CORPORATE PRESENTATION June 2018 TSX: VII.TO
7G CORPORATE PROFILE 7G Capitalization & Key Corporate Statistics Ticker symbol - TSX VII Share Price (1) $16.78 Basic Market Cap (1) $6.0 billion Net Debt (2)(4) $2.1 billion Enterprise Value (5) $8.1 billion Available Funding (3)(4) $1.3 billion Q1 2018 Production 188 Mboe/d (58% liquids) Q1 2018 Funds from Operations (4) $381 million Alberta’s Largest Condensate Producer 350,000 Alberta Condensate Production Other 2018 Alberta condensate demand is estimated to be approx. 550,000 bbl/d 300,000 Seven Generations 250,000 200,000 (bbl/d) 150,000 100,000 7G condensate production currently accounts for approx. 20% of Alberta supply 50,000 0 Source: Peters & Co. Limited Equity Research – April 2018 (1) May 31, 2018 share price & shares outstanding (2) US$1.575B in senior unsecured notes converted at $1.296 CAD/USD less adjusted net working capital deficiency as of March 31, 2018 of $87.4 MM 2 (3) Adjusted working capital deficiency as of March 31, 2018 of $87.4 MM plus available credit facility (4) Non-IFRS Financial Measure. For additional information see “Non - IFRS Measures Advisory” in the “Important Notice” that appears at the end of the presentation (5) Enterprise value is calculated as the sum of basic market capitalization and net debt
2018 BUDGET: SETTING THE STAGE FOR FREE CASH FLOW VISIBILITY 2018 Production Guidance (1) (boe/d) Processing Capacity & Corporate Production (mboe/d) 200,000 – 210,000 55% - 60% liquids 14% - 20% annual growth 2018 Capital Program (1) ($MM) $1,675 – $1,775 2018 Funds from Operations ($MM) (1)(2) $1,300 – $1,350 @ US$50/bbl $1,450 – $1,525 @ US$55/bbl $1,600 – $1,675 @ US$60/bbl 2019 Production Outlook (1) (boe/d) 220,000 – 240,000 ~55% liquids 7% - 17% growth Targeting a funds flow budget (at US$55/bbl WTI) 2018 capital program is designed to produce strong 2019 production and cash flow growth For additional information see “Forward Looking Information Advisory” and “Non - IFRS measures Advisory” in the “Important Notice” at the end of this presentation. 1) 3 2) Assumptions: WTI US$50/bbl low / US$60/bbl high; US$3.00/MMBtu NYMEX; AECO Basis (US$1.15/MMbtu); USD / CAD $0.78; Dawn Basis (US$0.10/MMbtu); Chicago Basis (US$0.15/MMbtu); Condensate as a % of WTI: 98%; NGLs as a % of WTI: C4 60%, C3 35%; C2 pricing consistent with the Company’s processing and marketing agreements.
LEVEL 1 CORPORATE POLICY Stakeholder Differentiation We believe that companies have only the rights given to them by society. While people have a natural entitlement to basic rights, corporations are an instrument created by society to provide its needs and ought to have no expectation of basic entitlements other than equitable rights with other corporations, including those wholly owned by a person. We recognize that rights, sufficient to build and operate an energy project, can be granted and taken away by society. Over the longer term, companies can only expect to thrive if they serve the legitimate needs of society in which they exist. To thrive, companies must differentiate, rise above the pack, standout as being among the best with all of their stakeholders. At Seven Generations Energy Ltd., we acknowledge this granted entitlement and accept from our stakeholders a duty to thrive and an understanding of the need to differentiate. Specifically, in acceptance of this challenge to differentiate with all stakeholders, we acknowledge: The need of society for us to conduct our business in a The need of our business partners and infrastructure way that protects the natural beauty of the environment and preserves the capacity of the earth to meet the needs customers to be treated fairly and attentively; of present and future generations; The need of Canada and Alberta for us to obey all The need of our suppliers and service providers to be regulations and to proactively assist with the formulation treated fairly and paid promptly for equipment and services of new policy that enables our company and our industry provided to us and to receive feedback from us that can to better serve society; help them to be competitive and thrive in their businesses; The need of the communities where we operate to The need of our employees to be compensated fairly and be engaged in the planning of our projects and to provided a safe, healthy and happy work environment participate in the benefits arising from them as they including a healthy work life – outside life balance; and are built and operated; The need of our shareholders and capital providers to have their investment managed responsibly and ethically and to earn strong returns. We see ourselves as being in the service business, serving the needs of our stakeholders . We seek satisfaction for all stakeholders. Differentiation is imperative. We support an open and competitive business environment, recognizing in the competitive world that we envision, only those who best serve their stakeholders can expect the support required to survive for the longer term. 4
