Canadian Shale Gas & LNG in a North American Context September - PowerPoint PPT Presentation

Canadian Shale Gas & LNG in a North American Context September 10, 2013

BMO Capital Markets Canadian Unconventional Natural Gas Plays North American Natural Gas Fundamentals North American Demand and LNG Alternatives Summary 1

BMO Financial Group and BMO Capital Markets BMO Capital Markets – BMO Financial Group Global Investment Banking Operations NORTH AMERICA Canada's first bank: established in 1817 ATLANTA | BOSTON | CALGARY | CHICAGO | DALLAS | DENVER | HOUSTON |  LOS ANGELES | MEXICO CITY | MONTREAL Offers broad range of retail banking, wealth  NEW YORK | SAN FRANCISCO | TORONTO | VANCOUVER management and investment banking services Organization EUROPE One of the largest diversified financial services DUBLIN | LONDON | LUGANO | MUNICH | ZURICH | PARIS  providers in North America Market Cap C$38 billion Total Assets C$525 billion ASIA ABU DHABI | BEIJING | DELHI | GUANGZHOU | HONG KONG | SHANGHAI | TAIPEI Key Operating LTM Revenue C$16.3 billion Data Employees 46,000 SOUTH AMERICA RIO DE JANEIRO Tier 1 Capital Ratio 12.62% AUSTRALIA MELBOURNE Note: BMO financials – as of October 31, 2012 BMO Capital Markets’ Capabilities ADVISORY SERVICES CORPORATE FINANCE DISTRIBUTION & TRADING TREASURY SERVICES  Acquisitions & Divestitures  Initial Public Offerings  Institutional Sales  Cash Management  Mergers & Acquisitions  Follow-on Offerings  Trading  Risk Management  Strategic Advisory  Convertible Securities  Equity Research  Asset Management  Fairness Opinions  Mezzanine Lending  Fixed Income Research  Foreign Exchange  Takeover Defense  High-Yield Debt  Investor Marketing  Trade Finance  Share Buybacks  Investment-Grade Debt  Investor Conferences  Valuation Analysis  Corporate Lending  Account Sponsorship  Securitization  Retail Distribution  Private Placements 2

Investment & Corporate Banking Financial Solutions MERGERS & ACQUISITIONS ACQUISITIONS & DIVESTITURES Provider of premier M&A services to public Provider of premier in-depth A&D services in   and private clients of varying sizes Canada and the United States Over 50 professionals globally 13 professionals in Canada and 19 in the   United States ` Advised on $29 bn worth of E&P  transactions in 2012 (ranked #1 in domestic E&P league tables) LOAN FINANCING EQUITY CAPITAL MARKETS Arranger, underwriter and provider of Equity underwriter for public and private   syndicated loan financing for M&A, companies through IPOs, follow-on common leveraged finance, bridge facilities, project share and trust offerings, preferred shares, finance and general corporate purposes private placements and convertible debentures 125 professionals globally  Over 19 professionals globally  Ranked #1 in domestic equity E&P league  tables via 10 book-run transactions in 2012 Complete suite of advisory and corporate banking solutions 3

BMO Global Energy Group North America Based International Reach Asia India Calgary Australia Corporate Finance 16 London Europe A&D 13 Toronto Lending 12 Corporate Finance 16 Energy ECM 3 Research 10 Lending 1 Energy Sales 3 Commodity Traders 2 Commodity Traders 3 Energy M&A 4 Beijing LONDON CALGARY DUBLIN Corporate Finance 4 MONTREAL ZURICH TORONTO VANCOUVER PARIS BEIJING CHICAGO BOSTON Abu Dhabi DENVER SAN FRANCISCO Lending 1 NEW YORK MILWAUKEE SHANGHAI LOS ANGELES Hong Kong ABU DHABI ATLANTA HOUSTON New York GUANGZHOU TAIPEI Corporate Finance 1 Lending 8 Houston MEXICO CITY Energy Sales 1 HONG KONG DELHI Corporate Finance 17 Commodity Traders 3 A&D 16 Lending 12 Delhi Research 6 Corporate Finance 4 M&A 1 RIO DE JANEIRO Melbourne Commodities/Derivatives 10 Corporate Finance 4 MELBOURNE Key BMO Energy Offices Other BMO Offices 145+ Energy professionals with global reach 4

Leading Energy M&A Franchise Canadian Oil & Gas M&A Last Twelve Months Rank Name Transactions Size $510 million US$17.9 billion (#) (C$ mm) 1 BMO Capital Markets 6 $26,821 Advisor on Sale of SE SASK Advisor on Acquisition of Asset to TORC Oil & Gas Nexen Inc. 2 RBC Capital Markets 13 $21,587 3 Citi 2 $18,496 Pending February 2013 4 Goldman Sachs & Co 1 $17,900 5 Bank of America Merrill Lynch 2 $6,147 6 HSBC Bank 2 $2,526 7 TD Securities 7 $1,818 8 GMP Securities 10 $1,528 9 Credit Suisse 3 $1,309 $6.0 billion US$861 million 10 Evercore Partners 4 $1,201 Advisor on Acquisition of Other 49 $7,546 Advisor on Sale to Ute Energy PETRONAS Source: Bloomberg (August 23, 2013): Canadian target or seller or acquirer; credit to acquirer or seller financial advisor only; announced and completed deals LTM; oil and gas E&P December 2012 November 2012 $424 million $183 million $611 million US$2.2 billion $1.1 billion $1.9 billion Advisor on Merger with Advisor on Amended Advisor on Acquisition of Advisor Advisor on sale to Advisor on Acquisition of WestFire Energy Proposal to Wild Stream Exploration Pengrowth Energy OPTI Canada Inc. on Montney Joint Venture Open Range Inc. with PETRONAS October 2012 August 2012 May 2012 March 2012 November 2011 August 2011 BMO Capital Markets is the #1 advisor to the Canadian energy sector 5

