NBCFM Research | Daily Bulletin

Oil, Gas & Consumable Fuels

Industry Rating: Overweight (NBF Economics & Strategy Group)
May 11, 2022

Birchcliff Energy Ltd. STOCK DATA

52-Week High and Low ($) 10.53-3.18
Singular Focus
Dividend per Share ($) 0.08
Dividend Yield (%) 0.9
BIR (TSX) STOCK RATING TARGET EST. TOTAL RETURN
C$9.37 Outperform C$12.50 34.3% Shares Outstanding (Mln) 266.8
(Unchanged) (Unchanged) Shares Outstanding - FD (Mln) 278.4
Market Capitalization ($Mln) 2,608.9

Q1/22 Operating & Financial Results Enterprise Value ($Mln) 2,665.1

NBCFM ESTIMATES & VALUATION

Q1/22 Operating & Financial Results
Fiscal Y/E December 2021E 2022E 2023E
The company reported first-quarter operating & financial results in line with
expectations, including average production of 76.0 mboe/d (20% liquids) Total Boe/d (6:1) boe/d 78,522 78,280 81,000
and associated CFPS of $0.66 (vs. consensus $0.68). During the quarter, % Nat Gas 79 80 80
the company largely maintained production on the back of a 48% payout WTI ($/bbl) 68.00 95.00 90.00
ratio (1/3rd of annual spend; to imply a +15% free cash flow yield), which
CF Netback ($/boe) 18.83 28.20 21.79
was funded by a robust cash netback (+6% Q/Q, ex-hedging) that was
optimistically supported by static cash costs (+2% Q/Q, positively navigating CFPS ($) 1.97 2.90 2.31
inflationary pressures). Cash Flow ($Mln) 540 806 644
Capex ($Mln) 234 260 260
Optimization Continues; Capitalization Update Net Payout (%) 45 35 43
With that, BIR’s highly-optimized business has maximized its free cash FCF Yield (%) 23.4 19.9 14.1
potential and yielded significant excess cash to drive debt lower (-19% Q/ EV/DACF (x) 3.3 3.3 3.6
Q; 0.6x Q1 D/CF) in support of long-term option value. That should remain
D/CF (x) 0.9 (0.0) (0.7)
the trend, as it has maintained its 2022 & five-year capital & production
All figures in C$ unless otherwise noted
guidance, which is expected to drive a MASSIVE cash & free cash flow profile,
which on strip pricing is set to deliver an annualized ~25% free cash yield Source: NBF Estimates, Company Reports and Refinitiv

(incl. 3-4% CAGR). As a result, debt is expected to be EXTINGUISHED by

Q4/22 (incl. redemption of prefs), and BIR plans to accelerate its return
of capital, with its cash dividend being doubled at mid-year ($0.08/sh
per annum; 1% yield on ~2% payout), and beginning in 2023 expanding by STOCK PERFORMANCE (Source: FactSet)
10x ($0.80/sh per annum; 9% yield on ~25% payout at strip), with cash 11
(P) (V 100000)
250
on the balance sheet incrementally expanding thereafter ($7 per share at 10
9 200
culmination of the five-year plan at strip) while maintaining sustainability 8 150
within its projections down to $70/bbl & $3/mcf. We expect that as the 7
strategy is executed, the confluence of returns and building cash within its 6 100
5
business should drive material yield contraction in support of shareholder 4
50

value (from today, over $10 per share, or 110% of its market cap, in tangible
cash can be seen through its five-year plan alone). May-21 Aug-21 Nov-21 Feb-22 May-22

Maintain Outperform Rating & $12.50/sh Target Price

The company has a singular focus, and massive free cash is set to be
generated to the benefit of shareholder value through a material expansion
of its return of capital. BIR is poised for a 44% return profile (vs. peers 39%)
on leverage of -0.7x (vs. peers 0.0x), while trading at 3.6x 2023e EV/DACF
(vs. peers 3.0x).
COMPANY PROFILE
Birchcliff Energy is a premium gas-levered exploration and production
company with a significant Montney natural gas project at Pouce Coupe
and Gordondale, Alberta, and includes over 400 net sections of land with
significant potential drilling locations from multiple geographic zones.
The company is led by industry veteran President & CEO, Jeff Tonken,
who has stewarded BIR through multiple natural gas price cycles and
delivered over 10% CAGR to production and reserves per share since
inception.

