Disclaimer Regarding Forward Looking Statements: This presentation - PowerPoint PPT Presentation

Disclaimer Regarding Forward Looking Statements: This presentation includes statements that contain forward looking information (“forward -looking statements”) in respect of Eagle Energy Trust’s expectations regarding its future operations, drilling program, production, reserves, operating costs, capital expenditures, debt and credit facility, payout and recycle ratios, funds flow from operations, field netbacks, hedging, the amount and sustainability of distributions, tax pools, business strategy and plans for growth, among other things. These forward looking statements involve estimates and assumptions including those relating to timing to drill and bring wells on production, production rates, marketability of oil and natural gas, future commodity prices, currency exchange rates, anticipated cash flow based on estimated production, size of reserves and reservoir performance, among other things. These estimates and assumptions necessarily involve known and unknown risks, delays, challenges and other uncertainties inherent in the oil and gas industry including those relating to geology, production, drilling, technology, operations, human error, mechanical failures, transportation, processing problems and poor reservoir performance, among others things, as well as the business risks discussed in the Trust’s annual information form dated March 22, 2012 under the headings “Risk Factors” and “Forward -Looking Statements and Risk Factors” . The forward-looking statements included in this presentation should not be unduly relied upon. Actual results may differ from the forward-looking information in this presentation, and the difference may be material and adverse to the Trust and its unitholders. No assurance is given that the Trust’s expectations or assumptions will prove to be correct. In addition, this presentation contains forward-looking statements attributed to third party industry sources. Accordingly, all such statements are qualified in their entirety by reference to, and are accompanied by, the information and factors discussed throughout this presentation. These statements speak only as of the date of this presentation and may not be appropriate for other purposes. Eagle’s annual information form dated March 22, 2012 contains important detailed information about Eagle and its trust units. Copies of the annual information form may be viewed at www.sedar.com and on Eagle’s website. Disclaimer Regarding Oil and Gas Measures: This presentation contains disclosure expressed as barrel of oil equivalency (“ boe ”) or boe per day (“ boe /d”) . All oil and natural gas equivalency volumes have been derived using the conversion ratio of 6 Mcf of natural gas: 1bbl of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. 2

 Eagle Energy Trust is an energy trust created to provide investors with a publicly traded, oil and natural gas focused yield product, with favourable tax treatment relative to taxable Canadian corporations.  Eagle pays out a portion of its available cash to unitholders on a monthly basis to provide attractive income.  Eagle’s strategy is to acquire on -shore producing assets in the United States that have predictable cash flows and low risk unexploited development and exploitation potential.  Eagle is a “mutual fund trust” and is not a “SIFT trust” . 3

VISION To create wealth for our investors by combining innovation, expertise and opportunity. GROWTH Our targeted 50% payout ratio allows us to sustain growth and distribute income. INCOME We deliver predictable monthly distributions. 4

Current Production: 2,900 boe/d Production Guidance (second half of 2012) : to average 3,600 boe/d Production split: 98% light oil and NGLs Current Debt (June 30, 2012) : US$24 million Credit Facility: US$48.5 million (Scotia) Annual Distribution: $1.05 per unit Current yield: 10.8% Tax Pools: approx. $250 million 5

Ticker Symbol: EGL.UN Units Outstanding (basic): 28.4 million 52 Week Range: $7.95 - $11.74 Recent price (Aug 1/12 close): $9.83 Average daily trading volume (30 day): 42,837 units 30 day VWAP: $9.73 Market Cap (Aug 1/12): $280 million Insider Ownership: 2.7% basic, 7.8% diluted Equity Research: Scotia CIBC TD National Acumen 6

Average working interest production of 3,600 boe/d for the second half of 2012:  Salt Flat new wells that are expected to be brought on production:  August – 3 wells  September – 2 wells  October through December - 5 wells  Permian Basin new wells that are expected to be brought on production:  September – 2 wells  October through December - 5 wells 7

