corporate summary - cavalier energy inc€¦ · manager, surface facilities • mr. sudlow has 15...

Corporate Presentation February 2013

Table of Contents

1. Corporate Summary

2. Grand Rapids Overview

3. Hoole Project Details

4. Exploration Portfolio

Appendices

A. Management and Director Biographies

B. Forward Looking Statements Advisory

Corporate Presentation

1

2

Corporate Summary

High Quality Oil Sands Asset Base

• 100% ownership of over 202,000 net acres of oil sands leases

• Cavalier’s oil sands and Carbonate bitumen assets have best estimate discovered exploitable bitumen in place (“DEBIP”) of 3.2 Bbbls

and undiscovered exploitable bitumen in place (“UEBIP”) of 4.5 Bbbls(1)

Eagles Nest asset provides additional upside with discovered bitumen in place (“DBIP”) of 0.4 Bbbls and undiscovered bitumen in

place (“UDBIP”) of 1.6 Bbbls(1)

• Assets are in areas which are currently seeing significant development activity

Near Term Production from Large Resource Position at Hoole

• Multi phase Grand Rapids project with expected production capacity of 80,000+ bbl/d by 2022

• Probable reserves of 93 MMbbls (B-tax 10% NPV of $379 million) and additional best estimate economic contingent resources of 719

MMbbls (B-tax 10% NPV best estimate of $1.9 billion)(2)

• Submitted 10,000 bbl/d Phase 1 application in November 2012 with first production expected in 2016

Significant Upside in Bitumen Carbonates Resource at Saleski and Other Lands

• Best estimate 1.6 Bbbls DEBIP and 4.5 Bbbls UEBIP with best estimate contingent resources of 492 MMbbls(3)

• Offsetting Laricina’s producing pilot at Saleski that has recently demonstrated peak production of 1,200 bbl/d from a single well-pair(4)

• Cavalier expects to develop its carbonates following broader industry commercialization/optimization

Strong Management Team and Board Combined with Highly Experienced and Successful Shareholder

• Experience building large oil projects, with over $5 billion executed on in a variety of operating and business environments

• History of executing value enhancing transactions that have generated material returns and liquidity for shareholders

• Opportunity for additional growth through strategic acquisitions

• Paramount Resources Ltd. (“Paramount”), Cavalier’s current shareholder, has a proven track record of creating significant value in the

oil sands across multiple transactions over the past decade (e.g. NAOSC and MEG)

Highlights

3

_______________

See forward looking statement advisory for disclosure on reserves and resource information and definitions.

1. McDaniel reports effective December 31, 2012, October 31, 2011 and April 30, 2010.

2. Hoole volumes and NPV as per McDaniel report effective December 31, 2012.

3. Carbonates volumes are contingent resources (technology under development) as per McDaniel report effective October 31, 2011.

4. Laricina September 2012 corporate presentation.

Cavalier is a private pure play in situ oil sands company with a very strong management

team and a highly experienced shareholder

Reserves Contingent Resources Net Present Value (B-Tax 10%)

Probable Low Best High

Asset Undev. Estimate Estimate Estimate

MMbbls MMbbls MMbbls MMbbls

Hoole(2) 93 511 719 903

Saleski Carbonates(3) - - 380 567

Other Carbonate Leases(3) - - 111 184

_______________

1. See forward looking statement advisory for disclosure on reserves and resource information and definitions.

2. Hoole volumes are probable undeveloped reserves and economic contingent resources as per McDaniel report effective December 31, 2012.

3. Carbonates volumes are contingent resources (technology under development) as per McDaniel report effective October 31, 2011.

Background

• In November 2011, Paramount contributed seed capital

and all of its oil sands and carbonate bitumen assets to

Cavalier

• Cavalier has a 100% working interest in its main project

areas

• Cavalier has 75MM shares outstanding, 100% owned by

Paramount

• Cavalier is targeting to produce 80,000+ bbl/d from the

Grand Rapids formation at its Hoole property with

significant additional development potential from its

portfolio of exploration lands

− Includes carbonates properties adjacent to and on

trend with the Laricina / Osum Saleski project, Eagles

Nest and Christina Lake

• New capital to be raised to fund ongoing development and

the evaluation of opportunities for the achievement of

greater scale in core areas

• Cavalier plans to remain private through initial

development phase

• Cavalier is led by Dr. Will Roach, former President and

CEO of UTS Energy Corporation

− UTS was sold to Total E&P Canada Ltd. for $1.5 billion

in 2010 plus the spinout of SilverBirch, which was sold

for an additional $500 million in 2012

Cavalier Asset Portfolio Overview

Corporate Snapshot

4

Reserves and Contingent Resource Summary(1)

Significant Resource Base with Attractive Economics

• Probable reserves of 93 MMbbls (B-tax 10% NPV of $379 million)

and best estimate economic contingent resources of 719 MMbbls

(B-tax 10% NPV best estimate of $1.9 billion)(1)

• Targeting the laterally continuous and homogeneous Grand

Rapids formation

• Use of proven SAGD technology is expected to result in strong

operating netbacks across a wide range of oil prices

• Proximal to high grade road networks, power and gas

infrastructure and substantial announced bitumen takeaway and

diluent return capacity

• Multi phase project with estimated total production capacity of

80,000+ bbl/d by 2022

• Growth opportunities through strategic acquisitions

Development Stage Project with Expected Near Term Production

• Filed regulatory application in November 2012 for 10,000 bbl/d

Phase 1 with first production expected in 2016

– 93 MMbbls of probable reserves(1) at Phase 1 were

recognized in Q1 2013 as a result

• Delineation drilling for Phase 1 completed in 2010 (74 wells)

• Environmental modeling complete and water source/disposal is

selected, subject to regulatory approval

• Preliminary front end engineering and design work completed

• Risk mitigation strategy being implemented through construction

of modularized components built off-site

• Ability to truck production volumes for Phase 1 until area pipeline

infrastructure is built

Hoole Project Overview

5

_______________

1. Hoole volumes and NPV as per McDaniel report effective December 31, 2012.

See forward looking statement advisory for disclosure on reserves and resource information and definitions.

