Canlin Energy Fee Title Land & Royalty Divestiture...

CIBC Capital Markets9th Floor, Bankers Hall East855 – 2nd Street SWCalgary, Alberta T2P 4J7

FEE TITLE LAND & ROYALTY DIVESTITURE

November 2018

• Canlin owns extensive Fee Title land in SE Saskatchewan and additional non-convertible GORR’s throughout Alberta and Saskatchewan

• 2018 estimated royalty revenue of ~$7.5 MM on royalty production of ~436 boe/d (63% liquids)1

• Well established, ongoing leasing program in SE Saskatchewan generates additional “lease bonus” revenue and promotes activity

Opportunity Overview

1

Canlin Energy Corporation (“Canlin”) has engaged CIBC Capital Markets (“CIBC”) as its financial advisor to solicit and evaluate proposals for the sale of their Fee Title Land and Non-Convertible GORR interests in Saskatchewan, Alberta, Manitoba, and British Columbia.

• 122,775 gross acres of Fee Title mineral rights

− Company administrated land sales ensure that lands are leased and developed in the most active areas

− Approximately 22% of Canlin’s Fee Title lands are currently leased

• Over 315,000 gross acres of Non-Convertible Gross Overriding Royalties (“NCGORR”)

• ~55,000 gross acres of Gross Royalty Trust (“GRT”) lands

RoyaltyHighlights

Opportunity Highlights

• Royalty revenue has averaged ~$7 MM annually since 20151

− Incremental aggregate revenue of ~$2.7 MM generated from Company administered land sales since 20152

• Income is generated from a wide variety of plays across the Western Canadian Sedimentary Basin, including potash

• Over 100 operators are currently paying royalties on Company lands

Diverse Revenue Sources

Positioned to Benefit from

Future Development

• Fee Title lands in SE Saskatchewan and Manitoba generate revenue from every major play in the Williston Basin with continual activity every year targeting infill, step-out, and EOR development

• Diverse Fee Title, NCGORR, and GRT interests in Alberta and British Columbia cover a portion of most major plays

− Exposure to the Cardium, Montney, and Duvernay as well as many others

1 Canlin Lease Ops.2 Canlin Land Sale Data.

Opportunity Highlights

Land Overview Map

2

Land, Revenue, and Production Summary

Province Fee NCGORR GRT 2015 2016 2017 2018 YTD1

British Columbia - 73,431 - $ 53 $ 30 $ 26 $ 8

Alberta 15,477 218,943 48,977 $ 3,204 $ 2,051 $ 2,338 $ 1,035

Saskatchewan 64,186 24,226 5,383 $ 3,920 $ 3,370 $ 4,544 $ 2,651

Manitoba 43,112 324 587 $ 76 $ 75 $ 67 $ 43

TOTAL 122,775 316,924 54,946 $ 7,253 $ 5,527 $ 6,974 $ 3,738

Revenue ($M)Land (gross acres)

1 2018 YTD includes January - June data from Canlin Lease Ops.

%Liquids

Province 2015 2016 2017 2018 YTD1 2018 YTD1

British Columbia 7 3 2 1 72%

Alberta 331 261 250 213 36%

Saskatchewan 222 212 230 218 90%

Manitoba 4 4 3 3 100%

TOTAL 564 481 485 436 63%

Production (boe/d)

1 Based on Canlin Lease Ops up to June 2018.2 Annualized. Canlin lease ops up to June 2018.

3Production and Revenue Summary1

Highlights

• Annual royalty revenue from 2015 to 2018 YTD has averaged ~$7.0 MM1

• Estimated 2018 revenue of ~$7.5 MM2

• Production and revenue have been stable since mid-2015• Over 100 operators are currently paying royalties on Canlin lands

— Top operators include TORC, Crescent Point, NAL, Bonterra, Obsidian, and Long Run

Summary by Product

Summary by Province

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Canlin Net Production Canlin Net Revenue


1 Canlin Lease Ops.

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4SE Saskatchewan / Manitoba Highlights

Regional Overview – SE Saskatchewan / Manitoba

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• Canlin owns interests in 137,818 gross acres (78% Fee Title, 18% NCGORR, 4% GRT) in Saskatchewan and Manitoba

