laricina energy ltd. - petersco.com · (10,700 bbl/d gross); ... petroleo cavalier cnooc grizzly...

This Information Memorandum is prepared solely for the use of certain qualified Interested Parties to provide information only. The information contained herein, while obtained from sources that we believe to be reliable, is not guaranteed as to its accuracy or completeness. This Information Memorandum is for information purposes only and does not constitute an offer to sell or a solicitation to buy securities of Laricina Energy Ltd.

Laricina Energy Ltd. ("Laricina" or the "Company") has initiated a process to identify potential strategic alternatives and has retained Peters & Co. Limited ("Peters & Co.") as its financial advisor to assist in this process. Laricina will consider proposals for a corporate sale, merger, sale of all or a portion of the assets, royalty, joint venture, strategic investment or other opportunities.

Upon the execution of the confidentiality agreement, access will be provided to a virtual data room containing confidential information. Detailed instructions for submitting a proposal will be delivered prior to the due date. All inquiries and requests shall be submitted or directed to a representative from Peters & Co. listed below. Laricina, its employees, consultants and board of directors should not be contacted.

Laricina is a private Calgary-based company that has a diverse portfolio of oil sands assets with two core development areas in Alberta.

SIGNIFICANT RESOURCE POTENTIAL389 MM BARRELS OF 2P RESERVES AND 2.5 BN BARRELS OF CONTINGENT RESOURCES 1

Large-scale project platform with more than 12.2 bnbbl discovered bitumen initially-in-place and 389 mmbbl 2P reserves1 and 2.5 bnbbl unrisked best estimate contingent resources1, with long-dated lease expiries on the lands (~2024).

Germain (Grand Rapids clastics) has 389 mmbbl of 2P reserves1 and 933 mmbbl of unrisked best estimate contingent resources1 that support production design capacity of 155,000 bbl/d.

Saleski (Grosmont carbonates) has 961 mmbbl of unrisked best estimate contingent resources1 that support net production design capacity of 113,700 bbl/d (189,500 bbl/d gross).

Additional properties targeting clastic and carbonate formations (594 mmbbl of unrisked best estimate contingent resources1).

PIONEERED TWO EMERGING AND INVESTMENT READY OIL SANDS PROJECTS (~$1 BN INVESTED TO DATE)

Germain Commercial Demonstration Project ("CDP") (100% WI): Production ramped up to ~1,100 bbl/d from four operating well pairs (SOR of 3.5 x) prior to suspension; production tracked the forecasted type curves;

First commercial application of solvent-cyclic steam-assisted gravity drainage (SC-SAGD, patented) in the Grand Rapids;

Regulatory application for commercial expansion (150,000 bbl/d) has been filed and has met stakeholder consultation requirements; and

Plant is currently suspended and maintained in an operational / warm state to facilitate a future restart. Saleski Pilot Project (60% WI):

Industry first production from horizontal wells in the bitumen-bearing Grosmont carbonates; Successful production tests from both the Grosmont C and Grosmont D zones (the 450 m long 2C well outpaced the forecasted type curve at the time); and

Performance learnings set the basis for AER approval of a commercial-scale project (10,700 bbl/d gross); pre-construction gating items have been significantly advanced to date.

PROJECT AREAS STRATEGICALLY POSITIONED FOR MARKET ACCESS

Ownership and operatorship of critical area roads.

Offsetting TransCanada's Grand Rapids Pipeline, grid-connected electricity and natural gas supply connected.

Access to camps at Germain and Saleski (under lease with option to acquire); have sub-leased over the next two winter seasons.

SUBSTANTIAL TAX ATTRIBUTES > $1.3 billion in tax pools, the majority of which are expected to be non-capital losses and SR&ED pools.

1 See additional Reserves / Contingent Resources disclosures in end notes

PETERS & CO. LIMITED2300 Jamieson Place308 Fourth Avenue SWCalgary, Alberta T2P 0H7www.petersco.com

Shane R. HutzalPrincipalCorporate [email protected]

Scott A. JohnstonPrincipalAcquisitions & [email protected]

Franklin P. EldridgeVice PresidentAcquisitions & [email protected]

TABLE OF CONTENTSCorporate Snapshot . . . . .2Thermal In Situ Oil Sands Landscape . . . . . . . . . . . . .3Area Infrastructure . . . . . . .4Germain . . . . . . . . . . . . . . .5

Geological Overview . . . .6CDP Performance . . . . . .7

Saleski . . . . . . . . . . . . . . . .8Geological Overview . . . .9Pilot Performance . . . . .10

Other Properties – Net Bitumen Pay . . . . . . . 11Other Assets . . . . . . . . . .12Process and Contacts . . .13Disclaimer . . . . . . . . . . . .14

