Fairborne Energy Ltd.

Fairborne Energy Ltd.
Corporate Presentation
November, 2012
Please refer to Forward-Looking Statements, Advisory and Resource Disclosure at end of presentation.
Fairborne Snapshot
Production
4,500 BOE/d
(20% Oil & Cond, 5% NGL’s)
Reserves
23.1 MMBOE (1)
Resource
131 MMBOE (2) – Cardium only
Drilling Inventory
>1,000 gross locations
Bank Line
$ 80 MM
Net Debt
$ 13 MM Working Capital Deficit
Shares OS (basic/FD)
102.6 MM/110.0 MM
Management & Insiders (FD)
5% (8%)
(1) As evaluated by GLJ, effective Dec 31, 2011 and updated for divestitures and production
(2) As evaluated by GLJ, see May 2, 2012 press release
Activity
Fourth Quarter 2012
Production Forecast
Cardium HZ
1-9 Drill and Complete (76% WI)
1-6 Drill and Complete (33% WI)
Wilrich HZ
1-20 Drill (50% WI)
First Half 2013
Cardium HZ
13-31 Drill and Complete (76% WI)
Wilrich HZ
1-20 Complete
Multizone Vertical
4-30 Drill and Complete (76% WI)
13-35 Drill and Complete (33%WI)
Production (BOE/d)
6,500
6,000
5,500
5,000
4,500
4,000
3,500
3,000
Oct. 12
Exit 12
H1, 13
Exit 13
Proforma Value
Future Development
Capital **
Net Asset Value *
Reserves
40
100
$5
90
30
20
15.4
$ MM
$/sh
MM BOE
$3
$2.35
$2
68
70
$3.21
23.1
Bank
Lines
80
$4
60
50
45
40
$1.75
Current
Share
Price
10.6
10
$1
30
20
10
1
0
$PDP
Proven
0
P+P
Gross Unbooked Locations
PDP
Proven
P+P
Horizontal
Cardium
Horizontal
Wilrich/Falher
Multizone
Vertical
330
201/182
55
PV10 - Debt
* Net Asset Value =
Shares OS
* PV10 YE 2011 Reserves & Pricing
** FDC on a Discounted Basis
PDP
GLJ Resource Report
Cardium 131 MM boe’s
Economic Contingent
Resource
Proven
P+P
Position for Co’s ‹10,000 boe/d
Opex ($/BOE)
Size (BOE/d)
Fairborne
FEL Proforma
Production
= 4,500 BOE/d
OPEX
= $10.50/BOE
G&A
= $3.80/BOE
Debt to Cash Flow
4.0
3.0
2.0
1.0
-2.0
Fairborne
0.0
$10.00
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
Fairborne
G&A ($/BOE)
5.0
-1.0
Fairborne
$30
$27
$24
$21
$18
$15
$12
$9
$6
$3
$0
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
Operating Focus – Deep Basin
320 Gross (204 Net) Sections
• FEL operates 100% of production
• High working interest
• Reservoir depth up to 3,800 m Multizone 12
producing horizons
• Rich gas, light oil & NGL’s
Harlech Area – Infrastructure & Activity
March 29, 2012
Landsale $4,000/ha
Keyera West Pembina Gas Plant
Capacity: 150 MMscf/d
1-20 Wilrich HZ
Keyera Brazeau Gas Plant
Capacity: 218 MMscf/d
1-6 Cardium
HZ Q4 ‘12
October 17, 2012
Land Acq.
