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

Eagle Energy Trust

• VISION. GROWTH. INCOME.

Investor Presentation

November 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, including the impact on Eagle’s investments, structure, taxability and distributions of investing in Canadian assets, drilling program, production, operating costs, 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 20, 2014 under the headings “Risk Factors” and “Advisory-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. 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

20, 2014 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

• f 6 Mcf: 1 bbl would be misleading as an indication of value.

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Mission Statement

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VISION We create wealth for investors by combining innovation, expertise and opportunity.

GROWTH

We target a capital spend and payout ratio that sustains moderate growth and distributes income.

INCOME

We strive to deliver predictable monthly distributions.

Overview

• Eagle’s strategy is to provide investors with a reliable distribution

paying investment by generating stable cashflows and managing risk while delivering moderate growth through increasing unit value.

• On October 20, 2014, Eagle announced that it will seek unitholder

approval to permit investment in Canadian assets to expand its range of opportunities in addition to continuing to actively acquire,

• perate and exploit U.S. oil and gas production in accordance with

the Trust’s growth strategy.

• All of Eagle’s current production is in Texas and Oklahoma.
• 95% of Eagle’s current production is light oil.
• Strong balance sheet – cash on hand and debt-free.

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Corporate Profile

Current Estimated Working Interest Production: 1,900 boe/d Production Split: 95% light oil Cash on Hand: $ 69.5 million Credit Facility Available: $ 61.6 million Annual Distribution: $1.05 per unit Tax Pools:

• approx. $US 166 million

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Market Data

Ticker Symbol:

TSX: EGL.UN

Units Outstanding (basic): 34.89 million 52 Week Range: $3.38 - $8.63 Recent price (Nov 4/14 close): $3.44 Average daily trading volume (30 day): 100,805 units 30 day VWAP: $4.88 Market Cap (Nov 4/14): $120 million Directors’ & Officers’ Ownership: 2.4% basic, 10.6% fully diluted Equity Research:

Scotia NBF Acumen TD

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Proposal to Invest in Canadian Assets

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• A Special Meeting of unitholders will be held on November 24, 2014 to vote
• n a special resolution to permit the acquisition of Canadian energy assets.
• Opportunities in Canada are as attractive as opportunities in the U.S.:
• market conditions in Canada’s oil and gas sector have resulted in Canadian oil and gas assets

being available at attractive prices;

• pricing differentials will continue to narrow over the coming years with the expansion of

liquefied natural gas, rail and pipeline infrastructure;

• Eagle’s management and directors have significant experience acquiring and developing

energy assets in Canada;

• investing in Canada will mitigate the Trust’s commodity price, foreign exchange and interest

rate risk through diversification.

Impact of Eagle Investing in Canadian Assets

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• Acquiring Canadian Assets will not affect Eagle’s U.S. Investments and U.S.

Sourced Distributions:

• No effect on its U.S. operations or on the taxes on distributions from U.S. assets.
• The Trust’s U.S. operating subsidiary will continue to actively acquire, operate and exploit U.S.
• il and gas production in accordance with the Trust’s growth strategy.
• Acquiring Canadian Assets will have no Negative Effects on Eagle’s Structure
• r Taxability:
• The Trust’s proposed Canadian investments will be structured such that the Specified

investment flow-through (SIFT) trust income and distribution tax will not apply to the Trust or its affiliates.

• The Trust’s Canadian corporate subsidiaries will be taxed in the same manner as other

Canadian oil and gas corporations.

• The total annual distribution will be allocated among three components and shown on the

Unitholder’s annual tax slips as:

• ther income (i.e., trust income from U.S. sources)
• return of capital
• dividends

Sale of Permian Properties

• In August 2014, Eagle sold its Texas Permian asset for $ 150 million ($US 140

million). Eagle’s remaining U.S. properties produce approximately 1,900 barrels of oil per day.

• As a result of the disposition, Eagle currently has $69.5 million ($US 62

million) of cash on hand, and a $61.6 million ($US 55 million) unutilized debt facility.

• Eagle is actively pursuing acquisitions to redeploy capital in attractive

investment opportunities.

• Eagle has withdrawn its current guidance and expects to provide revised

guidance after an announcement is made regarding its re-deployment of the sale proceeds.

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Q3 2014 Highlights

• Over 80% of the Trust’s current production is hedged at an average price of
• ver $US 90 per barrel WTI through to June 30, 2015.
• 30% of production is hedged for the second half of 2015 at an average price
• f $US 87 per barrel WTI.
• Eagle disposed of its entire working interest in its Permian properties on

August 29, 2014 for net proceeds of $150.1 million ($US 140 million) after closing adjustments.