Hoole is targeted to be a material 80,000+ bbl/d

project located in the core of the Grand Rapids

resource play with near term production expected

and multiple opportunities for achievement of

greater scale

Overview of Carbonates Assets

6

Cavalier’s Carbonates Assets Growth Potential in an Emerging Resource Play

• Over 128,000 acres within the Carbonate portfolio located on the

highly prospective Grosmont Carbonate Trend

• Holdings are located adjacent to the regional projects of Laricina,

Osum and Husky and proximate to those of several majors

including Shell, ConocoPhillips and Suncor

• Best estimate 1.6 Bbbls DEBIP and 4.5 Bbbls UEBIP with best

estimate contingent resource of 492 MMbbls(1)

• Advancement / selection of optimal extraction technologies by

industry peers will set the pace for Cavalier’s development of its

Carbonates portfolio following Hoole advancement

• Ongoing development of new technologies by industry peers

also expected to improve economics and recovery factors

Increasing industry activity in the carbonates continues to

prove up the resource potential of Cavalier’s Properties

_______________

1. Carbonates volumes are contingent resources (technology under development) as per McDaniel report effective

October 31, 2011. See forward looking statement advisory for disclosure on resource information and definitions.

Highly Experienced and Successful Shareholder

• Paramount is TSX listed with a market capitalization of ~$3 billion; insider ownership > 50%

– Founded in 1974 by Clayton Riddell, Chairman and CEO

• Strong history of creating shareholder value

• Paramount has spun-out three public entities: Perpetual Energy, Trilogy Energy and MGM Energy which have a combined

market cap of ~$3.5 billion

Paramount currently holds ~16% interest in Trilogy and ~14% interest in MGM Energy

• Proven, successful explorer and partner in oil sands, demonstrated by ~$1.0B in value realized over the past decade

(excluding Cavalier):

– Acquired, successfully delineated and then sold leases in the southern Athabasca region which form the backbone of

what today is MEG Energy’s successful Christina Lake Project

– Partnered with North American Oil Sands Corp. (“NAOSC”) to combine and further delineate oil sands leases and to

grow the asset base; ultimately becoming a shareholder of NAOSC through the contribution of Paramount’s interests in

the properties

– Statoil acquired NAOSC in 2007 for $2.2 billion; Paramount owned ~30% of NAOSC generating $680 million in cash

proceeds

– Sold Paramount’s delineated Surmont project to MEG Energy in 2007 for $300 million including $150 million in cash and

3.7 million MEG shares

• Service agreement in place between Paramount and Cavalier covering the provision of a wide range of services by

Paramount including drilling and completions, land, marketing, accounting, human resources and community relations

Cavalier’s Current Shareholder

Paramount Resources

7

Paramount, Cavalier’s current shareholder, has a proven track record of creating significant value in the oil sands

across multiple transactions over the past decade

Management Team

and Board of Directors

8

Cavalier’s executive team has a proven track record of creating value for shareholders and significant experience

bringing large scale oil projects on stream

Directors Current Role Public Company Directorships

James Riddell

Executive Chairman

• President and Chief Operating Officer, Paramount

Resources, Chief Executive Officer, Trilogy Energy

• Big Rock Brewery, MGM Energy, Paramount Resources, Sonde

Resources and Trilogy Energy

Clayton Riddell

• Chief Executive Officer, Paramount Resources • Alaris Royalty, Paramount Resources, Perpetual Energy, MGM

Energy, Tourmaline Oil and Trilogy Energy

Mitchell Shier • General Counsel, Corporate Secretary & Manager, Land,

Paramount Resources

• Trilogy Energy and Alaris Royalty

Bernard Lee • Chief Financial Officer, Paramount Resources

Management Experience

William Roach, Ph.D., P.Eng.

Chief Executive Officer and

Director

• Dr. Roach has 30 years of experience, more recently as President & CEO of UTS Energy between 2004 and the company’s sale to

Total in October 2010. Before then he held various positions with Husky Energy (where he oversaw all operational activities for the

$2.3 billion White Rose east coast offshore project) as well as British Borneo and Royal Dutch Shell

Martin Sandell, P.Eng.

Chief Operating Officer

• Mr. Sandell has over 30 years of experience and was formerly VP Engineering at UTS Energy until its sale in October 2010. He

previously held senior engineering positions with Husky Energy and British Borneo

Philip Moore, CFA

Chief Financial Officer

• Mr. Moore has 15 years of experience in capital markets, most recently as Managing Director, Investment Banking of Paradigm

Capital. Prior thereto he held Director positions at Cormark Securities and BMO Nesbitt Burns

Jina Abells Morissette, LLB

General Counsel & Corporate

Secretary

• Ms. Morissette has 15 years of legal experience in the oil and gas industry. Prior to joining Cavalier in 2012, she held similar

positions at SilverBirch Energy from October 2010 through to its sale in April 2012 and UTS Energy from 2004 through to its sale in

October 2010 and prior to that was Senior Legal Counsel of Husky Energy from 1999 to 2004

William Robinson, P.Geol.

VP, Geoscience

• Prior to joining Cavalier in 2012, Mr. Robinson had approximately 10 years experience with Paramount Resources overseeing the

exploration and delineation of its oil sands assets

Jeff Peterson, MSc., P.Eng.

Manager, Reservoir

Engineering

• Mr. Peterson has 15 years of engineering experience. Prior to joining Cavalier in 2012 he held various roles including Team Lead,

Saleski Development and Senior Reservoir Engineer, Germain at Laricina Energy where he was the co-inventor of a steam and

solvent process currently in the patent review stage

Paul Sudlow, P.Eng.

