• Continuous programs to retain experienced crews• Early regulatory and surface land approvals• Operatorship and drill ready inventory provides ability to substitute weather impacted areas• Hoffer central gathering facility tied-in to Enbridge – reduces costs and increases reliability 28
  • 29. Cardium Oil
  • 30. 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 30
  • 31. 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 31
  • 32. 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 32
  • 33. Production (Boe/d) 1000 1500 2000 2500 3000 3500 4000 4500 5000 0 500 Jan Feb Mar Apr May Jun 2010 Jul Aug Sep Oct Nov Dec Jan Base Feb Mar Apr May Jun 2011 Cardium Volume Profile Jul Aug Sep Oct Nov Dec Jan 2012 Program Feb Mar Apr May Jun 300% volume growth over 3 years Jul 2012 Aug Sep Oct Nov Dec33
  • 34. Mississippian Oil
  • 35. SE Saskatchewan - Mississippian Chapleau Lake Greater Williston Area Weyburn Hardy Nottingham/ Alida Midale Greater Hoffer Area NAL Access Lands Estevan Mississippian Oil Pools 3D Seismic Outline Hoffer • NAL has more than doubled land position in past 2 years • Greater Hoffer area is core growth oil area for company 35
  • 36. Mississippian Oil – SE Saskatchewan Chapleau Lake • Greater Williston area provides 3 to 5 year inventory of low risk development locations • Significant oil & cashWeyburn generating region for NAL since 1996 Nottingham/ Alida Midale Greater Williston Mississippian Prospect Inventory: n=111 2012 Program Estevan NAL Access Lands 23 Mississippian Oil Pools 37 3D Seismic Outline Drillable Inventory 51 Contingent Locations Gross Risked Locations (see Appendix) Gross Risked Locations (see Appendix) 36
  • 37. 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) 37
  • 38. Mississippian Oil Volume ProfileStrong cash generator with volumes returning to 2010 levels Production (Boe/d) 2009 2010 2011e Cash flow $100MM Cash flow $119MM Cash flow $125MM Capex $23MM Capex $50MM Capex $57MM Severe weather impacts volumes Q1 through Q3 of 2011 2010 2011 2012 Base 2012 Program 38
  • 39. Emerging Prospect Inventory
  • 40. 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) 40
  • 41. Montney – Fireweed - NE British Columbia • Scalable liquids-rich gas discovery in H2/11 NAL Access Lands MNTY Penetrations • Initial liquids yield of ~100 bbl/mmcf 2012 Program 2011 Program • Initial gas rates of up to 4 mmcf/d • EUR - 630 mboe per well • 100% WI in 21 gas spacing units • 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) 41
  • 42. 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 42
  • 43. 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 43
  • 44. Summary & Key Messages
  • 45. Summary & Key Messages Attractive Sustainable relative business valuation model Increasing Capital liquids focused in volumes core areas 45
  • 46. Appendix
  • 47. Experienced Management Team Andrew Wiswell President & CEO Keith Steeves Vacant Angele Mullins John Kanik John Koyanagi Clayton ParadisVP Finance & CFO VP Ops & COO Director, HR Director, Marketing VP Business Dev. Director, IR Tracy Heck David Allen Alex Tworo Controller Director, E&D A&D Geology Jim Van Camp Saskatchewan BU Lance Berg Sylvan Lake BU Darcy Reding Western BU Tim Brandenborg Non-Operated BU Darcy Erickson Drilling & Completions Deric Orton Director, Land 47
