Birchcliff Energy Ltd. · TSX:BIR
Birchcliff Energy — Investor Presentation (May 2023)
41 slides from Birchcliff Energy's investor presentation, May 2023
Slide 1: Corporate Presentation May 2023
CORPORATE PRESENTATION May 2023
Slide 2: Corporate Snapshot: Birchcliff Overview
CORPORATE SNAPSHOT BIRCHCLIFF OVERVIEW SELECT 2023 GUIDANCE(1)(2) BIRCHCLIFF IS A PURE ALBERTA MONTNEY/DOIG RESOURCE PLAY PRODUCER Average production 77,000 – 80,000 boe/d Adjusted funds flow(3) $360 million F&D capital expenditures $270 – $280 million Free funds flow(3) $80 – $90 million Annual bas
Slide 3: Select Q1 2023 Results
CORPORATE SNAPSHOT SELECT Q1 2023 RESULTS Average production 74,592 boe/d Light oil (% of production) 2,088 bbls/d (3%) Condensate (% of production) 5,358 bbls/d (7%) NGLs (% of production) 3,288 bbls/d (4%) Natural gas (% of production) 383,145 Mcf/d (86%) $88.7 million(1) Adjusted funds flow $0.33
Slide 4: Why Invest in Birchcliff
CORPORATE SNAPSHOT WHY INVEST IN BIRCHCLIFF WORLD-CLASS ASSET BASE OPERATIONAL EXPERTISE High-quality, multi-decade inventory in Pouce Coupe and Gordondale Executive and management teams with a proven track record Emerging Elmworth asset base provides significant resource upside aligned with strong
Slide 5: 2023 Outlook: Capital Program Details
2023 OUTLOOK 2023 CAPITAL PROGRAM DETAILS - ON TRACK INCLUDING NEW ELMWORTH WELLS(1) 2023 F&D Capital Expenditures by Classification 2023 Pouce Coupe/Gordondale Pad Locations Classification Capital (millions) 09-04 (7) 02-27 (2) (2)(3) 3 Montney D1 Remaining 9 wells 1 Montney D1 DCCET $202 - $207 2
Slide 6: 2023 Natural Gas Marketing and Diversification
2023 OUTLOOK 2023 NATURAL GAS MARKETING AND DIVERSIFICATION(1) AECO AECO $2.48 ($0.04) 15% DIVERSIFIED ($0.38) $2.06 MARKET EXPOSURE Dawn 42% NO FIXED Dawn $3.20 PRICE ($0.18) Alliance ($1.25) COMMODITY $1.77 6% HEDGES Alliance $2.42 ($0.04) ($0.43) Pricing Hub Henry Hub Dif. Henry $1.95 Forecasted
Slide 7: Two-Year Outlook: 2023/2024 Capital Program Optionality
TWO-YEAR OUTLOOK(1) 2023/2024 CAPITAL PROGRAM OPTIONALITY Strong balance sheet provides optionality to utilize Credit Facilities to fund capital program and dividend in 2023 with excess free funds flow(3) generated in 2024 allocated towards reducing debt $600 $600 $535 $535 2024 excess free $500 $48
Slide 8: Five-Year Outlook: Disciplined Production Growth
FIVE-YEAR OUTLOOK(1) DISCIPLINED PRODUCTION GROWTH ENHANCES PROFITABILITY GENERATE SUBSTANTIAL DELIVER SIGNIFICANT FULLY UTILIZE EXISTING FIVE-YEAR OUTLOOK SHAREHOLDER RETURNS INFRASTRUCTURE FREE FUNDS FLOW AND KEY THEMES: MAINTAIN CAPITAL AND ESTABLISH A CASH LEVERAGING EXTENSIVE DISCIPLINE POSITIO
Slide 9: Five-Year Outlook: Profitability and Shareholder Returns
FIVE-YEAR OUTLOOK(1) FOCUSED ON PROFITABILITY & SHAREHOLDER RETURNS GENERATING EXCESS FREE FUNDS FLOW SHAREHOLDER RETURNS CAPACITY $800 $1.40 $92 $1.24 $72 $117 $1.15 $1.20 $1.05 $1.07 $600 $67 $/common share $1.00 $213 $0.80 $0.80 $0.80 $0.80 $0.80 $213 $213 $ millions $400 $213 $0.80 $213 $0.60 $2
Slide 10: Enhanced Shareholder Returns
ENHANCED SHAREHOLDER RETURNS BASE DIVIDEND IS ONE OF THE HIGHEST YIELDS AMONG PEERS ANNUAL BASE DIVIDEND YIELD(1)(2) at May 9, 2023 12% 10% Third consecutive quarter of $0.20 per common share dividend(3) 8% 6% 4% 2% 0% Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer Group Average Peer 6 BIR Peer 7 1) Peer g
Slide 11: Montney/Doig Resource Play: World-Class Montney
