Investor PresentationOctober 2017

“Full cycle, fully engaged” Gold Creek Montney 11‐02 Battery

ADVISORY REGARDING FORWARD‐LOOKING STATEMENTS

2

This presentation contains certain forward‐looking information and statements with respect to Velvet Energy Ltd. (“Velvet” or the “Company”), includingexpectations, beliefs, plans, goals, objectives, assumptions, information and statements about future events, conditions, results of operations,performance, Velvet’s planned capital expenditure program and the nature of the expenditures, drilling plans, expected drilling and completion costs,expected average production, the expected splits among crude oil, NGLs and natural gas, forecasted commodity prices and factors affecting natural gasprices, forecasted general and administrative expenses, interest expenses, revenue, operating income, operating netbacks, funds from operations andyear‐end bank debt, management’s assessment of future potential, including years of drilling inventory and expectations with respect to natural gasdemand and supply in North America.. These forward‐looking statements are based on assumptions and are subject to numerous risks and uncertainties,certain of which are beyond the Company’s control, including the impact of general economic conditions; industry conditions; volatility of commodityprices; currency exchange rates; imprecision of reserve estimates; environmental risks; competition from other explorers; stock market volatility; oil andnatural gas development and transportation; actions by governmental authorities, including changes in government regulation, royalties and taxation;dependence upon compressors, gathering lines, pipelines and other facilities, certain of which the Company does not control; shortage or lack ofavailable of pipeline capacity or other transportation facilities; weather conditions, natural disasters and fires; and ability to access sufficient capital. Wecaution that the foregoing list of risks and uncertainties is not exhaustive. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”,“may”, “will”, “should”, “believe”, “plans”, and similar expressions are intended to identify forward‐looking information or statements

Statements relating to “reserves” or “resources” are deemed to be forward‐looking statements as they involve the implied assessment, based on currentestimates and assumptions that the reserves and resources can be profitably produced in the future. Readers are cautioned that disclosure of any welltest results is not necessarily indicative of long‐term performance.

Velvet’s actual results, performance or achievement could differ materially from those expressed or implied by these forward‐looking statements. Noassurance can be given that any events anticipated herein will transpire or occur and such forward‐looking statements included in this presentationshould not be unduly relied upon.

In addition, the reader is cautioned that historical results are not necessarily indicative of future performance. The forward‐looking statementscontained herein are made as of the date of this presentation and the Company does not intend, and does not assume any obligation, to update orrevise any forward‐looking statements, whether as a result of new information, future events or otherwise, unless expressly required by applicablesecurities laws.

Certain information set out herein may be considered as “financial outlook” within the meaning of applicable securities laws. The purpose of thisfinancial outlook is to provide readers with disclosure regarding Velvet’s reasonable expectations as to the anticipated results of its proposed businessactivities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.

VELVET ENERGY LTD. – A GEOSCIENCE DRIVEN, ORGANIC GROWTH COMPANY

3

“Velvet is an organic growth company. We apply best‐in‐class geoscience and commercial skill to build large and 

contiguous tracts of land in, and adjacent to, oil‐window source rocks. State‐of‐the‐art prospecting, drilling, completions, and 

production methods allow us to generate top decile economic returns”

Velvet EdsonCore

550 net sections

Gold CreekMontney

245 net sections

VELVET DIFFERENTIATORS

4

Highly technical, geoscience driven team Accountable and engaged in decision making processPeople

Assets

Returns

Access to Capital

Dominant player in the oil and liquids window of the Deep Basin Rigorous application of technology for continuous improvement

Strong track record of top decile returns and organic growth Risk management central to full cycle return philosophy

Solid foundation of PE support Strategic relationship with term debt providers

TRACK RECORD OF ORGANIC GROWTH

5

Over 90% of current production has been added via the drill bit

Disciplined acquisition strategy that targets hurdle rate of return on Multiple on Invested Capital (MOIC)

Vero 2011 Lightstream 2014 McLeod 2017

Continue to improve Edson full cycle E&D capex efficiency with objective to reduce to below $14k/boe/d

Daily Production

2011 2012 2013 2014 2015 2016

Capex ($mm) $39.5 $242.8 $110.7 $245.4 $108.3 $150.2

EBITDA ($mm) $24.4 $37.3 $87.3 $85.4 $84.6

Edson Wells drilled (G / N) 5 / 4.7 11 / 7.1 26 / 20.1 33 / 26.3 19 / 12.5 25/17.9