  • 48. Strategic Partnership with Manulife Manulife: • Direct investor in oil and gas assets since NAL Resources Management 1990 • Long term investment horizon (manages 46,500 boe/d) • Desire to increase investment Terms of Administrative Cost Sharing Agreement: NAL Energy Manulife • No management or acquisition fees • Shared G&A costs 28,500 18,000 • Independently controlled board boe/d boe/d • Long term contract - 90 day NAL Energy exit option 65% of assets are common Benefits: 90% are operated • Enhanced technical/financial capability • Broad market view & investment discipline • Financial partner in transactions 48
  • 49. Non-Taxable For Many YearsAvailable Tax Pools $ MMCanadian Exploration Expense 91Canadian Development Expense 442Canadian Oil & Gas Property Expense 417Undepreciated Capital Costs 261Other (including loss carry forwards) 328Total 1,539Note: as at September 30, 2011 49
  • 50. NAL Shareholder Analysis Income Focused High Canadian Ownership Institutional Presence Foreign Manulife 3% 1% U.S. 22% Institutional 41% Retail Canadian 58% 75%Note: As at September 30, 2011 50
  • 51. Available Credit Lines Credit Lines ($MM) 2011 Bank of Montreal* 145 $247 MM of credit Royal Bank of Canada 110 available as at Sept. 30th CIBC 87.5 Bank of Nova Scotia 87.5 Alberta Treasury Branch 40 National Bank Financial 40 Union Bank of California 40 Total 550* Includes $15 million of working capital facility 51
  • 52. Hedging Programs Manage Risk• Objective - Protect cash flow for the purposes of sustaining dividends and maintaining an active capital program• Board approval: maximum of 60% of net revenue• Counterparties: all Canadian chartered banks 52
  • 53. 2012 Hedging Program• Crude oil hedges: • 67% of 2012 oil volumes • Average floor price of US$ 97.42/bbl• Natural gas hedges: • 12% of 2012 gas volumes • Average floor price of C$ 4.05/GJ• Interest rate: • 30 – 35% of 2012 bank debt @ 1.71%*• Foreign Exchange: • 45% of 2012 US$ exposure @ 1.01(70% collared to 1.045) * All in bank interest rate 5.1% after bank fees 53
  • 54. Crude Oil Hedge Positions Crude Oil Hedge Contracts as at 1/5/2012 Q1-12 Q2-12 Q3-12 Q4-12US$ Collar Contracts$US WTI Collar Volume (b/d) 900 900 700 700Bought Puts – Average Strike Price ($US/bbl) 101.11 101.11 101.43 101.43Sold Calls – Average Strike Price ($US/bbl) 117.07 117.07 117.66 117.66US$ Swap Contracts$US WTI Swap Volume (b/d)* 6,950 6,950 6,750 6,750Average WTI Swap Price ($US/bbl) 97.03 97.03 96.93 96.93Cdn$ Collar Contracts$Cdn WTI Collar Volume (b/d)Bought Puts – Average Strike Price ($Cdn/bbl)Sold Calls – Average Strike Price ($Cdn/bbl)Cdn$ Swap Contracts$Cdn WTI Swap Volume (b/d)Average WTI Swap Price ($Cdn/bbl)Total Volume (b/d) 7,850 7,850 7,450 7,450Note: All counterparties are Canadian banks in our syndicate.• For calendar 2012, there are 4 swap contracts for a total of 1,250 bbl/d at an average price of $100.96, that contain extendable call options. These options provide the counterparty with the right to extend the contract into calendar 2013 under the same price and volumetric terms. The counterparty can exercise this option anytime before December 31, 2012. 54