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY LOCATED IN THE HEART OF THE WORLD-CLASS MONTNEY World-class asset base of largely contiguous land blocks consisting of 373.7 net sections as at December 31, 2022, including the Pouce Coupe, Gordondale and Elmworth areas. Extensive Montney/Doig portfolio provid
Slide 12: Elmworth Overview
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY ELMWORTH OVERVIEW Large contiguous Elmworth land block includes 153 net sections of prolific Montney/Doig inventory. Industry activity in the Elmworth area is evolving with recent competitive offsetting land sales and strong nearby third party well results. Tw
Slide 13: Massive Multi-Interval Land Position
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAYRESOURCE PLAY MONTNEY/DOIG MASSIVE MULTI-INTERVAL LAND POSITION MAY 2023 13
Slide 14: Birchcliff Montney/Doig Hexastack
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAYRESOURCE PLAY MONTNEY/DOIG BIRCHCLIFF MONTNEY/DOIG HEXASTACK • Resource density: Stacked resource up to 300 metres thick. • Large areal extent: Extends over 50,000 square miles. • Exceptional “fracability”: Low clay content, low Poisson’s Ratio and high Young’s
Slide 15: 2023 Capital Program Major Themes
2023 CAPITAL PROGRAM MONTNEY/DOIG RESOURCE PLAY MAJOR THEMES 2023 Capital Program Major Themes • Balanced drilling opportunities of prolific natural gas and liquids-rich wells. 2023 Pad Locations • Leverage interconnectivity between Pouce Coupe and Gordondale processing facilities to optimize infras
Slide 16: Pouce Coupe Overview
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY POUCE COUPE OVERVIEW Q1/23 average production of 51,527 boe/d(1), with a natural gas weighting of 91%. Proven asset in development phase with large low-risk multi-decade drilling inventory. Wells show high initial deliverability, low terminal decline and stabl
Slide 17: 2022/2023 Natural Gas Pad Results
BIRCHCLIFF’S MONTNEY/DOIG RESOURCEPERFORMANCE D&C CONTINOUS PLAY IMPROVEMENT 2022/2023 NATURAL GAS PAD RESULTS(1) 13-29 04-04 01-08 13-29 14-06 06-35 06-35 01-08 14-06 The 2022/2023 program average is outperforming the Tier 0 capped type curve and continues to show sustained, flat production 1) Pad
Slide 18: Pouce Coupe Deloitte Tier 0 Type Curve
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY POUCE COUPE DELOITTE TIER 0 TYPE CURVE(1) 4000 Rate of Return (%) WTI (US$/bbl) 3500 $70.00 $80.00 $90.00 $100.00 $2.00 115 137 159 184 (C$/GJ) AECO 3000 $3.00 162 187 213 241 $4.00 212 240 269 300 Sales Gas Rate (Mcf/d) 2500 $5.00 266 296 328 363 NPV 10% ($MM
Slide 19: Gordondale Overview
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY GORDONDALE OVERVIEW Q1/23 average production of 22,985 boe/d(1) with an oil, condensate & NGLs weighting of 27%(2). Low base production decline requires less incremental wells to keep infrastructure full. Strategic infrastructure with deep-cut liquids recovery
Slide 20: 2022/2023 Condensate Pad Results
BIRCHCLIFF’S MONTNEY/DOIG RESOURCEPERFORMANCE D&C CONTINOUS PLAY IMPROVEMENT 2022/2023 CONDENSATE PAD RESULTS(1) 5 well average Cumulative Raw Condensate Rate (bbl/d) condensate production rate Raw Condensate Rate (bbl/d) 03-06 03-06 03-06 pad results show strong condensate production driving robust
Slide 21: Gordondale Deloitte Low GOR Halo Oil Type Curve
