1 2015 The Energy Crisis An Investment Opportunity January 31, 2015 Westin Bayshore Hotel, Vancouver

1

2015The Energy Crisis

An Investment Opportunity

January 31, 2015Westin Bayshore Hotel, Vancouver

2

2014 Oil Glut Coming Window For

Canadian LNG Closing

February 1, 2014Westin Bayshore Hotel, Vancouver

3

Sell:High Debt Leveraged Energy CompaniesHigh Cost Oil Companies

Oil SandsSAGD

Dividend Model Companies

4Source: Lightstream Q3, 2014

$1.4B

$1.9B

5

Lightstream Resources Ltd.

Source: StockCharts, January 2015

6

Penn West Petroleum Ltd.

Source: StockCharts, January 2015

7Source: Stock Charts, January 30, 2014

Target Q4/16

Bull Market 2001-08 Energy Index Up 5.3X in 7.5 years

Bull Market Transition Phase

S&P/TSX Energy Index

8Source: Stock Charts, January 2015

Final Low Next Few Weeks

S&P/TSX Energy Index

9

History of Oil Price PlungesOver Last 30 Years $WTI/b

Plunge Timeline

Peak Oil Price $

Trough Oil Price $

Decline %

Months Peak To Trough

Recovery Price 6

Months Later % Gain

Recovery High Price 1 Year

Later $1986 -1987 31.17 9.95 68 6 16.60 67 20.001990 -1991 41.15 17.45 58 5 23.10 32 24.031997- 1998 23.15 10.65 54 14 19.00 78 27.15

2000-2001 36.90 17.12 54 14 29.45 72 29.45

2008-2009 147.27 33.55 77 8 75.00 124 82.002011 114.83 75.71 34 4 110.05 45 110.05

2014 -2015E 107.68 44.20 59 7 80.00 80 85.002014 -2015E 107.68 38.00F 65 8 80.00 110 85.00

Asian Financial Crisis

Dot-Com Bubble and 9/11

10

1980-1990 Energy Bear Markets

Source: StockCharts , December 2014

Light Crude Oil $/b

11Source: The Economist, March 6th, 1999

12

2000 – PresentEnergy Bear Markets

Source: StockCharts, January 2015

Light Crude Oil $US/b

13Source: Calgary Sun, 1986

14

Close Up Of 2009 Bottom

Light Crude Oil $US/b

4 Months 4 MonthsSource: StockCharts, January 2015

15

US Inventories at Peak

January 16, 2015 EIA report showed 398Mb

Source: OPEC Monthly Report, January 2015

16

Reasons for Current Energy Bear Market

Source: OPEC Report, January 2015

We note the three phases that this energy bear market has gone through:

Phase 1: Excess Oil Production

30.8 Mb/d production

OPEC Dec/14

17

Phase 2: Demand Decline

Germany, France, Italy and the UK

Japan

Source: OPEC Report, January 2015

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1. Russia • Annex Of Crimea Region• SE Ukraine Fighting• Support of Syria’s Assad

2. Iran/Islamic State• Slow Down Shiite/Sunni Sectarian War (Iraq/Syria/Lebanon)• Force Iran To Complete Deal On Nuclear Weapons Program

3. Venezuela • Force Regime Change – Remove Maduro/Chavez

4. Shut In High Cost North America Production• Shale Oil US & Canada – Remove Growth Upside And 500K – 800Kb/d by Q3/15• Heavy Oil – Now Uneconomic – Shut In 500Kb/d• Slow Down Or Get Deferment Of Oil Sands Expansions• Stripper Wells US – 300,000 Wells Which Average 15b/d – Total Production

1.4Mb/d – See 500Kb/d Shut In.

Phase 3: Oil As A Weapon

19

Why We Expect One More Price Decline Below US$40/b

Note: Speculators Net Long 199,388 lots: OPEC Oil Monthly Report January 2015

Material Long Positions

Negative Market Positions

Source: OPEC Report, June 2008 Source: OPEC Report, April 2009

20

OPEC Production in Excess of Demand

Source: OPEC Report, January 2015

21Source: The Week, December 12, 2014

22Source: OPEC World Oil Outlook 2014

Oil Demand Outlook 2013 – 2019The reason to turn bullish!

Medium-term oil demand outlook in the Reference Case Mb/d

23

US Oil Production Peaking NowCrude Oil Field Production US

4Mb/d

3 Years

24

Non-OPEC Crude Oil and Liquids Production Growth

Source: Short-Term Energy Outlook, January 2015

Millions barrels per day

Need to Knock-out this Growth

25

US Rigs by Target Oil & Gas

1 2

3

4

Target Rig Count US Q3/15

1,633 RigsJan 23/15

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Major Shale PlaysOil & Gas Revenue Index

