E&P

Whitecap Resources Inc.

Global Equity Research WCP-T: C$9.75 Target: C$13.00 Rating: Sector Perform

Daily Edge | Pre-market

Wednesday, June 29, 2022 Still on the Offensive!

Analyst Team Link to ScotiaView

OUR TAKE. Neutral. WCP continues to consolidate assets, but price decks used are on the
 
rise. The assets are high quality and add meaningful inventory to the company. The all cash
Jason Bouvier, CFA | Analyst
Scotia Capital Inc. - Canada | 403-213-7345
offer results in strong accretion metrics. Leverage ratios increase but are likely to fall quickly
 
if strip prices hold. As a result of the incremental FCF, WCP has also increased its dividend by
Kevin Fisk, CPA, CBV | Associate Analyst
Scotia Capital Inc. - Canada | 403-213-7768
22%.
 

Austin Glenn | Associate

Scotia Capital Inc. - Canada | 403-605-0871
KEY POINTS

Pertinent Data Adding High Quality Natural Gas. WCP acquired 32 mboe/d (29% gas) and 639,000 net
Rating Sector Perform acres (1,910 net locations, 20 years of Tier 1 inventory) of Montney and Duvernay assets
1-Yr. Target C$13.00
(Exhibit 2) for $1.7B. The inventory boasts mid-cycle payouts of 4-6 months ($81 WTI, C$3.70/
WCP-T C$9.75
mcf).
1-Yr. Return 37.2%
Div. (Curr.) $0.38
Valuation more aggressive than recent precedents. The company paid $53,125/boe/d and
This report is intended for replaceme@bluematrix.com. Unauthorized distribution of this report is prohibited.

Yield (Curr.) 3.9%

NAVPS $11.90 a DACF multiple of 3.3x ($85 WTI, C$4.50/mcf AECO). Natural gas transactions over the
P/NAV 0.82x past year went for $34-36,000/boe/d and a DACF multiple of 3.5-4.0x ($75 WTI, C$3.90/
ESG Score 42 mcf AECO). Although the DACF multiple is reasonable, it's at a much higher price deck than
Quant Ranking 96
precedents; $/boe/d is also higher. This is warranted given the current commodity price
Valuation: 19.5% 2023E DAFCF yield
 
environment but increases the risk should the strip not hold.
Pertinent Revisions
New Old
Accretion strong. The company estimates 2023 accretion of 27% on CFPS and 20% on FCFPS
CFPS22E $3.85 $4.01
CFPS23E $4.04 $3.53
($85 WTI, C$4.50/mcf AECO). The accretion is greatly enhanced via the purchase being 100%
 
 
cash. If the transaction was 100% equity financed we estimate the 2023 FCFPS impact would
Capitalization
be roughly neutral.
Market Cap. (M) $6,106
Net Debt + Pref. (M) $1,125
Enterprise Value (M) $7,231
Balance sheet leaned on, but still solid. The all cash offer will increase the debt metrics, but
Shares O/S (M) 626 if the strip holds, will quickly strengthen. Under strip prices we estimate the 2023 net debt to
EBITDA has increased to ~0.3x from a net cash position due to the transaction.

Dividend Increased. Given the strong FCFPS accretion of the deal, WCP has also increased its
dividend by 22%.

Valuation Declines. As a result of the transaction we have our 2023 DAFCF Yield decreasing
from 25% to 23% (Exhibit 5).

Qtly CFPS  (FD)   Q1 Q2 Q3 Q4 Year EV/DACF

2020A $0.32 $0.19 $0.29 $0.25 $1.06 6.3x
2021A $0.36 $0.43 $0.46 $0.55 $1.82 5.1x
2022E $0.80 $0.89 $1.03 $1.11 $3.85 3.0x
2023E $1.05 $1.03 $0.95 $0.87 $4.04 2.6x

(FY-Dec.) 2020A 2021A 2022E 2023E

Volume and Closing Price for WCP-T
Oil Price (WTI, US$/bbl) $39.42 $67.91 $102.89 $94.92
25 14
Nymex (US$/mcf) $2.13 $3.69 $5.22 $4.32
20 12 Total Production (boe/d) 68,662 112,222 139,000 171,174
Natural Gas (%) 16% 24% 30% 35%
15 10
Vol (M)

Historical price multiple calculations use FYE prices. All values in C$ unless otherwise indicated.
Price

10 8 Source: FactSet; company reports; Scotiabank GBM estimates.

5 6 Production: June 29, 2022, 03:14 ET. Dissemination: June 29, 2022, 06:15 ET.
0
Aug-21 Oct-21 Dec-21 Feb-22 Apr-22 Jun-22
4 For Reg AC Certification and important disclosures see Appendix A of this report. Analysts
Volume WCP-T employed by non-U.S. affiliates are not registered/qualified as research analysts with FINRA in
Source: FactSet. the U.S. unless otherwise noted within this report.
 Daily Edge | Pre-market
  
Wednesday, June 29, 2022
The
  XTO acquisition assumes higher commodity prices than the precedent transactions (Exhibit
1). WCP acquired XTO for 3.3x 2023 DACF (~$85 WTI and $4.50 AECO) compared to the precedent
transaction median of 3.5x DACF (~$60 WTI and ~$2.70 AECO).

Exhibit 1 - Precedent Transactions

Acquired Year of
Acquirer Target Date EV Production CF/FCF CF FCF EV/boe/d EV/ CF EV/ FCF Commodity Prices
($M) (boe/d) Estimates ($M) ($M) WTI (US$/bbl) AECO (C$/mcf)
CNQ3 PONY 08/10/2020 $461 49,600 2022 $9,294 3.7x $48.49 $2.71
COP KEL 07/22/2020 $510 14,300 2022 $35,664
TOU Jupiter Resources 11/04/2020 $626 67,000 2022 $255 $120 $9,343 2.5x 5.2x $42.20 $2.68
SDE Velvet Energy 07/28/2021 $743 20,600 2022 $218 $36,068 3.4x $65.24 $3.22
TOU Black Swan Energy 06/11/2021 $1,100 50,000 2022 $175 $22,000 6.3x $64.40 $2.75
WCP2 Kicking Horse Oil & Gas 04/05/2021 $300 8,000 2022 $152 $72 $37,500 2.0x 4.2x $55.00 $2.50
TOU Saguaro Resources (50% JV) 04/01/2021 $205 9,000 2022 $35 $22,778 5.9x $54.86 $2.48
CNQ Storm Resources 11/09/2021 $952 28,000 2022 $243 $143 $34,000 3.9x 6.7x $67.00 $3.50
VET1 Leucrotta Exploration Inc. 03/28/2022 $477 13,000 2023 $135 $25 $36,692 3.5x 19.1x $86.10 $4.31

Median $510 20,600 $218 $96 $34,000 3.5x 6.1x $59.70 $2.73

Acquired Year of
This report is intended for replaceme@bluematrix.com. Unauthorized distribution of this report is prohibited.

