Whitecap Resources Inc. · TSX:WCP
Whitecap Resources — Merger or Acquisition (June 2010)
36 slides from Whitecap Resources's merger presentation, June 2010
Slide 1: Going Public Transaction
Going Public Transaction J U N E 2010
Slide 2: Introduction
Introduction • Focus of three previous companies - cost effective per share growth in cash flow, production and reserves • Consistently Co s ste t y de delivered e ed st strong o g sshare a e pprice ce app appreciation ec at o oover e 27 months o t s to 3 yea year pe periods ods • Balanced drilling
Slide 3: Consistent Track Record: Previous Junior Public Companies
Consistent Track Record: Previous Junior Public Companies SHARE PRICE GROWTH $2.20 to $7.29 $1.92 to $19.45 $2.20 to $6.75 per share per share per share 3 3x 3.3x 10 1x 10.1x 3 1x 3.1x PRODUCTION GROWTH RESERVES GROWTH (1) Production before the strategic asset sale in late 2007 (1) Total production
Slide 4: The Whitecap Team
The Whitecap Team Yrs. Executive Background Experience Grant B. Fagerheim • Former President & CEO of Ketch Energy Ltd., Ketch Resources Ltd, and Kereco 27 President & CEO Energy Ltd. David Mombourquette • 24 years engineering and evaluation experience, past Officer of Ketch Energy 24 VP Business De
Slide 5: Seasoned Board of Directors
Seasoned Board of Directors Director Experience Grant B. Fagerheim g • Chairman, Chairman President & CEO of Whitecap Resources Inc. Inc Chairman • Independent Businessman Robert G. Welty • Recently retired Board member of Talisman Energy Inc. Director • Significant g oil & g gas Executive and Board
Slide 6: Going Public Transaction
Going Public Transaction • On June 1, 2010 Whitecap a privately held company announced its RTO of Spitfire Energy Ltd. (“Spitfire”) – Trades ades u under de SEL S on o the t e TSX S Venture e tu e Exchange c a ge • The transaction combines two high quality, operated, oil-weighted assets - 1,360 boe/
Slide 7: Transaction Summary
Transaction Summary • Whitecap shareholders to receive 8.33 shares of Spitfire per Whitecap share • Concurrent private placement of $7.75 million – $0.25/share $0 25/share (25% premium) and subject to 18 month hold periods – $4.0 million to new management and all staff (16.0 million shares) – $3.75
Slide 8: Recapitalization Case Studies
Recapitalization Case Studies Private Placement Amount Performance Warrant Ex. Premium Result /TOG $20.0 $6.0 Traf algar/M idway 32.9% Ant ler Creek/Pinecrest $13.4 $6.7 Spitf ire/ Whitecap 25.0% Zapat a/Surge $9.1 Colonia/ Renegade 20.0% Glamis/Legacy $10.3 $4.6 Glamis/Legacy 15.0% E l R Eagle Rock
Slide 9: Transaction Snapshot
Transaction Snapshot Whitecap Spitfire Pro Forma Pre-Acquisition Pre-Acquisition Whitecap Capitalization Basic Shares ((mm)) (1) 22.6 37.9 226.3 Options (mm) 2.1 2.9 20.5 Private Placement (mm) - - 31.0 Warrants (mm) (2) - 1.3 17.3 F D Shares (mm) (3) F.D. 24 7 24.7 42 1 42.1 295 1 295.1 Operational
Slide 10: Core Strengths of Whitecap's Business
Core Strengths of Whitecap’s Business • Identify, capture and integrate value growth opportunities – $980 mm of accretive growth with 10+ acquisitions in team’s past 3 ventures • Ability to drill, optimize and expand from core anchor properties – History of growing through the drill bit, drilled ove
Slide 11: Business Strategy
Business Strategy Share Price Appreciation • Per share growth (cash flow, production, reserves) • Project rate of returns • Target 5x return on investment Optimize Guiding Principles • People • Assets • Efficiencies Drill • Balance sheet Acquire 11
Slide 12: Strategic Go Forward Plan
Strategic Go Forward Plan I. Develop current assets to achieve top quartile returns and growth • Enhance Valhalla North Montney waterflood & evaluate other zones • Exploit SW Sask. Asset with infill drilling II. Consolidate working interest in operated areas • Acquire partner interest and properties
Slide 13: Current Asset Base (Post-Recapitalization)
Current Asset Base (Post-Recapitalization) Combined Whitecap/Spitfire Asset Base • Pro Forma Whitecap Resources Inc. - 1,360 boe/d (50% oil and NGL) of production 98% operated production, - 7,032 mboe 2P reserves (58% proved) Peace River Arch - 31,000 net acres of undeveloped p land, Valhalla North
Slide 14: Valhalla North – Asset Overview
Valhalla North – Asset Overview • Major Montney oil pool with non-booked incremental waterflood upside • Purchased for $58 million in September 2009 with a 50% non-operated partner – Implied purchase metrics of $57,297/boe/d and $10.32/P+P boe(1) • 980 boe/d current production – 45% oil and NGL weig
Slide 15: Geological Setting - Montney Trends
Geological Setting - Montney Trends Two Major Play Styles • (1) Montney turbidite deposits p - fairlyy uniform sand distribution and good reservoir quality. • (2) ( ) Montneyy “Tight g Gas”- Stacked assemblages of regional sandstone / siltstone shoreface deposits Relatively deposits. thick but low p
Slide 16: Stable Production – Strong Base to Grow From
Stable Production – Strong Base to Grow From Valhalla North Property – Whitecap Share • Asset has had minor Whitecap Purchase Date activity for the past 4 years Year Wells Drilled 2006 1 2007 2 2008 0 2009 0 330 • Stable production over the bopd past 15 years shown here • Corporate decline of 12% 3.
