Oil & Gas: Equity Research

EQUITY RESEARCH | DAILY EDGE
Monday, September 27, 2021, Pre-market
Oil & Gas ANALYST TEAM

Jason Bouvier, CFA | Analyst
Link to ScotiaView
403-213-7345
Awash in Free Cash Flow Scotia Capital Inc. - Canada
Cameron Bean | Analyst
403-218-6786
OUR TAKE: Positive. With Q3/21 approaching and commodity prices strengthening, Scotia Capital Inc. - Canada
we have updated our CF/FCF sensitivities for our oil-weighted producers. In our view, Paul Y. Cheng, CFA | Analyst
212-225-5927
there is significant value in the energy space. Scotia Capital (USA) Inc.
Gavin Wylie | Analyst
KEY POINTS 403-213-7333
Scotia Capital Inc. - Canada
Kevin Fisk, CPA, CBV | Senior Associate
Energy shares have performed well, but upside remains. In the last six months, oil- 403-213-7768
weighted shares are up ~28% with Canadian firms up ~36%. Even with the strong move Scotia Capital Inc. - Canada
higher, 2022 DAFCF yields (at $65 WTI) average ~16%. Jessica Fu, CA, CFA | Senior Associate
403-213-7349
Scotia Capital Inc. - Canada
Who has the most torque? Exhibits 3-5 show our DAFCF yields at various oil prices Jordan Monahan | Associate
This report is intended for replaceme@bluematrix.com. Unauthorized distribution of this report is prohibited.
and Exhibit 6 shows our FCF sensitivity (from $65 WTI to $75 WTI). The companies with 212-225-5814
Scotia Capital (USA) Inc.
the most torque to higher oil prices include GTE, KEL, PBR, GPRK, and MEG.
Betty Zhang, CFA | Associate
212-225-5977
Canadian integrated/oil sands standout relative to US and International peers. Scotia Capital (USA) Inc.
Brian Zhang | Associate
At $65 WTI Canadian integrated/oil sands companies have an average DAFCF yield 347-224-3686
of ~17% vs. their US and International peers at ~10%. We continue to believe that the Scotia Capital (USA) Inc.
valuation will narrow as egress improves, shareholder returns are enhanced, and GHG
reduction initiatives advance.
Large Cap and SMID Cap E&Ps generating significant free cash flow. At $65 WTI
the average Large Cap and SMID Cap DAFCF yield is ~16% and ~18%, respectively.
We expect meaningful free cash flow to be directed towards improving shareholder
returns in the form of share buybacks, increased base dividends, and variable
dividends. Generally, US producers are more willing to adopt variable dividend policies
than their Canadian peers.
Balance sheet concerns in the rear-view mirror. With industry focused on debt
repayment and returns to shareholders, balance sheets have improved considerably.
At strip, we estimate an average 2021 and 2022 ND/CF for oil-weighted companies of
1.3x (~$67 WTI) and 0.7x ($69 WTI), respectively. We consider these healthy leverage
metrics and believe firms will remain committed to debt repayment.
Top picks. Our top oil-weighted picks (all Sector Outperform rated) include:
• Integrated/Oil Sands: BP, CVE, COP, PBR
• Large Caps: ARX
• SMID Caps: ERF, IPCO, KEL
Dissemination: September 27, 2021, 06:19 ET. Production: September 26, 2021, 19:52 ET.
For Reg AC Certification and important disclosures see Appendix A of this report. Analysts employed by non-U.S. affiliates are not 1
registered/qualified as research analysts with FINRA in the U.S. unless otherwise noted within this report.
Room for share price appreciation. Exhibit 1 presents the relative performance of oil-weighted names
since January 1, 2020 (pre-pandemic), of which ~70% have underperformed WTI.
Exhibit 1: Relative Stock Price Performance (since January 1, 2020)

Source: FactSet.
2
Building share price momentum. Share prices have increased significantly over the last six months with
oil weighted shares increasing ~28% on average (Exhibit 2).
Exhibit 2: Relative Stock Price Performance (last six months)

Source: FactSet.
3
Wide range of yields for integrated/oil sands companies (Exhibit 3). At US$65 WTI, the average
integrated/oil sands company has a 2022 DAFCF yield of ~13%. IMO, CVE, and CNQ have the highest
DAFCF yields at US$65 WTI of 19.1%, 18.8%, and 15.8%, respectively.
Exhibit 3: 2022E Integrated / Oil Sands CF/FCF Sensitivity (Includes Hedging Impact)
Integrated / Oil Sands
BP CNQ CVE1 CVX EC IMO1 PBR RDS SU1 TTE XOM
Currency USD CAD CAD USD COP CAD USD USD CAD USD USD
US$45/bbl WTI; US$10/bbl WCS Diff; ($0.75 FX) Case

CF ($M) $22,310 $8,838 $5,106 $18,052 $24,491 $3,917 $20,203 $33,490 $7,343 $20,241 $25,807
Total Capex ($M) $13,501 $4,250 $2,790 $11,043 $19,036 $1,600 $11,120 $20,748 $5,150 $15,316 $15,465
Other Cash Outflows ($M)2 $500 $220 $174 $500 $0 $20 $6,800 $0 $320 $0 $0
FCF (Before Dividends; $M) $8,309 $4,369 $2,143 $6,509 $5,455 $2,297 $2,283 $12,742 $1,873 $4,924 $8,342
Dividends ($M) $4,420 $2,148 $141 $10,689 $14,513 $744 $7,161 $7,667 $1,531 $8,336 $15,562
FCF (After Dividends; $M) $3,890 $2,220 $2,001 -$4,180 -$9,058 $1,553 -$4,878 $5,075 $342 -$3,412 -$7,219
Net Debt / EBITDA3 1.1x 1.5x 1.5x 1.5x 1.4x 0.2x 2.8x 1.0x 1.4x 1.5x 1.8x
Net Debt / Capitalization4 20.6% 30.8% 26.5% 21.8% 40.6% 9.7% 42.4% 19.3% 22.6% 20.6% 25.8%
EV/DACF 4.6x 6.4x 4.1x 11.0x 5.7x 6.3x 18.5x 5.7x 6.3x 7.6x 10.5x
DAFCF Yield5,6 (%) 9.0% 7.6% 9.1% 3.5% 4.4% 9.1% nmf 7.6% 4.7% 3.8% 3.3%
FCF Yield6,7 (%) 9.7% 9.0% 9.2% 3.1% 5.1% 9.3% 3.4% 6.1% 5.1% 4.8% 3.6%
US$55/bbl WTI; US$11.50/bbl WCS Diff; ($0.77 FX) Case

CF ($M) $24,355 $11,187 $6,464 $23,044 $28,112 $5,043 $25,995 $38,690 $9,458 $23,986 $31,509
Total Capex ($M) $14,111 $4,250 $2,790 $11,480 $19,036 $1,600 $11,120 $20,748 $5,150 $16,019 $16,170
Dividends ($M) $4,396 $2,129 $141 $10,689 $14,513 $741 $7,161 $7,667 $1,496 $8,336 $15,562
FCF (After Dividends; $M) $5,348 $4,589 $3,359 $375 -$5,438 $2,682 $915 $10,275 $2,492 -$369 -$2,223
Net Debt / EBITDA3 0.9x 1.0x 0.9x 1.0x 1.1x 0.0x 1.6x 0.9x 1.0x 1.1x 1.3x
DAFCF Yield5,6 (%) 10.3% 11.8% 14.0% 5.7% 7.1% 14.1% 1.1% 10.1% 9.4% 5.7% 5.1%
FCF Yield6,7 (%) 11.5% 14.1% 15.0% 5.7% 8.5% 14.0% 11.9% 9.5% 11.1% 7.4% 5.8%

CF ($M) $26,399 $13,318 $7,694 $28,052 $32,016 $6,114 $32,269 $43,890 $11,280 $27,728 $37,156
Total Capex ($M) $14,722 $4,250 $2,790 $11,920 $19,036 $1,600 $11,120 $20,748 $5,150 $16,721 $16,881
Dividends ($M) $4,372 $2,111 $141 $10,689 $14,513 $741 $7,161 $7,667 $1,486 $8,300 $15,562
FCF (After Dividends; $M) $6,805 $6,737 $4,589 $4,943 -$1,533 $3,753 $7,189 $15,475 $4,324 $2,707 $2,713
Net Debt / EBITDA3 0.8x 0.8x 0.6x 0.7x 0.8x nmf 0.9x 0.8x 0.7x 0.9x 0.9x
DAFCF Yield5,6 (%) 11.6% 15.8% 18.8% 7.9% 10.2% 19.1% 13.6% 12.6% 13.8% 7.6% 6.9%
FCF Yield6,7 (%) 13.4% 19.0% 20.2% 8.2% 12.2% 18.3% 21.2% 13.0% 16.3% 10.1% 8.0%