Fort McMurray

Wabasca

AuroraSouth

Kearl

Muskeg River

Goodlow

SouthLiege

Saleski

Saleski West

Jackfish

ChristinaLake

Meadow CreekCottonwood

Leismer

GreatDivideThornbury

House

Hangingstone

TriStarSouth

Aspen

Clarke Creek

Long Lake SouthKinosis

GreaterPelicanRegion

LongLakeSaleski

East

NorthLiege

Aurora North

GranorMeadow Creek

Algar Lake

LegendLake

Thornbury

Portage

ClydenWabasca

Hoole

Kai Kos DehsehSouth

Leismer

Thornbury

McMullen

Lewis

Firebag

Mildred LakeNorth Mine

Steepbank

GregoireLake

Brintnell/Pelican Lake

SaleskiSaleski

MacKaySaleski

MacKayDoverDover

West

CNRLCHEVRON

BPHUSKY

SUNRISE

PERPETUAL

IMPERIAL/EXXON

SOUTHERNPACIFIC

TOTAL

CNRLCHEVRON

BOUNTYGRIZZLY

SOUTHERNPACIFIC

TOTALSUNCOR

OCCIDENTALINPEX

JOSLYN

CAVA-LIER

CAVA-LIER

PERPETUAL

SUNCORNEXENJACOS

SUNCORNEXENJACOS

IMPERIAL

JACOSIMPERIALCNOOCCORNER

CONOCO

ATHABASCA

SOUTHERN PACIFICBOUNTYANZAC

MARQUEE

MEGSURMONT

IMPERIAL

E-T

IMPERIAL

VALUECREATION

MARQUEE

PETROLEO

CAVALIER

CNOOC

CNOOC

GRIZZLY

CONNACHER

TOTALKOCH

CNRL

PERPETUAL

TOTAL

GRIZZLY

LEGACY

PERPETUAL

CAVA-LIER

STONEPAN

PACIFIC

DEVON

CENOVUS/CONOCO

GRIZZLY SUNCORNEXEN

CONOCOTOTAL

SURMONTGRIZZLY

STONE

BLACK-PEARL

CAVALIERCNRL

CNPC

PERPETUAL

KOCH

CAVALIER

KOCH

KOCH

KOCH

GRIZZLY

EXXON/IMPERIAL

MEG

OSUM

ATHABASCA

ATHABASCA

ATHABASCAPETRO-CHINA

PETRO-CHINA

SUNCOR

SUNCOR

CNRL

KOCHCONOCO

SUNSHINE

CNRL

CNPC

CNRL

OSUM

CNRL

CNRL

HUSKY

HUSKY MEG

MEGSUNSHINE

HUSKY

SUNSHINE

CNRLHUSKY

SUNCOR

OSUM CNOOC

CENOVUSEXXON

SYNCRUDE

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BURNTLAKES

HOUSERIVER

CONNCREEK

POPLARCREEK

THORNBURYWEST

BOILERRAPIDS

GERMAINSALESKI

PORTAGE

THORNBURY

R1W5 R4W4R6R8R10R12R14R16R18R20R22R24

T76

T78

T80

T82

T84

T86

T88

T90

T92

T94

Laricina Land

ASSET OVERVIEW

Peters & Co. Limited February 2018

Laricina Energy Ltd.Information Memorandum – Strategic Alternatives Process

2Peters & Co. Limited | www.petersco.com

Laricina is a private company that has a diverse portfolio of oil sands assets with two core development areas at Germain in the Grand Rapids (100% WI) and Saleski in the Grosmont carbonates (60% WI). In 2015, the Company suspended operations at both the Germain and Saleski projects in an effort to preserve financial capacity and protect the long-term value of the assets. The Company was recapitalized on November 30, 2015 pursuant to the settlement agreement dated July 20, 2015 between the Company and its sole lender.

BALANCE SHEET SUMMARY $31.7 MM cash position (~$17.5 MM restricted for the credit facility and note repayments).

Continuing Notes ($33.5 MM) and Payment-In-Kind (PIK) Notes ($10.3 MM) as at December 31, 2017.

Interest at 12.5% per annum is paid quarterly and settled by way of additional PIK Notes, in lieu of cash.

Notes are due in March 2021, estimated indebtedness of $65.7 MM (assuming Notes in lieu of cash interest payments).

Based on management forecasts there is sufficient liquidity to fund operations and working capital requirements to mid-2020.

NATURAL GAS AND POWER ACCESS IN PLACE Germain natural gas take-or-pay transportation commitment with volumes purchased on the spot market:

254 GJ/d to June 30, 2020 (Tranche 1); An additional 16,062 GJ/d from November 1, 2019 to October 31, 2027 (Tranche 2); and

Tolls are equal to the prevailing firm toll on the NGTL system.

Germain power commitment: Electric service agreement with ATCO in place until September 30, 2032 (the remaining facility cost commitment is ~$9.3 MM); and

Contract volumes are 8,000 kW from October 1, 2012 to September 30, 2018 and 45,000 kW from October 1, 2018 to September 30, 2032.

ASSET RETIREMENT OBLIGATIONS Third party estimate of abandonment and reclamation costs of ~$50 MM (undiscounted).

Management estimate of $39 MM accounting for salvage value and other cost savings.

Estimated asset retirement obligation of $40.1 MM as at December 31, 2017.

Best EstimateReserves 1 Contingent

Net 2P 3P ResourcesAsset Land Reserves Reserves Unrisked 1

(Formation) (ha) (mmbbl) (mmbbl) (mmbbl)

Germain (Grand Rapids) 15,616 389 468 933

Saleski 2

(Grosmont C and D)10,291 - - 961

Conn Creek (McMurray) 8,192 - - 195

Poplar Creek (McMurray) 1,824 - - 91

Portage (Grand Rapids) 2,304 - - 58

Boiler Rapids (McMurray & Wabiskaw) 5,120 - - 62

Thornbury West (McMurray) 2,304 - - 58

Thornbury (McMurray) 1,792 - - 36

House River (McMurray) 11,776 - - 93

Total 59,219 389 468 2,4881 See additional Reserves / Contingent Resources disclosure in end notes2 Saleski property based on Laricina's 60% WI

Corporate SnapshotPositive cash position and substantial tax pools

(MM)Basic common shares outstanding 576Dilutives outstanding 1 29Cash and restricted cash 2 $32Senior secured and payment-in-kind notes principal $441 28.8 MM warrants expire on March 20, 20182 $17.5 MM restricted for credit facility and notes

