Rubellite Energy

RUBELLITE ENERGY INC ENERGY & UTILITIES

E N E R GY G E M S TO N E Newly-formed Rubellite Energy is the latest jewel in the Clearwater crown, as President and CEO, Sue Rose, informs us Writer: Jack Salter | Project Manager: David Knott

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nearthed in July 2021, Rubellite Energy (Rubellite) is a true gem.

This new, pure play Clearwater oil company was created last year by Perpetual Energy (Perpetual), an active player in the Canadian oil and gas industry for close to two decades.

Over the past four years, Perpetual had accumulated a material land position in the exciting, emerging Clearwater oil play in eastern Alberta, where it is well-capitalized to deliver on its ambitious growth plan.

Rubellite raised close to $83 million in equity capital in October to close the acquisition of the Clearwater assets from Perpetual, and fund an initial drilling program to delineate and develop established pools and also test several exploratory prospects.

The company has also been successful in expanding its land base and location inventory through bolt-on land purchases in its core operating areas, and negotiating

access to additional exploratory lands across the Clearwater play fairway.

“A large inventory of potential drilling locations in the Clearwater play have been identified and captured by Rubellite,” begins Sue Rose, President and CEO of Rubellite.

“We have a robust, organic growth plan, investing capital into the drill bit to increase production, reserves, cash flow and value for shareholders.”

DRILLING PROGRAM

Through a management services contract with Perpetual, Rubellite hit the ground running with an experienced team to drive its exploration activities, optimize the development of its Clearwater assets, and produce and market its heavy oil.

As Clearwater formation occurs at relatively shallow depths of 450 to 800 meters, the opportunity to produce heavy oil from these unconventional reservoirs has been unlocked by innovative new multilateral drilling technology.

North America Outlook issue 08 | 3

Three core areas, namely at Marten Hills, Figure Lake, and Ukalta, were targeted in Rubellite’s initial drilling program

“From a single wellbore, generally six to eight legs are drilled horizontally, opening up close to 10,000 meters of fine-grained sandstone reservoir for production,” Rose explains.

“At current oil prices, rapid payouts on the modest capital investment per well translates to high rates of return, ranking this play amongst the most economically viable in North America.”

With access to capital firmly in hand, the drilling program was launched to follow up on the seven successful wells that grounded Rubellite’s initial production base at inception.

Three core areas, namely at Marten Hills, Figure Lake, and Ukalta, were targeted in Rubellite’s initial drilling program, which launched last summer.

“Production was established at Marten Hills with two drills in early July. The rig then moved south and four exploratory wells were drilled on two separate pad sites, targeting to establish production across the large, contiguous land base assembled in 4 | North America Outlook issue 08

the Figure Lake area and delineate the economic development potential,” states Rose.

“From there, the planned drilling program shifted to the development of the proven Clearwater zone in the Ukalta area at the southern end of the Clearwater play fairway.”

As strong initial production rates were established from two wells on the south pad at Figure Lake, Rubellite contracted a second rig to follow up on its success. Four additional wells have since been drilled in the area, and have recently been placed on production.

“Once the wells get through their initial oil-based mud recovery period, sales production rates will be closely monitored to refine expected type curves and inform future development plans,” Rose outlines.

Meanwhile, a continuous development drilling plan at Ukalta remains ongoing, and production is growing quickly as new wells are drilled and placed on production. As a result, Rubellite expects to hit its 2,000 bbl/d heavy oil sales milestone late in the Q1 of 2022.

In addition to investing in development drilling, capital will be allocated over the next 12 months to continue to execute its land capture strategy and to fund exploratory drilling in several of these new areas.

SAFETY AND EFFICIENCY

Rubellite’s capital activities are executed through the management of a network of highly skilled, reliable partners and suppliers.

“Multi-well pad sites are built to host concurrent drilling and production operations, so they require significant coordination,” elaborates Rose.

“We have forged strong relationships that we can depend on for safe and efficient operations, through from padsite construction, drilling operations, wellbore equipping, and the installation of our permanent production facilities.”

Burnet, Duckworth & Palmer LLP Burnet, Duckworth & Palmer LLP is thankful to have such a valued longstanding relationship with the teams at Perpetual and Rubellite and it is a privilege to help these companies with their dynamic transactions and evolving legal needs.

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McDANIEL We find value in the details.

Our dedication to every fine point that makes for technical innovation, intuitive expertise and excellence in service with a collaborative approach, makes all the difference.

For over 60 years we have established a trusted name that brings us to the forefront of evaluating and advising in reserves in the oil and gas industry.

We are proud of our bold, unique vision of the future; one that does not compromise on everything that counts.

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RUBELLITE ENERGY INC ENERGY & UTILITIES

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| VALUE THE DETAILS

Congratulations to the entire Rubellite Team For over 60 years Mcdaniel has established a trusted name that brings us to the forefront of reserve evaluations and advising in the oil and gas industry.

We see the world differently. Find out more at Mcdan.com North America Outlook issue 08 | 5

RUBELLITE ENERGY INC ENERGY & UTILITIES

NORTH AMERICA OUTLOOK: HOW DID YOU BECOME INTERESTED IN THE OIL AND GAS SECTOR? SUE ROSE, PRESIDENT AND CEO: “I come from a family of geologists, and we have deep roots in the oil and gas industry in western Canada.

“I studied geological engineering at university, and in my third year I had a summer job at Shell Canada. I was fascinated by the industry, the ingenuity of the people, and the intricacies of the hunt for oil and gas.

