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APRIL 2012. CIBC 2012 Energy conference Corporate Presentation. dISCLAIMER. - PowerPoint PPT Presentation
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CIBC 2012 ENERGY CONFERENCECORPORATE PRESENTATION
APRIL 2012
2
DISCLAIMER
Certain information regarding RMP Energy Inc. (“RMP”) (the “Company”) contained within this corporate presentation may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements include internal estimates and forecasts and may also include estimates, plans, expectations, opinions, forecasts, projections, indications, targets, guidance or other similar statements that are not statements of fact. The forward-looking statements contained within this corporate presentation are based on Management’s assessments of future plans that involve geological, engineering, operational and financial estimates or expectations of future production, reserves, capital expenditures, well project economics, cash flow and earnings. Although the Company believes that such estimates or expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. A number of risks and uncertainties that may or may not be within the control of the Company may cause these results to vary materially from those predicted herein and the reader and/or viewer is therefore cautioned that such information is speculative in nature. Please refer to the Risk Factors outlined in RMP’s Annual Information Form for the year ended December 31, 2010, which is available on the System for Electronic Document Analysis and Retrieval (“SEDAR”). The disclosed and presented net present value of future net revenue or cash flows attributable to the Company’s reserves are stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production/operating and transportation costs, future development costs, other income, and well abandonment costs. It should not be assumed that the undiscounted or discounted net present value of future net revenue or cash flows attributable to the Company’s reserves, as estimated or evaluated by the Company or their independent qualified reserves evaluators, represents the fair market value of those reserves. Actual reserves may be greater than or less than the estimates provided herein.
3
DISCLAIMER
The well economics provided in this presentation are based on the average historical estimates of reserves for wells drilled in the respective areas in which RMP has an interest and there is no certainty that future wells will have similar economics. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation. Finding and development costs have been prepared in accordance with National Instrument 51-101. The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year.
The estimates of original oil in place ("OOIP") and original gas in place ("OGIP") with respect to the Montney Growth Fairway in this presentation are estimates prepared by the Alberta Energy Resources Conservation Board. Such estimates have been provided to highlight the resource potential in the Montney Growth Fairway in which RMP has an interest. RMP cannot confirm whether such estimates have been prepared by a qualified reserves evaluator or whether such estimates have been prepared in accordance with the Canadian Oil and Gas Evaluation Handbook.
Reserves and production data are commonly stated in barrels of oil equivalent (“BOE”) using a six to one conversion ratio when converting thousands of cubic feet of natural gas (“MCF”) to barrels of oil (“BBL”) and a one to one conversion ratio for natural gas liquids (“NGLs”). Such conversion may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 mcf: 1 bbl is based on energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
4
FORMATION OF COMPANY
Formed May 11, 2011 with the combination of Orleans Energy Ltd. and RMP Energy Ltd.
Trading Symbol RMP.TO
Shares Outstanding96.7 million
Options 8.2 million
Warrants2.9 million
Directors’ & Officers’ ownership (fully diluted) 12%
5
COMPANY
Significant Waskahigan and Ante Creek light oil development opportunity• Near-term focus
Excellent natural gas resource potential
Strong balance sheet• Line of credit of $80 million• Drawn $45 million (as of March 31, 2012)
Large tax pool balance• $305 million of tax pools
6
MANAGEMENT TRACK RECORD
Senior management team has worked together for over 20 years
Successfully grown and managed companies from 1,000 boe/d to 120,000 boe/d
Team has invested over $5.0 billion in WCSB since 1992
Team is a proven value creator throughout commodity price cycles
7
2012 FORECAST
2011 Actual 2012 Budget % Change
E&D Capital Spending $ 100 million $ 75 million (25)
Production:
Annual Avg. (boe/d) 3,472 5,000-5,500 44-58
December 2011(boe/d) 5,000
Cash Flow $ 24.4 million $ 55-$ 65 million 125-166
Per basic share $ 0.30 $ 0.57 - $ 0.67 90-123
Assumptions:
Crude Oil ($WTI/bbl) $ 95.05 $ 94.00 (1)
Natural Gas ($AECO/GJ) $ 3.50 $ 3.00 (14)
Net Debt $ 49.1 million $60 - $70 million 22-43
Line of Credit $ 80 million $ 80 million -
8
RESERVES SUMMARY
Total proved plus probable oil and gas reserves increased to 22.68 million boe, 36% increase over the 16.68 million boe at Dec. 31, 2010
Total crude oil reserves increased by 814% to 9.41 million bbls from 1.03 million bbls (proved plus probable)
2011 F&D costs of $23.34/boe, prior to natural gas revisions (proved plus probable)
Replaced 573% of 2011 annual production on a proved plus probable basis and 405% on a proved basis, net of revisions
Year-end net asset value of $3.93 per share (discounted 8%) and $3.47 per share (discounted 10%) (fully diluted)
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Light oil exploration and development• Waskahigan• Ante Creek• Big Muddy
Natural gas potential• Kaybob• Pine Creek• Ricinus
CORE AREAS
10
MONTNEY OIL FAIRWAY
Significant land position in the Montney oil fairway
Estimated 416 Mstb OOIP* on RMP acreage
59.6 net (63.25 gross) Montney sections in fairway; 94% working interest
215 locations
Significant low risk development inventory
* Internal estimates combined with independent engineering.
