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TSX: SEQ
Shoreline Energy Corp.
GROWTH, VALUE, INCOME, UPSIDE
CORPORATE PRESENTATION, JUNE 2013
2
DISCLAIMER
Certain information in this presentation constitutes forward-looking statements under applicable securities law. Any statements that are contained in
this presentation that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often
identified by terms such as “may,” “should,” “anticipate,” “expects,” “seeks” and similar expressions. Forward-looking statements necessarily involve
known and unknown risks, including, without limitation, that the final set-off amounts may impact the financial exposure of Shoreline differently
than currently anticipated, the availability of drilling services and risks associated with oil and gas production; marketing and transportation; loss of
markets; volatility of commodity prices; currency and interest rate fluctuations; imprecision of reserve estimates; environmental risks; competition;
incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions or dispositions; inability to access sufficient
capital from internal and external sources; changes in legislation, including but not limited to income tax, environmental laws and regulatory matters.
Readers are cautioned that the foregoing list of factors is not exhaustive.
Readersarecautionednottoplaceunduerelianceonforward-lookingstatementsastherecanbenoassurancethattheplans,intentionsorexpectations
upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to
beincorrectandactualresultsmaydiffermateriallyfromthoseanticipated.Inparticular,drillingplans,on-productiondatesandproductioncontinuity
are particularly subject to uncertainties and uncontrollable events such as surface access, rig availability, equipment availability, weather conditions,
changes in geological interpretation, and other factors. Forward-looking statements contained in this press release are expressly qualified by this
cautionary statement.
Additional information on these and other factors that could affect Shoreline’s operations or financial results are included in Shoreline’s reports on
file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) or by contacting Shoreline.
Furthermore, the forward looking statements contained in this presentation are made as of the date of this presentation, and Shoreline does not
undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information,
future events or otherwise, except as expressly required by securities law.
Although the Company believes that the expectations conveyed by the forward-looking statements are reasonable based on information available
to the Company on the date such forward-looking statements were made, no assurances can be given as to future results, levels of activity and
achievements. For residents outside of the Province of Ontario, this presentation does not constitute an offering memorandum of the Company and
does not attempt to describe all material facts or material information regarding the Company or its business. Persons receiving this presentation
should not rely upon the presentation as a complete overview of the business of the Company and should rely on their own investigation and
diligence efforts. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
NotethatpurchasingsecuritiesoftheCompanyshouldbeconsideredariskyinvestmentasthesecuritiesarespeculativeinnatureandareappropriate
only for investors who are prepared to have their money invested for a long period of time and have the capacity to absorb a loss or all of their
investment. There is no public market for the securities of the Company, and one may never develop, therefore investors may find it difficult to resell
their securities.
The securities referred to in this presentation have not been and will not be registered under the U.S. Securities Act of 1933 or the
securities laws of any other jurisdiction and may not be offered or sold in the United States absent an exemption from, or in a
transaction not subject to, the registration requirements of the U.S. Securities Act of 1933 and any other applicable securities laws.
This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, the securities, nor shall there be any sale of
any of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
3
• ......GROWTH
• Reserves : 322% higher than IPO levels
• Production : 200% increase over the same period
• Revenue : 130% increase in 2012 over 2011
• ......VALUE
• Current Proved plus Probable Reserve Value : $141 million
• December 31, 2011 Value : $ 63 million
• January 1, 2010 Value : $ 34 million
• ......INCOME
• Dividends paid to date $1.08/share
• Current quarterly dividend $0.12/share
• Yield based on recent trading ~14% cash on cash
• Dividend Policy distribute 25%-65% of net free cash flow
• ......UPSIDE
• Wattenberg Colorado Niobrara/Codell Oil Resource Play
• Western Canada Montney Oil Resource Play
SHORELINE : DELIVERING......
44
TWO CORE AREAS : DELIVERING WITH DECREASING RISK
Niobrara/Codell Light Oil Resource, Weld County Colorado
• 5 Acquistions since November 2012
• Horizontal drilling with fracking to develop light oil
• GROWTH >200% production growth in 6 months
