Corporate Presentation May, 2019 - Traverse...

Corporate Presentation

May, 2019

Advisory

This presentation is for informational purposes only and is not intended as a solicitation or offering of securities of Traverse Energy Ltd.

(“Traverse” or “TVL”) in any jurisdiction. The material presented is not intended to modify, qualify, supplement or amend information disclosed

under corporate and securities legislation of any jurisdiction applicable to Traverse and should not be used for the purpose of making investment

decisions concerning Traverse securities.

Forward Looking Information

Certain statements contained in this presentation constitute forward-looking information and are based upon the estimates and opinions of the

Company’s management at the time the statements are made. The use of any of the words “could”, “expect”, “believe”, “will”, “projected”,

“estimated” and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking

information and are based on Traverse’s current belief or assumptions as to the outcome and timing of such future events. Actual future results

may differ materially. These statements relate to the Company’s corporate strategy, reserves and resources estimates, type curve production

estimates and the potential development or disposition of its Duvernay lands. Traverse’s Annual Information Form filed with securities regulatory

authorities (accessible through the SEDAR website www.sedar.com) describes the risks, material assumptions and other factors that could

influence actual results and which are incorporated herein by reference. Traverse disclaims any intention or obligation to publicly update or

revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be expressly required

by applicable securities laws.

Barrels of Oil Equivalent

Natural gas reserves and volumes contained herein are converted to barrels of oil equivalent (BOE) on the basis of six thousand cubic feet

(mcf) of gas to one barrel (bbl) of oil. The term “barrels of oil equivalent” may be misleading, particularly if used in isolation. A BOE conversion

ratio of 6 mcf to 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.

Original Oil in Place (“OOIP”)

OOIP is equivalent to Total Petroleum Initially-In-Place (“TPIIP”). TPIIP, as defined in the Canadian Oil and Gas Evaluations (COGE)

Handbook, is that quantity of petroleum that is estimated to exist in naturally occurring accumulations. It includes that quantity of petroleum that

is estimated, at a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet

to be discovered. A portion of the TPIIP is considered undiscovered and there is no certainty that any portion of such undiscovered resources

will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of such discovered resources. A

significant portion of the estimated volumes of TPIIP will never be recovered. Due to the uncertainty as to how the Duvernay will be developed

and the lack of definition of a recovery project for the OOIP at this time, the OOIP estimates disclosed herein are the most specific assignable

category that can be provided at this time.

Type Curves

Certain type curve disclosure presented herein represents estimates of the production decline and ultimate volumes expected to be recovered

over time. Type curves are useful in confirming and assessing the potential for the presence of hydrocarbons, however, such rates are not

determinative of the rates at which such wells will continue production and decline thereafter and are not necessarily indicative of long-term

performance or long term economics of the relevant well or fields or of ultimate recovery of hydrocarbons. While encouraging, readers are

cautioned not to place reliance on such rates in calculating the aggregate production or performance of Traverse.

Advisory

Analogous Information

Certain information in this presentation may constitute “analogous information” as defined in NI 51-101, including, but not limited to, information

relating to the areas in geographical proximity to lands held or to be held by Traverse. Traverse believes this information is relevant as it helps

to define the reservoir characteristics in which Traverse may hold an interest. Traverse is unable to confirm that the analogous information was

prepared by a qualified reserves evaluator or auditor or in compliance with the COGE Handbook. Such information is not an estimate of the

reserves or resources attributable to lands held or to be held by Traverse and there is no certainty that the reservoir data and economics

information for the lands held or to be held by Traverse will be similar to the information presented herein. The reader is cautioned that the data

relied upon by Traverse may be in error and/or may not be analogous to such lands held or to be held by Traverse.

Non-IFRS Measures

In this presentation references are made to certain financial measures such as “adjusted funds flow”, “operating netback” and “net debt” which

do not have standardized meanings prescribed by IFRS and therefore may not be comparable to the calculation of similar measures by other

entities. Management uses certain industry benchmarks such as operating netback to analyze financial and operating performance. There are

no comparable measures in accordance with IFRS for operating netback. Management believes that in addition to net income (loss), these non-

IFRS measures are useful supplemental measures as they assist in the determination of the Company’s performance, leverage and liquidity.

