Corporate Presentation January 2020 1
Reader Advisory Forward Looking Statements and Forward Looking Information Certain statements included in this presentation constitute forward looking statements or forward looking information under applicable securities legislation. Such forward looking statements or information are provided for the purpose of providing information about management’s current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward looking statements or information typically contain statements with words such as “anticipate”, “expect”, “plan”, “intend”, “estimate”, “propose”, “project”, “forecast”, “should”, “target”, “will”, “may”, or similar words suggesting future outcomes or statements regarding an outlook. Forward looking statements or information in this presentation include, but are not limited to, statements or information with respect to business strategy and objectives; development plans; growth in production from the Western Canadian Sedimentary Basin (“WCSB”) ; ongoing demand for crude oil in North America; growth of crude oil transported by rail, contractual arrangements with railways, shippers and other market participants; pipeline constraints; capital expenditures; cash flow; debt levels and operating and other costs. Forward looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although Altex believes that the expectations reflected in such forward looking statements or information are reasonable, undue reliance should not be placed on forward looking statements because Altex can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this presentation, assumptions have been made regarding, among other things: successful completion of the proposed financing referenced herein; the general stability of the economic, legal and political environment in which Altex operates; the timely receipt of any required regulatory approvals; the ability of Altex to obtain qualified staff, equipment and services in a timely and cost efficient manner; the timing and costs of facility construction and expansion and the ability of Altex to secure adequate product for transportation; future oil prices; currency, exchange and interest rates; and the regulatory framework regarding crude transportation by rail, taxes and environmental matters in the jurisdictions in which Altex operates. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have ben used. Forward looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Altex and described in the forward looking statements or information. These risks and uncertainties which may cause actual results to differ materially from the forward looking statements or information include, among other things: the ability of management to execute its business plan; general economic and business conditions; the risk of economic, legal or political instability affecting the jurisdictions in which Altex operates; the risks inherent in the railway industry and the crude oil industry; the possibility that government policies or laws may change or governmental approvals may be delayed or withheld; the effects of competition and pricing pressures; Altex’s ability to enter into or renew customer and supplier contracts; potential delays or changes in plans with respect to development projects or capital expenditures; fluctuations in oil prices, foreign currency exchange rates and interest rates; risks inherent in Altex’s operations, including credit risk, health, safety and environmental risks; risks associated with existing and potential future law suits and regulatory actions against Altex; uncertainties as to the availability and cost of financing; and financial risks affecting the value of Altex’s investments. Readers are cautioned that the foregoing list is not exhaustive of all possible risks and uncertainties. The forward looking statement or information contained in this presentation are made as of January 2020 and Altex undertakes no obligation to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise unless expressly required by applicable securities laws. The forward looking statements or information contained in this presentation are expressly qualified by this cautionary statement. 2
Altex Energy ▪ Leading Canadian rail terminal company connecting Western Canadian Sedimentary Basin to key North American refining markets and export/import terminals ▪ Dominant loader of undiluted heavy oil and bitumen in Canada with unit train capability moving oil to locations in North America and globally ▪ Also load other products (e.g. refined products) and unload other products (e.g. chemicals) to support customers ▪ Owns and operates four terminals strategically located in Canada’s largest heavy oil production basins capable of moving more than 160,000 bpd at full capacity ▪ Strategic partnership and long-term arrangement with Canadian National Railway ▪ Backed by key contracts with highly capable counterparties ▪ Proprietary technology and systems 3
Altex Helps Customers ▪ The Problems ▪ Diluent Value Loss with Pipelined Heavy Oil/Bitumen ▪ Egress for Western Canadian Oil Production ▪ How Rail Can Help ▪ Already Exists (Established and Operational System) ▪ Gets Beyond Current Oversupplied Markets ▪ Large Capacity to Move Commodities ▪ Safe and Reliable and Efficient ▪ Altex Energy ▪ Terminals and Logistics ▪ Technology / Patents ▪ Dominant Undiluted Heavy Oil / Bitumen Terminal 4
Altex Terminals in Western Canada ▪ Owns and operates 4 terminals in Western Canada Peace River ▪ Focusses on moving Oilsands Region undiluted heavy oil and bitumen to refineries in USA, Athabasca Canada, and globally Oilsands Region ▪ Transports other products including condensate imports ▪ Key terminals offer emulsion Cold Lake and H 2 S treating services, Oilsands Region adding value for customers Normal Full Tank Truck Terminal Capacity Capacity Storage Stations (mbbl/d) (mbbl/d) (mbbl) (#) Lloydminster Heavy Oil Region Lashburn 65 90 148 26 Unity 15 30 24 12 Lynton 15 30 30 6 Falher 5 10 - 2 Total 100 160 202 46 5
Based on Avoiding Diluent in Crude Oil Movements ▪ Altex/CN initiation of crude on rail business in Canada was originally not Refinery value of C5+ should be less than light oil based on egress challenges ▪ Was based on avoiding need to add diluent (C5+) to heavy oil/bitumen which is required by current pipelines ▪ C5+ worth more as diluent than it is as refinery feedstock (lose money by moving C5+ like this) ▪ Added benefit is heavy oil/bitumen is safer and more environmentally- friendly to move without diluent ▪ Altex has been doing this for a decade GMPFE Jan 3, 2020 6
New Undiluted Heavy Oil Entrants? Athabasca ▪ Altex accesses undiluted heavy oil by Oilsands Region picking it up close to production site (before pipeline-required diluent is added) Peace River Oilsands Region ▪ Other option is to build a Ditillate Recovery Unit (DRU) with upfront capex and ongoing opex costs to remove the added diluent ▪ Other rail terminals are not located proximate to oil production and thus Cold Lake Oilsands Region are considering expensive DRU option Lloydminster Heavy Oil Region Altex Rail Terminals Other Rail Terminals 7
Egress Problems ▪ Pipeline infrastructure development (Keystone, TransMountain, Enbridge, Gateway, Energy East, … ) has been unable to keep up with growing Western Canadian production production in Western Canada ▪ This has led to large discount for western Canadian oil and unprecedented curtailment action by Alberta government to manage price ▪ Historic pipeline infrastructure was built to move product to markets in Ontario and US midwest ▪ With US production increasing, less demand for Canadian oil in those markets All the people, refineries, ▪ Rail provides opportunity to also consumers that we sell service USGC, East Coast, West Coast to…. Source: Canadian Association of Petroleum Producers and offshore markets through established infrastructure 8
New and Emerging Markets for Canadian Crude Oil ▪ The bigger challenge remains where to move Canadian barrels to as US production increases in the face of stagnant North American demand 15.3 3.5 14.5 4.1 24.7 22.6 35.9 7.6 Asia is the major global importer of oil – needs 31.8 more supply and supply diversification 9.1 8.2 4.0 6.8 6.5 Cons Prod mmbpd Source: BP Statistical Review of World Oil Energy June 2019 9
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