NORTH 40 RESOURCES LTD. Corporate Presentation - September 2021
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NORTH 40 RESOURCES LTD. Corporate Presentation – September 2021
Forward Looking Statements
Certain statements contained in this corporate profile of North 40 Resources Ltd. (“N40") constitute forward-looking statements or information (collectively "forward-looking statements") within
the meaning of applicable securities legislation, including, but not limited to management's future plans and expected operations, the characteristics and quality of N40’s assets and matters
related to the foregoing. Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", "project", "could", "plan",
"intend", "should", "believe", "outlook", "potential", "target" and similar words suggesting future events or future performance or may be identified by reference to a future date.
With respect to forward-looking statements contained in this corporate profile, N40 has made assumptions regarding, among other things: the ability to acquire oil and gas assets, future capital
expenditure levels; future oil and natural gas prices; future oil and natural gas production levels; future exchange rates and interest rates; ability to obtain equipment and services in a timely
manner to carry out development activities; ability to market oil and natural gas successfully to current and new customers; the impact of increasing competition; and ability to add production
and reserves through development and exploitation activities. Although N40 believes that the expectations reflected in the forward-looking statements contained in this corporate profile, and
the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to
place undue reliance on forward-looking statements included in this corporate profile, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking
statements are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that
the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause N40's actual performance and financial results in future periods to differ materially
from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, the ability
of management to execute its business plan; general economic and business conditions; the risks of the oil and natural gas industry, such as operational risks in exploring for, developing and
producing crude oil and natural gas and market demand; the possibility that government policies or laws may change or governmental approvals may be delayed or withheld; risks and
uncertainties involving geology of oil and natural gas deposits; the uncertainty of reserves estimates and reserves life; the ability of N40 to add production and reserves through acquisition,
development and exploration activities; N40's ability to enter into or renew leases; potential delays or changes in plans with respect to exploration or development projects or capital
expenditures; the uncertainty of estimates and projections relating to production (including decline rates), costs and expenses; fluctuations in oil and natural gas prices, foreign currency
exchange rates and interest rates; risks inherent in N40's marketing operations, including credit risk; uncertainty in amounts and timing of royalty payments; health, safety and environmental
risks; risks associated with unexpected potential future law suits and regulatory actions against N40; uncertainties as to the availability and cost of financing; and financial risks affecting the value
of N40's investments. Readers are cautioned that the foregoing list is not exhaustive of all possible risks and uncertainties.
Any financial outlook or future oriented financial information in this corporate profile, as defined by applicable securities legislation, has been approved by management of N40. Such financial
outlook or future oriented financial information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are
cautioned that reliance on such information may not be appropriate for other purposes.
The forward-looking statements contained in this corporate profile speak only as of the date of this corporate profile. Except as expressly required by applicable securities laws, N40 does not
undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements
contained in this corporate profile are expressly qualified by this cautionary statement. The information contained in this corporate profile does not purport to be all-inclusive or to contain all
information that a reader may require. Readers are encouraged to conduct their own analysis and reviews of N40, and of the information contained in this corporate profile. Without limitation,
readers should consider the advice of their financial, legal, accounting, tax and other advisors and such other factors they consider appropriate in investigating and analyzing N40.
NORTH 40 2
RESOURCES LTD.
Management & Directors Management Previous Experience Darrin Hanik, P.Eng Newstar Energy Ltd., Range Royalty LP, Galleon Energy President, CEO and Director Inc., KeyWest Energy Corp., Renaissance Energy Ltd. Kim Schoenroth, CA, CFA Endurance Energy Ltd., Focus Energy Trust, Husky VP, Finance & CFO Energy Inc., Renaissance Energy Ltd. Don W. Robson Long Run Exploration Ltd., PennWest Petroleum Ltd., VP, Land and Business Development Canetic Resources Ltd., Renaissance Energy Ltd. Preston Kraft, P.Eng Twin Butte Energy Ltd., Husky Energy Inc., Renaissance VP, Operations Energy Ltd. Steven R. Metzger, P.Geol. Spyglass Resources Corp., Pace Oil & Gas Ltd., VP, Exploration Tournament Energy Ltd., PennWest Petroleum Ltd. Gerald Aleman Newstar Energy Ltd., Galleon Energy Inc., Enterra VP, Production Energy Ltd., Encana Corp Directors Current Role Clayton Woitas (Chairman) Partner, Calmar Capital Corporation Tyson Birchall Managing Director, Longbow Capital Jeff Lebbert President, Southbow Royalty Margaret McKenzie Independent Businesswoman Grant Zawalsky Managing Partner, Burnet Duckworth & Palmer LLP Lonny Tetley (Corporate Secretary) Partner, Burnet Duckworth & Palmer LLP NORTH 40 3 RESOURCES LTD.