Keyera Nordegg Gas Plant
Capacity: 75 MMscf/d
Blackstone De-Hy
Gas goes to
Husky Ram River Gas Plant
Capacity: 532 MMscf/d
1-9 Cardium
HZ Q4 ‘12
FEL 16-36 Compressor Station
Capacity: 30 MMscf/d
200m3 oil/condensate transfer capacity
Regional Cardium Geology
Cardium Ram Barrier Trend
225
Miles long
30
Miles wide
2,562
Vertical production
163
Hz. Production
13,350
Total wells through
cardium sand
Harlech – Cardium Ram Barrier
1-6 Cardium
HZ Q4 ‘12
1-9 Cardium
HZ Q4 ‘12
GR
GAPI
0
GR
DEPTH
M
PHIE
DEC
0
RXOZ
OHMM
200 0
PHIE 0
RLA5
OHMM
200 300
DSGAS
units
Harlech Cardium
GR
150
0.15
GR
PHIE
120
PHIE
0
0.03 RXOZ
RXOZ DSGAS
RXOZ
3000
DSGAS
GAS
RLA5
Cardium Type Log
Gamma
Depth
15 Porosity
0
Resistivity
Theoretical Volumetric Calculation
Mud Gas
Low
Med
High
AREA (acres):
640
640
640
NET PAY (m):
6
7
8
POROSITY (%):
12
11
10
SW (%):
20
15
10
RESERVOIR TEMPERATURE (deg F)
184
184
184
RESERVOIR PRESSURE (psia):
4,700
4,700
4,700
COMPRESSIBILITY FACTOR:
0.95
0.95
0.95
RECOVERY FACTOR (%):
75%
75%
75%
GIP PER SECTION (BCF)
14.4
16.3
17.9
RGIP PER SECTION (BCF)
10.8
12.2
13.4
LIQUIDS mmbbls
0.54
0.61
0.67
MM BOE/SECTION
2.34
2.64
2.90
2850
CARDIUM TOP
2860
CARDIUM BASE
2870
Rock - Porosity Types
Open
Fracture
Fairborne owns 104 net sections
Porosity
Conglomerate
Fracture + Intergranular Porosity
Sandstone
Fracture + Intergranular Porosity
Cardium Resource
Economic Contingent Resource – GLJ Evaluated
LOW (P90)
BEST (P50)
HIGH (P10)
790
1,056
1,389
45
60
79
176
236
310
436
588
757
CONDENSATE/NGL (MMBBLs)
25
33
43
TOTAL (MMBOE)
97
131
169
WELLS (GROSS)
298
330
387
GAS (BCF)
2.9
3.5
4.0
CONDENSATE/NGL (MBBLs)
150
180
200
TOTAL RECOVERABLE
GAS (BCF)
CONDENSATE/NGL (MMBBLs)
TOTAL (MMBOE)
WORKING INTEREST
GAS (BCF)
TYPE WELL
1.
2.
3.
4.
5.
6.
7.
8.
Based on an independent resource study (the "Resource Study") prepared by GLJ for a portion of Fairborne's
Cardium land holdings in the greater Harlech area effective March 31, 2012.
"Total Interest" means a 100% working interest in the lands in which Fairborne has an interest in the area (which
includes Fairborne's interest in the area as well as all other working interests in such lands held by third parties).
"Working Interest" means Fairborne's working interest (operated or non-operated) share before deduction of
royalties and without including any royalty interests of Fairborne.
All volumes in the table are sales volumes.
The liquid yields are based on average yield over the producing life of the property.
Numbers in the table may not add due to rounding.
Reflects contingent resources which have been sub-classified by GLJ as economic based on GLJ forecast pricing as
at April 1, 2012.
