tsx-sgi september 2005 investor presentation september 2005

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TSX-SGI September 2005 TSX-SGI September 2005 Investor Presentation September 2005

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Page 1: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

Investor PresentationSeptember 2005

Page 2: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

CorporateCorporate DevelopmentDevelopment StrategyStrategy

The PlanThe Plan

Growth through a balanced approach of acquisitions Growth through a balanced approach of acquisitions combined with aggressive exploitation of upsidecombined with aggressive exploitation of upside

• Significant surplus tax pools provides a competitive advantage

• Acquire and develop quality asset base featuring long-life reserves with high operating net-backs

• Generate a balanced prospect inventory including low risk development, medium risk exploration and high impact reserve targets

• Maintain an in-house technical team skilled in resource play development, conventional exploration and efficient operations

Page 3: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

Performance to datePerformance to date

The ResultsThe Results

Acquisitions

• Completed four corporate and 3 property acquisitions

• Increased NAV per share to $1.60/share up 130% compared to re-capitalization at $0.70/share in December 2003

Efficient Operations

• Executed 35 operations in 2004 including 23 wells drilled at an 88% success rate

• Delivered top-quartile F&D costs of $11.16/boe Proven plus Probable

• Developed strong prospect inventory of over 60 opportunities

• 7.7 MMboe Proven plus Probable reserves pro-forma Goose River transaction as at March 31, 2005

• Drilled 18 wells year to date in 2005 with 100% success – completions and tie-ins underway

Page 4: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

2,000

410271 417

1,300

2,500

1,020

430

966

0

500

1,000

1,500

2,000

2,500

3,000

Q12004

Q22004

Q32004

Q42004

Q12005

Q22005

Q32005

Q42005

2005Exit

Time LineTime Line

Resource Play Development

Acquisitions Exploration and Development

Drilled 23 Wells Drilled 2 Wells Drilled 26 Wells

Page 5: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

J. Cameron Bailey (CFA) President & CEO

Michael Wuetherick (P.Eng) VP Corporate Development & COO

Dave Meleshko (P.Eng) Executive VP

Darcy Lamb (P.Eng) VP Operations

Tim Campbell VP Land

Brian Doherty VP Exploration

Barry Edmonson (P.Geol) Senior Geologist

Gary Walker (P.Geol) Senior Geologist

Jamie Jeffs (CA) CFO

Management TeamManagement Team

Page 6: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

Norman McIntyre (P.Eng.) Chairman Former President of Petro-Canada

George Watson (P.Eng.) Former CEO of TransCanada Pipelines Ltd.

Barry Giovanetto (CA) President of Rayquest Holding Ltd.

Randy Harrison (P.Land) President of Stallion Energy Inc.

J. Cameron Bailey (CFA) President and CEO of SignalEnergy Inc.

Curt Hartzler (P.Eng) President and CEO of G2 Resources Inc.

Hugh Mogenson (P.Geol) Former Chairman of Goose River Resources

Board of DirectorsBoard of Directors

Page 7: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

Where we are TodayWhere we are Today

Production 1,700-1,800 boe/dNatural Gas 75%

Oil and Liquids 25%

March 2005 Year End Reserves (mboe)Proven 5,054Proven & Probable 7,770

Undeveloped Land 52,000 net acres

Net Asset Value Per Share $1.60

RLI (based on current production)Proven 7.7 yearsProven & Probable 11.8 years

Page 8: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

Signal Score CardSignal Score Card

(Since recapitalization in December 2003 based on 2004 Reserve Estimates)

Finding & Development Costs without with Future Capital Future Capital

Total Proven $14.94/boe $16.30/boeProven & Probable $ 9.81/boe $11.16/boe

Recycle Ratios

Total Proven 2.1 timesProven & Probable 3.2 times

Operating Costs

Total Proven $6.00 -$6.50/boe

Full Cycle Capital Efficiency Full Cycle Capital Efficiency

Page 9: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

220

600

1200

400

180

520

500

220

0 200 400 600 800 1,000 1,200 1,400

Privateco

Predator

Goose

Carrot Creek

• Average 70% increase in production

Creating Value on Major AcquisitionsCreating Value on Major Acquisitions

Production Increases (boe/d)Production Increases (boe/d)

2005 Exit Rate

Acquired

Page 10: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

430

966 1,020

2,500

1,300

417271

410

2,000

0

500

1,000

1,500

2,000

2,500

3,000

Q12004

Q22004

Q32004

Q42004

Q12005

Q22005

Q32005

Q42005

2005Exit

Average Daily Production boe/dAverage Daily Production boe/dB

oe/

d

Page 11: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

36.8

21.321.720.6

9.012.311.9

13.7

29.4

0.05.0

10.015.020.0

25.030.035.0

40.045.0

Q12004

Q22004

Q32004

Q42004

Q12005

Q22005

Q32005

Q42005

Exit2005

Boe/d

per

mill

ion S

hare

sProduction Per ShareProduction Per Share

74% Growth Rate in 200574% Growth Rate in 2005

Page 12: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

Pro-forma Net Asset Value Pro-forma Net Asset Value

December 2003 December 2004 (millions) (millions)

Reserves @10% DCF nil $101.7

Undeveloped Land nil $ 9.9

Tax Pools $ 5.5 $ 5.5

Net Working Capital $14.4 ($ 6.9)

Net Asset Value $19.9 $110.2

Shares Outstanding 28.4 68.5

Net Asset Value per Share $ 0.70 $1.60

Growth in Asset Value per Share 130%

• Note: The above is presented on a pro forma basis after giving effect to the Goose River, Predator and Privateco acquisition and the Twining disposition.