Acquirer Target Date EV Production CF/FCF 2023 CF 2023 FCF EV/boe/d EV/2023 CF EV/ 2023 FCF Commodity Prices
($M) (boe/d) Estimates ($M) ($M) WTI (US$/bbl) AECO (C$/mcf)
WCP XTO Energy 06/28/2022 $1,700 32,000 2023 $515 $255 $53,125 3.3x 6.7x $85.00 $4.50

Note:
1) CF figure assumes production of 13 mboe/d.
2) CF figure assumes production of 18-19 mboe/d.
3) 2021 EV/DACF is presented for CNQ's acquisition of PONY.

Source: Scotiabank GBM estimates.

Exhibit 2 - Map XTO Assets

XTO Montney /
Duvernay Assets
568,000 net acres Montney /
85,000 net acres Duvernay

9 mbb/d + 140 mmcf/d = ~32 mboe/d

XTO Montney

Source: Scotiabank GBM; Geoscout.

 
Global Equity Research 2
 Daily Edge | Pre-market
  
Wednesday, June 29, 2022
Exhibit
  3 - Financial and operating summary on strip pricing as of June 22, 2022

Fiscal Year End - December 31 Q1/22A Q2/22E Q3/22E Q4/22E 2022E 2023E

Price Deck Assumptions

WTI US$/B $94.38 $109.55 $106.98 $99.96 $102.74 $90.58
Edmonton Par C$/B $117.78 $136.66 $134.95 $123.42 $128.24 $111.96
WCS C$/B $101.04 $120.41 $114.13 $104.03 $109.92 $94.84
Nymex Natural Gas US$/Mcf $4.64 $7.58 $6.86 $6.92 $6.51 $5.38
AECO 30-Day Spot C$/Mcf $4.75 $7.36 $6.78 $6.83 $6.44 $5.40
Exchange Rate US$/C$ $0.79 $0.78 $0.77 $0.77 $0.78 $0.77

Daily Production
Total Oil & Liquids B/d 97,571 92,771 96,091 101,214 96,919 110,676
Natural Gas Mmcf/d 211 217 257 324 252 363
Total Production Boe/d 132,691 128,907 138,961 155,194 139,000 171,174
Change in Total Production % 18% -3% 8% 12% 24% 23%
Percentage Natural Gas % 26% 28% 31% 35% 30% 35%

Financial Estimates
Cash Flow from Operations [$mm] $505.7 $614.4 $712.8 $704.0 $2,536.9 $2,465.1
This report is intended for replaceme@bluematrix.com. Unauthorized distribution of this report is prohibited.

Investment Cash Flows - Internal [$mm] -$211.5 -$73.3 -$157.8 -$177.4 -$620.0 -$1,000.0
Investment Cash Flows - M&A [$mm] -$0.1 $0.0 -$1,700.0 $0.0 -$1,700.1 $0.0
Financing Cash Flows [$mm] -$35.2 -$537.6 $1,148.5 -$523.1 $52.6 -$1,451.1
Dividends [$mm] -$47.1 -$55.6 -$68.6 -$68.0 -$239.3 -$256.0

Cash Flow Per Share - FD $/Share $0.80 $0.98 $1.13 $1.13 $4.06 $4.35
EBITDA $/Share $1.67 $1.01 $1.14 $1.14 $4.98 $5.14
EPS $/Share $1.03 $0.51 $0.60 $0.57 $2.73 $1.54
Distribution - Basic $/Share $0.07 $0.09 $0.11 $0.11 $0.38 $0.44

Netbacks
Revenue (pre-hedging) [C$/boe] $84.06 $102.30 $97.67 $87.95 $92.80 $78.49
Hedging Gains (Losses) [C$/boe] ($6.52) ($10.12) ($4.86) ($3.30) ($6.03) ($0.92)
Royalties [C$/boe] ($16.53) ($20.20) ($19.29) ($17.37) ($18.31) ($14.52)
Operating Costs [C$/boe] ($13.76) ($15.00) ($14.25) ($14.25) ($14.31) ($13.00)
Transportation Costs [C$/boe] ($2.08) ($2.20) ($2.20) ($2.20) ($2.17) ($2.00)
Field Netback [C$/boe] $45.18 $54.77 $57.07 $50.84 $51.99 $48.05
After-Tax Netback [C$/boe] $140.26 $148.27 $163.04 $157.52 $48.72 $44.93

Valuation Measures
EV/DACF x 3.6 2.8 2.9 2.8 3.1 2.7
EV/EBITDA x 1.7 2.9 2.9 2.8 2.6 2.3
P/E x 2.4 5.2 4.1 4.3 3.6 6.3
D/P % 3% 4% 5% 5% 4% 5%
EV per Boe/d $/Boe/d 54,494 55,998 60,705 51,423 57,414 39,640

Source: Scotiabank GBM estimates.

 
Global Equity Research 3
 Daily Edge | Pre-market
  
Wednesday, June 29, 2022
Exhibit
  4 - Commodity Sensitivities

$90/bbl WTI, 0.78 USD/CAD $100/bbl WTI, 0.80 USD/CAD $110/bbl WTI, 0.82 USD/CAD
SGBM Commodity Deck
-$4.00/bbl Edm. Par Diff. -$4.00/bbl Edm. Par Diff. -$4.00/bbl Edm. Par Diff.