— Royalty interests in 19 different Units in SE Saskatchewan and Manitoba• Since 2015, industry operators have drilled over 2,500 wells in this area• Key industry plays include the Bakken, Torquay, and Mississippian (Ratcliffe,

Midale, Frobisher, Alida, Tilston, and Souris Valley-Lodgepole)• Most active area operators include Crescent Point, Vermilion, Tundra, TORC,

and Corex

Production and Revenue Summary by Product1


• Future opportunities include continued development of low risk, well understood plays and the implementation of waterfloods and other EOR projects (i.e. CO2floods)

• Potash potential exists in SW Manitoba

1 Based on public rig release data.


Drilling Activity Overview1

• Both the Mississippian and Bakken/ Torquay plays exhibit significant, widespread activity on and surrounding Canlin lands

Mississippian Activity

Bakken & Torquay Activity

1 Public data.2 Licences and Drilled Uncompleted wells (“DUC”) only include locations licenced up to July 2018.


Mississippian Overview1

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Ratcliffe Midale Frobisher AlidaTilston SrsVal. - Ldgpl. DUC Licenced Wells

• The Mississippian is a series of conventional sub-crop plays with well developed porosity and permeability at the erosional surface

• Continuous development has been occurring on these plays since the 1950’s targeting the Ratcliffe, Midale, Frobisher, Alida, Tilston, and Souris Valley-Lodgepole intervals

• Horizontal drilling has been used in the area since the 1990’s to enhance production rates and EUR’s

Mississippian Activity Summary1

• Area operators continue to drill 300 wells per year on these high returning, low risk plays• Activity has increased to >500 well/year in 2017 and 2018E• Continuous development by active operators, combined with the current posting and leasing program, will

ensure that long-term stable cash flow is maintained for the royalty owners• 42 different operators have drilled wells since 2015, with five operators responsible for over 70% of activity

2015-2018 Mississippian Drilling by Year 2015-2018 Mississippian Drilling by Operator

2

Midale

Crescent Point (387)

Vermilion (334)

Tundra (162)

TORC (131)

Corex (112)NAL (19)

36 Others (431)

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Cardinal NAL TORC VermilionCrescent Pt. Corex Others

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Ratcliffe Midale Frobisher Alida Tilston SV-Lpole

Midale Recent Results

1 Public data and geoSCOUT.2 Cardinal production is predominantly from the Midale Unit.3 Includes only recent Midale wells within the circled area.


Mississippian Production Summary1

• Stable production from multiple formations • Predictable, low risk development opportunities• Potential for additional production from waterflood and/or large scale EOR implementation analogous to the

world class CO2 project in Weyburn-Midale

2015-2018 Industry Mississippian Production 2015-18 Gross Production from Canlin Lands2

Midale Production MapMidale Type Curve3

• Midale horizontal oil development has continually generated favourable results surrounding Canlin land in Southeast Saskatchewan

• There are extensive undrilled opportunities that exist over Canlin Fee Title land

CPEC (Midale)101/12-30-004-03W2

On Prod: 07/17IP~225 bbl/d oil

Cum:47 Mbbl oil ~1 year

CPEC (Midale)101/12-30-004-03W2

On Prod: 07/17IP~225 bbl/d oil

Cum:47 Mbbl oil ~1 year

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Avg. IP 90: 106 bbl/d

Avg. Est. EUR: 61 Mbbl

1 Public data.2 Industry research.


Frobisher-Alida Recent Results1

Frobisher-Alida Production Map

• Conventional Mississippian horizontal oil development in the Frobisher-Alida has delivered top tier economic results among North American plays

• Abundant development opportunities exist over Canlin fee title land surrounded by active operators (Crescent Point, Vermilion, Torc)