North 40 Overview
• North 40 Resources Ltd. (“North 40”) is a private Canadian E&P company financed in 2016
• Experienced management team, most having worked together previously
• Established veteran board that is highly vested and actively involved in the growth of the
company
• Initial equity raise in June 2016 of $75.25 million at $1.00/share (no front-end promote
for insiders)
• Management, directors and affiliates hold 48.9% of common shares
• Long term incentive structure for insiders consists of Class B* and C** shares which are
convertible into common shares.
• Set out with goal to build a company comprised of assets capable of self-funded growth
• Strategy was to be focused on organic growth and/or the purchase of existing producing
assets
• SE Alberta was chosen as an area where industry had been less active, yet still had
potential
• The less-competitive nature of the area would allow for land deals to be done at
reasonable costs
*Class B shares are convertible into common shares at $1.00 per share
NORTH 40 **Class C shares are convertible into common shares on a liquidity event in six equal allotments with escalating conversion 4
RESOURCES LTD. and hurdle prices
North 40 Overview (cont’d)
• What we’ve done toward our goal
• Established significant land positions in a total of 11 prospective properties, with total corporate land
holdings of ~254,000 acres (397 sections), all considered greenfield acquisitions
• Multiple deals have been done with large freehold landowners
• Supplemented with Crown land where possible using 3rd party land fund
• Have drilled a total of 57 wells to-date, testing at least 1 prospect in 9 separate properties, with 7 of
those properties currently producing
• Success thus far has been based on the use of horizontal well technology where vertical wells are not
economically viable or have not been able to access areas of the reservoir due to surface topography
• Most drilling carried out by North 40 to-date has been for the purpose of evaluating our prospects,
which has produced a significant inventory of high-quality locations
• Total capital spent to-date is ~$150 million (80% wells / 20% land & seismic)
• Generated ~$72 million in cashflow from inception to June 30, 2021
• Current production of over 4,500 boe/d (72% oil & liquids) from 48 producing wells
• Estimate ~$10 million of cash on hand at end Q2/21 and no debt
• Corporate LMR of 17.6 (August 2021), well within the top 10% of industry
NORTH 40 5
RESOURCES LTD.
Rate (boed)
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
500
0
Sep-17 408
NORTH 40
RESOURCES LTD.
Oct-17 561
Nov-17 621
Dec-17 629
Jan-18 1090
Feb-18 1136
Mar-18 1156
Apr-18 774
May-18 980
Jun-18 818
Jul-18 773
Aug-18 754
Sep-18 1317
Oct-18 1927
Nov-18 1316
Corporate Production
Dec-18 1539
Jan-19 2963
Feb-19 2779
Mar-19 2550
Oil & NGL (bpd)
Apr-19 2669
May-19 2419
Jun-19 2129
Jul-19 1931
Aug-19 1885
Sep-19 2034
Oct-19 2260
Gas (boed)
Nov-19 3193
Dec-19 3051
Jan-20 2334
Feb-20 2126
Monthly Production History
Mar-20 1427
Apr-20 647
May-20 0
Wellcount
Jun-20 1336
Jul-20 2471
Aug-20 2540
Sep-20 2438
Oct-20 2106
Nov-20 2107
Dec-20 2060
Jan-21 1776
Feb-21 1690
Mar-21 1434
Apr-21 1725
May-21 1753
Jun-21 1686
6
Jul-21 1890
Aug-21 2457
0
5
10
15
20
25
30
35
40
45
50
Land Base & Drilling Inventory
North 40 Land Base and Drilling Inventory
500 100
450 90
400 80
De-risked Drilling Inventory
350 70
300 60
Net Sections
250 50
200 40
150 30
100 20
50 10
0 0
2016 2017 2018 2019 2020 2021
De-risked Land Land Remaining to be Evaluated De-risked Inventory
NORTH 40 7
RESOURCES LTD.
North 40 Properties NORTH 40 8 RESOURCES LTD.