• potential for 1000 to 2500 BOED by end 2014
• VALUE $63MM 2P NPV (65% above investment)
• diverse portfolio : royalty plus working interest
• light crude oil, pipelined to Cushing Oklahoma
• anticipated finding costs : $13 to $19 per BOE
• INCOME Highly Profitable
• Very Low Operating Costs ($4 to $7 per BOE)
• $60 to $85 Per Barrel Netbacks
• Well Payout - 10 to 15 months
• UPSIDE $200 MM potential NPV upside
• SEQ lands located in the heart of the play
• Industry >$4 Billion being invested annually
• IP : 300 to 600 BOED per well
• 15 to 19 net wells
Peace River Arch Region, Northwest Alberta (PRA)
• 2 Years of Continuous Success
• GROWTH 700 to 2,000 BOED in 2 years
• VALUE $38MM NPV to $ 78 MM NPV
• finding & development costs $14 to $22 per BOE
• INCOME $23 MM of revenue since IPO
• low operating costs $12 to $15 per BOE
• UPSIDE Montney Oil Pure Play
• High Impact New Pool Discovery
• 3,000 to 5,000 BOED in potential upside, HZ Drilling
• 100% owned and operated (full control over capital)
5
• Toronto Stock Exchange Listed Common Shares : SEQ Convertible Debenture : SEQ.DB
• Frankfurt Exchange Common Shares : SLO
• 52 week Trading Range: C$3.00 to C$4.50
• 8.25 MM Shares Outstanding
• Insider Ownership: ~12% (17% Fully Diluted)
FINANCIAL
Operating Income
• 2013 $ 21.7 MM Cash Flow 2013
$ 47.6 MM Q4 2013 Cash Flow Annualized
(assumes $56 MM Total 2013 CAPEX including acquisitons)
Dividend Paying
• Shoreline was one of market leaders in creating a dividend paying junior oil and gas company
• Current Dividend - $0.12/share per quarter
• $1.08 per share paid to date
• Dividend Policy - between 25% and 65% of annual net free cash flow
Hedging
• ~40% of current gas production hedged through 2013 at average of $3.53/MCF
• ~11% of current gas production hedged in 2014 at average of $3.80/MCF
Debt (5-31-2013 Estimate)
• Bank Debt $ 22 Million
• Convertible Debenture $ 15 Million
• Seller’s Note related to Vendor Take Back $ 16 Million
• Long Term Royalty Obligation $ 10 Million
• Working Capital Deficiency $ 7 Million
• Total Debt $ 70 Million
Note : debt levels increased in Q4 2012/Q1 2013 to facilitate acquisition of Colorado Assets
CORPORATE
6
Production
• Q1 2013 Average Production : 1,663 Barrels Oil Equivalent (BOE) per day
• Current Production : 2,400 Barrels Oil Equivalent (BOE) per day (44% above Q1 average)
Liquids weighting increased to 30 %
• Net Production Awaiting Tie-in : ~200 Barrels Oil Equivalent (BOE) per day
2012 Capex Program
• Highly Successful Oil Drilling Program
• Charlie Lake and Montney Light Oil Targets
• 9 wells drilled (89% success rate)
• 2,564 mBOE reserves added (2P),
• $15.5 MM in value added despite poor natural gas pricing, and after subtracting 2012 production revenue
ReserveValuation
• 2P Reserve Value : $97 MM total proved, $141 MM proved plus probable
• 110% increase in TP and 127% increase in 2P reserve value over 2011 levels despite reduced gas prices
• Working interest reserve life index of 10 years using 2,400 BOED production
• $5.5 MM in land value assigned by Seaton Jordan to undeveloped lands acquired in Colorado
Go Forward Strategy
• Canadian Strategy Develop Montney Oil Pool Discoveries using Horizontal wells/fracking
• Colorado Strategy Royalty Income Grows ($0 CAPEX) & Participate in Working interest Wells
OPERATIONS
77
002,500,5002,00
duction(BOED)
1,0001
erlyAvg.DailyProd
500
Quarte
-
Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Current (E)
Nat Gas (BOE/D) Oil and NGL(BBL/D)
PRODUCTION
>200% increase
from Q2 2011
88
CORPORATE RESERVES & RESERVE VALUES(1)
Working Interest Reserves (2)
(MBOE, by Reserve Category)
Total Net PresentValue (2)
: C$141 Million
($MM, 10%, by Reserve Category)
894
1,518
2,916
12,978
20,723
32,277
94
219
361
3,151
5,191
8,657
12 %
38 %
67 %
$65,193
$97,241
$141,454
67 %
108 %
126 %
NPV10
($M)
INCREASE
OVERYE‘11
INCREASE
OVERYE‘11RESERVECATEGORY1 MBOENGL
(MBBL)
GAS
(MMCF)
LIGHTOIL
(MBBL)
Proved Developed Producing (PDP)
Total Proved (TP)
Proved plus Probable (2P)
1. Independent Evaluations by GLJ Petroleum Consultants and DeGolyer and McNaughton dated 12/31/2012, and 2/1/2013 Note royalty
reserves owned by Shoreline are not included.
CompanyWorking Interest Reserves Summary
PROVED
NONPRODUCING
ANDUNDEVELOPED)
2,040 (24%)
PROVED DEVELOPED
PRODUCING (PDP)
3,151 (36%)
PROVED
NONPRODUCING
ANDUNDEVELOPED
$32,048(23%)
PROBABLE (2P)
$44,213 (31%)
PROVED DEVELOPED
PRODUCING (PDP)
$65,193 (46%)
897
1,457
2,595
13,077
19,845
29,586
66
152
242
3,143
4,917
7,768
YR./YR.
INCREASERESERVECATEGORY1 MBOENGL
(MBBL)
GAS
(MMCF)
LIGHTOIL
(MBBL)
Proved Developed Producing (PDP)
Total Proved (TP)
Proved plus Probable (2P)
1. Independent Evaluations by GLJ Petroleum Consultants and DeGolyer and McNaughton dated 12/31/2012 and 2/1/2013
2. Total Company reserves including royalties owned by the company, net of royalties paid.
Company Net Reserves after Royalties (2)
PROBABLE (2P)
3,466 (40%)
99
CANADA VS. UNITED STATES RESERVES & VALUES
243
498
876
1,684
3,161
5,351
0
0
0
524
1,025
1,768
$23,126
$41,113
$63,326
MBOE
NPV10
($M)RESERVECATEGORY(3) NGL
(MBBL)
GAS
(MMCF)
LIGHTOIL
(MBBL)
Proved Developed Producing (PDP)
Total Proved (TP)
Proved plus Probable (2P)