Capitalization as at December 31, 2017

(MM)UCC 1 $206CDE 2 33CEE 2 81COGPE 2 28Non-capital losses 3 782Investment tax credits 3 40SR&ED 3 212Total $1,382Note: Tax pools are estimates and subject to reassessment or other change1 An additional $3 MM has been added to this pool in 20172 Successored pools3 Streamed to same or similar business

Tax Pools as at December 31, 2016

CAPITALIZATION

RESERVES AND CONTINGENT RESOURCES SUMMARY

TAX POOLS

Laricina Energy Ltd. | Information Memorandum | Strategic Alternatives Process | February 2018


Thermal In Situ Oil Sands LandscapeProjections position Laricina's assets competitively amongst active thermal in situ oil sands projects

Christina Lake (CVE)

Firebag (SU)

Jackfish 3 (DVN) Rush Lake (HSE)

Jackfish 1 (DVN) Kirby (CNQ)

Vawn (HSE)Sandall (HSE) Jackfish 2 (DVN)Paradise Hill (HSE)

Foster Creek (CVE)Lindbergh (PGF)

Christina Lake (MEG)

Leismer (ATH)Surmont (COP) Surmont 2 (COP)

Pikes Peak South (HSE)Mackay River (SU)

Pikes Peak North (HSE)Hangingstone (JACOS)

Great Divide (CLL) Blackrod (Blackpearl)Hangingstone (ATH)Algar (CLL)Orion (OSUM)

Plover Lake (NBZ)Wolf Lake (CNQ)

Long Lake (CNOOC)Tucker Lake (HSE)

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

1 2 3 4 5 6 7 8

CSOR (bbl/bbl)

Max 6 Month Bitumen Production Ratebbl/d

Saleski C-SAGD2P+2C Projections

Germain SC-SAGD2P+2C Projections

▪ CSOR is the Cumulative Steam Oil Ratio of the well▪ Industry data (actuals) to Q3 2017 as per McDaniel & Associates Consultants Ltd. "SAGD Production Summaryand Project Comparison" (Nov 2017)▪ Laricina data as per GLJ 2P+2C Type Curves from the 2014 YE Reserves Reports

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

CenovusChristina

Lake

SuncorFirebag

ImperialColdLake

CenovusFosterCreek

MEGChristina

Lake

LaricinaGermain

CNRLKirby

ImperialAspen

Conoco-Phillips

Surmont

DevonJackfish

SuncorMeadowCreek

LaricinaSaleski

HuskySunrise

PetroChinaMacKay

CNRLPrimrose

CenovusNarrows

PetroChinaDover

In-Situ ProjectsRecently Placed on ProductionSanctioned/Under ConstructionHigh LikelihoodRelatively High LikelihoodOther ProjectsLaricina Potential Projects

bbl/d

▪ As per Peters & Co. Research and Laricina internal management views▪ Laricina estimates based on 2P+2C design capacity, Saleski project represents Laricina's net interest

THERMAL IN SITU TYPE WELL COMPARISON

THERMAL IN SITU PROJECT DESIGN CAPACITY COMPARISON



Area InfrastructureMajor projects well positioned for market access with substantial auxiliary infrastructure in place

KEY INFRASTRUCTURE IN PLACE

TransCanada's Grand Rapids Pipeline offers direct access from Saleski to the market hubs in Fort Saskatchewan, Edmonton and beyond.

40% working interest and operator of the S4 / Chip Lakes Road, only access road in the region.

Grid-connected electricity to Germain and in close proximity at Saleski.

Gas supply tied in to NGTL gas network. Industry activity in the area by Husky Energy, Canadian Natural Resources, and Osum Oil Sands, combined with the close proximity to key infrastructure.



ASSET OVERVIEWProject overview

100% working interest and operatorship. 29 leases comprising 15,616 hectares with Grand Rapids rights and 17,664 hectares with Winterburn rights:

Grand Rapids (primary target): 172 delineation wells (55 with core) and 12.8 km2 3D seismic; and

Winterburn (secondary target): 20 delineation wells and 90.7 km 2D seismic.

The Grand Rapids Formation has similar porosity and bitumen saturation to the McMurray sands.

Central processing facility for CDP is currently set up to process 5,000 bbl/d of production and deliver 10,500 bbl/d of steam, with a well pad (ten well pairs) and includes:

Four 50 mmbtu once through steam generators, water recycling, treatment and disposal systems, solvent storage and injection, and control room and office building.

$647 MM invested in development to date of which the CDP is $440 MM.

By end of 2014, CDP ramped up production to ~1,100 bbl/d and SOR of 3.5 x from four operating well pairs prior to suspension.

Three Class 1B disposal wells on site, completed in the Grosmont A, operating at low pressures and often under vacuum conditions.

Reserves & Contingent Resources1

389 mmbbl of 2P reserves and 933 mmbbl of unrisked best estimate contingent resources.

CURRENT STATUSState of facilities

In February 2015, Germain CDP was suspended to protect the long-term value of the asset and maintain full reservoir potential until commodity prices recover:

Facility maintained in a warm state for a quick restart; Facility can be maintained in this state for several years; and One operator and continued environmental monitoring are required to manage operational regulatory requirements.

Laricina has defined the steps and actions required to re-start operations at Germain.

Regulatory status CDP is classified as suspended with AER. Filed EIA application for commercial expansion (150,000 bbl/d design capacity), approval can be secured in a short time once AER is re-engaged.

