january 22, 2019 cuda oil and gas inc....amir arif, (403) 750-7200; [email protected] michael...

Amir Ar i f , (403) 750-7200; [email protected] Michael Muel ler , P. Geo, Associate (403) 750-7210; [email protected]

O I L & G A S

January 22, 2019 Cuda Oil and Gas Inc.

Powder River Basin Light Oil Exposure With Multizone Potential

Unless otherwise denoted, all figures shown in C$

Recommendation: Buy

Target Price: $4.00

Company Statistics: Stock Symbol: CUDA - TSXV

Price: $1.70

Share Outstanding:

Basic: 21.9 MM

Fully Diluted: 26.7 MM

Insiders: 7.0 MM

Market Cap: $37.2 MM

Net Debt (19E): $40.5 MM

Avg. Daily Trading Volume (30D): 17,839

High – Low (52-Week): $5.50 - $0.70

Company Description:

Cuda Oil and Gas Inc. is a Calgary-based, small-cap E&P with a diversified portfolio of assets in Wyoming, Alberta, and Quebec. Its near-term focus is on developing its Powder River Basin acreage in Wyoming.

During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities for Cuda Oil and Gas Inc.

Initiating coverage with a Buy rating and $4.00 target price. Cuda Oil

and Gas Inc. completed the acquisition of its key asset in the Wyoming

Powder River basin in August 2018 for $48 MM and went public through a

reverse takeover at the same time.

Resource exposure to the oily Powder River Basin. The Powder River

Basin is an oil-rich basin with a proven thick oil column, basin-wide rocks,

and multiple stacked plays providing up to 14 productive horizontal targets.

Additionally, the basin offers visible light oil, high netback drilling

opportunities with ample basin takeaway capacity and industry-wide activity

picking up in 2019 from most of the established companies in the area.

Cuda has an ~30% non-operated working interest in the area providing

exposure to 12,500 net acres. Current enterprise value, after deducting

estimated PDP value, results in an implied land value of $2,800/acre, in line

with recent transactions in the area which have been valued at US$2,500-

$3,500/acre, suggesting the stock is only reflecting acreage value at these

levels. With 11 recent vertical wells completed, two to three horizontal wells

planned, gas plant coming online in February, and miscible flood planned for

June, the risk/reward on this name is very attractive.

Fiscal YE Dec 31 2019E 2020E 2021E

Production (BOE/d) 1,563 2,600 2,800 CFPS (Diluted) $0.64 $1.30 $1.48 Net Debt $40.5 $29.9 $14.5

Disclosure statements located on pages 23 – 24 of this report

Net Debt / EBITDA 1.9x 0.8x 0.3x EV / EBITDA 3.7x 1.7x 1.2x Source: Cormark Securities Inc.

JANUARY 22, 2019 AMIR ARIF 403·750·7200; MICHAEL MUELLER - ASSOCIATE 403·750·7210

2

Investment Thesis Shannon Provides Low-Risk, Near-Term Cash Flow Growth with Deeper Zones Providing More Meaningful Upside

Since closing, Cuda has drilled 11 wells, bringing total well count to 26 producing wells,and field production north of 1,600 BOE/d (94% oil), 450 BOE/d net to Cuda. Thisproduction is primarily from the shallower Shannon formation in the Barron Flats Unitwhere well costs are estimated to be $1.6 MM with initial IP rates of 180 BOE/d (96%oil) with an additional 70 remaining 160-acre locations. Even within the Shannon zoneitself, the company has identified an Upper and Lower Shannon zone which has thepotential to further improve well performance and/or landing zones/inventory. Three ofthe 11 recent wells have been completed with the Lower and Upper Shannon zonescommingled. Two of these wells are outperforming the type-curve. The company willhave finished electrifying wells as well as completed building its gas gathering and gasplant in the Barron Flats Unit in the coming few weeks, which should further reduceoperating costs and improve liquid recoveries. This also provides most of theinfrastructure for a gas flood to begin. Additional Shannon drilling will most likelyresume in June after the gas flood application process is complete since gas flooddevelopment would determine where new primary wells should be placed. Bottom line,the Shannon zone provides low-risk, lower well costs, and highly economic light oiltargets which provides oil volume growth in the short-term with significant long-term gasflood production and reserve growth. Large upside resides in the deeper horizontal targetzones with two or three horizontal wells planned in 2019.

Figure 1 Price Chart

Source: BigCharts.com (January 21, 2019)


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Upside To Deeper Horizons

Deeper potential targets include the Niobrara, Frontier 1/2/3, Mowry Shale, Muddy,Dakota, and Lakota formations with approximately two or three horizontal wells plannedin 2019 targeting the low hanging fruit in the Frontier formation. With these wells costing$5-9 MM each dependent on lateral length (i.e., one-mile versus two-mile), the timing ofthese wells is more dependent on cash flows. However, nearby two-mile Frontierhorizontal wells have initial rates of 1,000-2,000 BOE/d with some nearby wells comingonline in the 3-4 MBOE/d range. The Cole Creek area has existing Frontier productionfrom 18 wells making the Frontier 2 the likely first target for the first one to twohorizontal wells. Cuda also plans to drill a horizontal well in the Barron Flats Unittargeting the Frontier 1 with very successful Frontier 1 well results northeast of thecompany’s acreage. The potential rates of these wells being 5-10x the rates of Shannonwells with wells costing 5-6x more may meaningfully improve the capital efficiency,growth rate, and running room for the company over time.

Miscible Gas Flood Provides Additional Optionality

Once gas infrastructure and permits are in place, the potential for a gas flood in theShannon zone could increase production by two-fold to three-fold with better economicsthan the already attractive primary drilling. There is a successful gas flood in the Muddyzone in the Sand Dunes pool located only six miles away from the Barron Flats Unitproviding good analogous pool performance. Given the undersaturated reservoir and rockqualities, the production response from a miscible gas flood should begin to take place inless than two months, similar to the analogous pool where production increased from 2.3MBOE/d to 13 MBOE/d. The application for the gas flood will be submitted in thecoming 30 days with approvals expected in April/May. In the meantime, the completionof the gas plant and gathering infrastructure will allow the company to begin a gas floodtest prior to a larger scale rollout following regulatory approval.

Stable Differentials One final key differentiating factor for Cuda is the plentiful takeaway capacity from thebasin, which results in stable differentials relative to most Canadian listed oil producerswith Cuda’s current differential to WTI being approximately US$2.50/B.