CF ($M) $28,444 $15,256 $8,799 $33,062 $36,206 $7,131 $39,646 $49,090 $12,988 $31,466 $42,752
Total Capex ($M) $15,334 $4,250 $2,790 $12,363 $19,036 $1,600 $11,120 $20,748 $5,150 $17,423 $17,596
Dividends ($M) $4,349 $2,095 $141 $10,689 $14,513 $741 $7,161 $7,667 $1,482 $8,254 $15,562
FCF (After Dividends; $M) $8,262 $8,691 $5,695 $9,510 $2,657 $4,770 $14,566 $20,675 $6,036 $5,789 $7,595
Net Debt / Capitalization4 19.3% 23.5% 13.9% 13.8% 30.5% -1.9% 25.6% 13.7% 14.5% 16.9% 18.8%
DAFCF Yield5,6 (%) 12.9% 19.8% 23.6% 10.1% 13.7% 24.4% 31.5% 15.1% 18.2% 9.4% 8.6%
FCF Yield6,7 (%) 15.3% 23.6% 25.0% 10.8% 16.1% 22.5% 32.1% 16.4% 21.1% 12.8% 10.1%

CF ($M) $30,489 $17,021 $9,792 $38,070 $40,932 $8,099 $45,540 $54,290 $14,585 $35,200 $48,300
Total Capex ($M) $15,947 $4,250 $2,790 $12,808 $19,036 $1,600 $11,120 $20,748 $5,150 $18,125 $18,316
Dividends ($M) $4,325 $2,081 $141 $10,689 $14,513 $741 $7,161 $7,667 $1,479 $8,208 $15,562
FCF (After Dividends; $M) $9,717 $10,471 $6,687 $14,073 $7,383 $5,739 $20,459 $25,875 $7,636 $8,868 $12,422
Net Debt / Capitalization4 18.9% 19.9% 10.3% 11.1% 26.7% -5.8% 20.6% 11.8% 11.4% 15.9% 16.6%
DAFCF Yield5,6 (%) 14.2% 23.8% 28.3% 12.3% 17.9% 29.8% 52.5% 17.7% 22.6% 11.3% 10.3%
FCF Yield6,7 (%) 17.2% 27.7% 29.2% 13.3% 20.6% 26.4% 40.8% 19.8% 25.6% 15.5% 12.2%
Notes:
1) Downstream cash flows were held constant at the US$65/bbl case.
2) Other cash outflows includes lease principle payments, ARO spending, and capitalized G&A where not already included in cash flow or capex.
3) Net debt calculated as Bank debt, notes, convertible debentures, and preferred shares + working capital deficit (surplus) as at YE 2022; EBITDA calculated as Revenue (pre-hedging) +/- Realized hedging gains (losses) -
Royalties - Opex - Transportation - G&A (excl share based comp) - Other cash costs. Excludes FX and unrealized hedging gains / losses.
4) Net debt calculated as total debt less cash; Capitalization calculated as net debt (numerator) + shareholders' equity from balance sheet.
5) DAFCF Yield calculated as (DACF - Capex - Other Cash Outflows) / Enterprise Value.
6) DAFCF and FCF yields include the impact of hedging gains and losses.
7) FCF Yield calculated as (Cash Flow - Capex - Other Cash Outflows) / Market Capitalization.
Commodity Price Assumptions 2022E

Brent-WTI Diff (US$/bbl) $3.00
EdmPar Diff (US$/bbl) -$4.00
Condensate Diff (US$/bbl) -$0.50
SCO Diff (US$/bbl) -$1.00
HH (US$/mcf) $4.00
AECO Diff (US$/mcf) -$0.90
Northeast 6-3-2-1 (Dated Brent) $6.31
NYH321 (US$/bbl) $20.00
Source: Scotiabank GBM estimates.
4
Large Caps generating significant FCF (Exhibit 4). At US$65 WTI, the average Large Cap 2022 DAFCF
yield is ~16%. MRO, ARX, and XEC have the highest DAFCF yields (US$65 WTI) at 21.7%, 20.4%, and
19.5%, respectively.
Exhibit 4: 2022E Large Cap CF/FCF Sensitivity (Includes Hedging Impact)

Large Cap
APA ARX CLR COP DVN EOG FANG HES MRO MUR OVV OXY PXD XEC
Currency USD CAD USD USD USD USD USD USD USD USD USD USD USD USD

CF ($M) $2,139 $2,639 $3,321 $13,932 $3,983 $6,524 $3,596 $2,429 $2,258 $1,159 $2,151 $6,116 $7,177 $1,755
Total Capex ($M) $1,594 $1,375 $1,711 $8,584 $1,993 $4,282 $1,680 $2,274 $1,241 $893 $1,600 $3,320 $3,169 $732
Other Cash Outflows ($M)1 $30 $23 $100 $0 $55 $0 $150 $0 $0 $0 $75 $0 $200 $0
FCF (Before Dividends; $M) $515 $1,242 $1,510 $5,348 $1,935 $2,242 $1,766 $155 $1,017 $266 $476 $2,797 $3,808 $1,023
Dividends ($M) $38 $191 $274 $2,307 $1,132 $3,464 $422 $448 $204 $157 $145 $1,006 $3,153 $690
FCF (After Dividends; $M) $477 $1,050 $1,236 $3,041 $803 -$1,222 $1,344 -$292 $813 $110 $331 $1,791 $655 $333
Net Debt / EBITDA2 2.9x 0.2x 1.0x 0.9x 0.9x 0.2x 1.5x 2.8x 1.3x 1.8x 2.1x 2.7x 0.4x 0.2x
Net Debt / Capitalization3 67.4% 7.1% 20.3% 23.2% 17.3% 2.8% 29.5% 28.2% 28.8% 42.5% 45.2% 42.3% 6.0% 3.4%
EV/DACF 5.2x 3.1x 4.8x 5.4x 5.4x 6.3x 4.8x 9.4x 4.4x 3.8x 5.1x 7.6x 5.8x 4.5x
DAFCF Yield4,5 (%) 6.9% 15.2% 10.2% 7.7% 9.8% 5.7% 10.6% 2.0% 11.2% 8.2% 5.5% 7.1% 9.2% 13.1%
FCF Yield5,6 (%) 3.3% 15.7% 13.4% 7.6% 10.9% 5.3% 11.2% -1.7% 12.1% 5.7% 6.2% 8.4% 10.4% 15.1%

CF ($M) $2,710 $2,841 $3,809 $16,797 $4,721 $7,745 $4,303 $3,104 $2,862 $1,418 $2,718 $8,039 $8,539 $2,029
Total Capex ($M) $1,606 $1,375 $1,738 $8,755 $2,051 $4,381 $1,719 $2,291 $1,272 $901 $1,600 $3,373 $3,255 $743
FCF (Before Dividends; $M) $1,074 $1,443 $1,971 $8,042 $2,628 $3,364 $2,435 $813 $1,590 $518 $1,043 $4,666 $5,084 $1,286
Dividends ($M) $38 $191 $274 $2,307 $1,461 $3,464 $422 $448 $202 $157 $145 $1,010 $4,110 $822
FCF (After Dividends; $M) $1,036 $1,252 $1,698 $5,735 $1,166 -$100 $2,013 $366 $1,389 $361 $899 $3,656 $974 $465
Net Debt / EBITDA2 1.9x 0.1x 0.8x 0.5x 0.7x 0.0x 1.1x 1.8x 0.9x 1.3x 1.5x 2.0x 0.3x 0.1x
Net Debt / Capitalization3 58.6% 4.3% 17.5% 18.3% 16.4% 0.1% 25.7% 25.6% 25.6% 37.8% 40.6% 38.9% 5.2% 1.8%
DAFCF Yield4,5 (%) 11.2% 18.1% 12.9% 11.1% 12.8% 8.3% 14.3% 4.5% 16.4% 13.4% 10.3% 10.4% 12.2% 16.3%
FCF Yield5,6 (%) 10.6% 18.3% 17.2% 11.4% 14.7% 8.0% 15.7% 1.4% 19.2% 13.0% 13.6% 15.9% 13.7% 19.0%