Long term planning anticipates 2025 start-up date for Phase 2a (30,000 bbl/d design capacity).

LEASE EXPIRIES AND CARRYING COSTS Majority of the acreage can be held through 2024 for its initial term and extended beyond that. Only one lease (Winterburn resource only) expires in January 2019. Under current MLE requirements, remaining leases would require 22 wells drilled after 2022 for an estimated cost of approximately $40 MM.

Annual surface lease rental obligation of ~$29,000.1 See additional Reserves / Contingent Resources disclosures in end notes

GermainReady for further investment with ~1.3 bnbbl of 2P+2C Reserves / Contingent Resources 1

GERMAIN SALESKI

PORTAGE

R17W4R19R21R23R25

T76

T78

T80

T82

T84

BlackPearl BlackrodPilot FacilityFull Development: 80,000 bbl/d Capacity

Cavalier10,000 bbl/dProject Approved

CNRL Pelican LakePilot FacilityPilot Phase A: 10,000 bbl/d CapacityFull Development up to: 180,000 bbl/d Capacity

Laricina GermainCDP Production Capable of: 2,000-3,500 bbl/dFull Development: 155,000 bbl/d Capacity

Laricina LandOil Sands Leases

Grand RapidsBitumen Pay Area

GRAND RAPIDS TREND AND PRODUCING PROJECTS

MINERAL LEASE RENTAL SCHEDULE

Hectares 2018 2019 Future 1

Escalating RentsAB 0747496070604 1,792 $50,176 $50,176 $87,808AB 074749607A606 2,048 $28,672 $28,672 $50,176AB 0747497120943 3,072 $21,504 $43,008 $64,512AB 07400060005 512 - $3,584 $5,376AB 07400060004 256 - $1,792 $2,688AB 07401010003 1,024 - - $8,960

Annual Rentals 17,664 $61,824 $61,824 $61,824Total $162,176 $189,056 $281,3441 Average lease rental cost from 2020 through 2023



DESCRIPTION The Grand Rapids Formation is a regional shoreface sand deposit consisting of a clean homogenous and laterally continuous sandstone, lending itself to having a predictable and consistent reservoir.

The Grand Rapids at Germain consists of a sandstone reservoir with: Average porosity of 34%; Average bitumen saturation of 70%; and Core permeability ranging from 2 to 5 Darcies.

The net bitumen pay map highlights net pay, up to 20 metres, across Laricina's entire lease.

Top portion of reservoir has a thin upper transition zone (UTZ) with decreasing bitumen saturation towards the top of the reservoir.

Bottom portion of reservoir has a thin basal water zone (BWZ) which has thin mudstone layers extending throughout the resource.

The resource is overlain by ~7 metres of Joli Fou shale, which is a competent caprock for thermal recovery processes.

Germain – Geological OverviewLaterally continuous high quality oil sands reservoir

0

0

5

5

5

10

10

10

10

10

15

15

15

15

15

10

10

1020

20

20

2020

5

5

15

CI: 5 m

Grand RapidsHz CDP Area

15-33-84-22W4Grand Rapids Vert Type Log

Source: Management estimates

GERMAINR21W4R22R23

T83

T84

T85

Laricina Grand Rapids LandLaricina WellsAll WellsGrand Rapids Bitumen Fairway

GRAND RAPIDS NET BITUMEN PAY

200

225

Upper Transition Zone

Basal Water

Hz Well-PairLaricina CDP

D/N POROSITY % (SS)153045

GAMMA RAY0 150

RESISTIVITY100101 1000

JOLI FOU

GRANDRAPIDS

200 m

225 m

25 mInjector

Producer

15-33-84-22W4

CDP Full Field

Net Pay 17.0 m 15.5 mPorosity 34% 34%Bitumen Saturation 65 - 75% 65 - 75%Weight % Bitumen 9 - 11.5% 9 - 11.5%Permeability 2 - 5 DarciesViscosity 2.0 million cP @ 15.0°C; 12.5 cP @ 200°CExploitableBitumen 72 mmbbl 2,500 mmbbl


GRAND RAPIDS RESERVOIR CHARACTERISTICS

GRAND RAPIDS CORE PHOTO

GRAND RAPIDS TYPE WELL LOG



MudstoneBasal Water

Bitumen Sand

10 9 8 7 6 5

Upper Transition Zone

4 2 13

InjectorProducerOperating Well-PairShut-in Well-PairStanding Well-Pair

0

3

6

9

12

15

18

0

100

200

300

400

500

600

700

- 1.0 2.0 3.0 4.0Time (years)

Well-pair 7 Well-pair 8Well-pair 9 Well-pair 10Internal SAGD Internal:SC-SAGDWell-pair 7 CSOR Well-pair 8 CSORWell-pair 9 CSOR Well-pair 10 CSORInternal:SAGD CSOR Internal:SC-SAGD CSOR

SAGD type curveSC-SAGD type curve

Producing Day Oil Rate (PDOR) (bbl/d) CSOR

Adjusted to conversion date, as of December 31, 2014

Germain – CDP PerformanceAchieved initial 12 month ramp-up production of ~1,100 bbl/d from four well pairs

OVERVIEW Germain Phase 1 (CDP) reached steady operations in January 2014. Operating capacity of 3,500 bbl/d based on an SOR of 3.0 (using Solvent Cyclic SC-SAGD).

Ten initial well-pairs drilled and tied-in: Six well-pairs with producers located in the basal water zone (three not completed); and

Four well-pairs with producers located in the bitumen zone. Achieved ~1,100 bbl/d from four wells-pairs with producers in the bitumen zone prior to suspension.

