Corporate Presentation
January, 2012
NAL Energy Corporation Profile
2
TSX Symbol NAE
Market Capitalization1 $1.1 Billion
Monthly Dividend $0.05/share
Net Debt2...
Strategic Direction – Long Term Sustainability
3
• Dividend paying E&P company
• Maximize cash flow
• Add scalable liquids...
Key Focus – Grow Liquids Volumes
4
8,000
9,000
10,000
11,000
12,000
13,000
14,000
15,000
16,000
Q1/11 Q2/11 Q3/11 Q4/11E Q...
2012 Corporate Plan
5
1. Grow liquids volumes
• Forecast oil volumes up 5% / Liquids mix 47% to 50%
2. Capital focused on ...
Financial Action Plan
6
Reduce monthly
dividend to $0.05
per share
Maintain credit
lines by
focusing capital
on oil and
li...
2012 Full Year Guidance
7
•Production (boe/d) 28,000 – 29,000
•Capital ($MM) 200
•Operating Costs ($/boe) 11.50 – 12.00
8
2012 Key Assumptions
WTI ($US/bbl) 85.00 95.00 105.00
AECO ($C/GJ) 2.50 3.00 3.50
FX (CAD/US) 1.00 0.98 0.96
Monthly Div...
9
2012 Financial Forecast
Funds From Operations “FFO” ($MM) 275 265 275
Net Capital Expenditures ($MM) (200) (200) (200)
D...
10
2012 Balance Sheet Forecast
Year end 2012e ($MM)
Bank Debt at Year-end 2012e 412 305 412
Working Capital Deficit 72 70 ...
Operate Across Western Canada
11
Alberta
% Crude Oil: 45%
% of Production: 59%
British Columbia
% Gas & NGL’s: 100%
% of P...
Operational Strategy
12
• Oil 85% of the capital program
• Deliver capital performance
• Actively managing execution risk
...
13
2012 Capital Allocation
2011e 2012e
Drill, Complete & Tie-in 200 170
Plant & Facilities 18 10
Land & Seismic 18 10
Subt...
Capital Allocation By Play
14
$26
$23
$40
$51
$42
$34
$51
$73
$26
$26
$39
$79
$0 $10 $20 $30 $40 $50 $60 $70 $80 $90
Liqui...
Cardium Oil: West Central AB
15
**Resource Halo Areas provided by Canadian Discovery
• Developing selectively to 3-4 wells...
New Cardium Land Deal Increases Inventory
16
• New four year deal finalized January 2012
• Net $6MM commitment per year
• ...
Cardium Oil: Cochrane / Lochend AB
17
• Sweet spot outperforming regional type
curve by 2-3 times
• New 3D applied to deli...
Lochend Cardium Exceeding Expectations
18
• Q4 2011 results set-up active program for 2012
• Liquids and solution gas hand...
30
45
39
Mississippian Prospect
Inventory: n=114
2012 Program
Drillable Inventory
Contingent
Locations
Mississippian Oil –...
Emerging Tight Oil Play – Sawn Lake
20
• Scalable, repeatable oil resource play
targeting Slave Point Platform Carbonates
...
Montney – Fireweed - NE British Columbia
21
• Scalable liquids-rich gas discovery in H2/11
• Initial production – 1,000 bo...
Significant Potential To Increase Oil Reserves
22
Gross Net
Drillable
Inventory
Contingent
Inventory
Total
Risked
Location...
Extensive Land Base
23
Note: Excludes Approx 950,000 Acres (Gross) of undifferentiated Developed and Undeveloped Lands
955...
24
Summary & Key Messages
Sustainable
business
model
Capital
focused in
core areas
Increasing
liquids
volumes
Attractive
r...
Appendix
26
Experienced Management Team
Andrew Wiswell
President & CEO
John Kanik
Director, Marketing
Alex Tworo
A&D Geology
John K...
27
Manulife:
• Direct investor in oil and gas assets since
1990
• Long term investment horizon
• Desire to increase invest...
Non-Taxable For Many Years
28
Note: as at September 30, 2011
Available Tax Pools $ MM
Canadian Exploration Expense 91
Cana...
