Corporate Presentation Fall 2014
Corporate Snapshot • Cavalier Energy was spun out of Paramount Cavalier Asset Portfolio Overview Resources in 2011 comprising Oilsands and Carbonate bitumen assets • Owned 100% by Paramount Resources • Execution focused team • Hoole Project has regulatory approval for 10,000 bbl/d from the Grand Rapids formation with potential for 115,000 bbl/d • Completed acquisition of offsetting acreage in July 2014 • In addition to Hoole there is significant development potential from its portfolio of exploration lands Reserves and Contingent Resource Summary (1) Reserves Contingent Resources − Includes carbonates properties adjacent Probable Low Best High to and on trend with the Laricina / Osum Asset Undev. Estimate Estimate Estimate Saleski project, as well as McMurray MMbbls MMbbls MMbbls MMbbls clastics at Eagles Nest and Christina Hoole (2) 93 871 1,157 1,492 Saleski Carbonates (3) Lake - - 380 567 Other Carbonate Leases (3) - - 111 184 _______________ 1. See forward looking statement advisory for disclosure on reserves and resource information and definitions. 2 2. Hoole volumes are probable undeveloped reserves and economic contingent resources as per McDaniel report effective July 31, 2014. 3. Carbonates volumes are contingent resources (technology under development) as per McDaniel report effective October 31, 2011.
Grand Rapids Industry Activity Grand Rapids Formation Generating Significant Interest • Industry peers have already applied for Grand Rapids SAGD projects totaling over 450,000 bbl/d of production capacity (1) : – Cenovus: 180,000 bbl/d (pilot achieved first oil in Q3 2011 commercial application approved in March 2014); 8-10,000 bbl/d commercial demonstration to see first steam in 2017 – Laricina: 155,000 bbl/d (commercial application filed Q4 2011); First 5,000 bbl/d commercial phase three well pairs switched to SAGD in Q2 2014; 30,000 bbl/d Phase 2 expected to start up in 2018 – BlackPearl: 80,000 bbl/d ( pilot achieved first oil in Q3 2011 and filed commercial application in May 2012) Hoole is targeted to be a material 115,000+ bbl/d project located in the core of the Grand Rapids resource play – Koch: 40,000 bbl/d (10,000 bbl/d commercial with opportunities for achievement of greater scale application approved June 2014) 3 _______________ 1. All based on publicly available information.
Grand Rapids Resource Overview Key Attributes of the Grand Rapids • Developable using proven SAGD drilling, completion and production techniques • Laterally continuous sand body provides for repeatable surface development template • Homogenous reservoir enables more predictable drilling and well production profiles • Ostensibly no occurrence of top, middle or bottom water in core area; contributes to better reservoir performance and steam oil ratios • Competent extensive top seal • Reservoir depth of ~250m permits use of established drilling and completion techniques Grand Rapids Shore Face Sand Grand Rapids Cross Section • Large, laterally continuous, homogeneous shore face sand in the Grand Rapids formation is the cornerstone of Cavalier’s asset base 4
Cenovus’ Comparison of the Grand Rapids _______________ Source: Cenovus’ Grand Rapids project application. 5
Grand Rapids Project Comparison (1) Well Log Locations Map Operator Laricina (1) Cenovus (2) Cavalier (3) BlackPearl (4) Project Germain Pelican Hoole BlackRod Effective Φ 34% 30% 33% 30% K 2 – 6 D 1 – 4 D 1 – 4 D 1 – 5 D D 200m 225m 250m 300m H (up to) 24m 25m 27m 26m Oil Saturation (Pay Zone) 75% 65% 65% 60% Rf 49% / 55% (3) 54% 52% 49% 2P Reserves (2) 389 MMbbls - 93 MMbbls 182 MMbbls Contingent Resource (2) 934 MMbbls 1,500 MMbbls 1,157 MMbbls 566 MMbbls Project Status CDP Operating Pilot Operating Project Approved Pilot Operating _______________ 6 1. All based on publicly available information. 2. See forward looking statement advisory for disclosure on reserves and resource information and definitions. 3. 49% of the producible bitumen-in-place under SAGD operations and 55% of the producible bitumen-in-place under SC-SAGD operations.