Investors should be cautioned however, that these measures should not be construed as an alternative to both net income (loss) and cash from

operating activities, which are determined in accordance with IFRS, as indicators of the Company’s performance.

Operating netback represents revenue less royalties, operating and transportation expenses. Operating netback per boe is the operating

netback divided by barrels of oil equivalent production volumes for the applicable period. The calculation of the Company’s operating netback is

detailed under the heading “Netback” within Highlights. The Company defines net debt as outstanding bank debt plus or minus working capital.

Adjusted funds flow represents cash from operating activities prior to changes in non-cash working capital and settlement of decommissioning

obligations as detailed below:

($ Thousands) 2019 Q1 2018 2017

Cash from operating activities 203 2,216 3,420

Decommissioning expenditures 12 268 178

Change in non-cash working capital 158 (1,042) 640

Adjusted funds flow 373 1,442 4,238

Corporate

Market Summary

TSXV: TVL

Basic shares outstanding 103.5 million

Fully diluted 111.9 million

Insider ownership basic 29.9%

Insider ownership fully diluted 33.5%

Corporate Strategy

Growth through the drill bit (predominantly 100% working interest)

Exploring for new oil pools that can be exploited by vertical and horizontal drilling

Maintain a significant undeveloped land base

Focus on southern and central Alberta

Corporate Summary

P+P Reserves1 1,853 Mboe

Undeveloped land 203,800 net acres (99.7% working interest)

LMR May 4, 2019 3.44

March 31, 2019 Exit Net Debt $6.7 million

Bank line $7 million

1 Independent reserves evaluation prepared by Sproule & Associates Limited dated February 15, 2019, effective December 31, 2018

Highlights

2019 Q1 2018 2017

Financial ($ thousands)

Petroleum and natural gas revenue 1,582 6,717 10,023

Adjusted funds flow 373 1,442 4,238

Net loss (512) (17,705) (5,006)

Capital expenditures 238 2,954 17,706

Working capital (deficiency) (6,671) (6,673) (4,894)

Average production (units as noted)

Natural gas (Mcf per day) 1,629 1,774 2,358

Oil and NGL (bbls per day) 237 264 375

Total (BOE per day) 509 559 768

Average sales price

Natural gas ($/Mcf) 2.63 1.83 2.66

Oil and NGL ($/bbl) 56.10 57.43 56.48

Netback ($/BOE)

Petroleum and natural gas revenue 34.58 32.90 35.74

Royalties 0.55 1.57 1.17

Operating 16.41 15.88 14.33

Transportation 1.85 1.91 1.73

Operating netback 15.77 13.54 18.52

Undeveloped Land Holdings

(March 31, 2019)

Gross Net

Acres Acres

Duvernay Shale Oil 100,100 100,100

Greater Coyote 92,000 92,000

Non Core 8,300 7,700

Turin 4,000 4,000

204,400 203,800

Areas of Activity

Development of the Duvernay Shale Oil Window

• The Duvernay Shale Basin is a light oil resource play

in the initial phase of development.

• Estimated potential of 7 to 18 MMbbls of original oil in

place per section (BMO Capital Markets PADA Society

Presentation March 12, 2018).

• The major players developing the East Shale Basin oil

window are Vesta Energy and Artis Exploration.

• In the West Shale Basin near Pigeon Lake, several

new wells have recently been completed and put on

production by Baytex Energy and Crescent Point

Energy.

• Operators continue to improve oil productivity and

development economics by modifying horizontal lateral

lengths, fracture spacing, sand placement techniques,

and sand and water concentrations.

Duvernay Formation Gross Isopach

East Shale Basin

(ERCB/AGS Open File Report 2012-06)

Chigwell

(Traverse)

Joffre

(Vesta)

Huxley-

Twining

(Artis)

Edmonton

West Shale

Basin

Buffalo Lake

(Traverse)

Pigeon Lake

(Traverse)

Duvernay Shale Oil Play

Core Land Positions:

Chigwell

39,200 Net Acres Crown and Freehold

1,900 Acres Freehold Options

Pigeon Lake


Buffalo Lake


• Traverse’s core land positions target three

prospective oil prone Duvernay areas at

Chigwell, Pigeon Lake and Buffalo Lake.