Slide 17: Excellent Flood Response – Needs Extension
Excellent Flood Response – Needs Extension 4-27 Waterflood Oil rate increased 75 40 Oil rate declines under primary GOR decreased 6 27 6-27 Waterflood Oil rate increased SUMMARY: Pool requires further drilling and 150 waterflooding over the rest of the pool • Currently 5 injectors for 46 producers 4
Slide 18: Valhalla Montney C Waterflood Project
Valhalla Montney C Waterflood Project Development Plan • Horizontal multi frac wells to develop the pool • Expand waterflood to the entire pool • Additional 23 vertical and 18 horizontal wells under full development • Simulation study to optimize development 2010 Pool Projects • Drilled 2 horizontal
Slide 19: Resource Upside Potential
Resource Upside Potential • Valhalla Montney Sexsmith Main Pool – Gross Oil Pool Analysis OOIP 76.0 mmbbls Oil Cum to Date 6 1 mmbbls 6.1 8% Recovery Factor GLJ 2P Booking 10.0 mmbbls 13% Recovery Factor Full Development 24.1 mmbbls 32% Recovery Factor U id (Unbooked Upside (U b k d ) 14 1 mmbbls 14
Slide 20: Valhalla North – Multi-Zone Upside
Valhalla North – Multi-Zone Upside EXPLOIT WHITECAP CURRENTLY PRODUCING POOLS ZONES OF INTEREST • Middle Montney Oil – 2 Pools (5 wells & 2 wells) Doe Creek Gas, mapped Doe Creek Oil, mapped • Montney M t S Sexsmith ith SE Oil P Pooll (7 wells) ll ) Dunvegan Gas Gas, mapped Paddy Gas • Multiwell Mon
Slide 21: Southwest Saskatchewan Oil Trend
Southwest Saskatchewan Oil Trend FOSTERTON Conventional Oil Estimates – Sask Government Major Formation mmbbl OOIP Cum Oil Ultimate Oil Ultimate RF% Cantuar 598 71 82 14% Roseray 1 351 1,351 402 452 33% Upper Shaunavon 1,760 360 402 23% SPITFIRE CORE AREA Lower Shaunavon 19 1 2 11% TOTAL 3,728 834 9
Slide 22: Fosterton Roseray Downspacing Project
Project Fosteron Roseray Downspacing Project R Roseray Sand S d Gross G Pay P M Map • Spitfire drilled 7 successful wells from 2004 2007 2004-2007 • GLJ booked average 2P reserves of 150 mbbls/well • Capital $500,000 per well (drill through tie-in) • 11 low risk development locations at 1,000 m dept
Slide 23: Fosterton Area – Medium Risk Upside
Fosterton Area – Medium Risk Upside SW Extension to Roseray Pool F t t 3-D: Fosterton 3 D Roseray R Depth D th Converted C t d Structure St t • Potential 10.0 mmbl OOIP Roseray 1.2 mmbl OOIP Cantuar • 14-25 location is updip from 12-25 well that made 30 mbbls cumulative oil • 7 m of net p payy at 14
Slide 24: Risked Well Economics
Risked Well Economics Valhalla North Fosterton Per well (except F&D) Horizontal Vertical Working Interest 30 – 50% 30 – 50% 84.1% Drill & Complete ($000) 3,900 1,900 500 Equip & Tie-In ($000) 200 200 100 Wellhead 2010 Price ($/bbl) (1) 76.98 76.98 68.83 Initial Production (boe/d) 233 78 27 Reserves
Slide 25: Whitecap Proforma Outlook 2010 - Operational
Whitecap Proforma Outlook 2010 - Operational 2010 Guidance Production Natural Gas (mmcf/d) 3.7 Oil & Liquids (bbl/d) 800 Total (boe/d) 1,400 Exit (boe/d) 60% Oil & NGL 2,000 Operating Netback ($/boe) (1) 36.50 Net Capital Expenditures ($mm) 23 Wells Drilled (#) 16 (7.8 net) (1) Based on US$82.50/bbl
Slide 26: Whitecap Proforma Outlook 2010 - Financial