7G IS DESIGNED TO DELIVER Cash flow Profitable Industry-leading Financial self-sufficiency growth returns sustainability Targeting a 7% to 14% Delivering a 10% Continue to balanced budget production CAGR to 15% ROCE maintain a strong in 2019 over five years target balance sheet Growing cash Organic growth Compensation Debt to funds flow with to 300,000 - will be tied to flow below 2.0 improved 350,000 boe/d returns times execution and production by market access 2022 Differentiated characteristics position 7G for long-term value creation Notes: For additional information see “Forward Looking Information Advisory” and “Non - IFRS Measures Advisory” in the “Important Notice” at the end of this presentation. 5
DELIVERING BEST IN CLASS CORPORATE RETURNS Historical Cash Return on Invested Capital (CROIC) (1)(2) 19% 20% 18% 2015A 2016A 2017A 15% 16% 14% 12% CROIC (%) 12% 9% 9% 10% 8% 8% 7% 6% 6% 6% 5% 5% 4% 4% 2% – VII Top Canadian Top Canadian Top U.S. VII Liquids-Rich Gas Peers Gas Weighted Peers Growth Peers Source: CIBC World Markets Peer groups are comprised of: Liquids-Rich - ARX, CR, KEL, NVA | Gas – AAV, BIR, PEY, PPY, SRX, TOU | U.S. Growth – AR, COG, EOG, EQT, PXD, RRC, SWN Historical Return on Capital Employed (ROCE) (2) 15.0% 7G targeted ROCE 7G 2017 ROCE of 9.8% of 10% to 15% 10.0% ROCE (%) 5.0% 0.0% -5.0% 2015 2016 2017E 2018E 2019E VII US Small/Mid Caps Cdn Large Caps US Large Caps Cdn Small/Mid Caps Source: Macquarie Capital Markets prepared the graph and 7G modified the graph to add the Company’s future ROCE target and re ported 2017 ROCE. (1) CROIC calculated as FactSet EBITDA divided by gross PP&E. FactSet EBITDA and CROIC are non-IFRS financial measures. For additional information see “Forward Looking Information A dvisory” and “Non - IFRS Measures Advisory” in the “Important Notice” that appears at the end of the presentation. (2) 6
LIQUIDS PRODUCTION DRIVING REVENUE 7G Production Mix – Q1 2018 Actuals 2018 Forecasted Revenue by Product (1)(2) 29% 36% 42% 61% 10% 22% Condensate NGLs Natural Gas Condensate NGLs Natural Gas 7G Realized Condensate Price vs. WTI 7G Realized Gas Price vs. AECO $85.00 $6.00 Initiation of Alliance $75.00 long haul transportation $5.00 $4.00 $65.00 C$/bbl C$/Mcf $3.00 $55.00 $2.00 $45.00 $1.00 $35.00 $0.00 7G Realized WTI (C$/bbl) 7G Realized AECO 7A AECO 5A Source: NGX Source: Bloomberg 1) Assumptions: US$60/bbl, $0.81 USD/CAD, NYMEX HH price of US$3.00/MMbtu, Chicago CG basis of -US$0.15/MMbtu, AECO basis of -US$1.15/MMbtu. 7 Notes: For additional information see “Forward Looking Information Advisory” in the “Important Notice” at the end of this pre sentation. 2)
Breakeven HHub Price ($/mcfe) at 30% Assumes: US$50/bbl WTI, ($0.95USD/MMbtu) AECO basis, $0.79 USD/CAD for 30% after tax IRR Source: TPH Canada equity research November 2017 TOP TIER LIQUIDS RICH MONTNEY ASSETS $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 Montney - Nest 2 Montney - Attachie Montney Eagle Ford Wet Tier 1 US Play VII Montney - Doe Montney - Dawson Montney - Gundy Among the lowest supply cost natural gas in North America NE Marcellus Dry Tier 1 Montney - Bilbo Montney - Sunrise Alpine High Montney - Sundown North American Natural Gas Supply Cost Montney - Groundbirch Montney - Elmworth SCOOP Woodford Wet Gas / Condy Montney - Gordondale Montney - Glacier Montney - Townsend Montney - Nest 1 Montney - Blair Montney - Pouce Coupe SW Marcellus Dry Tier 1 Terryville / N LA Montney - West Septimus Eagle Ford Dry Gas Tier 1 Montney - Parkland NE Marcellus Dry Tier 2 OH Utica Dry Haynesville PA Utica Dry SW Marcellus Dry Tier 2 Marcellus Wet Montney - Gold Creek gas Eagle Ford Wet Tier 2 Montney - Septimus Barnett Rich Utica Wet Meramec Wet Gas Pinedale Fayetteville Core / Moorefield Piceance Cana Wet Gas Cana Lean Gas SCOOP Sycamore Wet Gas Utica Condensate 8
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