Analyst  Dan Payne, CFA ● (403) 290-5441 ● dan.payne@nbc.ca For required disclosures, please refer to the end of the document.
Associate  Nick Stevenson ● (403) 441-0928 ● nick.stevenson@nbc.ca
Associate  Trevor Martensson ● (403) 290-5624 ● trevor.martensson@nbc.ca
 Birchcliff Energy Ltd.
NBCFM Research | May 11, 2022

Q1/22 Operating & Financial Results

The company reported first-quarter operating & financial results in line with expectations, including average
production of 76.0 mboe/d (20% liquids) and associated CFPS of $0.66 (vs. consensus of $0.68). During the
quarter, the company largely maintained production on the back of a 48% payout ratio (1/3rd of annual
spend; to imply a +15% free cash flow yield), which was funded by a robust cash netback (+6% Q/Q, ex-
hedging) that was optimistically supported by static cash costs (+2% Q/Q, positively navigating inflationary
pressures).

Exhibit 1: Quarterly Results vs. NBF Estimates

Q/Q Y/Y %
Q1/22 Est. Q1/22 %∆ Q4/21 %∆ Q1/21 ∆
Production Volumes
Light Oil & NGL's (bbl/d) 15,960 15,141 -5% 15,504 -2% 17,556 -14%
Natural Gas (mmcf/d) 360.2 365.3 1% 379.3 -4% 345.1 6%
Total Production (BOE/d) 76,000 76,024 0% 78,716 -3% 75,065 1%
PPS (per 1000 shares) 274 274 0% 285 -4% 282 -3%
DAPPS (per 1000 shares) 226 226 0% 225 0% 135 67%
% Natural Gas (%) 79% 80% 1% 80% 0% 77% 5%
Financial Summary
Cash Flow ($mln) 186.7 183.8 -2% 193.6 -5% 87.8 109%
CFPS (diluted) ($/share) $0.67 $0.66 -1% $0.70 -5% $0.33 101%
Total Capex ($mln) -88.5 -88.1 0% -37.2 137% -96.6 -9%
Cash Dividends (net DRIP) ($mln) -3.7 -4.4 18% -3.7 18% -2.4 84%
Dividends per Share ($/share) $0.01 $0.01 0% $0.01 0% $0.01 100%
Corporate PoR (%) 49% 50% 2% 21% 146% 113% -55%
Free Cash Flow (net Div)* ($mln) 94.5 91.1 -4% 153.9 -41% -11.2 nmf
Net Debt ($mln) 405 406 0% 499 -19% 777 -48%
D/CF (x) 0.5x 0.6x 2% 0.6x -14% 2.2x -75%
Avg. Shares Outstanding (mln) 277.4 277.2 0% 276.6 0% 266.4 4%
Netbacks ($/BOE)
Revenue ($/boe) $43.48 $41.79 -4% $40.02 4% $27.47 52%
Hedging Gains/(Loss) ($/boe) ($1.09) ($0.03) -97% $1.37 -102% ($2.29) -99%
Royalties ($/boe) ($5.22) ($4.41) -16% ($3.93) 12% ($1.72) 156%
% Revenue (%) 12% 11% -12% 10% 7% 6% 68%
Operating ($/boe) ($3.25) ($3.39) 4% ($3.39) 0% ($3.12) 9%
Transportation ($/boe) ($5.00) ($5.53) 11% ($5.17) 7% ($5.58) -1%
Operating Netback ($/boe) $28.92 $28.44 -2% $28.89 -2% $14.76 93%
G&A (Cash) ($/boe) ($0.80) ($1.12) 40% ($1.45) -23% ($0.92) 21%
Interest Expense ($/boe) ($0.83) ($0.48) -42% ($0.72) -33% ($1.21) -60%
Taxes ($/boe) $0.00 $0.00 nmf $0.00 nmf $0.00 nmf
Other ($/boe) $0.00 $0.02 nmf $0.01 156% $0.37 -94%
Cash Netback ($/boe) $27.29 $26.86 -2% $26.74 0% $13.00 107%