Canadian
75%
U.S.
22%
Foreign
3%
Institutional
41%
Retail
58%
Manulife
1%
29
NAL Shareholder Analysis
Income Focused
Insti...
30
Available Credit Lines
Credit Lines ($MM)
2011
Bank of Montreal* 145
Royal Bank of Canada 110
CIBC 87.5
Bank of Nova Sc...
Hedging Programs Manage Risk
31
• Objective - Protect cash flow for the purposes of
sustaining dividends and maintaining a...
2012 Hedging Program
32
•Crude oil hedges:
• 67% of 2012 oil volumes
• Average floor price of US$ 97.42/bbl
•Natural gas h...
Note: All counterparties are Canadian banks in our syndicate.
• For calendar 2012, there are 4 swap contracts for a total ...
34
Natural Gas Hedge Positions
Natural Gas Hedge Contracts as at 1/5/2012
Q1-12 Q2-12 Q3-12 Q4-12
Collar Contracts
AECO Co...
35
Interest Rate Hedge Positions
Financial Interest Rate Swap Contracts as at 1/5/2012
Remaining Term Notional (Cdn $MM) F...
36
Foreign Exchange Hedge Positions
Option Fixing Range
(USD/CAD)
Notional (US) per
month
Term Counterparty Floating Rate
...
37
Foreign Exchange Hedge Positions
Fixed Rate
(USD/CAD)
Notional (US)
per month
Term Counterparty Floating Rate
0.9954 $2...
2012 Program: Half Cycle Play Metrics
38
Note: See Appendix for price assumptions
Approximate%WI
DCETCapital-Gross
($MM)
E...
Understanding Our Inventory
39
Prospect
Attributes
Risked
Inventory
>100% ROR
Tier 1 locations Tier 2 locations Tier 3 loc...
Understanding Our Inventory
40
• Drillable Inventory equals
• 100% of Tier 1 Locations
• Total Risked Inventory equals
• 9...
2010 – Stable Reserves Performance
41
•Reserves performance in the McDaniel report
was stable and predictable
•109% total ...
42
Reserves & Capital Efficiency Summary
2010 2009
Reserves (MMboe)
Proved 71.0 70.91
Proved + Probable (“P+P) 103.9 102.2...
43
PDP reserves represent a high percentage of total proved
Conservatively Booked Reserves
96%
93%
94%
95%
94%
85% 86%
0
1...
44
Probables represent a low percentage of total P+P reserves
Conservatively Booked Reserves
29%
30%
30%
27%
28%
31% 32%
0...
45
Stable Reserves Per Share Performance
Note: DARPU calculated using year-end reserves, net debt, convertibles and units ...
46
Stable Production Per Share Performance
Note: Production per unit calculated using annual average production and annual...
47
2012 Sensitivities on FFO
Impact on FFO – Excluding Hedges
Change ($MM) $/share
WTI ($US/bbl) $5.00 16.9 0.11
AECO ($C/...
48
2012 Sensitivities on FFO
Impact on FFO – Including Hedges
($MM) $/share
WTI ($US/bbl) $5.00 2.9 0.02
AECO ($C/GJ) $0.5...
Economic Evaluation Price Assumptions
49
Edmonton Par ($C/bbl) AECO Gas ($C/GJ)
2012 88.95 3.50
2013 92.00 3.90
2014 93.98...
50
Sell-side Research
Analyst Firm Recommen
Gordon Tait BMO Capital Markets Market
Grant Hofer Barclays Capital Unde
Jerem...
51
EXECUTIVE TEAM
Andrew Wiswell President & CEO
Keith Steeves VP Finance & CFO
John Koyanagi VP Business Development
INVE...