FUTURE RESTART The project has been maintained in an operating / warm state and can be restarted to re-establish production.

The existing four well pairs (800 m lateral length) could be brought online for ~$4.5 MM and are projected to achieve ~1,600 bbl/d in ~1 year.

Two additional well pairs (1,200 m lateral length) could be drilled and brought online for ~$12.5 MM which would bring projected production to ~2,800 bbl/d.

Potential production uplift to ~3,500 bbl/d with the application of solvent (SC-SAGD).

KEY LEARNINGS The four well pairs drilled with producers in the bitumen zone were tracking type curve until project suspension.

Performance of well-pairs with producers in basal water indicates that producers are located below an extensive mudstone barrier and SAGD was not established:

Similar mudstones have been delineated throughout the resource lease area defining the new base of SAGD and optimal producer placement.

Operationally, gas co-injection was successful in managing interaction with the UTZ.

Production uplift with SC-SAGD was observed: Results on well-pair 10 have shown > 25% rate uplift and a proportionally similar instantaneous SOR reduction, as compared to SAGD; and

Based on these results well-pairs 8, 9 and 7 were converted to SC-SAGD in Q4 2014 (in order of conversion).

Artificial lift (electrical submersible pump) optimization for gas handling and production enhancement.

CDP FACILITY

Office/Operations

MaintenanceSteamGeneration

BitumenTreatment

Well Pad

Storage Tanks Truck TerminalWater Treatment

Pipe Rack

GRAND RAPIDS TYPE CURVES AND PRODUCTION DATA

EXISTING WELL-PAIR CONFIGURATION



SaleskiIndustry first horizontal well production from the Grosmont Carbonates

ASSET OVERVIEWProject overview

60% working interest and operatorship. 47 leases in total, comprising 10,291 net hectares (17,152 gross hectares) of full oil sands rights:

61 delineation wells (48 with cores); 197 km 2D seismic; 42 km2 3D seismic (covers Phase 1); and 1.1 km2 4D seismic (one baseline and three subsequent monitors over Pilot).

First in industry to achieve production from a horizontal well in bitumen-bearing Grosmont carbonates (April 2011).

Pilot plant processing scheme was designed to process 1,800 bbl/d (gross) of production:

Two 50 mmbtu once through steam generators; dilbit, propane and diluent storage; water treatment and disposal system; and solvent injection and recovery.

$290 MM (net) invested in development, of which Pilot was $146 MM.

Ten horizontal wells drilled in total, six of which are producers. Four Class 1B disposal wells on site, completed in the Cooking Lake (two) and Grosmont (two), operating at low pressures and often under vacuum conditions.

Reserves & Contingent Resources1

961 mmbbl of unrisked best estimate contingent resources. First test of commercial block steaming

Development of the Cyclic SAGD process (C-SAGD) which conducts cyclic steam injection below fracture pressure followed by production under gravity forces.

Tested performance of block steaming, as seen in other large scale CSS processes, in the two Grosmont C wells, 1C-s and 2C.

D zone had a low SOR with passive C zone heat; 1D well producing more than 800 days with SOR less than 1.7 x.

CURRENT STATUSState of facilities

Pilot was suspended in September 2015 after achieving industry first production results from the block steaming cycle.

Suspension state will preserve the resource for continued future development:

Regular plant inspection requires operations personnel; and Personnel shared with Germain CDP.

Equipment has been cleaned and preserved. As the Pilot has been properly preserved, restart could be achieved for a modest cost.

Laricina has defined the steps and actions required to restart operations.

Regulatory status Pilot is in compliance with all regulatory requirements under its suspended state. 10,700 bbl/d (gross) Phase 1 approval received in July 2013; detailed design engineering is ~80% complete with certain long lead-time equipment secured and project site cleared.

LEASE EXPIRIES AND CARRYING COSTS All acreage can be held through 2024 for its initial term and extended beyond that. Laricina has received confirmation that it has met the MLE requirements on five of its leases; expect that these leases will be continued at expiry without further delineation.

Under current MLE requirements, remaining leases require 42 wells drilled after 2022 for an estimated cost of approximately $82 MM (gross).

Annual surface lease rental obligation of approximately $25,000 (gross).1 See additional Reserves / Contingent Resources disclosures in end notes

MINERAL LEASE RENTAL SCHEDULE

Hectares 2018 2019 Future 1

Annual Rentals 10,291 $36,019 $36,019 $36,0191 Average lease rental cost from 2020 through 2023

GrosmontTrend

GrosmontSweet Spot

GERMAIN

SALESKI

R13W4R15R17R19R21R23R3 R1W5R5

T76

T78

T80

T82

T84

T86

T88

T90

T92

T94

T96

T98

CNRLNorth Field PilotAcquired from Shell

OsumSaleski East Project60,000 bbl/d CapacityRegulatoryApplication Filed

LaricinaSaleski PilotSuspended10,700 bbl/d (gross)CapacityPhase I RegulatoryApproval Received

HuskySaleski Pilot3,000 bbl/d CapacityRegulatoryApplication Filed

LaricinaCenovusCNRLConocoHuskyImperialKochMEGOsumSuncorSunshineOil Sands Leases

GROSMONT TREND AND ACTIVITY



Phase 1 Full FieldZone C D C D

Net Pay 18.5 m 27.0 m 16.0 m 28.5 mPorosity 18% 24% 19% 25%Bitumen Saturation 83% 85% 83% 82%Permeability > 10 DarcyViscosity 3.0 million cP @ 15°C; 10 cP @ 200°CExploitableBitumen (net) 245 mmbbl 4,232 mmbbl

Source: Management estimates; excludes Ireton

Saleski – Geological OverviewThick, oil bearing, high quality reservoir

DESCRIPTION The Grosmont at Saleski comprises a bitumen saturated dolomite reservoir with porosity averaging 22%, ranging upward to > 33%, and fracture permeability > 10 Darcies.