Cash Costs (ex. Hedging) ($/boe) ($15.10) ($14.90) -1% ($14.65) 2% ($12.18) 22%
* FCF calculated as operating cash flow less E&D capex and cash dividends
Source: NBF, Company Reports

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NBCFM Research | May 11, 2022

Optimization Continues; Capitalization Update

With that, and as evidenced during the quarter, the company’s highly-optimized business (currently tailoring
to natural gas through low capital efficiency adds) has maximized its free cash potential and yielded
significant excess cash to drive debt lower (-19% Q/Q; 0.6x Q1 D/CF) in support of long-term option value.
That should remain the trend, and as evidence of the conservative stance of its business (supported by a
moderated pace of development), it has maintained its 2022 & five-year capital & production guidance,
which based on the strength of pricing is expected to drive a MASSIVE cash & free cash flow profile (see
forecasts), which on strip pricing is set to deliver an annualized ~25% free cash yield (incl. 3-4% CAGR). As a
result, debt is expected to be EXTINGUISHED by Q4/22 (incl. redemption of prefs), and the company plans to
accelerate its return of capital, with its cash dividend being doubled at mid-year ($0.08/sh per annum; 1%
yield on ~2% payout), and beginning in 2023 expanding by 10x ($0.80/sh per annum; 9% yield on ~25% payout
at strip), with cash on the balance sheet incrementally expanding thereafter ($7 per share at culmination of
the five-year plan at strip) while maintaining sustainability within its projections down to $70/bbl & $3/mcf.
We expect that as the strategy is executed, the confluence of returns and building cash within its business
should drive material yield contraction in support of shareholder value (from today, over $10 per share, or
110% of its market cap, in tangible cash can be seen through its five-year plan alone; while noting the
exponential duration potential of its assets).

Our Estimates
In connection with the update, we made the following changes to our forecast.

Exhibit 2: NBF Annual Estimates

Actual 2022E 2023E
2019A 2020A 2021A Previous Revised % Chg Previous Revised % Chg
Production Volumes
Light Oil & NGL's (bbl/d) 17,151 17,889 16,319 15,603 15,460 -1% 16,200 16,200 0%
Natural Gas (mmcf/d) 365 351 373 380.4 376.9 -1% 388.8 388.8 0%
Total Production (boe/d) 77,977 76,401 78,522 79,000 78,280 -1% 81,000 81,000 0%
% Natural Gas (%) 78% 77% 79% 80% 80% 0% 80% 80% 0%

Financial Summary
Cash Flow ($mln) $334.5 $184.5 $539.7 $791.6 $805.8 2% $678.3 $644.2 -5%
CFPS (diluted) ($/share) $1.26 $0.69 $1.97 $2.85 $2.90 2% $2.44 $2.31 -5%
Total Capex ($mln) ($296.3) ($276.8) ($233.7) ($250.0) ($259.8) 4% ($260.0) ($260.0) 0%
Cash Dividends (net DRIP) ($mln) ($32.1) ($15.2) ($10.8) ($14.8) ($25.5) 73% ($14.8) ($28.2) 91%
Dividends per Share ($/share) $0.11 $0.04 $0.03 $0.04 $0.07 75% $0.04 $0.08 100%
Free Cash Flow (net Div)* ($mln) $43.6 -$120.3 $296.7 $526.9 $520.3 -1% $403.5 $366.6 -9%
Corporate PoR (%) 87% 165% 45% 33% 35% 0% 41% 43% 3%
Net Debt ($mln) $633 $762 $499 ($27) ($24) -14% ($431) ($422) -2%
D/CF (x) 1.9x 4.1x 0.9x 0.0x 0.0x -16% -0.6x -0.7x 3%
Avg. Shares Outstanding (mln) 265.9 265.9 274.4 277.4 278.1 0% 277.4 278.4 0%