4

Company Overview Formed Through A Reverse Takeover Of Junex During The Summer Of 2018

On June 8, 2018, Junex entered into an agreement to acquire Cuda Energy, completingthe acquisition on August 14, 2018. At closing, shares were consolidated 10:1 and thecorporate name changed to Cuda Oil and Gas Inc. Junex issued 8.6 MM shares to acquireCuda, resulting in total shares outstanding of 18.9 MM at closing with Junex shareholdersowning 55% and Cuda shareholders owning 45% of the combined company. Also issuedto Cuda shareholders were 1 MM purchase warrants with a $4.00/sh exercise price and atwo-year term expiring on August 14, 2020.

Concurrent With The Business Combination, Cuda Closed On Its Key Foundational Asset In The Powder River Basin

On August 14, 2018, the company closed on its Wyoming asset acquisition for $48 MM.The US$37 MM purchase price was composed of US$31 MM cash and 2.1 MM Cudashares, reflecting an equity price of $3.70/sh. The cash portion of the deal was fundedthrough a $35 MM 10.5% acquisition facility and available cash on hand. The acquisitionfacility debt matures on June 29, 2019. The shares are under a lockup agreement for sixmonths following closing and will become freely tradeable on February 14, 2019.

The Initial Acquisition Provided A 27.75% Working Interest In the 25,000 Acre Barron Flats Unit In The Powder River Basin With Net Production Of 280 BOE/d

This asset produces high netback, light sweet oil from vertical wells in the Shannonformation with four additional deeper zones (also oil-bearing) with nearby production byoffset operators. At the time of the acquisition, the Wyoming assets were producing 1,000BOE/d (280 BOE/d net to Cuda) of high netback (92% oil) production from the Shannonformation. An additional 70 locations in the Shannon have been identified with well costsof ~$1.6 MM and EURs of 150 MB of oil per well. Primary development is expected torecover 10% of oil-in-place with miscible flood having the ability to increase this furthertowards 50% according to the company. Of the four deeper zones, two have already beenproven productive on the acreage with historical vertical wells.

Wyoming Footprint Has Been Expanded With Subsequent Land Acquisitions

On October 17, 2018, Cuda announced that it has acquired a 33% working interest in theCole Creek Unit and surrounding acreage. This area sits to the west of the Barron FlatsUnit. In addition, the company also acquired mineral rights to 5,046 gross acres (1,682net) in the vicinity through BLM land sales. The BLM lands provide ten-year lease terms,minimizing near-term drilling commitments, and an attractive 12.5% royalty rate. As aresult of these acquisitions, Cuda has now blocked up 42,000 gross (12,500 net) acres inthe oily Powder River Basin.

Financing Closed To Fund Additional Acreage Position And Kickstart Development

On November 9, 2018, Cuda closed a private placement for 2.981 MM shares at a priceof $2.40/sh resulting in gross proceeds of $7.2 MM. The shares are subject to a four-month hold and become freely tradeable on March 9, 2019. The financing allowed for thepurchase of the additional acreage as well as the ongoing development program on thePowder River Basin assets, which included an 11 Shannon well program with all 11drilled, completed and are now on production.


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Current Financial Snapshot

Post-closing, Cuda has 21.93 MM basic shares outstanding resulting in an approximatemarket cap of $37.2 MM, acquisition facility of $35 MM, convertible debentures of $1.5MM and an estimated unrestricted cash balance of $1.5 MM at YE2018, resulting in netdebt of $33.5 MM (excluding restricted cash of $7.7 MM). This results in a $71 MMenterprise value for a company producing 1,100 MBOE/d (45% liquids) with a very largerunway of highly economic oil-weighted growth given the early stage of the Wyomingasset development.

Current Operational Snapshot

On December 19, 2018, Cuda provided an operational update noting that currentcorporate production volumes are 1,100 BOE/d (45% liquids). The company has drilled11 gross (3.05 net) vertical Shannon oil wells with all 11 on production. The averagepeak rate for the completed wells is 180 BOE/d (96% oil) supporting the Ryder Scotttype-curve of 150 MB of oil. Current Baron Flats Unit Shannon production is 1,600BOE/d (94% oil) with net production of 450 BOE/d for Cuda’s 27.75% working interest.The 11 additional wells completed and brought on production bring the total producingwell count to 26 for Shannon production. The first 10 wells have been electrified whilethe next 16 have yet to be electrified, though full electrification is expected to becompleted by February 2019. This is expected to reduce operating costs by $3,000/monthper well. The gas handling facility is near completion and is expected to startup inFebruary 2019. At Cole Creek, current production is 40 B/d gross (13 B/d net to Cuda).Six workovers and two recompletions are planned at Cole Creek in Q1/19. The companyshould be in a position to commence a horizontal program in 2019 as well with two wellstargeted for Cole Creek Frontier 2 zone and one well planned for the Frontier 1 zone atBarron Flats Unit.

The table below provides results of 11 recent Shannon wells drilled by the company. Thekey points to note include the initial rates of greater than 200 B/d of oil in the 12-20 and32-21 well. Both wells had perforations in both the Upper and the Lower Shannon zone.

Figure 2 Cuda 2018 Barron Flats Unit Drilling Program

Frac Prod.Peak Oil

RateSept. Avg.

Oct. Avg.

Nov. Avg.

Dec. Avg.

Well Spud (t) Start (B/d) (B/d) (B/d) (B/d) (B/d)

BFU 23-14 Jul/24 110 Sep/01 180 140 124 101 85BFU 44-22 Aug/08 110 Sep/04 155 108 84 69 61BFU 23-27 Aug/19 110 Sep/26 169 45 103 86 100BFU 22-29 Aug/26 110 Oct/06 182 - 104 94 104BFU 32-27 Sep/05 110 Oct/13 136 - 104 115 104BFU 41-30 Sep/13 135 Oct/24 130 - 59 78 51BFU Fed 12-20 Oct/02 135 Nov/12 220 - - 121 132BFU Fed 32-21 Oct/12 140 Nov/21 210 - - 128 139BFU Fed 11-28 Sep/22 140 Nov/25 172 - - 52 123BFU 23-28 Oct/21 135 Dec/15 120 - - - -BFU 34-14 Dec/09 110 - - - - - -

Average 122 167 98 96 94 100 Source: Cormark Securities Inc., Company reports


6

Asset Overview Asset Overview Cuda’s key growth engine is in the Powder River Basin in Wyoming with additional

assets in Southern Alberta and Quebec.

Southern Alberta – Drill Ready Oil Prospects

In Southern Alberta, the company has 700 BOE/d of production, primarily legacy gasproduction. The company is targeting Nisku and Glauc reservoirs in the fairway withthree specific locations identified and drill ready. The three wells would cost $1.6 MM(net to Cuda), although timing of the drills is dependent on capital allocation relative toits other plays.

