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E-T ENERGY LTD. UNLOCKING OVER 100 BILLION BARRELS OF STRANDED RESOURCE. ET Energy Management Presentation May 2013. Outline. Introduce E-T Energy What is ET-DSP™? Strong Economics and Environmental Performance Step 3 Field Test Program Next Steps: Demonstrate Commerciality.

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E t energy ltd

E-T ENERGY LTD.

UNLOCKING OVER 100 BILLION BARRELS OF STRANDED RESOURCE

ET Energy

Management Presentation

May 2013


Outline

Outline

  • Introduce E-T Energy

  • What is ET-DSP™?

  • Strong Economics and Environmental Performance

  • Step 3 Field Test Program

  • Next Steps: Demonstrate Commerciality


Important notice

Important Notice

Disclaimer

This presentation and the information contained herein are confidential and the property of E-T Energy Ltd. (“E-T Energy”). This presentation is intended to introduce you to E-T Energy or provide a general update for those of you who know us. By reviewing and attending this presentation and accepting delivery of these materials, the recipient agrees not to reproduce, transmit, circulate or otherwise make available the materials to any other person without the prior written consent of E-T Energy. Any distribution or dissemination of these materials without the prior written consent of E-T Energy may also result in a violation of federal, state or provincial securities laws and is therefore prohibited.

This presentation is not, and is not intended to be, an offer to sell or the solicitation of an offer to buy any security of E-T Energy and shall not constitute an offer, solicitation or sale of any securities of E-T Energy in any jurisdiction. This presentation is an overview of E-T and should not be relied on for the purposes of making an investment decision. Investors must make their investment decisions based solely on the disclosure contained in materials which may be provided in connection with an offering of securities

Forward-Looking information

This presentation contains, without limitation, forward-looking information relating to the current state and future development of E-T Energy's oil sands resources, business prospects and strategies, technology, business, financial condition and operations. Forward-looking information typically contains statements using words such as "anticipate", "believe", "project", "forecasted", "expect", "plan", "intend", "estimate", "goal" or similar words suggesting future outcomes and statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future.

Readers are cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, risks and uncertainties and other factors that contribute to the possibility that the possible outcome, expectations, forecasts, projections and other forms of forward looking information will not be achieved. These factors include management's ability to anticipate and manage uncertainty and risk. The Company faces a large number of risks, including: reliance on a new and unproven process; electricity supply and pricing; dependence on contractual arrangements with third parties; reliance on key personnel and competition for qualified personnel; early stage of development of the Company; insufficient funding or proceeds of financing; oil prices and heavy oil differentials; marketability of bitumen and the lack of infrastructure ; royalty regime and changes to it; taxation; environmental laws and regulations and their application; general government regulation and regulatory approvals; reliance on intellectual property rights and a proprietary process; legal risks and challenges; resource estimates and quantities; abandonment and reclamation costs; competition; foreign exchange rate fluctuations; title risks and aboriginal claims; insurance; seasonality; operational difficulties; and all of the typical risks faced by resource developers. The Company is also exposed to additional risks and uncertainties that it does not presently know, or currently considers immaterial, which may also impair E-T Energy's business and/or operations. If one or more of the events associated with these various risks actually occur, the Company's business may be harmed and E-T Energy's financial and operating results may suffer significantly.

Forward-looking statements are based on a number of assumptions that may prove to be incorrect including, but not limited to: general economic, market and business conditions; commodity prices and differentials; resource estimates; the accuracy of cost estimates, the relationships with key project contractors, suppliers and customers, production rates and economic returns; the availability of sufficient capital on satisfactory terms; the successful and timely approval and implementation of capital projects; currency exchange rates; government enacted environmental initiatives; the impact of changes in applicable laws and regulations; and the successful commercialization of ET-DSP™.

The actual results, performance or achievements of E-T Energy, and ET-DSP™, could differ materially from those expressed in or implied by forward looking statements; accordingly, no assurance can be given that any of the events anticipated by the forward looking statements will transpire or occur, or if any of them do so, what benefit E-T Energy will derive from them. Except as required by law, E-T Energy undertakes no obligation to publicly update or otherwise revise any information, including any forward looking information for future events, changes or other such factors that affect this information.

All references to funds in this presentation refer to Canadian dollars.