2020A 2021A 2022E 2023E 2020A 2021A 2022E 2023E 2020A 2021A 2022E 2023E 2020A 2021A 2022E 2023E
WTI US$/bbl $39.42 $67.91 $102.89 $94.92 $90.02 $90.00 $90.00 $90.00 $100.02 $100.00 $100.00 $100.00 $110.02 $110.00 $110.00 $110.00
AECO $/mcf $2.23 $3.63 $4.94 $4.05 $6.35 $6.73 $6.73 $6.73 $6.07 $6.56 $6.56 $6.56 $5.82 $6.40 $6.40 $6.40
USD/CAD FX Rate US$/C$ 0.75 0.80 0.80 0.82 0.78 0.78 0.78 0.78 0.80 0.80 0.80 0.80 0.82 0.82 0.82 0.82
Production boe/d 68,662 112,222 139,000 171,174 68,662 112,222 139,000 171,174 68,662 112,222 139,000 171,174 68,662 112,222 139,000 171,174
% Gas % 16% 24% 30% 35% 16% 24% 30% 35% 16% 24% 30% 35% 16% 24% 30% 35%
Growth YOY % -3% 63% 24% 23% -3% 63% 24% 23% -3% 63% 24% 23% -3% 63% 24% 23%
Debt-Adj Prod/sh Growth YOY % -1% 18% 13% 42% -1% 18% 9% 44% -1% 18% 12% 50% -1% 18% 15% 55%
Cash Flow $mm $434 $1,099 $2,415 $2,314 $434 $1,099 $2,162 $2,531 $434 $1,099 $2,376 $2,746 $434 $1,099 $2,578 $2,951
CFPS (F.D.) $/share $1.06 $1.82 $3.85 $4.04 $1.06 $1.82 $3.43 $4.43 $1.06 $1.82 $3.78 $4.91 $1.06 $1.82 $4.12 $5.38
Growth YOY % -35% 71% 112% 5% -35% 71% 88% 29% -35% 71% 108% 30% -35% 71% 126% 31%
Capex (Ex A&D) $mm $196 $428 $620 $1,000 $196 $428 $620 $1,000 $196 $428 $620 $1,000 $196 $428 $620 $1,000
Other Cash Outflows $mm $16 $19 $26 $36 $16 $19 $26 $36 $16 $19 $26 $36 $16 $19 $26 $36
Capex/CF x 0.5x 0.4x 0.3x 0.4x 0.5x 0.4x 0.3x 0.4x 0.5x 0.4x 0.3x 0.4x 0.5x 0.4x 0.2x 0.3x
Dividends $mm $87 $126 $240 $257 $87 $126 $241 $259 $87 $126 $240 $255 $87 $126 $240 $252
Effective Payout Ratio (Ex-A&D) % 65% 50% 36% 54% 65% 50% 40% 50% 65% 50% 36% 46% 65% 50% 33% 42%
Free Cash Flow (Ex A&D) $mm $222 $651 $1,769 $1,278 $222 $651 $1,516 $1,495 $222 $651 $1,729 $1,710 $222 $651 $1,932 $1,915
FCF per share (Ex A&D) $/share $0.54 $1.09 $2.85 $2.19 $0.54 $1.09 $2.43 $2.54 $0.54 $1.09 $2.78 $2.95 $0.54 $1.09 $3.11 $3.34
Net Debt/CF (LTM) x 2.6x 1.1x 0.7x 0.5x 2.6x 1.1x 0.9x 0.5x 2.6x 1.1x 0.7x 0.4x 2.6x 1.1x 0.6x 0.2x
Net Debt/EV % 36% 21% 20% 17% 36% 21% 22% 18% 36% 21% 21% 15% 36% 21% 19% 11%
Market Price EV/DACF x 6.3x 5.0x 3.3x 2.9x 6.3x 5.0x 3.8x 2.7x 6.3x 5.0x 3.3x 2.3x 6.3x 5.0x 3.0x 2.1x
Target Implied EV/DACF x nmf nmf 4.0x 3.5x nmf nmf 4.5x 3.3x nmf nmf 4.0x 2.8x nmf nmf 3.5x 2.5x
This report is intended for replaceme@bluematrix.com. Unauthorized distribution of this report is prohibited.

$100/bbl WTI, 0.80 USD/CAD $100/bbl WTI, 0.80 USD/CAD $100/bbl WTI, 0.80 USD/CAD
Futures Strip
-$3.00/bbl Edm. Par Diff. -$4.00/bbl Edm. Par Diff. -$5.00/bbl Edm. Par Diff.

2020A 2021A 2022E 2023E 2020A 2021A 2022E 2023E 2020A 2021A 2022E 2023E 2020A 2021A 2022E 2023E
WTI US$/bbl $39.42 $67.91 $102.74 $90.58 $100.02 $100.00 $100.00 $100.00 $100.02 $100.00 $100.00 $100.00 $100.02 $100.00 $100.00 $100.00
AECO $/mcf $2.23 $3.63 $6.44 $5.40 $6.07 $6.56 $6.56 $6.56 $6.07 $6.56 $6.56 $6.56 $6.07 $6.56 $6.56 $6.56
USD/CAD FX Rate US$/C$ 0.75 0.80 0.78 0.77 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80
Production boe/d 68,662 112,222 139,000 171,174 68,662 112,222 139,000 171,174 68,662 112,222 139,000 171,174 68,662 112,222 139,000 171,174
% Gas % 16% 24% 30% 35% 16% 24% 30% 35% 16% 24% 30% 35% 16% 24% 30% 35%
Growth YOY % -3% 63% 24% 23% -3% 63% 24% 23% -3% 63% 24% 23% -3% 63% 24% 23%
Debt-Adj Prod/sh Growth YOY % -1% 18% 14% 45% -1% 18% 13% 50% -1% 18% 12% 50% -1% 18% 12% 49%
Cash Flow $mm $434 $1,099 $2,537 $2,465 $434 $1,099 $2,404 $2,776 $434 $1,099 $2,376 $2,746 $434 $1,099 $2,347 $2,717
CFPS (F.D.) $/share $1.06 $1.82 $4.06 $4.35 $1.06 $1.82 $3.83 $4.98 $1.06 $1.82 $3.78 $4.91 $1.06 $1.82 $3.73 $4.84
Growth YOY % -35% 71% 123% 7% -35% 71% 110% 30% -35% 71% 108% 30% -35% 71% 105% 30%
Capex (Ex A&D) $mm $196 $428 $620 $1,000 $196 $428 $620 $1,000 $196 $428 $620 $1,000 $196 $428 $620 $1,000
Other Cash Outflows $mm $16 $19 $26 $36 $16 $19 $26 $36 $16 $19 $26 $36 $16 $19 $26 $36
Capex/CF x 0.5x 0.4x 0.2x 0.4x 0.5x 0.4x 0.3x 0.4x 0.5x 0.4x 0.3x 0.4x 0.5x 0.4x 0.3x 0.4x
Dividends $mm $87 $126 $239 $256 $87 $126 $240 $255 $87 $126 $240 $255 $87 $126 $240 $256
Effective Payout Ratio (Ex-A&D) % 65% 50% 34% 51% 65% 50% 36% 45% 65% 50% 36% 46% 65% 50% 37% 46%
Free Cash Flow (Ex A&D) $mm $222 $651 $1,891 $1,429 $222 $651 $1,758 $1,740 $222 $651 $1,729 $1,710 $222 $651 $1,701 $1,681
FCF per share (Ex A&D) $/share $0.54 $1.09 $3.05 $2.46 $0.54 $1.09 $2.83 $3.00 $0.54 $1.09 $2.78 $2.95 $0.54 $1.09 $2.73 $2.89
Net Debt/CF (LTM) x 2.6x 1.1x 0.6x 0.4x 2.6x 1.1x 0.7x 0.3x 2.6x 1.1x 0.7x 0.4x 2.6x 1.1x 0.7x 0.4x
Net Debt/EV % 36% 21% 19% 15% 36% 21% 20% 14% 36% 21% 21% 15% 36% 21% 21% 15%
Market Price EV/DACF x 6.3x 5.0x 3.1x 2.7x 6.3x 5.0x 3.3x 2.3x 6.3x 5.0x 3.3x 2.3x 6.3x 5.0x 3.4x 2.4x
Target Implied EV/DACF x nmf nmf 3.8x 3.3x nmf nmf 4.0x 2.8x nmf nmf 4.0x 2.8x nmf nmf 4.0x 3.0x

Source: Company reports; FactSet; Bloomberg; Scotiabank GBM estimates.