  • 55. Natural Gas Hedge Positions Natural Gas Hedge Contracts as at 1/5/2012 Q1-12 Q2-12 Q3-12 Q4-12 Collar Contracts AECO Collar Volume (GJ/d) Bought Puts – AECO Average Strike Price ($Cdn/GJ) Sold Calls – AECO Average Strike Price ($Cdn/GJ) Swap Contracts AECO Swap Volume (GJ/d) 24,000 5,000 5,000 3,674 AECO Average Price ($Cdn/GJ) 3.98 4.16 4.16 4.17 Total Volume (GJ/d) 24,000 5,000 5,000 3,674Note: All counterparties are Canadian banks in our syndicate. 55
  • 56. Interest Rate Hedge Positions Financial Interest Rate Swap Contracts as at 1/5/2012 Remaining Term Notional (Cdn $MM) Floating Rate Fixed Rate (Receive) (Pay) Oct 2011– Jan 2013 22 CAD-BA-CDOR 3 month 1.3850% Oct 2011– Jan 2014 22 CAD-BA-CDOR 3 month 1.5100% Oct 2011 – Mar 2013 14 CAD-BA-CDOR 3 month 1.8500% Oct 2011 – Mar 2013 14 CAD-BA-CDOR 3 month 1.8750% Oct 2011 – Mar 2014 14 CAD-BA-CDOR 3 month 1.9300% Oct 2011 – Mar 2014 14 CAD-BA-CDOR 3 month 1.9850% Total Notional (Cdn $) 100** Fixed approximately 30% of floating bank debt ($325MM average for 2012e)Note: All counterparties are Canadian banks in our syndicate. 56
  • 57. Foreign Exchange Hedge Positions Notional (US) per Term Counterparty Floating Rate Option Fixing Range month (USD/CAD) 0.97 – 1.04 $1.0 MM Jan 1, 2012 to Dec 31, 2012 BofC Monthly Average Noon RateWhen the monthly average noon spot foreign exchange rate exceeds the fixing range, NAL is committed to selling the above listed USD at the lower fixing ratefor that month. To the extent the monthly average spot foreign exchange rate is below the lower fixing rate, NAL has a commitment to sell the above listedUSD at the lower fixing rate. When the monthly average noon spot foreign exchange rate falls within the fixing range, NAL has no commitment to sell USD. Option Payout Range Notional (US) per Term Counterparty Floating Rate Monthly (USD/CAD) month Premium Received 0.93 - 1.01 $2.0 MM Jan 1, 2012 to Dec 31, 2012 BofC Monthly Average Noon Rate CAD $40K 0.90 - 1.15 $1.0 MM Jan 1, 2013 to Sept 30, 2013 BofC Monthly Average Noon Rate CAD $40KWhen the monthly average noon spot foreign exchange rate is outside the payout range, the monthly premium is forfeited. NAL is committed to selling theabove listed USD at the upper payout range value for that month when the average noon spot foreign exchange rate exceeds the payout range. Fade-in Level Strike Price Participation Level Notional (US) Term Counterparty Floating Rate (USD/CAD) (USD/CAD) (USD/CAD) per month 0.92 0.985 1.03 $2.0 MM Jan 1, 2012 to Dec 31, 2012 BofC Monthly Average Noon Rate 0.91 1.0075 1.05 $1.5 MM Jan 1, 2012 to Dec 31, 2012 BofC Monthly Average Noon Rate 0.935 1.00 1.05 $0.5 MM Jan 1, 2012 to Dec 31, 2012 BofC Monthly Average Noon Rate 0.92 1.012 1.0625 $0.5 MM Jan 1, 2012 to Dec 31, 2012 BofC Monthly Average Noon Rate 0.92 0.995 1.035 $1.0 MM Jan 1, 2012 to Dec 31, 2012 BofC Monthly Average Noon Rate 0.93 1.04 1.075 $0.5 MM Jan 1, 2012 to Dec 31, 2012 BofC Monthly Average Noon Rate 0.90 1.065 1.15 $1.0 MM Jan 1, 2013 to Sept 30, 2013 BofC Monthly Average Noon RateNAL is fixed to sell USD on a monthly basis at the strike price. If the Bank of Canada monthly average noon rate is below the fade-in level or between the strike andparticipating level, NAL has no commitment to sell USD.Note: FX contracts as at 01/05/2012. 57