Netbacks ($/BOE)
Revenue ($/boe) $21.55 $18.90 $32.53 $42.25 $43.57 3% $36.29 $36.96 2%
Hedging Gains/(Loss) ($/boe) $0.48 ($2.13) ($0.75) ($0.17) $0.08 -148% ($0.57) ($0.57) 0%
Royalties ($/boe) ($0.96) ($0.65) ($2.66) ($5.07) ($5.59) 10% ($4.35) ($4.43) 2%
% Revenue (%) 4% 3% 8% 12% 13% 1% 12% 12% 0%
Operating ($/boe) ($3.03) ($2.85) ($3.10) ($3.25) ($3.25) 0% ($3.15) ($3.15) 0%
Transportation ($/boe) ($4.49) ($5.03) ($5.28) ($5.00) ($5.30) 6% ($4.85) ($4.85) 0%
Operating Netback ($/boe) $13.55 $8.23 $20.75 $28.76 $29.52 3% $23.36 $23.95 3%
G&A (Cash) ($/boe) ($0.94) ($0.88) ($0.99) ($0.80) ($0.90) 13% ($0.80) ($0.80) 0%
Interest Expense ($/boe) ($0.88) ($0.93) ($1.00) ($0.50) ($0.42) -17% $0.38 $0.39 1%
Taxes ($/boe) $0.00 $0.00 $0.00 $0.00 $0.00 -- $0.00 ($1.75) --
Other ($/boe) $0.02 $0.18 $0.08 $0.00 $0.00 -- $0.00 $0.00 --
Cash Netback ($/boe) $11.75 $6.60 $18.83 $27.45 $28.20 3% $22.94 $21.79 -5%
* FCF calculated as operating cash flow less E&D capex and cash dividends
Source: NBF, Company Reports

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NBCFM Research | May 11, 2022

Exhibit 3: Credit Analysis

CREDIT ANALYSIS
($mm) 2020 Q1/21 Q2/21 Q3/21 2021 Q1/22 Q2/22 Q3/22 2022
EBITDA(1) 210.6 263.7 335.7 444.9 568.5 659.6 754.1 791.1 817.7
Debt/EBITDA(1) 3.5x 2.7x 2.1x 1.5x 0.9x 0.6x 0.4x 0.2x 0.0x
Net Debt/EBITDA(1) 3.6x 2.9x 2.3x 1.4x 0.9x 0.6x 0.4x 0.2x 0.0x
Debt/Capital 31% 30% 30% 26% 21% 17% 13% 8% -1%
EBITDA/Interest(2) 8.1x 9.3x 10.5x 13.8x 19.7x 27.6x 37.4x 49.0x 68.7x
FFO(3)/Debt 25% 34% 42% 64% 108% 160% 225% 430% -2563%
(1) EBITDA trailing 12 months
(2) Interest trailing 12 months
(3) FFO trailing 12 months
Source: NBF, Company Reports

Maintain Outperform Rating & $12.50/sh Target Price

The company has a singular focus, and massive free cash is set to be generated to the benefit of shareholder
value through a material expansion of its return of capital. BIR is poised for a 44% return profile (vs. peers
39%) on leverage of -0.7x (vs. peers 0.0x), while trading at 3.6x 2023e EV/DACF (vs. peers 3.0x).