Disclaimers
52
• Forward Looking Statements
• This document contains statements that constitute “forward-looking informati...
of 52

Nal energy corporate presentation - january 2012

NAL Energy Corporation - Corporate Presentation - January 2012
Published on: Mar 3, 2016
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Transcripts - Nal energy corporate presentation - january 2012

  • 1. Corporate Presentation January, 2012
  • 2. NAL Energy Corporation Profile 2 TSX Symbol NAE Market Capitalization1 $1.1 Billion Monthly Dividend $0.05/share Net Debt2 $376 Million Current Shares Outstanding2 150.4 Million Convertible Debentures Trading Symbol NAE.DB NAE.DB.A Coupon 6.75% 6.25% Principal Outstanding ($MM) 80 115 Conversion Price ($/Share) 14.00 16.50 Maturity Date 31AUG12 31DEC14 Notes: 1) As at January 10, 2012 2) As at Q3/11
  • 3. Strategic Direction – Long Term Sustainability 3 • 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
  • 4. Key Focus – Grow Liquids Volumes 4 8,000 9,000 10,000 11,000 12,000 13,000 14,000 15,000 16,000 Q1/11 Q2/11 Q3/11 Q4/11E Q1/12E Q2/12E Q3/12E Q4/12E Volumes(Boe/d) NAL Liquids Volumes
  • 5. 2012 Corporate Plan 5 1. Grow liquids volumes • Forecast oil volumes up 5% / Liquids mix 47% to 50% 2. Capital focused on high ROR and recycle ratio projects • Oil focused capital projects / higher liquids yields 3. Higher proportion of low risk development capital 4. Continued appraisal activity in new oil resource plays 5. Maintain financial flexibility
  • 6. Financial Action Plan 6 Reduce monthly dividend to $0.05 per share Maintain credit lines by focusing capital on oil and liquids plays Converted bank line from one to three year term in 2011 Term out a portion of existing bank line with high yield Refinance 2012 convertible maturity ($80MM) with debt Financial Flexibility
  • 7. 2012 Full Year Guidance 7 •Production (boe/d) 28,000 – 29,000 •Capital ($MM) 200 •Operating Costs ($/boe) 11.50 – 12.00
  • 8. 8 2012 Key Assumptions WTI ($US/bbl) 85.00 95.00 105.00 AECO ($C/GJ) 2.50 3.00 3.50 FX (CAD/US) 1.00 0.98 0.96 Monthly Dividend ($) 4.7 0.05 4.7 Volume (boe/d) 28,500 G&A ($/boe)2 3.00 2.50 3.00 Royalties (%) 17 18 19 Oil Differential (%)3 90 90 90 DRIP Participation (%) 23 23 23 Weighted Avg Shares O/S (MM) 152.3 152 152.3 Note: 1) Commodity, FX and Royalty assumptions are held constant through the year; 2) G&A excludes Unit Based Compensation (UBC); 3) NAL forecast price differential to C$ WTI .
  • 9. 9 2012 Financial Forecast Funds From Operations “FFO” ($MM) 275 265 275 Net Capital Expenditures ($MM) (200) (200) (200) Dividends ($MM) (90) (92) (90) Payout Ratios (% of FFO): Basic 46 35 46 Basic + Capital 122 110 122 Basic + Capital, net of DRIP 117 102 117
  • 10. 10 2012 Balance Sheet Forecast Year end 2012e ($MM) Bank Debt at Year-end 2012e 412 305 412 Working Capital Deficit 72 70 72 Net Debt 484 375 484 Convertible Debentures1 115 195 115 Total Debt 599 570 599 Net Debt/2012e Cash Flow 1.8x 1.4x 1.8x Total Debt/2012e Cash Flow 2.2x 2.2x 2.2x Available Capacity ($550MM bank line) 138 245 138 Notes: 1) Assumes 2012 convertible maturity ($80MM) is refinanced with either high yield or convertible debenture. 2015 maturity shown at face value and assumes no conversion in 2012.
