June 19, 2018
This presentation contains certain forward-looking statements and forward-looking information (collectively referred to herein as
“forward-looking statements”) within the meaning of applicable Canadian securities laws. All statements other than statements of present
or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such
as “could”, “should”, “can”, “anticipate”, “expect”, “believe”, “will”, “may”, “projected”, “sustain”, “continues”, “strategy”, “potential”,
“projects”, “grow”, “take advantage”, “estimate”, “well positioned” or similar words suggesting future outcomes. In particular, but without
limiting the forgoing, this presentation contains forward-looking statements pertaining to future opportunities, business strategies,
exploration and development activities, and competitive advantages. The forward-looking statements regarding the business and
operations of Return Energy Inc. (“Return” or the “Company”) are based on certain key expectations and assumptions of Return
concerning, among other things: the anticipated financial performance of the Company; performance of existing wells and success in
drilling new wells; business prospects; strategies; regulatory developments; prevailing commodity prices; exchange rates; estimates of
costs, including drilling and operating costs; tax laws; the sufficiency of budgeted capital expenditures in carrying out planned activities; the
availability and cost of labour and services; the state of the economy and the exploration and production business; the legislative and
regulatory environments of the jurisdictions where Return carries on business or has operations; the impact of increasing competition; the
ability to obtain financing on acceptable terms; the actual results of exploration and development projects being equivalent to or better than
estimated results, all of which are subject to change based on market conditions and potential timing delays. Although management of
Return consider these assumptions to be reasonable based on information currently available to them, they may prove to be incorrect. By
their very nature, forward-looking statements involve inherent risks and uncertainties (both general and specific), including the risk that
forward-looking statements will not be achieved. Undue reliance should not be placed on forward-looking statements, as a number of
important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations and anticipations,
estimates and intentions expressed in the forward-looking statements, including among other things: inability to meet current and future
obligations; inability to implement Return’s business strategy effectively; uncertainties associated with estimating reserves; general
economic and market factors, including business competition, changes in government regulations; volatility in the market prices for oil and
natural gas; fluctuation in commodity prices; the actual results of exploration, development or operational activities; geological, technical,
drilling and processing problems; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations;
changes in project parameters as plans continue to be refined; access to capital markets; interest and currency exchange rates;
technological developments; general political and social uncertainties; lack of insurance; delay or failure to receive board or regulatory
approvals; changes in legislation; timing and availability of external financing on acceptable terms; and lack of qualified, skilled labour or
loss of key individuals.
Readers are cautioned that the foregoing list is not exhaustive.
The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking
statements included in this presentation are made as of the date of this presentation and Return does not undertake and is not obligated to
publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless so required by
applicable securities laws.
of Return as of the date hereof. Such financial outlook or future-oriented financial information is provided for the purpose of providing
information about management's current expectations and goals relating to the future of Return. Readers are cautioned that reliance on
such information may not be appropriate for other purposes.
Any references in this presentation to initial, early and/or test or production/performance rates are useful in confirming the presence of
hydrocarbons, however, such rates are not determinate of the rates at which such wells will produce or continue production and decline
thereafter. Additionally, such rates may also include recovered “load oil” fluid used in well completion stimulation. Readers are cautioned not
to place reliance on such rates in calculating the aggregate production for Return. The initial production rate may be estimated based on
other third-party estimates or limited data available at this time. In all cases in this presentation, initial production or tests are not necessarily
indicative of long-term performance of the relevant well or fields or of ultimate recovery of hydrocarbons.
Statements relating to “reserves” are also deemed to be forward-looking statements, as they involve the implied assessment, based on
certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be
profitably produced in the future. In addition, and without limiting the generality of the foregoing, this presentation contains forward-looking
statements pertaining to the following: Return’s plans for 2018, Return’s future production levels on wells proposed to be drilled on its
Rycroft Charlie Lake project; the net present value, rate of return, payout term, profit to investment ratio, the quantity of reserves and recycle
ratio of these wells; projections of market prices and costs; supply and demand for oil and natural gas; the effectiveness of a potential future
water-flood scheme; capital expenditure programs; treatment under governmental regulatory and taxation regimes.