Exhibit 4: Gas Resource Peer Comparables

Market Net Div. FCF
Cap Debt EV Yield Yield EV/DACF Production Gas DAPPS Growth CF Netback CF Margin D/CF Drawn FCF Total Net
Ticker ($mln) ($mln) ($mln) (%) (%) (x) (mboe) (%) (%) ($/bbl) (%) (x) (%) ($mln) Payout
2022E 2022E 2022E 2022E 2022E 2023E 2022E 2023E 2022E 2022E 2023E 2022E 2023E 2022E 2023E 2022E 2023E 2022E 2022E 2023E 2022E 2023E
AAV $2,094 -$67 $2,027 0% 11% 4.6x 4.3x 53.5 55.5 90% 36% 23% $22.31 $21.22 63% 64% 0.0x 0.0x 0% $236 $210 46% 51%
ARX $10,056 $1,184 $11,240 3% 18% 3.4x 3.1x 343.3 352.9 62% 13% 20% $25.94 $24.76 62% 55% 0.4x 0.0x 0% $1,770 $1,320 46% 59%
CR $785 $229 $1,014 0% 24% 3.5x 3.0x 32.0 32.0 80% 93% 36% $23.41 $22.66 69% 67% 0.8x 0.1x 0% $186 $205 32% 23%
KEC $520 $82 $603 0% -7% 3.2x 1.9x 14.0 20.0 50% 0% 55% $36.75 $39.47 65% 61% 0.4x 0.1x 22% -$37 $48 120% 83%
KEL $1,203 -$63 $1,139 0% 7% 3.2x 2.4x 31.0 40.0 63% 60% 53% $31.24 $28.41 62% 60% 0.0x 0.0x 0% $89 $165 75% 60%
NVA $2,876 $11 $2,887 0% 16% 3.4x 2.9x 68.0 80.0 61% 102% 50% $33.71 $28.80 62% 56% 0.0x 0.0x 0% $472 $491 44% 42%
PEY $2,280 $730 $3,010 4% 16% 3.4x 3.1x 102.3 110.6 87% 43% 26% $22.73 $20.52 75% 72% 0.9x 0.5x 35% $372 $349 56% 58%
PIPE $1,219 $44 $1,263 0% 14% 3.1x 2.1x 32.0 41.0 55% 68% 56% $34.11 $33.18 64% 62% 0.1x 0.0x 6% $168 $247 58% 50%
POU $4,723 $39 $4,763 3% 10% 4.0x 3.1x 93.0 107.5 54% 32% 34% $35.14 $34.47 58% 56% 0.0x 0.0x 0% $454 $568 62% 58%
SDE $2,137 $46 $2,183 0% 19% 2.9x 2.1x 70.5 78.0 60% 87% 65% $28.81 $28.55 61% 62% 0.1x 0.0x 0% $411 $483 45% 41%
TOU $23,535 -$498 $23,036 1% 7% 5.6x 4.9x 500.0 515.0 77% 19% 24% $22.31 $22.40 66% 64% 0.0x 0.0x 0% $1,628 $2,672 60% 37%
Avg 1.1% 12% 3.4x 3.0x 67% 43% 36% $28.77 $27.68 64% 62% 0.1x 0.0x 6% 58% 51%
BIR $2,609 -$24 $2,665 0.7% 20% 3.3x 3.6x 78.3 81.0 80% 38% 31% $28.20 $21.79 65% 60% 0.0x -0.7x 0% $520 $367 35% 43%
Source: NBF, Company Reports, Refinitiv

We are maintaining our Outperform rating and $12.50/sh target price (unchanged). Our target price is
predicated on a valuation methodology that solely reflects a cash flow multiple and is correlated to an asset
value perspective. For BIR, our target price is based on a 2023e EV/DACF cash flow multiple of 4.5x
(unchanged).

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NBCFM Research | May 11, 2022

Financial & Operating Summary - Birchcliff Energy Ltd. (BIR)

Stock Rating OP Current Share Price $9.37
Target Price $12.50 52 Wk. High / Low $10.53 / $3.18
Yield 0.9% Market Cap ($mln) $2,609
Total Return 34% Enterprise Value ($mln) $2,665

Production Mix 2019 2020 2021 2022E 2023E Core Assets

Oil & NGLs bbls/d 17,151 17,889 16,319 15,460 16,200
Heavy bbls/d 0 0 0 0 0
Natural Gas mmcf/d 365.0 351.1 373.2 376.9 388.8
Total BOE/d (6:1) boe/d 77,977 76,401 78,522 78,280 81,000
% Natural Gas % 78% 77% 79% 80% 80%

Growth
Absolute % 1% -2% 3% 0% 3%
PPS % 2% -2% 0% -2% 3%
DAPPS % -14% -37% 104% 38% 31%
Production Growth
100 Production Absolute Growth PPS Growth DAPPS Growth 120%
100%
80 80%
60%
mboe/d