Whitecap Proforma Outlook 2010 - Financial 2010 Guidance Cash Flow ($mm) (1) 16.3 Per Share ($ basic) (2) 0.08 Year-end Net Debt ($mm) 17 9 17.9 Debt to Cash Flow 1.1 x Q4 2010 Annualized Cash Flow ($mm) (3) 28 0 28.0 Per Share ($ basic) (4) 0.11 (1) Full year Whitecap stand-alone cashflow combined
Slide 27: The Whitecap Investment Opportunity
The Whitecap Investment Opportunity Experienced Management Team • Management team has on average 20 years of oil & gas experience • Track record of success with previous ventures – focus on share price appreciation Strong Asset Base • High quality oil production from the Valhalla Montney oil pool an
Slide 28: Contact Information
Contact Information Grant Fagerheim Thanh Kang President & Chief Executive Officer Vice President Finance & CFO (403) 817-2200 (403) 817-2209 Whitecap tecap Resources esou ces Inc. c #800, 521 – 3rd Ave SW Calgary, Alberta T2P 3T3 Phone: (403) 266-0767 Fax: (403) 266-6975 28
Slide 29: Note Regarding Forward Looking Statements
Note Regarding Forward Looking Statements Special Note Regarding Forward-Looking Statements and Forward-Looking Information • This presentation contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect",
Slide 30: Purchasers' Rights of Action in Ontario
Purchasers' Rights of Action in Ontario • The following statutory rights of action for damages or rescission will only apply to a purchase of securities of Spitfire or Whitecap in the event that the foregoing presentation is deemed to be an offering memorandum pursuant to applicable securities legis
Slide 31: Additional Information
Additional Information WHITECAP 7, RESOURCES INC
Slide 32: Management Transactional Experience
Appendix Management Transactional Experience Inception to Exit 1 to 6 Months 6 to 12 Months 12 to 18 Months 18 to 24 Months 24 to 30 Months 30 to 45 Months Sale of Ketch Energy: Acclaim Energy Trust ($290MM) Highland Energy Caravan Oil & Gas Post Energy Apr 2000 to October 2002 Corp. ($31.1MM) Corp.
Slide 33: Team Track Record
Appendix Team Track Record • Ketch Energy Ltd. – Mr. Fagerheim g joined j Interaction Resources as CEO on April p 4, 2000 and subsequently changed the name to Ketch Energy Ltd. – Completed several corporate acquisitions: Highland Energy ($31.1 mm), Caravan Oil & Gas ($36.6 mm), Post Energy ($200 mm)
Slide 34: Team Track Record (continued)
Appendix Team Track Record (continued) • Ketch Resources Ltd. – Completed Gauntlet ($44.6 ($44 6 mm) corporate acquisition out of CCAA, securing E & P assets and valuable tax pools – Completed several asset acquisitions: Encana ($29.3 mm), Paramount ($6 mm), mm) Imperial ($17 mm) – Grew production f
Slide 35: Team Track Record (continued)
Appendix Team Track Record (continued) • Cadence Energy Inc. (formerly Kereco Energy Ltd.) – Completed several corporate acquisitions: Chariot ($188 mm), Chamaelo ($330 mm) – Completed an asset acquisition: Jed Oil ($36.6 mm) – Completed 4 separate asset dispositions totaling $242 mm: ProEx ($23 mm)
Slide 36: Exploration & Development Capital History
Appendix Exploration & Development Capital History Ketch Energy gy Ketch Resources Cadence ((Kereco)) Energy gy Year 2000 2001 2002 2002 2003 2004 2005 2006 2007 2008 Capex ($ mm) $27.2 $49.5 $38.3 $5.1 $51.5 $52.5 $88.2 $102.1 $118.5 $48.6 Drilling Activity Gross Wells 23.0 56.0 31.0 4.0 36.0 36.0
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