  • 11. Operate Across Western Canada 11 Alberta % Crude Oil: 45% % of Production: 59% British Columbia % Gas & NGL’s: 100% % of Production: 14% SE Saskatchewan % Crude Oil: 93% % of Production: 25% Cardium Oil Mississippian Oil Natural Gas
  • 12. Operational Strategy 12 • 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
  • 13. 13 2012 Capital Allocation 2011e 2012e Drill, Complete & Tie-in 200 170 Plant & Facilities 18 10 Land & Seismic 18 10 Subtotal E&D 236 190 Other 10 10 Total 246 200 Note: Net dispositions totaled ~($29) MM in 2011
  • 14. Capital Allocation By Play 14 $26 $23 $40 $51 $42 $34 $51 $73 $26 $26 $39 $79 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 Liquids Rich Gas Other Oil Mississippian Oil Cardium Oil (Millions) 2012 2011 2010 Note: Does not include G&A, Facilities, Land & Seismic. Drill, Complete & Tie-in - $170 MM
  • 15. Cardium Oil: West Central AB 15 **Resource Halo Areas provided by Canadian Discovery • Developing selectively to 3-4 wells/section • Local sweet-spots emerging - focus on high- graded lands in Garrington/Westward Ho • De-risking non-core through farm-outs • New land deal completed in January 2012 Gross Risked Locations assuming up to 4 wells/ sec (see Appendix) NAL Access Lands Tier 1 Halo Tier 2 Halo Tier 3 Halo Conventional Garrington/ Westward Ho Lochend
  • 16. New Cardium Land Deal Increases Inventory 16 • 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
  • 17. Cardium Oil: Cochrane / Lochend AB 17 • Sweet spot outperforming regional type curve by 2-3 times • New 3D applied to delineate sweet spot • Solution gas infrastructure added 3D 0 50 100 150 200 250 300 350 400 450 500 1 13 25 37 49 ProductionVolumes(Boe/d) Month Lochend Sweet Spot Lochend Normal WWHO Garrington NAL Access Lands Key Penetrations 2012 Program 2011 Program
  • 18. Lochend Cardium Exceeding Expectations 18 • Q4 2011 results set-up active program for 2012 • Liquids and solution gas handling facilities added in 2011 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 On Production August 27, 2010 December 1, 2011 November 3, 2011 November 3, 2011 September 5, 2011 December 1, 2011 August 6, 2011 30 day IP (boe/d) 335 310 588 840 770 300 172 90 day IP (boe/d) 268 - - - - - 162 Current (boe/d) 174 153 258 660 234 167 100 Formation Cardium A Cardium A Cardium A Cardium A Cardium A Cardium A Cardium A Frac Fluid Type Water Water Water Water Water Water Water Number of Fracs 10 15 11 13 14 14 12 Lateral length (m) 1,082 1,179 1,024 1,260 1,132 1,276 1,000
  • 19. 30 45 39 Mississippian Prospect Inventory: n=114 2012 Program Drillable Inventory Contingent Locations Mississippian Oil – Greater Hoffer 19 • Multiple play trends now proven • Infrastructure in-place to: o Facilitate pressure maintenance o Minimize production down-time o Reduce operating costs • Land position increasing through strategic farm-ins completed in Q4/11 Gross Risked Locations assuming 300 m inter-well spacing (see Appendix) NAL Access Lands MSSP Producers 2012 Program 2011 Program MSSP Oil Pools 3D Seismic Outline Area Play-Types Schematic Hoffer 2009 Pool Discovery Beaubier New Pool Discovery Neptune New Pool Discovery Oungre Pool Extension
  • 20. Emerging Tight Oil Play – Sawn Lake 20 • Scalable, repeatable oil resource play targeting Slave Point Platform Carbonates – positioned in 2010 - 2011 • 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 2 26 20 Slave Point Prospect Inventory: n=48 2012 Program Drillable Inventory Contingent Locations Gross Risked Locations assuming 4 wells/ sec (see Appendix) NAL Access Lands SLVP Penetrations 2012 Program 2011 Program 3D 1-26-91-13W5 IP: 445 bopd & 2%WC 16-35-91-13W5 IP: 380 bopd & 7%WC
  • 21. Montney – Fireweed - NE British Columbia 21 • Scalable liquids-rich gas discovery in H2/11 • Initial production – 1,000 boe/d @ 100 bbls/mmcf of liquids • EUR - 630 mboe per well • 100% WI in 21 gas spacing units (sections) • Second earning well drilled Q1/12 1 11 8 Montney Prospect Inventory: n=20 2012 Program Drillable Inventory Contingent Locations Gross Risked Locations assuming 3 wells/ sec (see Appendix) NAL Access Lands MNTY Penetrations 2012 Program 2011 Program