 
Global Equity Research 4
 Daily Edge | Pre-market
  
Wednesday, June 29, 2022
Exhibit
  5 - Valuation Metrics on Strip Pricing as of June 22, 2022
DAFCF Yield 1,2 Capex / CF D/CF
Company EV/DACF Total S/H Return3 Cash Flow ($M) Total Capex ($M) FCF Growth Production Growth
(Total Capex)1,2 (x) (x)

Canadian Large Cap 2022E 2023E 2022E 2023E 2022E 2023E 2022E 2023E 2022E 2023E 2022E 2023E 2022E 2023E 22E/21E 23E/22E 22E/21E 23E/22E
Canadian Natural Resources Limited 4.3x 4.6x 18% 16% 10% 9% $20,863 $17,653 $4,500 $4,900 0.2x 0.3x 0.4x 0.2x 60% -22% 4% 3%
Cenovus Energy Inc. 3.3x 3.2x 22% 21% 9% 17% $15,688 $13,534 $3,410 $3,780 0.2x 0.3x 0.1x 0.0x 162% -21% 0% 1%
Imperial Oil Limited 3.4x 3.6x 26% 23% 15% 17% $11,227 $8,917 $1,390 $1,470 0.1x 0.2x -0.1x -0.3x 156% -24% -2% 0%
Suncor Energy Inc. 3.6x 3.5x 21% 20% 13% 18% $19,777 $17,750 $4,926 $4,980 0.2x 0.3x 0.4x 0.3x 164% -14% 4% 6%
Average 3.6x 3.7x 22% 20% 9% 12% $16,889 $14,463 $3,556 $3,783 0.2x 0.3x 0.2x 0.1x 135% -20% 2% 2%

Canadian E&P Oil Weighted

Baytex Energy Corporation 3.2x 2.3x 20% 27% 4% 12% $1,356 $1,554 $500 $565 0.4x 0.4x 0.6x 0.2x 98% 16% 5% 5%
Crescent Point Energy Corp. 2.4x 1.7x 27% 38% 9% 12% $2,671 $2,908 $937 $1,040 0.4x 0.4x 0.3x -0.1x 120% 8% 1% 1%
Enerplus Corporation2 2.6x 2.0x 26% 31% 12% 16% $1,371 $1,336 $440 $490 0.3x 0.4x 0.2x -0.1x 127% -9% 7% 2%
MEG Energy Corp. 2.4x 2.9x 35% 27% 11% 15% $2,549 $1,692 $385 $400 0.2x 0.2x 0.2x 0.0x 363% -40% 2% 1%
Parex Resources Inc.2 1.7x 1.5x 22% 27% 14% 18% $955 $967 $550 $530 0.6x 0.5x -0.4x -0.4x 35% 8% 17% 13%
Vermilion Energy Inc. 2.4x 1.6x 30% 47% 7% 16% $2,133 $2,389 $520 $550 0.2x 0.2x 0.4x 0.0x 196% 14% 4% 10%
International Petroleum Corporation 1.6x 1.4x 49% 59% 13% 15% $699 $504 $127 $87 0.2x 0.2x -0.5x -1.0x 110% -27% 3% 1%
Average 2.3x 1.9x 30% 37% 10% 15% $1,676 $1,621 $494 $523 0.3x 0.3x 0.1x -0.2x 150% -4% 6% 5%

Gas Weighted Canadian E&P

Advantage Energy Ltd. 3.1x 2.3x 18% 27% 6% 11% $528 $618 $230 $250 0.4x 0.4x 0.0x -0.2x 242% 24% 9% 7%
ARC Resources Ltd. 3.3x 2.5x 19% 26% 13% 11% $3,805 $4,124 $1,352 $1,375 0.4x 0.3x 0.3x 0.0x 81% 12% 14% 2%
Birchcliff Energy Ltd. 2.3x 2.9x 31% 21% 5% 12% $1,052 $774 $290 $290 0.3x 0.4x -0.1x -0.3x 153% -37% 0% 3%
Crew Energy Inc. 3.0x 2.0x 18% 31% 0% 0% $324 $383 $137 $145 0.4x 0.4x 0.7x 0.0x nmf 27% 21% 6%
Kelt Exploration Ltd. 3.0x 2.5x nmf nmf 0% 0% $388 $417 $300 $275 0.8x 0.7x -0.2x -0.5x nmf 61% 41% 22%
NuVista Energy Ltd. 2.8x 2.2x 21% 26% 8% 10% $933 $980 $381 $415 0.4x 0.4x 0.2x -0.1x nmf 3% 32% 23%
Peyto Exploration & Development Corp. 3.1x 2.1x 18% 30% 5% 6% $940 $1,147 $450 $438 0.5x 0.4x 0.7x 0.1x 269% 45% 15% 11%
Paramount Resources Ltd. 3.2x 2.2x 16% 25% 5% 9% $1,286 $1,570 $609 $650 0.5x 0.4x 0.0x -0.3x 262% 36% 13% 14%
Spartan Delta Corp. 2.4x 1.7x 24% 36% 2% 6% $886 $985 $381 $400 0.4x 0.4x 0.0x -0.5x 355% 16% 55% 11%
Tourmaline Oil Corp. 4.4x 3.6x 16% 21% 11% 10% $5,120 $5,819 $1,367 $1,426 0.3x 0.2x 0.0x -0.3x 149% 17% 14% 2%
This report is intended for replaceme@bluematrix.com. Unauthorized distribution of this report is prohibited.

