Eagle Energy Trust VISION GROWTH INCOME Investor Presentation - PowerPoint PPT Presentation

Eagle Energy Trust VISION GROWTH INCOME Investor Presentation February 2014

Disclaimers 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, well type curves, corporate decline rates, operating costs, capital expenditures, debt, 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, operating and capital costs, marketability of crude oil, natural gas and natural gas liquids, 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, 2013 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, 2013 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: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalent of six to one, utilizing a boe conversion ratio of 6 Mcf: 1 bbl would be misleading as an indication of value. 2

Mission Statement VISION To create wealth for Eagle’s investors by combining innovation, expertise and opportunity. GROWTH Eagle’s targeted lower payout ratio allows the company to sustain moderate growth as well as distribute income. INCOME To deliver predictable monthly distributions. 3

Strategy • Acquire and operate petroleum assets with predictable cash flows and low risk unexploited potential • Initially ramp-up investment to grow production • Reach a sustainable level within two to three years when less than 50% of the asset’s cash flow needs to be reinvested to replace declines • Deliver moderate annual growth 4

Overview • Eagle Energy Trust provides investors with a publicly traded, oil focused reliable distribution paying investment, 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. • 100% of Eagle’s production is in Texas. • 94% of Eagle’s production is light oil and NGLs. • Eagle holds a light oil weighted portfolio and operates in four properties in Texas: Salt Flat (Edwards), Permian (Wolfberry), Palo Pinto and Hardeman (Holmes, Mississippi Chappel and Conglomerate). 5

Corporate Overview January 2014 Working Interest Production: 3,000 boe/d Production Guidance – full year 2014 : 3,250 - 3,450 boe/d (average) 94% light oil and NGLs Production Split: $US 90 million Credit Facility: $1.05 per unit Annual Distribution: Current Yield (1)(2) : 12.7% approx. $306 million Tax Pools: (1) Based on the closing price of $8.30 on February 19, 2014. (2) Unlike fixed income securities, the Trust has no obligation to distribute any fixed amount, and reductions in, or suspension of, cash distributions may occur that would reduce future yield. 6

Market Data TSX: EGL.UN Ticker Symbol: Units Outstanding (basic): 32.4 million 52 Week Range: $6.28 - $9.05 Recent price (Feb 19/14 close): $8.30 Average daily trading volume (30 day): 50,003 units 30 day VWAP: $8.19 Market Cap (Feb 19/14): $268.6 million Directors’ & Officers’ Ownership: 2.2% basic, 10% fully diluted Equity Research: Scotia Acumen CIBC TD NBF 7

2014 Guidance • Eagle’s 2014 capital guidance is $US 28.0 million consisting of: • $US 3.8 million towards land acquisition and seismic evaluation of future opportunities in Eagle’s areas; • $US 24.2 million base investment (down 17% year over year) used to replace declines and grow 2014 average working interest production and funds flow by approximately 10% over 2013; • Execute an 11 (9.6 net) well drilling program on its properties near Luling, Midland and in Hardeman County • Embark on recompletions, facilities and debottlenecking across our portfolio 8

2014 Guidance and Capital Budget (cont’d) Eagle’s 2014 guidance with respect to its capital budget, production, operating costs and funds flow from operations is as follows: 2014 Guidance Notes Capital Budget $US 28.0 mm (1) Working Interest Production 3,250 - 3,450 boe/d Operating Costs (inclusive of transportation) $12.50 - $14.50 per boe Funds Flow from Operations $49.1 mm (2) Notes : (1) The capital budget amount does not include the cost of acquisitions. (2) 2014 funds flow from operations of $49.1 million has been estimated using the following assumptions: a. Average working interest production at the mid-point of guidance, at 3,350 boe/d; b. Pricing at $US 95.00 per barrel WTI oil, $US 3.35 per Mcf NYMEX gas and $US 33.25 per barrel NGLs (NGLs price is calculated as 35% of the WTI price); c. Differential to WTI (excluding transportation) is $1.17 discount per barrel in Midland, $2.52 discount per barrel in Luling and $2.40 discount per barrel in Hardeman; d. Operating costs (inclusive of transportation) of $13.50 per boe; and e. Foreign exchange at $CAD 1.05 = $US 1.00. 9

2014 Guidance and Sustainability Benchmarks (cont’d) 2014 Guidance Notes Payout Ratios (as a percentage of funds flow) Basic Payout Ratio (i.e.: distribution) 72% (1) Plus: Capital Expenditures (Excluding "E" capital) 52% (2) Equals: Corporate Payout Ratio 123% (3) Adjusted Payout Ratio (i.e.: Distribution - DRIP proceeds + Capital Expenditures) 77% (4) Financial Strength Debt to trailing cash flow 1.34x (5) % Drawn on existing credit facility at end of period 78% (6) Notes: 1. Eagle calculates the Basic Payout Ratio as follows: Unitholder Distributions / Funds Flow from Operations = Basic Payout Ratio. A table showing the sensitivity of Eagle’s Basic Payout Rat io to production and pricing is set out in the slide titled “ 2014 Sensitivities”. 2. Approximately $US 3.75 million of the 2014 capital budget will be directed towards land and seismic evaluation of opportunities in Eagle’s areas of operation, and is excluded from this calculation. 3. Eagle calculates the Corporate Payout Ratio as follows: (Capital Expenditures + Unitholder Distributions) / Funds Flow from Operations = Corporate Payout Ratio. A table showing the sensitivity of Eagle’s Corporate Payout Ratio to production and pricing is set out in the slide titled “ 2014 Sensitivities”. 4. Assumes 65% unitholder participation in Eagle’s Premium DRIP TM and distribution reinvestment programs is unchanged throughout 2014. As is the case with any manner of equity funding, Eagle weighs the benefits from this method of financing and will make adjustments as deemed prudent. 5. Debt to cash flow is a bigger driver than the percentage drawn on current bank facilities. Increase leverage means increased di stribution sustainability risk. Eagle’s view is that the maximum target would be 2.0x for larger entities, and 1.5x for smaller entities. 6. The borrowing base under the credit facility is $US 90.0 million. 10