The Grosmont reservoir interval is up to 50 metres in thickness, subdivided into the upper Grosmont D (30 metres) and the lower Grosmont C (20 metres) by a 1-2 metre thick fractured marl zone.

Located in the Grosmont high graded area, characterized by: Maximum Grosmont D thickness (thins to erosional limit to the east);

Enhanced porosity and permeability due to Karst exposure; and Located down dip of gas cap and up dip of basal water.

Highly fractured reservoir; fracture network enhances vertical and horizontal permeability.

45

45

45

45

5030

30

40

40

35

35

Grosmont D Erosi

onal

Lim

it

SALESKI

R18W4R19R20

T84

T85

T86

CI: 2.5 m

Grosmont Hz PilotProduction Area

1AA/7-26-85-19W4Grosmont Vert Type Log


Laricina LandLaricina WellsAll WellsGrosmont Bitumen Fairway

GROSMONT NET BITUMEN PAY

GROSMONT RESERVOIR CHARACTERISTICS

GROSMONT TYPE WELL LOG

P1-2Obs2P1Obs2

P1Obs1

P1Obs3

P2Obs1

P2Obs3

P2Obs2

P3D

P2D

P1D

P1CP2C

I1D

I1C

I2D

I2C

P1Cs

P3D

P3D

I2D

I2D

P2D

P2D

I2CP2C

P1D

P1D

I1D

I1D

P1C

P1C

I1C

I1C

P1Cs

P1Cs

350 m

250 m

well length 800 m

heel

toe

100 m

33 m

18 m

100 m

NORTH

SALESKI PILOT WELL CONFIGURATION

325

350

375

?

?

Hz WellsLaricina Pilot

D/N POROSITY % (DOL)153045 0

GAMMA RAY0 150

RESISTIVITY100101 1000

IRETONGROSMONT

GROSMONT D

1D

330 m

381 m2C

GROSMONT C

30 m

20 m

1AA/7-26-85-19W4



GROSMONT D

MARL

3D

2C1C

1C-s

2D

1D

IRETONCAP ROCK

GROSMONT C

30 m

20 m

5 m

1 m

Producer WellLateral Abandoned

Saleski – Pilot PerformanceEarly results indicate strong potential for a large-scale project

OVERVIEW Approximately 600,000 bbl (gross) of bitumen was produced before suspension, indicating a mature pilot.

Well 2C (450 metres): Pioneered successful second generation drilling and completions design for Grosmont C;

Best point in time SOR of 4.5; and 23% recovery achieved and was tracking GLJ and management type curves.

Well 1C-s (800 metres): Sidetrack of 1C using second generation drilling practices; and Began production in Q1 2014 achieving peak production daily rate of 479 bbl/d (gross) where a progressive SOR reduction (7.6 to 2.2) was observed.

Well 1D (800 metres) produced (with intermittent small steam slugs) for more than 600 days at a CDOR of ~110 bbl/d (gross) and cycle SOR of 2.1, harvesting passive heating from C zone below.

Well 3D (800 metres) began production in Q2 2014; reached peak daily production rate of 820 bbl/d (gross) with a cycle SOR of 6.3 over the first three production cycles and calendar day oil rate (CDOR) averaged 120 bbl/d.

KEY LEARNINGS Early results indicate commercial recovery potential. Operating practices for the Grosmont Formation were modified to single well C-SAGD from conventional dual well SAGD.

C-SAGD uses alternating cycles of steam injection below fracture pressure using fractures to contact the reservoir and drain bitumen production.

Most recent drilling practices (returns to surface, balanced, staged acid, open hole) have been proven effective as observed in well 2C.

Potential SOR and production rate improvements may include: Well lengths of 800-1,000 metres and multi-laterals; Steam injection rates at 1,500 m3/d (up from 400 m3/d at the pilot) per well;

Block steaming (i.e. simultaneous well steaming); and Improved artificial lift reliability.

PILOT FACILITY

PRODUCTION RESULTS

PILOT WELL CONFIGURATION

P2C RATE vs TIME PRODUCTION PLOT

De-commissionedStorage Tank

Run Off Pond

Water Treatment Building

Boiler FeedwaterPump Building

FlareLine

Blowdown Tank

Boiler Feedwater Tank

MCC Building

2nd OTSG1st OTSG

De-OilingBuilding(Slop Oil,Skim)

FWKO/Treater

FlareKnockoutDrumBuilding

Skim, Slop,SourceDisposalTanks

Fuel Gas Line Heater

Disposal/Source WaterPump Building

DilbitTanks

DiluentProduced GasBuilding

Injected Cumulative Production Cum. Rec.Steam Oil Water Total Liq. SOR Factor

Well Pair (bbl) (bbl) (bbl) (bbl) (Ratio) (%)

1D Well Pair 637,836 135,509 911,857 1,047,366 4.7 4.0%1C Well Pair and P1C-s Well 1,520,843 186,780 608,677 795,457 8.1 13.1%

I2D Well 546,000 17,264 169,126 186,390 31.6 0.5%2C Well Pair 1,152,333 221,987 770,934 992,921 5.2 26.4%P3D Well 265,635 37,981 226,772 264,753 7.0 1.2%