• Strong financial position, with approximately $69.5 million ($US 62.0 million)

cash on hand, debt free and a $61.6 million ($US 55 million) unused credit facility.

• Suspended the Premium DistributionTM component of its Distribution

Reinvestment Plan (“DRIP”) and reduced the market discount from 5% to 2%

• n units acquired under the regular DRIP.
• DRIP participation is substantially reduced from 60% to the range of 5% to 8%,

significantly reducing the number of units issued each month.

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Q3 2014 Highlights

• To date, 91% of the $US 28 million capital program for 2014 has been

executed with results performing to expectations.

• In recent news, Eagle announced that it will seek unitholder approval to

permit investment in Canadian assets to expand its range of

• pportunities in addition to continuing to actively acquire, operate and

exploit U.S. oil and gas production in accordance with the Trust’s growth strategy.

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Hedging Program

• Based on current estimated working interest production ,Eagle is hedged at approximately 87% for Q4/2014 at a

weighted average price of $US 93.19 WTI.

• Eagle is hedged at approximately 80% for the first half of 2015 at a weighted average price of $US 90.72 WTI.
• Eagle is hedged at approximately 30% for the second half of 2015 at a weighted average price of $US 87.09 WTI.

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200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 2600 2800 3000 3200 3400 BBL/D - OIL

Hedging Summary

$US 87.90 Fixed Price $US 90.50 x $US 94.35 Costless Collar $US 90.10 x $US 92.00 Costless Collar $US 85.40 Fixed Price $US 93 x $US 95.35 Costless Collar $US 90 x $US 94.95 Costless Collar $US 91.15 Fixed Price $US 91.15 Fixed Price $US 98 Fixed Price

Eagle has price protection on more than 80% of production through June 2015.

Eagle’s Areas of Operation

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• Eagle currently holds a light oil weighted portfolio and operates properties in three areas: Salt Flat (Edwards),

Palo Pinto and Hardeman (Pennsylvanian, Mississippian and Ordovician).

Caldwell County – Salt Flat Properties

Eagle’s Areas of Operation

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Eagle’s Areas of Operation

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Palo Pinto County – Palo Pinto Properties

Eagle’s Areas of Operation

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Hardeman County – Hardeman Properties

Eagle’s Areas of Operation

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Hardeman County – Hardeman Properties

Operations Update

• To date, 91% of Eagle’s 2014 capital budget has been

executed with results meeting expectations.

• Initiatives continue to decrease operating costs in the Salt

Flat and Hardeman areas.

• Eagle has negotiated a new power contract for all of its
• perated assets.
• Less than 5 cents per kwh.
• 3 years.
• Electricity is approximately 50% of Salt Flat operating costs.

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Operations Update (cont.)

Hardeman Properties

• Completed reprocessing of 3-D seismic across part of the

acreage.

• Added more drilling locations to inventory.
• Began drilling first well in Hardeman in late September. Results of

this well expected mid-November.

• Commenced drilling second well in late October.
• Eagle continues to evaluate the newly processed and interpreted

data to de-risk additional drilling opportunities.

• Recompleted one well, with results meeting expectations.
• Initiatives continue to reduce water disposal and power costs,

which collectively comprise 80% of field operating costs.

• Water hauling rates have been renegotiated and water hauling

routes optimized.

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Operations Update (cont.)

Salt Flat Properties

• One “sidetrack” well completed and placed on production in

Q3.

• This well was a successful pilot project.
• Shows that in some cases, production can be added at a lower cost

by drilling less expensive “sidetrack” wells instead of drilling new wells.

• Eight horizontal pumps installed with good success.
• Salt Flat capital program has exceeded expectations.
• Year over year field operating expense reductions continue to

be realized at Salt Flat.

• Estimated year over year costs savings of approximately $US 1

million.

• 3-D high density seismic shoot completed.

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Production History

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Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Production 1,269 1,214 995 2,023 2,169 2,400 2,825 2,986 2,928 3,022 3,052 2,994 3,010 3,341 2,859 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Average WI Production per Quarter (boe/d)

Includes production from the Permian property until its Aug. 29, 2014 disposition.