1. Independent Evaluations by Degolyer McNaughton dated 12/31/2012 and 2/1/2013, NPV 10%, $CDN, Before Tax
2. Total Net Company reserves including royalties owned by the company, net of royalties paid.
United States Summary (2)
654
1,051
2,000
12,067
18,503
27,455
91
219
361
2,760
4,354
6,937
$42,067
$56,128
$78,128
MBOE
NPV10
($M)RESERVECATEGORY
NGL
(MBBL)
GAS
(MMCF)
LIGHTOIL
(MBBL)
Proved Developed Producing (PDP)
Total Proved (TP)
Proved plus Probable (2P)
1. Company Gross Reserves as per Independent Evaluations by GLJ Petroleum Consultants dated 12/31/2012, NPV 10%, $CDN, Before Tax
Canadian Summary (1)
10
- ~ 40% of current production hedged through remainder of 2013 at average price of $3.53 per mcf
- ~ 11% of current production hedged in 2014 at average price of $3.80 per mcf
Physical Gas Contracts
• 525 mcf per day C$3.32 per mcf April to October 2013
• 1050 mcf per day C$3.80 per mcf May to December 2013
• 1050 mcf per day C$3.80 per mcf Calender 2014
Financial Gas Contracts
• 1050 mcf per day C$3.28 per mcf Calender 2013, Swap
• 1050 mcf per day C$3.50 per mcf Calender 2013, Swap
• 525 mcf per day C$3.78 per mcf April to December, 2013, Enhanced Swap
HEDGING/RISK MANAGEMENT
1111
CANADA : OIL DRILLING CREATES ADDED OPPORTUNITY
Current Production: 2,000 to 2,100 BOED
Production AwaitingTie in : ~ 200 BOED
2012 Estimated Capital Expenditures $28 million
2012 Production Additions: 900 to 1,000 BOED
EstimatedCapitalEfficiency: $ 28,000 to 31,000 per BOED
Reserves Added 2,564 BOE (2P, 12-31-2012)
Finding & Development Costs $ 14.17/BOE (2P, incl. future capital)
Highlights
9 wells drilled (6.9 net) - 89% success rate 1 wells (1 net) completed and awaiting tie in
New Montney Oil Pool Discoveries Added 16 wells to oil drilling inventory (100%WI)
Montney Oil Program
• New high impact project : 3,200 acres earned to date, additional 1,280 acres under option
• Three HZ wells drilled to date (100% Shoreline) : 100% success rate
• Well #1 Current production 125 BOED from first well
Estimated net cash flow $1.1 MM per year
• Well #2 On stream April 2013, over 600 BOED and $2.5 in annual cash flow
• Well #3 Completed, awaiting tie-in, 200 BOED
• Analog pools
• up to 30 producing wells
• 15 and 25 million barrels of oil in place
Progress Area Charlie Lake Horizontal Development Program
• Four horizontals wells drilled (2.0 net)
• 75% Success rate
• Added 190 BOED in net initial production, currently 154 BOED net to SEQ
• Annual forecast free cash flow $1.0 to $1.5MM per well
T76
T77
T78
T79
T80
T81
T82
T83
T84
T85
T86
T87
T88
93-P-1
93-P-8
94-A-16
Dawson Creek
Grande Prairie
93-P-1
0 10 20 30 40 50 60
0 10 20 30 40
Kilometres
Miles
CANADA : PEACE RIVER ARCH OPERATING AREA
1212
• Prolific area for oil and gas production.
• 10 to 15“conventional”reservoir
targets, and an additional 3 to 5
“resource play”targets
• Developing light oil via a) lower risk
drilling in existing pools & b) step out
drilling to develop new pools
• SEQ drilling high impact
Montney Oil and Liquids Rich Gas
• All“upside”projects are operated by
Shoreline
• Active projects
• PRA Montney - Light Oil/NGL/Gas
• Pouce Coupe/Progress - Light Oil
• Working and royalty interest in over
170,000 net acres of land
• Future Acquisition targets
• 200 to 2000 BOE/day
• Peace River Arch preferred
• Identified upside a must
Hines Creek
Bonanza
Progress/Pouce
Montney Oil Fairway
CANADA GROWTH/UPSIDE : DEVELOP MONTNEY LIGHT OIL DISCOVERY
1313
• 100% Working Interest, Operated by Shoreline
• Initial Exploratory Well, on stream December 2012, currently 120 BOED
• Follow Up Development Well on stream Apri l2013, >600 BOED
• $3.5 million per well on stream cost
• 16 development drilling locations = 4,000 BOED potential, only 2 wells booked in existing reserve report
• Option on 8 additional locations = 2,000 BOED potential
UNITED STATES : NIOBRARA/CODELL LIGHT OIL, WELD COUNTY COLORADO
1414
• STRATEGIC ENTRY : Five acquisitions in world
class Wattenberg oil development project
• HIGH NETBACKS : Low Op Costs, $4 to $7/
BOE, premium to WTI Pricing, Nymex gas
pricing (no effect from Canadian differentials)
• Ranked by Credit Suisse as 3rd highest IRR
play in USA, behind Super Rich Marcellus and
Liquids Rich Eagle Ford
• Mix of Royalty and Working Interest
•Royalty - passive income taking advantage of other
operators capex program
•WI - non-operated position, typically 5 to 7% in each well
(~$250,000 to $350,000 net per well, ~ $10,000/BOED)
• Area Operators investing over $4 Billion in
2013 developing field with Horizontal wells
• Very Low Risk
•4 vertically stacked horizons
•Drill Horizontal wells between >10,000 existing vertical wells
•New HZ wells encounter undepleted reservoir
• Very high quality oil : 44 - 48 deg. API
• Operators plan on 8 to 30+ wells per section
targeting multiple horizons
• $13 to $19/BOE F&D Costs
• 3.0 to 4.5 recycle ratioWattenberg Field, Colorado - Seven drill rigs located within 4 miles of one
another, drilling 8 to 16 wells per square mile for Niobrara and Codell Oil.
UNITED STATES : WATTENBERG FIELD, PRODUCTION TYPE CURVES
1515
200
300
400
500
600
BOE/d
Niobrara Type Curve
-
100
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
Production Month
Niobrara Oil Production (BBLS/d) Niobrara Gas Production (BOE/d)
200
300
400
500
600
BOE/d
CodellType Curve
-
100
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
Production Month
Codell Oil Production (BBLS/d) Codell Gas Production (BOE/d)
• Initial Production
•300 to 800 BOED
•60% Oil
•10% Natural Gas Liquids
•30% Natural Gas
• Reserves 300,000 to
600,000 BOE/well
• First 8 working interest
wells on production
• Over 150 new wells
drilled or permitted on
royalty lands
• 35 new Horizontal wells
permitted or planned
on WI lands
• Low operating costs
• High Netback
NIOBRARA/CODELL : WHAT THEY ARE SAYING?(1)
1616
ENCANA CORP
•105 barrels per MMCF NGL’s
•150 net well locations
•24 gross wells in 2012 (2 rigs), $5.4 Million per well
•16 to 19 frac stages
• Niobrara IP 30 : 539 to 907 BOED
SYNERGY RESOURCES
• $3.87 per BOE lifting costs
• 50% to 100% IRR
• 100% success rate on wells drilled
• IP30 : 381 to 521 BOED
BILL BARRETT CORP.