Quebec – Large Resource Upside With Regulatory Hurdles Limiting Development

In Quebec, the company has exposure to the Utica gas play and a light oil discovery inthe Galt field. Both of these are large resource-type plays that are legacy Junex assetswith the key impediment being the September 2018 Quebec legislation banning hydraulicfracing, which impacts Cuda’s ability to delineate or develop the resource. $7.7 MM ofrestricted cash sits on the company’s balance sheet which is essentially required to bespent in Quebec. However, with the inability to obtain drilling permits, the use ofrestricted cash is limited to allocated G&A costs related to the Quebec assets. Thelocation of the company’s Utica acreage and Galt position is shown in the followingmaps. The Utica resource potential of 3.5 Tcf and the Galt resource potential size of 4.2MMBOE indicate the technical size of the resource upside.

Figure 3 Cuda Quebec Acreage

Source: Company reports


7

Powder River Basin – Multiple Oil-Weighted Landing Zones And Plenty Of Running Room

The key reason for investors to look at this name is for the Powder River Basin asset inWyoming. This area has active drilling from many private and large E&P producers withexpectations for industry activity to pick up further in 2019. The area is characterized bymultiple development zones over a 750’ thick oil column with high oil-cuts and lowwatercuts, resulting in very strong economics, especially as the industry begins to focuson horizontal development with current frac completion techniques. The other attractionabout the area is the plentiful takeaway capacity in the area with the Casper and Guersneyhubs providing access to Denver and Salt Lake City refineries. As a result, unlike otherCanadian listed companies, Cuda does not have any differential concerns on its asset baseand as industry drilling picks up in 2019, the investor knowledge/interest in the playshould improve. The company’s working interest in the play is approximately 30% withthe operator being Atomic Oil & Gas.

Industry Activity Picking Up

The heart of the play is in eastern Wyoming’s Campbell and Converse counties. Themajority of the recent focus with horizontal drilling has been on the Turner zone withEOG unveiling two additional targets in 2018 including the Mowry and Niobrara. Thereare 14 different horizons that have existing production in the Powder River Basin withhorizontal well results in the 500-2,000 BOE/d range with high oil-cuts in most zones.The largest landholders in the play are Anadarko, Anschutz, EOG, Devon, Chesapeake,Samson, and Wold.

Oil production in Wyoming started to increase in 2012 as oil development in the PowderRiver Basin began to pick up with horizontal drilling. Production peaked in 2015 withslightly over 60 rigs active prior to the drop in oil prices and capital budgets began tohave an impact. Current industry oil production in the Powder River Basin isapproximately 150 MB/d and is expected to increase in the coming years as industryactivity has started picking back up with over 30 rigs active today.

Figure 4 Wyoming Drilling Activity

0

10

20

30

40

50

60

70

2013 2014 2015 2016 2017 2018 2019

Rig

Co

un

t

Directional Horizontal Vertical Total Source: Cormark Securities Inc., Baker Hughes


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Activity By Some Of The Larger Producers In The Area Expected To Increase Further In 2019

Large public producers in the Powder River Basin include Anadarko Petroleum (APC),EOG Resources (EOG), Devon Energy (DVN), Chesapeake Energy (CHK), and DenburyResources (DNR). EOG, CHK, APC, and DVN have all highlighted the area as a coreasset with most of these companies expected to increase activity levels in the play in 2019relative to 2018. As industry drilling, activity, and well results continue to pick up, thisshould prove a positive for Cuda as industry results help de-risk Cuda’s large inventory inthe play.

EOG has 400k net acres in the play and over 80 MBOE/d of production in Wyoming withthe Powder River Basin accounting for the majority of the production. Powder RiverBasin drilling activity in the area increased from 39 wells in 2017 to 45 wells in 2018with a focus on the Mowry, Niobrara, and Turner as key landing zones. 2019 guidancewill be provided in February. Average well costs are in the $4.5-6.0 MM range withaverage wells having a lateral of 7,500’ and IP-30 oil rates of 750-800 B/d.

CHK has approximately 250k net acres in the play with current production of 32MBOE/d. Production is expected to double in the coming 12 months with a focus on theTurner zone with key activity east of Cuda’s acreage. Six wells were brought online in2017 while another (estimated) 34 wells were brought online in 2018 with almost half ofthose occurring in Q4/18 and 72 more wells are expected to be turned online in 2019.

APC is the largest landholder in Wyoming with approximately 450k net acres in thePowder River Basin. Production from the basin was 12 MBOE/d in Q3/18, up from 9MBOE/d in Q3/17. APC spent $76 MM on acquisitions in the Powder River Basin duringthe third quarter and is expected to provide more details on its Powder River Basin planswith its Q4/18 results. In 2019, APC will drill 10-15 wells and invest approximately $250MM in the basin.

DVN has approximately 400k net acres in the play with approximately 19 MBOE/d ofproduction. Devon will be doubling its activity in the area in 2019 with 45-50 wellsplanned relative to the 25 wells drilled in 2018. Rig activity will increase from twocurrently to four in 2019. The company’s well results in its Super Mario area has seen IP-30 rates of 1,000-1,600 BOE/d with 80-90% oil-cuts.

Samson Resources II (private) has ~145k net acres in the Powder River Basin. Earlier thismonth, the company announced results for a Shannon horizontal well in the SpearheadFederal area in Converse County. This well generated an IP-30 rate of 2,339 BOE/d (97%oil) with a peak rate of 3,815 BOE/d (95% oil). The Spearhead Federal well has a 9,940’lateral and was completed with 1,243 pounds of proppant per foot. This well has one ofthe highest IP rates of any Shannon formation well and highlights the horizontal potentialof the various zones.

Cuda’s Acreage Relative To Key Industry Activity

Cuda’s acreage position in the play relative to the industry activity cited above issummarized in the following map (Figure 5). The acreage is in the southwest corner ofthe play with existing production from the assets. Cuda’s acreage in the play is 42,000gross (12,500 net acres), which results in Cuda having the largest exposure to the PowderRiver Basin acreage on a per share basis. Therefore, as Cuda and industry activitycontinues to draw investor interest to the area, we believe that Cuda should be abeneficiary of the increasing industry activity levels in 2019.


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Figure 5 Powder River Basin Activity

Source: Company reports, Cormark Securities Inc.