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WASKAHIGANMONTNEY OIL
Top tier light oil play in WCSB
Large accumulation: initial resource study of oil estimate 264 Mstb OOIP with potential to significantly grow
Three years of low risk infill drilling inventory (40+ locations)• Up to 130 additional locations with step out drilling
High netbacks ~$50/boe; low operating costs ~$5/boe
Exceptional economics
12
WASKAHIGANMONTNEY OIL
51.25 gross sections (47.6 net) 93% W.I.
Drilled wells: 22
Open Range, Harvest and Athabasca Oil locations have significantly de-risked the northern and eastern part of property and increased development program.
Recent land acquisition significantly increases exposure to play.
Potential for up to 170 additional locations.
Pool details• Avg. OOIP/Section: 8,000 MBOE• 40o API Light Oil• GOR: 2,500 scf/bbl
13
WASKAHIGANMONTNEY OIL
Development
Over 40 locations in licensing process
130+ incremental locations in full development scenario
Pad drilling configuration will significantly reduce surface access and tie-in costs
Infrastructure is in place for 2012 drilling program. 10 pads are built and pipelines are in the ground
Evaluating smaller fracs to reduce costs
Optimizing production infrastructure
14
WASKAHIGANMONTNEY OIL
Oil Battery
Design capacity:• 2,500 bbl/d oil• 10 mmcf/d natural gas• $18.5 million for battery and gathering
line
Has significantly reduced transportation and operating costs
Water disposal permit to inject approved• $100,000 per month savings
Expansion:• Future capacity ~ 6,000 bbls/day• Oil expansion ~ $4 million
15
WASKAHIGANMONTNEY OIL
16
WASKAHIGANMONTNEY OIL
17
WASKAHIGANMONTNEY OIL
Capital Costs ($000): Single Well Economics: (C$3.5/GJ and US$95/bbl WTI)
Drill 2,100 High Oil Rec. Ave. Oil Rec. Low Oil Rec.Complete 2,100Equip & Tie-in 700 NPV (10% BT $000) 5,400 3,650 2,050Total 4,900 IRR (% BT) 110 50 25
F&D ($/BOE) 17.00 21.63 22.60Recycle Ratio 3.4 3.1 2.6
0
100
200
300
400
500
600
700
800
900
1,000
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000
Daily Oil Production, Barrels per Day
Cumulative Oil Production, Barrels
Waskahigan Oil Recovery Type Curves
133 mbbl 178 mbbl 223 mbbl 05‐25 04‐36 03‐23 09‐35
Type Curve Oil Gas Totalmstb mmcf mboe
High Oil Recovery 233 424 294Ave Oil Recovery 178 333 234Low Oil Recovery 133 514 219
18
ANTE CREEKMONTNEY OIL
Development
6 sections 100% W.I.
Extension of Ante Creek oil pool
Drilled 4-35 well:• Tested 1,900 boe/d, 1,620 bbl/d• 85% oil (38˚ API)
On-stream Q4 2012
Significant resource:• ~ $4 million per well • 23 potential locations• 280,000 boe (proved plus probable)• 130% rate of return
19
CONCLUSION
Strong production growth through oil development at Waskahigan and Ante Creek
• Focus on costs
Tremendous natural gas potential at:
• Kaybob
• Pine Creek
• Ricinus
20
APPENDIX
21
DIRECTORS
Craig Stewart Executive Chairman of RMP Energy Inc.
Doug Baker Independent Businessman
John Brussa Partner, Burnet Duckworth & Palmer LLP
John Ferguson President and CEO of RMP Energy Inc.
Andrew Hogg President and CEO of Coda Petroleum Inc.
Jim Saunders President and CEO of Twin Butte Energy Ltd.
Lloyd Swift Independent Businessman
22
MANAGEMENT TEAM
Craig Stewart Executive Chairman
John Ferguson President and CEO
Dean Bernhard Vice President, Finance and CFO
Brent DesBrisay Vice President, Geosciences
Jon Grimwood Vice President, Exploration
Ross MacDonald Vice President, Engineering
Bruce McFarlane Vice President, Business Development
Derek Riddell Vice President, Operations
23
PINE CREEKWILRICH NATURAL GAS
6.25 net sections, 56% W.I.
Wilrich development
5 wells currently producing from Wilrich, 1 well drilled in 2012 (40% W.I.; Peyto operated)
Currently producing ~ 700 boe/d
24
KAYBOB MONTNEY NATURAL GAS
28 sections 92% W.I.