• 1,082 DJ Basin drililng locations (gross)
• 65% IRR @ $90 WTI and $4 Henry Hub
• $200 Million Capex for 2013
• 2 to 4 rigs operating, 65 gross/42 net operated wells planned
• IP30 : 412 BOED per well (avg.)
• 300,000 BOE per well reserves
CARRIZO ENERGY
• 2 drilling rigs in Niobrara
• $35 Million 2013 Capex, 59 gross/17.6 net wells planned
• 80 acre well spacing
• 52 gross/21.2 net operated wells drilled
• Testing 60 acre well spacing
• $3.6MM per well cost
• 235,000 BOE per well reserves
•$19.20/BOE Estimated F&D
ANADARKO/KERR MCGEE
•1.0 to 1.5 Billion BOE Net Resource
•350,000 BOE per HZ Well (50% Oil, 20% NGL)
•>100% rate of return
•Doubling Activity to 300+ wells in 2013
NOBLE ENERGY
•Minimum 16 wells per section, testing up to 32 wells per section
•74 Million BOE in Place Per Section
•2.1 Billion BOE Net Resource
•335,000 BOE per HZ well (51% oil, 13% NGL)
•Improving reserves and recovery rates
•$1.7 Billion for 2013 Capex
•500 wells drilled per year by 2016
•Extended reach laterals - 1 million BOE potential
PDC ENERGY
• 2,000 HZ projects @ 16 wells per section
• Type Curve ~400 BOED initial production per well
• 70 to 80% liquids
• 149 Million BOE Total Proved Reserves
• 300,000 to 500,000 BOE per HZ well
• $4.2 Million per well, on stream
BONANZA CREEK
• 39 Million BOE Total Proved Reserves
• Niobrara 313,000 BOE reserves >75% Oil,
• Niobrara IP30 : 444 to 496 BOED
• Codell IP30 : 370 BOED, > 80% Oil
• Potential for 40 acre spacing in Niobrara
• 2013 Capex ~ $400 Million, 75 wells, 4 rigs
(1) Source : Company Presentations
1717
TREVOR FOLK
CanadianInvestmentManager
CHIEF EXECUTIVE OFFICER
EXPERIENCE
5 years energy M&A
experience,10 years
Commodity Trading &
Fund Management
PREVIOUSLY
President,
Shoreline Capital
Management
HISTORY
Shoreline Capital
Management
KEVINSTROMQUIST
Professional Geologist
PRESIDENT &COO
EXPERIENCE
30 years Geology
and Management
PREVIOUSLY
Chairman,
Lakeridge Energy
HISTORY
VPExploration,
IterationEnergyand
CNRL,GulfCanada
Resources
GARY LOBB
Chartered Accountant
CHIEF FINANCIAL OFFICER
EXPERIENCE
25 years, 19 as
Senior Executive,
Domestically &
International
PREVIOUSLY
CFO PetroSpirit
Resources Ltd.
HISTORY
Vast Exploration,
Longford Energy,
Stetson O & G, C1
Energy
SHAUN E. ALSPACH
Professional Geologist
EXECUTIVE VP,BUSINESS DEVELOPMENT
EXPERIENCE
20 years E&P
and M&A
PREVIOUSLY
President & CEO,
Lakeridge Energy
HISTORY
VP Fairborne Energy
&FairquestEnergy,
EnermarketSolutions,
CNRL,CrestarEnergy
BRIANR.CUMMING
ProfessionalEngineer
VP,ENGINEERING
EXPERIENCE
32 years Oil & Gas
Engineering
PREVIOUSLY
VP Engineering
& Director -
Lakeridge Energy
HISTORY
TritonEnergy,Resolute
Energy,CrestarEnergy,
Ranchman’sResources,
MaxwellOil&Gas
JAN BOYDOL
VP,LAND
EXPERIENCE
30 years Land Asset
Management
PREVIOUSLY
LandManager,
LakeridgeEnergy&
ShorelineEnergyFund
HISTORY
LandManager,several
privateandpublicoil
&gascompanies
KELSEY COOPER
CHARTERED ACCOUNTANT
CONTROLLER
EXPERIENCE
8 years Audit,
Accounting and Oil
and Gas
PREVIOUSLY
Audit &Accounting
CollinsBarrow
HISTORY
Controllerofprivate
andpubliccompanies
LEADERSHIP TEAM
Board of Directors
JohnWilliams PROFESSIONAL GEOLOGIST | PRESIDENT, TRILOGY ENERGY CORP.