Manager, Surface Facilities

• Mr. Sudlow has 15 years of experience in heavy oil facilities, primarily in in-situ projects. Prior to joining Cavalier in 2012, he was a

project manager at IMV Projects where he managed projects for Cenovus, Laricina, Shell, CNRL and Devon and is the co-inventor of

a steam generation technology

9

Grand Rapids Overview

Grand Rapids Resource Overview

10

Key Attributes of the Grand Rapids

• Developable using proven SAGD drilling, completion and production techniques

• Laterally continuous sand body provides for repeatable surface development template

• Homogenous reservoir enables more predictable drilling and well production profiles

• Ostensibly no occurrence of top, middle or bottom water in core area; contributes to better reservoir performance and

steam oil ratios

• Competent extensive top seal

• Reservoir depth of ~250m permits use of established drilling and completion techniques

Grand Rapids Cross Section Grand Rapids Shore Face

• Large, laterally continuous, homogeneous shore face

sand in the Grand Rapids formation is the cornerstone of

Cavalier’s asset base

Grand Rapids Formation Generating Significant Interest

• Industry peers have already applied for Grand Rapids

SAGD projects totaling over 450,000 bbl/d of production

capacity(1):

– Cenovus: 180,000 bbl/d (pilot achieved first oil in Q3

2011 and filed commercial application in December

2011); 1st 60,000 bbl/d phase expected to start in 2017

– Laricina: 155,000 bbl/d (commercial application filed Q4

2011); First 5,000 bbl/d commercial phase under

construction (first steam scheduled for Q2 2013); 30,000

bbl/d Phase 2 expected to start up in 2015

– BlackPearl: 80,000 bbl/d (pilot achieved first oil in Q3

2011 and filed commercial application in May 2012)

– Koch: 40,000 bbl/d (10,000 bbl/d commercial application

filed)

Proximate to Significant Pre-Existing Producing Area

• Hoole is directly adjacent to Cenovus and Canadian

Natural’s Pelican Lake projects that are currently producing

~65,000 bbl/d from the Wabiskaw formation

– Benefits from having significant pre-existing

infrastructure (pipelines, natural gas, electricity, roads,

etc.) in place

Grand Rapids Industry Activity

11

Hoole is targeted to be a material 80,000+ bbl/d project

located in the core of the Grand Rapids resource play

with opportunities for achievement of greater scale

_______________

1. All based on publicly available information.

Grand Rapids Infrastructure

12 _______________


Longer-term, a number of export pipeline alternatives

exist

Area Pipeline Infrastructure(1)

• Significant level of industry activity in the vicinity of the

Hoole Grand Rapids Project and other areas to the north

has resulted in a number of recently proposed new

pipelines in the area

– Laricina’s Stony Mountain Pipeline is expected to be in

service mid-2015 and mid-2016, for crude and diluents

respectively

• Capacity of up to 200,000 bbl/d for blended crude oil

and 70,000 bbl/d for diluent

– TransCanada & PetroChina’s Grand Rapids Pipeline

project is expected to be in service by early 2017

• Capacity of up to 900,000 bbl/d for crude oil and

330,000 bbl/d for diluent

• The Plains Midstream Rainbow Pipeline and the Pembina

Nipisi pipeline are routed approximately 100 km to the west

and have terminals at Nipisi

– Currently constructing the parallel Rainbow II pipeline to

supply diluent to Nipisi from Edmonton

• Ability to truck production volumes for Phase 1 until area

pipeline infrastructure is built

Grand Rapids Project Comparison(1)

13

Well Log Locations Map Operator Laricina (1) Cenovus (2) Cavalier (3) BlackPearl (4)

Project Germain Pelican Hoole BlackRod

Effective Φ 34% 30% 30% 30%

K 2 – 6 D 1 – 4 D 1 – 4 D 1 – 5 D

D 200m 225m 250m 300m

H (up to) 24m 25m 27m 26m

Oil Saturation 75% 65% 65% 60%

Viscosity 1,370,000cp >1,000,000cp 200,000–

2,000,000cp

N/A

Rf 49% / 55%(3) 54% 52% 49%

2P Reserves(2) 387 MMbbls - 93 MMbbls 182 MMbbls

Contingent Resource(2) 951 MMbbls 1,600 MMbbls 719 MMbbls 476 MMbbls

Pilot Yes Yes N/A Yes

On Production Date 2013 Operating 2016 Operating

Application Date Nov. 2011 Apr. 2010 Nov. 2012 May 2012 _______________


2. See forward looking statement advisory for disclosure on reserves and resource information and definitions.

3. 49% of the producible bitumen-in-place under SAGD operations and 55% of the producible bitumen-in-place under SC-SAGD operations.

Cenovus’ Comparison of the

Grand Rapids

14

_______________

Source: Cenovus’ Grand Rapids project application.

15

Hoole Project Details

Management Hoole Net Pay Mapping

16

Grand Rapids Reservoir Continuity

• Large, homogeneous shore face sand in the

Grand Rapids formation

• Laterally continuous sand body provides for

repeatable surface development template

• Homogenous reservoir enables more predictable

drilling and well production profiles

• Ostensibly no occurrence of top, middle or

bottom water in core area; contributes to better

reservoir performance and steam oil ratios

Early Infrastructure Already Present

• Hoole has easy surface access from existing high grade

road networks and is proximal to existing power and gas

infrastructure

• Reduces capital spending and facility development

time

Advanced Development Plans

• Central processing facility and well pad locations identified

(see map from application at left)

Sizing of Facilities and Equipment

• Surface facilities designed for conservative steam-oil-

ratios (“SORs”) and liquids handling assumptions

– Facility size a function of desired steam generation

capacity with oil production a derivative of steam

• Utilize largest modularized size for evaporator and

corresponding drum boilers

• Limit field construction activities throughout plant site by

utilizing modularization wherever feasible

Conventionality

• Use proven execution strategies and methods

• Phase 1 to use steam only, with allowances to easily add

solvent in the future

Focus on Capital Efficiencies

• Controlling spending and execution risks through 100%

ownership in main operating areas

Hoole Phase 1

Layout & Development Philosophy

17

Phase 1 Schedule

• Submitted application in November 2012 and began front-

end engineering

• Expect regulatory approval in Q1 2014 and begin site

preparation, module fabrication and drilling initial well-

pairs

• Assuming approval, complete construction and begin first

steam in H2 2015

• First production from Phase 1 is expected in 2016

Phase 1 Capital Requirements ($MM)(1)

• Phase 1 capital costs estimated at approximately

$45,000/bbl/d:

• The capital cost intensity of $45,000/bbl/d quoted above

assumes an SOR of 3.5; stronger reservoir performance

is expected to reduce this number

• Construction costs can be mitigated through the

incorporation of modularized components built off site

Hoole Phase 1

18

Phase 1 sized for steam capacity; capital cost intensity of approximately $45,000/bbl/d

based on conservative cumulative SOR _______________

1. Management’s estimate based on Pre-FEED engineering and Class 4 Estimates, stated in 2012 dollars.

2. Cumulative steam oil ratios (“CSOR”) is the cumulative ratio of steam injected (in cold water equivalent) to oil produced from a SAGD well pair or Project over the life of the scheme.