Reservoir Development Comparison Grand Rapids vs. McMurray Development • The extensiveness and homogeneity of the Grand Rapids shoreface sand reservoir provides for project development predictability and allows for the achievement of significant scale (with associated economic advantages) − Similar to CNRL Primrose which is a Clearwater/Grand Rapids development − This type of development is very rare in the context of oil sands in situ projects, especially those based on estuarine/ fluvial channel systems • For example, the Cenovus Foster Creek project is one of a very limited number of large, continuous McMurray channel sands developments • Most McMurray channel projects are characterized by heterogeneous and non-laterally continuous channel reservoirs, which can result in less efficient and less predictable development (and sometimes significant operational challenges) Atypical McMurray Hoole Project Project (Foster Creek) Primrose Project Typical McMurray Project (Great Divide) 7
Hoole Project Overview Significant Resource Base with Attractive Economics • Probable reserves of 93 MMbbls (B-tax 10% NPV of $404 million) and best estimate economic contingent resources of 1,157 MMbbls (B-tax 10% NPV best estimate of $2.4 billion) (1) • Targeting the laterally continuous and homogeneous Grand Rapids formation • Use of proven SAGD technology is expected to result in strong operating netbacks across a wide range of oil prices • Proximal to high grade road networks, power and gas infrastructure and substantial announced bitumen takeaway and diluent return capacity • Multi phase project with estimated total production capacity of 115,000+ bbl/d • Growth opportunities through strategic acquisitions Development Stage Project with Expected Near Term Production • Regulatory approval received in June 2014 for 10,000 bbl/d Phase 1 • Delineation drilling for Phase 1 completed in 2010 (80 wells) • Environmental modeling complete and water source/disposal is selected, subject to regulatory approval • Front end engineering and design work completed • Risk mitigation strategy being implemented through construction of modularized components built off-site • Ability to truck production volumes for Phase 1 until area pipeline Hoole, A Shovel Ready Project, has resource to infrastructure is built support 115,000+ bbl/d of production located in the core of the Grand Rapids resource play _______________ 1. Hoole volumes and NPV as per McDaniel report effective July 31, 2014. 8 See forward looking statement advisory for disclosure on reserves and resource information and definitions.
Hoole Phase 1 Hoole Phase 1 Central Plant 3D Model Rendering: 9
Hoole Phase 1 Phase 1 Capital Requirements ($MM) (1) Phase 1 Development Philosophy • Phase 1 capital costs are estimated to be ~ $13,000 per • Use proven execution strategies and methods – Phase 1 stream day barrel of steam (CWE) 2 to use steam only, with allowances to easily add solvent in the future Facilities / Infrastructure $350 $400 - • Surface facilities designed for conservative cumulative Drilling & Completions 105 - 110 SORs (2) , GORs (3) and liquids handling assumptions Total $455 $510 - • Utilize largest modularized size for evaporator and • This capital cost intensity of approximately $45,000/bbl/d corresponding drum boilers of Bitumen assumes an SOR of 3.5; stronger reservoir performance reduces this number • Limit field construction activities throughout plant site by • Construction cost risk can be mitigated through the utilizing modularization wherever feasible incorporation of modularized components built off site • Provides data and better information for optimizing future phases • Standalone and not expandable, but designed to integrate with future phases Phase 1 sized for steam capacity; capital cost intensity of ~ $13,000 per bbl of steam, or ~ $45,000 of bitumen based on conservative cumulative SOR _______________ 1. Management’s estimate based on FEED engineering and Class 3 Estimates, stated in 2013 dollars. 2. Cumulative steam oil ratios (“CSOR”) is the cumulative ratio of steam injected (in cold water equivalent “CWE”) to oil produced from a SAGD well pair or Project over the life of the scheme. 10 3. Gas Oil Ratio.
Hoole Full Field Notional Development Plan • Phase 2A, 2B and 2C capital costs estimated at $1.4 billion, $1.2 billion and $1.2 billion, respectively (including facilities, drilling and completions) (1) Management has a track record of delivering large scale projects on time and on budget ______________ 11 1. Management’s estimate based on PRE-FEED engineering and Class 4 Estimates, stated in 2013 dollars
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