•TSX listed oil and gas company, current market capitalization of $2.1 Billion
• 24 years Management, Exploration, Operations and Acquisitions Experience
Peter John Henry INDEPENDENT BUSINESSMAN | PRESIDNET, PJH CONSULTING
• Capital Markets, Investment Banking and Brokerage experience
• Previously, First Energy Capital Corp., Private Client Sales. Junior and Mid-
Cap Energy Financing
Daniel (Dan) Long PROFESSIONAL ENGINEER | VICE-PRESIDENT, CLEARBROOK RESOURCES
• 29yearsengineering,mergersandacquisitions&seniormanagementexperience
• Previously,VPBusinessDevelopmentNorthrockResources
Trevor Folk CANADIAN INVESTMENT MANAGER | CHIEF EXECUTIVE OFFICER
Shaun E. Alspach PROFESSIONAL GEOLOGIST | EXECUTIVE VP, BUSINESS DEVELOPMENT
1818
CALGARY OFFICE
MAILING ADDRESS
Suite 400, 209-8th Ave SW
Calgary, Alberta, T2P 1B8
PHONE
(403) 767-9066
ONLINE
www.ShorelineEnergy.ca
TREVOR FOLK
CHIEF EXECUTIVE OFFICER
EMAIL
tfolk@shorelineenergy.ca
PHONE
(403) 398-4070
J. KEVIN STROMQUIST
PRESIDENT & CHIEF OPERATING OFFICER
EMAIL
kstromquist@shorelineenergy.ca
PHONE
(403) 398-4075
GARY LOBB
CHIEF FINANCIAL OFFICER
EMAIL
globb@shorelineenergy.ca
PHONE
(403) 398-4080
CONTACT INFORMATION
Bank: AlbertaTreasury Branch
Auditor: KPMG
Independent Reserve: GLJ Petroleum Consultants
Evaluators DeGolyer and McNaughton

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SEQ June 18 2013

  • 1. TSX: SEQ Shoreline Energy Corp. GROWTH, VALUE, INCOME, UPSIDE CORPORATE PRESENTATION, JUNE 2013
  • 2. 2 DISCLAIMER Certain information in this presentation constitutes forward-looking statements under applicable securities law. Any statements that are contained in this presentation that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as “may,” “should,” “anticipate,” “expects,” “seeks” and similar expressions. Forward-looking statements necessarily involve known and unknown risks, including, without limitation, that the final set-off amounts may impact the financial exposure of Shoreline differently than currently anticipated, the availability of drilling services and risks associated with oil and gas production; marketing and transportation; loss of markets; volatility of commodity prices; currency and interest rate fluctuations; imprecision of reserve estimates; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions or dispositions; inability to access sufficient capital from internal and external sources; changes in legislation, including but not limited to income tax, environmental laws and regulatory matters. Readers are cautioned that the foregoing list of factors is not exhaustive. Readersarecautionednottoplaceunduerelianceonforward-lookingstatementsastherecanbenoassurancethattheplans,intentionsorexpectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to beincorrectandactualresultsmaydiffermateriallyfromthoseanticipated.Inparticular,drillingplans,on-productiondatesandproductioncontinuity are particularly subject to uncertainties and uncontrollable events such as surface access, rig availability, equipment availability, weather conditions, changes in geological interpretation, and other factors. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement. Additional information on these and other factors that could affect Shoreline’s operations or financial results are included in Shoreline’s reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) or by contacting Shoreline. Furthermore, the forward looking statements contained in this presentation are made as of the date of this presentation, and Shoreline does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by securities law. Although the Company believes that the expectations conveyed by the forward-looking statements are reasonable based on information available to the Company on the date such forward-looking statements were made, no assurances can be given as to future results, levels of activity and achievements. For residents outside of the Province of Ontario, this presentation does not constitute an offering memorandum of the Company and does not attempt to describe all material facts or material information regarding the Company or its business. Persons receiving this presentation should not rely upon the presentation as a complete overview of the business of the Company and should rely on their own investigation and diligence efforts. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. NotethatpurchasingsecuritiesoftheCompanyshouldbeconsideredariskyinvestmentasthesecuritiesarespeculativeinnatureandareappropriate only for investors who are prepared to have their money invested for a long period of time and have the capacity to absorb a loss or all of their investment. There is no public market for the securities of the Company, and one may never develop, therefore investors may find it difficult to resell their securities. The securities referred to in this presentation have not been and will not be registered under the U.S. Securities Act of 1933 or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act of 1933 and any other applicable securities laws. This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, the securities, nor shall there be any sale of any of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