60
40%
20%
40
0%

20 -20%
-40%
0 -60%
2019 2020 2021 2022E 2023E

Netbacks 2019 2020 2021 2022E 2023E Comparative Metrics 2022E 2023E

Revenue $/boe $21.55 $18.90 $32.53 $43.57 $36.96 BIR Peer Avg. BIR Peer Avg.
Hedging $0.48 -$2.13 -$0.75 $0.08 -$0.57 EVDACF 3.3x 3.4x 3.6x 3.0x
10.0x
Royalties -$0.96 -$0.65 -$2.66 -$5.59 -$4.43 EV/BOE/d $34,046 $38,339 $27,981 $28,858
Op. Costs -$3.03 -$2.85 -$3.10 -$3.25 -$3.15 EV/2P $2.56 $4.86 $2.18 $4.29
8.0x
Transportation -$4.49 -$5.03 -$5.28 -$5.30 -$4.85 NAV
Operating Netback $/boe $13.55 $8.23 $20.75 $29.52 $23.95 P / NAV
G&A -$0.94 -$0.88 -$0.99 -$0.90 -$0.80 6.0x

Interest -$0.88 -$0.93 -$1.00 -$0.42 $0.39 Dividend Yield 0.7% 1.1% 0.9% 1.1%
Tax $0.00 $0.00 $0.00 $0.00 -$1.75 D/CF 0.0x 0.1x -0.7x 0.0x 4.0x
Other $0.02 $0.18 $0.08 $0.00 $0.00 Total Net Payout 35% 58% 43% 51%
Cash Flow Netback $/boe $11.75 $6.60 $18.83 $28.20 $21.79 DAPPS Growth 38% 43% 31% 36% 2.0x
Cash Costs -$15.45 -$19.08 -$14.60 -$18.13
Cash Flow Margin 65% 64% 60% 62% 0.0x +/- 1 Std. Dev. LT Avg NBF 2022e
Cash Costs (Ex. Hedging) $/boe -$10.28 -$10.17 -$12.95 -$15.45 -$14.60 BIR Peer Avg.
CF Margin (Ex. Hedging) % 52% 46% 60% 65% 60% Decline Rate 20% 33% 20% 32%
Capital Efficiency $15,000 $11,841 $15,000 $12,914
Financial Summary 2019 2020 2021 2022E 2023E FCF Profile
Revenue $mln $613 $528 $932 $1,245 $1,093
Cash Flow $mln $335 $185 $540 $806 $644 Cash Flow Capex Dividend DRIP FCF D/CF
CFPS (diluted) $1.26 $0.69 $1.97 $2.90 $2.31 $1,000 5.0x
DPS (basic) $0.11 $0.04 $0.03 $0.07 $0.08
$800
Capital Expenditures $mln -$259 -$290 -$232 -$260 -$260 4.0x
(Acquisitions) / Dispositions -$38 $13 -$2 $0 $0
Total -$296 -$277 -$234 -$260 -$260 $600
Dividends $mln -$32 -$15 -$11 -$26 -$28 3.0x
DRIP $mln $0 $0 $0 $0 $11
(Cdn$ mlns)