  • 58. Foreign Exchange Hedge Positions Fixed Rate Notional (US) Term Counterparty Floating Rate (USD/CAD) per month 0.9954 $2.0 MM Jan 1, 2012 to Dec 31, 2012 BofC Monthly Average Noon Rate 1.0565 $1.5 MM Jan 1, 2012 to Dec 31, 2012 BofC Monthly Average Noon Rate NAL has a monthly commitment to settle the above fixed rates against the Bank of Canada monthly average noon rate.Note: FX contracts as at 01/05/2012. 58
  • 59. 2012 Program: Half Cycle Play Metrics BTAX NPV @15 - Gross BTAX Payout (mnths) EUR per Well - Gross DCET Capital- Gross Approximate %WI Recycle Ratio (x) Netback ($/boe) 2012e Program F & D ($/boe) BTAX ROR (%) (mboe) % Gas ($MM) ($MM)Cochrane CRDM 65 3.5 - 3.7 200 - 300 21 12 - 20 60 3.5 - 5.0 1.7 - 6.0 30 - 200 8 - 36 16Garr/ WWho CRDM 65 - 70 3.0 -3.3 160 20 20 75 4.0 1.4 - 1.7 34 - 40 24 - 30 15Deep Basin Gas 20 - 70 3.0 - 6.0 300 - 550 60 - 94 9 - 14 20 - 35 2.0 - 4.0 0.6 - 2.0 20 - 50 22 - 40 10Fireweed- MNTY 100 7.5 - 9.0 630 60 14 29 2.1 0.45 17 58 1SW Williston MSSP 50 1.8 - 2.3 85 - 105 0 20 - 27 55 - 60 2.0 - 3.0 0.8 - 1.4 30 - 50 24 - 36 23Greater Williston MSSP 35 - 100 1.2 - 1.7 60 - 70 0 - 10 18 - 28 70 - 85 2.5 - 4.0 0.9 - 1.9 45 - 190 12 - 24 22Sawn Lake- SLVP 50 4.0 - 5.0 167 5 25 62 2.5 1.9 55 15 2Other Oil 35 - 100 1.5 - 3.0 80 - 270 0 - 60 6 - 30 40 - 60 2.0 - 9.0 0.8 - 3.5 35 - 200 10 - 34 24Misc. 11Note: See Appendix for price assumptions 59
  • 60. Understanding Our Inventory Geoscience Professionals feeding Prospect Hopper Economic Prospect ProvenAttributes Well Constrained by Mapping Positioning complete Un-Risked Tier 1 locations Tier 2 locations Tier 3 locations Inventory (n=2,750) Risk Execution Barriers Factors Failed Proof-of-concept Positioning Barriers 80% 50% 20% >100% ROR Drillable Immediately Drillable in Risked 20% ROR Near Term Drillable in Inventory Medium Term (n=1,150) 60
  • 61. Understanding Our Inventory• Drillable Inventory equals • 100% of Tier 1 Locations• Total Risked Inventory equals • 90% of Tier 1 locations plus • 50% of Tier 2 locations plus • 10% of Tier 3 locations• Contingent Inventory equals • Total Risked Inventory minus Drillable Inventory 61
  • 62. 2010 – Stable Reserves Performance• Reserves performance in the McDaniel report was stable and predictable• 109% total production replacement, approximately 90% through the drill bit• 3 yr average F&D of $18.80/boe; FD&A of $21.86/boe 62
  • 63. Reserves & Capital Efficiency Summary 2010 2009Reserves (MMboe)Proved 71.0 70.91Proved + Probable (“P+P) 103.9 102.21P+P Reserves/sh (boe/sh) 0.71 0.74RLI (years)P+P 9.4 9.2Reserves Replacement RatioP+P (excluding A&D) 90% 131%P+P (including A&D) 109% 445% Three Year Weighted AverageIncluding Changes in Future Development Capital 2010 2009 2008 2008 – 2010Finding & Development Costs ($/boe)Proved 21.41 18.52 14.18 17.92P+P 22.60 17.86 16.24 18.80F&D Recycle Ratio(3)Proved 1.4 1.7 3.0 1.9P+P 1.3 1.8 2.6 1.8Finding, Development & Acquisition Costs ($/boe)Proved 22.37 27.87 19.41 24.77P+P 22.85 22.33 19.66 21.86 63
  • 64. Conservatively Booked Reserves PDP reserves represent a high percentage of total proved 80,000 85% 86% 70,000 60,000 94% 95% 50,000 93% 94% Mboe 40,000 30,000 96% 20,000 10,000 0 2004 2005 2006 2007 2008 2009 2010 PROVED PRODUCING 64
