A LOW COST NATURAL GAS CONSOLIDATOR
INVESTOR UPDATE
JANUARY 2016
TSX-V: PNE
CAUTIONARY STATEMENTS
Certain statements contained in this presentation include statements which contain words such as “anticipate”, “could”, “should”, “expect”, “seek”, “may”, “intend”, “likely”, “will”, “believe” and
similar expressions, statements relating to matters that are not historical facts, and such statements of our beliefs, intentions and expectations about development, results and events which
will or may occur in the future, constitute “forward-looking information” within the meaning of applicable Canadian securities legislation and are based on certain assumptions and analysis
made by us derived from our experience and perceptions. In particular, this presentation contains statements regarding: the potential growth opportunities and benefits on Pine Cliff Energy
Ltd.’s (“Pine Cliff” of the “Company”) assets; information regarding Pine Cliff on a pro forma basis; the amount drawn on Pine Cliff's syndicated credit facility; net debt levels; current and pro
forma production values; expected decline rates; the strategy of the Company and the ability of the Company to execute on this strategy; expected cash provided by operations; future
returns on share price; future capital expenditures, including the amount, timing and nature thereof; oil and natural gas prices and demand; Pine Cliff’s share price multiple and the correlation
to natural gas pricing; net debt to funds flow from operations; cash flow / funds flow leverage to natural gas prices; corporate netbacks and break even prices; expected operating expenses,
royalty rates, general and administrative expenses and interest expenses; expected cash / funds provided by operations; free cash flow; expansion and other development trends of the oil
and gas industry; reserve and resource volumes; business strategy and outlook; expansion and growth of the business and operations; maintenance of existing customer, supplier and
partner relationships; future acquisition opportunities including the amount, timing, success and nature thereof; the ability of the Company to raise capital; supply channels; accounting
policies; credit risks; availability of drilling or recompletion locations, including the timing and success thereof; the operational, economic and financial impacts of the acquisition of assets in
Pine Cliff’s core areas that closed on May 29, 2015 (the “May 2015 Acquisition”) to Pine Cliff; the potential growth opportunities on the assets; the operational, economic and financial
impacts of the acquisition that closed on December 11, 2015 (the “December 2015 Acquisition”) on Pine Cliff; ability to reduce operating costs on the Ghost Pine and Viking assets; change
in Pine Cliff’s LLR; future consolidation opportunities around the Ghost Pine and Viking assets, including the timing and nature thereof; reserve life index; other anticipated benefits to Pine
Cliff of the December 2015 Acquisition; guarantee that it will be listed on the TSX or, if listed, how long the application process will be; and other such matters. As such, many factors could
cause the performance or achievement of Pine Cliff to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking
statements. Because of the risks, uncertainties and assumptions contained herein, readers should not place undue reliance on these forward-looking statements. Any data, graphs or
information in this presentation that have been compiled by a third party has been credited to that third party and Pine Cliff does not take responsibility for the accuracy of such information.
In addition, statements relating to "reserves" are by their nature forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions that the
reserves described can be profitably produced in the future. The recovery and reserves estimates provided herein are estimates only and there is no guarantee that the estimated reserves
will be recovered. Pine Cliff cautions that its future oil, natural gas and natural gas liquids production, revenues, cash flows, liquidity, plans for future operations, expenses, outlook for oil and
natural gas prices, timing and amount of future capital expenditures, and other forward-looking information is subject to all of the risks and uncertainties normally incident to the exploration for
and development and production and sale of oil and gas.
All such forward-looking information is based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected
future developments, as well as other factors we believe are appropriate in the circumstances. The risks, uncertainties, and assumptions are difficult to predict and may affect operations, and
may include, without limitation: foreign exchange fluctuations; equipment and labour shortages and inflationary costs; general economic conditions; industry conditions; changes in applicable
environmental, taxation and other laws and regulations as well as how such laws and regulations are interpreted and enforced; the ability of oil and natural gas companies to raise capital; the
effect of weather conditions on operations and facilities; the existence of operating risks; volatility of oil and natural gas prices; oil and gas product supply and demand; risks inherent in the
ability to generate sufficient cash flow from operations to meet current and future obligations; increased competition; stock market volatility; opportunities available to or pursued by us; and
other factors, many of which are beyond our control. The foregoing factors are not exhaustive.
Actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that
any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits will be derived therefrom. Except as required by law, Pine Cliff
disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. The annual audit of our
consolidated financial statements is not yet complete and accordingly all financial and production amounts represent management's estimates which are unaudited and subject to revision.
The forward-looking information contained herein is expressly qualified by this cautionary statement.
This presentation contains the term barrels of oil equivalent (“boe”) which has been calculated on the basis of six thousand cubic feet equivalent (“mcfe”) of gas to one barrel of oil. This
conversion ratio is based on energy equivalence primarily at the burner tip and does not represent a value equivalency at the wellhead. The term boe may be misleading, particularly if used
in isolation.
-1-
CORPORATE PROFILE
POSITIONED FOR PROFITABLE AND SUSTAINABLE
LOW RISK NATURAL GAS GROWTH
Listing (1)
TSX-V: PNE
Market Capitalization(2)
$290 MM
Average Daily Volume(3)
0.7 MM
52-Week Trading Range
$0.86 to $1.90
Shares Issued(4)
305.2 MM
Directors and Officer’s Ownership(5)
13.9%
2015 Production Guidance
11,800-12,300 boe/d
2016 Production Guidance
22,500-23,000 boe/d
2016 Natural Gas Weighting
~92%
Corporate Base Production Decline
<12%
2016 Capital Guidance
$10.0 MM
2015 Year-end Net debt
~$146 MM
Bank Line (6)
$185 MM
Tax Pools(7)
>$480 MM
(1)
Applied to be listed on the TSX in December 2015
Reflects January 4, 2016 closing price of $0.95 per share
(3) Average daily trading volumes for July 1, 2015 to January 4, 2016 (includes subscription receipts volumes)
(4) As of January 4, 2016. In addition, as of January 4, 2016 there were 17.2 MM stock options issued (5.6% of outstanding
shares)
(5) Fully diluted
(6) $165 MM revolving syndicated credit facility and $20 MM operating facility, interest at prime plus1.0% to 2.5% or the
bankers’ acceptance rate plus 2.0% to 3.5% based on the trailing 12 months debt to EBITDA
(7) As of September 30, 2015 and after taking into effect the December 2015 Acquisition
(2)
-2-
SUSTAINABLE SHAREHOLDER VALUE CREATION
Acquisition Priorities Focused on Value
Accretive acquisitions of high-quality natural gas assets offering low
operating costs, low decline production, and increasing drilling
inventories; nine acquisitions completed since 2012
FINANCIAL
FLEXIBILITY
Free Cash Flow
Continued debt reduction, supports balance sheet
and allows flexibility for future transactions
Access to Capital
CAPITAL
DISCIPLINE
Five financings completed since Nov. 2012
INCREASING
VALUE PER
SHARE
PRUDENT
GROWTH
Exceptional Track Record
Consistent delivery of superior long-term results supported by
decades of transaction execution experience
EXPERIENCED
MANAGEMENT
TEAM
High Insider Ownership
Interests aligned with shareholders
-3-
A UNIQUE, COUNTER-CYCLICAL STRATEGY
CAPITALIZING ON A LOW COMMODITY PRICE ENVIRONMENT
• PNE uniquely focused on a low-risk, natural gas asset consolidation strategy in Western
Canada
• Weak commodity prices have reduced industry cash flow and stimulated non-core asset
sales to fund debt repayment, capital expenditures and dividends
• Market is rewarding companies for strong balance sheets and focused asset portfolios;
sales of “non-core properties” expected to continue
• Cash flow positive gas properties + conservative capital program enable PNE to use
excess cash flow for debt repayment, strengthening balance sheet for future potential
acquisitions
Pine Cliff is well-positioned to
capitalize on its growth strategy and is poised to
provide shareholders with increased long-term value and returns
-4-
SUCCESSFUL EXECUTION
TRACK RECORD SINCE JANUARY 2012
$488,000,000
$448,000,000
Market Cap
$408,000,000
Phil Hodge appointed President
and CEO; George Fink appointed
Executive Chairman
$368,000,000
$2.9M rights offering and
private placement
Share Price
Realized security - became
sole shareholder of
Skope Energy
$5.4M private
placement at $0.70
/share
$13.3M acquisition of
additional Southern AB
assets and operatorship
$34M
Acquisition of
additional 52% WI in
the Monogram unit
$328,000,000
$288,000,000
$248,000,000
$208,000,000
Purchased debt &
security of Skope Energy
$23.5M Carrot
Creek acquisition
Closed acquisition of
Geomark Exploration Ltd.