  • 3. 3 • ......GROWTH • Reserves : 322% higher than IPO levels • Production : 200% increase over the same period • Revenue : 130% increase in 2012 over 2011 • ......VALUE • Current Proved plus Probable Reserve Value : $141 million • December 31, 2011 Value : $ 63 million • January 1, 2010 Value : $ 34 million • ......INCOME • Dividends paid to date $1.08/share • Current quarterly dividend $0.12/share • Yield based on recent trading ~14% cash on cash • Dividend Policy distribute 25%-65% of net free cash flow • ......UPSIDE • Wattenberg Colorado Niobrara/Codell Oil Resource Play • Western Canada Montney Oil Resource Play SHORELINE : DELIVERING......
  • 4. 44 TWO CORE AREAS : DELIVERING WITH DECREASING RISK Niobrara/Codell Light Oil Resource, Weld County Colorado • 5 Acquistions since November 2012 • Horizontal drilling with fracking to develop light oil • GROWTH >200% production growth in 6 months • potential for 1000 to 2500 BOED by end 2014 • VALUE $63MM 2P NPV (65% above investment) • diverse portfolio : royalty plus working interest • light crude oil, pipelined to Cushing Oklahoma • anticipated finding costs : $13 to $19 per BOE • INCOME Highly Profitable • Very Low Operating Costs ($4 to $7 per BOE) • $60 to $85 Per Barrel Netbacks • Well Payout - 10 to 15 months • UPSIDE $200 MM potential NPV upside • SEQ lands located in the heart of the play • Industry >$4 Billion being invested annually • IP : 300 to 600 BOED per well • 15 to 19 net wells Peace River Arch Region, Northwest Alberta (PRA) • 2 Years of Continuous Success • GROWTH 700 to 2,000 BOED in 2 years • VALUE $38MM NPV to $ 78 MM NPV • finding & development costs $14 to $22 per BOE • INCOME $23 MM of revenue since IPO • low operating costs $12 to $15 per BOE • UPSIDE Montney Oil Pure Play • High Impact New Pool Discovery • 3,000 to 5,000 BOED in potential upside, HZ Drilling • 100% owned and operated (full control over capital)
  • 5. 5 • Toronto Stock Exchange Listed Common Shares : SEQ Convertible Debenture : SEQ.DB • Frankfurt Exchange Common Shares : SLO • 52 week Trading Range: C$3.00 to C$4.50 • 8.25 MM Shares Outstanding • Insider Ownership: ~12% (17% Fully Diluted) FINANCIAL Operating Income • 2013 $ 21.7 MM Cash Flow 2013 $ 47.6 MM Q4 2013 Cash Flow Annualized (assumes $56 MM Total 2013 CAPEX including acquisitons) Dividend Paying • Shoreline was one of market leaders in creating a dividend paying junior oil and gas company • Current Dividend - $0.12/share per quarter • $1.08 per share paid to date • Dividend Policy - between 25% and 65% of annual net free cash flow Hedging • ~40% of current gas production hedged through 2013 at average of $3.53/MCF • ~11% of current gas production hedged in 2014 at average of $3.80/MCF Debt (5-31-2013 Estimate) • Bank Debt $ 22 Million • Convertible Debenture $ 15 Million • Seller’s Note related to Vendor Take Back $ 16 Million • Long Term Royalty Obligation $ 10 Million • Working Capital Deficiency $ 7 Million • Total Debt $ 70 Million Note : debt levels increased in Q4 2012/Q1 2013 to facilitate acquisition of Colorado Assets CORPORATE
  • 6. 6 Production • Q1 2013 Average Production : 1,663 Barrels Oil Equivalent (BOE) per day • Current Production : 2,400 Barrels Oil Equivalent (BOE) per day (44% above Q1 average) Liquids weighting increased to 30 % • Net Production Awaiting Tie-in : ~200 Barrels Oil Equivalent (BOE) per day 2012 Capex Program • Highly Successful Oil Drilling Program • Charlie Lake and Montney Light Oil Targets • 9 wells drilled (89% success rate) • 2,564 mBOE reserves added (2P), • $15.5 MM in value added despite poor natural gas pricing, and after subtracting 2012 production revenue ReserveValuation • 2P Reserve Value : $97 MM total proved, $141 MM proved plus probable • 110% increase in TP and 127% increase in 2P reserve value over 2011 levels despite reduced gas prices • Working interest reserve life index of 10 years using 2,400 BOED production • $5.5 MM in land value assigned by Seaton Jordan to undeveloped lands acquired in Colorado Go Forward Strategy • Canadian Strategy Develop Montney Oil Pool Discoveries using Horizontal wells/fracking • Colorado Strategy Royalty Income Grows ($0 CAPEX) & Participate in Working interest Wells OPERATIONS
  • 7. 77 002,500,5002,00 duction(BOED) 1,0001 erlyAvg.DailyProd 500 Quarte - Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Current (E) Nat Gas (BOE/D) Oil and NGL(BBL/D) PRODUCTION >200% increase from Q2 2011
  • 8. 88 CORPORATE RESERVES & RESERVE VALUES(1) Working Interest Reserves (2) (MBOE, by Reserve Category) Total Net PresentValue (2) : C$141 Million ($MM, 10%, by Reserve Category) 894 1,518 2,916 12,978 20,723 32,277 94 219 361 3,151 5,191 8,657 12 % 38 % 67 % $65,193 $97,241 $141,454 67 % 108 % 126 % NPV10 ($M) INCREASE OVERYE‘11 INCREASE OVERYE‘11RESERVECATEGORY1 MBOENGL (MBBL) GAS (MMCF) LIGHTOIL (MBBL) Proved Developed Producing (PDP) Total Proved (TP) Proved plus Probable (2P) 1. Independent Evaluations by GLJ Petroleum Consultants and DeGolyer and McNaughton dated 12/31/2012, and 2/1/2013 Note royalty reserves owned by Shoreline are not included. CompanyWorking Interest Reserves Summary PROVED NONPRODUCING ANDUNDEVELOPED) 2,040 (24%) PROVED DEVELOPED PRODUCING (PDP) 3,151 (36%) PROVED NONPRODUCING ANDUNDEVELOPED $32,048(23%) PROBABLE (2P) $44,213 (31%) PROVED DEVELOPED PRODUCING (PDP) $65,193 (46%) 897 1,457 2,595 13,077 19,845 29,586 66 152 242 3,143 4,917 7,768 YR./YR. INCREASERESERVECATEGORY1 MBOENGL (MBBL) GAS (MMCF) LIGHTOIL (MBBL) Proved Developed Producing (PDP) Total Proved (TP) Proved plus Probable (2P) 1. Independent Evaluations by GLJ Petroleum Consultants and DeGolyer and McNaughton dated 12/31/2012 and 2/1/2013 2. Total Company reserves including royalties owned by the company, net of royalties paid. Company Net Reserves after Royalties (2) PROBABLE (2P) 3,466 (40%)