CF ($M) $3,258 $3,000 $4,298 $19,656 $5,455 $8,965 $5,011 $3,780 $3,466 $1,678 $3,319 $9,962 $9,901 $2,304
Total Capex ($M) $1,618 $1,375 $1,766 $8,927 $2,107 $4,479 $1,757 $2,308 $1,303 $909 $1,600 $3,428 $3,344 $754
FCF (Before Dividends; $M) $1,611 $1,603 $2,432 $10,728 $3,313 $4,487 $3,104 $1,472 $2,163 $769 $1,644 $6,534 $6,357 $1,550
Dividends ($M) $38 $191 $274 $2,307 $1,789 $3,464 $422 $448 $199 $157 $144 $1,010 $5,065 $729
FCF (After Dividends; $M) $1,573 $1,412 $2,159 $8,421 $1,523 $1,023 $2,682 $1,024 $1,964 $613 $1,500 $5,524 $1,292 $821
Net Debt / EBITDA2 1.4x 0.0x 0.6x 0.3x 0.6x -0.1x 0.8x 1.2x 0.7x 0.9x 1.1x 1.5x 0.2x 0.0x
Net Debt / Capitalization3 51.0% 2.1% 14.8% 13.4% 15.6% -2.7% 22.0% 23.0% 22.4% 33.1% 35.6% 35.5% 4.5% 0.2%
DAFCF Yield4,5 (%) 15.2% 20.4% 15.7% 14.5% 15.7% 11.0% 17.9% 7.0% 21.7% 18.6% 15.9% 13.8% 15.2% 19.5%
FCF Yield5,6 (%) 17.7% 20.3% 21.0% 15.2% 18.6% 10.7% 20.2% 4.6% 26.6% 20.3% 21.6% 23.6% 17.0% 22.9%

CF ($M) $3,791 $3,110 $4,787 $22,506 $6,189 $10,186 $5,718 $4,456 $4,070 $1,938 $3,926 $11,884 $11,263 $2,579
Total Capex ($M) $1,630 $1,375 $1,794 $9,101 $2,163 $4,575 $1,795 $2,325 $1,336 $917 $1,600 $3,485 $3,435 $766
FCF (Before Dividends; $M) $2,132 $1,713 $2,893 $13,405 $3,991 $5,611 $3,774 $2,130 $2,735 $1,020 $2,251 $8,400 $7,628 $1,813
Dividends ($M) $38 $191 $274 $2,307 $2,118 $3,464 $422 $448 $196 $157 $144 $1,010 $6,018 $727
FCF (After Dividends; $M) $2,094 $1,521 $2,619 $11,098 $1,873 $2,147 $3,352 $1,682 $2,539 $864 $2,107 $7,390 $1,610 $1,086
Net Debt / EBITDA2 1.1x 0.0x 0.4x 0.2x 0.5x -0.2x 0.6x 0.9x 0.5x 0.7x 0.9x 1.2x 0.1x 0.0x
Net Debt / Capitalization3 44.2% 0.5% 12.0% 8.5% 14.7% -5.5% 18.2% 20.3% 19.1% 28.4% 30.7% 32.2% 3.7% -1.5%
DAFCF Yield4,5 (%) 19.1% 22.1% 18.4% 17.9% 18.6% 13.7% 21.6% 9.5% 27.0% 23.7% 22.0% 17.2% 18.2% 22.7%
FCF Yield5,6 (%) 24.6% 21.7% 24.8% 19.0% 22.4% 13.4% 24.8% 7.7% 34.1% 27.6% 29.7% 31.3% 20.3% 26.8%

CF ($M) $4,314 $3,209 $5,275 $25,349 $6,923 $11,406 $6,426 $5,131 $4,674 $2,197 $4,410 $13,807 $12,625 $2,854
Total Capex ($M) $1,642 $1,375 $1,824 $9,276 $2,218 $4,669 $1,832 $2,342 $1,369 $926 $1,600 $3,543 $3,529 $779
FCF (Before Dividends; $M) $2,642 $1,811 $3,352 $16,073 $4,670 $6,736 $4,444 $2,789 $3,305 $1,271 $2,735 $10,264 $8,896 $2,075
Dividends ($M) $30 $191 $274 $2,307 $2,447 $3,464 $422 $448 $193 $157 $144 $1,010 $6,969 $1,216
FCF (After Dividends; $M) $2,612 $1,620 $3,078 $13,767 $2,223 $3,272 $4,022 $2,341 $3,113 $1,115 $2,592 $9,254 $1,927 $859
Net Debt / EBITDA2 0.8x nmf 0.3x 0.1x 0.4x -0.2x 0.4x 0.7x 0.4x 0.5x 0.7x 0.9x 0.1x -0.1x
Net Debt / Capitalization3 38.2% -1.0% 9.2% 3.7% 13.9% -8.2% 14.5% 17.7% 15.9% 23.7% 26.7% 28.8% 3.0% -3.1%
DAFCF Yield4,5 (%) 23.0% 23.7% 21.1% 21.2% 21.5% 16.3% 25.3% 12.0% 32.2% 28.9% 27.3% 20.6% 21.2% 25.9%
FCF Yield5,6 (%) 31.3% 23.0% 28.7% 22.8% 26.3% 16.1% 29.3% 10.9% 41.8% 34.9% 36.3% 39.0% 23.6% 30.7%
Notes:

HH (US$/mcf) $4.00
NYH321 (US$/bbl) $20.00
5
SMID Cap yields looking attractive (Exhibit 5). At US$65 WTI the average SMID Cap DAFCF yield is
~18%. IPCO, ERF, and MEG have the highest yields (US$65 WTI) at 26.7%, 24.2%, and 22.2%,
respectively.
Exhibit 5: 2022E SMID Cap CF/FCF Sensitivity (Includes Hedging Impact)

SMID Cap Royalty
BTE CPG ERF GPRK GTE KEL IPCO MEG NVA POU PXT SDE VET1 WCP FRU PSK
Currency CAD CAD CAD USD USD CAD USD CAD CAD CAD USD CAD CAD CAD CAD CAD

CF ($M) $557 $1,177 $826 $180 $114 $206 $162 $353 $418 $619 $391 $387 $709 $873 $174 $197
Total Capex ($M) $366 $933 $500 $162 $177 $215 $92 $350 $315 $370 $287 $300 $407 $570 $0 $0
Other Cash Outflows ($M)2 $24 $0 $21 $0 $0 $4 $1 $24 $5 $30 $0 $5 $25 $14 $5 $2
FCF (Before Dividends; $M) $167 $245 $305 $18 -$63 -$13 $69 -$21 $98 $219 $104 $81 $277 $289 $168 $195
Dividends ($M) $0 $69 $37 $10 $0 $0 $0 $0 $0 $32 $43 $0 $0 $123 $90 $78
FCF (After Dividends; $M) $167 $175 $267 $8 -$63 -$13 $69 -$21 $98 $187 $61 $81 $277 $166 $78 $116
Net Debt / EBITDA3 2.4x 1.6x 1.0x 2.3x 4.4x 0.0x 0.5x 3.9x 0.9x 0.5x nmf 1.0x 2.2x 1.0x 0.2x 0.6x
Net Debt / Capitalization4 43.4% 27.0% 37.6% 110.2% 79.7% 1.3% 10.3% 42.3% 22.6% 12.4% -32.1% 31.6% 40.8% 25.7% 8.2% 6.4%
EV/DACF 4.0x 3.5x 2.9x 6.0x 7.0x 4.1x 5.1x 9.1x 3.2x 3.7x 4.3x 3.0x 4.5x 5.0x 7.5x 14.9x
DAFCF Yield5,6 (%) 8.6% 6.9% 11.4% 4.3% nmf nmf 8.7% 3.3% 9.5% 10.6% 6.2% 8.8% 9.5% 7.1% 11.6% 6.4%
FCF Yield6,7 (%) 10.0% 8.4% 14.4% 2.6% nmf nmf 9.0% nmf 9.1% 9.7% 5.3% 9.9% 15.7% 8.0% 11.7% 6.6%

CF ($M) $659 $1,473 $984 $240 $187 $234 $225 $757 $472 $728 $482 $445 $823 $1,102 $204 $221
Total Capex ($M) $366 $933 $500 $162 $177 $215 $92 $350 $315 $370 $287 $300 $407 $570 $0 $0
FCF (Before Dividends; $M) $269 $540 $463 $78 $10 $16 $132 $383 $152 $328 $195 $140 $391 $518 $198 $219
Dividends ($M) $0 $69 $37 $10 $0 $0 $0 $0 $0 $32 $44 $0 $0 $123 $90 $78
FCF (After Dividends; $M) $269 $471 $426 $68 $10 $16 $132 $383 $152 $296 $151 $140 $391 $395 $108 $141
Net Debt / EBITDA3 1.8x 1.1x 0.6x 1.5x 2.6x nmf 0.1x 2.0x 0.7x 0.3x nmf 0.7x 1.7x 0.6x 0.1x 0.5x
Net Debt / Capitalization4 39.4% 23.0% 28.4% 94.9% 70.3% -2.6% 2.9% 36.0% 19.7% 8.4% -41.7% 27.4% 37.4% 19.1% 5.0% 6.5%
DAFCF Yield5,6 (%) 12.6% 13.7% 18.0% 9.3% 4.3% 1.9% 17.2% 12.1% 13.6% 16.1% 12.3% 14.2% 13.3% 12.7% 13.9% 7.2%
FCF Yield6,7 (%) 16.2% 18.6% 21.9% 11.2% 4.3% 1.9% 17.2% 14.7% 14.1% 14.6% 9.9% 17.1% 22.3% 14.3% 13.8% 7.5%