 Funds flow from operations of $46.4million at US$88 WTI and natural gas at US$2.68 NYMEX.  Payout ratio of 60% at US$88 WTI.  Current hedges lock in 1,500 bopd at US$87 - $108 WTI through January 2014. 8

 Operating costs of $15 per boe, trending downward to $12 as electrical costs reductions in Salt Flat take effect.  Field netbacks of above $50 per boe at US$88 WTI.  Existing drilling inventory and oil prices above US$75 WTI sustains distributions (below an 80% payout ratio) for over 4 years with 7-10% annual production growth. 9

 2012 Capital budget of US$42 million:  Permian Basin (US$ 17.5 million):  7.4 net vertical oil wells.  8 stage frac, multi-zone, stacked pay.  Salt Flat (US$ 24.5 million):  12.8 net horizontal oil wells.  2.1 net side track re-entry wells.  1.6 net salt water disposal wells.  2 net tank batteries.  Completing the electrification of balance of Salt Flat field. 10

BUSINESS STRATEGY  To acquire and optimize US based petroleum assets which have been adequately de-risked (typically >20% PDP) and have attractive metrics for: • potential production growth (typically >2x boe/d in <24 months), • return on capex (2:1 recycle ratio), and • sustainability (targeted 50% payout ratio and multi-year drilling inventory). 11

PLAN FOR GROWTH  Upon acquiring a low PDP % asset, Eagle intends to increase the historical rate of capital investment in the near term to grow production, optimize operations and maximize drilling inventory.  After the “ramp up”, Eagle expects cash -flow from each asset to: • sustainably support Eagle’s targeted payout ratio of 50 %, • fund the capital to replace declines, and • deliver 7-10% annual production growth on that asset.  Eagle may acquire higher PDP % assets if production is sustainable. 12

DELIVERING ON VALUE CREATION AT SALT FLAT  Increased Salt Flat production 800% since acquisition date.  Paid consistent distributions since inception.  Extended drilling inventory on Salt Flat from 3 years at time of acquisition, to over 5 years today.  Reserves replacement ratio over 250% from acquisition date.  Achieved a recycle ratio of 2:1. 13

PERMIAN BASIN ACQUISITION  92.5% working interest in 3,175 gross (2,937 net) acres of land.  Acquired 600 boe/d effective April 1, 2012, for US$113 million.  PV10 2P reserves value of $US152 million. 14

PERMIAN BASIN ACQUISITION  Eagle overall 2P RLI lengthened from 8 years to over 13 years.  Added 10.2 MMboe of proved plus probable reserves (88% oil and liquids).  $95 million financing at $11/unit; balance paid with $18 million of debt.  Eagle has agreed to purchase the seller’s remaining working interest in the properties on or before April 30, 2013 at fair market value. 15

DELIVERING ON VALUE CREATION  Since inception Eagle has bought 900 boe/d of production at a cost of $243 million (Salt Flat + Permian Basin).  By the end of 2012, we expect to add $69 million of additional capital for an overall cost since inception of $312 million.  With $69 million, we expect to grow 900 boe/d of purchased production into 3,600 boe/d average for the second half of 2012 – a 400% increase. Eagle has drilled 35 Hz wells at Salt Flat with a 95% success rate – a  trend we expect to continue on the Permian Basin assets. 16

 Solid metrics:  98% light oil and NGL’s, 2% natural gas.  Premium netbacks.  Competitive operating costs.  Excellent balance sheet – prudent use of debt.  Experienced management team and Board.  Demonstrated ongoing organic growth.  Predictable distributions.  Poised to grow production on existing assets.  Expect to grow by continuing to transact. 17

Hedging Summary 3200 3000 2800 95 X 103.75 Costless Collar 2600 2400 98 Fixed Price 2200 103 Fixed Price 2000 90 X 91.60 Costless Collar 1800 Bbl/d 87 X 89.70 Costless Collar 1600 1400 95 X 108 Costless Collar 1200 92 X 105 Costless Collar 1000 91 Fixed Price 800 101 Fixed Price 600 400 88 X 107 Costless Collar 200 85 X 100 Costless Collar 0 18

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