Oct 1: $100M Shallow Gas asset
acquisition
Sept 23: $60.1M equity offering at
$2.05/sh
Aug 7: $33.3M Carrot Creek /
Edson asset acquisition
$2.67
$14.1M acquisition of
additional assets in Carrot
Creek / Edson & S. AB
$2.17
$20.0M common
share offering at
$1.10/sh
Closed $185M
acquisition of new
Core Area in Central
AB and $72M share
offering at
$1.08/share
$1.67
$25.1M common
share offering at
$0.88 /sh
$1.17
$168,000,000
$128,000,000
$0.67
$88,000,000
$48,000,000
$8,000,000
$0.17
-5-
WHAT WE HAVE BUILT
THREE MAJOR OPERATED CORE AREAS
• Base Production of ~142,800 mcfe/d or
23,800 boe/d
• Weighted ~92% towards natural gas
• Low Decline Rate
• Corporate decline rate on base production of
<12%
• High Working Interest and Operatorship
• Production is ~85% operated
Recent
Acquisition
• 80% working interest
• Extensive Land Position
• ~2,200,000 gross acres (1,800,000 net acres)
•
Significant Undrilled or Recompletion
Locations
• Internally
locations
estimated
at
over
1,500
gross
• Significant Operated Infrastructure
• Includes U.S. export pipeline to the Pacific
Northwest
-6-
HISTORY OF ACCRETIVE ACQUISITIONS
ACQUISITION METRICS REFLECT VALUE FOCUSED STRATEGY
Transaction Metrics
Announcement
Transaction Value
Production
P+P Reserves
Flowing Barrel
P+P Reserves
P+P Reserves
Date
($million)
(boe/d)
(mmboe)
($/boe/d)
($/boe)
($/mcfe)
9-Nov-15
$185.0
11,730
78.6
$15,772
$2.35
$0.39
20-Apr-15
$14.1
1,030
4.8
$13,699
$2.93
$0.49
29-Jul-14
$33.3
970
4.0
$34,278
$8.31
$1.39
17-Jul-14
$100.0
5,300
15.5
$18,868
$6.45
$1.08
17-Jul-13
$13.3
850
2.4
$15,588
$5.62
$0.94
Monogram Unit WI Acquisition
27-May-13
$33.7
1,600
7.7
$21,063
$4.39
$0.73
Skope Energy Inc. Acquisition
20-Nov-12
$28.0
3,500
9.4
$8,000
$2.98
$0.50
Carrot Creek Asset Acquisition
10-Feb-12
$23.5
950
3.1
$24,737
$7.58
$1.26
$16,614
$3.43
$0.57
Transaction
Central AB Assets Acquisition
Carrot Creek/Edson and Southern
AB Asset Acquisition
Carrot Creek/Edson Asset
Acquisition
Southern AB & SK Asset
Acquisition
Southern AB & SK Asset
Acquisition
100
to
Boe/d
23,800
Boe/d
in
3.5
years
-7-
ACQUISITION
OF
NEW CORE AREA (D
EC
11’15)
GROWS PRODUCTION BY 90% AND RESERVES LIFE INDEX BY 55%
• $185 million accretive acquisition of natural gas weighted, low decline assets in the Viking and Ghost
Pine areas of Central Alberta
• Adds new core area and creates opportunities for further consolidation across PNE’s focal areas to
support long-term growth
• Increases reserve life index by 55% to ~13 years from ~9 years by offering long-term, attractive
inventory for drilling, recompletions and optimization of existing production
• Significantly accretive per share on cash flow and reserves
• Decreases corporate break-even point to less than $2.00/mcf
• Significantly increases Pine Cliff’s limited liability ratio (“LLR”) from 1.04 to 1.29(1)
• Ownership in key strategic infrastructure, including four gas plants with third party revenue
• Opportunities to reduce operating costs
(1)
Based in internal estimates on August 1, 2015
-8-
STRONG ACQUISITION METRICS
(1)
ACCRETIVE ACQUISITION WITH STRONG EXPOSURE TO NATURAL GAS PRICES
Production (July 2015 average) (1)
11,730 boe/d
Natural gas weighting
89%
Operating costs
$11.20 per boe
Royalty rate(2)
11% of revenue
Low decline rate
12%
Booked drilling and recompletion locations(3)
~520 gross (~420 net)