Revenue & Operating Netback

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Breakdown of Working Interest Revenue (Before Realized Hedges)

$51.00 $57.42 $44.58 $47.82 $54.36 $44.96 $44.63 $46.66 $52.58 $52.20 $56.79 $47.58 $54.29 $53.10 $48.80 $11.49 $8.68 $15.85 $15.50 $16.31 $14.93 $13.78 $13.48 $11.19 $10.22 $12.73 $16.79 $17.54 $17.16 $16.39 $23.90 $25.51 $23.10 $25.57 $26.49 $24.11 $21.40 $23.13 $24.80 $24.26 $27.00 $24.55 $26.19 $25.93 $24.42 $0.00 $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Operating Netback (before realized hedges) Op Costs & Processing Royalties & Tax

Crude Oil Price Comparison

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• Eagle’s production in Texas and Oklahoma has realized a premium sales price.
• Eagle believes that Canadian pricing differentials which have been high and volatile over the past

few years but have recently narrowed, will continue to narrow over the coming years as the expansion of liquefied natural gas, rail and pipeline infrastructure enhances Canada’s access to non- U.S. markets.

50.00 60.00 70.00 80.00 90.00 100.00 110.00 120.00 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 WTI (NYMEX) - Cushing ($US/bbl) Edmonton Par ($CDN/bbl) WCS ($CDN/bbl)

Highlights

• Production is 95% oil.
• Premium netbacks and competitive operating costs.
• Strong balance sheet – cash on hand and debt-free.
• Experienced management team and Board.
• Continue to strategically acquire, operate and exploit U.S. oil

and gas production.

• Poised to diversify its asset base by investing in Canadian

energy assets.

• Focused on providing investors with a reliable distribution

paying investment by generating stable cash flows and managing risk while delivering moderate growth in production

• ver time to enhance unitholder value.

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CONTACT: Richard W. Clark, President and CEO

Tel: (403) 531-1575

Kelly Tomyn, CFO

Tel: (403) 531-1574

Eagle Energy Inc. Eagle Hydrocarbons Inc.

2710, 500 – 4th Avenue SW 3005, 333 Clay Street Calgary, AB T2P 2V6 Houston, TX 77002 info@EagleEnergyTrust.com www.eagleenergytrust.com

TSX: EGL.UN

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APPENDIX

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Management

Richard Clark, B.A. (Econ), LLB, Director, President and Chief Executive Officer

• 19 years in the legal profession as a founding partner at a boutique oil and

gas law firm, then 10 years at a Canadian national law firm, specializing in corporate finance, securities, M&A and venture capital.

• Extensive experience in the royalty trust sector.

Wayne Wisniewski, P.E., MBA, Chief Operating Officer (Houston)

• 30 years of oil and gas engineering and operations experience.
• Last 13 years of career spent in a senior operations and engineering

management role in the Houston office of a major international E&P company.

Kelly Tomyn, CA, Chief Financial Officer

• Former VP Finance and CFO for numerous public & private companies with
• ver 25 years of financial experience with E&P companies.
• Former controller for Shiningbank.

Continued..

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Management

Continued… Scott Lovett, M.Sc., MBA, P.Eng, Vice President, Corporate & Business Development

• Over 18 years experience in the oil and gas industry, including reservoir

evaluations, acquisitions and divestments, business planning and strategic analysis.

Eric McFadden, Vice President, Capital Markets & Business Development

• Over 25 years of experience in the corporate finance, capital markets,

management and business development industries, including eleven years in the energy industry

Robert Cunningham, Vice President, Commercial & Business Development (Houston)

• Over 25 years experience in the oil and gas industry involving business

development, finance, energy banking and risk management.

James Elliott, CA, Vice President, Finance

• Over 16 years of corporate finance and financial accounting experience, including

14 years in the oil and gas industry. Jo-Anne Bund, B.A., LLB, General Counsel and Corporate Secretary

• 17 years of experience in corporate finance, securities, and M&A, including with

a national law firm, with a securities regulator and as corporate counsel.

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Board of Directors

David Fitzpatrick, P.Eng., Chairman

• Former Chief Executive Officer of Shiningbank

Bruce Gibson, CA, Chair of Audit Committee

• Former Chief Financial Officer of Shiningbank

Warren Steckley, P.Eng., Chair of Reserves and Governance Committee

• Former President and Chief Operating Officer, Barnwell of Canada,

Former Director of Shiningbank

Joseph Blandford, P.Eng., Chair of Compensation Committee

• Retired Oilman, Resides in Houston, TX

Richard Clark, B.A. (Econ), LLB, Director

• President and Chief Executive Officer of Eagle; Former Director of

Shiningbank

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