Significant low risk gas inventory
60 locations; 90 BCF
Infrastructure is established; quick tie-in and onstream projects
Industry is still very active in area; i.e TQN, TET, CLT
Very attractive play when gas prices recover
25
RICINUSLIQUID RICH NATURAL GAS
52 sections, 64% W.I.
“Deep Basin” stratigraphy provides a “resource style” area
Reviewing 3-D seismic
Potential zones:• Cardium• Viking• Glauconite• Ellerslie• Cadomin
26
BIG MUDDYBAKKEN OIL PROSPECT
27
RESERVES SUMMARY
December 31, 2011 Reserves Summary (1) (Company interest before royalties)
Natural Gas Light Crude Oil NGLs Oil Equivalent
(Columns may not add due to rounding) (Bcf) (Mbbls) (Mbbls) (Mboe) (6:1)
Proved developed producing 29.295 1,596.7 532.1 7,011.3
Proved developed non-producing 0.561 207.4 1.5 302.5
Proved undeveloped 21.395 3,232.2 285.8 7,083.8
Total Proved 51.252 5,036.3 819.4 14,397.6
Probable 21.904 4,370.2 258.3 8,279.3
Total Proved plus Probable
Commodity Weighting
73.156
54%
9,406.5
41%
1,077.7
5%
22,676.9
Note (1) Estimated using InSite’s forecast prices and costs as of December 31, 2011.
28
NET PRESENT VALUE SUMMARY
December 31, 2011 Net Present Value Summary (Company interest before royalties)
(Columns may not add due to rounding)
Discount factor:0% 8% 10% 15% 20%
Proved developed producing $ 214,478 $ 150,980 $ 141,124 $ 122,094 $ 108,423
Proved developed non-producing 12,534 7,876 7,191 5,908 5,021
Proved undeveloped 193,905 71,779 56,073 28,506 11,113
Total Proved 420,917 230,636 204,388 156,508 124,557
Probable 342,428 132,241 109,017 70,402 47,435
Total Proved plus Probable $ 763,345 $ 362,877 $ 313,405 $ 226,910 $ 171,991
Note (1) Estimated using InSite’s forecast prices and costs as of December 31, 2011.
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F&D COSTS
F&D Costs
(amounts in $000s except reserve units and unit costs)Fiscal 2011
Proved Proved + Probable
Exploration and development expenditures $ 86,596 $ 86,596
Waskahigan oil battery and gathering lines infrastructure 18,531 18,531
Net land dispositions (5,163) (5,163)
Capitalized general and administrative and office costs 1,037 1,037
Total finding and development expenditures $ 101,001 $ 101,001
Future development cost - ending period 149,734 239,855
Less: Future development cost - beginning period (81,953) (97,573)
All-in total, including change in future development cost $ 168,782 $ 243,283
Reserve additions - excluding acquisitions / dispositions and natural gas technical revisions (Mboe)
6,683.9 11,737.6
Natural gas technical revisions - (Mboe) (1,523.5) (4,483.0)
Net reserve additions - including revisions (Mboe) 5,160.4 7,254.6
F&D Costs - excluding natural gas technical revisions ($/boe) $ 28.81 $ 23.34F&D Costs - including natural gas technical revisions ($/boe) $ 32.71 $ 33.53
30
FOURTH QUARTER 2011 FINANCIAL RESULTS
Three Months ended December 31,
(thousands except share data) 2011 2010 % Change
Cash flow from operations $ 11,558 $ 7,134 62
Per share – basic and diluted $ 0.12 $ 0.11 9
Net Income (loss) $ (70,980) $ 20,153 -
Net debt – period end $ 49,087 $ 8,449 481
31
FOURTH QUARTER 2011 OPERATING RESULTS
Three months ended December 31,
(6:1 oil equivalent conversion) 2011 2010 % Change
E&D Capital Spending ($ thousands) $ 42,157 $ (25,546) -
Average Daily Production:
Crude Oil & NGLS(bbls/d) 1,496 856 75
Natural Gas (mcf/d) 19,337 15,278 27
Oil Equivalent (boe/d) 4,719 3,402 39
32
FISCAL 2011 FINANCIAL RESULTS
Year ended December 31,
(thousands except share data) 2011 2010 % Change
Cash flow from operations $ 49,511 $ 47,770 4
Per share – basic and diluted $ 0.30 $ 0.41 (27)
Net Income (loss) $ (74,974) $ 20,001 -
Net debt – period end $ 49,087 $ 8,449 481
33
FISCAL 2011 OPERATING RESULTS
Year ended December 31,
(6:1 oil equivalent conversion) 2011 2010 % Change
E&D Capital Spending ($ thousands) $ 99,964 $ 15,874 530
Average Daily Production:
Crude Oil & NGLS(bbls/d) 877 681 29
Natural Gas (mcf/d) 15,568 18,321 (15)
Oil Equivalent (boe/d) 3,472 3,734 (7)