Contango Oil & Gas — Merger or Acquisition (August 2021)
25 slides from Contango Oil & Gas's merger presentation, Aug 11, 2021
Slide 1: G&G + Independence Q2 2021 Update
y & we G&G + Independence Contango As NA. brs mi) Q2 2021 Update August 2021
Slide 2: Disclaimer
+ Disclaimer 2 This presentation relates to a proposed business combination transaction (the “Transaction”) between Independence Energy LLC (the “Company”) and Contango Oil & Gas (“Contango”) and contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, a
Slide 3: Disclaimer (Cont'd)
+ Disclaimer (Cont’d) 3 The Company was formed in 2020 for purposes of completing a series of reorganization transactions. Historical financial and operating data of the Company has been presented on a recast basis to account for the reorganization of entities under common control. In addition, cert
Slide 4: The Pro-Forma Company at a Glance
+ 47% 15% 38% Oil NGL Gas The Pro-Forma Company at a Glance 4 Key Portfolio Attributes Current Operations Across the L48 1H’21 Production: ~115 MBoe/d 1H’21 Ann. Unhedged Adj. EBITDA (3) : ~$846 MM 1H’21 Ann. Unhedged Levered FCF(4) : ~$712 MM 2021E PDP Decline(1): (18%) Net Debt / NTM EBITDA (5): ~
Slide 5: Creating a Differentiated E&P Company
+ Creating a Differentiated E&P Company 5 An E&P Company that Can Deliver Attractive Risk-Adjusted Investment Returns and Predictable Cash Flows Across Cycles Accretive Transaction for Contango Shareholders Creates Company Uniquely Positioned in Market Aligned Management with Investor Mindset 1 Sust
Slide 6: Aligned Management with Investor Mindset
+ Aligned Management with Investor Mindset 6 Aligned Management Free Cash Flow Operational Excellence at Scale Leading Consolidator ESG Commitment Financial Discipline Well-Capitalized Balance Sheet Independence Management Team David Rockecharlie CEO Ben Conner Executive VP Brandi Kendall CFO Clay R
Slide 7: G&A as % of Enterprise Value
+ 21% 20% 12% 10% 9% 9% 9% 7% 4% MCF Peer 1 Peer 6 Peer 3 Peer 2 Pro Forma (+ Synergies) Peer 4 Peer 5 Peer 7 4% 3% 2% 2% 2% 2% 2% 2% 1% Peer 1 MCF Peer 3 Peer 4 Peer 2 Pro Forma (+ Synergies) Peer 5 Peer 6 Peer 7 Pro Forma Management Detail G&A1 as % of Enterprise Value 7 Source: Capital IQ, Compan
Slide 8: Significant and Sustainable Free Cash Flow Generation
+ Significant and Sustainable Free Cash Flow Generation 8 (1) Represents projected pro forma PDP decline from February 2021 – February 2022 based on current management assumptions of the Company and Contango. (2) Represents percent of PDP oil production hedged in 2022E based on current management as
Slide 9: Operational Excellence at Scale
+ Operational Excellence at Scale High Quality Portfolio of Reinvestment Opportunities2 Current Operations Balanced portfolio of cash flowing assets and attractive, low-risk reinvestment opportunities in key proven basins across the Lower 48 9 Eagle Ford Barnett Permian Rockies Mid-Continent 1H 2021
Slide 10: Key Asset Overview: Eagle Ford
+ Key Asset Overview: Eagle Ford 10 Aligned Management Free Cash Flow Operational Excellence at Scale Leading Consolidator ESG Commitment Financial Discipline Well-Capitalized Balance Sheet Scaled asset base across the core of the Eagle Ford • ~170K total net acres (~105K net operated) located acros
Slide 11: Key Asset Overview: Permian
+ Key Asset Overview: Permian 11 Aligned Management Free Cash Flow Operational Excellence at Scale Leading Consolidator ESG Commitment Financial Discipline Well-Capitalized Balance Sheet Attractive asset portfolio in the southern Delaware basin • Non-operated position operated by Callon Petroleum •
Slide 12: Key Asset Overview: Conventional & Low-Decline
+ Key Asset Overview: Conventional & Low-Decline 12 Aligned Management Free Cash Flow Operational Excellence at Scale Leading Consolidator ESG Commitment Financial Discipline Well-Capitalized Balance Sheet Diverse portfolio of operated, low-decline positions across the Rockies, Barnett and Mid- Cont
Slide 13: Well Positioned to Be a Leading Oil & Gas Consolidator