FREE CASH FLOW $mln $44 -$120 $297 $520 $367

D/CF
$400
2.0x
DRIP Participation % 0% 0% 0% 0% 0%
$200
Dividend Payout 10% 8% 2% 3% 4%
Capex Payout 77% 157% 43% 32% 40% 1.0x
Total Payout 87% 165% 45% 35% 45% $0
Total Net Payout 87% 165% 45% 35% 43%
0.0x
-$200
Net Debt* $mln $633 $762 $499 -$24 -$422
D/CF* 1.9x 4.1x 0.9x 0.0x -0.7x
-$400 -1.0x
Credit Facility $mln $1,000 $1,000 $850 $850 $850 2019 2020 2021 2022E 2023E
% Drawn 61% 73% 59% 0% 0%
Quarterly CFPS (diluted) 2019 2020 2021 2022E 2023E Reserves 2018 2019 2020 2021
Q1 $0.44 $0.14 $0.33 $0.66 $0.56
Q2 $0.28 $0.08 $0.33 $0.68 $0.57 Volume % mmboe % mmboe % mmboe % mmboe
Q3 $0.24 $0.22 $0.61 $0.75 $0.58 PDP 20% 204 20% 207 20% 207 21% 217
Q4 $0.30 $0.25 $0.70 $0.81 $0.59 Proved 69% 690 69% 709 67% 699 68% 690
Annual $1.26 $0.69 $1.97 $2.90 $2.31 2P 100% 1,002 100% 1,032 100% 1,040 100% 1,022
Quarterly Production (boe/d) 2019 2020 2021 2022E 2023E Growth
Q1 74,884 73,580 75,065 76,024 81,000 PDP 3% 2% 0% 5%
Q2 78,453 74,950 75,265 73,500 81,000 Proved 4% 3% -1% -1%
Q3 80,548 78,376 84,924 80,000 81,000 2P 3% 3% 0% 0%
Q4 77,963 78,649 78,716 83,495 81,000 RPS (2P) 3% 4% 0% 0%
Annual 77,977 76,401 78,522 78,280 81,000 DARPS (2P) -7% -12% 0% 0%
Commodity Price Assumptions 2019 2020 2021 2022E 2023E Replacement Costs
WTI Crude oil (US$/bbl) $57.00 $39.25 $68.00 $95.00 $90.00 FD&A Ex. FDC (PDP) $8.75 $9.38 $9.95 $5.89
WCS(C$/bbl) $58.10 $35.50 $68.50 $104.25 $96.25 FD&A Ex. FDC (Proven) $5.55 $6.27 $15.40 $11.81
Canadian Par (C$/bbl) $69.05 $45.25 $80.50 $117.00 $107.50 FD&A Ex. FDC (P+P) $5.13 $5.12 $7.64 $22.96
NYMEX gas (US$/mcf) $2.55 $2.15 $3.70 $4.90 $4.00
AECO Basis (US$/mcf) $-1.20 $-0.45 $-0.80 $-1.20 $-1.00 Recycle Ratio Ex. FDC (PDP) 0.1x 1.3x 0.7x 3.2x
AECO gas (C$/mcf) $1.80 $2.25 $3.65 $4.70 $3.75 Recycle Ratio Ex. FDC (Proven) 2.0x 1.9x 0.4x 1.6x
Exchange Rate (US$/C$) $0.75 $0.75 $0.80 $0.79 $0.80 Recycle Ratio Ex. FDC (P+P) 2.2x 2.3x 0.9x 0.8x
Source: Company reports, Bloomberg, NBF estimates

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NBCFM Research | May 11, 2022

Disclosures
PRICE, RATING AND TARGET HISTORY: I = Initiation, OP = Outperform, SP = Sector Perform, UP = Underperform, UR = Under Review, R = Restricted; T = Tender (Source: Factset, NBF)

Birchcliff Energy Ltd. Rating History as of 05/11/2022

OP:$4.50 OP:$4.00 OP:$3.00 OP:$1.75 OP:$1.50 OP:$2.25 OP:$2.50 OP:$3.00 OP:$3.50 OP:$4.75 OP:$4.50 OP:$6.25
06/24/2019 10/01/2019 01/30/2020 03/09/2020 03/11/2020 04/22/2020 06/24/2020 10/15/2020 01/20/2021 02/18/2021 04/14/2021 06/16/2021
12
10
8
6

Price (CAD)
4
2
0
Jul 19 Oct 19 Jan 20 Apr 20 Jul 20 Oct 20 Jan 21 Apr 21 Jul 21 Oct 21 Jan 22 Apr 22
OP:$10.00 OP:$11.00 OP:$12.50
09/27/2021 02/02/2022 04/13/2022

Closing Price

RISKS:
Commodity Prices: Fluctuations in global and local commodity prices, in addition to foreign exchange rates, can have material, adverse impacts on operations, financial condition and reserves value.
A decline in commodity prices presents the greatest single direct risk to a company’s revenue, cash flow and earnings.

Operational/Regulatory: Oil and natural gas development involves a high degree of risk, which is managed through a combination of experience, knowledge and careful evaluation. There is no assurance
that expenditures made on exploration and development will result in new discoveries or commercial quantities of oil and gas. As well, existing production and processing activities can be impacted
by unforeseeable events that can negatively impact production and cash flow. Additionally, controls and regulations may be imposed and amended from all levels of government, presenting immediate
material impacts to companies in some cases.

Gathering and Processing Facilities and Pipeline Systems: Lack of capacity and/or constraints on gathering and processing facilities and pipeline systems may have a negative impact on the
Corporation's ability to produce and sell its oil and natural gas.