E t energy ltd highlights

E-T Energy Ltd. Highlights

Large asset base

McDaniel’s best estimate contingent resource of 284 million barrels with $1.4 billion NPV10

Technology leader

E-T DSP™ technology unlocks 175 billion barrels of stranded resources in the Athabasca oil sands alone that are to deep for mining and to shallow for SAGD

Compelling economics

Lower capital intensity, operating costs and energy costs than mining or SAGD

Substantial investment

To date over $60 million has been raised and invested in the ET-DSP™ technology

TOTAL E&P participation

TOTAL provided financial and technical support for the Step 3 field test with the option to participate in future testing and to acquire a technology licence

Protected technology

ET-DSP™ protected by Canadian and US patents


E t energy management team

E-T Energy Management Team


E t energy management team1

E-T Energy Management Team


Outline1

Outline

  • Introduce E-T Energy

  • What is ET-DSP™?

  • Strong Economics and Environmental Performance

  • Step 3 Field Test

  • Next Steps: Demonstrate Commerciality


Et dsp process

6

7

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ET-DSP™ Process

Power Delivery System distributes electrical current and non-potable water to the electrode wells.

Electric current energizes the electrodes, while injected water cools the electrodes.

Electric current rapidly cycles between electrodes, heating the formation water and bitumen.

Injected water maintains electrical conductivity and formation pressure.

Heated bitumen and water are pumped from the formation by progressive cavity pumps.

Bitumen is cleaned to sales spec and sold into markets.

Produced water is recycled and re-injected to minimize the need for external water.


Et dsp process1

ET-DSP™ Process

Oil sands formations are highly permeable and contain a significant amount of in situ formation water

Electrical current is conducted through the formation water that envelops the non-conductive sand particles

Water is strongly resistant to electricity and the electrical energy is converted to heat, i.e. the water gets hotter the more current that flows

The water is heated to +/- 130 deg. C, but the formation pressure prevents it from flashing into steam

Heat is transferred from the water to the oil and sand particles by conduction

The large surface area between the water film and the sand particles facilitates the rapid transfer of heat.


Access to stranded resources

Access to Stranded Resources

Mineable Depth

Stranded Depth

173 billion bbls in place

ET-DSP™ Depth

SAGD Depth

  • The application of ET-DSP™ provides the unique opportunity to unlock bitumen volumes at depths currently inaccessible under current extraction methods

  • McDaniel estimates over 173 billion bbls in place are currently stranded at depths which are too deep to mine, yet too shallow for SAGD


Potential upside for technology application

Potential Upside for Technology Application


Outline2

Outline

  • Introduce E-T Energy

  • What is ET-DSP™?

  • Strong Economics and Environmental Performance

  • Step 3 Field Test

  • Next Steps: Demonstrate Commerciality


Economic advantages of et dsp

Economic Advantages of ET-DSP™

  • Lower energy requirements

  • Lower capital cost

    • No water treatment facilities for boiler quality water

    • No steam generation

  • Access to stranded resources

    • Can use in areas too deep to mine, too shallow to SAGD

    • No cap rock needed

  • Environmental benefits

    • Low carbon footprint


Economic benefits comparison of operating and capital costs

Economic BenefitsCOMPARISON OF OPERATING AND CAPITAL COSTS

Operating Cost Comparison – 2011$ ($/bbl)

Total Cost Comparison – Project Life – 2011$ ($/bbl)

ET-DSP™

Poplar Creek

ET-DSP™

Poplar Creek

  • On both an operating and total cost basis, ET-DSP™ economics based on management estimate is substantially better than other extraction processes

  • E-T's significantly lower initial capital cost intensity results in substantially higher returns on capital

Source: Macquarie Research, Management Estimates


Economic benefits irr and npv comparison

Economic BenefitsIRR AND NPV COMPARISON

Net Present Value per Barrel ($/bbl)

Internal Rate of Return (%)

  • Based on management estimates, ET-DSP™ delivers superior per barrel NPV and rates of returned when compared to other extraction processes

Model scenarios include flat pricing with unescalated costs

Source: Macquarie Research, Management Estimates


No direct ghg emissions

No Direct GHG Emissions

  • Process can have zero GHG emissions, depending on source of electrical energy

  • Low energy usage compared to SAGD and Mining means even if electricity is from gas fired generation, GHG emissions are still considered lowest in industry.


Other environmental benefits of et dsp

Other Environmental Benefits of ET-DSP™

  • Land reclamation can occur within 3 years from initial land disturbance.

  • Water Usage is for void replacement.

  • Preference is to use saline water.

  • All produced water is re-injected into formation.


Outline3

Outline

  • Introduce E-T Energy

  • What is ET-DSP™?