CF ($M) $763 $1,753 $1,117 $315 $257 $261 $284 $1,142 $527 $829 $588 $498 $931 $1,334 $232 $245
Total Capex ($M) $366 $933 $500 $162 $177 $215 $92 $350 $315 $370 $287 $300 $407 $570 $0 $0
FCF (Before Dividends; $M) $374 $821 $596 $153 $80 $42 $191 $768 $207 $429 $301 $193 $499 $750 $227 $243
Dividends ($M) $0 $69 $37 $10 $0 $0 $0 $0 $0 $32 $45 $0 $0 $123 $90 $78
FCF (After Dividends; $M) $374 $751 $559 $143 $80 $42 $191 $768 $207 $396 $256 $193 $499 $627 $136 $165
Net Debt / EBITDA3 1.3x 0.7x 0.4x 1.0x 1.8x nmf nmf 1.1x 0.5x 0.1x nmf 0.6x 1.4x 0.3x nmf 0.4x
Net Debt / Capitalization4 35.4% 19.1% 20.2% 79.0% 62.2% -6.2% -4.0% 29.7% 16.7% 4.6% -53.7% 23.6% 34.2% 12.1% 1.9% 6.5%
DAFCF Yield5,6 (%) 16.9% 21.2% 24.2% 16.4% 12.9% 5.2% 26.7% 22.2% 18.0% 21.7% 20.1% 19.5% 17.2% 19.2% 16.2% 8.0%
FCF Yield6,7 (%) 22.4% 28.3% 28.2% 21.9% 34.1% 5.0% 24.9% 29.5% 19.2% 19.0% 15.2% 23.6% 28.4% 20.7% 15.8% 8.3%

CF ($M) $853 $2,020 $1,222 $390 $326 $284 $349 $1,509 $563 $920 $671 $536 $1,033 $1,570 $259 $267
Total Capex ($M) $366 $933 $500 $162 $177 $215 $92 $350 $315 $370 $287 $300 $407 $570 $0 $0
FCF (Before Dividends; $M) $463 $1,087 $700 $228 $149 $66 $256 $1,135 $243 $520 $384 $231 $601 $986 $254 $265
Dividends ($M) $0 $69 $37 $10 $0 $0 $0 $0 $0 $32 $46 $0 $0 $123 $90 $77
FCF (After Dividends; $M) $463 $1,018 $664 $218 $149 $66 $256 $1,135 $243 $487 $338 $231 $601 $863 $163 $188
Net Debt / EBITDA3 1.0x 0.5x 0.3x 0.7x 1.3x nmf nmf 0.7x 0.4x 0.0x nmf 0.5x 1.2x 0.1x nmf 0.4x
Net Debt / Capitalization4 31.8% 15.3% 13.3% 63.3% 54.8% -9.5% -11.5% 23.4% 14.7% 1.1% -62.7% 20.8% 31.2% 4.7% -1.1% 6.5%
DAFCF Yield5,6 (%) 21.0% 29.2% 29.6% 24.6% 22.3% 8.5% 39.0% 33.9% 21.1% 27.3% 27.0% 23.6% 21.1% 26.5% 18.4% 8.8%
FCF Yield6,7 (%) 27.8% 37.5% 33.2% 32.7% 63.3% 7.8% 33.4% 43.5% 22.5% 23.1% 19.4% 28.2% 34.2% 27.2% 17.6% 9.1%

CF ($M) $922 $2,273 $1,321 $447 $394 $306 $412 $1,860 $595 $1,003 $758 $570 $1,129 $1,782 $285 $289
Total Capex ($M) $366 $933 $500 $162 $177 $215 $92 $350 $315 $370 $287 $300 $407 $570 $0 $0
FCF (Before Dividends; $M) $532 $1,341 $800 $285 $217 $88 $319 $1,486 $276 $603 $471 $265 $696 $1,198 $279 $287
Dividends ($M) $0 $69 $37 $10 $0 $0 $0 $0 $0 $32 $47 $0 $0 $123 $90 $77
FCF (After Dividends; $M) $532 $1,271 $763 $275 $217 $88 $319 $1,486 $276 $571 $423 $265 $696 $1,075 $189 $210
Net Debt / EBITDA3 0.9x 0.3x 0.2x 0.5x 0.9x nmf nmf 0.4x 0.3x nmf nmf 0.4x 1.0x 0.0x nmf 0.4x
Net Debt / Capitalization4 28.8% 11.6% 6.6% 50.9% 47.3% -12.6% -18.5% 17.2% 12.8% -2.1% -72.4% 18.2% 28.3% -2.2% -4.0% 6.5%
DAFCF Yield5,6 (%) 24.5% 38.0% 35.2% 31.4% 33.7% 11.6% 53.4% 47.6% 24.1% 33.0% 35.1% 27.6% 25.0% 33.8% 20.6% 9.6%
FCF Yield6,7 (%) 31.9% 46.2% 37.9% 40.7% 92.4% 10.4% 41.5% 56.9% 25.5% 26.8% 23.8% 32.3% 39.6% 33.0% 19.4% 9.9%
Notes:
1) VET's cash flows were calculated assuming strip TTF pricing.

HH (US$/mcf) $4.00
NYH321 (US$/bbl) $20.00
Source: Bloomberg; Scotiabank GBM estimates.
6
Higher commodity prices could meaningfully increase free cash flow. Exhibit 6 shows a free cash flow
sensitivity to a +$10/bbl change in WTI ($65 to $75). The most sensitive companies are GTE, KEL, PBR,
GPRK, and MEG with WTI sensitivities greater than 45%.
Exhibit 6: 2022E FCF Sensitivity Between US$65/bbl and US$75/bbl WTI (Includes Hedging Impact)
90% 85%
80%
70%
60% 57%
51%
Percentage Change in FCF
49% 48%
50%
45%
40% 37%
34% 33%
32% 32% 32% 31%
29% 29% 29%
30% 28% 28% 27% 26%
25% 25% 24%
23% 23% 22% 22%
22% 21% 21% 20%
20% 20% 19%
20% 18% 18% 17%
13% 12%
9%
10% 7%
0%
7
Canadian firms are attractively priced (Exhibit 7). Canadian firms offer attractive valuations compared to
Supermajors and US peers. Canadian integrated/oil sands and Canadian oil-weighted E&Ps have average
2022E DAFCF yields of 21% and 23%, respectively, compared to the Supermajors and US oil-weighted
averages of 12% and 15%, respectively.
Exhibit 7: Valuation Metrics on Futures Strip Pricing (as of September 23, 2021) (Includes Hedging Impact)
DAFCF Yield 1 Capex / CF D/CF Production
Company EV/DACF 2 Cash Flow ($M) Sust. Capex ($M) Total Capex ($M) CFPS Growth FCF Growth
(Total Capex) (x) (x) Growth
2021E/20 2022E/2 2021E/20 2022E/20 2021E/2 2022E/20

Canadian Integrated and Oil Sands 2021E 2022E 2021E 2022E 2021E 2022E 2021E 2022E 2021E 2022E 2021E 2022E 2021E 2022E
20E 021E 20E 21E 020E 21E
Cenovus Energy Inc. 4.5x 3.2x 15% 22% $6,786 $8,363 $3,291 $3,316 $2,500 $2,790 0.4x 0.3x 1.4x 0.6x nmf 23% nmf 30% 65% 0%
Canadian Natural Resources Limited 4.8x 4.0x 16% 18% $13,142 $13,986 $3,409 $3,623 $3,480 $4,250 0.3x 0.3x 1.1x 0.8x 153% 13% 284% 1% 7% 4%
Imperial Oil Limited 5.0x 3.2x 16% 24% $5,442 $7,103 $1,135 $1,143 $1,200 $1,600 0.2x 0.2x 0.3x -0.3x nmf 37% nmf 30% 8% 0%
Suncor Energy Inc. 4.6x 3.3x 13% 19% $10,100 $12,796 $4,322 $4,179 $4,278 $5,150 0.4x 0.4x 1.1x 0.6x 166% 34% nmf 31% 8% 6%
Average 4.7x 3.4x 15% 21% $8,867 $10,562 $3,039 $3,065 $2,865 $3,447 0.3x 0.3x 1.0x 0.4x 160% 27% 284% 23% 22% 3%
Oil Weighted Canadian E&P