Success rate* (%) 79 80 92 82 92 94

2P FD&A cost ($/boe)** $33.51 $15.73 $13.22 $14.52 $14.33 $9.85

Note on acquisitions: 2012 capex included $195mm net acquisitions; $85mm in 2014* Success rate is post completion   ** FD&A includes change in FDC

0

5,000

10,000

15,000

20,000

25,000

Corporate Prod

uctio

n (BOED

)

Vero Acq 2012 2013 LTS Acq 2014 2015 2016 2017 Dev Montney

MANAGEMENT & DIRECTORS

6

Ken Woolner, P.Eng, President & CEO

Geoff MacDonald, P. Geol, Vice President, Exploration

Jeremy Kwasnecha, P.Eng, Vice President, Operations

George Gervais, P. Eng., MBA, Executive Vice President

Chris Theal, CFA, CIM, Chief Financial Officer

Peter Henry, CA, Vice President, Finance 

Ken Woolner, P.Eng, President & CEO

John Brussa, Partner, Burnet, Duckworth & Palmer LLP

Vincent Chahley, Independent Businessman

Robert E. Hougie, 1901 Partners LP

Jacob Strauss, Warburg Pincus

Harvey Doerr, Independent Businessman

Roger Smith, Independent Businessman

Christopher R. Manning, Trilantic Capital Partners

David B. Krieger, Warburg Pincus

MANAGEMENT

BOARD OF DIRECTORS

Firm‐service &  long‐term planning

Innovative risk‐sharing midstream partnerships

Focus on controllables through the entire value chain

Scale affords cost savings and leverages technology gains

Grassroots play generation Data intensive analysis Constant refining & integration of 

G&G model

Target hurdle rate IRRs Margin maximization vs. price 

taker

EMPLOYEE ENGAGEMENT IN VALUE CREATION

7

“PROFITABLY converting undeveloped land to PDP provides greatest opportunity for value creation”

TECHNICAL DIFFERENTIATION

MARKET ACCESS COST CONTROL

HEDGING STRATEGYRATE OF RETURN 

INVESTING

VELVET EXPLORATION & DEVELOPMENT PORTFOLIO

Our base business in the Ellerslie has been recognized as the low supply cost play in the Deep Basin by third parties

While we continue to grow the Ellerslie, we are also adding and advancing prospects across the risk/entry cost spectrum:

Strong results from stack drilling in 1H2017 First oil in the Montney at Gold Creek  New areas being acquired & evaluated Low cost capture of higher risk prospects

8

Velvet Exploration & Development Portfolio

Conceptual Exploratory Development Exploitation

Play Maturity

Edson EllerslieEdson stack

Relativ

e Technical R

isk Gold Creek Montney

RPC

RPC

RPC

RPC = Resource Play Concept

Edson Ellerslie Hybrid Resource Play – High Return Base Business

9

VELVET’S DEEP BASIN FAIRWAY

10

1. Abundant Data Thousands of feet thick  Thousands of penetrations since 1950’s

2. No Water Basin‐centered Petroleum System Relative over‐pressure

3. Condensate/Volatile Oil Prone Local oil‐mature sources Gas via migration

4. High IP and EUR Porosity and Permeability preserved Water Saturations misleading

ELLERSLIE: THE DISCOVERY

11

1000 Boe/d

500 Bbl/d

UNCONVENTIONAL APPROACH: 16‐14‐50‐13W5  (hz): 55 months: 

3.5 Bcf, 195 mstb NGL, 214 mstb Oil

990 MBOE

55 months

CONVENTIONAL APPROACH:11‐14‐50‐13W5  (vt): 16 years, 396 Mmcf

100mcf/d

16 years

A’

4‐33‐55‐17W5

2‐3‐53‐14W5

11‐14‐50‐13W5

A

12

Core from hundreds of wells were analyzed Consistent preservation of porosity and 

permeability along the fairway  = repeatable results

Production on hundreds of vertical wells was analyzed Horizontal wells demonstrate a significant multiple 

of vertical well performance 

500 um

4‐33‐55‐17W5Porosity: 9%; Perm: 2.5 mD

Offset Vt in 7 yrs: 0.137 bcf, 11 mstbOffset Hz in 36months:371 MBOE (1.6 BCF, 69 MStb)