3. Gas Oil Ratio.

Facilities / Infrastructure $345 - $365

Drilling & Completions 105 - 110

Total $450 - $475

Phase 1 Development Philosophy

• Use proven execution strategies and methods – Phase 1

to use steam only, with allowances to easily add solvent

in the future

• Surface facilities designed for conservative cumulative

SORs(2), GORs(3) and liquids handling assumptions

• Utilize largest modularized size for evaporator and

corresponding drum boilers

• Limit field construction activities throughout plant site by

utilizing modularization wherever predictable

• Provides data and better information for optimizing future

phases

• Standalone and not expandable, but designed to

integrate with future phases

Hoole Full Field

Development Plan

19

Management has a track record of delivering large scale projects on time and on budget

• Hoole Phase 1 application filed with the Energy Resources Conservation Board (“ERCB”) and the Alberta Environment and

Sustainable Resource Development (“AESRD”) on November 7, 2012

• Phase 2 and 3 capital costs estimated at $1.4 billion and $1.3 billion, respectively (including facilities, drilling and

completions)

20

Exploration Portfolio

Exploration Portfolio

21

_______________

1. Carbonates volumes as per McDaniel report effective October 31, 2011; Eagles Nest volumes as per McDaniel report effective April 30,

2010. See forward looking statement advisory for disclosure on resource information and definitions.


Platform for Long Term Growth in

Resource and Production Potential

• Best estimate of over 1.6 Bbbls DEBIP

and 4.5 Bbbls UEBIP(1) across six

primary project areas, five of which

have had no delineation carried out by

Cavalier or Paramount

‒ Eagles Nest provides additional

upside with DBIP of 0.4 Bbbls and

UDBIP of 1.6 Bbbls(1)

• Multiple play types including

Carbonates, Wabiskaw and McMurray

channels

• Eagles Nest located immediately north /

northwest of BP / Value Creation’s 2.7

Bbbls best estimate contingent resource

Terre de Grace Project and Athabasca’s

2.1 Bbbls best estimate contingent

resource Birch Project(2)

• Small, but highly prospective block

located immediately south of Devon’s

105,000 bbl/d Jackfish Project(2)

• Control over pace of development with

100% ownership of 239 sections of land

Exploration Assets(1)

Exploration portfolio provides

resource growth potential through

delineation of 100% owned leases

Carbonate Assets

22

Cavalier’s Carbonates Assets Growth Potential in an Emerging Resource Play

• Over 128,000 acres within the Carbonate portfolio located on the highly

prospective Grosmont Carbonate Trend

– Holdings are located adjacent to the regional projects of Laricina,

Osum and Husky and proximate to those of several majors including

Shell, ConocoPhillips and Suncor

– Cavalier’s leases, other than Saleski, have had very little delineation

carried out on them historically

• At Saleski, Cavalier has drilled 11 delineation wells, cased one well

for testing and shot five seismic lines

‒ Best estimate 1.6 Bbbls DEBIP and 4.5 Bbbls UEBIP with best

estimate contingent resource of 492 MMbbls(1)

• Offsetting Laricina pilot at Saleski has shown promising results to date

– Recent well-pair demonstrated a peak production test rate of 1,200

bbl/d and forecast second cycle SOR of 3.5 to 4.5(2)

• Advancement / selection of optimal extraction technologies by industry

peers will set the pace for Cavalier’s development of its Carbonates

portfolio following Hoole advancement

– Laricina and Osum have 2.9 Bbbls of contingent resources at the

Saleski Project with first commercial production targeted in late 2015(2)

– Husky has 10.0 Bbbls of contingent resources at Saleski with first

production targeted in 2016 (3)

– Osum has 1.8 Bbbls of contingent resources at its Saleski East and

West Projects (4)

• Ongoing development of new technologies by industry peers also

expected to improve economics and recovery factors

_______________

1. Carbonates volumes are contingent resources (technology under development) as per McDaniel report effective October

31, 2011. See forward looking statement advisory for disclosure on resource information and definitions.

2. Laricina September 2012 corporate presentation.

3. Husky October 2012 corporate presentation.

4. Osum July 2012 corporate presentation.

Laricina / Osum - Saleski Joint Venture

• Results from the 1,800 pilot project have been successful to date,

proving production potential from both the Grosmont C and D

zones and demonstrating commerciality through production rates

of 1,200 bbl/d from a single well-pair

• Submitted an update to its phase one (10,700 bbl/d) application

in October 2012 to reflect change from a traditional dual-well

SAGD design to a single horizontal well cyclic SAGD process

(“CSS”), first production is expected in late 2015

Osum - Saleski East and West

• Completed phase one delineation at Saleski East with plan to file

a 60,000 bbl/d commercial application in 2013 and first

production expected in 2018

Royal Dutch Shell - North Field

• Actively carrying out appraisal and exploration activities

• Approval received in late 2010 for North Field pilot to test

proprietary in-situ extraction and upgrading technology

• Amended the North Field application and received approval for

steam testing in late 2012

Husky - Saleski

• Husky is actively delineating its acreage and plans to file pilot

application in 2013 with first production expected in 2016

Sunshine - Harper

• Sunshine received approval for a 1,000 bbl/d CSS pilot at harper

in 2009 with first production from the pilot in 2011 which

demonstrated the mobility of bitumen under thermal stimulation.