  • Strong Economics and Environmental Performance

  • Step 3 Field Test

  • Next Steps: Demonstrate Commerciality


E t energy ltd

Step 3Field TestTHREE FULLY ENCLOSED EXTRACTION WELLS

  • OBJECTIVES

  • confirm scale up assumptions

  • confirm bitumen flow rates

  • confirm bitumen recovery factors

  • confirm energy requirements

  • confirm equipment reliability factors

  • FINANCIAL SUPPORT

  • Total E&P Canada participation

  • CCEMC funding


Field test site

Field Test Site


Electrode wells 16 m spacing

Electrode Wells 16 m spacing

Producer Well

Electrode Well


Step 3 field test summary

Step 3 Field Test Summary

  • Started all 69 electrodes February 2012.

  • Production operations began in June 2012.

  • From June 2012 to March 2013 temperatures continued to rise as did bitumen production.

  • At March 2013 average reservoir temperature over 60 C with peak temperatures of up to 99 C at some observations wells.

  • Chemical injection program from December 2012 to March 2013

    • sponsored by Baker Hughes.

    • increased bitumen production observed in wells surrounding additive injection.

  • March 2013 concluded heating phase.

  • May 2013 shut in production.


Electrode energy

March 2013– Monthly Data Summary

Electrode Energy

Heating started

Feb. 1, 2012

Decision made to not heat upper zone

Jul. 4, 2012

Reduction in Effective Electrode Performance

Jul. 19, 2012

Electrodes Turned Off

Mar. 31, 2013


Average observation well temperature

March 2013– Monthly Data Summary

Average Observation Well Temperature


Observation wells show good temperature response

Observation Wells Show Good Temperature Response


Production profile

Production Profile

Electrodes Turned Off

Mar. 31, 2013


Marketed bitumen by rail car 17 bbl higher netback

Marketed Bitumen By Rail Car. $17/bbl higher netback.


Step 3 field test achievements

Step 3 Field Test Achievements

  • Heated and produced bitumen despite challenging reservoir characteristics

  • Achieved good long-term power delivery to many electrodes

  • Successful commissioning, startup and operation of largest ET DSP Pilot

  • Able to make pipeline quality diluted bitumen


Step 3 field test lessons learned

Step 3 Field Test Lessons Learned

  • Learnings for future development phases:

    • Electrode reliability to be further improved

    • Improvements to operational practices

    • Plan for longer pre-heating phase

    • Better reservoir characterization

    • Focus on uniform heating within formation


Step 3 field test options

Step 3 Field Test Options

  • Background

    • Step 3 shut down May 2013 primarily due to financing constraints

    • Challenging geology makes achieving a high recovery factor difficult

    • Significant heat persists in the reservoir

  • Option 1: Restart Step 3

    • Restart heating, production and chemical injection for up to 9 months

    • Funding required ($3.5m): Field operations ($1m), G&A ($1.5m) and ERCB compliance ($1m)

  • Option 2: Maximize Step 3 Performance

    • Recomplete production wells and install mini-electrodes

    • Restart heating, production and chemical injection for up to 12 months

    • Funding required ($6.5m): recomplete production wells ($1m), install mini electrodes ($1m), field operations ($1.5m), G&A ($2m) and ERCB compliance ($1m)

    • Effectiveness of recompleting wells and mini-electrode is uncertain


Outline4

Outline

  • Introduce E-T Energy

  • What is ET-DSP™?

  • Strong Economics and Environmental Performance

  • Step 3 Field Test

  • Next Steps: Demonstrate Commerciality


Next step demonstrate commerciality

Next Step: Demonstrate Commerciality

  • Approval received from ERCB for up to 1,000 bbl/day facility adjacent to existing pilot plant operation.

  • Primary objectives of the next project are:

    • Demonstrate electrode reliability

    • Demonstrate commercial production levels.

    • Apply learnings and improvements from prior field tests

  • Longer-term objectives of the next project are:

    • Refine understanding of reservoir production mechanisms

    • Improve drilling and operational techniques

    • Achieve cash flow positive results

    • Make and market on-spec diluted bitumen


Pre commercial project

Pre-commercial Project

  • Project Scope:

    • Up to 1,000 b/d bitumen production approved by ERCB.

  • Implementation Options

    • 250 b/d project to test electrode enhancements

    • 1,000 b/d well field could be repeated several times in area using same CPF


Pre commercial project1

Pre-Commercial Project


Pre commercial project timeline

Pre-commercial Project - Timeline

  • Project Activities:

    • Design and Construction

      • Design & surface preparation6 months

      • Drilling and well completions4 months

      • Well field & CPF construction6 months

    • Commissioning and startup2 months

    • Operations

      • Pre-heat (heating with no production)6-9 months

      • Production and heating9 months

  • First oil 2 years after project sanctioning


Commercial demonstration project long term

Commercial DemonstrationProject:Long-Term

  • E-T Energy anticipates continuing production with additional well fields commissioned to sustain 1,000 bbl/day production


Questions

Questions


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