500 um

2‐3‐53‐14W5Porosity: 7.8%; Perm: 0.4 mD

Offset Vt in 16 yrs:0.98 bcf, 30 mstb oilOffset Hz in 41 months:655 MBOE (2.7Bcf, 131MStb)

500 um

11‐14‐50‐13W5Porosity: 14.2%; Perm: 1.0 mD

Offset Vt in 16 yrs:0.39 bcfOffset Hz in 44 months:990 MBOE (3.5 Bcf, 214 MStb)

VEL Lower Mannville

VEL 3D Seismic 

Images on rightShallow marine sand fairway

AN EXTENSIVE FAIRWAY

13

EDSON ELLERSLIE & STACK DRILLING INVENTORY

Edson Land and Ellerslie Resource Mapping Velvet maximizes value on every one of its 353,026net acres

Depth of inventory from a depth of understanding multi‐zone potential in deep basin‐centered 

petroleum system synergies drive attractive half‐cycle economics

157 mmboe of potential EUR in the Ellerslie

*Land as at September 30, 2017.  Inventory numbers as of June  30, 2017

Play IRR (%)

NPV10 ($mm)

Current Inventory(G / N)

Ellerslie 106 2.87 543/380

Notikewin / Falher 1‐mile 44 1.32 118/79

Wilrich Bayfill 1‐mile 47 1.64 102/77

Wilrich Shoreface TBD TBD 142/94

Bluesky 64 2.37 67 / 45

Rock Creek TBD TBD 51 / 31

Total Deep Basin 1,022/ 707

2017 Ellerslie Locations2018 Ellerslie Locations2019 Ellerslie Locations

Drilled 96 gross, 68.2 net ELRL wells to‐date

DCET budget of $3.3MM for operated wells in 2017

$3.19MM average capex for operated wells in 9M2017

2017 program:

33 gross (24.9 net) total wells

80% Ellerslie / 20% stack

Velvet controls gathering and processing infrastructure

Optimize facility throughput to minimize unit operating costs

Acquired & filling 16‐36 at McLeod

Focus on filling & optimizing facility throughput

14

ELLERSLIE PIPELINE, GATHERING & FACILITIES CONTROL

Ellerslie Locations Only

Repsol 4‐11285 mmcf/d

Velvet 16‐23 (100%)23 mmcf/d

ISH 10‐12 (1%)23 mmcf/d

Notine 7‐3421 mmcf/d

Velvet  12‐15 (100%)29 mmcf/d

Keyera 11‐10 (40%)50 mmcf/dVelvet  8‐36 (72%)

23 mmcf/d

Velvet  8‐6 (100%)12 mmcf/d

Pine Cliff 16‐12 (40%)16 mmcf/d

Velvet 9‐4 (100%)10 mmcf/d

Tidewater 4‐31 185 mmcf/d

Velvet 16‐36 (55%)14 mmcf/d

Continuous Improvement Yields Higher Returns

15

VELVET ELLERSLIE – CONTINUOUS IMPROVEMENT

16

0

5

10

15

20

25

0

200

400

600

800

1000

2013 2014 2015 2016 ‐ H12016 ‐ H2

Stages

Total TNE

Ellerslie Stage & Tonnage Trends

Total TNE Total Stages

0

500

1,000

1,500

2,000

0

100

200

300

400

500

2013 2014 2015 2016 ‐ H1 2016 ‐ H2

Total LB (000s)

LB/ft

Ellerslie Proppant Intensity Trends

LB/ft Total Lb/well

$2.80 $2.35 $1.96 $1.62 $1.62 $1.60

$1.23$1.28

$0.98 $1.10 $0.80 $1.05

$0.99$0.65

$0.62 $0.62 $0.62 $0.65

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Gross W

ell Cost (DCE

T $M

M)

Ellerslie Well Cost

DRILL COMPLETE EQUIP/TIE

$5.03

$4.28$3.56 $3.34 $3.30$3.04

* 2016 normalized for tonnage

22.0

18.6

13.3

10.17.6

9.0

0.0

5.0

10.0

15.0

20.0

25.0

2013 2014 2015 2016 BEST 2017TARGET

Spud

 to Rig Release

Ellerslie Drilling Days

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

PEY

AAV

PMT

TOU

BIR

BNP CR

VEL w/o M

TG ARX

VEL w M

TG CKE

PNE

BXE

VII

CQE

ERF

SRX

BTE

TVE

VET

GTE

WCP

POU

KEL

RRX

PGF

TOG

BNE

NVA DEE JOY

SGY

CPG

GXE

OBE

MQX

SPE

PXX CJ

% Liquids

$/bo

e

2018 Opex + Transport 2018 % Liquids

PEER GROUP OPEX + TRANSPORTATION COST – 2018E

As Montney grows, Velvet maintains a top quartile Opex + Tport cost structure Similarly weighted liquids‐rich Montney peers Opex + Tport average $12.28/boe  (KEL, POU, NVA, DEE, VII)