ARC Resources Ltd. 3.2x 2.3x 18% 25% $2,356 $3,138 na na $1,025 $1,375 0.4x 0.4x 0.6x -0.1x 99% 15% 310% 33% 85% 16%
Baytex Energy Corporation 3.9x 3.5x 16% 18% $718 $833 $365 $393 $300 $366 0.4x 0.4x 2.0x 1.7x 129% 15% nmf 12% 0% 1%
Crescent Point Energy Corp. 3.1x 2.0x 18% 26% $1,462 $1,898 $770 $844 $680 $933 0.5x 0.5x 1.3x 0.6x 59% 26% 369% 23% 9% 1%
Enerplus Corporation 3.1x 1.9x 19% 32% $911 $1,194 $493 $532 $380 $500 0.4x 0.4x 0.9x 0.3x 128% 38% nmf 31% 23% 4%
GeoPark Limited 4.6x 2.8x 11% 21% $234 $352 $113 na $134 $162 0.6x 0.5x 2.6x 1.2x 33% 50% -73% 90% -4% 8%
Gran Tierra Energy Inc. 3.7x 2.4x 9% 16% $214 $302 $122 na $141 $177 0.7x 0.6x 3.3x 1.9x 374% 41% nmf 71% 10% 20%
Kelt Exploration Ltd. 5.2x 2.7x nmf 8% $155 $274 na na $175 $215 1.1x 0.8x -0.1x -0.2x 162% 77% nmf nmf -15% 40%
International Petroleum Corporation 3.0x 1.8x 20% 33% $283 $348 $96 $81 $71 $92 0.3x 0.3x 0.4x -0.4x 160% 24% nmf 21% 6% 4%
MEG Energy Corp. 4.9x 2.7x 14% 28% $802 $1,296 $285 $291 $335 $350 0.4x 0.3x 2.8x 1.0x 226% 62% 425% 102% 13% 2%
NuVista Energy Ltd. 4.4x 2.1x 7% 22% $299 $563 na na $243 $315 0.8x 0.6x 1.5x 0.4x 86% 88% nmf 342% 2% 28%
Paramount Resources Ltd. 4.6x 2.2x 10% 27% $480 $892 na na $283 $370 0.6x 0.4x 1.0x 0.0x 278% 85% nmf 165% 20% 6%
Parex Resources Inc. 2.7x 2.1x 16% 20% $593 $629 $86 $96 $265 $287 0.4x 0.5x -0.6x -0.9x 120% 16% 110% 4% -3% 8%
Spartan Delta Corp. 4.2x 1.9x 8% 23% $253 $518 na na $175 $300 0.7x 0.6x 1.9x 0.5x 193% 66% 326% 182% 191% 50%
Vermilion Energy Inc. 4.1x 2.9x 14% 20% $788 $983 $477 $430 $368 $432 0.5x 0.4x 2.3x 1.3x 51% 24% 282% 31% -11% 1%
Whitecap Resources Inc. 4.0x 2.6x 17% 24% $1,116 $1,455 $486 $582 $365 $570 0.3x 0.4x 0.9x 0.2x 64% 30% 216% 18% 61% 10%
Average 3.9x 2.4x 14% 23% $711 $978 $364 $464 $329 $430 0.5x 0.5x 1.4x 0.5x 144% 44% 246% 80% 26% 13%
Royalty Companies
Freehold Royalties Ltd. 8.7x 5.6x 12% 18% $175 $246 $0 $0 $0 $0 0.0x 0.0x 0.7x -0.2x 111% 26% 138% 41% 18% 21%
PrairieSky Royalty Ltd. 13.1x 11.3x 8% 9% $232 $257 $0 $0 $0 $0 0.0x 0.0x 0.5x 0.5x 63% 16% 58% 11% 0% 3%
Topaz Energy Corp. 12.1x 9.6x 8% 10% $174 $217 $0 $0 $2 $2 0.0x 0.0x 1.0x 0.3x 45% 18% 97% 25% 34% 13%
Average 11.3x 8.8x 9% 12% $194 $240 $0 $0 $1 $1 0.0x 0.0x 0.7x 0.2x 73% 20% 98% 25% 18% 12%
Supermajors3
BP p.l.c. 3.9x 3.6x 15% 15% $28,220 $28,422 na na $12,412 $14,917 0.4x 0.5x 1.1x 1.0x 131% 6% nmf -15% -5% 0%
Chevron Corporation 7.7x 6.7x 9% 10% $25,674 $27,928 na na $9,193 $11,089 0.4x 0.4x 1.3x 1.1x 105% 11% 406% 2% 1% -2%
Ecopetrol 3.8x 3.6x 14% 13% $8,545 $9,286 $4,183 $4,039 $3,995 $4,936 0.5x 0.5x 0.8x 0.7x 185% 9% nmf -4% -2% 4%
Exxon Mobil Corporation 8.8x 7.7x 7% 7% $31,780 $36,322 na na $14,255 $17,145 0.4x 0.5x 1.8x 1.5x 95% 14% nmf 9% -1% 0%
Petrobras 2.4x 2.2x 27% 25% $39,629 $38,018 $12,281 $12,414 $15,318 $17,920 0.4x 0.5x 0.9x 0.7x 69% -4% 173% -17% -1% 5%
Royal Dutch Shell plc 5.3x 5.4x 9% 8% $45,644 $40,731 na na $21,701 $23,507 0.5x 0.6x 1.5x 1.5x 55% -10% 85% -28% -2% -3%
TotalEnergies SE 7.2x 6.6x 7% 7% $24,418 $26,998 na na $12,791 $13,989 0.5x 0.5x 2.1x 1.9x 86% 12% 436% 12% -1% 3%
Average 5.6x 5.1x 13% 12% $29,130 $29,672 $8,232 $8,226 $12,809 $14,786 0.4x 0.5x 1.4x 1.2x 104% 5% 275% -6% -2% 1%
US Oil Weighted E&P3

APA Corporation 4.5x 4.5x 14% 14% $2,941 $2,941 na na $1,300 $1,300 0.4x 0.4x 2.4x 2.4x 86% 0% nmf 0% -11% 0%
Continental Resources, Inc. 4.8x 3.8x 13% 16% $3,798 $4,375 na na $1,448 $1,769 0.4x 0.4x 1.0x 0.6x 168% 21% nmf 11% 11% 4%
ConocoPhillips 5.9x 4.9x 11% 14% $14,096 $17,476 na na $5,282 $5,905 0.4x 0.3x 0.8x 0.4x 122% 33% nmf 31% 38% 3%
Devon Energy Corporation 5.0x 3.6x 12% 19% $4,193 $5,588 na na $1,948 $2,124 0.5x 0.4x 1.0x 0.6x 64% 35% nmf 54% 68% 3%
EOG Resources, Inc. 5.0x 4.7x 11% 11% $9,061 $9,282 na na $4,126 $4,502 0.5x 0.5x 0.0x -0.1x 85% 2% 255% -3% 10% 6%
Diamondback Energy, Inc. 5.6x 3.7x 10% 18% $3,627 $5,181 na na $1,627 $1,770 0.4x 0.3x 1.5x 0.7x 59% 45% nmf 71% 24% 2%
Hess Corporation 12.2x 7.3x 0% 5% $2,587 $3,954 na na $2,104 $2,309 0.8x 0.6x 2.0x 1.1x 42% 52% nmf 241% -3% 29%
Marathon Oil Corporation 4.4x 3.1x 15% 20% $2,729 $3,483 na na $990 $1,304 0.4x 0.4x 1.3x 0.8x 94% 42% nmf 25% 0% 0%
Murphy Oil Corporation 5.3x 3.1x 5% 13% $1,278 $1,739 na na $748 $915 0.6x 0.5x 1.6x 0.9x 52% 34% nmf 55% -3% 11%
Ovintiv Inc 3.9x 3.0x 14% 19% $3,109 $3,601 na na $1,500 $1,600 0.5x 0.4x 1.7x 1.1x 57% 20% nmf 24% -1% -2%
Occidental Petroleum Corporation 5.6x 4.5x 13% 16% $9,467 $10,841 na na $2,899 $3,451 0.3x 0.3x 3.8x 2.8x 74% 14% 201% 13% -13% 0%
Pioneer Natural Resources Company 6.4x 4.0x 7% 17% $6,229 $10,314 na na $3,314 $3,375 0.5x 0.3x 0.6x 0.2x 93% 56% 322% 138% 71% 15%
Cimarex Energy Co. 4.5x 3.4x 14% 20% $1,891 $2,369 na na $731 $758 0.4x 0.3x 0.3x 0.0x 98% 24% 280% 39% -2% 9%
Average 5.6x 4.1x 11% 15% $5,000 $6,242 na na $2,155 $2,391 0.5x 0.4x 1.4x 0.9x 84% 29% 265% 54% 15% 6%
Strip Pricing, 09/23/21 2021E 2022E Notes:

WTI (US$/bbl) $66.64 $69.20 (1) Total Capex is defined as Sustaining Capex plus Growth Capital.
Brent (US$/bbl) $69.55 $71.95 (2) DAFCF yields include the impact of hedging.
WCS Diff (US$/bbl) ($12.80) ($12.85) (3) Cash flow and total capex estimates are in USD.
WCS Diff (% of WTI) -19% -19%
Maya (US$/bbl) $56.64 $64.34
Ed. Par Diff (US$/bbl) ($3.77) ($3.85)
SCO Diff (US$/bbl) -$1.80 -$2.00
NYH321 (US$/bbl) $17.77 $19.86
HH (US$/MMbtu) $3.76 $4.14
AECO (C$/mcf) $3.56 $3.90
FX (US$/CDN$) $0.80 $0.79
Source: Company reports; FactSet; Bloomberg; Scotiabank GBM estimates.
8
Pertinent Data
ARC Resources Ltd. (ARX-T)
Valuation: 30/20/50 weighting of: 6.0x our blended '21E/'22E DACF, 8% blended '21E/'22E
FCFf yield, and our Scenario Sum of the Assets NAV.
Key Risks: Crude oil and natural gas prices; CAD/USD exchange rate; drilling program
success
BP p.l.c. (BP-N)
Valuation: Derived from a combination of our NAV, EV/after-tax cash flow, and free cash
flow yield estimates
Key Risks: Oil and natural gas prices, refining and chemical margins, execution risk
Cenovus Energy Inc. (CVE-T)

Valuation: 95% our risked 2P+RU (Risked Upside) NAV less annual dividends
Key Risks: Commodity prices, crack spreads, timing of projects, and project execution.
ConocoPhillips (COP-N)
Key Risks: Oil and natural gas prices, execution risk
Enerplus Corporation (ERF-T)

Valuation: 2.6x 2022E EV/DACF
Key Risks: Crude oil and natural gas prices; CAD/USD exchange rate; drilling program
success
Exxon Mobil Corporation (XOM-N)

Key Risks: Oil and natural gas prices, refining and chemical margins, execution risk
International Petroleum Corporation (IPCO-T)

Valuation: Based on our risked NAV (C$9.48/share) that also equates to 3.4x 2022E debt-
adjusted CF and 1.23x our 2P NAV.
Key Risks: Commodity prices, access to external financing, operational risk, and regulatory
and political risk.
Kelt Exploration Ltd. (KEL-T)

Valuation: 30/20/50 weighting of: 5.0x our blended '21E/'22E DACF, 8% blended '21E/'22E
FCFf yield, and our Scenario Sum of the Assets NAV.
Key Risks: Oil and natural gas prices; drilling program success.
9
Appendix A: Important Disclosures
Company Disclosures (see legend below)*

ARC Resources Ltd. G, HH, I, O1, O3, U
Canadian Natural Resources Limited G, I, O1, O3, U
Cenovus Energy Inc. G, J, O3, U
Crescent Point Energy Corp. I, V0151, V0168
Devon Energy Corporation HH, N1
Diamondback Energy, Inc. G, N1, U
Enerplus Corporation G, I, U
Exxon Mobil Corporation I
Freehold Royalties Ltd. G, I, J, U
GeoPark Limited VS0682
Gran Tierra Energy Inc. VS0446
Hess Corporation N2
Imperial Oil Limited VS0589
Kelt Exploration Ltd. HH
Marathon Oil Corporation HH, N2

Murphy Oil Corporation G, N1, U
NuVista Energy Ltd. G, I, J, U
Occidental Petroleum Corporation G, N1, U
Parex Resources Inc. VS0683
Petrobras VS0684
Pioneer Natural Resources Company G, HH, N1, N2, U
Spartan Delta Corp. G, I, U
Suncor Energy Inc. G, I, N1, O1, O3, U
Topaz Energy Corp. I, J
Vermilion Energy Inc. HH, O1
We, Gavin Wylie, Jason Bouvier, Cameron Bean and Paul Y. Cheng, certify that (1) the views expressed in this report in connection with
securities or issuers that we analyze accurately reflect our personal views and (2) no part of our compensation was, is, or will be directly
or indirectly, related to the specific recommendations or views expressed by us in this report.
This document has been prepared by Research Analysts employed by The Bank of Nova Scotia and/or its affiliates. The Bank of Nova
Scotia, its subsidiaries, branches and affiliates are referred to herein as "Scotiabank." "Scotiabank" together with "Global Banking and
Markets" is the marketing name of the global corporate and investment banking and capital markets business of The Bank of Nova
Scotia and its affiliates. Scotiabank, Global Banking and Markets produces research reports under a single marketing identity referred
to as "globally branded research" under U.S. rules. This research is produced on a single global research platform with one set of rules
which meet the most stringent standards set by regulators in the various jurisdictions in which the research reports are produced. In
addition, the Research Analysts who produce the research reports, regardless of location, are subject to one set of policies designed to
meet the most stringent rules established by regulators in the various jurisdictions where the research reports are produced.
Scotiabank relies on information barriers to control the flow of non-public or proprietary information contained in one or more areas
within Scotiabank into other areas, units, groups or affiliates of Scotiabank. In addition, Scotiabank has implemented procedures to
prevent research independence being compromised by any interactions they may have with other business areas of The Bank of Nova
Scotia. The compensation of the Research Analyst who prepared this document is determined exclusively by Scotiabank Research
Management and senior management (not including investment or corporate banking).
Research Analyst compensation is not based on investment or corporate banking revenues; however, compensation may relate to
the revenues of Scotiabank as a whole, of which investment banking, corporate banking, sales and trading are a part. Scotiabank
Research will initiate, update and cease coverage solely at the discretion of Scotiabank Research Management. Scotiabank Research
has independent supervisory oversight and does not report to the corporate or investment banking functions of Scotiabank.
For Scotiabank, Global Banking and Markets Research Analyst Standards and Disclosure Policies, please visit
www.gbm.scotiabank.com/disclosures.
For additional questions, please contact Scotiabank, Global Banking and Markets Research, 4 King St W, 12th Flr, Toronto, Ontario,
M5H 1A1.
Time of dissemination: September 27, 2021, 06:19 ET. Time of production: September 26, 2021, 19:52 ET. Note: Time of dissemination
is defined as the time at which the document was disseminated to clients. Time of production is defined as the time at which the
Supervisory Analyst approved the document.
10
*Legend
G Scotia Capital (USA) Inc. or its affiliates has managed or co-managed a public offering in the past 12 months.
HH The Head of Equity Research or a Supervisory Analyst owns securities of this issuer in his or her own account or in a related
account.
I Scotia Capital (USA) Inc. or its affiliates has received compensation for investment banking services in the past 12 months.
J Scotia Capital (USA) Inc. or its affiliates expects to receive or intends to seek compensation for investment banking services in
the next 3 months.
N1 Scotia Capital (USA) Inc. had an investment banking services client relationship during the past 12 months.
N2 Scotia Capital (USA) Inc. had a non-investment banking securities-related services client relationship during the past 12
months.
O1 Scotia Capital Inc. and its affiliates collectively beneficially own in excess of 1% of one or more classes of the issued and
outstanding equity securities of this issuer.
O3 The Bank of Nova Scotia and its affiliates collectively have a net long position in excess of 0.5% of the total issued share
capital of the issuer.

