1. Healthcare

Arsenal Energy Inc.
Corporate Presentation
TSX: AEI OTC: AEYIF January 2015
Forward Looking Information
Certain information regarding Arsenal Energy Inc. (the “Company”) contained in this presentation, including statements regarding
management’s assessment of future plans and operations, its ability to incur the flow-through qualifying expenditures as expected, the
timing of drilling, tie-in and commencement of production of new wells, productive capacity and economics of new wells and
alternatives for increasing liquidity, may constitute forward-looking statements under applicable securities laws. The forward‐looking
statements are based on certain key expectations and assumptions made by the Company, including expectations and assumptions
concerning the success of optimization and efficiency improvement projects, the availability of capital, the success of future drilling and
development activities, the performance of existing wells, the performance of new wells, prevailing commodity prices, the availability of
labour and services, the geological nature of the formations targeted by the Company and the success of completion and recompletion
activities. Although the Company believes that the expectations and assumptions on which the forward‐looking statements are based
are reasonable, undue reliance should not be placed on the forward‐looking statements because the Company can give no assurance
that they will prove to be correct. Since forward‐looking statements address future events and conditions, by their very nature they
involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors
and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in
development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital
expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and
expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations, changes in the regulatory
regime applicable to the Company and uncertainties resulting from potential delays or changes in plans with respect to exploration or
development projects or capital expenditures. Certain of these risks are set out in more detail in the Company's Annual Information
Form will be filed on SEDAR and can be accessed at www.sedar.com on filing. The forward‐looking statements contained in this
presentation are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward‐
looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable
securities laws.
In this presentation the calculation of barrels of oil equivalent (boe) is calculated at a conversion rate of six thousand cubic feet (Mcf) of
natural gas for one barrel (Bbl) of oil based on an energy equivalency conversion method primarily applicable to the burner tip and
does not represent a value equivalency at the wellhead. Boes may be misleading particularly if used in isolation.
Corporate Presentation January 2015
2
Company Summary
Low Payout, Growth Company
!   Low decline base production with 2 growth properties
!   Payout ratio approximately 10% of trailing cash flow
!   Consistent cash flow and production growth
!   Undervalued in current market
Legend
Desan, BC
Gas: 600 Boe/d
Provost, Alberta
Medium oil: 800 Boe/d
Low Decline Base
!   Base of ~2,300 Boe/d of low decline production
Princess Growth Property – Detrital and Glauconite
!   Play has added 1,000 Boe/d of new production
!   17 Detrital and 4 Glauconite exploration and
development locations based on 3D seismic
!   4 Detrital wells planned for Q1 2015
Repeatable, Low Risk Growth in North Dakota
!   Historic growth engine
!   7 net remaining low risk development locations
Exploration Upside
!   Additional Detrital/Glauconite at Princess, Alberta
!   Midale and Bakken at Rennie Lake, North Dakota
!   Deep Basin at Blackstone, Alberta
Corporate Presentation January 2015
Oil
Gas
Exploration
Princess, Alberta
Medium oil: 1,500 Boe/d
Development and Exploration
Blackstone, Alberta
Liquids rich gas
Exploration
North Dakota
Light Oil: 2,000 Boe/d
Stanley and Lindahl - Development
Rennie Lake - Exploration
3
Low Decline Properties
Historic Value Creation
Canadian Properties – Q3 Production
Desan - 642 Boe/d, 0% Decline
1400 1200 Reserves (mbbl) 1000 800 600 400 200 0 -­‐200 Acq Prod Pos Rev YE 13 -­‐400 -­‐600 Princess West Provost - 449 Boe/d, 13% Decline
700 1400 600 1200 500 1000 Reserves (mbbl) Reserves (mbbl) Princess West - 532 Boe/d, 7% Decline
400 300 200 100 0 -­‐100 Acq Prod Pos Rev YE 13 800 600 400 200 0 -­‐200 -­‐200 -­‐400 -­‐300 -­‐600 Corporate Presentation January 2015
Acq Prod Pos Rev YE 13 4
Production/Cash Flow Growth
2014E Results:
!   4,500 Boe/d (77% Oil and Liquids)
!   Funds from operations - $53.0 million
2015 Guidance:
!   2015 Capital Program - $26.8 million
9 Detrital wells planned at Princess
($3.00 per share)
!   Capex - $53.5 million
4 (0.60 net) Bakken wells at Lindahl
1 Viking horizontal well at Provost
!   Operating netback - $37.00/Boe
!   Funds flow netback - $32.25/Boe
!   Estimated 2014 exit debt - $64.0 million
Production- Boe/d (Oil/Gas)
! 
