Athabasca Oil Corporation · TSX:ATH
Athabasca Oil — Investor Presentation (April 2022)
31 slides from Athabasca Oil's investor presentation, April 2022
Slide 1: Athabasca Oil Corporation
ATHABASCA OIL CORPORATION FOCUSED | EXECUTING | DELIVERING APRIL 2022
Slide 2: Why Own Athabasca
WHY OWN ATHABASCA PREDICTABLE, LOW DECLINE THERMAL OIL BUSINESS Low sustaining capital requirements (~$5/bbl) >1 billion boe 2P reserves at top quartile assets Athabasca is committed to DE‐RISKED LIGHT OIL BUSINESS WITH FLEXIBLE CAPITAL returning free cash flow to Top quartile operating netback;
Slide 3: Portfolio – 35,000 boe/d | 90% Liquids
PORTFOLIO – 35,000 BOE/D | 90% LIQUIDS THERMAL OIL ASSETS (~28,000 BBL/D) LIGHT OIL ASSETS (~7,000 BOE/D) LEISMER Top tier project that PLACID MONTNEY HANGINGSTONE has been in operation for 11 years with 70% WI Placid with current production of stable declines, high ~19,000 bbl/d margins and flexibl
Slide 4: Q4 2021 Highlights
Q4 2021 HIGHLIGHTS 35,147 boe/d (91% liquids) $43MM Adj FFO ($0.08/sh) $24MM Free Cash Flow 2021 34,618 boe/d 2021 $184MM 2021e $92MM $223MM Unrestricted Cash Operating Netback $18MM Capex ~$43/boe Light Oil Refinancing completed Oct. 2021 2021 $92MM ~$33/bbl Thermal Oil ATHABASCA OIL (TSX:ATH) Q4 p
Slide 5: Capital Structure and Guidance
CAPITAL STRUCTURE AND GUIDANCE CAPITAL STRUCTURE CAPITAL STRUCTURE OVERVIEW o US$350MM Second Lien Notes • 9.75% coupon & 5‐year term to Q4 2026 • Semi‐annual free cash flow redemption feature at 105 ~$1,100MM o $160MM Credit Facilities Market US$25MM • $110MM Reserve Based Facility Capitalization R
Slide 6: Managing for Strong Free Cash Flow
MANAGING FOR STRONG FREE CASH FLOW EBITDA & FCF AT US$85 WTI (C$MM) STRONG FREE CASH FLOW ~$900MM 3‐year cum FCF o Maintain production base of ~34,000 boe/d o Low annual sustaining capital of ~$125MM o 10+ year tax free horizon ($3.2B of tax pools) EXCELLENT EXPOSURE TO COMMODITY UPSIDE o 2022 hedge
Slide 7: Creating Significant Shareholder Value
CREATING SIGNIFICANT SHAREHOLDER VALUE DEBT OUTLOOK US$85 WTI (C$MM) US$350MM UNIQUE LOW LEVERAGE COMPANY Term Debt Net cash position o Direct 100% of free cash flow to term debt repayment • Net cash position achieved by year end 2022 US$175MM target • Debt target US$175MM (50% reduction) achieved i
Slide 8: Integrated Sustainability
Athabasca Stated ESG Goal (May 2021) INTEGRATED SUSTAINABILITY “Prepare a technology roadmap for a lower carbon future evaluating carbon capture use and storage, cogeneration, solvent injection, and renewable energy” CARBON CAPTURE – AOC’S LOW‐CARBON BARREL TECHNOLOGY OVERVIEW o Entropy Inc. (Entrop
Slide 9: Asset Overview
ASSET OVERVIEW
Slide 10: The Thermal Business
THE THERMAL BUSINESS HIGHLIGHTS THERMAL PROPERTIES 100% Working Interest Fort McMurray 28,084 bbl/d Q4/21 Production AOC Hangingstone ~$390MM 2022E Operating Income 2022E Enbridge ~$115MM Capital Expenditures Hangingstone Cheecham 414 MMbbl & Gross Reserves Surmont 1,230 MMbbl (Proved & 2P) AOC Corn
Slide 11: Thermal Oil – Leismer