• Multiple exploratory horizontal Duvernay

wells are being completed near Traverse

lands which will provide significant

information to further de-risk the play.

• In March 2019 Traverse retained an advisor

to pursue alternatives for development or

disposition of its Duvernay lands.

Traverse Energy Land

Leduc ReefHz Duvernay Well Awaiting Completion

Producing Hz Duvernay Well

Deep Control WellsLicensed Duvernay well

R24W4R25W4R26W4R27W4R01W5R02W5R03W5 R23W4 R22W4 R21W4 R20W4 R19W4

T52

R04W5

T50

T43

T44

T45

T46

T48

T47

T41

T42

T49

T51

T40

T39

Duvernay East Shale Basin Log and Maturity Comparison

Baytex Ferrybank Traverse Chigwell Vesta Joffre

FERRYBANK AREA

Total Organic Content (TOC) 2.0-7.5 wt.%

Thermal Maturity (Tmax) 436-443°C

CHIGWELL AREA



02/03-32-042-24W4 (Tmax) 447°C

JOFFRE AREA



Chigwell Duvernay Shale Oil Development


Land Position:


1,900 Net Acres Freehold Options

• Large continuous land base.

• Traverse’s first exploratory well (03-32) was

drilled in October, 2017 and has been on

production since December 21, 2017.

• 03-32’s water recovery to the end of March

2019 was 44% (114,000 barrels).

• 03-32’s oil cut for the month of March 2019

was 12%.

• Baytex Energy’s horizontal well 8 miles west of

Traverse’s well is currently at 15% oil cut (and

improving) after three months of production

and 10% load recovery.

Completed Hz Duvernay Well Awaiting

Production Information

TVL Producing Hz Duvernay WellLeduc Reef

Deep Control Wells

Traverse Chigwell Duvernay Drilling and Completion Information

TVL Chigwell 02/03-32-042-24W4

Total Well Length 4410 m MD

Well Depth 2025 m TVD

Drilling Period 15 days

Frac Stages 44

Stimulated Length

of Horizontal Leg

2172 m

Sand Placed 1.6 tonnes/m

(3414 tonnes)

Open Hole Logs

Recorded Through

Horizontal Leg

Density-Neutron, Resistivity,

and Spectral Gamma

Porosity 6-9%

Average Net Pay 24 m

Chigwell 03-32-042-024W4 Cordax Open Hole Logs

0

4

8

12

16

20

24

28

32

36

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2050 2250 2450 2650 2850 3050 3250 3450 3650 3850 4050 4250 4450

Lim

esto

ne

Po

rosity (

%)

Resis

tivity (

oh

m-m

)

Measured Depth, m KB

02/03-32-042-24W4 Resistivity and Porosity75 Units GR Cutoff for Shale

GR > 75 (more shaly) GR < 75 (more limestone) 00/02-04-043-24W4

00/03-32-042-24W4 Porosity (Shaly) Porosity (Limestone)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

100

200

300

400

500

600

700

800

900

1000

2017-12-21 2018-02-19 2018-04-20 2018-06-19 2018-08-18 2018-10-17 2018-12-16 2019-02-14

Oil

Cut (%

)

Flu

id R

ate

, B

arr

els

/Day

Date

02/03-32-042-24W4 Duvernay Fluid Rate and Oil Cut

Fluid Rate Oil Cut

Buildup

Test

Cleanout &

Lowered

Bottomhole

Pump Pump

Change Buildup

Test

Coyote Ellerslie Development

• Additional horizontal locations

have been identified using 3D

seismic data interpretation.

• Wells can be added to the

existing infrastructure for

minimal cost.

• Coyote Oil Battery has emulsion

treating, gas compression, oil

storage, on-site power

generation and water disposal.