Tundra (Frobisher)102/06-31-001-30W1

On Prod: 03/17IP~600 bbl/d oil, curr~150 bbl/d

Cum: 90 Mbbl oil

Tundra (Frobisher)102/06-31-001-30W1

On Prod: 03/17IP~600 bbl/d oil, curr~150 bbl/d

Cum: 90 Mbbl oil

FCL (Frobisher)101/14-09-002-31W1

On Prod: 01/17IP~400 bbl/d oil, flat ~90 bbl/d

Cum: 118 Mbbl oil

FCL (Frobisher)101/14-09-002-31W1

On Prod: 01/17IP~400 bbl/d oil, flat ~90 bbl/d

Cum: 118 Mbbl oil

TORC (Frobisher)101/02-26-005-06W2

On Prod: 01/17IP~400 bbl/d oil, flat~100 bbl/d

Cum: 101 Mbbl oil

TORC (Frobisher)101/02-26-005-06W2

On Prod: 01/17IP~400 bbl/d oil, flat~100 bbl/d

Cum: 101 Mbbl oil

NAL (Frobisher-Alida)104/08-18-005-33W1

On Prod: 09/17IP~290 bbl/d oil, flat ~275 bbl/dCum: 91 Mbbl oil in 11 months

NAL (Frobisher-Alida)104/08-18-005-33W1


Triland (Frobisher-Alida)102/10-36-006-05W2


Triland (Frobisher-Alida)102/10-36-006-05W2


North American Top IRR Oil Plays2

31% 36% 43% 43% 45% 46% 48% 49% 50% 51% 53% 54% 60% 60% 63% 63% 63% 66% 68% 68% 75%88%

110%

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1 Public data.2 Includes only recent Frobisher or Frobisher-Alida wells within the circled areas.


Frobisher Recent Results1

Frobisher Area 1 Type Curve2 Frobisher-Alida Area 2 Type Curve2

Frobisher-Alida Area 3 Type Curve2 Frobisher Area 4 Type Curve2

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Avg.Est. EUR: 114 Mbbl

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Bakken Torquay DUC Licenced1 Public data and GeoSCOUT.2 DUC = Drilled Uncompleted well.3 Licences and DUC’s only include locations licenced up to October 2018.


Devonian Overview1

• Bakken deposits are present over a large portion of SE Saskatchewan and is comprised of shales, siltstones, argillaceous sandstones

• To-date, only a small percentage of Bakken sourced oil has been identified in or produced from Williston Basin reservoirs leaving substantial future development opportunities

• The Torquay formation lies uncomfortably below the Bakken and is comprised mainly of interbedded dolostones and mudstones

• Lower resistivity play with deposition often affected by

Bakken & Torquay Activity Summary1,2

• Industry activity has been relatively stable with well over > 200 Bakken & Torquay wells drilled per year since 2015

• An active leasing program targeting current area operators helps to ensure long-term, stable royalty income

2015-2018 Bakken & Torquay Drilling 2015-18 Bakken & Torquay Drilling by Operator

Viewfield Bakken

Crescent Point (736)

Tundra (93)

TORC (64)

Ridgeback (43)

Vermilion (37)

14 Others (49)3

structural uplift and collapse including salt dissolution• The Prairie Evaporite has potash potential in SW Manitoba

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Bakken Torquay


• Post decline from pre-2015 drilling, production from the area has generally stabilized• Development of both plays continues with infill wells and operators pushing play boundaries• EOR evaluation and implementation is in the early stages and could add significant reserves in the future

Industry Bakken & Torquay Production 2015-18 Gross Production from Canlin Lands

Bakken & Torquay Production Summary1

Viewfield Bakken Recent Results

1 Public data.2 Average 2015-2017.3 Includes recent Bakken wells within the map area.

Viewfield Bakken Production MapViewfield Bakken Type Curve3

• Industry continues to drill over 180 wells per year for the Bakken in the Viewfield area2

• Crescent Point is the dominant operator in the area, with TORC, Vermilion, and Ridgeback also maintaining active drilling programs

• Drilling activity is expected to continue in the future as operators continue to push the play boundaries and investigate EOR methods

CPEC (Bakken)101/13-05-09-07W2

On Prod: 01/18IP~240 bbl/d oil, curr ~90 bbl/d

Cum: 34 Mbbl oil in 7 months

CPEC (Bakken)101/13-05-09-07W2



Recent Wells

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12Alberta / British Columbia Highlights

Regional Overview – Alberta / British Columbia

• Canlin owns interests in 356,828 gross acres in Alberta and British Columbia (4% Fee Title, 82% NCGORR, 14% GRT)

— Royalty interests in 34 different Units in Alberta

• Ownership covers the Montney, Duvernay, and Cardium plays as well as several other key industry plays

• Future opportunities include extensive development of Montney and Duvernay as well as continued development and step-out drilling in the Cardium


Montney

Duvernay

Cardium

1 Canlin Lease Ops.

Production and Revenue Summary by Product1

1 Public data.


Drilling Activity Overview1

Recent Cardium Drilling Activity Recent Duvernay Drilling Activity

Recent Montney Drilling Activity

• Recent activity suggests significant future opportunities focused on continued development and step-out drilling in the Cardium as well as extensive development of the Montney and emerging Duvernay in the East Shale Basin

1 Public data and geoSCOUT within the map area on page 15.2 Licences and DUC’s only include locations licenced up to October 2018.