Average 3.1x 2.4x 20% 27% 5% 8% $1,526 $1,682 $550 $566 0.4x 0.4x 0.2x -0.2x 216% 20% 22% 10%

Royalty E&P
Freehold Royalties Ltd. 5.1x 4.9x 20% 20% 7% 7% $366 $304 $0 $0 0.0x 0.0x -0.3x -1.0x 93% -17% 20% 4%
PrairieSky Royalty Ltd. 8.6x 8.6x 12% 12% 5% 5% $487 $458 $0 $0 0.0x 0.0x 0.7x 0.2x 78% -6% 21% 6%
Topaz Energy Corp. 8.3x 7.9x 12% 13% 5% 5% $360 $364 $3 $3 0.0x 0.0x 0.1x -0.5x 90% 1% 17% 6%
Average 7.4x 7.1x 14% 15% 6% 7% $404 $375 $1 $1 0.0x 0.0x 0.2x -0.4x 87% -7% 20% 5%

Whitecap Resources Inc. (Pro-Forma) 3.1x 2.7x 25% 23% 5% 14% $2,537 $2,465 $620 $1,000 0.2x 0.4x 0.6x 0.4x 186% -24% 24% 23%
Whitecap Resources Inc. (Pre-Acquisition) 2.4x 2.5x 31% 25% 13% 12% $2,440 $1,969 $570 $725 0.2x 0.4x 0.2x 0.0x 179% -33% 17% 3%

Strip Pricing, 06/22/22 2022E 2023E Notes:

WTI (US$/bbl) $102.74 $90.58 - (1) Total Capex is defined as Sustaining Capex plus Growth Capital.
Brent (US$/bbl) $105.75 $94.68 - (2) Cash flow and total capex estimates are in USD.
WCS Diff (US$/bbl) ($16.58) ($17.24) - (3) Total S/H returns equals SBB + Dividends
WCS Diff (% of WTI) -16% -19%
Maya (US$/bbl) $96.07 $84.96
Ed. Par Diff (US$/bbl) ($2.73) ($4.07)
SCO Diff (US$/bbl) $0.19 ($1.00)
NYH321 (US$/bbl) $44.02 $31.27
HH (US$/MMbtu) $6.51 $5.38
AECO (C$/mcf) $6.43 $5.40
FX (US$/CDN$) $0.78 $0.77

Source: Company reports; FactSet; Bloomberg; Scotiabank GBM estimates

 
Global Equity Research 5
 Daily Edge | Pre-market
  
Company Overview Wednesday, June 29, 2022

 
Company Description

Whitecap Resources Inc. is an oil-weighted E&P company with four main operating areas: northern
Alberta and British Columbia, central Alberta, western Saskatchewan, and eastern Saskatchewan. The
company also has a carbon capture and utilization storage project at Weyburn, which stores more than
its annual Scope 1 and 2 emissions. Whitecap trades on the Toronto Stock Exchange under the symbol
WCP.

Key Risks

Oil and natural gas prices; drilling program success.

This report is intended for replaceme@bluematrix.com. Unauthorized distribution of this report is prohibited.

 
Global Equity Research 6
 Daily Edge | Pre-market
  
Wednesday, June 29, 2022

  Appendix A: Important Disclosures

Company Disclosures (see legend below)*

Advantage Energy Ltd. V0185
Birchcliff Energy Ltd. O3
Canadian Natural Resources Limited O1, O3
Cenovus Energy Inc. G, I, N1, U, V0181
Crescent Point Energy Corp. V0151, V0168
Enerplus Corporation J
Freehold Royalties Ltd. G, I, U
Imperial Oil Limited VS0589
NuVista Energy Ltd. G, I, U
PrairieSky Royalty Ltd. G, I, U
Spartan Delta Corp. I
This report is intended for replaceme@bluematrix.com. Unauthorized distribution of this report is prohibited.

Suncor Energy Inc. O1, O3, V0188

Topaz Energy Corp. I
Tourmaline Oil Corp. G, I, O3, U, V0173
Vermilion Energy Inc. G, I, J, N1, O1, U, V0179

I, Jason Bouvier, certify that (1) the views expressed in this report in connection with securities or issuers that I analyze accurately reflect my
personal views and (2) no part of my compensation was, is, or will be directly or indirectly, related to the specific recommendations or views
expressed by me in this report.

This document has been prepared by Research Analysts employed by The Bank of Nova Scotia and/or its affiliates. The Bank of Nova Scotia,
its subsidiaries, branches and affiliates are referred to herein as "Scotiabank." "Scotiabank" together with "Global Banking and Markets"
is the marketing name of the global corporate and investment banking and capital markets business of The Bank of Nova Scotia and its
affiliates. Scotiabank, Global Banking and Markets produces research reports under a single marketing identity referred to as "globally
branded research" under U.S. rules. This research is produced on a single global research platform with one set of rules which meet the
most stringent standards set by regulators in the various jurisdictions in which the research reports are produced. In addition, the Research
Analysts who produce the research reports, regardless of location, are subject to one set of policies designed to meet the most stringent
rules established by regulators in the various jurisdictions where the research reports are produced.

Scotiabank relies on information barriers to control the flow of non-public or proprietary information contained in one or more areas within
Scotiabank into other areas, units, groups or affiliates of Scotiabank. In addition, Scotiabank has implemented procedures to prevent
research independence being compromised by any interactions they may have with other business areas of The Bank of Nova Scotia. The
compensation of the Research Analyst who prepared this document is determined exclusively by Scotiabank Research Management and
senior management (not including investment or corporate banking).

Research Analyst compensation is not based on investment or corporate banking revenues; however, compensation may relate to the
revenues of Scotiabank as a whole, of which investment banking, corporate banking, sales and trading are a part. Scotiabank Research will
initiate, update and cease coverage solely at the discretion of Scotiabank Research Management. Scotiabank Research has independent
supervisory oversight and does not report to the corporate or investment banking functions of Scotiabank.

For Scotiabank, Global Banking and Markets Research Analyst Standards and Disclosure Policies, please visit www.gbm.scotiabank.com/
disclosures.

For additional questions, please contact Scotiabank, Global Banking and Markets Research, 4 King St W, 12th Flr, Toronto, Ontario, M5H 1A1.

Time of dissemination: June 29, 2022, 06:15 ET. Time of production: June 29, 2022, 03:14 ET. Note: Time of dissemination is defined as
the time at which the document was disseminated to clients. Time of production is defined as the time at which the Supervisory Analyst
approved the document.

*Legend
G Scotia Capital (USA) Inc. or its affiliates has managed or co-managed a public offering in the past 12 months.
I Scotia Capital (USA) Inc. or its affiliates has received compensation for investment banking services in the past 12 months.
J Scotia Capital (USA) Inc. or its affiliates expects to receive or intends to seek compensation for investment banking services in the
next 3 months.
 