Future-Oriented Financial Information
This presentation contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about Return’s
prospective results of operations and the components thereof, all of which are subject to the same assumptions, risk factors, limitations
and qualifications as set forth in the above paragraphs. FOFI contained in this presentation was made as of the date of this presentation
and was provided for the purpose of providing further information about Return's anticipated future business operations. Return disclaims
any intention or obligation to update or revise any FOFI contained in this presentation, whether as a result of new information, future
events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this presentation should
not be used for purposes other than for which it is disclosed herein.
This presentation includes non-GAAP measures as further described herein. These non-GAAP measures do not have a standardized
meaning prescribed by International Financial Reporting Standards (“IFRS or, alternatively, “GAAP”) and therefore may not be comparable
with the calculation of similar measures by other companies.
This presentation contains the terms “rate of return”, “payout”, “profit to investment ratio” and “recycle ratio” in relation to certain
performance measures. These terms do not have any standardized meaning under IFRS, and Return’s determination of such terms may
not be comparable to that reported by other companies. Return defines “rate of return” as the gain or loss on an investment over a
specified time period, expressed as a percentage of the investment's cost. Return defines “payout” as the point at which all costs of
leasing, exploring, drilling and operating have been recovered from production of a well or wells; “profit to investment ratio” is the ratio of
payoff to investment of a proposed project; and “recycle ratio” is the profit per boe divided by the total cost of discovering and extracting.
The information contained in this presentation does not purport to be all-inclusive or to contain all information that a prospective investor
may require. Prospective investors are encouraged to conduct their own analysis and review of Return and of the information contained in
this presentation. Without limitation, prospective investors should consider the advice of their financial, legal, accounting, tax and other
advisors and such other factors they consider appropriate in investigating and analyzing Return.
Canadian $, BOE Equivalent
All amounts are expressed in Canadian dollars unless otherwise noted. Oil, natural gas and natural gas liquids reserves and volumes are
converted to a common unit of measure, referred to as a barrel of oil equivalent (boe), on the basis of 6,000 cubic feet of natural gas being
equal to one barrel of oil. This conversion ratio is based on an energy equivalency conversion method, primarily applicable at the burner
tip and does not necessarily represent a value equivalency at the wellhead. It should be noted that the use of boe might be misleading,
particularly if used in isolation.
Common Shares Issued:
(June 1, 2018)
By way of example, the number of Units issuable on conversion of the Preferred Shares , assuming a market price of $0.20, would be
2,000,000 Preferred Shares X $1.00/share ÷ $0.20/share = 10,000,000 Units. The number of shares issuable on conversion of the Units
would be 10,000,000 Common shares plus 5,000,000 warrants, each convertible to one Common Share. No more than 10% of the
Preferred Shares can be exercised at any given time in a 30 day period and the holder can own no more than 10% of the issued shares at
any given time.
Approximately 50 BOE/d have been temporarily shut-in due to low natural gas prices.
Closed private placement financings for gross proceeds of over $8 million (October 2016 –
Initiated operations, post-acquisition (October 2016) of Peace River Arch assets in NW Alberta,
through its wholly-owned subsidiary Winslow Resources Inc.
Consolidated ownership at Rycroft through the acquisition of partner interests, resulting in 100%
ownership of the Rycroft gas plant, and acquired additional P&NG rights.
Assembled Charlie Lake light oil drilling projects.
Drilled two wells in Q1 2018 resulting in two oilwells, including a significant eastward extension to
the Charlie Lake light oil resource play being developed regionally by Tourmaline Oil Corp.
Equipping operations have commenced and tie-in is planned for summer 2018 to conserve liquids
rich solution gas from 14-27 well and future locations.
Front-end engineering work for horizontal drilling campaign.