Drumheller
• ~79,500 acres (~124 sections) of Crown
and fee land under lease (74% Crown /
26% Freehold)
• Land holdings are within and surrounding
an oil pool discovered in 1972
• Target is oil in the Banff formation (30°
API) at depth of ~1,300 m
• Large oil pool (estimated at >130 mmbbl)
with low pool recovery to-date, initially
developed with vertical wells in the
1980’s
• Multi-stage fractured horizontal well
technology has allowed development to
be taken further
• 3D seismic coverage over the majority of
the project area
* Wells shown: Banff producers
NORTH 40 9
RESOURCES LTD.
Drumheller
• Banff formation - sandstone
• Net pays of 4 – 10 m (6% porosity cutoff)
• Porosity range 6 – 18%
• Based on mid-point of reservoir parameters, OOIP estimated at ~9 mmbbl per section
- Type log: 14-32-26-17W4
NORTH 40 10
RESOURCES LTD.Drumheller
• Total wells drilled to-date in the
Drumheller property by North 40 is 29
hztls (26 producers/1 injector)
• Six horizontal wells (shown in purple)
drilled in Q2/Q3 2021, 4 infill oil wells and
2 natural gas wells to the east
• With the 4 new oil wells now on
production, Drumheller is currently
producing ~2,400 boepd (69% oil & liq)
• Two gas wells now being completed and
scheduled to go on production in early Q4
• Waterflood pilot cum voidage fill-up now
at 70% and has seen a 75% increase in oil
production recently; will continue to
monitor
• Drilling inventory for the property is
estimated at 30-35 tier 1 locations (based
on 4 wells/section) with potential to add
* North 40 wells in bold ~10 more
NORTH 40 11
RESOURCES LTD.Drumheller Oil
Drumheller (22 Hz) - Normalized Prod (bopd) Drumheller - Well Economics
350
300 Assumption:
2,050 M$ DCET capital
Oil Rate (bopd)
250
200 $3.00 AECO, 1.25 Fx
150
100
NPV10BT Payout ROR P/I
50
(m$) (years) (%) Ratio
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Months 130 Mbbl (166 Mboe)
Average 130 mbbl 180 mbbl
$40 WTI (201) 5.3 -- 0.0
$50 WTI 563 2.1 34 0.3
Drumheller (22 Hz) - Cumulative Oil (bbls) $60 WTI 1,517 1.2 84 0.7
80,000 $70 WTI 2,471 0.8 164 1.2
70,000 $80 WTI 3,426 0.6 293 1.7
Cumulative Oil (bbls)
60,000
50,000
180 Mbbl (230 Mboe)
40,000
30,000
20,000 $40 WTI 583 1.8 39 0.3
10,000 $50 WTI 1,611 1.0 106 0.8
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 $60 WTI 2,895 0.6 267 1.4
Months $70 WTI 4,178 0.4 >500 2.0
$80 WTI 5,462 0.3 >500 2.7
Average 130 mbbl 180 mbbl
NORTH 40 12
RESOURCES LTD.Drumheller Gas
Drumheller Gas - Prod (mcfd) Drumheller Gas - Well Economics
4,500
4,000 Assumption:
3,500
Gas Rate (mcfd)
3,000 2,100 M$ DCET capital
2,500 1.25 Fx
2,000
1,500
1,000 NPV10BT Payout ROR P/I
500
0
(m$) (years) (%) Ratio
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Months
2,000 mcf/d (2.0 Bcf)
Type Well (2 Bcf) Type Well (4 Bcf)
$2.50 AECO 1,017 1.9 43 0.5
Drumheller Gas - Cumulative Gas (mmfd) $3.00 AECO 1,663 1.5 68 0.8
1,800 $3.50 AECO 2,288 1.2 97 1.1
1,600
Cumulative Gas (mmcf)
1,400
1,200 4,000 mcf/d (4.0 Bcf)
1,000
800
600 $2.50 AECO 4,166 0.8 221 2.0
400
200 $3.00 AECO 5,388 0.6 347 2.6
0 $3.50 AECO 6,554 0.5 >500 3.1
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Months
Type Well (2 Bcf) Type Well (4 Bcf)
NORTH 40 13
RESOURCES LTD.Drumheller North
• ~24,800 acres (39 sections) of land leased
(29% Crown / 71% Freehold)
• Targeting oil in the Mannville Basal Quartz
(29° API) at a depth of ~1,300 m
• 3D seismic coverage over all lands
• Three wells drilled in 2021 (shown in
purple), 1 in Q1 and 2 in Q2
• With the 2 new wells only coming on in mid-
August, property is currently producing
~1,600 boepd (78% oil & liq)
• Drilling inventory currently estimated at 8
tier 1 locations with the potential for ~8
additional
* Wells shown: Lower Mannville oil producers.