Global Equity Research 7
 Daily Edge | Pre-market
  
Wednesday, June 29, 2022

 N1 Scotia Capital (USA) Inc. had an investment banking services client relationship during the past 12 months.
O1 Scotia Capital Inc. and its affiliates collectively beneficially own in excess of 1% of one or more classes of the issued and outstanding
equity securities of this issuer.
O3 The Bank of Nova Scotia and its affiliates collectively have a net long position in excess of 0.5% of the total issued share capital of
the issuer.
U Within the last 12 months, Scotia Capital Inc. and/or its affiliates have undertaken an underwriting liability with respect to equity or
debt securities of, or have provided advice for a fee with respect to, this issuer.
V0151 Scotia Capital Inc. is acting as financial advisor to Crescent Point Energy Corp in connection with the announced sale of its
southeast Saskatchewan non-core assets.
V0168 Scotia Capital Inc. is acting as financial advisor to Crescent Point Energy Corp. in relation to the announced acquisition of the
Kaybob Duverney Assets from Shell Canada Energy, an affiliate of Royal Dutch Shell plc.
V0173 Scotia Capital Inc. is acting as financial advisor to Tourmaline Oil Corp. in the announced agreement to acquire privately owned
Black Swan Energy Ltd.
V0179 Scotia Capital Inc. acted as financial advisor to Vermilion Energy Inc. on the Corrib Acquisition.
V0181 Scotia Capital Inc. is acting as financial advisor to Cenovus Energy Inc. on the announced sale of its Tucker oil sands asset to
Strathcona Resources Ltd.
This report is intended for replaceme@bluematrix.com. Unauthorized distribution of this report is prohibited.

V0185 Scotia Capital Inc. acted as advisor to Entropy Inc., a subsidiary of Advantage Energy Ltd., for financing in relation to the announced
$300 Million Investment Agreement with Brookfield Renewable.
V0188 Scotia Capital Inc. is acting as financial advisor to Suncor Energy Inc. in relation to the announced sale of Suncor Energy Norge AS.
VS0589 Research Associate Analyst Kevin Fisk visited the Kearl oil sands project, in Wood Buffalo, Alberta, on March 19, 2019. Full payment
was received from the issuer for the travel-related expenses incurred by the Research Associate to visit this site.

 
Global Equity Research 8
 Daily Edge | Pre-market
  
Wednesday, June 29, 2022

  Rating and Price Target History

Whitecap Resources Inc. (WCP-T) as of June 28, 2022 (in CAD)

03-21-2019 08-27-2019 11-01-2019 01-14-2020 03-18-2020 04-07-2020 05-01-2020 01-20-2021 04-15-2021 06-09-2021 07-15-2021
Price: 4.83 Price: 3.45 Price: 3.84 Price: 5.28 Price: 0.78 Price: 1.45 Price: 1.78 Price: 5.27 Price: 5.85 Price: 6.27 Price: 5.80
Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP
Target: 7.75 Target: 7.25 Target: 6.50 Target: 7.50 Target: 2.00 Target: 2.25 Target: 2.50 Target: 6.00 Target: 6.50 Target: 7.00 Target: 7.50
14

12
10

Price (CAD)
8
6
4
2

0
Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22

10-14-2021 01-13-2022 03-08-2022 04-18-2022 06-08-2022

Price: 7.71 Price: 8.39 Price: 10.26 Price: 11.28 Price: 12.54
Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP
This report is intended for replaceme@bluematrix.com. Unauthorized distribution of this report is prohibited.

Target: 9.00 Target: 9.25 Target: 11.00 Target: 12.00 Target: 13.00

*Represents the value(s) that changed.

Ratings Legend: FS=Focus Stock; SO=Sector Outperform; SP=Sector Perform; SU=Sector Underperform; T=Tender; UR=Under Review; CS=Coverage Suspended; DC=Discontinued Coverage
Source: Scotiabank GBM estimates; FactSet.

 
Global Equity Research 9
 Daily Edge | Pre-market
  
Wednesday, June 29, 2022

  Definition of Scotiabank, Global Banking and Markets Equity Research Ratings

Scotiabank has a three-tiered rating system, with ratings of Sector Outperform, Sector Perform, and Sector Underperform. Each Research
Analyst assigns a rating that is relative to his or her coverage universe or an index identified by the Research Analyst that includes, but is not
limited to, stocks covered by the Research Analyst.

The rating assigned to each security covered in this report is based on the Scotiabank, Global Banking and Markets Research Analyst’s 12-
month view on the security. Research Analysts may sometimes express in research reports shorter-term views on these securities that may
impact the price of the equity security in a manner directly counter to the Research Analyst’s 12-month view. These shorter-term views
are based upon catalysts or events that may have a shorter-term impact on the market price of the equity securities discussed in research
reports, including but not limited to the inherent volatility of the marketplace. Any such shorter-term views expressed in research report are
distinct from and do not affect the Research Analyst’s 12-month view and are clearly noted as such.

Ratings
 
 

Sector Outperform (SO) Other Ratings

The stock is expected to outperform the average 12-month total
return of the analyst’s coverage universe or an index identified by Under Review – The rating has been temporarily placed under
the analyst that includes, but is not limited to, stocks covered by the review, until sufficient information has been received and assessed
This report is intended for replaceme@bluematrix.com. Unauthorized distribution of this report is prohibited.

analyst. by the analyst.

Sector Perform (SP) Tender – As of January 25, 2021, Scotiabank GBM discontinued the
Tender rating.
The stock is expected to perform approximately in line with the
average 12-month total return of the analyst’s coverage universe or Risk Ranking
an index identified by the analyst that includes, but is not limited to,
The Speculative risk ranking reflects exceptionally high financial
stocks covered by the analyst.
and/or operational risk, exceptionally low predictability of financial
Sector Underperform (SU) results, and exceptionally high stock volatility. The Director of
Research and the Supervisory Analyst jointly make the final
The stock is expected to underperform the average 12-month total
determination of the Speculative risk ranking.
return of the analyst’s coverage universe or an index identified by
the analyst that includes, but is not limited to, stocks covered by the
analyst.

Focus Stock (FS)

As of April 29, 2019, Scotiabank GBM discontinued the Focus
Stock rating. A stock assigned this rating represented an analyst’s
best idea(s); stocks in this category were expected to significantly
outperform the average 12-month total return of the analyst’s
coverage universe or an index identified by the analyst that
included, but was not limited to, stocks covered by the analyst.

Ratings Distribution
As of May 31, 2022
  Companies Rated Investment Banking Service Provided
in Each Category in the Last 12 Months
Rating Count Percentage Count Percentage
Sector Outperform 267 51% 86 32%
Sector Perform 236 45% 57 24%
Sector Underperform 22 4% 1 5%

For the purposes of the ratings distribution disclosure FINRA requires members who use a ratings system with terms different than
“buy,” “hold/neutral” and “sell,” to equate their own ratings into these categories. Our Sector Outperform, Sector Perform, and Sector
Underperform ratings are based on the criteria above, but for this purpose could be equated to buy, neutral and sell ratings, respectively.

 
Global Equity Research 10
 Daily Edge | Pre-market
  
Wednesday, June 29, 2022

  General Disclosures
This document is for distribution only as may be permitted by law. It is not directed to, or intended for distribution to or use by, any person
or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication,
availability or use would be contrary to law or regulation or would subject Scotiabank to any registration or licensing requirement within
such jurisdiction. It is published solely for information purposes; it is not an advertisement nor is it a solicitation or an offer to buy or sell any
financial instruments or to participate in any particular trading strategy.