U Within the last 12 months, Scotia Capital Inc. and/or its affiliates have undertaken an underwriting liability with respect to
equity or debt securities of, or have provided advice for a fee with respect to, this issuer.
V0151 Scotia Capital Inc. is acting as financial advisor to Crescent Point Energy Corp in connection with the announced sale of its
southeast Saskatchewan non-core assets.
V0168 Scotia Capital Inc. is acting as financial advisor to Crescent Point Energy Corp. in relation to the announced acquisition of the
Kaybob Duverney Assets from Shell Canada Energy, an affiliate of Royal Dutch Shell plc.
VS0446 Research Analyst Gavin Wylie visited the Costayaco and Acordionero fields, producing and exploration assets, on January 31,
2017. The issuer paid for a portion of the travel-related expenses incurred by the Research Analyst to visit the site.
VS0589 Research Associate Kevin Fisk visited the Kearl oil sands project, in Wood Buffalo, Alberta, on March 19, 2019. Full payment
was received from the issuer for the travel-related expenses incurred by the Research Associate to visit this site.
VS0682 Research Analyst Gavin Wylie visited Geopark's LLA-34 operations in Colomba on June 6, 2019. The issuer paid for a portion
of the travel-related expenses incurred by the Research Analyst to visit the site.
VS0683 Research Analyst Gavin Wylie visited Parex's LLA-34 operations in Colombia on June 6, 2019. The issuer paid for a portion of
the travel-related expenses incurred by the Research Analyst to visit the site.
VS0684 Research Analyst Gavin Wylie visited Petrobras's shipyards in Vitoria and the P-68 production unit on September 3, 2019. The
issuer paid for a portion of the travel-related expenses incurred by the Research Analyst to visit the site.
11
Rating and Price Target History
ARC Resources Ltd. (ARX-T) as of September 24, 2021 (in CAD)

04-09-2018 12-20-2018 06-21-2019 06-27-2019 10-08-2019 02-21-2020 03-09-2020 03-16-2020 04-07-2020 06-15-2020 07-13-2020
Price: 13.97 Price: 8.23 Price: 6.75 Price: 6.47 Price: 5.44 Price: 6.82 Price: 4.36 Price: 2.91 Price: 4.72 Price: 5.10 Price: 4.76
Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: UR Rating: SO Rating: SO Rating: SO Rating: SP Rating: SP
Target: 20.00 Target: 16.00 Target: 13.75 Target: 13.00 Target: 12.00 Target: NA Target: 12.00 Target: 7.50 Target: 8.00 Target: 7.00 Target: 7.75
25
20
Price (CAD)
15
10
0
Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
07-31-2020 10-13-2020 01-14-2021 02-11-2021 04-15-2021 05-27-2021 07-15-2021

Price: 5.69 Price: 6.28 Price: 7.27 Price: 7.78 Price: 7.80 Price: 9.17 Price: 9.82
Rating: SP Rating: SP Rating: SP Rating: SO Rating: SO Rating: SO Rating: SO
Target: 8.00 Target: 8.50 Target: 9.00 Target: 11.00 Target: 14.00 Target: 15.00 Target: 19.00
*Represents the value(s) that changed.

Ratings Legend: FS=Focus Stock; SO=Sector Outperform; SP=Sector Perform; SU=Sector Underperform; T=Tender; UR=Under Review; CS=Coverage Suspended;
DC=Discontinued Coverage
Source: Scotiabank GBM estimates; FactSet.
BP p.l.c. (BP-N) as of September 24, 2021 (in USD)

07-23-2018 09-23-2020 01-14-2021 02-16-2021 04-15-2021 07-15-2021
Price: 44.25 Price: 17.97 Price: 25.47 Price: 23.18 Price: 25.20 Price: 24.65
Rating: CS Rating: SP Rating: SP Rating: SO Rating: SO Rating: SO
Target: NA Target: 23.00 Target: 26.00 Target: 28.00 Target: 30.00 Target: 33.00
50
45
40
Price (USD)
35
30
25
20
15
10

12
Cenovus Energy Inc. (CVE-T) as of September 24, 2021 (in CAD)

07-09-2018 09-27-2018 10-30-2018 12-20-2018 03-21-2019 06-27-2019 01-14-2020 04-07-2020 06-11-2020 07-13-2020 01-14-2021
Rating: SP Rating: SP Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SP Rating: SP Rating: SP
Target: 17.00 Target: 16.00 Target: 16.00 Target: 15.00 Target: 16.00 Target: 15.00 Target: 14.50 Target: 5.00 Target: 6.50 Target: 7.00 Target: 9.25
25
20
Price (CAD)
15
10
0
04-15-2021 06-09-2021 07-15-2021
Price: 10.15 Price: 12.01 Price: 10.68
Rating: SO Rating: SO Rating: SO
Target: 12.00 Target: 13.00 Target: 14.00

ConocoPhillips (COP-N) as of September 24, 2021 (in USD)

07-23-2018 08-15-2019 10-30-2019 11-12-2019 01-23-2020 02-05-2020 03-19-2020 07-13-2020 09-23-2020 01-14-2021 04-15-2021
Rating: CS Rating: SO Rating: SO Rating: SO Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SO Rating: SO
Target: NA Target: 69.00 Target: 74.00 Target: 74.00 Target: 74.00 Target: 70.00 Target: 50.00 Target: 45.00 Target: 45.00 Target: 56.00 Target: 63.00
90
80
70
Price (USD)
60
50
40
30
20
05-21-2021 07-15-2021
Price: 55.65 Price: 57.08
Rating: SO Rating: SO
Target: 67.00 Target: 76.00

13
Enerplus Corporation (ERF-T) as of September 24, 2021 (in CAD)

07-09-2018 11-12-2018 01-28-2019 08-12-2019 01-14-2020 03-17-2020 04-07-2020 06-15-2020 07-13-2020 01-14-2021 04-08-2021
Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO
Target: 22.50 Target: 20.00 Target: 18.50 Target: 15.75 Target: 15.00 Target: 5.50 Target: 4.50 Target: 5.00 Target: 4.50 Target: 5.75 Target: 7.50
20
15
Price (CAD)
10
0
04-15-2021 06-09-2021 07-15-2021 08-25-2021
Price: 6.78 Price: 8.51 Price: 8.04 Price: 7.00
Rating: SO Rating: SP Rating: SP Rating: SO
Target: 8.50 Target: 9.25 Target: 10.00 Target: 10.00

Exxon Mobil Corporation (XOM-N) as of September 24, 2021 (in USD)

07-23-2018 08-15-2019 11-12-2019 01-23-2020 02-03-2020 03-06-2020 03-20-2020 07-13-2020 09-23-2020 01-14-2021 04-15-2021
Rating: CS Rating: SP Rating: SP Rating: SU Rating: SU Rating: SU Rating: SU Rating: SU Rating: SP Rating: SP Rating: SP
Target: NA Target: 81.00 Target: 80.00 Target: 75.00 Target: 72.00 Target: 60.00 Target: 50.00 Target: 47.00 Target: 45.00 Target: 48.00 Target: 60.00
100
90
80
Price (USD)
70
60
50
40
30
07-15-2021
Price: 58.95
Rating: SP
Target: 63.00

14
International Petroleum Corporation (IPCO-T) as of September 24, 2021 (in CAD)

08-08-2018 09-27-2018 10-11-2018 12-20-2018 06-27-2019 08-06-2019 01-14-2020 02-11-2020 04-02-2020 04-07-2020 05-06-2020 07-13-2020
Price: 8.49 Price: 8.70 Price: 6.53 Price: 4.75 Price: 5.92 Price: 5.19 Price: 5.48 Price: 4.99 Price: 1.96 Price: 2.02 Price: 1.93 Price: 2.59
Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SP Rating: SP Rating: SP
Target: 11.00 Target: 11.50 Target: 10.50 Target: 9.50 Target: 8.25 Target: 8.00 Target: 8.50 Target: 8.00 Target: 6.50 Target: 3.25 Target: 3.00 Target: 3.25
35
30
25
Price (CAD)
20
15
10
5
0
Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
08-04-2020 01-14-2021 03-22-2021 04-15-2021 07-12-2021 07-15-2021
Price: 2.75 Price: 3.58 Price: 4.13 Price: 4.01 Price: 5.97 Price: 5.93
Rating: SP Rating: SP Rating: SP Rating: SP Rating: SO Rating: SO
Target: 3.50 Target: 4.00 Target: 5.00 Target: 5.50 Target: 8.50 Target: 9.00

Kelt Exploration Ltd. (KEL-T) as of September 24, 2021 (in CAD)

07-09-2018 12-20-2018 06-27-2019 10-08-2019 04-07-2020 05-19-2020 06-15-2020 07-13-2020 10-13-2020 01-14-2021 04-15-2021 05-31-2021
Price: 8.85 Price: 4.39 Price: 3.97 Price: 2.96 Price: 1.25 Price: 1.31 Price: 1.60 Price: 1.65 Price: 1.44 Price: 2.16 Price: 2.60 Price: 3.25
Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO
Target: 14.00 Target: 9.00 Target: 7.00 Target: 8.00 Target: 2.50 Target: 2.25 Target: 2.50 Target: 3.00 Target: 2.75 Target: 3.00 Target: 4.00 Target: 4.25
12
10
Price (CAD)
6
0
07-15-2021
Price: 3.15
Rating: SO
Target: 5.75