THERMAL OIL – LEISMER STRATEGIC POSITIONING DEVELOPMENT MAP o Maximize FCF and deliver strong netbacks ($33/bbl Q4/21) o Focus on projects that improve the SOR Illustrative 2022 ACTIVITY OVERVIEW Pad 8 Sustaining o Pad L8 – 5 wells on stream; ramping up to >5,000 bbl/d in 2022 o Five additional well
Slide 12: Thermal Oil – Hangingstone
THERMAL OIL – HANGINGSTONE DEVELOPMENT MAP STRONG RESERVOIR RESPONSE o Excellent facility utilization o Improved SOR due to the field wide NCG co‐injection o Start‐up of standing well pair in December 2021 COST OPTIMIZATION o Low non‐energy operating expenses (~$6.75/bbl Q4/21) o 5,000 bbl/d third‐p
Slide 13: Thermal Oil – Crown Royalty Advantage
THERMAL OIL – CROWN ROYALTY ADVANTAGE CROWN ROYALTY OVERVIEW OIL SANDS ROYALTY RATES o Royalties vary depending on whether a project is in Gross revenue less opex & capex pre‐payout or post‐payout phase • Pre‐payout royalty rates are lower to account for the initial cost of investment • Post‐payout
Slide 14: The Light Oil Business
THE LIGHT OIL BUSINESS HIGHLIGHTS LIGHT OIL PROPERTIES 7,063 boe/d Q4/21 Production Kaybob 2022E Net Capital ~$13MM Expenditures ~$95MM 2022E Operating Income ~850 Gross Locations ~280,000 Gross Acres Placid 27 MMboe & Gross Reserves 72 MMboe (Proved & 2P) ~12 years & RLI o Joint Venture with Murphy
Slide 15: Light Oil – 2022 Activity
LIGHT OIL – 2022 ACTIVITY STRATEGIC OBJECTIVES PLACID MONTNEY o Maintain future optionality o Maximize netback & cash flow generation ($43/boe in Q4) • $36/boe Placid; $51/boe Kaybob 2022 ACTIVITY o Kaybob Duvernay: 3 Two Creeks wells currently on stream FUTURE ACTIVITY o ~150 gross Montney developm
Slide 16: ESG Overview
mea ESG OVERVIEW
Slide 17: ESG – Inaugural 2021 Report
ESG – INAUGURAL 2021 REPORT We believe that the responsible energy we produce here in Alberta makes people’s lives better. Our inaugural ESG report is an opportunity for us to showcase the positive impacts we have made and explain how sustainability and responsibility are being embedded into every d
Slide 18: ESG – 2020 Highlights
ESG – 2020 HIGHLIGHTS NET GHG EMISSIONS INTENSITY WATER RECYCLE RATIO 95% 0.08 20% Reduction 90% 0.07 tonnes Co2e/boe 85% 0.06 80% 0.05 75% 0.04 70% 2015 2016 2017 2018 2019 2020 Oil Sands Mining In Situ Enhanced oil Athabasca recovery Thermal Oil Athabasca has a longstanding history of consistently
Slide 19: Integrated Sustainability
Athabasca Stated ESG Goal (May 2021) INTEGRATED SUSTAINABILITY “Prepare a technology roadmap for a lower carbon future evaluating carbon capture use and storage, cogeneration, solvent injection, and renewable energy” CARBON CAPTURE – AOC’S LOW‐CARBON BARREL TECHNOLOGY OVERVIEW o Entropy Inc. (Entrop
Slide 20: ESG – Governance & Social
ESG – GOVERNANCE & SOCIAL GOVERNANCE SOCIAL o Technically‐focused, experienced management team o Contributed 66% of the Provincial Park Lands • Four most senior executives have managed current • Expanded the ecologically and culturally significant portfolio for an aggregate of 35 years Kitaskino Nuw
Slide 21: ESG – Commitment to Responsibility