NORTH 40 14
RESOURCES LTD.Drumheller North • Basal Quartz formation – sandstone • Net pays of 5 – 20m (12% porosity cutoff) • Porosity range of 9 – 15% - Type log: 09-16-28-19W4 NORTH 40 15 RESOURCES LTD.
Drumheller North
Drum North (5 Hz) - Normalized Prod (bopd) Drumheller North - Well Economics
500
Assumption:
400
2,050 m$ DCET capital - 1 mile lateral
Oil Rate (bopd)
300 2,300 m$ DCET capital - 1.5 mile lateral
200 $3.00 AECO, 1.25 Fx
100 NPV10BT Payout ROR P/I
(m$) (years) (%) Ratio
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Months 140 mbbl (187 mboe) - 1 mile lateral
Average 140 Mbbl 210 Mbbl
$40 WTI (20) 3.8 9 --
$50 WTI 798 1.7 45 0.4
Drum North (5 Hz) - Cumulative Oil (bbls) $60 WTI 1,818 1.0 108 0.9
120,000 $70 WTI 2,839 0.7 213 1.4
100,000 $80 WTI 3,860 0.5 396 1.9
Cumulative Oil (bbls)
80,000
60,000
210 mbbl (280 mboe) - 1.5 mile lateral
40,000
$40 WTI 805 1.6 47 0.3
20,000
$50 WTI 2,008 0.9 131 0.8
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 $60 WTI 3,509 0.5 363 1.5
Months $70 WTI 5,011 0.4 >500 2.1
$80 WTI 6,512 0.3 >500 2.7
Average 140 Mbbl 210 Mbbl
NORTH 40 16
RESOURCES LTD.Wintering Hills
• ~13,800 acres (22 sections) of land leased
(5% Crown / 95% Freehold)
• Target is oil in the Mannville Basal Quartz
(28° API) at a depth of ~1,300 m
• Three wells drilled in 2021, 1 in Q1 and 2
in Q3
• The 2 new wells were put on production
in first week of September
• Wintering Hills drilling inventory
estimated to be 8 tier 1 locations and
potential to add ~10
NORTH 40 17
RESOURCES LTD.Wintering Hills • Basal Quartz formation – sandstone • Net pays of 10 – 15m (12% porosity cutoff) • Porosity range of 6 – 15% - Type log: 09-28-25-17W4 NORTH 40 18 RESOURCES LTD.
Wintering Hills
Wintering Hills (1 Hz) - Normalized Prod (bopd) Wintering Hills - Well Economics
350
300 Assumption:
2,050 M$ DCET capital
Oil Rate (bopd)
250
200 $3.00 AECO, 1.25 Fx
150
100
NPV10BT Payout ROR P/I
50
(m$) (years) (%) Ratio
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Months 120 Mbbl (160 Mboe)
Average 120 mbbl 160 mbbl
$40 WTI (420) -- -- --
$50 WTI 270 3.0 19 0.1
Wintering Hills (1 Hz) - Cumulative Oil (bbls) $60 WTI 1,132 1.7 51 0.6
70,000 $70 WTI 1,995 1.1 95 1.0
60,000 $80 WTI 2,858 0.8 157 1.4
Cumulative Oil (bbls)
50,000
40,000 160 Mbbl (213 Mboe)
30,000
20,000
$40 WTI 161 3.0 18 0.1
10,000
$50 WTI 1,054 1.4 59 0.5
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 $60 WTI 2,170 0.8 145 1.1
Months $70 WTI 3,285 0.6 306 1.6
$80 WTI 4,401 0.4 >500 2.1
Average 120 mbbl 160 mbbl
NORTH 40 19
RESOURCES LTD.Matziwin West
• Land holdings of ~13,100 acres (20
sections) in Matziwin West (33% Crown /
67% Freehold)
• Primary targets include oil in the
Mannville (Basal Quartz, Sunburst and
Glauconitic Channels)
• Additional oil potential in the Pekisko
• The location shown, an open-hole hztl
Sunburst test, rig released Sept 5/21
• Production testing to follow
• Current potential for 15 additional wells
NORTH 40 20
RESOURCES LTD.Matziwin West • Sunburst formation – sandstone • Net pays of 3 – 8m (15% porosity cutoff) • Porosity range of 9 – 24% - Type log: 02-24-23-15W4 NORTH 40 21 RESOURCES LTD.