• The Cardium is a mature, well understood play with historical production dating back to the 1950’s

• Horizontal drilling has enabled the expansion of the play into tighter, less permeable and thinner reservoir intervals and vastly expanded the prior play boundaries both geographically and stratigraphically

• Canlin owns multiple sections of NCGORR lands along with some sections of GRT and in areas with excellent future development opportunities

• Continued development is anticipated to access additional Company lands in the future

Cardium Overview1

Bonterra (103)

Whitecap (55)

Obsidian (53)

Tamarack (34)

ARC (31)Ridgeback (26)

8 Others (54)

Cardium Activity Summary1

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• Recent drilling in the Pembina area has rebounded from 2016 lows and 2018 is poised to match 2015 and 2017 levels with ~120 wells forecasted to be drilled

2015-2018 Cardium Drilling by Year 2015-18 Cardium Drilling by Operator

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Cardium Recent Results

1 Public data.2 Includes only the Cardium wells shown within the map area.


• Cardium production has slightly increased since 2017 lows and is anticipated to remain stable / slightly grow in the future

• Production from Canlin lands has remained stable despite 2014+ commodity price challenges

Cardium Production Summary1,2

2015-2018 Industry Cardium Production 2015-18 Gross Production from Canlin Lands

Pembina Cardium Production MapPembina Cardium Type Curve2

• Recent industry activity surrounding Canlin land at Pembina have continued to generate favourable results targeting Cardium oil

• Canlin NCGORR land is well positioned within the Cardium play fairway and holds significant upside potential with an inventory of low-risk horizontal drilling opportunities

NTD: Lindsay working on

Ridgeback (Cardium)13-36-48-11W5On Prod: 12/17

IP~180 bbl/d oil, curr ~125 bbl/dCum: 41 Mbbl oil in 8 months

Ridgeback (Cardium)13-36-48-11W5On Prod: 12/17


ARC (Cardium)15-14-49-07W5On Prod: 11/17


ARC (Cardium)15-14-49-07W5On Prod: 11/17


Bonterra (Cardium)09-25-46-07W5On Prod: 10/17


Bonterra (Cardium)09-25-46-07W5On Prod: 10/17


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• Liquids rich play being actively developed by many companies in both Alberta and British Columbia

• Newer entrants to the unconventional play are pushing the updip edges to the northeast and having excellent results expanding the play into new areas

• Company owns multiple sections of NCGORR lands along with a few scattered sections of GRT and Fee in both conventional and unconventional areas targeting both oil and gas windows

Montney Overview1

Montney Activity Summary1,2

• After a temporary slow-down in drilling activity during 2015-16, there were a record number of wells drilled into the Montney in 2017

• Montney activity in 2018 is expected eclipse the 2017 totals

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Montney DUC Licenced1 Public data and geoSCOUT.2 Includes only the Montney wells shown within the map area.3 Licences and DUC’s only include locations licenced up to October 2018.

Regional Montney2,3 2015-18 Drilling by Operator

• Continued ongoing development expected in this active very economic play

Encana (315)

Tourmaline (206)

ARC (203)

Painted Pony (138)

Shell (132)Birchcliff (120)Progress (117)

25 Others (489)

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Alberta / British Columbia Highlights

• The Montney continues to experience production growth as operators focus on condensate and liquids rich production

• Montney development is encroaching on Canlin lands from both the north and south

Montney Production Summary1,2

1 Public data.2 Includes Montney production as shown on the map.3 Includes only the Montney wells shown within the circled area.4 Only includes gas and condensate as reported in public data – plant liquids are not included.