  • 65. Conservatively Booked Reserves Probables represent a low percentage of total P+P reserves 120,000 31% 32% 100,000 28% 80,000 27% 30% 30% Mboe 60,000 29% 40,000 20,000 0 2004 2005 2006 2007 2008 2009 2010 PROVED PROBABLE 65
  • 66. Stable Reserves Per Share PerformanceStable reserves per share performance reinvesting approximately 59% of cash flow 0.70 0.60 0.50 Mboe / 000 units 0.40 0.30 0.20 0.10 0.00 2007 2008 2009 2010 Note: DARPU calculated using year-end reserves, net debt, convertibles and units outstanding. Net debt converted to units using annual average unit price. Converts converted to units at strike price 66
  • 67. Stable Production Per Share Performance Stable production per share performance reinvesting approximately 59% of cash flow 120 35,000 100 30,000 80 Production (boe/d) boe / 000 units 25,000 60 20,000 40 15,000 20 0 10,000 2007 2008 2009 2010 P+P Reserves Per Unit Annual Average ProductionNote: Production per unit calculated using annual average production and annual average units outstanding.This metric is not debt-adjusted given complications in calculating average annual debt figures. 67
  • 68. 2012 Sensitivities on FFO Impact on FFO – Excluding Hedges Change ($MM) $/shareWTI ($US/bbl) $5.00 16.9 0.11AECO ($C/GJ) $0.50 14.4 0.09FX (CAD/US) $0.01 3.4 0.02Prime Rate 1.0% 3.4 0.02Production (bbl/d) 100 2.1 0.01Production (mmcf/d) 1 0.4 0.003Oil Differential 1.0% 3.9 0.03Gas Differential 1.0% 0.9 0.01Note: Excludes impact of hedge contracts 68
  • 69. 2012 Sensitivities on FFO Impact on FFO – Including Hedges ($MM) $/shareWTI ($US/bbl) $5.00 2.9 0.02AECO ($C/GJ) $0.50 12.7 0.08FX (CAD/US) $0.01 2.3 0.02Prime Rate 1.0% 2.4 0.02Note: Includes impact of hedge contracts 69
  • 70. Economic Evaluation Price Assumptions Edmonton Par ($C/bbl) AECO Gas ($C/GJ) 2012 88.95 3.50 2013 92.00 3.90 2014 93.98 4.15 2015 95.96 4.40 2016 97.94 4.65 Thereafter +2%/year +2%/year 70
  • 71. Sell-side Research Analyst Firm Recommen Gordon Tait BMO Capital Markets Market Grant Hofer Barclays Capital Unde Jeremy Kaliel CIBC World Markets Sector Outpe Kevin C.H. Lo FirstEnergy Capital Market Stacey McDonald GMP Securities Cristina Lopez Macquarie Capital Kyle Preston National Bank Financial Out Jeff Martin Peters & Co. Sector Kristopher Zack Raymond James Market Mark Friesen RBC Capital Markets Sector Gordon Currie Salman Partners Patrick Bryden Scotia Capital Sector Michael Zuk Stifel Nicolaus Travis Wood TD Securities 71
  • 72. 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 72
  • 73. Corporate InformationEXECUTIVE TEAM TRUSTEE AND TRANSFER AGENTAndrew Wiswell President & CEO Computershare Trust Company of CanadaKeith Steeves VP Finance & CFO AUDITORJohn Koyanagi VP Business Development KPMG ENGINEERING CONSULTANTSINVESTOR RELATIONS McDaniel & AssociatesClayton Paradis Director, Investor Relations LEGAL COUNSELLocal: (403) 294-3620 Bennett Jones LLPToll-free: (888) 223.8792 STOCK EXCHANGE LISTINGE-mail: investor.relations@nal.ca & SYMBOL Toronto Stock Exchange: NAE EXECUTIVE OFFICE 1000 – 550 6th Avenue SW, Calgary, Alberta, T2P 0S2 Website: www.nalenergy.com 73

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