+ 3 4 8 3 3 4 2012-16 Avg. / Year 2017 2018 2019 2020 2021 Independence Energy Strategy Contango Well Positioned to Be a Leading Oil & Gas Consolidator 13 ✓ Differentiated business model ✓ Focused and proven strategy ✓ Significant access to capital ✓ Large foundational asset base ✓ Low leverage Comp
Slide 14: Recent Acquisitions and Strategic Value
+ Date Transaction Region Strategic Value Jan-21 (Close) • Acquisition of PDP heavy reserves at an attractive unlevered return • Leverages familiarity with Mid-Con’s assets and operations via MSA(1) • Immediate free cash flow accretion Feb-21 (Close) Project Silvertip • Acquisition of PDP-focused as
Slide 15: Wind River Basin Asset Acquisition
+ 15 Big Horn Basin Powder River Basin Wind River Basin Wind River Basin Asset Acquisition Asset Quality / Profile • World class conventional gas field that has recovered 2.8 Tcf to date • Low decline asset with a long reserve life – 78 Mmcfe/d(1) of net production currently on an expected 5% declin
Slide 16: ESG Commitment
+ ESG Commitment 16 Proactive and focused ESG approach driven by engaged partnership with KKR Commitment to ESG Leadership Shared commitment to developing industry-leading Environmental, Social, and Governance (“ESG”) programs and continually improving ESG performance Develop a diverse workforce cul
Slide 17: Disciplined Financial and Risk Management Approach
+ Commitment to Low Leverage Active Risk Management Strategy Accretive Acquisitions • Target investment grade credit metrics • Long-term target leverage at or below 1.0x • Monitor and manage enterprise risk • Hedging program protects cash flows and reinvestment returns • Evaluate acquisitions consis
Slide 18: Well-Capitalized Balance Sheet
+ Well-Capitalized Balance Sheet 18 • Investment grade credit metrics and increased scale of proved reserves, production, EBITDA and free cash flow • No near-term debt maturities • Pro forma capital structure(1) includes: – ~$419 million drawn on RBL facility – $500 million in Senior Notes due 2026
Slide 19: Pro Forma Company Compares Favorably to Peers
+ 0% 17% 36% 37% 47% 53% 55% 75% Peer 1 Peer 2 Peer 5 Peer 3 Peer 6 Peer 4 PF Peer 7 2.2x 2.1x 2.0x 1.3x 1.1x 0.5x 0.3x 0.2x Peer 7 Peer 5 Peer 4 Peer 2 PF Peer 3 Peer 1 Peer 6 54% 52% 45% 44% 41% 38% 33% 9% Peer 6 Peer 5 Peer 4 Peer 3 PF Peer 1 Peer 2 Peer 7 38% 37% 33% 32% 19% 18% 8% 6% Peer 1 Pee
Slide 20: Why Own the Combined Company?
+ Why Own the Combined Company? 20 Sustainable Free Cash Flow Significant Scale Across Proven Basins Well Positioned to be a Leading Oil & Gas Consolidator Disciplined Financial and Risk Management Approach Well-Capitalized Balance Sheet Commitment to ESG Excellence Aligned Management with Investor
Slide 21: Appendix
SG Independence Contango Energy Appendix
Slide 22: Transaction Overview
+ Transaction Overview 22 Transaction Structure Leadership & Governance Approvals & Timing ► Combined company will have an initial market cap and TEV of ~$3.0 Bn and ~$3.8 Bn (1) ► All stock transaction ► Pro forma net debt of ~$846 MM (2) ► Pro forma ownership of ~76% legacy Independence shareholde
Slide 23: Transaction is Accretive to Strategy and Financial Metrics
+ Transaction is Accretive to Strategy and Financial Metrics 23 ✓ ✓ ✓ ✓ ✓ Significant upgrade in asset quality and growth profile through the addition of high return inventory and organic reinvestment opportunities Reinforces strong financial position and creates a path towards investment grade cred
Slide 24: Pro Forma Management Team Bios
+ Pro Forma Management Team Bios 24 David Rockecharlie (Chief Executive Officer) | David Rockecharlie joined KKR in 2011 and is a Partner and Head of KKR's Energy Real Assets business. Mr. Rockecharlie serves as Chairman of KKR’s Energy Investment Committee and as a member of the Board of Directors
Slide 25: Summary Hedge Schedule
+ Summary Hedge Schedule 25 Crude Oil Natural Gas NGLs Hedged Volume (MBbl) Weighted Average Price ($ / Bbl) Hedged Volume (MMcf) Weighted Average Strike Price ($ / MMBtu) Hedged Volume (MBbl) Weighted Average Strike Price ($ / Bbl) Q3 2021 3,207 $52.86 22,528 $2.83 1,012 $17.85 Q4 2021 2,995 $53.10
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