  • 22. Significant Potential To Increase Oil Reserves 22 Gross Net Drillable Inventory Contingent Inventory Total Risked Locations EUR per Well (mboe) Upside Reserve Potential (mmboe) Average WI% Upside Reserve Potential (mmboe) Cardium 151 191 342 170 58.1 65 37.8 Mississippian – East 75 39 114 65 7.4 50 3.7 Mississippian – West 74 37 111 85 9.4 50 4.7 Slave Point Carbonate 28 20 48 170 8.2 100 8.2 Montney 12 8 20 630 12.6 100 12.6 635 95.7 67.0* • 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 *Note: includes 9.2 mmboe of booked reserves
  • 23. Extensive Land Base 23 Note: Excludes Approx 950,000 Acres (Gross) of undifferentiated Developed and Undeveloped Lands 955,000 919,000 294,000 NAL Access Lands (Gross Acres) Developed Undeveloped JV 195,000 747,000 271,000 NAL Undeveloped Access Lands (Gross Acres) BC Alberta Saskatchewan • 2.2 million gross acres • 1.2 million gross acres
  • 24. 24 Summary & Key Messages Sustainable business model Capital focused in core areas Increasing liquids volumes Attractive relative valuation
  • 25. Appendix
  • 26. 26 Experienced Management Team Andrew Wiswell President & CEO John Kanik Director, Marketing Alex Tworo A&D Geology John Koyanagi VP Business Dev. Clayton Paradis Director, IR Tracy Heck Controller Vacant VP Ops & COO Keith Steeves VP Finance & CFO Angele Mullins Director, HR David Allen Director, E&D Deric Orton Director, Land Darcy Reding Western BU Tim Brandenborg Non-Operated BU Darcy Erickson Drilling & Completions Jim Van Camp Saskatchewan BU Lance Berg Sylvan Lake BU
  • 27. 27 Manulife: • Direct investor in oil and gas assets since 1990 • Long term investment horizon • Desire to increase investment Terms of Administrative Cost Sharing Agreement: • No management or acquisition fees • Shared G&A costs • Independently controlled board • Long term contract - 90 day NAL Energy exit option Benefits: • Enhanced technical/financial capability • Broad market view & investment discipline • Financial partner in transactions Strategic Partnership with Manulife NAL Resources Management (manages 46,500 boe/d) 65% of assets are common 90% are operated NAL Energy 28,500 boe/d Manulife 18,000 boe/d
  • 28. Non-Taxable For Many Years 28 Note: as at September 30, 2011 Available Tax Pools $ MM Canadian Exploration Expense 91 Canadian Development Expense 442 Canadian Oil & Gas Property Expense 417 Undepreciated Capital Costs 261 Other (including loss carry forwards) 328 Total 1,539
  • 29. Canadian 75% U.S. 22% Foreign 3% Institutional 41% Retail 58% Manulife 1% 29 NAL Shareholder Analysis Income Focused Institutional Presence High Canadian Ownership Note: As at September 30, 2011
  • 30. 30 Available Credit Lines Credit Lines ($MM) 2011 Bank of Montreal* 145 Royal Bank of Canada 110 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 $247 MM of credit available as at Sept. 30th
  • 31. Hedging Programs Manage Risk 31 • Objective - Protect cash flow for the purposes of sustaining dividends and maintaining an active capital program • Board approval: maximum of 60% of net revenue • Counterparties: all Canadian chartered banks
  • 32. 2012 Hedging Program 32 •Crude oil hedges: • 67% of 2012 oil volumes • Average floor price of US$ 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
  • 33. Note: 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 $100.96, that contain extendable call options. These options provide the counterparty with the right to extend the contract into calendar 2013 under the same price and volumetric terms. The counterparty can exercise this option anytime before December 31, 2012. 33 Crude Oil Hedge Positions Crude Oil Hedge Contracts as at 1/5/2012 Q1-12 Q2-12 Q3-12 Q4-12 US$ Collar Contracts $US WTI Collar Volume (b/d) 900 900 700 700 Bought Puts – Average Strike Price ($US/bbl) 101.11 101.11 101.43 101.43 Sold Calls – Average Strike Price ($US/bbl) 117.07 117.07 117.66 117.66 US$ Swap Contracts $US WTI Swap Volume (b/d)* 6,950 6,950 6,750 6,750 Average WTI Swap Price ($US/bbl) 97.03 97.03 96.93 96.93 Cdn$ 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 7,450
  • 34. 34 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 3,674 Note: All counterparties are Canadian banks in our syndicate.