M&A Platform Combines Financial and Technical Expertise Strong synergies created by combining traditional investment banking with technically-focused A&D group  Full platform of advisory and banking services offered within BMO Capital Markets  Technical expertise allows BMO to effectively sell assets/corporations and support Investment Banking  Extensive contact network of investment banking at C-suite levels supports technical expertise and business development contacts of the  A&D group Combination of technical and financial expertise to provide clients with a full service platform 6

BMO Capital Markets Canadian Unconventional Natural Gas Plays North American Natural Gas Fundamentals North American Demand and LNG Alternatives Summary 7

Unconventional Natural Gas Plays North American Shale Basins Commentary North America has a proliferation of Unconventional/Tight  Gas Resource Plays unconventional / tight gas resource plays 3 plays are dominant in Canada  Montney  Horn River Horn River*  Duvernay *Montney  Muskwa Duvernay Shale* Glauconite Cardium Deep Basin Colorado Group Utica Shale Horton Bluff Fm Cody Gamon Mowry Collingwood/Utica Jonah Michigan Basin Antrim Hillard-Baxter-Mancos Niobrara Marcellus Mancos Mississippi Lime NewAlbany Granite Wash Hermosa Piceance Utica Anadarko Lewis Pierre Excello-Mulky San Juan Bend Devonian Woodford-Caney Conasauga Woodford Barnett-Woodford Haynesville Barnett Tuscaloosa Permian Pearsall-Eagle Ford Source: Street Research 8

Canadian Unconventional Natural Gas Plays West Coast Natural Gas Plays YUKON NORTHWEST TERRITORIES Cordova Liard Embayment Basin Horn River Horn River: Resource Potential: ~100 tcf ALBERTA Current Production: ~0.6 bcf/d Western Canada Montney Sedimentary Basin Montney: Resource Potential: ~130 tcf Current Production: ~2.5 bcf/d SASKATCHEWAN MANITOBA Duvernay: Evolving liquids-rich gas opportunities Duvernay BRITISH COLUMBIA with promising early stage results Initial Production EUR/Well Condensate NGL (Deep Cut) Capital ROR mmcf/d bcf bbl/mmcf bbl/mmcf $mm % 3 - 10 3 - 8 0 - 60 7 - 70 4.5 - 8.5 20 - 100+ Montney 5 - 12 6 - 14 0 0 - 2 12 - 18 0 - 25 Horn River 2 - 6 3 - 7 3 - 300+ 80 - 120 10 - 15 50 - 100+ Duvernay 2 - 5 Source: Wood Mackenzie 9

Western Canada Unconventional Gas Plays – Top Land Holders Top 15 Key Acreage Holders Montney (Moderately Liquids-rich) Producers participating in west coast LNG projects 1,400 1,281 1,200 1,024 Net Sections 1,011 1,000 841 694 688 800 600 303 266 264 256 400 201 195 195 190 180 200 0 Horn River (Dry Gas) Producers participating in west coast LNG projects 600 531 Net Sections 450 500 400 313 266 245 300 203 156 148 139 141 138 200 116 113 84 72 100 0 Duvernay (Liquids-rich) Producers participating in west coast LNG projects 1,200 1,000 1,000 Net Sections 800 623 563 600 400 381 355 340 400 225 199 195 172 156 145 141 125 (1) 200 - Source: Public Disclosure, GeoSCOUT 10

Montney Gas Production – Alberta and British Columbia Montney Production Profile 3.0 4,200 Well Location Map Montney Production Montney Well Count Top 5 Producers #1 Encana - 612 mmcf/d #2 Shell – 287 mmcf/d 2.5 3,500 #3 Arc – 267 mmcf/d Montney production has grown  #4 Murphy – 185 mmcf/d rapidly over the last 5 years #5 Progress/Petronas – 147 mmcf/d Natural Gas Production (Bcf/d) 2.0 2,800 Well Count 1.5 2,100 Top 5 Acreage Holders 1,400 1,281 1,200 1,024 1,011 1.0 1,000 1,400 841 Net Acres 800 694 600 400 0.5 700 June 2013 production – 2.49 Bcf/d 200  0 June 2013 well count – 3,144  0.0 0 2007 2008 2009 2010 2011 2012 2013 Q2 Canadian Montney production proximal to west coast LNG – 2.4 Bcf/d 11