The Economics of Proper Measurement Why accurate allocations matter to the bottom line! May 8, 2018

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Canlin Energy Corporation Introductions Canlin Energy Corporation Canlin Energy Corporation is a privately held, long reserve life, natural gas weighted producer in the Western Canadian Sedimentary Basin. Our E&P business produces over 50,000 boe per day from predominantly operated wells, infrastructure and facilities. Canlin's key priorities are running a safe and sustainable business, focusing our portfolio, improving productivity, generating value from our midstream assets and investing for growth and value. Who I am? Who I am not!

What factors affect allocations? Volumes Transportation Meter Stations Operated Plants

History of our measurement story 3 major plants with complex requirements 2 applications Manually intensive

In April of 2014, the world of allocations became very challenging. History, part 2 Prior to 2014, Firm and Interruptible transportation flowed freely on NGTL which made moving gas where needed a breeze and managing allocations easier. In April of 2014, the world of allocations became very challenging.

Firm Restriction Example NGTL posts an 85% Firm Service allowable. This means only 85% of the firm service held at a meter station can flow. You have a limited time to reduce your flow. If you do not comply NGTL can shut in your facility.

Help was needed to manage the complexity Decision to implement WellTrak. Software developed by Tinbox Energy Software. WellTrak is automated and auditable. Saves manpower and time. Removes the risk of manual error. Increases efficiencies and reduces operational risk.

The Nuts and Bolts of Allocations – Why does it matter? How is gas allocated, and what does it mean to shippers? What is a Gas Balance Recovery?

Gas Balance Recovery Economics, part 1 Actuals Submitted by 17th of following month Monthly Actuals Gas Balance Recovery Daily Estimates MONTH 1 MONTH 2 MONTH 3

Gas Balance Recovery Economics, part 2 Submitted by 17th of following month Monthly Actuals Gas Balance Recovery Daily Estimates MONTH 1 MONTH 2 MONTH 3 201707 201708 201709 Price (CA$/GJ)7A 2.3029 2.032 1.4604 Original Allocation (201707) Actual Allocation (201707, made 20170820) Gas Balance Recovery (done 20170822 to 0920) Gas Balance Volume (GJ) 8,000,000 8,240,000 240,000 or 8,000 GJ/d

Gas Balance Recovery Economics, part 3 Each row shows the date, original monthly price, and eventual daily price. The final column shows the gain loss created by the difference in price. Bottom line impact of a bad month. Bad months are positive GBR’s in a declining price environment, or negative GBR’s in an increasing price environment. Both of these are typical in shoulder months.

Measurement is important Measurement has an impact on Cash Flow If you are serious about managing Cash Flow, you should be serious about managing measurement and allocations.

Any questions???