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY GORDONDALE DELOITTE LOW GOR HALO OIL TYPE CURVE(1) 500 D1 Halo Low GOR - Rate of Return (%) 450 WTI (US$/bbl) $70.00 $80.00 $90.00 $100.00 400 $2.00 167 217 271 329 (C$/GJ) AECO $3.00 195 248 305 367 350 $4.00 223 279 339 403 $5.00 251 310 373 440 Oil Rate (bb
Slide 22: 2022YE Corporate Reserves
2022YE CORPORATE RESERVES(1) SIGNIFICANT RESERVES VOLUME AND VALUE GROWTH 1,200,000 $9,000 PDP Reserves Birchcliff added 35.6 MMboe 1,100,000 1P Reserves of PDP reserves in 2022, $8,000 2P Reserves 1,000,000 which reflects a PDP PDP NPV10 reserves replacement of $7,000 900,000 1P NPV10 127%(2) 2P NP
Slide 23: Focused on ESG Excellence: Environmental
CORPORATE RESPONSIBILITY FOCUSED ON ESG EXCELLENCE PEER EMISSIONS METRICS(1)(2)(3)(4)(5) ENVIRONMENTAL 2,500,000 Producer GHG Emissions Metrics 0.050 Waste heat recovery units at the Pouce Coupe Gas Plant take the 2,000,000 0.040 equivalent of >5,000 cars off the road annually. Emissions Intensity(7
Slide 24: Focused on ESG Excellence: Social and Governance
CORPORATE RESPONSIBILITY FOCUSED ON ESG EXCELLENCE SOCIAL $4.25 million donated to more than 100 local community groups and organizations in the last 5 years. Continued partnerships with local communities through educational, cultural, and economic development initiatives. Major supporter of STARS A
Slide 25: Canadian West Coast LNG Opportunity
CANADIAN WEST COAST LNG OPPORTUNITY BIRCHCLIFF’S ACTIVE ROLE SUPPLYING THE WORLD WITH CLEAN LNG Environmental Benefits of Canadian LNG LNG is critical in the transition to a low-carbon economy, as it displaces higher carbon fuels like coal and oil and provides a backstop to intermittent renewables s
Slide 26: Western Canadian LNG Landscape
CANADIAN WEST COAST LNG OPPORTUNITY(1) WESTERN CANADIAN LNG LANDSCAPE 48 MTPA (6.8 Bcf/d) of LNG projects either under construction Ksi Lisims LNG (Floating) or in development on Canada’s West Coast 12 MTPA (1.7 Bcf/d) Environmental Assessment Phase Canada West Coast LNG Projects (Proposed and Under
Slide 27: Appendix
BIRCHCLIFF ENERGY APPENDIX MAY 2023 27
Slide 28: Production History
PRODUCTION HISTORY SIGNIFICANT GROWTH SINCE INCEPTION 90,000 77,000 – 77,977 78,520 76,925 80,000 80,000 77,096 76,401 70,000 67,963 Average Production (boe/d) 60,000 49,236 50,000 38,950 40,000 33,734 30,000 25,829 22,802 20,000 18,136 13,079 10,148 11,216 10,000 6,711 5,368 2,793 0 2005 2006 2007
Slide 29: Historical Profitability
HISTORICAL PROFITABILITY PROVEN TRACK RECORD AS A LOW-COST PRODUCER Profitability Breakdown: 5 Year 2018 2019 2020 2021 2022 Average(5) Average AECO (CDN$/GJ) $1.42 $1.67 $2.11 $3.44 $5.04 $2.74 Average WTI (US$/bbl) $64.77 $57.03 $38.91 $68.70 $94.31 $64.74 P&NG Revenue ($/Mcfe)(1)(2) $3.68 $3.59 $
Slide 30: Corporate Information
CORPORATE INFORMATION EXECUTIVE DIRECTORS BANK SYNDICATE Jeff Tonken Jeff Tonken The Bank of Nova Scotia Chief Executive Officer and Chairman of the Board Chief Executive Officer and Chairman of the Board HSBC Bank Canada National Bank of Canada Christopher Carlsen Dennis Dawson Canadian Imperial Ba
Slide 31: Corporate Information: Management Team
CORPORATE INFORMATION MANAGEMENT TEAM HEAD OFFICE Gates Aurigemma Jeff Rogers Suite 1000, 600 – 3rd Avenue S.W. Manager, General Accounting Facilities Manager Calgary, Alberta T2P 0G5 Phone: 403-261-6401 Jesse Doenz Randy Rousson Controller and Investor Relations Manager Drilling and Completions Man
Slide 32: Advisories: Definitions