TVL Producing Ellerslie Horizontal WellTraverse Energy Land

T29

R15W4R16W4

T28

Control Point Well

TVL Producing Ellerslie Vertical/Directional Well

TVL Ellerslie Horizontal Well Location Ellerslie Pool Boundary

00/15-36

02/09-36

B

B TVL BatteryTVL Suspended Ellerslie Well

0

50

100

150

200

250

300

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36

Oil

Pro

du

ctio

n, B

arr

els

/Da

y

Months of Production

Coyote Ellerslie Oil Type Curve120,000 Barrels Oil, 333 MMscf Sales Gas

Type Curve 00/15-36 02/09-36

Type Curve is based on:• Optimal placement of horizontal wells within

reservoir.

• Increased horizontal length.

• Improved fracture techniques.

Coyote Mid Mannville Lithic Channel Development

• The Mid Mannville Lithic

Channel pool will be further

developed using horizontal

wells.

• 3D seismic coverage and

well control are used to

delineate the pool.

• The new wells will access

existing infrastructure and

have significantly lower tie-

in costs.

T29

R15W4R16W4

T28

TVL Producing Mannville Horizontal wellTraverse Energy Land

Control Point Well TVL Mannville Horizontal Well Location

Mannville Channel Pool Boundary

03/09-36

02/11-36

00/11-36

B

B TVL Battery

0

50

100

150

200

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36

Oil

Pro

du

ctio

n, B

arr

els

/Day


Coyote Mid Mannville Oil Type Curve80,000 Barrels Oil, 436 MMscf Sales Gas

Type Curve 00/11-36 02/11-36 03/09-36

Type Curve is based on:• Optimal placement of horizontal wells within

reservoir.

• Increased horizontal length.

• Improved fracture techniques.

Watts Ellerslie Development

• The Watts Ellerslie oil pool is characterized

by high permeability and excellent porosity.

It is partially depleted due to gas cap

drainage.

• 3D seismic program shot in 2017

compliments existing 2D seismic coverage

and delineates pool for further development.

• Third Party reservoir study identified

remaining reserves in the oil dominant

portion of the reservoir. These reserves will

be accessed by additional locations.

T30

R15W4

TVL Producing Ellerslie Oil WellTraverse Energy Land

Control Point Well

00/03-29

00/07-29

TVL Ellerslie Location

Ellerslie interpreted Pool

Boundary

0

25

50

75

100

125

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Oil

Pro

du

ctio

n, B

arr

els

/Day


Watts Ellerslie Oil Type Curve32,000 Barrels Oil, 63 MMscf Sales Gas

Type Curve 100/03-29 100/07-29

Turin

• Low decline production from

Sunburst sands.

• Existing infrastructure includes

an oil battery equipped with

water disposal, sweetening, gas

compression, a sales gas line

and gathering system.

• Conducted seismic and

geological review for additional

development drilling locations.

• Acquired shut in oil well (10-04-

011-19W4) which will be

reworked for oil production.


Control Point Well TVL Producing Oil Well

TVL Suspended Well

R19W4

T11

TVL Oil Pipeline

TVL Water Pipeline

TVL Natural Gas Pipeline

B

TVL BatteryB

Water Disposal Well TVL Producing Gas Well TVL Sales Gas line

Ellerslie Sand 1

meter thickness

Mid Mannville Sand

Seismic defined edge

Ellerslie Sand 1m

TVL Sunburst Location

Corporate Information

Management Bank

Laurie J. Smith Alberta Treasury Branch

President & Chief Executive Officer Auditor

David H. Erickson KPMG LLP

VP and Chief Operating Officer Legal Counsel

Sharon A. Supple Osler, Hoskin & Harcourt LLP

Chief Financial Officer Independent Reserve Engineer

Sproule Associates Limited

Directors Transfer Agent

David H. Erickson Computershare

J. Reid Hutchinson Corporate Office

Robert M. Libin Suite 780, 839 – 5th Avenue S.W.

Laurie J. Smith Calgary, AB T2P 3C8

A. David van der Lee T: (403) 264-9223

Adam O. Wells www.traverseenergy.com

Corporate Presentation May, 2019 - Traverse...

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