Red Creek Montney Recent Results

2015-2018 Industry Montney Production2 2015-18 Industry Montney Production2

Montney Production MapRed Creek Montney Type Curve3,4

• Increasing Montney activity with encouraging initial results seen in Inga and Red Creek area• Canlin NCGORR land is positioned favourably within the Montney liquids-rich gas to oil fairway with substantial

resource development potential

Kelt (Montney)07-02-88-23W6On Prod: 07/17

IP ~800 bbl/d cond, curr ~150 bbl/dCum: 73 Mbbl cond, 1.1 Bcf gas

Kelt (Montney)07-02-88-23W6On Prod: 07/17

IP ~800 bbl/d cond, curr ~150 bbl/dCum: 73 Mbbl cond, 1.1 Bcf gas

Kelt (Doig)100/02-28-087-23W6

On Prod: 08/14IP ~475 bbl/d cond and 6.2 MMcf/d gas

curr ~17 bbl/d cond and ~1.2 MMcf/d gasCum: 105 Mbbl cond, 4.0 Bcf gas

Kelt (Doig)100/02-28-087-23W6



Kelt (Montney)100/08-31-087-23W6

On Prod: 03/15IP ~750 bbl/d oil and 2.3 MMcf/d gas curr ~90 bbl/d oil and ~850 Mcf/d gas

Cum: 165 Mbbl cond, 1.2 Bcf gas

Kelt (Montney)100/08-31-087-23W6

On Prod: 03/15IP ~750 bbl/d oil and 2.3 MMcf/d gas curr ~90 bbl/d oil and ~850 Mcf/d gas

Cum: 165 Mbbl cond, 1.2 Bcf gas

Kelt (Montney)102/06-02-86-18W6



Kelt (Montney)102/06-02-86-18W6



Recent Wells

Average

Avg. IP 90: 304 boe/d

Avg. Est. EUR: 270 Mboe


• Light oil play being actively developed by Artis and Vesta with additional activity by Baytex, Crescent Point, Inplay, Repsol, Shell, Traverse, etc.

• Land sale, licencing, and drilling activity continue to increase indicating excellent future potential for play development

• Canlin owns multiple sections of GRT lands throughout the East Shale Basin and a few NCGORR and Fee title sections

East Shale Basin Duvernay Overview1

East Shale Basin Duvernay Activity Summary1,2

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• Drilling activity has been dominated by Vesta who was an early mover; play is poised for step change in production with several operators executing funded drilling programs in the play

• Limited drilling in the past as operators test with well length and completion optimization• >75 wells have been licenced and drilled year-to-date in with many awaiting completion and/or tie-in

1 Public data.2 Licences and DUC’s only include locations licenced up to October 2018 within TWP 31-43 RGE 23W4-2W5.

East Shale Basin Duvernay 2015-18 Drilling by Operator

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Vesta (63)

Artis (21)

Baytex (3)

Rife (2)Crescent Point (2)

3 Others (3)

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Oil Gas


• Production has grown from nothing in early 2015 to well over 10 Mboe/d currently• Multiple active operators experiencing continually improving well results will ensure further production

growth for several years to come• There was no Duvernay production on Canlin Royalty Lands up to June, 2018

East Shale Basin Duvernay Production Summary1

1 Public data.2 Includes Duvernay wells within T31-43 R23W4-2W5.

East Shale Basin Duvernay Recent Results

2015-2018 Industry Duvernay Production2 2015-18 Industry Duvernay Production2

East Shale Basin Duvernay Type Curve2

• Vesta has recently drilled a well on Canlin land at 100/10-27-041-27W4/00 that came on production in July, 2018 and has produced ~50 Mbbl oil as of August 31, 2018

• Canlin lands are well positioned within the heart of the oil prone Duvernay East Shale Basin • Surrounding industry activity has generated favourable results within the early stages of the play, highlighting

significant growth potential over Canlin GRT land

East Shale Basin Duvernay Production Map

NTD: Lindsay working on

Vesta (Duvernay)100/01-05-41-27W4








Cum: 50 Mbbl oil in 1 year



Cum: 50 Mbbl oil in 1 year

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Canlin Type Curve

Avg, IP 90: 240 bbl/d


ProcessCanlin Energy Corporation (“Canlin”) has retained CIBC Capital Markets (“CIBC”) as its advisor to solicit and evaluate proposals for the sale of the company’s Fee Title and Royalty assets in British Columbia, Alberta, Saskatchewan, and Manitoba.