See "Information Regarding Disclosure on Contingent Resources and Resource Study"
Liquids
0%
C2
33% C3 – C4
67%
C5 +
Cardium - Resource
1,200
11-21 Well 5.6 MMscf/d IP
1,000
800
2-15 Well 2.4 MMscf/d IP
Well #2 1,200 m Hz
20 Fracs
GLJ TYPE CURVE
$8
Gas
44%
600
Well
#1 850
Well
#1 m Hz
10 Fracs
400
NGLs
56%
0
2 Years
1 Year
($000)
Capital Efficiency
$3,900
Drill
$10.00
F & D (per boe)
$2,800
Complete
$8,705
On Stream Cost (per boe/D)
$ 700
Tie-In & Equip
$7,400
TOTAL
$7
$6
200
Cost Per Well
Total
Revenue per
MCF (Sales)
at 3.50/MCFE
Harlech
Revenue Stream
$/MCFE
Estimated Daily Production Rate (BOE/d)
CRDM HZ Estimated Type Well Curve
3.5 BCF GAS 50 bbls/MMscf liquid Yield
$5
$4
$3
Liquid Pricing :
C3 = $34.00/bbl
C4 = $66.00/bbl
C5+=$95.00/bbl
$2
$1
$0
Harlech Wilrich
13-29 HZ
On Prod May 12, 2012
Test Rate: 31MMcf/d
CTD: 771 MMcf
Tourmaline
Husky
16-15 HZ
08-36 HZ
On Prod Dec 8, 2011
On Prod Dec 11, 2010
Test Rate: 13MMcf/d
CTD: 916 MMcf
IP30: 6 MMcf/d
CTD: 1.7 Bcf
FEL 1-20 Wilrich HZ
Location
05-29 HZ
On Prod Dec 16, 2009
IP30: 6 MMcf/d
CTD: 4.8 Bcf
IP30: 2.5 MMcf/d
CTD: 2.2 Bcf
07-21 HZ
On Prod Dec 2, 2008
IP30: 6 MMcf/d
CTD: 6.1 Bcf
Summary
Hz Drilled
0
Land
106 Gross
Sections
45 Net Sections
Drilling inventory
Wilrich/Felare
354 (152 Net) Hz
Depth
Liquids content in gas
07-35 VT
On Prod Dec 18, 1995
3,400 m
10+ bbls/MMcf
FEL Voyager
Wilrich Tested
Harlech Wilrich
( HCAL )
125
375
DEPTH
M
0.15
DPSS
v/v
0
0.2
IMPH
ohmm
2000
0
0.2
SFLU
OHMM
125
GR
gapi
0
GAS
units
2000
0
GAS
GAS
GAS
WilrichType Log 7-35-46-15W5
( EHD2_PPC )
375
DPSS
DPSS
100
DPSS
0.01
20
IMPH
IMPH
IMPH
( BS )
125
GR
375
Gamma
GR
Depth
20 Porosity
0
Resistivity
3010
3020
Wilrich Base
Gas kick
bypassed
shaker
Conglomerate
Zone
3030
Rock – Porosity Types
Porosity
Conglomerate
Intergranular Porosity
Theoretical Volumetric Calculation
Mud Gas
Coal
Wilrich Top
300
Low
Med
High
AREA (acres):
640
640
640
NET PAY (m):
8
9
10
POROSITY (%):
12
10
8
SW (%):
25
20
15
RESERVOIR TEMPERATURE (deg F)
203
203
203
RESERVOIR PRESSURE (psia):
5,200
5,200
5,200
COMPRESSIBILITY FACTOR:
0.99
0.99
0.99
RECOVERY FACTOR (%):
70%
70%
70%
GIP PER SECTION (BCF)
12.2
18.8
27.4
RGIP PER SECTION (BCF)
8.5
13.1
19.1
LIQUIDS mmbbls
.10
.16
.23
MM BOE/SECTION
1.95
3.00
4.39
Fairborne owns 106 gross sections
Sandstone
Intergranular Porosity
FEL – The Investment Opportunity
Value
Assets
Upside
Trading below PDP net asset value
$80 MM undrawn bank facility
$68 MM in FDC
23.1 MM BOE in 2P reserves
Low Corporate decline rate (20%)
207,250 acres undeveloped land (132,270 net)
Competitive cost structure with peers
Cardium - 131 MM BOE in Economic Cont. Resource
1,000+ unbooked drilling locations
Corporate Information
TSX Listings
Trading Symbol: FEL
Reserve Auditors
GLJ Petroleum Consultants Ltd.
Corporate Office
3400, 450 1st St. S.W.