Pilot Total 4,122,647 599,521 2,687,367 3,286,888 6.9 4.9%

Note: Figures as at August 31, 2015 (time of Pilot suspension)0

200

400

600

800

1,000

1,200

1,400

Date

GLJ P2C Type CurveP2C ActualP2C CDOR

Oil Rate (bbl/d)CDOR (bbl/d)



1510

10

56

7 8

1718

19 20

292222223303

31313131 32

12345

8 999 10 11 12

1314151617

20 21 22 23 2444

2526272829

32 33 34 35 36

R14W4R15

T89

10

1520

1015

20McMurrayB & C

Channels

McMurrayA Channel

31 3636

1

1

6

3131 36

1

363

61 R10W4R11

T88

T89

10

1520

1015

2025

R21W4R22R23

T83

T84

T85

1510

2252627282930

31 323232 33 341 35 36

256

5555 36

12345556

7 8 9 10 11 12

131415161718

19 20 21 22 23333 24

252627282930

1

12

13

24

25555

R14W4R15

T82

T83

1020

1010

15

3456

7 8 9 10

15161718

19 20 21 22

27282930

31 32 33 34

1

12

13

24

25

36

3456

7 8 9 10

1

12

R13W4R14

T80

T81

1020

15

19191 202 21 22

27289 0151530

3111 3223232 33 34

2333 24

25252526626

35 36

345556

77 8 99999 10

1

12

R11W4R12

T78

T79

10 15 20 25 30

11119

3330

31

20200 2121 22 23232 24

5555222225252522555255552266662728282829929

3232 33333 343334 53553553533 36336

6

7

18

1112222345

88 9 11110 111111111111 12

1311114114411441111151151551617

R9W4

T89

T90

1416

16

16

16

16

14

12

10

18

18

18 18

20

20

24

24

22

22

22

8 9 10 11

14151617188

1919 20 21 22 23

26272822930

311 32 33 34 35

11 12

131444444

222333333322222222 24

2555552222222226666662662626662

35333 663663366666666636636

223344555666666666666666666666666

7 88888 9 10 11

11112

1111111 122222222222

ShaleChannel

ShaleChannel

R17W4R18

T76

T77

10 15 2025

30

7

31

8

32

8 122

32 36

5555

32

4

33

15

33233 3636

5

1717

4

16

15

1317

T94

T95

T96

R1W5 R25 R24W4

10

15

20

7

31

8

3323

8 122

32 36

5

32

4

333333

15

33233 3636

5

1717

4

16

15

1317

T94

T95

T96

R1W5 R25 R24W4

Boiler RapidsMcMurray Formation62 mmbbl; 5,120 ha;1st expiry: 2024

Burnt Lakes DGrosmont Formation391 mmbbl 1 ; 16,619 ha;1st expiry: 2025

Burnt Lakes CGrosmont Formation59 mmbbl 1 ; 16,619 ha;1st expiry: 2025

Conn CreekMcMurray Formation195 mmbbl; 8,192 ha;1st expiry: 2025

Germain WinterburnGrand Rapids Formation433 mmbbl 1 ; 17,664 ha;Major expiries: 2025

House RiverMcMurray Formation93 mmbbl; 11,776 ha;1st expiry: 2024

Thornbury WestMcMurray Formation58 mmbbl; 2,304 ha;1st expiry: 2024

ThornburyMcMurray Formation37 mmbbl 1 ; 1,792 ha;1st expiry: 2024

Poplar CreekMcMurray Formation91 mmbbl; 1,824 ha;1st expiry: 2023

PortageGrand Rapids Formation58 mmbbl; 2,304 ha;1st expiry: 2025

Laricina Land3D Seismic2D Seismic

Other Properties – Net Bitumen PayMultiple additional prospects in corporate portfolio

ElectricalWell 2D 3D Resistivity

Density Seismic Seismic Tomography(wells/sec) (km) (km2) (km)

Boiler Rapids 0.15 - - 32.00Burnt Lakes (C & D) 0.12 117.00 23.50 - Conn Creek 0.42 22.25 5.10 70.00Germain Winternburn 0.29 90.59 - - House River 0.52 - - - Poplar Creek 5.30 - - 73.50Portage 0.90 31.00 - - Thornbury West 0.75 - - - Thornbury 1.14 - - -

PROPERTY DATA

Note: Reserves and Contingent Resources volumes as per GLJ 2016YE assessments unless otherwise noted (see end notes for additional disclosures), contours as per Laricina1 Laricina internal estimates



Other AssetsStrategic ownership of key road and exclusive access to area camps

CHIP LAKES ROAD MAP

GERMAIN AND SALESKI CAMPS

SALESKI

GERMAIN

All Weather

All Weather

Peerless Road 1st 40kmAll Weather

Km 27 - Cenovus/CNRL

Km 68 - Laricina/OSUM

Km 54 - Bridge

Km 61 - Bridge

Km 1 - Bridge

Km 13 - Bridge

Km 37 - Bridge

Wood Buffalo Bridge

WoodBuffaloBridge

Km 5 - 4 Way Stop

Wabasca

R18W4R1W5 R20R22R24

T80

T82

T84

T86

T88

T90

Laricina LandChip Lakes Road SouthChip Lakes Road NorthGovernment Chip RoadSaleski RoadGermain RoadHighway 813

CHIP LAKES ROAD Laricina owns a 40% working interest and is the operator of the only road in the region, a strategic infrastructure position.

76 km all-season gravel road, running from Wabasca to Chipewyan Lake.