Matziwin West
Matziwin West (Sunburst Type Well) - Rate (bopd) Matziwin West - Well Economics
350
300 Assumption:
1,800 m$ DCET capital
Oil Rate (bopd)
250
200 $3.00 AECO, 1.25 Fx
150
100
50
NPV10BT Payout ROR P/I
0 (m$) (years) (%) Ratio
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Months
150 mbbl (180 mboe)
Type Well (150 mbbl)
$40 WTI -31 4.1 9 --
$50 WTI 772 2.0 39 0.4
Matziwin West (Sunburst Type Well) - Cum Oil (bbls)
$60 WTI 1776 1.2 86 1.0
60,000
$70 WTI 2779 0.9 153 1.6
50,000
Cumulative Oil (bbls)
$80 WTI 3783 0.7 253 2.1
40,000
30,000
20,000
10,000
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Months
Type Well (150 mbbl)
NORTH 40 22
RESOURCES LTD.Princess
• Land holdings of ~17,900 acres (28
sections) in Princess (4% Crown / 96%
Freehold)
• Multiple oil targets within the Mannville
group
• The completion of an existing vertical
well directly offsetting the planned Mid-
Mnvl hztl well (shown in orange) will
occur in Q4 to confirm oil charge
• If successful, the hztl will be drilled in
2022
• 3D seismic program required to complete
coverage of the lands (area shown in
black) will be carried out in Q4
NORTH 40 23
RESOURCES LTD.Princess • Mid-Mannville Ch - sandstone • Net pays of 5 – 20m (12% porosity cutoff) • Porosity range of 12 – 21% - Type log: 09-14-020-12W4 NORTH 40 24 RESOURCES LTD.
Princess
Princess (Mnvl Ch Type Well) - Rate (bopd) Princess - Well Economics
350
300 Assumption:
2,050 m$ DCET capital
Oil Rate (bopd)
250
200 $3.00 AECO, 1.25 Fx
150
NPV10BT Payout ROR P/I
100
50 (m$) (years) (%) Ratio
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
130 mbbl (175 mboe)
Months
Type Well (130 mbbl) Type Well (210 mbbl) $40 WTI (176) 5.1 -- --
$50 WTI 588 2.1 34 0.3
$60 WTI 1,542 1.2 85 0.8
Princess (Mnvl Ch Type Well) - Cum Oil (bbls)
$70 WTI 2,496 0.8 165 1.2
90,000
80,000
$80 WTI 3,450 0.6 295 1.7
Cumulative Oil (bbls)
70,000
60,000
50,000
210 mbbl (280 mboe)
40,000
30,000
20,000
$40 WTI 1,154 1.1 85 0.6
10,000 $50 WTI 2,356 0.6 238 1.1
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
$60 WTI 3,858 0.4 >500 1.9
Months $70 WTI 5,359 0.3 >500 2.6
$80 WTI 6,862 0.2 >500 2.4
Type Well (130 mbbl) Type Well (210 mbbl)
NORTH 40 25
RESOURCES LTD.Finance – Spending Forecast
(Millions) 2021
DCE&T(1) $32.9
Land $3.6
Seismic/Other $1.5
$38.0
Cash G&A $2.3
$40.3
1 DCE&T includes capital for a total of 14 new drills in 2021
NORTH 40 26
RESOURCES LTD.Summary
• World oil demand recovery and price improvement continue to show resilience
• Opec and Opec+ remain disciplined with supply constraints thus far
• North American reduction in growth spending also a factor
• Natural gas price has made substantial gains over the last year and the current outlook remains
positive
• North 40 has executed its remaining 2021 drilling program, with 11 additional horizontal wells drilled
in five different properties, bringing the year’s total to 14 new wells
• Eight of the new wells have now been put on production, with the remaining 3 to be brought on over
the next 4 to 6 weeks
• Current production of over 4,500 boepd and strong commodity pricing resulting in strong cashflow
• Through a balanced approach, North 40 continues to enjoy its position of cash in the bank and no
debt, while being able to test out new prospects
NORTH 40 27
RESOURCES LTD.Contact Details
For more information, please contact:
• Darrin Hanik, President & CEO
403.974.6833
dhanik@north40resources.com
• Kim Schoenroth, Vice President, Finance & CFO
403.974.6817
kschoenroth@north40resources.com
NORTH 40 28
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