Proved producing reserves(3)
37.5 MMboe
Proved reserves(3)
47.5 MMboe
Proved and probable reserves(3)
78.6 MMboe
TRANSACTION METRICS
Production
$15,772 per flowing boe
Proved Reserves(3)
$3.90 per boe or $0.65 per mcfe
Proved and Probable Reserves(3)
$2.35 per boe or $0.39 per mcfe
(1)
(2)
(3)
Certain information herein is provided to Pine Cliff by the vendor, and has not been verified by any independent sources. Pine Cliff believes such information to be accurate & reliable but does not
make any representations as to the accuracy of any estimates
Prior to gas cost allowance adjustments
Based on reserves evaluated by an independent third party with an effective date of July 1, 2015. The proved producing, proved and proved and probable reserves as presented, include 1.2
MMBoe, 1.2 Mmboe and 1.5 MMboe of royalty interest reserves, respectively. The booked drilling and recompletion locations, as presented, are based on the proved and probable reserves
-9-
NEW CORE AREA ASSET OVERVIEW
LOW RISK, LOW DECLINE ASSETS WITH
SIGNIFICANT UPSIDE(1)
Ghost Pine
Viking
5,400 boe/d
6,330 boe/d
Natural gas weighting
92%
85%
Annual decline rate
9%
14%
244,699
583,722
10,699
89,231
65%
85%
369 (247)
107 (107)
Production (July Average)
Net working interest acres
Fee title acres
% Operated
Gross (net) booked locations(2)
Very low
12%
Blended decline rate
(1)
(2)
Certain information herein is provided to Pine Cliff by the vendor, and has not been verified by any independent sources. Pine Cliff believes such information to be accurate & reliable but does not make any
representations as to the accuracy of any estimates
Based on reserves evaluated by an independent third party with an effective date of July 1, 2015. Pine Cliff does not guarantee that it will be booking all of these locations in the December 31, 2015 reserve
report
-10-
SIGNIFICANT LOW RISK DEVELOPMENT
SIGNIFICANT UPSIDE POTENTIAL GHOST PINE HORSESHOE CANYON COAL BED
METHANE (1)
•
Attractive and predictable low-cost
production with long reserve life
•
Over 1,000 gross upside opportunities
identified
•
~490 gross (272 net) have been
identified as Tier 1 locations that
return 25-30% at $3.50/GJ
AECO
•
CBM infill drilling opportunities
plus potential for conventional
drilling
•
369 gross (247 net) booked
locations(2)
•
Infrastructure is operated, segregated
from conventional production, and has
low operating cost requirements
(1)
(2)
Certain information herein is provided to Pine Cliff by the vendor,
and has not been verified by any independent sources. Pine Cliff
believes such information to be accurate & reliable but does not
make any representations as to the accuracy of any estimates
Based on reserves evaluated by an independent third party with an
effective date of July 1, 2015. Pine Cliff does not guarantee that it
will be booking all of these locations in the December 31, 2015
reserve report
-11-
EMERGING COLORADO SHALE PLAY(1)
SIGNIFICANT
UPSIDE POTENTIAL
•
Industry was drilling this
area using horizontal
drilling technology in
2014
•
144 Tier 1 locations with
over 4m of net pay with
a 25-30% rate of return
at $3.50/GJ AECO (2)
•
~70% recovery factor at
3 horizontal
wells/section = 700
MMcf/well (2)
•
Typical EURs on
vertical wells range from
200 – 300 MMcf (2)
•
107 wells booked at 2
wells/section (3)
(1)
(2)
(3)
COLORADO SHALE(1)