Page 13: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

Ideal Budget AllocationIdeal Budget Allocation

Prospect Development PyramidProspect Development Pyramid

Geotechnical Geotechnical ResourcesResources

Three GeologistsThree GeologistsOne GeophysistOne GeophysistThree EngineersThree Engineers

New Concept Plays &High Risk Exploration

10%10%

30%Medium Risk

30%Medium Risk

60%Low Risk Development

60%Low Risk Development

ProductionProduction

Page 14: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

The Landscape has ChangedThe Landscape has Changed

Prospect Development Pyramid Prospect Development Pyramid

10%10%

30%Medium Risk

30%Medium Risk

60%Low Risk Development

60%Low Risk Development

ProductionProduction

ExploreCos – Peer Group

• Seeded with inventory drillable prospects and access to land

• Valuations reflect high growth rates

Trusts

• Transformed into sustainable business models through reinvestment activities

• Distributions average 64%

• Low cost of capital

• Drilling inventory acquired

• Competition for acquisitions

Page 15: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

How Does Signal Compete?How Does Signal Compete?

Average Gas Production Mix 54%SignalEnergy 75%

Average Operating Costs $7.67 per boeSignalEnergy $6.00 per boe

Proven Reserve Life Index 7.0 yearsSignalEnergy 7.7 Years

Average Reserves per Well 98 mboeSignalEnergy 140 mboe

Average Production per Well 28 boe/dSignalEnergy 40 boe/d

Trust Comparison Trust Comparison

Page 16: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

Unlocking Hidden ValueUnlocking Hidden Value

• Tax Pools $90 million

100% Write-off Pools $60 million

• Signal can shelter proceeds from the sale of its producing assets

• Signal has developed assets that are highly marketable and valuable to the Trusts

• Trust can provide access to undeveloped land

• Signal has very attractive “trading chips” in a highly competitive cash rich environment.

Strategies Strategies

Page 17: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

$21.0

$3.7$18.3

2005 Capital Budget of $6 MM for remainder of year

• Always maintain prospect inventory double available capital

• Manage portfolio risk exposure by high-grading opportunities

• Exploration and medium risk projects to provide contingent follow-up low risk development locations

$43 MM Prospect Inventory$43 MM Prospect Inventory

High Risk Exploration:• 2 Drilling Locations• 320 boe/d• 700 Mboe Reserves

Low RiskLow RiskDevelopment:Development:• 32 Operations• 857 boe/d• 2227 Mboe Reserves

Medium Risk:Medium Risk:• 20 Operations• 926 boe/d• 1225 Mboe Reserves

Page 18: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

Core AreasCore Areas

Cheap Deep (Resource Plays)