10

Multiple Landing Zones Increases Effective Acreage/Inventory

A key attraction of the area is the success industry is finding proven production from over12 landing zones. Note that some of these zones are not present over Cuda’s acreageposition, although Cuda has identified eight distinct landing zones with an initial focus onlower risk vertical Shannon development and a few horizontal wells targeting the Frontierand Dakota formations. The Niobrara and Mowry shale are considered the key sourcerocks with existing production from the Teapot/Parkman, Sussex/Shannon, Niobrara,Frontier, Mowry, Muddy, and Dakota all in the vicinity of the map above.

Figure 6 Powder River Basin Stratigraphy


Near-Term Drilling Focus

The key near-term targets are for ongoing lower cost vertical drilling in the Shannon atBaron Flats and the beginning of some deeper horizontal drilling in 2019 commencingwith the Frontier 1 at Barron Flats and the Frontier 2 and Dakota at Cole Creek.

Barron Flats Unit – Shannon Development

The Shannon development provides the low risk drilling inventory for base productionand cash flow. Cuda has a 27.75% working interest in the play with 16 existing wells onproduction and an additional 11 wells drilled by Cuda and its partner in late 2018. Thecompany believes there is 70 remaining locations within the Barron Flats Unit and someadditional locations in the recently acquired offset acreage, bringing total Shannoninventory to the 75-90 location range. Given the well control, the risk of the Shannonwells is fairly low as can be seen by the 100% success rate on the 2018 drills. The keyquestion surrounding development is in determining the optimal spacing. The pool hasalready recovered 500 MB to date with 70 infill/step-out locations identified on 160-acrespacing.


11

These wells cost approximately $1.6 MM have a type-curve IP-30 oil rate of 150 B/d and IP-365 of 100 B/d and recover 150 MBOE with an oil-cut of nearly 100%. Operating costs are low at US$4.00/B and differentials are stable at US$2.50/B. Royalties are a combination of federal, state, and fee lands with an average royalty rate of 21.5% and additional production/ad valorem tax of 12%. Based on our estimates and five-year strip pricing, these wells will generate $2 MM of NPV.

Figure 7 Barron Flats Unit Locations


Barron Flats – Frontier 1 Near-Term Focus

In 2H/19, Cuda plans to drill a deeper horizontal well in the Barron Flats Unit. The near-term focus will be the Frontier 1, Frontier 3, and eventually the Muddy zone. A nearbyoperator, Wold, has existing Frontier 1 wells to the northeast of the Barron Flats Unitwith one well achieving a peak rate of 1,446 B/d oil with an IP-90 rate of 1,089 BOE/d(85% oil). Many nearby operators have horizontal well results in the deeper zones withrates ranging 1,000-1,500 BOE/d including oil-cuts of 80-90%. Cuda has one legacy welldrilled in the Frontier 3, providing confirmation of the presence of the zone on its lands.A Frontier 1 well with a two-mile lateral would cost ~$7-9 MM with estimated type-curve oil rates of 1,000+ B/d IP-30 and 634 B/d IP-365 with an EUR of 750 MBOE (76%oil-cut). The cost of this well relative to the $1.6 MM cost for a Shannon well is part ofthe reason why Cuda needs to increase its production/cash flow from the lower costShannon wells prior to start drilling the potential of the deeper zones. Based on strippricing, we estimate an NPV of $5.8 MM for these wells with approximately 24 net one-mile locations on the acreage.


12

Cole Creek – Frontier 2 And Dakota Near-Term Focus

At Cole Creek, Cuda’s working interest is 33% with its partner owning the remaining67%. Existing production has already occurred from the Shannon, Dakota, Lakota, andFrontier zones including secondary recovery in the Dakota. As a result, the shalloweropportunity in the Shannon has been depleted/produced. However, the Cole Creek areadoes offer meaningful near-term opportunity especially in the F2 and Dakota zones. Twohorizontal wells were drilled in 2007 and produced from the Dakota and F2, thereby de-risking the potential of these zones. The F2 well only had a 1,000’ lateral and one open-hole frac whereas the Dakota well had a 1,600’ lateral and one open-hole frac. Thesewells confirmed the productivity of the zone and with the F2 well having a cumulative oilproduction of 61 MB and the Dakota well having cumulative oil production of 145 MB.With newer completion techniques and more fracs, these wells could potentially surpassthe 1,000 B/d IP-30 type-rates observed at nearby wells. One or two horizontal wells areplanned for 2019.

Relative to the Barron Flats Unit, Cole Creek is somewhat shallower at 9,000’ versus BFU at 12,000’. Additionally, the area is more overpressured versus the BFU. The higher pressure could be a positive for initial rates, while the shallower depth results in estimated two-mile lateral well cost of $7.8 MM versus the $9.1 MM for the F1 at Barron Flats. Estimated type-curve oil rates are 700 B/d IP-30, 390 B/d IP-365 and 500 MBOE EUR with an 88% oil-cut. Based on our estimates and strip pricing, we estimate an NPV of $4.0 MM with ~19 net F2 and nine Dakota one-mile locations on the acreage.

Figure 8 Powder River Basin Type Curves


Other Deeper Zones – Longer-Term Potential

The Frontier 3 zone also provides another key landing zone with similar economics as aFrontier 1. The Turner zone is not as developed over the Barron Flats Unit while theNiobrara Chalk could offer another key zone with several successful industry data pointsin this zone. However, the Niobrara most likely has more water production associatedwith it and is not as well defined/de-risked over Cuda’s acreage. The Muddy zone alsooffers another key landing zone but is more of a channel fairway suggesting more limitedinventory and higher risk in mapping the channel across the acreage.


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Barron Flats – Miscible Flood Potential

In 2019, once all permits are received, the operator plans to initiate a test for a miscibleflood in the field. The two key requirements for initiating a flood include creating asecondary recovery unit for royalty ownership purposes and determining pool definitionfrom a technical perspective. The company believes that these approvals could be inplace by mid-2019. The company plans to start an injection test once the gas plant isoperational in February 2019. The initial injection well would be an existing producerwith offset producers providing the ability to measure the production response. Byincreasing the density of the gas, conditions for miscibility are achieved and theundersaturated oil will expand. The higher pressure and improved sweep efficiency couldallow recovery factors to increase from 10% (on primary) to potentially 50% under amiscible flood. An offsetting field has seen more than a tripling of its production from theinitiation of a flood. We have not factored any success from a flood into our estimates ortarget price but have indicated the potential upside of the impact in our unrisked NAVcalculations.

Well Economics The Shannon formation at Barron Flats boasts the most attractive economics of thecompany’s prospects with IRRs of more than 60% at US$50.00/B WTI, while the Dakotaand Frontier 2 at Cole Creek generate IRRs of over 25% at US$50.00/B WTI. With suchsmall quantities of gas in the production stream, these wells show little sensitivity to anychange in gas pricing. Type-curve assumptions and sensitivities to WTI pricing areshown below.