Certain information herein is provided to Pine Cliff by the vendor, and has not been verified by any independent sources. Pine Cliff believes such information to be accurate & reliable but does not
make any representations as to the accuracy of any estimates
Based on Pine Cliff internal estimates
Based on reserves evaluated by an independent third party with an effective date of July 1, 2015. Pine Cliff does not guarantee that it will be booking all of these locations in the December 31, 2015
reserve report
-12-
SUSTAINABILITY OUR KEY FOCUS
STRONG EMPHASIS ON GROWTH OF SUSTAINABLE NATURAL GAS ASSETS
CFPS Growth Debt-Adj 2016E vs. Debt-Adj PPS Growth 2016E
•
PNE continues to grow
production per share through
accretive acquisitions while
maintaining balance sheet
strength
Source: Desjardins Capital Markets, December 2015
Decline
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
BXE
RMP
CQE
TOU
POU
RRX
PPY
VII
PMT
DEE
PEY
KEL
CR
NVA
LEG
TET
BTE
VET
ECA
CPG
TBE
BIR
BNP
AAV
WCP
BNE
LRE
SPE
LTS
ARX
PWT
ATH
TOG
ERF
AET
HSE
CNQ
SGY
PXX
SGL
PGF
NBZ
OIL
EGL
ZAR
CJ
PNE
CVE
PLT
With one of the lowest
production declines in the
industry, low operating
expenses and low overhead,
Pine Cliff is positioned to
withstand & exploit low
commodity price environment
Corporate Decline Rate
•
Average: 29%
Source: Scotiabank Statsbook May 2015
Note: CNQ, CVE and HSE are Canadian production only and exclude oil sands
production
-13-
SUCCESSFUL COST REDUCTIONS
IN
2015
COMMITTED TO COST REDUCTIONS AND INCREASING EFFICIENCIES IN THE FIELD
• Realized a 7% decrease in operating expenses per boe since 2012 and a 5% decrease
in operating expenses per boe since 2014 alone
• In addition to reducing costs in the field, a strong focus is put on minimizing head office
costs and eliminating discretionary spending
G&A Expenses per Boe
Operating Expenses per Boe
$9.50
$9.42
$9.39
$4.60
$4.50
$9.18
$9.00
$4.00
$8.75
$8.50
$8.00
71%
$3.50
per boe
per boe
$5.00
7%
$10.00
$3.00
$2.50
$1.83
$2.00
$7.50
$1.67
$1.35
$1.50
$7.00
$1.00
$6.50
$0.50
$6.00
$0.00
2012
2013
2014
First Nine Months
2015
2012
2013
2014
First Nine Months
2015
Note: G&A expenses excludes transaction costs and overhead recoveries
-14-
UPDATE: SHALLOW GAS ACQUISITION
DEMONSTRATING SUCCESS BY ARRESTING DECLINE + REDUCING OPERATING COSTS
• Shallow gas asset package
acquired October 2014
Offsetting Production Declines Through Reactivation
Sales Volumes (boe/d)
6000
Acquisition Closed
Oct. 1
Reactivated
75 Wells
Pipeline
Curtailment
Curtailment
Ends
5000
• Less than one year after assets
transferred, production
maintained at ~5,000 boe/d
while operating expenses were
reduced by ~13% to ~$7.40 /
boe (~$1.23 / mcfe)
4000
3000
2000
CBM
Hatton East
Hatton
Many Islands
Long Valley
1000
0
01-Oct-14
01-Dec-14
• At acquisition, production was
~5,000 boe/d (30,000 mcfe/d)
and operating expenses
averaged ~$8.54 / boe (~$1.42
/ mcfe)
01-Feb-15
01-Apr-15
01-Jun-15
01-Aug-15
• During 2015 to September 30,
~80 wells were reactivated for
capex of $0.41 MM, adding
~450 boe/d – resulting in a
capital efficiency of $900 per
flowing boe
-15-
HIGHLY LEVERAGED TO NAT GAS PRICING
ONE OF THE HIGHEST FREE FUNDS FLOWS PER SHARE IN THE INDUSTRY
• Offers one of the highest exposures to movements in natural gas pricing given low
operating expenses and overhead, low decline, no hedging and minimal capital spending