VEL at $9.15/boe in 2018

17

2018 Opex + Transportation Cost vs. Liquids Weight

Source: Peters & Co researchPeters restricted on VII; VII 1H17 was  $10.21/boe

Comparable liquids weights

VEL

0

100

200

300

400

500

600

700

800

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Raw Oil Eq

uivalent Produ

ction (boe

/d)

Months

Average (47 Wells) ELRL Type Curve

ELLERSLIE TYPE CURVES & ECONOMICS

18Assumes AECO C$2.40/Gj.  Sales volumes with shrinkage of 10%.   Alberta Royalty Framework

IRR vs. Price SensitivitiesEUR, IRR and Payout

IP30 EURGas (mmcf/d : bcf) 2.4 1.7Oil (bbl/d : mbbl) 197 70

C3+ (bbl/mmcf : mboe) 98 67Total (boe/d : mboe) 699 412

% Liquids 42% 33%

DCET Cost mm 3.25Chance of Success % 100

Payout yrs 1.3RoR % 93

NPV10 mm 2.57PV10 mm 5.82F&D per boe 7.88

0

1

2

3

4

5

0%

50%

100%

150%

200%

250%

$35 $40 $45 $50 $55 $60 $65 $70

NPV

10 ($

MM)

IRR (%

)

WTI Oil Price ($/bbl)Type Curve ‐ IRR Type Curve ‐ NPV10

VELVET ELLERSLIE IS THE LOWEST DEEP BASIN SUPPLY COST

19Source: RS Energy Group, November 2016 

Third party research: “Velvet’s Ellerslie, a liquids‐rich zone, has the lowest operator zone breakeven at $1.97/mcfe HH”

20

Independent research ranks Velvet Ellerslie (Pembina) as a top five BT IRR play in North America 

VELVET ELLERSLIE RELATIVE RATE OF RETURN

Gold Creek Montney –Unlocking the Oil Window

21

APPLYING LEADING EDGE TECHNOLOGY TO OPEN MONTNEY LIGHT OIL WINDOW

22

Early adoption of leading‐edge technology

Benchmark D&C learnings from Permian analogs

3D seismic, core, LWD, microseismic, tracer technology

Translate multi‐parameter maps into fully‐integrated geological model

Continuous improvement to establish top return oil play

Reservoir model allows us to understand well design, orientation, placement and completion

Optimize recoveries and mitigate geologic risks

Generate capital and operating cost efficiencies

GOLD CREEK MONTNEY

23

TCPL/NOVA

MERITAGEPATTERSON CREEK

VELVET 11‐2 PAD:• BATTERY: 16,000 BBLS/d, 25,000 mmcf/d• ON‐SITE DISPOSAL WELL• 12‐10 ON PRODUCTION• 4 WELLS COMING ONSTREAM Q4/17• SPUD 5 WELL PAD Q4/17  

VEL 4‐1 PAD:• 1‐10 ON PRODUCTION

VEL 11‐5 PAD:• 15‐7 ON PRODUCTION

CNRL GOLD CREEK

CNRL WAPITI

VELVET ADVANTAGELand: 245 net sectionsGeoscience:• > 500m core • 5 wells microseismic• 58 mi2 proprietary 3D

VELVET

3D SEISMIC

PIPELINEVELVET WELLSMONTNEY WELLS

CORPORATE INFORMATION

24

AuditorsPricewaterhouseCoopers, LLPReservoir EngineersGLJ Petroleum ConsultantsBankersCanadian Imperial Bank of CommerceRoyal Bank of CanadaBank of MontrealThe Toronto‐Dominion BankSolicitorsBurnet, Duckworth & Palmer LLP

Velvet Energy Ltd.1500, 308 4th Avenue SWCalgary, AB  T2P 0H7

P: 403.781.9125

Investor contacts:

investors@velvetenergy.ca

www.velvetenergy.ca