Oil & Gas in Alberta Backgrounder

Current Oil and Gas Projects

November 2023 – Lindbergh 2 drilled and on Production for December 2023. Argo’s interest is 37.5%.

September 2023 – Lloyd Oil Well drilled and on Production for October 2023. Argo’s interest is 18.75%.

February 2023 – Argo announces participation in Lloyd Sparky Oil Well – Q3 2023

March 2023 – Lindbergh Oil Well drilled and on Production for April 2023. Argo’s interest is 37.5%.

November 2022 – Argo announces participation in Lindbergh Sparky Oil Well – Q1 2023

February 2022 – Argo starts identifying oil & gas assets available for purchase and builds out oil & gas consulting expertise for due diligence

Oil is 90% of the transportation industry in the United States (2020). The EV initiative is great but the transformation reality is multiple decades.
Coal-fired electric power plants are being transformed to Natural Gas. US Electrical Power is now 40% natural gas and 40% coal.
Natural Gas heats 60% of US homes. 25% of US homes use electrical heat.
The Oil & Gas sector – transportation, heat and electricity – is important to people’s daily lives and reasonable prices are important for economic activity
Poor public perception of sector, low prices and COVID resulted in under-investment and challenges for expanding production now
US oil & gas inventories are well below 5-year averages
Decreasing Western world oil & gas production increases the world’s reliance on
OPEC (36%) and Russia (10%) & gas prices and supply concerns. The Canadian oil & gas industry and is a world leader in environmental standards

Companies trading at 2 – 5 X cash flows and get no credit for long life assets or reserves
2020 sector FCF of ~ US $126 B to anticipated 2022 sector FCF of ~ US 834 B with anticipated investment ratio of 20% to 30% (Rystad)
Q1 2022 oil prices provided first opportunity for companies to sell non-core assets
Long life, low decline and low risk assets available that require minimal capital
Many producing assets provide optimization opportunities such as low-cost workovers, re-activations and re-completions
Opportunity to increase production by implementing waterfloods and drilling additional wells
Abundant oil & gas exploration and development opportunities after a 7-year slowdown
Oil & Gas exploration almost immediately becomes development and production resulting in CASH FLOW

Western Canada Sedimentary Basin Cross-section Location (diagonal black line)
Tectonic activity resulted in burial to generate oil and migrate it up-dip
Hydrocarbons are expelled from source rock and move into reservoir rocks
80% tar sands – remaining 20% a unique opportunity for junior producers