No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information
contained in this document except with respect to information concerning Bank of Nova Scotia (TSX: BNS; NYSE: BNS). This document is not
intended to be a complete statement or summary of the securities, markets or developments referred to in this document. Scotiabank does
not undertake to update or keep current the information contained herein, nor make any commitment as to the frequency of publication.

If you are affected by EU MiFID or the onshored UK MiFID regime, you must advise us in writing at trade_supervision@scotiabank.com.

Any opinions expressed in this document may change without notice and may differ or be contrary to opinions expressed by other business
areas or groups of Scotiabank. Any statements contained in this document attributed to a third party represent Scotiabank’s interpretation
of the data, information and/or opinions provided by that third party either publicly or through a subscription service, and such use and
interpretation have not been reviewed by the third party. Nothing in this document constitutes a representation that any investment
This report is intended for replaceme@bluematrix.com. Unauthorized distribution of this report is prohibited.

strategy or recommendation is suitable or appropriate to an investor's individual circumstances or otherwise constitutes a personal
recommendation. Investments involve risks, and investors should exercise prudence and their own independent judgement in making their
investment decisions and carefully consider any risks involved.

The financial instruments that may be described in this document may not be eligible for sale in all jurisdictions or to certain categories of
investors. Instruments such as options, derivative products, and futures are not suitable for all investors, and trading in these instruments
is considered risky. Mortgage and asset-backed securities may involve a high degree of risk and may be highly volatile in response to
fluctuations in interest rates or other market conditions. Foreign currency rates of exchange may adversely affect the value, price, or income
of any security or related instrument referred to in this document. For investment advice, trade execution, or other enquiries, clients should
contact their local sales representative. The value of any investment or income may go down as well as up, and investors may not get back
the full amount invested. Past performance is not necessarily a guide to future performance.

To the full extent permitted by law, neither Scotiabank nor any of its directors, employees or agents accepts any liability whatsoever for
any direct or consequential loss arising from any use of the information or this document. Nothing in this document constitutes financial,
investment, tax, accounting or legal advice. Investors should seek their own legal, financial and tax advice regarding the appropriateness
of investing in any securities or pursuing any strategies discussed in the document. Any prices stated in this document are for information
purposes only and do not represent real-time valuations for individual securities or other financial instruments. There is no representation
that any transaction can or could have been effected at those prices, and any prices do not necessarily reflect Scotiabank's internal books
and records or theoretical model-based valuations and may be based on certain assumptions. Different assumptions by Scotiabank or
any other source may yield substantially different results. All pricing of securities in reports is based on the closing price of the securities'
principal marketplace on the night before the publication date, unless otherwise explicitly stated.

The Research Analyst(s) responsible for the preparation of this document may interact with trading desk personnel, sales personnel and
other parties for the purpose of gathering, applying and interpreting market information.

In the normal course of offering investment and banking products and services to clients, Scotiabank may act in several capacities (including
issuer, market maker, underwriter, distributor, index sponsor, swap counterparty, and calculation agent) simultaneously with respect to
a product, giving rise to conflicts of interest. Scotiabank uses controls such as information barriers to manage conflicts should they arise.
Scotiabank and its affiliates, officers, directors, and employees may have long or short positions (including hedging and trading positions),
trade as principal and buy and sell in instruments or derivatives identified herein; such transactions or positions may be inconsistent with
the opinions expressed in this document.

Recipients of this document should expect that Scotiabank will from time to time perform services (including investment banking or capital
market services) in connection with the services and activities described in this document and that they perform services for and engage in
transactions with other market participants, including the issuers of certain of the investments underlying the transactions herein.

The information in this document has been prepared without taking into account any investor's objectives, financial situation or needs, and
investors should, before acting on the information, conduct independent due diligence when making an investment decision and consider
the appropriateness of the information, having regard to their objectives, financial situation and needs. For further information, please
contact your sales representative.

Scotiabank specifically prohibits the redistribution of this document in whole or in part without Scotiabank's prior written permission, and
Scotiabank accepts no liability whatsoever for the actions of third parties in this respect. Images may depict objects or elements that are
protected by third-party copyright, trademarks and other intellectual property rights.

 
Global Equity Research 11
 Daily Edge | Pre-market
  
Wednesday, June 29, 2022
Equity
  research reports published by Scotiabank are initially and simultaneously made available electronically to intended recipients through
its proprietary research website, ScotiaView, e-mail, and through third-party aggregators. The mediums in which research is disseminated
to clients may vary depending on client preference as to the frequency and manner of receiving research reports. Institutional clients with
questions regarding distribution of equity research or who wish to access the proprietary model used to produce this report should contact
Scotiabank at 1-800-208-7666.

A list of all investment recommendations in an equity security or issuer that have been disseminated during the preceding 12 months is
available at the following location: www.gbm.scotiabank.com/disclosures.

 Additional Disclosures

Australia: This report is provided in Australia by the Bank of Nova Scotia, an APRA-regulated Authorised Deposit-Taking Institution (Foreign
Bank ADI) holding an Australian Financial Services License (AFSL).

Canada: Distributed to eligible Canadian persons by Scotia Capital Inc., a registered investment dealer in Canada.

Chile: This report is distributed by Scotia Corredora de Bolsa Chile Limitada, a subsidiary of The Bank of Nova Scotia.

China: The research report may not be offered, sold or delivered, or offered or sold or delivered to any person for reoffering or resale or
This report is intended for replaceme@bluematrix.com. Unauthorized distribution of this report is prohibited.

redelivery, in any such case directly or indirectly, in Mainland China (excluding Hong Kong, Macau and Taiwan, “China”) in contravention of
any applicable laws.

This research report does not constitute an offer to sell or the solicitation of an offer to buy any securities in Mainland China (excluding Hong
Kong, Macau and Taiwan, "China") to any person to whom it is unlawful to make the offer or solicitation in China.

The issuer does not represent that this research report may be lawfully distributed, or that any securities may be lawfully offered, in
compliance with any applicable registration or other requirements in Mainland China (excluding Hong Kong, Macau and Taiwan, "China"), or
pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular,
no action has been taken by the issuer which would permit a public offering of any securities or distribution of this document in China.
Accordingly, the securities are not being offered or sold within China by means of this research report or any other document. Neither this
research report nor any advertisement or other offering material may be distributed or published in China, except under circumstances that
will result in compliance with any applicable laws and regulations.