Figure 9 Cuda Well Economic Sensitivities

0%

20%

40%

60%

80%

100%

120%

140%

160%

$30 $35 $40 $45 $50 $55 $60 $65 $70

IRR

(%

)

WTI (US$/B)

BFU - Shannon Cole Creek - Dakota/F2 BFU - F1/F3/Niobrara Source: Cormark Securities Inc.


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Facilities/Transportation The company has well separation and storage at each well site. These sites are beingelectrified which is expected to reduce operating costs by $3,000/month per well. TheBarron Flats Unit gas handling facility is also nearing the final stages of completion withanticipated start-up in early 2019. This facility will process 1,500 Btu of Shannon naturalgas with a natural gas liquids yield estimated at 125 B/MMcf. The gas gathering and gashandling facility will also allow for gas injection once all permits are in place for themiscible flood.

The Powder River Basin has ample takeaway capacity with access to many differentmarkets. This has allowed for an average 2018 differential of ~US$2.50/B to WTI at theBarron Flats Unit. We expect this to remain stable given the plentiful takeaway from thearea.

Figure 10 Wyoming Market Access



15

Financial Summary Capital Structure On the equity front, on November 9, 2018, the company completed a private placement

for 2.981 MM shares at $2.40/sh, resulting in net proceeds of $6.55 MM and bringingshares outstanding to 21.93 MM with a market cap of ~$37.2 MM. Approximately 2.4MM warrants are also outstanding, composed of 1.39 MM warrants and 999.9karrangement warrants with the following pricing and expiry dates:

• 954k warrants exercisable at a price of $5.30/sh, until August 4, 2020;

• 999.9k warrants exercisable at a price of $4.00/sh, until August 14, 2020; and

• 437.5k warrants exercisable at a price of $5.90/sh, until October 20, 2021.

Note that the arrangement warrants vest once an equity offering takes place at a minimumprice of $6.00/sh or once the stock achieves a 20-day weighted average price of $6.40.The company also has 2.2 MM stock options outstanding with a weighted averageexercise price of $4.34/sh. This includes 1.455 MM options which were granted toofficers, directors, employees, and consultants in conjunction with the arrangement withan exercise price of $3.71/sh.

At the end of Q3/18, the company now has $7.5 MM of restricted cash held for eligiblecosts associated with the Galt project work program in Quebec. Though Cuda has a52.87% working interest in the Galt project, Cuda is only obligated to pay 10% of thefirst $14 MM exploration program based on its partnership with Ressources Quebec Inc.and Gestion Bernard Lemaire Inc. Under the terms of the partnership, $8.2 MM wasinitially deposited into a joint account and recorded as restricted cash which can only bedrawn to fund the exploration program at the Galt project.

Cuda has a $35 MM, 10.5% non-revolving credit facility which matures at the end ofJune 2019 and has an upcoming obligation related to the purchase of shares from adissenting shareholder. The company has accrued $3.1 MM reflecting Management’sbest estimate for the fair value that will be paid to the dissenting shareholder. Cuda alsohas $1.5 MM of convertible debentures that bear interest at a rate of 12% and mature inJune 2020. The convert price is $11.70/sh.

Guidance No formal guidance has been provided by the company.

Capital Spending Our capital and production forecasts are based on the assumption that the company willdrill 18 vertical wells and two horizontal wells in 2019. Well costs would amount to ~$14MM for Cuda’s share with an additional $5 MM estimated for infrastructure in thePowder River Basin, resulting in a total E&D spend of $19 MM. An additional $5 MMhas been included for other expenditures including approximately $3 MM for thedissenting shareholder settlement, resulting in our forecast assuming a total spend of $24MM.


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Production Production as of mid-December 2018 was 1,100 BOE/d (45% liquids). This includes 450BOE/d (94% oil) net to Cuda’s 27.75% working interest from 26 producing wells.Shannon wells have an IP-365 of 98 BOE/d based on the Ryder Scott type-curve with anestimated well cost of $1.6 MM. Horizontal wells in the area are estimated to have an IP-365 of 400-650 BOE/d with an estimated well cost of $8-9 MM. Therefore, twohorizontal wells and 18 additional vertical wells (net to Cuda) should add average full-year productive capacity of ~800 BOE/d. Factoring in declines on the existing 1,100BOE/d, we are estimating average 2019 production of 1,563 BOE/d based on the capitalprogram assumptions noted above.

The estimated strip cash flow from our production forecast would be $10 MM in 2019,resulting in an outspend of $14 MM based on our estimates. Keeping a flat $24 MMannual capital expenditure plan would result in the following production, cash flow, andcapital spend profiles allowing the company to become self-funded by 2020 (Figure 11).

Figure 11 Cuda Outlook – Strip Pricing

2019E 2020E 2021E

Total Production (BOE/d) 1,563 2,600 2,800Cash Flow ($MM) $10 $23 $27Capex ($MM) $24 $24 $24Free Cash Flow ($MM) $(14) $(1) $3

EV / EBITDA (x) 5.9x 3.1x 2.5xNet Debt / EBITDA (x) 3.3x 1.8x 1.4x

Source: Cormark Securities Inc.

Hedging Cuda has no commodity or currency hedges in place as of September 30, 2018.

Cost Structure The majority of production growth is all derived from planned spending on the PowderRiver Basin assets. The Shannon vertical wells have oil-cuts close to 100%, whereas thehorizontal wells are estimated to have oil-cuts of ~75-90%. This results in high operatingnetbacks of $40.00/B at US$52.00/B WTI pricing due to the low differentials in the basin(~US$2.50/B) and operating costs of ~US$4.00-5.00/B. The small differentials and lowoperating costs more than offset the higher average royalty rate of 21.5% and advalorem/production taxes of 12%.


17

Valuation and Recommendation Target Price And Valuation

Our target price of $4.00/sh reflects a blend of our EBITDA multiple and NAV approach.The $4.00/sh target reflects a strip EBITDA multiple of 9.4x 2019, 4.9x 2020 and 55% ofour risked NAV. Given that the key assets were acquired in late 2018 with first full-yeardevelopment taking place in 2019, we believe that the 2020 outlook better reflects anappropriate valuation multiple.

A comparison of Cuda’s valuation and leverage to Canadian oil-weighted producers isshown below.