“It is exciting to be part of discovering and developing energy resources that are so critical to society. Energy is foundational to prosperity in the modern world; access to clean, affordable, reliable energy makes life better for literally everyone.”

Complete with two fully-trained crews carrying out drilling operations on a 24/7 basis, Rubellite is currently running a pair of Precision Drilling (Precision) rigs that directly and indirectly employ close to 100 people and are well-suited to its multi-lateral drilling techniques, utilizing an oil-based mud system to minimize reservoir damage.

“Using Secure Energy Services’ (Secure) innovative Enviromax system, we are cleaning our drill cuttings on-site and reusing the oilbased mud on a continuous basis,” says Rose.

Further, wellsite geologists work closely with the directional drillers to optimize the placement of the lateral legs, steering continuously and reacting to reservoir changes encountered by Rubellite.

“Experienced and talented drilling superintendents keep this complex operation running like clockwork, working to reduce drill times, minimize mud losses and formation damage, and drive ever-better capital

efficiencies.”

Safety is job number one at Rubellite, and the company has a track record of excellence in this regard thanks to its management service agreement with Perpetual and a field operations team that is committed to a comprehensive health and safety management system.

Rubellite’s independent board of directors oversee its environment, health and safety programs, striving for ‘triple zero performance’ – zero spills, zero injuries, and zero vehicle incidents.

“Through the cost-effective management service contract with Perpetual, almost 50 employees and contractors in our Calgary head office and in the field operate Rubellite’s assets with a focus on safety first,” Rose emphasizes.

REDUCING EMISSIONS

With strong balance sheets, unprecedented collaborations and innovative solutions driving evercleaner operations, responsibly North America Outlook issue 08 | 7

“Exploration will continue to be front and center for the coming year, and capital will be deployed to capture additional opportunities and expand our acreage and prospect inventory” ‑ Sue Rose, President and CEO, Rubellite Energy

produced Canadian oil and natural gas is poised to play a greater role in the global energy mix.

“The Canadian oil and gas sector is up for the challenge and excited to be part of bringing ever-cleaner and much needed energy to society, improving the lives and livelihoods of Canadians and helping to build prosperity in emerging economies throughout the world,” affirms Rose.

The Clearwater play is the poster child for environmentally-responsible heavy oil production, with a minimal surface land footprint for as many as eight wells, each with six to eight laterals, reaching as far as a mile away in every direction.

No fracture stimulation is required in the Clearwater play, with the multi-lateral drilling technology and oil-based mud system eliminating the 8 | North America Outlook issue 08

NORTH AMERICA OUTLOOK: WHAT IS YOUR CURRENT TAKE ON THE OIL AND GAS INDUSTRY IN CANADA? SUE ROSE, PRESIDENT AND CEO: “The oil and gas industry in Canada is becoming an exciting place to work in again. Commodity prices have recovered from the lows of 2020 induced by a supply-demand imbalance exacerbated by the COVID-19 pandemic. These stronger prices are providing companies with the opportunity to firm up balance sheets and return value to shareholders.

“Access to capital is slowly coming back as western Canadian provinces have worked hard to improve the industry’s competitiveness and secure line of sight to reliably access export markets. Concerted efforts by several provincial governments to cut red tape whilst modernizing regulations to keep up with technological change is also helping to restore investor confidence.

“The oil and gas resources in western Canada are world class, and we have a tremendous pool of talent with that entrepreneurial spirit needed to drive new ideas forward every day and commercialize innovations that produce an evercleaner molecule.”

RUBELLITE ENERGY INC ENERGY & UTILITIES

“ W E H AV E A R O B U S T, O R G A N I C G R O W T H P L A N , I N V E S T I N G C A P I TA L I N T O T H E D R I L L B I T TO I N C R E AS E P R O D U C T I O N , R E S E R V E S , C A S H F L O W A N D VA L U E F O R SHAREHOLDERS” – SUE ROSE, PRESIDENT AND CEO, RUBELLITE ENERGY

need to use any fresh water.

“Solution gas is used to fuel production and oil treating facilities, and we are currently working on a low emissions pad site battery design to further reduce emissions,” Rose shares.

“Looking forward, our consolidated land position presents pipeline tie-in opportunities to reduce and perhaps eliminate the trucking of oil to sales terminals.”

UNLOCKING VALUE

In 2022, Rubellite plans to deliver a robust, organic production growth profile to unlock free funds flow. As the company hits its stride with its continuous drilling program, learnings will be applied to drive increasingly stronger capital efficiencies.

“Investing through the drill bit is expected to materially grow our heavy oil reserves and inform type curves to refine expectations from our

extensive drilling location inventory,” Rose says.

“Exploration will continue to be front and center for the coming year, and capital will be deployed to capture additional opportunities and expand our acreage and prospect inventory.”

Coming off a busy period of corporate consolidation in the Canadian sector, growth-focused start-ups such as Rubellite are a rare find, almost as rare as the gemstone itself.

Tel: 403-269-4400 info@rubelliteenergy.com www.rubelliteenergy.com North America Outlook issue 08 | 9

RUBELLITE ENERGY INC 3200, 605 5th Ave SW Calgary, Alberta, Canada T2P 3H5 Tel: 403-269-4400 info@rubelliteenergy.com www.rubelliteenergy.com PRODUCED BY NORTH AMERICA OUTLOOK MAGAZINE