Colombia: This report is distributed in Colombia by The Bank of Nova Scotia (“Scotiabank”) or Scotia Capital Inc. (“SCI”) through the
Representation in Scotiabank Colpatria S.A. and/or Scotia Securities (Colombia) S.A. Sociedad Comisionista de Bolsa authorized by the
Financial Superintendence of Colombia via Resolutions 1377 of 2010, 058 of 2014, 226 of 2015 and 1070 of 2021. This document does not
contain any type of investment advice nor does it aim to provide advice. This report is prepared by analysts employed by Scotiabank and
certain of its affiliates, including SCI. This report is strictly private and confidential and may not be reproduced or used for any other purpose
by the recipient of this report or provided to any person or entity other than the recipient of this report.

Hong Kong: This report is distributed by The Bank of Nova Scotia Hong Kong Branch, which is authorized by the Securities and Future
Commission to conduct Type 1, Type 4 and Type 6 regulated activities and regulated by the Hong Kong Monetary Authority.

Japan: This research report is provided for information purposes only and it is not intended to solicit any orders for securities transactions or
commodities futures contracts. While we believe that the data and information contained in this research report are obtained from reliable
sources, we do not guarantee the accuracy or completeness of the data and information.

Mexico: The information contained in this report is for informational purposes only and is not intended to influence the decision of the
addressee in any way whatsoever with respect to an investment in a certain type of security, financial instrument, commodity, futures
contract, issuer, or market, and is not to be construed as an offer to sell or a solicitation of an offer to buy any securities or commodities
futures contracts. Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat, is not responsible for the outcome of any
investment performed based on the contents of this research report. The analysis contained in this research report reflects exclusively the
point of view of the Analysts responsible for its preparation. The Analysts did not receive any compensation other than from the Financial
Entity or Investment Advisor to which they provide their services or from legal entities that belong to the same Financial Group or Business
Group.

Peru: This report is distributed by Scotiabank Peru SAA, a subsidiary of The Bank of Nova Scotia. This report is prepared by analysts
employed by The Bank of Nova Scotia and certain of its affiliates, including Scotia Capital Inc.

Singapore: For investors in the Republic of Singapore, this document is provided via an arrangement with BNS Asia Limited pursuant to
Regulation 32C of the Financial Advisers Regulations. The material contained in this document is intended solely for accredited, expert or
institutional investors, as defined under the Securities and Futures Act 2001. If there are any matters arising from, or in connection with this

 
Global Equity Research 12
 Daily Edge | Pre-market
  
Wednesday, June 29, 2022
material,
  please contact BNS Asia Limited, located at 1 Raffles Quay, #20-01 North Tower, One Raffles Quay, Singapore 048583, telephone:
+65 6305 8388.

This document is intended for general circulation only and any recommendation that may be contained in this document concerning an
investment product does not take into account the specific investment objectives, financial situation, or particular needs of any particular
person, and advice should be sought from a financial adviser based in Singapore regarding the suitability of the investment product, taking
into account the specific investment objectives, financial situation, or particular needs of any person in receipt of the recommendation,
before the person makes a commitment to purchase the investment product.

BNS Asia Limited and/or its affiliates may have in the past done business with or may currently be doing or seeking to do business with
the companies or issuers covered in this report. The information provided or to be provided or actions taken by or to be taken by BNS Asia
Limited and/or its affiliates in such circumstances may be different from or contrary to the discussion set out in this report.

United Kingdom and the rest of Europe: Except as otherwise specified herein, this material is distributed by The Bank of Nova Scotia,
London branch (“BNS London”), Scotiabank Europe plc, or Scotiabank (Ireland) Designated Activity Company to persons who are eligible
counterparties or professional clients. BNS London is authorised by the Prudential Regulation Authority (PRA) and subject to regulation by
the Financial Conduct Authority (FCA) and limited regulation by the PRA. Scotiabank Europe plc is authorised by the PRA and subject to
regulation by the FCA and PRA. Scotiabank (Ireland) Designated Activity Company is authorised and regulated by the Central Bank of Ireland
(CBI).
This report is intended for replaceme@bluematrix.com. Unauthorized distribution of this report is prohibited.

United States: United States: Distributed to U.S. persons by Scotia Capital (USA) Inc. or by an authorized subsidiary or affiliate of The Bank of
Nova Scotia that is not registered as a U.S. broker-dealer (a ‘non-U.S. affiliate’) to major U.S. institutional investors only. Scotia Capital (USA)
Inc. accepts responsibility for the content of a document prepared by its non-U.S. affiliate (s) when distributed to U.S. persons by Scotia
Capital (USA) Inc. To the extent that a U.S. person wishes to transact in the securities mentioned in this document through Scotiabank, such
transactions must be effected through Scotia Capital (USA) Inc., and not through a non-U.S. affiliate. The information in this document
has not been approved, disapproved, or recommended by the U.S. Securities and Exchange Commission (“SEC”), any state securities
commission in the United States or any other U.S. or non-U.S. regulatory authority. None of these authorities has passed on or endorsed the
merits or the accuracy or adequacy of this document. Any representation to the contrary is a criminal offense in the United States.

™ Trademark of The Bank of Nova Scotia. Used under license, where applicable. Scotiabank, together with "Global Banking and Markets,"
is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and
certain of its affiliates in the countries where they operate, including Scotia Capital Inc., Scotia Capital (USA) Inc., Scotiabank Europe plc,
Scotiabank (Ireland) Designated Activity Company, Scotiabank Inverlat S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank
Inverlat, Scotia Inverlat Casa de Bolsa S.A. de C.V., Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Derivados S.A. de C.V. – all members
of the Scotiabank Group and authorized users of the mark. The Bank of Nova Scotia is incorporated in Canada with limited liability. Scotia
Capital Inc. is a member of the Canadian Investor Protection Fund and regulated by the Investment Industry Regulatory Organization of
Canada. Scotia Capital (USA) Inc. is a broker-dealer registered with the SEC and is a member of FINRA, NYSE, NFA and SIPC. BNS London
is authorised by the Prudential Regulation Authority (“PRA”) and subject to regulation by the Financial Conduct Authority (“FCA”) and
limited regulation by the PRA. Scotiabank Europe plc is authorised by the PRA and subject to regulation by the FCA and PRA. Scotiabank
(Ireland) Designated Activity Company is authorised and regulated by the CBI. Scotiabank Inverlat, S.A., Institución de Banca Múltiple,
Grupo Financiero Scotiabank Inverlat , Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat, and Scotia Inverlat
Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities.

© The Bank of Nova Scotia 2022

This report and all the information, opinions, and conclusions contained in it are protected by copyright. This report may not be reproduced
in whole or in part, or referred to in any manner whatsoever, nor may the information, opinions, and conclusions contained in it be referred
to without the prior, express consent of Scotiabank, Global Banking and Markets. The Bank of Nova Scotia, Scotiabank, and Global Banking
and Markets logo and names are among the registered and unregistered trademarks of The Bank of Nova Scotia. All rights reserved.
 
Global Equity Research 13