Figure 12 Peer Comp. Table (2019 Estimates) – Strip Pricing

Mkt. Cap. Production CF Capex FCF YieldEV /

EBITDAD /

EBITDASymbol ($MM) (MBOE/d) ($MM) ($MM) (%) (x) (x)

Bonterra Energy Corp. BNE $202 12.9 $97.1 $67.0 13% 4.5x 2.7x♦ Cardinal Energy Ltd. CJ $285 20.8 $130.4 $50.0 23% 3.4x 1.4x

Gear Energy Ltd. GXE $147 7.4 $47.3 $42.5 3% 4.4x 1.6xGranite Oil Corp. GXO $27 1.9 $16.6 $10.0 25% 3.7x 2.3x

♦ Prairie Provident Res. Ltd. PPR $40 7.5 $36.0 $20.0 40% 3.3x 2.4x♦ Surge Energy Inc. SGY $404 22.0 $143.4 $135.0 -5% 5.2x 2.8x

Tamarack Valley Energy Ltd. TVE $508 24.0 $217.5 $175.0 8% 2.8x 0.6xTORC Oil & Gas Ltd. TOG $1,008 28.0 $275.1 $180.0 4% 4.6x 1.1x

♦ Whitecap Resources Inc. WCP $1,899 71.0 $609.7 $450.0 1% 4.8x 1.9xYangarra Resources Ltd. YGR $248 13.9 $108.3 $100.0 3% 3.1x 1.1x

Average 4.0x 1.8x

♦ Cuda Oil and Gas Inc. CUDA $37.3 1.6 $10.2 $24.0 -37% 5.9x 3.3x During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of

securities and/or provided financial advice regarding the stock market insight and financial analysis regarding potential transactions for these companies

Source: Cormark Securities Inc., Thomson Reuters

Figure 13 Peer Comp. Table (2020 Estimates) – Strip Pricing

Mkt. Cap. Production CF Capex FCF YieldEV /

EBITDAD /

EBITDASymbol ($MM) (MBOE/d) ($MM) ($MM) (%) (x) (x)

Bonterra Energy Corp. BNE $202 14.2 $107.2 $85.0 9% 4.0x 2.3x♦ Cardinal Energy Ltd. CJ $285 21.6 $105.4 $65.0 9% 4.1x 1.5x

Gear Energy Ltd. GXE $147 7.8 $44.5 $50.0 -4% 4.8x 1.5xGranite Oil Corp. GXO $27 2.2 $13.9 $12.0 7% 4.2x 2.5x

♦ Prairie Provident Res. Ltd. PPR $40 7.9 $35.0 $27.5 19% 3.2x 2.3x♦ Surge Energy Inc. SGY $404 23.2 $148.5 $150.0 -8% 5.2x 2.9x

Tamarack Valley Energy Ltd. TVE $508 27.0 $242.8 $237.5 1% 2.5x 0.5xTORC Oil & Gas Ltd. TOG $1,008 29.2 $265.7 $210.0 0% 4.8x 1.1x

♦ Whitecap Resources Inc. WCP $1,899 80.0 $706.3 $580.0 0% 4.2x 1.6xYangarra Resources Ltd. YGR $248 16.2 $120.9 $120.0 0% 2.8x 1.0x

Average 4.0x 1.7x

♦ Cuda Oil and Gas Inc. CUDA $37.3 2.6 $22.8 $24.0 -3% 3.1x 1.8x During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of

securities and/or provided financial advice regarding the stock market insight and financial analysis regarding potential transactions for these companies

Source: Cormark Securities Inc., Thomson Reuters


18

Net Asset Value Our risked NAV at average five-year strip prices is summarized in Figure 14. Year-end2018 reserves are currently based on our own estimate and have not been updated by thecompany. The key upside as noted in the NAV is from the horizontal zone potential in thePowder River Basin. The vertical Shannon wells and gas flood provide some lowercapital cost near-term cash flow, which can then be utilized to transition into a higherhorizontal mix program in future years. As a result of the timing and production history,we have assumed a higher percentage of the unrisked value associated with the verticalShannon zone in our risked NAV relative to the percentage of value allocated from thelarger potential of the horizontal zones. In Quebec, Cuda has exposure to 4.2 MMB netcontingent light oil resource at its Galt prospect and 3.5 Tcf of net prospective resource inthe Utica play. However, given regulatory issues, we have limited the value to currentbook value of $28 MM.

Figure 14 Net Asset Value – Five-Year Avg. Strip Pricing

MMBOE $/BOE $MM $/sh Risk % $MM $/sh

Proved $30.0 $1.37Probable $36.5 $1.66Est. YE2018 2P Reserve $66.5 $3.03

Net Debt (YE2018E) $(34.2) $(1.56)2P NAV $32.3 $1.47

Miscible Flood Upside $82.5 $3.76 33% $27.5 $1.25BFU - Shannon 2.4 $10.32 $24.8 $1.13 50% $12.4 $0.56BFU - Frontier 1 17.8 $5.05 $89.9 $4.10 33% $29.7 $1.35BFU - Frontier 3 13.3 $5.33 $71.1 $3.24 33% $23.5 $1.07Cole Creek - Frontier 2 9.4 $5.30 $50.1 $2.28 33% $16.5 $0.75Cole Creek - Dakota 4.5 $5.20 $23.3 $1.06 33% $7.7 $0.35Niobrara 20.0 $4.93 $98.6 $4.50 10% $9.9 $0.45Quebec 4.8 $28.9 $1.32 97% $28.0 $1.28

Unbooked Upside 72.2 $5.35 $386.6 $17.63 33% $127.6 $5.82

Total 75.8 $5.52 $418.9 $19.10 $159.9 $7.29

Unrisked Risked

Source: Cormark Securities Inc., Company reports

Risk Factors • Economic risk from changes in the fiscal regimes in which the company operates in, whether on a provincial or federal level;

• Liquidity risk arising from investing in small-cap companies;

• The ability to raise debt or equity capital to carry out the intended spending programs;

• Geologic and engineering risks associated with the finding and ultimate recovery of oil and gas reserves in the quantities estimated in determining the company’s value;

• Volatility in oil and gas prices, which may materially affect the accuracy of the forecasts; and,

• Sector rotation risk.


19

Appendix 1: Management and Directors Management Team R. Glenn Dawson –President and CEO – Mr. Dawson was most recently President of

Williston Hunter Canada and Bakken Hunter North Dakota (subsidiaries of MagnumHunter Resources). Prior to this, he served as President of NuLoch Resources until thecompany was sold to Magnum Hunter in 2011. Mr. Dawson brings more than 35 years ofoil and gas experience and has held numerous VP, Exploration roles with TriLochResources, PanAtlas/Summit Resources, Sundance Oil and Gas, and Golden Eagle Oiland Gas.