Discussions are ongoing with various parties with respect to rationalization of non-core assets and
further consolidation and/or acquisition of additional interests in the Rycroft core area.
(not all shown) of which 13,000 are undeveloped.
Return’s Peace River Arch Assets
Rycroft Area – Return Production by Zone – Pre-Drill
Bluesky and Gething
(Kelt, Return et.al.)
Light Oil (37
(CNRL, Birchcliff, Tourmaline, Return et. al.)
Light sweet oil (37-40
(Tourmaline, CNRL, Kelt,
Rising Star, Return et.al.)
Charlie Lake light (37
API) sweet oil
project and Upper Charlie Lake
light sweet (37
API) dolomitic siltstone
Potential for 13 additional Braeburn
well locations and 22 horizontal wells
in the dolomitic siltstone on existing
100% ownership in the 15-11 gas plant
and associated gathering system.
Processing third party volumes.
Available capacity in plant.
Rycroft Core Area
Upper Charlie Lake Siltstone Member.
Coarsening upward from siltstone to
very fine-grained sandstone,
Developed utilizing horizontal wellbores
and multi-stage fracture stimulations.
Charlie Lake Braeburn Member.
Dolomitized algal mat facies reservoir.
Developed through conventional vertical
wellbores and simple fracture
Source: GeoScout, Return
Oil fluorescence in drill cuttings – Braeburn member
reservoir is sub-parallel to present-day
structure. Strike length ~ 7km.
Good geometry and potential for secondary
recovery (waterflood) with 30m+ structural
across the pool.
Braeburn Vertical Well Development
Ch. Lk. Algal Facies Distribution
Structure: Coplin Unconformity
Winslow DD Rycroft
On Prod: Nov. 01, 2003 (Ch. Lk.)
Cum. Prod to Mar. 31, 2018:
86,399 Bbls oil
1.219 BCF gas
2049 Bbls wtr
Gas comp 79% C
On Prod.: April 03, 2000 (Paddy)
1740 Bbls wtr
. Gas comp. 94% C
existing Charlie Lake “S” Pool performance (10-27-76-6W6), we expect the following
economic results on a per well basis assuming all-in capital costs of $1 million per well:
Net Present Value @ 10% discount rate (before tax) = $2.1 million
Rate of Return = 113%
Payout = 1.1 years
Profit to Investment Ratio (PIR) = 3.4
Recycle Ratio = 3.9
Calculated using Sproule Associates March 31, 2018 price deck for oil and $2.00/mcf flat gas price.
Note: The terms “Net Present Value”, “Rate of Return”, “Payout”, “Profit to Investment Ratio”, and “Recycle Ratio” are non-GAAP measurements not recognized under IFRS
reporting as having standardized meanings. The reader is directed to the “Non-GAAP Measurements” section within the Forward Looking Statements for a description of
175+ wells drilled
horizontally through the
Upper Charlie Lake
dolomitic siltstone as
highlighted in green on
Earlier wells drilled
More recent wells drilled
at the north end of the
are oriented north-south.
Changes in frac
stimulation protocol has
resulted in shorter
horizontal sections with
smaller fracs having
Tourmaline Oil Corp. is
the dominant player.
Upper Charlie Lake Dolomitic Siltstone
Horizontal Multi-stage Frac Development
Horizontal wellbore trajectory planned
around deeper vertical wells drilled at
3-36, 6-36, and 11-36.
14-36 horizontal wellbore passes within
17m of the 11-36 vertical wellbore.
All three wells commenced production in
August, 2017 with cumulative aggregate
production up to and including April, 2018
(8.5 months) as follows:
Oil: 231,131 Bbls
Gas: 665.3 MMcf (110,883 BOE)
Water: 573,384 Bbls (includes
Maximum oil rate attained in Sept., 2017
April, 2018 prod:
Source: PETRINEX, GeoScout
RR: Oct. 20, 2003
Fm. @ TD: Debolt
RR: Feb. 23, 2018
Fm. @ TD: Doig
0 GR 150
0 GR 150
Phi-h = 0.75
Phi avg.= 0.15
Phi-h = 0.589
Phi avg.= 0.11
The productive interval in the 15-36 horizontal well is
also developed in Return’s vertical wells at 14-27 and at 6-34
(6-34 flowed at a rate of 45 Bbls per day).