  • 35. 35 Interest Rate Hedge Positions Financial Interest Rate Swap Contracts as at 1/5/2012 Remaining Term Notional (Cdn $MM) Floating Rate (Receive) Fixed Rate (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.
  • 36. 36 Foreign Exchange Hedge Positions Option Fixing Range (USD/CAD) Notional (US) per month Term Counterparty Floating Rate 0.97 – 1.04 $1.0 MM Jan 1, 2012 to Dec 31, 2012 BofC Monthly Average Noon Rate When 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 rate for 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 listed USD 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. When the monthly average noon spot foreign exchange rate is outside the payout range, the monthly premium is forfeited. NAL is committed to selling the above listed USD at the upper payout range value for that month when the average noon spot foreign exchange rate exceeds the payout range. Note: FX contracts as at 01/05/2012. Fade-in Level (USD/CAD) Strike Price (USD/CAD) Participation Level (USD/CAD) Notional (US) per month Term Counterparty Floating Rate 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 Rate Option Payout Range (USD/CAD) Notional (US) per month Term Counterparty Floating Rate Monthly 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 $40K NAL 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 and participating level, NAL has no commitment to sell USD.
  • 37. 37 Foreign Exchange Hedge Positions Fixed Rate (USD/CAD) Notional (US) per month Term Counterparty Floating Rate 0.9954 $2.0 MM Jan 1, 2012 to Dec 31, 2012 BofC Monthly Average Noon Rate 1.0565 $1.5 MM Jan 1, 2012 to Dec 31, 2012 BofC Monthly Average Noon Rate NAL has a monthly commitment to settle the above fixed rates against the Bank of Canada monthly average noon rate. Note: FX contracts as at 01/05/2012.
  • 38. 2012 Program: Half Cycle Play Metrics 38 Note: See Appendix for price assumptions Approximate%WI DCETCapital-Gross ($MM) EURperWell-Gross (mboe) %Gas F&D($/boe) Netback($/boe) RecycleRatio(x) BTAXNPV@15-Gross ($MM) BTAXROR(%) BTAXPayout(mnths) 2012eProgram 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 16 Garr/ WWho CRDM 65 - 70 3.0 -3.3 160 20 20 75 4.0 1.4 - 1.7 34 - 40 24 - 30 15 Deep 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 10 Fireweed- MNTY 100 7.5 - 9.0 630 60 14 29 2.1 0.45 17 58 1 SW 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 23 Greater 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 22 Sawn Lake- SLVP 50 4.0 - 5.0 167 5 25 62 2.5 1.9 55 15 2 Other 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 24 Misc. 11
  • 39. Understanding Our Inventory 39 Prospect Attributes Risked Inventory >100% ROR Tier 1 locations Tier 2 locations Tier 3 locations Failed Proof-of-concept Positioning Barriers Execution Barriers 80% 50% 20% Drillable Immediately Proven Economic Well Constrained by Mapping Positioning complete Drillable in Near Term Drillable in Medium Term 20% ROR Geoscience Professionals Feeding Prospect Hopper Un-Risked Inventory (n=2,750) (n=1,150) Risk Factors
  • 40. Understanding Our Inventory 40 • 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
  • 41. 2010 – Stable Reserves Performance 41 •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 $21.86/boe