It is the intention of Canlin and CIBC to conduct the process such that it minimizes any disruption to Canlin’s operations. Interested parties should not contact Canlin directly regarding any aspect of the process. All communications, enquiries and requests for information relating to the process should be directed to one of the CIBC individuals listed herein.

Signed Confidentiality Agreements (“CA”) should be forwarded by email or courier to CIBC. Once a CA has been executed, confidential information will be made available to qualified parties via a Virtual Data Room (“VDR”).Bid deadline anticipated for early / mid December.

20

CIBC Capital Markets9th Floor, Bankers Hall East

855 – 2nd Street SWCalgary, Alberta T2P 4J7

Fax: (403) 260-0524

Investment Banking Acquisitions & Divestitures

John PeltierExecutive DirectorTel: (403) 260-8646

[email protected]

Ashley EngbloomDirector

Tel: (403) [email protected] Doug Ashton, P.Eng.

Executive DirectorTel: (403) 260-8654

[email protected]

Dave Smith, P.Geol.Executive DirectorTel: (403) 260-0505

[email protected] Hladyshevsky*Associate

Tel: (403) [email protected]

Process Overview

* CA contact

Key Contacts

Process Launch

VDR Open

Interested Party Evaluation Period

Nov. 2018

5 6 7 8 9

12 13 14 15 16

19 20 21 22 23

26 27 28 29 30

Dec. 2018

3 4 5 6 7

10 11 12 13 14

17 18 19 20 21

24 25 26 27 28

Notes:

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DisclaimerThis document is confidential and has been prepared by CIBC Capital Markets. In preparing this presentation, CIBC Capital Markets has relied without any independent verification on information provided or that is publicly available. The information and any analyses in this document are preliminary and is not intended to constitute a “valuation,” “formal valuation,” “appraisal,” “prior valuation,” or a “report, statement or opinion of an expert” for purposes of any securities legislation in Canada or otherwise. We are not legal, tax or accounting experts and we express no opinion concerning any legal, tax or accounting matters or the sufficiency of this document for your purposes. Prospective counterparties are responsible for their own due diligence investigation in respect of any investment or joint venture in the assets described herein. This printed document is incomplete without reference to discussions and any related written materials that supplement it. These materials are confidential and are intended solely for your benefit and for your internal use only and may not be reproduced, disseminated, quoted from or referred to in whole or in part at any time, in any manner or for any purpose, without obtaining the prior written consent of CIBC Capital Markets in each specific instance. CIBC Capital Markets employees are prohibited from offering to change or otherwise influence any research report, rating or price target to any company as inducement for the receipt of any business or compensation. This document does not constitute an offer or solicitation to buy or sell any securities in any jurisdiction where such would be prohibited. CIBC World Markets Inc. is a legal entity name. CIBC Capital Markets is a trademark brand name under which different legal entities provide different services under this umbrella brand. Products and/or services offered through CIBC Capital Markets include products and/or services offered by the Canadian Imperial Bank of Commerce, the parent bank of CIBC World Markets Inc. and various other subsidiaries of the Canadian Imperial Bank of Commerce. Services offered by the Canadian Imperial Bank of Commerce include corporate lending services, foreign exchange, money market instruments, structured notes, interest rate products and commodities, equity options and OTC derivatives. Canadian exchange-traded equity options are executed through CIBC World Markets Inc. Equity and fixed income securities are executed through CIBC World Markets Inc. and other directly or indirectly held subsidiaries of CIBC. CIBC World Markets Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. CIBC World Markets Corp. is a member of the Financial Industry Regulatory Authority. CIBC World Markets plc is regulated by the Prudential Regulation Authority and Financial Conduct Authority. CIBC World Markets Securities Ireland Limited is regulated by the Central Bank of Ireland. CIBC Australia Ltd is regulated by the Australia Securities and Investment Commission. CIBC World Markets (Japan) Inc. is a member of the Japanese Securities Dealer Association. Canadian Imperial Bank of Commerce, Hong Kong Branch, is a registered institution under the Securities and Futures Ordinance, Cap 571. Canadian Imperial Bank of Commerce, Singapore Branch, is an offshore bank licensed and regulated by the Monetary Authority of Singapore. All values are expressed in Canadian dollars, unless otherwise noted.

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Canlin Energy Fee Title Land & Royalty Divestiture...

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