• $0.10 / mcf increase in AECO adds approximately $4.4 million of funds flow annually
(or ~$0.015 per share)(1)
2016E Funds Flow per Share
Sensitivity to Natural Gas Pricing
2016E Free Cash Flow Yield
Sensitivity to Natural Gas Pricing
125%
100%
Variance from base
Scenario (%)
75%
50%
25%
0%
-25%
-50%
-75%
-100%
-125%
AAV
BXE
BIR
PPY
PNE
SRX
CQE
Source: December 1, 2015 Canaccord Genuity Corp.
(1)
Source: September 7, 2015 CIBC World Markets Inc.
Using the production on closing of the December 2015 Acquisition and estimated royalty rates
-16-
2016 FOCUS
ON
FREE FUNDS FLOW
ONE OF THE HIGHEST FREE FUNDS FLOWS PER SHARE IN THE INDUSTRY
• Pine Cliff generates some of the highest free cash flow yield in the industry
2016 Free Cash Yield % to Debt to Cash Flow
Source: Dundee Capital Markets, November 2015
2016 Free Cash flow as a % of Enterprise Value
Excluding Dividend Obligations
FCF/EV (%)
PNE
PXX
RE
CPG
SKX
SGY
VET
TOG
TBE
BTE
LRE
JOY
MQL
BXE
RRX
KCK
NVA
BIR
RMP
MEI
QEC
ATH
PPY
LXE
-50.0%-40.0%-30.0%-20.0%-10.0% 0.0% 10.0% 20.0%
Source: Canaccord Genuity Corp, November 2015
-17-
FOCUS ON PER SHARE VALUE INCREASES
Mid-point of
2016 Guidance
22,750
Production (boe/d)
25,000
Mid-point of
2015 Guidance
47%
12,050
20,000
4,775
10,000
775
5,000
increase in daily
production per basic
share(1)
7,888
15,000
2012
2013
2014
2015
2016 (est)
$2,000
$442
$520
(1)
(2)
$11,615
$7,507
$5.00
$4.00
50%
increase in funds flow from
operations per basic share(2)
$3.00
$2.00
$1.00
$(35)
$$(2,000)
$5,555
$3,721
$3,014
$4,000
$775
$6,000
$2,401
$8,000
$5,564
$10,000
$6.00
$6,182
$12,000
$8,104
$10,089
$14,000
$9,180
Funds Flow From Operations (000s)
Mid point of 2016 guidance as compared to the mid point of 2015 guidance
For the quarter ended September 30, 2015 as compared to June 30, 2015
$-
-18-
SUSTAINABLE COST STRUCTURE
CAPITAL BUDGET IS SUBSTANTIALLY LOWER THAN PROJECTED FUNDS FLOW
• 2016 capital budget of $10 million, before acquisitions (2015 - $7.5 million, before
acquisitions)
• 2016 production volumes of 22,500 to 23,000 boe/d (2015 – 11,800 to 12,300 boe/d)
• Use monthly funds flow to repay debt drawn for acquisitions
• Ongoing focus on optimizing production, minimizing overhead and reducing operating
expenses
• Sustainable cost structure and corporate break even (before capital spending) of less
than $2.00/Mcf
-19-
WHY INVEST IN PINE CLIFF
• High-quality assets with low operating costs and one of the lowest decline rates in the
industry
• Free cash flow allows for debt repayment in depressed commodity environment
• Entirely unhedged production allows for high leverage to increases in natural gas prices
• Current depressed commodity price environment is anticipated to provide additional
accretive acquisition opportunities (sales processes have been announced by Bellatrix,
Centrica, Encana, Enerplus, Pengrowth, Pennwest, Quicksilver, Husky, Cequence, Long
Run, Spyglass etc…)
• Proven track record of delivering superior long-term results for shareholders
•
Proven access to capital to take advantage of opportunities in a depressed commodity
price environment
• Management team and the board stock ownership creates high alignment with shareholder
interests
-20-
APPENDIX
Note: Pine Cliff Energy Ltd. was recognized on Alberta Venture magazine’s 2015 Fast Growth 50 List.