Production tests are ongoing

Grosmont Carbonates

Recent Industry Activity(1)

23 _______________


Overview

• 15 sections of land with best estimate 1.2 Bbbls DEBIP and

O.1 UEBIP(1)

– Five seismic lines shot

• 11 delineation wells drilled; one well cased for testing

• 380 MMbbls best estimate contingent resources(1)

Saleski Grosmont Reservoir:

Porosity = 21 %, k = 1-10 D

Vuggy porosity

Depth = 300m, h = up to 50m,

Pressure = 1300 kPa

Viscosity ~ 200,000 cp

Saleski Carbonates

24

_______________

1. Carbonates volumes are contingent resources (technology under development) as per McDaniel report effective October 31, 2011. See forward looking statement

advisory for disclosure on resource information and definitions.

Cavalier’s Saleski assets are offsetting Laricina and Osum’s Saleski project

Depletion Options:

• Cyclic Steam

Stimulation

• SAGD

• Thermal Solvents

Overview

• 36 sections of land purchased in early 2012 out of CCAA

(former Oil Sands Quest)

• 6 legacy gas wells point to McMurray and Wabiskaw oil

sands potential

• McDaniel engineering report effective April 2010 assigns a

best estimate of 0.4 Bbbls of DBIP and 1.6 Bbbls of

UDBIP(1)

• Currently evaluating seismic data to validate mapping and

plan additional seismic and drilling

• Control over pace of development with 100% ownership of

land

Proximal to Industry SAGD Projects(2)

• Terre de Grace (75% BP, 25% Value Creation)

− 2.7 Bbbls of best estimate contingent resource

‒ 400,000 bbl/d production capacity

‒ Approvals in place for 10,000 bbl/d pilot project

• Birch (Athabasca)

− 2.1 Bbbls of best estimate contingent resource

‒ 155,000 bbl/d production capacity

‒ Application for 12,000 bbl/d SAGD project to be filed by

the end of 2012

• Birch Mountain (SilverWillow)

− 147 sections of which 105 remain unexplored

‒ Originally acquired by UTS before its sale to Total

‒ Seismic program to commence winter 2012/2013

Eagles Nest

25

_______________

1. As per McDaniel report effective April 30, 2010. See forward looking statement advisory for disclosure on resource

information and definitions.


Overview

• Small, but highly prospective land position located

immediately south of Devon’s 105,000 bbl/d Jackfish and

Cenovus/ConocoPhillips’ 30,000 bbl/d Kirby West

Projects and north of Devon / BP’s Pike Project

• Potential for future small modular SAGD development

options

• Jackfish (Devon)(1)

− 105,000 bbl/d capacity through three equal size

phases (Jackfish 1, 2, & 3)

− Jackfish 1 has top tier operating performance with

2.69 cumulative SOR

− Jackfish 2 began producing in June 2011

− Jackfish 3 construction is 45% complete

• Pike (BP/Devon)(1)

− 109,000 bbl/d capacity

− First phase application filed June 2012

• Kirby West (Cenovus/ConocoPhillips)(1)

− 30,000 bbl/d capacity

− Application expected to be filed in 2015

Christina/Kirby

26

_______________


27

Appendix A

Management and Director Biographies

• Dr. William Roach became Chief Executive Officer of Cavalier Energy Inc, in November 2011. Prior to that, Dr. Roach served as Chief Executive Officer of Calera in Los Gatos, California. Prior to Calera Dr. Roach was the President & Chief Executive Officer of UTS Energy where he led the Corporation's executive team and was responsible for maximizing the value growth opportunities for UTS shareholders. UTS was sold to Total E&P Canada Ltd. for $1.5 billion in 2010 plus the spinout of SilverBirch, which was sold to Teck Resources Ltd. for an additional $500 million in 2012

– While at UTS, Dr. Roach oversaw the successful identification, acquisition and

development of a significant portfolio of oil sands leases interspaced with, and

ultimately coveted by, a number of the active super majors in the area (including

Exxon Mobil, Shell and Total) growing the market capitalization from $50 million to

$2.0 billion in six years

– UTS created significant value by delineating attractively acquired exploration lands at

Frontier/Equinox and Lease 421

• In June 2007, UTS sold a 50% interest in Equinox to Teck for $200 million; in

November 2009, UTS sold its 50% interest in Lease 421 for $250 million to

ExxonMobil/Imperial Oil

• In January 2012, SilverBirch (UTS Frontier/Equinox focused spin-out) was acquired

by Teck for ~$500 million

• Dr. Roach has a successful 25 year track record directing and managing the design, construction and delivery of large capital-intensive national and international upstream oil and gas projects. Dr. Roach worked internationally for Shell, British-Borneo, and Husky Energy on the East Coast of Canada. Dr. Roach is a Professional Engineer in Canada and the UK and holds a Bachelor of Science in Metallurgy and a Ph.D. in Physical Metallurgy

Management and

Director Biographies

28

Dr. Will Roach, President & Chief Executive Officer and Director

• Mr. Martin Sandell joined Cavalier Energy at its foundation in November 2011. Prior to

that he was VP Engineering at N-Solv Corp, where he was responsible for the

development of the company’s in-situ solvent technology pilot project, and VP

Engineering of UTS Energy, where he managed the company’s interests in the Fort Hills

project.

• Mr. Sandell’s successful track record spans over 30 years as a technical professional

and manager, primarily in the design, construction and delivery of offshore and onshore

oil and gas projects and in field operations. His projects include Husky’s White Rose

project off the Canadian east coast and major international projects in the Gulf of Mexico

deepwater and in the UK and Norwegian North Sea. Mr. Sandell is a registered

Professional Engineer in Alberta and a Chartered Engineer in the UK and holds a

Bachelor of Science in Chemical Engineering.

• Mr. Moore joined Cavalier Energy in June 2012 as CFO. He has over 15 years of energy

investment banking experience and has extensive experience in capital raising and

advising Canadian and international clients across a broad range of merger and

acquisition and financial advisory mandates.