  • 9. 99 CANADA VS. UNITED STATES RESERVES & VALUES 243 498 876 1,684 3,161 5,351 0 0 0 524 1,025 1,768 $23,126 $41,113 $63,326 MBOE NPV10 ($M)RESERVECATEGORY(3) NGL (MBBL) GAS (MMCF) LIGHTOIL (MBBL) Proved Developed Producing (PDP) Total Proved (TP) Proved plus Probable (2P) 1. Independent Evaluations by Degolyer McNaughton dated 12/31/2012 and 2/1/2013, NPV 10%, $CDN, Before Tax 2. Total Net Company reserves including royalties owned by the company, net of royalties paid. United States Summary (2) 654 1,051 2,000 12,067 18,503 27,455 91 219 361 2,760 4,354 6,937 $42,067 $56,128 $78,128 MBOE NPV10 ($M)RESERVECATEGORY NGL (MBBL) GAS (MMCF) LIGHTOIL (MBBL) Proved Developed Producing (PDP) Total Proved (TP) Proved plus Probable (2P) 1. Company Gross Reserves as per Independent Evaluations by GLJ Petroleum Consultants dated 12/31/2012, NPV 10%, $CDN, Before Tax Canadian Summary (1)
  • 10. 10 - ~ 40% of current production hedged through remainder of 2013 at average price of $3.53 per mcf - ~ 11% of current production hedged in 2014 at average price of $3.80 per mcf Physical Gas Contracts • 525 mcf per day C$3.32 per mcf April to October 2013 • 1050 mcf per day C$3.80 per mcf May to December 2013 • 1050 mcf per day C$3.80 per mcf Calender 2014 Financial Gas Contracts • 1050 mcf per day C$3.28 per mcf Calender 2013, Swap • 1050 mcf per day C$3.50 per mcf Calender 2013, Swap • 525 mcf per day C$3.78 per mcf April to December, 2013, Enhanced Swap HEDGING/RISK MANAGEMENT
  • 11. 1111 CANADA : OIL DRILLING CREATES ADDED OPPORTUNITY Current Production: 2,000 to 2,100 BOED Production AwaitingTie in : ~ 200 BOED 2012 Estimated Capital Expenditures $28 million 2012 Production Additions: 900 to 1,000 BOED EstimatedCapitalEfficiency: $ 28,000 to 31,000 per BOED Reserves Added 2,564 BOE (2P, 12-31-2012) Finding & Development Costs $ 14.17/BOE (2P, incl. future capital) Highlights 9 wells drilled (6.9 net) - 89% success rate 1 wells (1 net) completed and awaiting tie in New Montney Oil Pool Discoveries Added 16 wells to oil drilling inventory (100%WI) Montney Oil Program • New high impact project : 3,200 acres earned to date, additional 1,280 acres under option • Three HZ wells drilled to date (100% Shoreline) : 100% success rate • Well #1 Current production 125 BOED from first well Estimated net cash flow $1.1 MM per year • Well #2 On stream April 2013, over 600 BOED and $2.5 in annual cash flow • Well #3 Completed, awaiting tie-in, 200 BOED • Analog pools • up to 30 producing wells • 15 and 25 million barrels of oil in place Progress Area Charlie Lake Horizontal Development Program • Four horizontals wells drilled (2.0 net) • 75% Success rate • Added 190 BOED in net initial production, currently 154 BOED net to SEQ • Annual forecast free cash flow $1.0 to $1.5MM per well
  • 12. T76 T77 T78 T79 T80 T81 T82 T83 T84 T85 T86 T87 T88 93-P-1 93-P-8 94-A-16 Dawson Creek Grande Prairie 93-P-1 0 10 20 30 40 50 60 0 10 20 30 40 Kilometres Miles CANADA : PEACE RIVER ARCH OPERATING AREA 1212 • Prolific area for oil and gas production. • 10 to 15“conventional”reservoir targets, and an additional 3 to 5 “resource play”targets • Developing light oil via a) lower risk drilling in existing pools & b) step out drilling to develop new pools • SEQ drilling high impact Montney Oil and Liquids Rich Gas • All“upside”projects are operated by Shoreline • Active projects • PRA Montney - Light Oil/NGL/Gas • Pouce Coupe/Progress - Light Oil • Working and royalty interest in over 170,000 net acres of land • Future Acquisition targets • 200 to 2000 BOE/day • Peace River Arch preferred • Identified upside a must Hines Creek Bonanza Progress/Pouce Montney Oil Fairway
  • 13. CANADA GROWTH/UPSIDE : DEVELOP MONTNEY LIGHT OIL DISCOVERY 1313 • 100% Working Interest, Operated by Shoreline • Initial Exploratory Well, on stream December 2012, currently 120 BOED • Follow Up Development Well on stream Apri l2013, >600 BOED • $3.5 million per well on stream cost • 16 development drilling locations = 4,000 BOED potential, only 2 wells booked in existing reserve report • Option on 8 additional locations = 2,000 BOED potential
  • 14. UNITED STATES : NIOBRARA/CODELL LIGHT OIL, WELD COUNTY COLORADO 1414 • STRATEGIC ENTRY : Five acquisitions in world class Wattenberg oil development project • HIGH NETBACKS : Low Op Costs, $4 to $7/ BOE, premium to WTI Pricing, Nymex gas pricing (no effect from Canadian differentials) • Ranked by Credit Suisse as 3rd highest IRR play in USA, behind Super Rich Marcellus and Liquids Rich Eagle Ford • Mix of Royalty and Working Interest •Royalty - passive income taking advantage of other operators capex program •WI - non-operated position, typically 5 to 7% in each well (~$250,000 to $350,000 net per well, ~ $10,000/BOED) • Area Operators investing over $4 Billion in 2013 developing field with Horizontal wells • Very Low Risk •4 vertically stacked horizons •Drill Horizontal wells between >10,000 existing vertical wells •New HZ wells encounter undepleted reservoir • Very high quality oil : 44 - 48 deg. API • Operators plan on 8 to 30+ wells per section targeting multiple horizons • $13 to $19/BOE F&D Costs • 3.0 to 4.5 recycle ratioWattenberg Field, Colorado - Seven drill rigs located within 4 miles of one another, drilling 8 to 16 wells per square mile for Niobrara and Codell Oil.