Pine Cliff was recognized in June 2015 as one of The 200 companies by Alberta Oil magazine.
Pine Cliff Energy Ltd. was recognized as a TSX Venture 50® company in 2015. TSX Venture 50 is a trade-mark of TSX Inc. and is used under license.
-21-
BUILDING A FAMILIAR MODEL
A CLEAR VISION FOR LONG-TERM GROWTH WITH PROVEN EXPERIENCE
• Pine Cliff management has a long-term view of value creation, with a counter-cyclical
focus to acquire natural gas assets that are non-core to their owners at good valuations
•
•
Similar to Bonterra’s origin with oil assets in 1998
Despite natural gas pricing fluctuations in the past four years, our approach to acquiring assets has remained
disciplined
• Pine Cliff’s Chairman and largest shareholder, George Fink, served the same roles with
both Bonterra Energy and Comaplex Minerals
•
Four out of five of Pine Cliff’s board of directors also served on the boards and management teams of Bonterra
and Comaplex
Bonterra (TSX: BNE) has gone from $0.20 per share in 1998 to $17.21 per share on January 4, 2016, while
paying over $35.00 of dividends per share. A $20,000 investment in 1998 would equate to almost $5.3 million
today (including dividends and share appreciation)
Comaplex went from $0.60 per share in 1994 to $10.32 per share in 2010 when it was sold
•
•
Share Price
Pine Cliff Return(1)
Bonterra Return
Combined
Share Price
Share Price
$10.32
Comaplex Return
$52.79
Cum Dividend
$0.95
$35.58
$17.21
$0.60
$0.17
2011
2012
2013
2014
Dec-15
1998
2000
2002
2004
2006
2008
2010
2012
2014
1994
(1) Pine Cliff return is presented since the change in strategic focus of the company and management appointment on December 21, 2011
Note: The Pine Cliff and Bonterra share prices are to closing on January 4, 2016.