! 
! 
Estimated 2015 exit net debt - $64.0 million
Average production - 4,700 Boe/d
Funds from operations – $30.4 million
Cash Flow $MM (Canada/US)
60.0
$3.00
per share
50.0
$2.38
per share
40.0
$1.85
per share
30.0
20.0
$1.99
per share
$1.70
per share
$1.37
per share
10.0
-
2010 Corporate Presentation January 2015
_
2011 2012 Canada
_
2013 2014E 2015B US
5
North Dakota Bakken
Oil Price Sensitivity
US Bakken (Stanley / Lindahl,
mostly non-operated):
! 
Heart of the North Dakota
Bakken play
! 
! 
! 
$8.4 million US/Hz well DCE&T
Light oil (40°API)
Main growth properties from
2012 to 2014
Established play, 7 undrilled
development locations
Challenged at lower WTI prices
! 
! 
Corporate Presentation January 2015
6
Provost - Viking
Oil Price Sensitivity
JAN 2015 BOD MEETING
7
Princess Detrital
Oil Price Sensitivity
Princess Detrital
(~100% and Operated):
! 
! 
$1 million per well DCE&T
97% medium gravity (25°API) oil
! 
! 
Robust economics at $50.00
WTI per barrel
5 producing wells
! 
! 
! 
3D seismically defined play
17 locations identified
3 planned for Q1 2015
Corporate Presentation January 2015
8
Princess Glauconite
Oil Price Sensitivity
Princess Glauconite Channel
(~100% and Operated):
! 
! 
$1.8 million/well DCE&T
Medium gravity (25°API) oil
! 
! 
Robust economics @ 60.00
WTI per barrel
5 producing wells
! 
! 
3D seismically defined play
5 locations identified
Corporate Presentation January 2015
Princess Glauconite Type Well – Payout SensiHvity 9
Princess, Alberta
Detrital and Glauconite
3-­‐20 indicated Detrital oil OPERATIONS
Current production (Boe/d):
1,700
1-­‐29 Detrital tested non commercial gas to be abandoned 8-­‐20 indicated Detrital oil 8-­‐17 Detrital water injector Netbacks Cdn/Boe
Q3 Current pricing
$76.21
$47.16
Royalty
$15.55
$10.38
OPEX
$11.29
$13.50
netback ($/Boe)
$49.37
$23.28
Legend
1-­‐11 indicated Detrital gas 15-­‐16 Detrital tested Low rate oil to be fracked Producing Wells
Q4 2014 Locations
JAN 2015 BOD MEETING
9-­‐9 indicated Glauc oil 10
Lindahl, North Dakota
Bakken
OPERATIONS
Current production (Boe/d)
500
Net mineral acres
743
Average working interest
Remaining locations (gross)
Remaining locations (net)
Field netback Q3 2014 ($/Boe)
7.5%
28
6.25% 6.30% 2
55.00
Production mix:
Gas: 15%
Oil:
85%
Legend
Producing wells
11.47% 2014 drilled
2015 budget
Evelyn Pad 4 wells 15.2 % WI Corporate Presentation January 2015
11
Growth Properties
Three Year Drilling Inventory
Gross
Locations
Net
Locations
Gross EUR /
well (Boe)
Development Time Frame
Estimate
17
17
199
2015-2017
4
4
145
2015-2017
1,280 acre Stanley (oil)
17
5
515
2015-2017
1,280 acre Lindahl (oil)
28
2
515
2015-2017
66
32
-
-
Drill Locations:
Princess - Mannville
Detrital (oil)
Glauconite (oil)
North Dakota – Bakken / Three Forks
Development Drilling Inventory