Calgary, Alberta, T2P 5H1
Telephone: 403-290-7750
Fax: 403-290-7724
Website: www.fairborne-energy.com
E-mail: [email protected]
Banking
Royal Bank of Canada
Alberta Treasury Branch
National Bank of Canada
Union Bank
Contacts
S. R. VanSickle, President & CEO
A. G. Grandberg, CFO
Legal Counsel
Burnet, Duckworth & Palmer LLP
Auditors
KPMG LLP
Aug ‘12
Forward-Looking Statements & Advisories
Certain information set forth in this document, contains forward-looking statements including management's assessment of future plans and operations of Fairborne Energy
Ltd. ("Fairborne"), the inventory of drilling prospects and potential drilling locations, future or anticipated production levels, the risk/reward potential of the portfolio of plays,
drilling plans, debt levels, capital expenditures and the nature of the expenditures, commodity and revenue mix, estimated netbacks, and estimated well costs and the resulting
capital efficiencies. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Fairborne's control, including the
impact of general economic conditions, industry conditions, volatility of commodity prices, risks associated with oil and gas exploration, development, exploitation, production,
marketing and transportation, loss of markets, delays resulting from or the inability to obtain required regulatory approvals, inability to retain and delays in retaining drilling
rigs and other services, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of
qualified personnel or management, stock market volatility, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions and
ability to access sufficient capital from internal and external sources. The foregoing list is not exhaustive. The estimates of reserves and future net income for individual
properties may not reflect the same confidence level as estimates of reserves and future net income for all properties, due to the effects of aggregation. Reserve information
included herein is as at December 31, 2011 unless otherwise stated. Type curves are provided for illustration purposes and may not necessarily be indicative of future well or
production results. Test rates and initial production rates disclosed may not necessarily be indicative of long-term performance or of ultimate recovery. Netbacks are calculated
by subtracting royalties, operating costs and transportation costs from revenues. Additional information on these and other risks that could affect Fairborne's operations and
financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), or at
Fairborne's website (www.fairborne-energy.com). Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at
the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The actual results, performance or
achievement of Fairborne could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any
of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Fairborne will derive therefrom. Fairborne
disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required
by applicable securities laws. BOE disclosure 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. Natural gas volumes are converted to barrels of oil
equivalent (boe) on the basis of 6,000 cubic feet (mcf) of gas for 1 barrel (bbl) of oil. The terms "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. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing
a conversion on a 6:1 basis may be misleading as an indication of value.
Information Regarding Disclosure on Continegent
Resources and Resource Study
The Resource Study is effective March 31, 2012 and was prepared in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities ("NI 51101") of the Canadian Securities Administrators based on the definitions and guidelines contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook").
Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or
technology under development, but may not currently be considered commercially recoverable due to one or more contingencies. Contingent resources are in additions to
reserves booked as proved, probable and possible.
Uncertainty ranges are described by the COGE Handbook as low, best and high estimates for resources as follows:
Low Estimate: This is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will
exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the
low estimate.
Best Estimate: This is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will
be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the quantities actually recovered will
equal or exceed the best estimate.
High Estimate: This is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will
exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed
the high estimate.
The most significant positive factors with respect to estimates of contingent resources are that Cardium formation is extensive in the Harlech region and there is extensive
vertical well data. Negative factors include that there is limited horizontal well tests and history in the immediate area. Both resource-in-place and productivity may be higher
or lower than current estimates. The principal risk that will influence the recovery of the contingent resources relate to the potential for variations in the quality of the Cardium
formation where minimal well data currently exists. There is no certainty that it will be commercially viable to produce any portion of the resources.
In the Company's year-end independent reserves evaluation, effective as at December 31, 2011, prepared by GLJ, gross proved plus probable reserves of 2.2 MMboe were
assigned to seven gross (4.9 net) horizontal Cardium well locations attributable to the Fairborne's interest evaluated in the Resource Study, which resources are incremented to
economic contingent resource identified in the Resource Study. The year-end independent reserve evaluation did not incorporate Fairborne's most recent Cardium well (75%
WI) that, as previously announced, had an initial 30 day gross production rate of 1,000 boe per day.