Internal roads, portions of which are shared with WI partner, provide access to Saleski and Germain assets which are approximately 30 km apart.

Laricina invested $38.5 MM to date: Purchased for $15 MM in December 2012; and Invested an incremental $23.5 MM to upgrade the roads and bridges.

CAMPS AT GERMAIN AND SALESKILease contract with buyout option

Laricina has annual renewable contracts with a camp services provider for:

504 person camp at Germain; and 116 person camp at Saleski.

Camps are rented by third parties primarily during the winter months. Leasing and operations fees are significantly reduced if camps are shut-in, only property taxes remain payable.

Buyout options exist, on both camps, for Laricina to exercise at any time before expiry of contracts:

Buyout value of Germain implies approximately $14,880 per bed; and

Buyout value of Saleski implies approximately $16,380 per bed. Laricina has entered into accommodation agreements with third parties for the next two winter seasons.

GERMAIN CAMP

SALESKI CAMP



Process and Contacts

Peters & Co. Limited | 2300 Jamieson Place | 308 Fourth Avenue SW | Calgary, Alberta, Canada | T2P 0H7

Laricina has retained Peters & Co. as its financial advisor to coordinate all aspects of this strategic alternatives process and Peters & Co. will act as the sole contact for all parties who wish to contact Laricina ("Interested Parties"). An online virtual data room has been established, which provides a comprehensive overview of Laricina, as well as detailed corporate, operational and financial information.

Interested Parties that execute a confidentiality agreement will receive access to the online data room and may receive a management presentation from Laricina.

Laricina and Peters & Co. expressly reserve the right at any time to amend or terminate the strategic alternatives process and / or these procedures, to decline to permit an Interested Party to participate in the process, to terminate discussions with any or all Interested Parties, to reject any or all offers, or to negotiate with any party with respect to a possible transaction.

Further information in the form of a process / bid letter will be provided to Interested Parties that have signed a confidentiality agreement.

Process timing will be communicated to Interested Parties after the execution of a Confidentiality Agreement.

Peters & Co. will act as the sole contact for all Interested Parties. The directors, officers, employees and consultants of Laricina should not be contacted directly. All communications and inquiries from Interested Parties should be directed to one of the representatives listed below:

End notes: In relation to any GLJ Petroleum Consultants Ltd. ("GLJ") Reserves / Contingent Resources assessments, the 2016 year-end report was not prepared fully in accordance with the Canadian Oil and Gas Evaluation Handbook as economic forecasts were not prepared at the time at the request of the Company. Further, the report is currently out of date and does not consider new technical and economic data and interpretations. Laricina is currently in the process of having GLJ update the volumes for 2017 year-end.

CONTACTS

Christopher S. PotterPresident & Chief Executive [email protected]

Shane R. HutzalPrincipalCorporate [email protected]

Callum J. MoorePrincipalCorporate [email protected]

Scott A. JohnstonPrincipalAcquisitions & [email protected]

Benjamin M. GazdicVice PresidentCorporate [email protected]

Franklin P. EldridgeVice PresidentAcquisitions & [email protected]



Disclaimer

This Information Memorandum is based on information provided by Laricina from its own records and from other sources. The Information Memorandum is being distributed, on behalf of Laricina, by Peters & Co., its financial advisor, solely for the use by a qualified third party ("Third Party").

The information contained herein (the "Information") has been prepared in good faith to assist a Third Party in completing its own independent evaluation of Laricina's assets, but does not purport to be all inclusive or to contain all of the information that a Third Party may desire or that may be required by a Third Party to properly conduct an evaluation. In all cases, a Third Party should conduct its own independent investigation and analysis of the assets and the data set forth in this Information Memorandum.

Peters & Co. has not independently verified any of the Information contained herein. Neither Peters & Co., the Company, nor their respective affiliates make any representation or warranty (expressed or implied) as to the accuracy or completeness of this Information Memorandum.

Neither Peters & Co., the Company, nor their respective affiliates will assume any liability for a Third Party's use of this Information Memorandum or any other oral, written or other communication transmitted to a Third Party during the course of its evaluation.

Laricina and Peters & Co. expressly disclaim any and all liability and responsibility for and associated with the quality, accuracy, completeness or materiality of the Information.

A Third Party will conduct its own independent evaluation and analysis of the Information and satisfy itself as to the quality, accuracy, completeness and materiality of the same. The Third Party will rely solely on its own independent evaluation and analysis of the Information at all times.

This Information Memorandum may include certain statements, estimates, forecasts and projections provided by the Company and with respect to the anticipated future performance of the assets. Such statements, estimates, forecasts and projections reflect various assumptions made by the Company and / or Peters & Co. concerning anticipated results, which may or may not prove to be correct. No representations or warranties are made as to the accuracy of such statements, estimates, forecasts or projections. The only Information that will have any legal effect will be that specifically represented or warranted in any definitive agreement, when, as and if executed.

NEITHER THIS INFORMATION MEMORANDUM NOR ITS DELIVERY TO A THIRD PARTY SHALL CONSTITUTE OR BE

CONSTRUED TO BE AN OFFER TO SELL ANY SECURITIES OF THE COMPANY. THIS INFORMATION MEMORANDUM SHALL

NOT BE DEEMED AN INDICATION OF THE STATE OF AFFAIRS OF THE COMPANY NOR CONSTITUTE ANY INDICATION

THAT THERE HAS BEEN NO CHANGE IN THE BUSINESS OR AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.


laricina energy ltd. - petersco.com · (10,700 bbl/d gross); ... petroleo cavalier cnooc grizzly...

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