• Prior to joining Cavalier, Mr. Moore was Managing Director of Energy Investment

Banking at Paradigm Capital, Director of Energy Investment Banking at Cormark

Securities (formerly Sprott Securities Inc.) and prior to that he was with BMO Nesbitt

Burns. Mr. Moore has a Bachelor of Commerce with a major in Finance from the

University of Calgary and is a Chartered Financial Analyst and a member of the

Association for Investment Management and Research.

Management and


29

Philip Moore Chief Financial Officer

Martin Sandell Chief Operating Officer

• Ms. Abells Morissette has 15 years experience as a lawyer in the oil and gas industry. She

was previously Vice President, Legal and Administration & Corporate Secretary

SilverBirch Energy Corp where she worked from the company’s inception in 2010 until its

ultimate takeover by Teck Resources via plan of arrangement. Prior to that she was the

Vice President, General Counsel & Corporate Secretary UTS Energy, which she joined in

2004. She was involved with the successful defence of a hostile takeover bid and was an

integral part of the executive team that ultimately sold UTS.

• Prior to joining UTS, Ms. Abells Morissette was employed at Husky Energy Inc., working

for the Canadian Offshore and International Business Group. While at Husky she worked

primarily on the White Rose Project, an off-shore project located off the coast of

Newfoundland and Labrador. She has a Bachelor of Administration with a major in

marketing from the University of Regina and a LL.B. from the University of Saskatchewan.

• Prior to joining Cavalier, Mr. Robinson oversaw the exploration and delineation of

Paramount's Western Athabasca oil assets from 2002 to 2011.

• Mr. Robinson was responsible for the delineation, and involved with the sale of, assets

from Paramount to both MEG and NAOSC, and was seconded into NAOSC prior to the

sale of Paramount’s interest.

• Mr. Robinson obtained his Bachelor of Science degree in Geology from the University of

Calgary in 2002 and is a member of APEGA.

Management and


30

Jina Abells Morissette

General Counsel,

Corporate Secretary

William Robinson

Vice President

Geoscience

• Mr. Peterson has over 15 years in the energy and resource industries. Prior to joining

Cavalier in 2012, he spent 6 years at Laricina Energy Ltd. focused on the reservoir

engineering, overall project development and regulatory aspects of the Laricina’s

Germain and Saleski projects, in the Grand Rapids clastics and Grosmont carbonate

formations. Mr. Peterson was a technical specialist in Trican Well Services from 2004 to

2006 focusing on the design and execution of large hydraulic fracturing treatments

throughout the Western Canadian Sedimentary Basin.

• Mr. Peterson holds a Masters of Science in Engineering from the University of Alberta

(Rock Mechanics) and is a member of the Association of Professional Engineers,

Geologists and Geophysicists of Alberta, Society of Petroleum engineers, and the

Canadian Heavy Oil Association. He served on the board of Directors of the Canadian

then Calgary Sections of the Society of Petroleum Engineers including the role of

Section Chairman in 2009-2010.

Management and


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Jeff Peterson

Manager, Reservoir

Engineering

Paul Sudlow

Manager, Surface

Facilities

• Mr. Sudlow has over 15 years of experience in oil and gas facilities engineering and

project management, including 8 years managing in situ thermal heavy oil projects in

Alberta’s oil sands. Prior to joining Cavalier in March of 2012, Mr. Sudlow worked as an

independent consultant for IMV Projects managing facilities projects for Paramount

Resources’ Hoole and Surmont SAGD Projects, Cenovus’ Foster Creek SAGD Pads and

Pipelines, Laricina Energy’s Germain Commercial Demonstration Project and Saleski

SC-SAGD Carbonates Pilot Project and Shell’s Orion Phase 2 Commercial SAGD

Project.

• Mr. Sudlow graduated in 1995 with a Bachelor of Applied Science, Co-op, in mechanical

engineering from the University of Waterloo. He is a registered professional with APEGA

and a CHOA member. He is listed as a co-inventor in a Paramount Resources patent

application for a zero emission, zero make-up water steam generation process for

generating steam using produced water.

• Mr. Riddell joined Paramount Resources Ltd. in 1991, has been a director since 2000 and

President and Chief Operating Officer since 2002.

• Graduated from Arizona State University with a BSc in Geology (1989) and from the

University of Alberta with a Master of Science degree in Geology (1993).

• Mr. Riddell is Chairman of the Board and Chief Executive Officer of Paramount where he

has been an executive officer since the company’s formation. Until June 2002 he was also

President of Paramount.

• Mr. Riddell graduated from the University of Manitoba with a BSc (Honours) degree in

Geology. He received the J.C. Sproule Memorial Plaque from the Canadian Institute of

Mining (1994), the Stanley Slipper Gold Medal from The Canadian Society of Petroleum

Geologists (1999), an Honorary Doctor of Science degree from the University of Manitoba

(2004), and Outstanding Explorer award from the American Association of Petroleum

Geologists (2004). In 2006, Mr. Riddell was inducted to the Calgary Business Hall of Fame

and in 2008 he was made an Officer of the Order of Canada.

• Mr. Lee has been Chief Financial Officer of Paramount since 2003. Prior thereto, Mr. Lee

held a variety of senior positions with Alberta Energy Company Ltd. and its successor

EnCana Corporation, the last senior position being Vice President & Corporate Advisor,

Business Ventures, Corporate Development.

• Mr. Shier is General Counsel, Corporate Secretary and Manager, Land of Paramount,

which he joined in 2008. From 2002 until 2009, Mr. Shier practiced oil and gas and

commercial law as a partner with Heenan Blaikie LLP and remains counsel to that firm.

Prior to 2002, he practiced as a partner with other major law firms in Calgary.

• Mr. Shier obtained his Bachelor of Science degree from the University of Calgary in 1981,

his Bachelor of Laws from the University of Alberta in 1984 and his Master of Laws in

Environmental and Natural Resources Law from the University of Calgary in 1994.