ADDITIONAL COMPANY RELATED DISCLOSURES

Birchcliff Energy Ltd. 2, 3, 5, 7, 10
ARC Resources Ltd. 2, 3, 4, 5, 7, 9
Advantage Energy Ltd. 2, 3, 5, 7, 10
Crew Energy Inc. 2, 3, 5, 7
Kelt Exploration Ltd. 2, 3, 5, 7
Kiwetinohk Energy Corp.
NuVista Energy Ltd.
Paramount Resources Ltd. 2, 3, 5, 7
Peyto Exploration & Development Corp. 2, 3, 5, 7
Pipestone Energy Corp. 2, 3, 5, 7, 10
Spartan Delta Corp. 2, 3, 4, 5, 7
Tourmaline Oil Corp. 2, 3, 4, 5, 7

LEGEND FOR COMPANY RELATED DISCLOSURES:

2 National Bank Financial Inc. has acted as an underwriter with respect to this issuer within the past 12 months.
3 National Bank Financial Inc. has provided investment banking services for this issuer within the past 12 months.
4 National Bank Financial Inc. or an affiliate has managed or co-managed a public offering of securities with respect to this issuer within the past 12 months.
5 National Bank Financial Inc. or an affiliate has received compensation for investment banking services from this issuer within the past 12 months.
6 National Bank Financial Inc. or an affiliate has a non-investment banking services related relationship during the past 12 months.
7 The issuer is a client, or was a client, of National Bank Financial Inc. or an affiliate within the past 12 months.
8 National Bank Financial Inc. or its affiliates expects to receive or intends to seek compensation for investment banking services from this issuer in the next 3 months.
9 As of the end of the month immediately preceding the date of publication of this research report (or the end of the second most recent month if the publication date is less than 10 calendar days after
the end of the most recent month), National Bank Financial Inc. or an affiliate beneficially own 1% or more of any class of common equity securities of this issuer.
10 National Bank Financial Inc. makes a market in the securities of this issuer, at the time of this report publication.
11 A partner, director, officer or research analyst involved in the preparation of this report has, during the preceding 12 months provided services to this issuer for remuneration other than normal
course investment advisory or trade execution services.
12 A research analyst, associate or any other person (or a member of their household) directly involved in preparing this report has a financial interest in the securities of this issuer.
13 A partner, director, officer, employee or agent of National Bank Financial Inc., is an officer, director, employee of, or serves in any advisory capacity to the issuer.
14 A member of the Board of Directors of National Bank Financial Inc. is also a member of the Board of Directors or is an officer of this issuer.

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NBCFM Research | May 11, 2022

15 A redacted draft version of this report has been shown to the issuer for fact checking purposes and changes may have been made to the report before publication.

RATING DISTRIBUTION

Outperform Sector Perform Underperform

Coverage Universe Ratings Distribution 65% 33% 0%

Investment Banking Distribution 70% 64% 50%

DISCLOSURES

Ratings And What They Mean: PRIMARY STOCK RATING: NBF has a three-tiered rating system that is relative to the coverage universe of the particular analyst. Here is a brief description of each:
Outperform (OP) – The stock is expected to outperform the analyst’s coverage universe over the next 12 months; Sector Perform (SP) – The stock is projected to perform in line with the sector over
the next 12 months; Underperform (UP) – The stock is expected to underperform the sector over the next 12 months. SECONDARY STOCK RATING: Under Review (UR) − Our analyst has withdrawn
the rating because of insufficient information and is awaiting more information and/or clarification; Tender (T) − Our analyst is recommending that investors tender to a specific offering for the company’s
stock; Restricted (R) − Because of ongoing investment banking transactions or because of other circumstances, NBF policy and/or laws or regulations preclude our analyst from rating a company’s stock.
INDUSTRY RATING: NBF has an Industry Weighting system that reflects the view of our Economics & Strategy Group, using its sector rotation strategy. The three-tiered system rates industries as
Overweight, Market Weight and Underweight, depending on the sector’s projected performance against broader market averages over the next 12 months. RISK RATING: As of June 30, 2020, National
Bank Financial discontinued its Below Average, Average and Above Average risk ratings. We continue to use the Speculative risk rating which reflects higher financial and/or operational risk.

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NBCFM Research | May 11, 2022

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