ESG – COMMITMENT TO RESPONSIBILITY GOALS o Reduce emission intensity by 30% (2015 2025) o Strong safety results (0.6 TRIF in 2021); aspiration of no harm to people and no hydrocarbon spills o ESG to be a formal consideration in all capital allocation decisions o Prepare a roadmap for lower carbon
Slide 22: Appendix
mea APPENDIX
Slide 23: Management Team
MANAGEMENT TEAM o Joined Athabasca in 2012 as Senior Vice President Light Oil. Promoted to Chief Operating Officer in 2013 and President and Chief Executive Officer in 2015 o 30 years of exploration and production experience including 18 years with Talisman Energy in various technical Rob Broen, P.E
Slide 24: Thermal Oil – Operations Improvements
THERMAL OIL – OPERATIONS IMPROVEMENTS HISTORY OF HIGH FACILITY UTILIZATION RATES LEISMER LOWER WELL PAIR COSTS ($MM) Hangingstone partial shut‐in in 2020 LEISMER TECHNOLOGY DRIVING RATES (BBL/D) NON‐ENERGY OPEX ($MM) 1,200 Leismer Pad 1‐6 Hangingstone 1,000 Pad 7 Hangingstone partial shut‐in in 2020
Slide 25: Light Oil – Netbacks & Operations Improvements
LIGHT OIL – NETBACKS & OPERATIONS IMPROVEMENTS INDUSTRY LEADING NETBACK (Q4/21) High Liquids % High Quality Product ~$43/boe (Q4) Low Lifting Costs DUVERNAY OIL WELL RESULTS (BOE/D) HISTORICAL WELL COSTS ($MM) 1,500 2016 Wells 2017 Wells 1,200 2018 Wells 2019 Wells 2020 Wells 900 >100% increase in I
Slide 26: Market Egress and Risk Management
MARKET EGRESS AND RISK MANAGEMENT CANADIAN MARKET ACCESS IMPROVING CANADIAN EGRESS OUTLOOK (MMBBL/D) o Excess pipeline capacity for foreseeable future Enbridge L3R: +270,000 bbl/d in‐service TMX: +590,000 bbl/d in 2023 o Lower WCSB supply growth expectations Producers focused on return of capi
Slide 27: Historical Transformation of ATH
HISTORICAL TRANSFORMATION OF ATH $486MM $470MM $265MM US$350MM New Notes Light Oil JV Contingent Infrastructure & $150MM Credit with Bitumen Sale Facilities; Redeemed Murphy Oil Royalties US$450MM Notes Managing for Resource Resumption of Pre‐COVID Business Plan strong FCF Appraisal 2016 2017 2018 2
Slide 28: Reader Advisory
READER ADVISORY Forward Looking Statements This Presentation contains forward‐looking information that involves various risks, uncertainties and other factors. All information other than statements of historical fact is forward‐looking information. The use of any of the words “anticipate”, “plan”, “
Slide 29: Reader Advisory Cont'd
READER ADVISORY CONT’D Additional Oil and Gas Information: Other Oil and Gas terms: This presentation contains certain other oil and gas metrics, including D&C (drilling and completion costs), F&D, steam oil ratio (or SOR), reserves life index, recycle ratio, capital efficiency and P/I, which do not
Slide 30: Reader Advisory Cont'd
READER ADVISORY CONT’D Non‐GAAP Financial Measures and ratios, and Production Disclosure Cont’d The Consolidated Capital Expenditures Net of Capital‐Carry and Light Oil Capital Expenditures Net of Capital‐Carry are non‐GAAP measures in this Presentation and are outlined in the Company’s Q4 2021 MD&A
Slide 31: Athabasca Oil Corporation
ATHABASCA OIL CORPORATION