Management and


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James H.T. Riddell Executive Chairman

Clayton H. Riddell Director

Bernard K. Lee Director

E. Mitchell Shier Director

33

Appendix B

Forward Looking Statements Advisory

Certain statements in this presentation constitute forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words

such as "anticipate", "believe", "estimate", "expect", "plan", "intend", "propose", or similar words suggesting future outcomes or an outlook. Forward looking information in this presentation

includes, but is not limited to:

expected production volumes and the timing thereof;

planned exploration and development expenditures, and the timing thereof;

exploration, development and expansion plans and strategies for Cavalier’s properties;

anticipated capital and financing requirements and access to capital;

project economics, and comparisons to other oil sands projects, estimated production profiles and scope and the timing thereof;

planned Hoole development schedules and costs, including cash flow profiles;

reserves and resource estimates and the discounted net present value of future net revenues from such reserves and resources (including the forecast prices, costs and the timing

of expected production volumes and future development capital);

predicted recovery factors including steam oil ratios and cumulative steam oil ratios;

construction and startup timelines and schedules;

anticipated development activity in areas where Cavalier assets are located;

expected pipeline capacity and ability to transport production when pipeline capacity is not available;

business strategies and objectives;

operating and other costs and strategies to reduce or mitigate such costs; and

expected regulatory review and approvals and the timing and the outcome thereof.

Such forward-looking information is based on a number of assumptions which may prove to be incorrect. The following assumptions have been made, in addition to any other assumptions

identified in this presentation:

future crude oil, bitumen and natural gas prices;

general economic and business conditions;

the ability of the Company to obtain required capital to finance its exploration, development and operations;

the ability of the Company to successfully obtain equipment, services, supplies and personnel in a timely manner to carry out its activities;

the ability of the Company to market its production;

estimates of input and labour costs for an oil sands project;

the ability of the Company to secure adequate product transportation and storage;

the ability of the Company to successfully apply oil sands technology and to capitalize on improvements thereto;

the ability of the Company to obtain project success including obtaining production volumes, steam oil ratios, capital and operating costs consistent and timing with expectations;

the timely receipt of required regulatory approvals and the scope of such approvals;

estimated timelines being met in respect of the development of the Hoole oil sands properties;

access to capital markets and other sources of funding; and

currency exchange and interest rates.


34

Although the Company believes that the expectations reflected in such forward looking information is reasonable, undue reliance should not be placed on it, as the Company can give no

assurance that such expectations will prove to be correct. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks and

uncertainties which could cause actual results to differ materially from those anticipated by the Company and described in the forward looking information.

These risks and uncertainties include, but are not limited to:

fluctuations in crude oil, bitumen and natural gas prices, foreign currency exchange rates and interest rates;

the uncertainty of estimates and projections relating to future revenue, future production, costs and expenses including project cost overruns;

the ability to secure adequate product processing, transportation and storage;

operational risks in exploring for, developing and producing bitumen, and the timing thereof;

the ability to obtain equipment, services, supplies and personnel in a timely manner;

potential disruption or unexpected technical difficulties in designing, developing, expanding or operating the Company’s projects;

risks and uncertainties involving the geology of bitumen, crude oil and gas deposits;

the uncertainty of reserves and resource estimates;

changes to the status or interpretation of laws, regulations or policies;

the receipt, timing and scope of governmental or regulatory approvals;

title defects;

aboriginal land claims;

the ability to obtain financing at an acceptable cost to meet current and future obligations including costs of anticipated projects;

environmental compliance and requirements;

general business, economic and market conditions;

the effects of weather; and

other risks and uncertainties described elsewhere in this presentation and in Paramount’s other filings with Canadian securities authorities, including Paramount’s Annual

Information Form.

The foregoing list of risks is not exhaustive. Additional information concerning these and other factors which could impact Cavalier and Paramount are included in Paramount’s most recent

Annual Information Form. The forward-looking information contained in this presentation is made as of the date hereof and, except as required by applicable securities law, Cavalier and

Paramount undertake no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.


35

Oil and Gas Measures and Definitions:

This presentation contains disclosure of certain results of (i) an updated independent evaluation of the Company’s bitumen reserves and resources from the Grand Rapids formation within

the Company’s Hoole oil sands property as of December 31, 2012 by McDaniel & Associates Consultants Ltd. ("McDaniel") (ii) an independent evaluation of the Company's Saleski and

other carbonate bitumen assets as of October 31, 2011 by McDaniel (collectively, the “McDaniel Evaluations”).

“Proved reserves” are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the

estimated proved reserves. “Probable reserves” are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining

quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

"Contingent resources" are those quantities of bitumen resources estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or

technology under development, but are classified as a resource rather than a reserve due to one or more contingencies, such as the absence of regulatory applications, detailed design

estimates or near term development plans. There is no certainty that it will be commercially viable to produce any portion of the contingent resources. For Cavalier, contingencies which

must be overcome to enable the reclassification of bitumen contingent resources as reserves include finalization of plans for the development of the Hoole oil sands properties, submission

of a regulatory application, and intent to proceed by the Company evidenced by a development plan with major capital expenditures. "Economic contingent resources" are those contingent

bitumen resources that are currently economically recoverable based on specific forecasts of commodity prices and costs. There is no certainty that it will be commercially viable to produce

any portion of the economic contingent resources.

“Contingent Resources (Technology Under Development)” are those quantities of bitumen estimated, as of a given date, to be potentially recoverable from known accumulations using

established technology or technology under development, but are classified as a resource rather than a reserve due to one or more contingencies, such as the absence of regulatory

approvals, detailed design estimates or near term development plans. There is no certainty that it will be commercially viable to produce any portion of the Contingent Resources. For the

Saleski property and the Other Carbonate Leases, because of the lack of demonstrated commercial SAGD production within carbonate reservoirs, the recoverable resources assigned are

contingent upon successful application of SAGD to the subject reservoir or a reasonable analog. The successful implementation of SAGD technology in carbonate reservoirs is a significant

contingency associated with these assignments that separate them from typical McMurray clastic SAGD contingent and prospective resources, where the technology has been proven

effective. In addition to the technical contingency, additional contingencies applicable to the carbonate resources include being in the early evaluation stage, the economic viability of

development and the absence of regulatory approvals. The economic status of these resources are undetermined.