  • 42. 42 Reserves & Capital Efficiency Summary 2010 2009 Reserves (MMboe) Proved 71.0 70.91 Proved + Probable (“P+P) 103.9 102.21 P+P Reserves/sh (boe/sh) 0.71 0.74 RLI (years) P+P 9.4 9.2 Reserves Replacement Ratio P+P (excluding A&D) 90% 131% P+P (including A&D) 109% 445% Three Year Weighted Average Including Changes in Future Development Capital 2010 2009 2008 2008 – 2010 Finding & Development Costs ($/boe) Proved 21.41 18.52 14.18 17.92 P+P 22.60 17.86 16.24 18.80 F&D Recycle Ratio(3) Proved 1.4 1.7 3.0 1.9 P+P 1.3 1.8 2.6 1.8 Finding, Development & Acquisition Costs ($/boe) Proved 22.37 27.87 19.41 24.77 P+P 22.85 22.33 19.66 21.86
  • 43. 43 PDP reserves represent a high percentage of total proved Conservatively Booked Reserves 96% 93% 94% 95% 94% 85% 86% 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 2004 2005 2006 2007 2008 2009 2010 Mboe PROVED PRODUCING
  • 44. 44 Probables represent a low percentage of total P+P reserves Conservatively Booked Reserves 29% 30% 30% 27% 28% 31% 32% 0 20,000 40,000 60,000 80,000 100,000 120,000 2004 2005 2006 2007 2008 2009 2010 Mboe PROVED PROBABLE
  • 45. 45 Stable Reserves Per Share Performance Note: DARPU calculated using year-end reserves, net debt, convertibles and units outstanding. Net debt converted to units using annual average unit price. Converts converted to units at strike price Stable reserves per share performance reinvesting approximately 59% of cash flow 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 2007 2008 2009 2010 Mboe/000units
  • 46. 46 Stable Production Per Share Performance Note: Production per unit calculated using annual average production and annual average units outstanding. This metric is not debt-adjusted given complications in calculating average annual debt figures. Stable production per share performance reinvesting approximately 59% of cash flow 10,000 15,000 20,000 25,000 30,000 35,000 0 20 40 60 80 100 120 2007 2008 2009 2010 Production(boe/d) boe/000units P+P Reserves Per Unit Annual Average Production
  • 47. 47 2012 Sensitivities on FFO Impact on FFO – Excluding Hedges Change ($MM) $/share WTI ($US/bbl) $5.00 16.9 0.11 AECO ($C/GJ) $0.50 14.4 0.09 FX (CAD/US) $0.01 3.4 0.02 Prime Rate 1.0% 3.4 0.02 Production (bbl/d) 100 2.1 0.01 Production (mmcf/d) 1 0.4 0.003 Oil Differential 1.0% 3.9 0.03 Gas Differential 1.0% 0.9 0.01 Note: Excludes impact of hedge contracts
  • 48. 48 2012 Sensitivities on FFO Impact on FFO – Including Hedges ($MM) $/share WTI ($US/bbl) $5.00 2.9 0.02 AECO ($C/GJ) $0.50 12.7 0.08 FX (CAD/US) $0.01 2.3 0.02 Prime Rate 1.0% 2.4 0.02 Note: Includes impact of hedge contracts
  • 49. Economic Evaluation Price Assumptions 49 Edmonton Par ($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
  • 50. 50 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
  • 51. 51 EXECUTIVE TEAM Andrew Wiswell President & CEO Keith Steeves VP Finance & CFO John Koyanagi VP Business Development INVESTOR RELATIONS Clayton Paradis Director, Investor Relations Local: (403) 294-3620 Toll-free: (888) 223.8792 E-mail: investor.relations@nal.ca Corporate Information TRUSTEE AND TRANSFER AGENT Computershare Trust Company of Canada AUDITOR KPMG ENGINEERING CONSULTANTS McDaniel & Associates LEGAL COUNSEL Bennett Jones LLP STOCK EXCHANGE LISTING & SYMBOL Toronto Stock Exchange: NAE EXECUTIVE OFFICE 1000 – 550 6th Avenue SW, Calgary, Alberta, T2P 0S2 Website: www.nalenergy.com
  • 52. Disclaimers 52 • 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 NAL's drilling programs and the production profile of NAL's 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.

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