• Chigwell

• Buick Creek

• Bashaw

Conventional Plays• Carrot Creek

• Elmworth

• Kaybob

• Redwater

Edmonton

Calgary

Bashaw

Kaybob

Chigwell

Redwater

Buick Creek

Carrot Creek

E

Elmworth

Page 19: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

Chigwell / BashawChigwell / Bashaw

Low Risk DevelopmentLow Risk Development• Current production of 285 boe/d

• Multi-zone targets to depths of 1700 m

• 9 gross (4.5 net) sections of undeveloped land

2005 Capital Program:

• Q2 &Q3 Drilled 7 wells and completed three tie-ins

• Q4 – 3 Drills and 7 tie-ins

2006 Capital Program:

• Drill 15 CBM locations

• Re-enter 2-3 wellbores for Ostracod potential

T.42

T.41

R.22

T.43

R.23R.24R.25 W.4

Bashaw

Chigwell

Signal LandsQ3 2005 WellsQ4 2005 WellsQ1 2006 WellsGas Wells

Page 20: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

• Multi-zone Mannville-Rock Creek at depths to 2500 m

• Follow-up on recent drilling success

• 41 gross (31 net) sections of undeveloped land

2005 Capital Program:

• Q2 & Q3 Drilled 4 wells and completed one tie-in

• Q4 – 3 wells and 3 tie-ins

2006 Capital Program:

• Drill 3-5 additional wells pending success

Carrot CreekCarrot Creek

Medium RiskMedium Risk R.14 W.5 R.13 R.12

T.52

T.51

T.53

Rock Creek Trends

BlueskySand

Signal LandsFarmin LandsQ3 2005 WellsQ4 2005 WellsQ1 2006 Wells

Rock Creek Trends

BlueskySand

Signal LandsFarmin LandsQ3 2005 WellsQ4 2005 WellsQ1 2006 Wells

Rock Creek Trends

BlueskySand

Signal LandsFarmin LandsQ3 2005 WellsQ4 2005 WellsQ1 2006 Wells

Rock Creek Trends

BlueskySand

Signal LandsFarmin LandsQ3 2005 WellsQ4 2005 WellsQ1 2006 Wells

Rock Creek Trends

BlueskySand

Signal LandsFarmin LandsQ3 2005 WellsQ4 2005 WellsQ1 2006 Wells

Rock Creek Trends

BlueskySand

Signal LandsFarmin LandsQ3 2005 WellsQ4 2005 WellsQ1 2006 Wells

Rock Creek Trends

BlueskySand

Signal LandsFarmin LandsQ3 2005 WellsQ4 2005 WellsQ1 2006 Wells

Rock Creek Trends

BlueskySand

Signal LandsFarmin LandsQ3 2005 WellsQ4 2005 WellsQ1 2006 Wells

Rock Creek Trends

BlueskySand

Signal LandsFarmin LandsQ3 2005 WellsQ4 2005 WellsQ1 2006 Wells

Signal LandsFarmin LandsQ3 2005 WellsQ4 2005 WellsQ1 2006 Wells

Page 21: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

• Target Ellerslie Oil at depth of <1100m

• Current production 600 boe/d

• Operating Cost reduction from $12.00/boe to $6.50/boe

• Average Working Interest 60%

2005 Capital Program:

• Q2 &Q3 – drilled 5 wells and completed 3 tie-in complete flow lines

• Q4 – Drill 7 infill wells and complete 9 tie-ins

2006 Capital Program:

• Drill 15 wells on 40 acre spacing

• 40 locations on 20 acre spacing

RedwaterRedwater

Low Risk DevelopmentLow Risk DevelopmentR.21 W.4 R.20

T.55

2

Signal LandsQ3 2005 WellsQ4 2005 WellsQ1 2006 Wells

Eller

slie

Cha

nnel

PendingPurchase

Page 22: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

2005 Fourth Quarter Activity2005 Fourth Quarter Activity

Q4 Expected Prod. adds

Q4 Drilling No. of Wells (boe/d)

Redwater 7 350

Bashaw / Chigwell 2 35

Carrot 3 *nil

Exploration 1 *nil

Total Drilling 13 385

Q4 Tie-insRedwater 2 20

Bashaw / Chigwell 7 35

Carrot 3 150

Total Tie-ins 12 205

Total Operations 25 590

* First Quarter 2006 Tie-in

Page 23: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

Shares Outstanding 68.5 million

Recent Share Price $1.40

Market Capitalization $95.9 million

Pro-forma Debt $22.5 million

Pro-forma Lending Facility $27.0 million

Total Capitalization $118.4 million

CapitalizationCapitalization

Page 24: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

2005 Average Production 1,300 boe/d

Cash Flow Per Share $0.17 per share

2005 Exit Rate 2,500 boe/d

Annualized Exit Rate Cash Flow $23.4 million

Annualized Exit Rate CFPS $0.38

Remaining 2005 Capital Expenditures $6.0 million

Year-end Exit Debt $22.0 million

Reserve Life Index 11.8 years

Tax Pools $90 million

2005 Guidance2005 Guidance

Price Assumption $50 WTIPrice Assumption $50 WTI

Page 25: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

Why SignalEnergy?Why SignalEnergy?

Attractive MetricsAttractive Metrics

• EV per boe/d

- Average 2005 Production $ 90,770

- Current Production $ 65,500

- 2005 Exit Rate $ 47,200

• High Quality Assets

- Long Life Assets - 11.8 year Reserve Life Index

- Low Operating Costs $6.00 - $6.50 per boe

• Significant Unused Tax Pools - $ 90 million

• Excellent Prospect Inventory

• Top 10% Industry Performance

• EV per boe = $ 15.94

- Lower than Industry average F & D Costs

Page 26: TSX-SGI September 2005 Investor Presentation September 2005

TSX-SGI September 2005TSX-SGI September 2005

Corporate InformationCorporate Information

SignalEnergy Inc.SignalEnergy Inc.600, 311 – 6600, 311 – 6thth Avenue S.W. Avenue S.W.

Calgary, Alberta T2P 3H2Calgary, Alberta T2P 3H2Email: [email protected]

Website: www.signalenergy.com

Investor Relations Contacts:

President & CEO J. Cameron Bailey [email protected]

VP – Corp.Dev &COO Michael Wuetherick [email protected]

Corporate Analyst Teresa Beets [email protected]

This presentation may contain forward-looking statements, including statements regarding the business and anticipated financial performance of SignalEnergy (the “Company”). These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. A number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, fluctuations in commodity prices, weather, access to capital markets, competition, changes in technology and government policies. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. The Company believes that the expectations reflected in these forward-looking statements are reasonable; however, no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this presentation should not be relied upon. In addition, these forward-looking statements relate to the date on which they are made. Unless otherwise required by applicable securities legislation, the Company  disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Phone: (403)398-3345

Fax: (403)398-3351

Toll Free: 1-866-592-6205