ADVISORIES DEFINITIONS Deloitte Deloitte LLP, independent qualified reserves evaluator Gordondale Gas Plant AltaGas’ deep-cut sour gas processing facility in Gordondale NI 52-112 National Instrument 52-112 – Non-GAAP and Other Financial Measures Disclosure Pouce Coupe Gas Plant Birchcliff’s 100% own
Slide 33: Advisories: Non-GAAP and Other Financial Measures
ADVISORIES NON-GAAP AND OTHER FINANCIAL MEASURES This presentation uses various “non-GAAP financial measures”, “non-GAAP ratios”, “supplementary financial measures” and “capital management measures” (as such terms are defined in NI 52-112), which are described in further detail below. These measures
Slide 34: Advisories
ADVISORIES Birchcliff has disclosed in this presentation forecasts of adjusted funds flow, free funds flow and excess free funds flow for 2023 – 2027, which are forward-looking non-GAAP financial measures. The equivalent historical non-GAAP financial measures are adjusted funds flow, free funds flow
Slide 35: Advisories: Adjusted Funds Flow Per Boe
ADVISORIES Adjusted Funds Flow Per Boe and Adjusted Funds Flow Per Basic Common Share Birchcliff calculates “adjusted funds flow per boe” as aggregate adjusted funds flow in the period divided by the production (boe) in the period. Management believes that adjusted funds flow per boe assists managem
Slide 36: Advisories: Total Debt and Total Surplus
ADVISORIES Total Debt and Total Surplus Birchcliff calculates “total debt” and “total surplus” as the amount outstanding under the Corporation’s Credit Facilities (if any) plus working capital deficit (less working capital surplus) plus the fair value of the current asset portion of financial instru
Slide 37: Advisories: Boe and Mcfe Conversions
ADVISORIES BOE AND MCFE CONVERSIONS Boe amounts have been calculated by using the conversion ratio of 6 Mcf of natural gas to 1 bbl of oil and Mcfe amounts have been calculated by using the conversion ratio of 1 bbl of oil to 6 Mcf of natural gas. Boe and Mcfe amounts may be misleading, particularly
Slide 38: Advisories: Production
ADVISORIES PRODUCTION With respect to the disclosure of Birchcliff’s production contained in this presentation: (i) references to “light oil” mean “light crude oil and medium crude oil” as such term is defined in NI 51-101; (ii) except where otherwise stated, references to “liquids” mean “light crud
Slide 39: Advisories: Forward-Looking Statements
ADVISORIES • the information set forth on the slide “Two-Year Outlook – 2023/2024 Capital Program Optionality” including: that Birchcliff’s strong balance sheet provides optionality to utilize its Credit Facilities to fund capital program and dividend in 2023 with excess free funds flow generated in
Slide 40: Advisories: Forward-Looking Statements
ADVISORIES o Birchcliff’s production guidance assumes that: the 2023 capital program will be carried out as currently contemplated; that the outage on Pembina Pipeline Corporation’s Northern Pipeline system is resolved in May, 2023; no unexpected outages occur in the infrastructure that Birchcliff r
Slide 41: Advisories: Forward-Looking Statements
ADVISORIES • With respect to statements of future wells to be drilled and brought on production, such statements assume the continuing validity of the geological and other technical interpretations performed by Birchcliff’s technical staff, which indicate that commercially economic volumes can be re