Ron Purvis – CFO – Mr. Purvis is a Chartered Accountant with more than 25 years ofexperience with both private and public companies including Northern Blizzard,TransCanada, Maxim Power Corp., Williams Energy Canada, and Ernst & Young.

Tim Bushell – VP, Exploration – Mr. Bushell has over 35 years of oil and gas experiencethroughout Alberta, Saskatchewan and North Dakota. He has held various seniorgeologist roles with NuLoch, Magnum Hunter, Landcruiser Resources, TailwindResources, Summit Resources, and Chevron.

Chad Gutor – VP, Engineering – Mr. Gutor brings more than 20 years of experience,having recently held the role of VP, Engineering at Forge Petroleum. Previously, he waswith Petrobakken, Highpine, True Energy, Ultima Energy Trust, Enerplus, CrestarEnergy, and Numac Energy.

Mathieu Lavoie – VP, Quebec Operations – Mr. Lavoie has 15+ years of experiencethroughout North America and played a key role in assembling the Quebec land positionwhile VP, Operations at Junex.

Board Of Directors Edward (Ted) Hirst – Managing Director, Head of Global Investment Baking,Canaccord Genuity Corp.

Rich Frommer – President and CEO, Great Western Oil and Gas.

Scott Dawson – Independent Businessman.

Jean-Yves Lavoie –President and CEO, Junex.

Guylaine Saucier – Former Chair of the Board of Directors of the CBC.

Bruce Lawrence – BLG LLP Partner; Corporate Secretary, Cuda Oil and Gas Inc.

R. Glenn Dawson – President and CEO, Cuda Oil and Gas Inc.


20

Appendix 2: Financials

Figure 15 Operations, Income Statement And Cash Flow Statement

Fiscal YE December 31($MM, exc. where noted) Q1E Q2E Q3E Q4E 2019E Q1E Q2E Q3E Q4E 2020E

OPERATING SUMMARYDaily Production (MBOE/d) 0.3 1.0 1.2 1.7 2.4 1.6 2.4 2.5 2.7 2.7 2.6 2.8% Natural Gas 48% 34% 27% 23% 20% 24% 17% 16% 16% 16% 16% 8%

Benchmark Prices - CormarkWTI (US$/B) $68.60 $72.00 $72.00 $72.00 $72.00 $72.00 $70.00 $70.00 $70.00 $70.00 $70.00 $65.00NYMEX (US$/MMBtu) $2.90 $3.00 $2.75 $2.70 $2.95 $2.85 $3.00 $2.80 $2.60 $2.82 $2.80 $3.00AECO-C ($/Mcf) $1.63 $2.25 $1.45 $1.39 $2.12 $1.80 $2.25 $1.52 $1.25 $1.90 $1.73 $2.18

Realized Prices (Excl. Hedging)Natural Gas ($/Mcf) $2.24 $1.79 $1.88 $2.01 $2.34 $2.04 $2.63 $2.46 $2.29 $2.51 $2.47 $2.11

INCOME STATEMENTTotal Revenue $6.3 $5.6 $7.6 $11.4 $17.0 $41.6 $16.8 $17.7 $18.8 $19.4 $72.7 $78.7

Royalties & Prod. Taxes $1.7 $1.7 $2.4 $3.6 $5.4 $13.1 $5.3 $5.6 $6.0 $6.2 $23.1 $25.0Operating & Trans. Costs $1.3 $0.8 $1.0 $1.4 $2.0 $5.1 $2.0 $2.1 $2.2 $2.3 $8.5 $9.2Cash Operating Expenses $3.0 $2.5 $3.4 $5.0 $7.4 $18.3 $7.3 $7.7 $8.2 $8.4 $31.6 $34.2

Interest $2.4 $0.9 $0.9 $1.0 $1.1 $3.9 $1.1 $1.0 $1.0 $0.9 $4.0 $2.7G&A $3.6 $0.6 $0.6 $0.6 $0.6 $2.4 $0.6 $0.6 $0.6 $0.6 $2.4 $2.4Cash Non-Op. Expenses $6.0 $1.5 $1.5 $1.6 $1.7 $6.3 $1.7 $1.6 $1.6 $1.5 $6.4 $5.1

DD&A $2.9 $2.1 $2.6 $3.7 $5.3 $13.8 $5.3 $5.6 $5.9 $6.1 $23.0 $24.8Other Non-Cash Expenses $1.6 $0.2 $0.2 $0.2 $0.2 $1.0 $0.2 $0.2 $0.2 $0.2 $1.0 $1.0Other Non-Cash Expenses $4.5 $2.3 $2.9 $4.0 $5.6 $14.8 $5.5 $5.9 $6.2 $6.4 $23.9 $25.7

Deferred Taxes $(0.5) $(0.2) $(0.0) $0.2 $0.6 $0.5 $0.6 $0.6 $0.7 $0.8 $2.7 $3.4Total Income Taxes $(0.5) $(0.2) $(0.0) $0.2 $0.6 $0.5 $0.6 $0.6 $0.7 $0.8 $2.7 $3.4

Net Income $(6.8) $(0.6) $(0.1) $0.6 $1.7 $1.6 $1.7 $1.9 $2.1 $2.3 $8.0 $10.2

Diluted Shares Out. 25.0 26.7 26.7 26.7 26.7 26.7 26.7 26.7 26.7 26.7 26.7 26.7

EPS (Diluted) $(0.52) $(0.02) $(0.00) $0.02 $0.07 $0.06 $0.06 $0.07 $0.08 $0.09 $0.30 $0.38CFPS (Diluted) $(0.26) $0.06 $0.10 $0.18 $0.30 $0.64 $0.29 $0.31 $0.34 $0.35 $1.30 $1.48

CASH FLOWCash Flow $(3.1) $1.6 $2.7 $4.8 $7.9 $17.0 $7.8 $8.4 $9.0 $9.5 $34.6 $39.4Capital Expenditures $6.1 $4.0 $6.0 $7.0 $7.0 $24.0 $7.0 $7.0 $5.0 $5.0 $24.0 $24.0Dividend $- $- $- $- $- $- $- $- $- $- $- $-Free Cash Flow $(9.2) $(2.4) $(3.3) $(2.2) $0.9 $(7.0) $0.8 $1.4 $4.0 $4.5 $10.6 $15.4EBITDAX $(0.4) $2.4 $3.7 $5.8 $9.0 $20.9 $8.9 $9.4 $10.0 $10.4 $38.7 $42.1

2018E 2021E2019E 2020E



21

Figure 16 Balance Sheet, Netbacks And Metrics Fiscal YE December 31($MM, exc. where noted) 2018E Q1E Q2E Q3E Q4E FY Q1E Q2E Q3E Q4E FY 2021E