Corporate Presentation January 2015
12
Key Corporate Information
Corporate Information
Q4 2014 Production (Boe/d)
Shares issued and outstanding (basic MM)
17.9
38%
Total insider ownership
23%
Medium oil
41%
Management and Directors (basic)
13%
Natural gas
21%
Management and Directors (fully diluted)
17%
Production split: Light oil
4,750
Valuation Summary (as at Dec 31, 2014) CAPITALIZATION Share price Shares outstanding (basic MM) Market capitalization (MM) Net estimated debt (MM) (1) Enterprise value (MM) Net debt / 2015B funds from operations TRADING METRICS
$6.77 Funds from operations (MM) (1) 17.9 CFPS $121.0 P/CF $64.0 EV/ CF $185.0
Current dividend yield 2.1X EV/ Boe/d 2014E
2015B $53.7 $30.4 $3.00 $1.70 2.3X 4.0X 3.4X 6.1X 4.1% 4.1% $38,160 $38,160 ¹ Estimates based on internal forecast
Corporate Presentation January 2015
13
Appendix
Corporate Presentation January 2015
14
Exploration Upside
Blackstone – Deep Basin
PLAY OVERVIEW Land: 12,760 Net Acres
VOLUMETRIC PARAMETERS CARDIUM
Porosity (%):
(Cardium and Wilrich rights only)
5m 9
Water saturation (%):
25
Thickness (m):
12
Area (acres):
AEI potential 2015
Cardium drill
640
Recovery factor (%):
75
Liquid content (Bbl/MMcf):
50
Original raw gas in place/section (Bcf):
17.6
Rec. reserves/well (2 well/section)
Gas (Bcf):
Liquids (MBbl):
3.9
227
Fahler Sand VOLUMETRIC PARAMETERS FAHLER
Porosity (%):
12
Water saturation (%):
30
Thickness (m):
5
Area (acres):
640
Recovery factor (%):
50
Liquid content (Bbl/MMcf):
39
Original raw gas in place/section (Bcf):
Industry Cardium drill
02-19-045-15W5
11.5
Rec. reserves/well (1 well/section)
Gas (Bcf):
Liquids (MBbl):
Corporate Presentation January 2015
6.4
213
Vertical completion
11-13-045-16W5/2
15
Corporate Information
Officers
Directors
Independent Reserve Engineers
Deloitte LLP
Tony van Winkoop
President and CEO
Neil MacKay
Chairman of the Board
J. Paul Lawrence
Vice President, Finance and CFO
Tony van Winkoop
ATB Corporate Financial Services
National Bank of Canada
William Hews
Ron Forth
Vice President, Engineering
Auditor
Harley Kempthorne
KPMG LLP
Leo Nolte
Vice President, Drilling
and Completions
Bill Powers
Legal Counsel
Derek Petrie
Borden Ladner Gervais LLP
McCarthy Tetrault
Kent Sawatzky
Vice President, Production
Gjoa Taylor
Vice President, Land
Corporate Presentation January 2015
Banks
Transfer Agent
Alliance Trust Company
Analyst Coverage
National Bank Financial
Acumen Capital Finance
Paradigm Capital Inc.
Industrial Alliance Securities Inc.
16
Contact Information
ARSENAL ENERGY INC.
Suite 1900, 639-5th Avenue SW
Calgary, AB, Canada T2P 0M9
Main Office
Fax
403.262.4854
403.265.6877
[email protected]
[email protected]
www.arsenalenergy.com
STOCK SYMBOL
TSX
AEI
OTC PINK
AEYIF
Corporate Presentation January 2014
17