1

2

27Source: OPEC Report, January 2015

14.4 Mb/d Jan 16/15

13.5 Mb/d forecast end of Q3/15

28

World Wide Decline Rate = 25%

Source: EIA International Energy Outlook, 2013

Long-Term Crude Oil Supply Growth

29Source: Oil and Gas Investor Magazine – April 2002

Hard To Find Large New Oil PoolsThe Oil Pyramid

30Source: Gable cartoons

31* Top Picks

Large Cap Shopping List

Dividend Investor Shopping List

Company Name SymbolStock Price $

Jan. 27/15Annual

Dividend $ Yield %Book Value

$/shareQ3/14 High Low

* Canadian Natural Resources Ltd. CNQ 36.63 0.90 2.5% 25.60 49.57 31.00Cenovus Energy Inc. CVE 24.67 1.06 4.3% 14.19 34.79 18.72Encana Corp. ECA 16.98 0.28 1.6% 12.81 26.85 13.31Husky Energy Inc. HSE 27.55 1.20 4.4% 21.51 37.31 21.39Paramount Resources Ltd. POU 30.80 N/A N/A 14.43 66.37 21.72

* Suncor Energy Inc. SU 37.63 1.12 3.0% 28.99 47.18 30.89Tourmaline Oil Corp. TOU 37.40 N/A N/A 20.37 59.25 34.47

52 week High-Low $

Company Name SymbolStock Price $

Jan. 27/15Annual

Dividend $ Yield %Book Value

$/shareQ3/14 High Low

* Cresent Point Energy Corp. CPG 30.68 2.76 9.0% 22.88 48.68 21.20* Enerplus Corp. ERF 12.30 1.08 8.8% 10.02 27.05 9.02* Long Run Exploration Ltd. LRE 1.11 0.21 18.9% 5.14 6.09 0.97

Pengrowth Energy Corp. PGF 3.55 0.24 6.8% 6.55 7.78 2.77Penn West Petroleum Ltd. PWT 2.02 0.12 5.9% 14.89 11.00 1.72Vermilion Energy Inc. VET 55.68 2.58 4.6% 18.23 78.24 44.05

52 week High-Low $

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Energy Service Stocks Shopping List

Maison Universe Shopping List

*Top Picks** JIS/Family owned shares

Company Name SymbolStock Price $

Jan. 27/15Annual

Dividend $ Yield %Book Value

$/shareQ3/14 High Low

* CanElson Drilling Inc. CDI 3.61 0.12 3.3% 4.77 8.78 3.35Ensign Energy Services Inc. ESI 9.88 0.48 4.9% 13.52 17.87 9.28Precision Drilling Corporation PD 6.84 0.24 3.5% 8.69 15.65 5.70

* Trican Well Service Ltd. TCW 5.13 0.30 5.8% 8.84 18.19 4.97Trinidad Drilling Ltd. TDG 4.53 0.20 4.4% 8.32 12.89 4.14

52 week High-Low $

Company Name SymbolStock Price $

Jan. 27/15Book Value

$/shareQ3/14 High Low

* Delphi Energy Corp. DEE 1.28 1.64 4.60 1.14* Long Run Exploration Ltd. LRE 1.11 5.14 6.09 0.97

Petromanas Energy Ltd. PMI 0.055 ** 0.14 0.40 0.05Sea Dragon Energy Inc. SDX 0.03 ** 0.09 0.095 0.03

* Serinus Energy Inc. SEN 1.00 ** 3.02 4.02 1.00* Sterling Resources Ltd. SLG 0.245 ** 1.07 0.78 0.185* Tamarack Valley Energy Ltd. TVE 3.60 5.57 7.85 2.57

Touchstone Exploration Inc. TXP 0.335 ** 1.41 1.09 0.25

52 week High-Low $

33* Top Picks

Other Interesting Names to ConsiderCompany Name Symbol

Stock Price $ Jan. 27/15

Book Value $/shareQ3/14 High Low

Bankers Petroleum Ltd. BNK 2.94 2.53 7.45 2.31* Gran Tierra Energy Inc. GTE 2.70 5.35 8.69 2.58

Hemisphere Energy Corp. HME 0.24 0.43 0.85 0.24Pan Orient Energy Corp. POE 1.54 2.11 2.44 1.35Questerre Energy Corp. QEC 0.325 0.93 1.40 0.29Transglobe Energy Corp. TGL 3.68 7.34 9.45 3.23

* WesternZagros Resources Ltd. WZR 0.415 0.81 1.28 0.39

52 week High-Low $

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Reasons For New Energy Bull Cycle

1. Cutback in drilling (30-40%) and high decline rates for shale production (60-80%) could remove 1Mb/d over the next 2-3 quarters.

2. Heavy Oil (Canada/US/Mexico/Venezuela) and Stripper Oil wells (US) are uneconomic at current prices could remove >500Kb/d in coming months.

3. China Strategic Reserve will start adding crude into new facilities currently being built. New facilities can take 50Mb in 2H/15 or 700Kb/d starting summer 2015.

4. Shiite/Sunni/ISIL conflict could impact Middle East producers. Security of supply premium could return. In the past we have seen US$8-12/b premium during outage risk.

5. Global GDP growth of >3%/year would add 7Mb/d to world oil demand by the end of the decade. This would provide 3-4Mb/d of new demand for non-OPEC shale and oil sands and 3-4Mb/d for OPEC members.

35Source: StockCharts , January 2015

Final Low Next Few Weeks

New High2018-2020

100+ 2016-2018

Light Crude Oil $/b

36Source: StockCharts , January 2015

Final Low Next Few Weeks

New High2018-2020

Target 2016-2018

S&P/TSX Energy Index

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Thank you

January 31, 2015Westin Bayshore Hotel, Vancouver