15-36 horizontal well I.P. 90:
881 BOPD, 234 BOE/D gas
we expect the following economic results on a per well basis assuming all-in capital
costs of $3.5 million per well:
Net Present Value @ 10% discount rate (before tax) = $6.2 million
Rate of Return = 95%
Payout = 1.2 years
Profit to Investment Ratio (PIR) = 4.2
Recycle Ratio = 3.3
Calculated using Sproule Associates March 31, 2018 price deck for oil and $2.00/mcf flat gas price.
(Drill, Complete & Equip)
(1) Calculated using Sproule Associates March 31, 2018 price deck for oil and $2.00/mcf flat gas price.
Note: The terms “Net Present Value”, “Rate of Return”, “Payout”, “Profit to Investment Ratio”, and “Recycle Ratio” are non-GAAP measurements
not recognized under IFRS reporting as having standardized meanings. The reader is directed to the “Non-GAAP Measurements” section within
the Forward Looking Statements for a description of these terms.
Proved Developed Producing
Total Proved + Probable
(1) Sproule Report: "Evaluation of the P&NG Reserves of Return Energy Inc.
(2) As per Canadian Oil and Gas Evaluation Handbook reserve definitions
(1) Management estimates, unaudited, assuming Sproule March 31, 2018 price forecast.
These figures are not reflected in Return’s current reserves report for the period ending
Dec. 31, 2017 but rather represent Management’s estimate of potential future results.
Initiate tie-in of 14-27 oil well to the Rycroft gas plant (post spring break-up), and
planning for follow-on vertical oil wells in the Braeburn dolomite.
Front-end engineering and design for horizontal drilling in the Charlie Lake dolomitic
Further consolidations at Rycroft.
Continue with the divestment of non-core assets.
Continue evaluating acquisition opportunities in the Company’s Rycroft core area.
Return has completed the drilling of the first two of its Triassic Charlie Lake light sweet
oil development wells at Rycroft, approximately 50 kilometres north of Grande Prairie,
Alberta. Plans are underway to pipeline connect the first of these, located at 14-27-76-
6W6, to Return’s wholly-owned Rycroft gas plant to process solution gas produced in
conjunction with the oil. The Company expects that an additional thirteen (13) wells
could be drilled into this reservoir on Company lands.
In addition to the Braeburn member at its 14-27 location, Return encountered light sweet
oil in the overlying Upper Charlie Lake dolomitic siltstone at 14-27 and at its 6-34-76-
6W6 location. This same zone is the target of a large-scale horizontal drilling campaign
that has been advanced primarily by Tourmaline Oil Corp. and several other third parties
over the last four to five years. The distribution of this zone is readily mapped in legacy
vertical wellbores. On this basis, and the successful test results at 6-34, Return expects
that 22 horizontal wells could be drilled on Company lands.
Return is well-positioned for growth in the Triassic Charlie Lake fairway and, with 100%
ownership in the Rycroft gas plant, has greater control in maximizing value
35+ years experience (DualEx, Dual, Devlan, Burlington, Petrobank, Chauvco, Norcen)
30+ years experience (DualEx, Dual, Devlan, Petrobank, Chevron)
20+ years experience (DualEx, Stratic, Nexen, Qatar Petroleum, KPMG)
20+ years experience (Westfire, Southpoint, Elk Point, Crestar)
30+ years experience (Bonterra, KPMG)
30+ years experience (DLA Piper (Canada) LLP)
30+ years experience (Boulder, Granite, DeeThree, Dual, Devlan)
Management and Directors