15
Definition of Scotiabank, Global Banking and Markets Equity Research Ratings

Scotiabank has a three-tiered rating system, with ratings of Sector Outperform, Sector Perform, and Sector Underperform. Each
Research Analyst assigns a rating that is relative to his or her coverage universe or an index identified by the Research Analyst that
includes, but is not limited to, stocks covered by the Research Analyst.
The rating assigned to each security covered in this report is based on the Scotiabank, Global Banking and Markets Research Analyst’s
12-month view on the security. Research Analysts may sometimes express in research reports shorter-term views on these securities
that may impact the price of the equity security in a manner directly counter to the Research Analyst’s 12-month view. These shorter-
term views are based upon catalysts or events that may have a shorter-term impact on the market price of the equity securities
discussed in research reports, including but not limited to the inherent volatility of the marketplace. Any such shorter-term views
expressed in research report are distinct from and do not affect the Research Analyst’s 12-month view and are clearly noted as such.
Ratings
Sector Outperform (SO) Other Ratings

The stock is expected to outperform the average 12-month total
Under Review – The rating has been temporarily
return of the analyst’s coverage universe or an index identified
placed under review, until sufficient information has
by the analyst that includes, but is not limited to, stocks covered
been received and assessed by the analyst.
by the analyst.
Tender – As of January 25, 2021, Scotiabank GBM
Sector Perform (SP)
discontinued the Tender rating.
The stock is expected to perform approximately in line with
the average 12-month total return of the analyst’s coverage Risk Ranking
universe or an index identified by the analyst that includes, but The Speculative risk ranking reflects exceptionally
is not limited to, stocks covered by the analyst. high financial and/or operational risk, exceptionally
low predictability of financial results, and
Sector Underperform (SU)
exceptionally high stock volatility. The Director
The stock is expected to underperform the average 12-month
of Research and the Supervisory Analyst jointly
total return of the analyst’s coverage universe or an index
make the final determination of the Speculative risk
identified by the analyst that includes, but is not limited to,
ranking.
stocks covered by the analyst.
Focus Stock (FS)
As of April 29, 2019, Scotiabank GBM discontinued the Focus
Stock rating. A stock assigned this rating represented an
analyst’s best idea(s); stocks in this category were expected
to significantly outperform the average 12-month total return
of the analyst’s coverage universe or an index identified by the
analyst that included, but was not limited to, stocks covered by
the analyst.
Scotiabank, Global Banking and Markets Equity Research Ratings Distribution*
Distribution by Ratings and Equity and Equity-Related Financings*
60%
Percentage of companies covered by
50.5%
44.6%
Scotiabank, Global Banking and Markets Equity
Research within each rating category.
40%
Percentage of companies within each rating
category for which Scotiabank, Global Banking
20% and Markets has undertaken an underwriting
liability or has provided advice for a fee within
4.9% the last 12 months.
33.6% 20.4% 7.4%
0%
Sector Outperform Sector Perform Sector
Underperform
* As of August 31, 2021. Source: Scotiabank GBM.
For the purposes of the ratings distribution disclosure FINRA requires members who use a ratings system with terms different
than “buy,” “hold/neutral” and “sell,” to equate their own ratings into these categories. Our Sector Outperform, Sector Perform,
and Sector Underperform ratings are based on the criteria above, but for this purpose could be equated to buy, neutral and
sell ratings, respectively.
16
General Disclosures
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offer to buy or sell any financial instruments or to participate in any particular trading strategy.
No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the
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This document is not intended to be a complete statement or summary of the securities, markets or developments referred to in this
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Any opinions expressed in this document may change without notice and may differ or be contrary to opinions expressed by other
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such use and interpretation have not been reviewed by the third party. Nothing in this document constitutes a representation that any
investment strategy or recommendation is suitable or appropriate to an investor's individual circumstances or otherwise constitutes a
personal recommendation. Investments involve risks, and investors should exercise prudence and their own independent judgement in
making their investment decisions and carefully consider any risks involved.
The financial instruments that may be described in this document may not be eligible for sale in all jurisdictions or to certain categories
of investors. Instruments such as options, derivative products, and futures are not suitable for all investors, and trading in these
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To the full extent permitted by law, neither Scotiabank nor any of its directors, employees or agents accepts any liability whatsoever
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is no representation that any transaction can or could have been effected at those prices, and any prices do not necessarily reflect
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The Research Analyst(s) responsible for the preparation of this document may interact with trading desk personnel, sales personnel
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In the normal course of offering investment and banking products and services to clients, Scotiabank may act in several capacities
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The information in this document has been prepared without taking into account any investor's objectives, financial situation or needs,
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17
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18
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EQUITY RESEARCH | DAILY EDGE

Monday, September 27, 2021, Pre-market

Oil & Gas ANALYST TEAM

• Integrated/Oil Sands: BP, CVE, COP, PBR

• Large Caps: ARX

• SMID Caps: ERF, IPCO, KEL

Exhibit 1: Relative Stock Price Performance (since January 1, 2020)

Exhibit 2: Relative Stock Price Performance (last six months)

US$45/bbl WTI; US$10/bbl WCS Diff; ($0.75 FX) Case

US$55/bbl WTI; US$11.50/bbl WCS Diff; ($0.77 FX) Case

US$65/bbl WTI; US$13/bbl WCS Diff; ($0.79 FX) Case

US$75/bbl WTI; US$14.50/bbl WCS Diff; ($0.81 FX) Case

US$85/bbl WTI; US$16/bbl WCS Diff; ($0.83 FX) Case

Commodity Price Assumptions 2022E

Source: Scotiabank GBM estimates.

Exhibit 4: 2022E Large Cap CF/FCF Sensitivity (Includes Hedging Impact)

US$45/bbl WTI; US$10/bbl WCS Diff; ($0.75 FX) Case

US$55/bbl WTI; US$11.5/bbl WCS Diff; ($0.77 FX) Case

US$65/bbl WTI; US$13/bbl WCS Diff; ($0.79 FX) Case

US$75/bbl WTI; US$14.5/bbl WCS Diff; ($0.81 FX) Case

US$85/bbl WTI; US$16/bbl WCS Diff; ($0.83 FX) Case

Commodity Price Assumptions 2022E

Source: Scotiabank GBM estimates.

Exhibit 5: 2022E SMID Cap CF/FCF Sensitivity (Includes Hedging Impact)

US$45/bbl WTI; US$10/bbl WCS Diff; ($0.75 FX) Case

US$55/bbl WTI; US$11.50/bbl WCS Diff; ($0.77 FX) Case

US$65/bbl WTI; US$13/bbl WCS Diff; ($0.79 FX) Case

US$75/bbl WTI; US$14.50/bbl WCS Diff; ($0.81 FX) Case

US$85/bbl WTI; US$16/bbl WCS Diff; ($0.83 FX) Case

Commodity Price Assumptions 2022E

Source: Bloomberg; Scotiabank GBM estimates.

Source: Scotiabank GBM estimates.

2021E/20 2022E/2 2021E/20 2022E/20 2021E/2 2022E/20

Oil Weighted Canadian E&P

US Oil Weighted E&P3

Strip Pricing, 09/23/21 2021E 2022E Notes:

Source: Company reports; FactSet; Bloomberg; Scotiabank GBM estimates.

Cenovus Energy Inc. (CVE-T)

Enerplus Corporation (ERF-T)

Exxon Mobil Corporation (XOM-N)

International Petroleum Corporation (IPCO-T)

Kelt Exploration Ltd. (KEL-T)

Appendix A: Important Disclosures

Company Disclosures (see legend below)*

Marathon Oil Corporation HH, N2

capital of the issuer.

Rating and Price Target History

ARC Resources Ltd. (ARX-T) as of September 24, 2021 (in CAD)

07-31-2020 10-13-2020 01-14-2021 02-11-2021 04-15-2021 05-27-2021 07-15-2021

*Represents the value(s) that changed.

BP p.l.c. (BP-N) as of September 24, 2021 (in USD)

*Represents the value(s) that changed.

Cenovus Energy Inc. (CVE-T) as of September 24, 2021 (in CAD)

*Represents the value(s) that changed.

ConocoPhillips (COP-N) as of September 24, 2021 (in USD)

*Represents the value(s) that changed.

Enerplus Corporation (ERF-T) as of September 24, 2021 (in CAD)

*Represents the value(s) that changed.