Balance Sheet

Current Assets $28.6 $7.3 $7.3 $7.3 $7.3 $7.3 $7.3 $7.3 $7.3 $7.3 $7.3 $7.3

Net PP&E $62.0 $63.9 $67.2 $70.5 $72.2 $72.2 $73.9 $75.2 $74.3 $73.2 $73.2 $72.4

Other Assets $42.2 $42.2 $42.2 $42.2 $42.2 $42.2 $42.2 $42.2 $42.2 $42.2 $42.2 $29.1

Total Assets $113.7 $113.4 $116.7 $120.0 $121.7 $121.7 $123.4 $124.7 $123.8 $122.7 $122.7 $121.9

Current Liabilities $8.2 $8.2 $8.2 $8.2 $8.2 $8.2 $8.2 $8.2 $8.2 $8.2 $8.2 $8.2

Long Term Debt $1.5 $1.5 $1.5 $1.5 $1.5 $1.5 $1.5 $1.5 $1.5 $1.5 $1.5 $1.5

Other Non-Curr. Liab. $43.9 $44.1 $47.4 $49.6 $48.7 $48.7 $47.9 $46.5 $42.5 $38.1 $38.1 $22.7

Deferred Income Tax $(0.5) $(0.7) $(0.7) $(0.5) $0.1 $0.1 $0.6 $1.3 $2.0 $2.7 $2.7 $6.1

Total Liabilities $53.0 $53.1 $56.3 $58.7 $58.4 $58.4 $58.2 $57.4 $54.1 $50.5 $50.5 $38.5

Shareholders' Equity $60.7 $60.3 $60.4 $61.3 $63.2 $63.2 $65.2 $67.3 $69.7 $72.2 $72.2 $83.4

Netbacks ($/BOE)

Revenue (Ex. Hedges) $52.8 $63.8 $70.1 $73.9 $77.0 $72.8 $76.5 $76.5 $76.5 $76.8 $76.6 $77.0

Hedging $- $- $- $- $- $- $- $- $- $- $- $-

Royalties & Prod. Taxes $15.31 $19.94 $21.92 $23.48 $24.45 $23.01 $24.30 $24.29 $24.29 $24.38 $24.31 $24.44

Op. & Trans. Costs $11.37 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00

Operating Netback $26.15 $34.86 $39.21 $41.47 $43.55 $40.83 $43.23 $43.22 $43.20 $43.40 $43.27 $43.54

G&A $31.88 $6.88 $5.50 $3.89 $2.73 $4.21 $2.74 $2.59 $2.44 $2.38 $2.53 $2.35

Interest Cost $20.88 $10.09 $8.65 $6.68 $4.94 $6.91 $4.86 $4.50 $4.10 $3.57 $4.23 $2.67

Cash Netback $(26.60) $17.88 $25.06 $30.90 $35.88 $29.72 $35.64 $36.14 $36.66 $37.45 $36.51 $38.52

Metrics

Net Debt $33.5 $35.9 $39.2 $41.4 $40.5 $40.5 $39.7 $38.4 $34.4 $29.9 $29.9 $14.5

FCF $(9.2) $(2.4) $(3.3) $(2.2) $0.9 $(7.0) $0.8 $1.4 $4.0 $4.5 $10.6 $15.4

EV/EBITDA nmf 7.5x 5.2x 3.4x 2.2x 3.7x 2.2x 2.0x 1.8x 1.6x 1.7x 1.2x

Net Debt/EBITDA nmf 3.7x 2.7x 1.8x 1.1x 1.9x 1.1x 1.0x 0.9x 0.7x 0.8x 0.3x

2019E 2020E



22

Recommendation Terminology

Cormark’s recommendation terminology is as follows:

Top Pick our best investment ideas, the greatest potential value appreciationBuy expected to outperform its peer groupMarket Perform expected to perform with its peer groupReduce expected to underperform its peer group

Our ratings may be followed by "(S)" which denotes that the investment is speculativeand has a higher degree of risk associated with it.

Additionally, our target prices are based on a 12-month investment horizon.

Disclosure Statements And Dissemination Policies

A full list of our disclosure statements as well as our research dissemination policies andprocedures can be found on our web-site at: www.cormark.com

Analyst Certification We, Amir Arif and Michael Mueller, hereby certify that the views expressed in this research report accurately reflect our personal views about the subject company(ies) andits (their) securities. We also certify that we have not been, and will not be receiving direct or indirect compensation in exchange for expressing the specificrecommendation(s) in this report.


23

Figure 17 Cuda Oil And Gas Inc. – Disclosure Chart

Source: Cormark Securities Inc.

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www.cormark.com

For Canadian Residents: This report has been approved by Cormark Securities Inc. (“CSI”), member IIROC and CIPF, which takes responsibility for this report and its dissemination in Canada. Canadian clients wishing to effect transactions in any security discussed should do so through a qualified salesperson of CSI. For US Residents: Cormark Securities (USA) Limited (“CUSA”), member FINRA and SIPC, accepts responsibility for this report and its dissemination in the United States. This report is intended for distribution in the United States only to certain institutional investors. US clients wishing to effect transactions in any security discussed should do so through a qualified salesperson of CUSA.

Every province in Canada, state in the U.S., and most countries throughout the world have their own laws regulating the types of securities and other investment products which may be offered to their residents, as well as the process for doing so. As a result, some of the securities discussed in this report may not be available to every interested investor. Accordingly, this report is provided for informational purposes only, and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such would be prohibited.

The information and any statistical data contained herein have been obtained from sources believed to be reliable as of the date of publication, but the accuracy or completeness of the information is not guaranteed, nor in providing it does CSI or CUSA assume any responsibility or liability. All opinions expressed and data provided herein are subject to change without notice. The inventories of CSI or CUSA, its affiliated companies and the holdings of their respective directors, officers and companies with which they are associated may have a long or short position or deal as principal in the securities discussed herein. A CSI or CUSA company may have acted as underwriter or initial purchaser or placement agent for a private placement of any of the securities of any company mentioned in this report, may from time to time solicit from or perform financial advisory, or other services for such company. The securities mentioned in this report may not be suitable for all types of investors; their prices, value and/or the income they produce may fluctuate and/or be adversely affected by exchange rates.

No part of any report may be reproduced in any manner without prior written permission of CSI or CUSA

A full list of our disclosure statements as well as our research dissemination policies and procedures can be found on our web-site at: www.cormark.com

january 22, 2019 cuda oil and gas inc....amir arif, (403) 750-7200; [email protected] michael...

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