Cost Effec*ve Well Site Facili*es Canada Congress GHG Emissions Reduc*on in a Small Private Co.

Feb27,2019

TABLE OF CONTENTS

Feb27,2019.WSFC 2

GHGEMISSIONSREDUCTIONINTIATIVES

PURPOSEOFTHEPRESENTATION

CARBONOFFSETCREDITPROGRAM

MOTIVATION

Q&A

Purpose of the Presenta*on

Feb27,2019.WSFC 3

1.  IntroduceModernResourcesInc.andourmoKvaKonforpursuingGHGreducKon

2.  PresentourprogramsandiniKaKves3.  Reviewlessonslearned

MOTIVATION Who is Modern Resources?

Modern Elements of Value

5

SuccessinaLowPriceEnvironment Modern

EnvironmentalLeader ! Safe,clean,lowliability(LMR18);163wells,133producing

Commodity&PlayDiversificaKon ! Premiumresourceplays:Spirit

Rivergas,Cardiumoil

SignificantResource1 ! 2Preserves=222mmboe2PBTNPV10=~$1.1billion

Scalable,FocusedAsset !

274,000netacres(~100%WI2)641grosslocaKons;335gasand306oil

TopTierF&D3 ! $0.57/mcfeSpiritRiverRich$9.35/boeCardiumTier1

LowOperaKngCost4 ! $4.36/boecorporate$0.39/mcfeSpiritRiver

StrongBalanceSheet4 ! $90mmavailablecapital(ELOC+bankline)

OwnedInfrastructure ! 125mmcf/dprocessingcapacity

AccesstoMarket ! FirmNGTLcalibratedtoproducKon

1 12/31/17McDanielreservesreport;Forecastpricing2 EffecKveWIforacKvedevelopmentareas–actualavg.WI~85%3 Halfcycleeconomics–seepgs.10&12;Cardiumismidpoint4 Q3/18financialresults

Wapi%

GreaterKakwa

PembinaPeaceLiquidsPipeline

MarketPipelines(NGTL,Alliance)

ModernPipelines

Jupiter

Cenovus

Tou

NuVista

Husky7Gen

WCP

DesignedtoProsperinthe‘Modern’ResourceWorld

0.0 2.0 4.0 6.0 8.0 10.012.014.016.018.0

ImportedLNG

UnconvenOonalMarcellusShale

UnconvenOonalTightGas

UnconvenOonalBarneSShale

ConvenOonalOnshore

U.S.AverageDomesOcNaturalGas(2010)

UnconvenOonalCoalBedMethane

ConvenOonalAssociated

ModernResources

ConvenOonalOffshore

gCO2e/MJ

NaturalGasProducOon

FieldTransportandProcessing

6

Environmental Advantage – Low Carbon Intensity

ModernCardium

LowEmissions=CarbonSecuritySource:ARCFinancial

GasPlays OilPlays

KgCO2e/barrel

ProducOonandUpgrading

OilandProductTransportandRefining

NorwayEkofysk

KuwaitBurgan

TexasSpraberry

CaliforniaMidwaySunset

VenezuelaMereyBlend

IranAbuzar

0 100 200 300

MOTIVATION – New/Upcoming Regula*ons

Feb27,2019.WSFC 7

Modern Resources Inc. GHG Emissions Reduc*on Ini*a*ves

Modern Ultra Low Emissions “MULE”

Sites

MULE Sites – Electric Chemical Pump

Feb27,2019.WSFC 10

MULE Sites – Pneuma*c Systems

11

NEW–AirAcOvatedEquipmentGHGReducKonof149tonnesCO2equivalentReduced:•  FugiKveEmissions•  OperaKngandMaintenanceCosts

ModernTechnologyElimina%ngFugi%veEmissions

ElectricAirCompressors0m3/dFugiKveEmissions

NEW

PneumaKclevelController,2perpkg

PneumaKcDumpValve,2perpkg

PneumaKcControlValveActuator,2perpkg

OLD–MethaneAcOvatedEquipment

~30m3/day

CombinedFugiKveEmissions

MULE Sites - Electric Valve Actua*on

Feb27,2019.WSFC 12

MULE Sites – Commercial Solar Panel Array

Feb27,2019.WSFC 13

MULE Sites– Methanol Fuel Cells

14

PropaneThermoelectricGenerators

MethanolFuelCells

85%ReducKoninGHGEmissions.CO2ReducKonEquivalenttodrivinganaveragecar1,200kmpermonth1

Innova%veSolu%onsReducingCarbonEmissions

Reduced:•  Emissions•  OperaKngCosts•  Trucking

OLD

NEW

MethanolfuelconsumpKononlywhenpowerdemandexceedsprimarysupply(solarpanels)

ConKnuousfuelconsumpKon+CO2emissions

OTHER INITIATIVES

Reduc*on/Elimina*on Solu*ons

Feb27,2019.WSFC 16

Reduc*on/Elimina*on Solu*ons

Feb27,2019.WSFC 17

Reduc*on/Elimina*on Solu*ons

Feb27,2019.WSFC 18

Reduc*on/Elimina*on Solu*ons

Feb27,2019.WSFC 19

Natural Gas Powered Rigs

20ImprovingEmissions,SafetyandCosts

•  ReducedDieselFuelConsumpKon~40,000lpermonth

•  ReducedCO2of27tonnesperwell•  ReducedNOx,SOxupto80%•  ReducedFuelTruckingandtransfers•  EnabledbyModerninfrastructure

NaturalGasFuelSupplyLine

Tes*ng to Pipeline

21EmissionsEliminated-EnergyConserved

•  FlaringofNaturalGasVirtuallyEliminated•  ReducedCO2eof252tonnesperwell•  Equivalenttoremovingover50cars•  Gassenttosales-RevenueSource•  EnabledbyModernInfrastructure

NEW–TesttoPipelineOLD–TesttoFlare

NoFlare

OperaKonspriortoModernInfrastructureconstrucKon

TOTAL FIELD METHANE EMISSIONS SURVEY

Methane Emissions Survey

Feb27,2019.WSFC 23

PneumaKcs54%Leaks

33%

Tanks8%

CompressorSeals3%

OtherVents2%

TotalAnnualMethane

TotalAnnualMethaneEmissions(priortoinspecKon):1,596e3m3/year(26,774tCO2e)

OneverylargeleakidenKfiedandresolvedrapidlybyoperaKons

UnknownstartdateofleakEsKmatedat~6,000tCO2e/yearannual~353e3m3/year

CARBON OFFSET CREDITS

CARBON OFFSET CREDITS

Feb27,2019.WSFC 25

•  Nocreditsforprojectsthatarenotinyourplan

•  Developmentforecastmustbeincluded

•  UnderstandtheplanrequirementsbeforewriKngyourplan

•  BigDocument

•  Veryspecifictreatmentofthedetails

•  AvoidRe-wriKng

•  ProgramAudit

•  AggregatorVSMaintainingOwnershipoftheCredits

A“ProjectPlan”mustbesubmiredandapprovedtoqualifyforcarboncredits

Project Plan

Feb27,2019.WSFC 26

EMISSIONS REDUCTION CALCULATOR

Feb27,2019.WSFC 27

EMISSIONS REDUCTION CALCULATOR

Feb27,2019.WSFC 28

Tracking/Documenta*on

Feb27,2019.WSFC 29

Tracking/Documenta*on

Feb27,2019.WSFC 30

Q&A