  • 15. UNITED STATES : WATTENBERG FIELD, PRODUCTION TYPE CURVES 1515 200 300 400 500 600 BOE/d Niobrara Type Curve - 100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Production Month Niobrara Oil Production (BBLS/d) Niobrara Gas Production (BOE/d) 200 300 400 500 600 BOE/d CodellType Curve - 100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Production Month Codell Oil Production (BBLS/d) Codell Gas Production (BOE/d) • Initial Production •300 to 800 BOED •60% Oil •10% Natural Gas Liquids •30% Natural Gas • Reserves 300,000 to 600,000 BOE/well • First 8 working interest wells on production • Over 150 new wells drilled or permitted on royalty lands • 35 new Horizontal wells permitted or planned on WI lands • Low operating costs • High Netback
  • 16. NIOBRARA/CODELL : WHAT THEY ARE SAYING?(1) 1616 ENCANA CORP •105 barrels per MMCF NGL’s •150 net well locations •24 gross wells in 2012 (2 rigs), $5.4 Million per well •16 to 19 frac stages • Niobrara IP 30 : 539 to 907 BOED SYNERGY RESOURCES • $3.87 per BOE lifting costs • 50% to 100% IRR • 100% success rate on wells drilled • IP30 : 381 to 521 BOED BILL BARRETT CORP. • 1,082 DJ Basin drililng locations (gross) • 65% IRR @ $90 WTI and $4 Henry Hub • $200 Million Capex for 2013 • 2 to 4 rigs operating, 65 gross/42 net operated wells planned • IP30 : 412 BOED per well (avg.) • 300,000 BOE per well reserves CARRIZO ENERGY • 2 drilling rigs in Niobrara • $35 Million 2013 Capex, 59 gross/17.6 net wells planned • 80 acre well spacing • 52 gross/21.2 net operated wells drilled • Testing 60 acre well spacing • $3.6MM per well cost • 235,000 BOE per well reserves •$19.20/BOE Estimated F&D ANADARKO/KERR MCGEE •1.0 to 1.5 Billion BOE Net Resource •350,000 BOE per HZ Well (50% Oil, 20% NGL) •>100% rate of return •Doubling Activity to 300+ wells in 2013 NOBLE ENERGY •Minimum 16 wells per section, testing up to 32 wells per section •74 Million BOE in Place Per Section •2.1 Billion BOE Net Resource •335,000 BOE per HZ well (51% oil, 13% NGL) •Improving reserves and recovery rates •$1.7 Billion for 2013 Capex •500 wells drilled per year by 2016 •Extended reach laterals - 1 million BOE potential PDC ENERGY • 2,000 HZ projects @ 16 wells per section • Type Curve ~400 BOED initial production per well • 70 to 80% liquids • 149 Million BOE Total Proved Reserves • 300,000 to 500,000 BOE per HZ well • $4.2 Million per well, on stream BONANZA CREEK • 39 Million BOE Total Proved Reserves • Niobrara 313,000 BOE reserves >75% Oil, • Niobrara IP30 : 444 to 496 BOED • Codell IP30 : 370 BOED, > 80% Oil • Potential for 40 acre spacing in Niobrara • 2013 Capex ~ $400 Million, 75 wells, 4 rigs (1) Source : Company Presentations
  • 17. 1717 TREVOR FOLK CanadianInvestmentManager CHIEF EXECUTIVE OFFICER EXPERIENCE 5 years energy M&A experience,10 years Commodity Trading & Fund Management PREVIOUSLY President, Shoreline Capital Management HISTORY Shoreline Capital Management KEVINSTROMQUIST Professional Geologist PRESIDENT &COO EXPERIENCE 30 years Geology and Management PREVIOUSLY Chairman, Lakeridge Energy HISTORY VPExploration, IterationEnergyand CNRL,GulfCanada Resources GARY LOBB Chartered Accountant CHIEF FINANCIAL OFFICER EXPERIENCE 25 years, 19 as Senior Executive, Domestically & International PREVIOUSLY CFO PetroSpirit Resources Ltd. HISTORY Vast Exploration, Longford Energy, Stetson O & G, C1 Energy SHAUN E. ALSPACH Professional Geologist EXECUTIVE VP,BUSINESS DEVELOPMENT EXPERIENCE 20 years E&P and M&A PREVIOUSLY President & CEO, Lakeridge Energy HISTORY VP Fairborne Energy &FairquestEnergy, EnermarketSolutions, CNRL,CrestarEnergy BRIANR.CUMMING ProfessionalEngineer VP,ENGINEERING EXPERIENCE 32 years Oil & Gas Engineering PREVIOUSLY VP Engineering & Director - Lakeridge Energy HISTORY TritonEnergy,Resolute Energy,CrestarEnergy, Ranchman’sResources, MaxwellOil&Gas JAN BOYDOL VP,LAND EXPERIENCE 30 years Land Asset Management PREVIOUSLY LandManager, LakeridgeEnergy& ShorelineEnergyFund HISTORY LandManager,several privateandpublicoil &gascompanies KELSEY COOPER CHARTERED ACCOUNTANT CONTROLLER EXPERIENCE 8 years Audit, Accounting and Oil and Gas PREVIOUSLY Audit &Accounting CollinsBarrow HISTORY Controllerofprivate andpubliccompanies LEADERSHIP TEAM Board of Directors JohnWilliams PROFESSIONAL GEOLOGIST | PRESIDENT, TRILOGY ENERGY CORP. •TSX listed oil and gas company, current market capitalization of $2.1 Billion • 24 years Management, Exploration, Operations and Acquisitions Experience Peter John Henry INDEPENDENT BUSINESSMAN | PRESIDNET, PJH CONSULTING • Capital Markets, Investment Banking and Brokerage experience • Previously, First Energy Capital Corp., Private Client Sales. Junior and Mid- Cap Energy Financing Daniel (Dan) Long PROFESSIONAL ENGINEER | VICE-PRESIDENT, CLEARBROOK RESOURCES • 29yearsengineering,mergersandacquisitions&seniormanagementexperience • Previously,VPBusinessDevelopmentNorthrockResources Trevor Folk CANADIAN INVESTMENT MANAGER | CHIEF EXECUTIVE OFFICER Shaun E. Alspach PROFESSIONAL GEOLOGIST | EXECUTIVE VP, BUSINESS DEVELOPMENT
  • 18. 1818 CALGARY OFFICE MAILING ADDRESS Suite 400, 209-8th Ave SW Calgary, Alberta, T2P 1B8 PHONE (403) 767-9066 ONLINE www.ShorelineEnergy.ca TREVOR FOLK CHIEF EXECUTIVE OFFICER EMAIL tfolk@shorelineenergy.ca PHONE (403) 398-4070 J. KEVIN STROMQUIST PRESIDENT & CHIEF OPERATING OFFICER EMAIL kstromquist@shorelineenergy.ca PHONE (403) 398-4075 GARY LOBB CHIEF FINANCIAL OFFICER EMAIL globb@shorelineenergy.ca PHONE (403) 398-4080 CONTACT INFORMATION Bank: AlbertaTreasury Branch Auditor: KPMG Independent Reserve: GLJ Petroleum Consultants Evaluators DeGolyer and McNaughton