1996
1998
2000
2002
2004
2006
2008
2010
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NATURAL GAS OUTLOOK - DEMAND
U.S. Gross LNG Exports
U.S. Natural Gas Demand Growth in
Electric Power Sector
bcf/d
bcf/d
8.0
5.0
7.2
4.0
7.0
Forecast
6.0
3.5
Forecast
3.0
2.0
4.6
5.0
1.3
1.0
4.0
1.3 1.0
1.0
(0.0)
-
3.0
2.2
(1.0)
2.0
1.1
1.0
(2.0)
0.1
(3.0)
(2.6)
0.0
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
(4.0)
2019
Source: September 28, 2015 First Energy; EIA
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Source: September 28, 2015 First Energy; EIA
U.S. Net Exports of Natural Gas to Mexico
U.S. Natural Gas Demand Growth
U.S. Power Sources
(indexed to 2014 demand)
bcf/d
4.4
4.5
2%
4.0
4.0
6%
3.6
3.5
39%
3.3
19%
2.8
3.0
B cf/d
R/C
P o we r
In d u strial
Me xico
LNG
14
7%
12
10
8
2.5
1.8
2.0
2.0
6
27%
4
Forecast
1.5
1.0
2
Coal
Nuclear
Other renewables
0.5
0.0
2009
2010
2011
2012
2013
2014
2015
Source: September 28, 2015 First Energy; EIA
2016
2017
2018
Natural Gas
Hydropower
Other
2019
Source: September 2015, Canaccord Genuity
0
-2
2 0 14
2 0 15
2 0 16
2 0 17
2 0 18
2 0 19
Source: SG Commodities Research, Bentek (March 2015)
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NATURAL GAS OUTLOOK - SUPPLY
U.S. Working Natural Gas in Storage
bcf
Deviation from average
Storage level
5,000
120%
4,000
100%
3,000
80%
2,000
60%
1,000
40%
Forecast
0
20%
-1,000
0%
-2,000
-20%
-3,000
-40%
-4,000
Jan 2011
-60%
Jan 2012
Jan 2013
Jan 2014
Jan 2015
Jan 2016
Note: Colored band around storage levels represents the range between the minimum and maximum from Jan.
2010 - Dec. 2014.
Source: EIA Short-Term Energy Outlook, September 2015
U.S. Natural Gas Supply Growth
U.S. Natural Gas Rig Count
bcf/d
5.0
3.8
4.0
3.0
4.4
4.0
4.4
3.6
2.5
1,000
800
600
2.0
1.0
1.0
Forecast
400
200
Apr
May
Dec
1Jan
3 5 Feb
7 9 Mar
11 13 15
17 19
21 23Jun
25 27Jul
29 31Aug
33 35Sep
37 39Oct
41 43 Nov
45 47 49
51
0.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: September 28, 2015 FirstEnergy; EIA
2015
2014
Source: Baker Hughes
2013
2012
2011
-24-
ANALYST COVERAGE
The following analysts provide research report coverage on Pine Cliff:
COMPANY
ANALYST
AltaCorp Capital
Patrick O’Rourke
Canaccord Genuity
Anthony Petrucci
CIBC World Markets
Dave Popowich
Clarus Securities Inc.
Robert Paré
Desjardins Capital Markets
Jamie Kubik
FirstEnergy Capital
Michael Hearn
GMP Securities
Aaron Swanson
Haywood Securities Inc.
Darrell Bishop
Industrial Alliance Securities Inc.
Michael Charlton
National Bank Financial Inc.
Dan Payne
Paradigm Capital
Ken Lin
Scotia Capital Inc.
Cameron Bean
TD Securities Inc.
Aaron Bilkoski
By posting this list, Pine Cliff does not imply endorsement of or agreement with the information, conclusions or recommendations provided in the reports. Pine Cliff does not
distribute electronic copies of analyst reports.
-25-
CORPORATE INFORMATION
BOARD OF DIRECTORS
Gary J. Drummond
George F. Fink
Philip B. Hodge
Randy M. Jarock
Carl R. Jonsson
OFFICERS
George F. Fink
HEAD OFFICE
850, 1015 – 4th Street SW
Calgary, Alberta T2R 1J4
Phone: (403) 269-2289
Fax: (403) 265-7488
REGISTRAR AND TRANSFER AGENT
Computershare Trust Company of
Canada
STOCK EXCHANGE LISTING
TSX Venture Exchange
Trading Symbol: PNE
WEBSITE
www.pinecliffenergy.com
INVESTOR CONTACT
info@pinecliffenergy.com
Executive Chairman of the Board
Philip B. Hodge
President and Chief Executive Officer
Kristi L. Kunec
Chief Financial Officer and Secretary
Cheryne A. Lowe
Interim Chief Financial Officer
Terry L. McNeill
Chief Operating Officer
AUDITORS
Deloitte LLP
BANKERS
Toronto-Dominion Bank
Alberta Treasury Branches
National Bank of Canada
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