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PBN Investor Day Nov 2012 - Drillings and Completions

PBN Investor Day Nov 2012 - Drillings and Completions

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Published by Devon Shire

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Published by: Devon Shire on Nov 08, 2012
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11/15/2012

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Drilling and Completions
November 2012
Slide Package 2 of 8
 
Cautionary Statements
Non-GAAP Measures. This presentation contains financial terms that are not considered measures under IFRS, such as funds flow from operations, adjusted net income, funds flow per share, adjusted net income per share, payout ratio, net debt, total debt, operating netback and net capital expenditures. These measures are commonly utilized in the oil and gas industry and are considered informative for management and stakeholders. Specifically, funds flow from operations reflects cash generated from operating activities before changes in non-cash working capital. Adjusted net income is determined by adding back any losses or deducting any gains on the derivative liabilities,
 
adding back any losses or deducting any gains on settlement of convertible debentures, and adding back impairments.Payout ratio is determined as dividends paid as a percentage of funds flow from operations. Management considers funds flow from operations, funds flow per share, adjusted net income, adjusted net income per share, and payout ratio important as it helps evaluate performance and demonstrate the ability to generate sufficient cash to fund future growth opportunities, pay dividends and repay debt.Net debt includes bank debt outstanding plus accounts payable less accounts receivable and prepaid expenses plus the full value outstanding on the senior unsecured notes converted to Canadian dollarsat the exchange rate on the period end date. Total debt includes net debt plus the full value outstanding on the convertible debentures converted to Canadian dollars at the exchange rate on the period end date. Net debt and total debt are used to evaluate
PetroBakken’s
financial leverage. Profitability relative to commodity prices per unit of production is demonstrated by an operating netback.Operating netback reflects revenues less royalties, transportation costs, and production expenses divided by production for the period. Net capital expenditures represent capital expenditures, includingexploration and evaluation expenditures, less proceeds from asset dispositions. Funds flow from operations, funds flow per share, adjusted net income, adjusted net income per share, payout ratio, net debt, total debt, operating netbacks, and net capital expenditures may not be comparable to those reported by other companies nor should they be viewed as an alternative to cash flow from operationsor other measures of financial performance calculated in accordance with IFRS. Further information in respect of these non-GAAP measures is set forth in our MD&A.
 
Forward Looking Statements. Certain information provided in this presentation constitutes forward-looking statements. Specifically, this press release contains forward-looking statements relating to financial results, results from operations, future production rates, proposed exploration and development activities, our drilling prospect inventory, projected costs, the timing of certain projects, futureresource recovery rates, our future debt levels and liquidity position and the terms of and timing for completion of the proposed reorganization with Petrobank. The forward-looking statements are based on certain key expectations and assumptions, including expectations and assumptions concerning the availability of capital, the success of future drilling, completion, recompletion and development activities, the performance of new and existing wells, the success of future planned enhanced recovery projects, prevailing commodity prices and economic conditions, the availability of labour and services, weather and access to drilling locations, the geological nature of the formations targeted and the receipt of required shareholder and regulatory approvals and satisfaction of other conditions tothe proposed reorganization. Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involveinherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with theoil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures;the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; reliance on industry partners; the uncertainty of the successful application of early stage enhanced oil recovery techniques; availability of equipment and personnel; uncertainty surrounding timing for drilling and completion activities resulting from weather and other factors;changes in applicable regulatory regimes; and health, safety and environmental risks), commodity price and exchange rate fluctuations, general economic conditions and risks associated with theapproval of the proposed reorganization by our shareholders, the receipt of regulatory approvals and the satisfaction of other conditions to the reorganization. Certain of these risks are set out in moredetail in our Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com. Except as may be required by applicable securities laws, PetroBakken assumes noobligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.
 
Natural gas volumes have been converted to barrels of oil equivalent (“ 
boe
”). Six thousand cubic feet (“ 
Mcf 
”) of natural gas is equal to one barrel of oil equivalent based on an energy equivalency 
conversion method primarily attributable at the burner tip and does not represent a value equivalency at the wellhead. Boes may be misleading, especially if used in isolation.
Discovered Petroleum Initially-In-
Place (“DPIIP”) is defined in the Canadian Oil and Gas Evaluations Handbook (“COGEH”). DPIIP i 
s that quantity of petroleum that is estimated, as of a given date, to becontained in known accumulations prior to production. The recoverable portion of DPIIP includes production, reserves and contingent resources; the remainder is unrecoverable. A recovery project cannot be defined for volumes of DPIIP disclosed in this presentation at this time. There is no certainty that it will be commercially viable to produce any portion of the resources.
2
 
Evolution of Drilling and Completions
3
Conventional PlaysCardiumResource PlayBakken
Time
   P   r   o    d   u   c   t   i   o   n
Resource Play
We learn and apply it to our next play.

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