"Best estimate" is considered to be the best estimate of the quantity of resources that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be

greater or less than the best estimate. Those resources that fall within the best estimate have a 50 percent confidence level that the actual quantities recovered will equal or exceed the

estimate. "Low estimate" is considered to be a conservative estimate of the quantity of resources that will actually be recovered. It is likely that the actual remaining quantities recovered will

exceed the low estimate. Those resources at the low end of the estimate range have the highest degree of certainty – a 90 percent confidence level – that the actual quantities recovered

will equal or exceed the estimate. "High estimate" is considered to be an optimistic estimate of the quantity of resources that will actually be recovered. It is unlikely that the actual

remaining quantities of resources recovered will meet or exceed the high estimate. Those resources at the high end of the estimate range have a lower degree of certainty – a 10 percent

confidence level – that the actual quantities recovered will equal or exceed the estimate. The volume of economic contingent resources disclosed represents the Company’s share of

recoverable volumes before the deduction of royalties.


36

Oil and Gas Measures and Definitions (cont’d):

“Discovered Exploitable Bitumen In Place” or “DEBIP” is the estimated volume of bitumen, as of a given date, which is contained in a subsurface stratigraphic interval of a known

accumulation that meets or exceeds certain reservoir characteristics, such as minimum continuous net pay, porosity and mass bitumen content. For the Hoole oil sands property, the

presence of these characteristics is considered necessary for the commercial application of known recovery technologies. For the Saleski property and the Other Carbonate Leases, these

volumes have been constrained to areas that have a minimum thickness of 10 meters of substantially clean, continuous predominantly bitumen-saturated carbonate with log porosity

meeting a minimum of 10 percent and bitumen saturation greater than 50 percent, respectively and with both competent top and lateral reservoir containment. These carbonate bitumen

resources are constrained to one mile in area around known data points that penetrate the zone and possess definitive geophysical log data. Discovered Exploitable Bitumen in Place for

the Saleski property and the Other Carbonate Leases may be assigned outside of the one mile area if reservoir continuity between offsetting delineation is expected. The technology

required to economically produce bitumen from carbonate formations is currently in the development stage and has not been proven on a commercial scale. There is no certainty that it will

be commercially viable to produce any portion of the resources from the Hoole oil sands property, the Saleski property or the Other Carbonate Leases.

“Undiscovered Exploitable Bitumen In Place” or “UEBIP” is the volume of petroleum estimated, as of a given date, to be contained in accumulations yet to be discovered. These resources

are mapped using known data points penetrating the zone and possess definitive geophysical log data along with seismic data and regional mapping. There is no certainty that any portion

of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

This presentation contains certain disclosures of net present values ("NPV") from the McDaniel Evaluations. The NPVs disclosed represent the Company’s share of future net revenue,

before the deduction of income tax from the probable undeveloped reserves and economic contingent bitumen resources in the Grand Rapids formation within the Hoole oil sands

properties. The calculation considers such items as revenues, royalties, operating costs, abandonment costs and capital expenditures. Royalties were calculated based on Alberta’s Royalty

Framework applicable to oil sands projects. The calculation does not consider financing costs and general and administrative costs. The NPVs were calculated assuming natural gas is

used as a fuel for steam generation. Revenues and expenditures were calculated based on McDaniel’s forecast prices as of January 1, 2013 and costs as of December 31, 2012. The

estimated net present values disclosed herein do not represent fair market value.


37

Oil and Gas Measures and Definitions (cont’d):

This presentation contains disclosure of certain results of an independent evaluation of discovered bitumen in place (“DBIP”) and undiscovered bitumen in place (“UDBIP”) prepared by

McDaniel dated July 20, 2010 for the Eagles Nest area of Northern Alberta. McDaniel prepared a report that provides estimates for volumes of DBIIP and UDBIP for the assets in the

Eagle’s Nest area (the “Report”). As a result of this assessment, McDaniel has estimated the DBIP and UDBIP resource to be about 0.4 million barrels and 1.6 million barrels, respectively.

The Report, effective April 30, 2010, was prepared in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the Canadian Oil and

Gas Evaluation Handbook as published by the Society of Petroleum Evaluation Engineers (Calgary Chapter) and the Petroleum Society of Canada (the “COGE Handbook”). There is no

certainty that the Company’s assets located at Eagle’s Nest will produce any portion of the volumes currently classified as “discovered resources” or “undiscovered resources”. The primary

contingencies which currently prevent the classification of the discovered or undiscovered resources disclosed above as reserves consist of: current uncertainties around the specific scope

and timing of the development of the Eagle’s Nest assets; uncertainty regarding the presence, extent or quality of cap rock; lack of regulatory approvals for such projects; the uncertainty

regarding marketing plans for production from the subject areas; improved estimation of project costs; commodity price fluctuations, timing, costs estimates and final approval of the Board

of Directors. The term “Discovered Bitumen in Place” (equivalent to discovered resources) is that quantity of petroleum that is estimated, as of a given date, to be contained in known

accumulations prior to production. The recoverable portion of discovered bitumen in place includes production, reserves, and contingent resources; the remainder is

unrecoverable. “Undiscovered Bitumen in Place” (equivalent to undiscovered resources) is that quantity of bitumen that is estimated, as of a given date, to be contained in accumulations

yet to be discovered. The definition is taken from the COGE Handbook. DBIP is currently the most specific resource category assignable to the Eagle’s Nest assets. McDaniel was unable

to classify the discovered resources into one of the subcategories because development projects could not be defined for the discovered resource volumes at this time. It is yet to be

determined what recovery process will be applied in Eagle’s Nest due to current uncertainty of cap rock integrity. There is no certainty that it will be commercially viable to produce any

portion of those discovered resources. Discovered resources do not constitute, and should not be confused with, reserves.


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corporate summary - cavalier energy inc€¦ · manager, surface facilities • mr. sudlow has 15...

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