Tamarack Valley Energy Ltd. · TSX:TVE
Tamarack Valley Energy — Investor Day (June 2024)
68 slides from Tamarack Valley Energy's investor day presentation, June 2024
Slide 1: Tamarack Valley Energy June 2024 Investor Day Presentation
TSX: TVE Tamarack Valley Energy Clearwater Sites at West Marten Hills June 2024 Investor Day Presentation
Slide 2: 2024 Investor Day Agenda
2024 Investor Day Agenda Bench Strength Driving Execution of The Strategic Plan Introduction: Christine Ezinga, VP Business Development & Sustainability Overview of Strategic Transformation: Brian Schmidt (AAKAIKKITSTAKII), President & CEO Clearwater (~41,000 boe/d; 2024 Budget Production): Lynne Ch
Slide 3: Corporate and Operational Snapshot
Corporate and Operational Snapshot Corporate Overview Ticker Symbol TSX - TVE Shares Outstanding (Basic)1 (MM) 549 Market Capitalization2 ($MM) $1,960 Largest Public Q1 2024 Net Debt ($MM) $985 Clearwater Producer Enterprise Value ($MM) $2,945 Annual Base Dividend3 ($/Sh.) $0.15 90% of Production Fr
Slide 4: Road Map For Value Generation
Road Map For Value Generation Strategic Transformation Complete... Consistent & Predictable Path Forward to Grow Shareholder Returns Phase I Phase II Phase III Asset Transformation Debt Paydown & Growth Completed in 2023 Return of Capital Optionality ~ In Progress ~ ~ Future Outlook ~ • Largest pu
Slide 5: Transformation To The Largest Public Clearwater Producer
Transformation To The Largest Public Clearwater Producer Portfolio Has A Significant Depth of Premium Inventory To Deliver Long-Term Returns For Shareholders 2020 Land Base 2024 Land Base Clearwater ~41 Mboe/d3 Redwater Charlie Lake Viking ~15 Mboe/d4 90% of Corporate Production In Charlie Lake and
Slide 6: Targeted Entry To Top Tier Conventional Oil Plays
Targeted Entry To Top Tier Conventional Oil Plays Clearwater and Charlie Lake Offer Superior Economics Assets Focused On Multiple Payouts1,2 5 100% Monetized 33% Monetized Multiple Payouts In <5 Years2 Nov. 2023 Jul. 2022 4 # of Payouts In 5 Yrs. (x) 3 2 1 0 # of Payouts In 5 Yrs. 1) See “Specified
Slide 7: Outsized Per Share Returns Growth
Outsized Per Share Returns Growth Leveraging Scale and Quality To Deliver Sustainable Long-Term Returns Per Share 1. Asset Quality & Duration 2. Operational Execution 3. Balancing Capital Allocation ✓ Premium Netbacks • Higher price realizations ✓ Debt Repayment ✓ Significant Resource In Place Per S
Slide 8: Clearwater
hs tamarack valley eNercy Clearwater
Slide 9: The Clearwater Advantage
The Clearwater Advantage Large Scale Exposure Through the Heart of the Clearwater Fairway • 8.7 billion barrels of OOIP in the Clearwater Inventory • Extensive holdings across the Clearwater fairway; 680 net sections of land1 • Significant asset duration driven by >2,100 drilling locations2 (~100 in
Slide 10: Clearwater Expansive Resource
Clearwater Expansive Resource Largest Public Clearwater Producer with 8.7 Billion Barrels of OOIP Seal Stacked Pay: OOIP > 50 MMbbls/section TVE 27.9 net sections Seal Ongoing development by offset operators Pelican Stacked Pay: OOIP > 40 MMbbls/section TVE 11 net sections Peavine McLeod Lake Dawson
Slide 11: Regional Clearwater North Cross Section
Regional Clearwater North Cross Section Multi-Zone Potential With Large OOIP Key To Long-Term Inventory Duration South Seal Dawson Peavine Gift Lake Utikuma Nipisi McLeod Lk McMullen Marten Hills CLWT South Clearwater N Mannville Stratigraphic Datum S Grand Rapids Eq. Mnvl G Mnvl E Mnvl I TVE B Uppe
Slide 12: Nipisi & Marten Hills: Near Term Development Focus
Nipisi & Marten Hills: Near Term Development Focus Stacked Pay Zones With Significant Oil In Place Nipisi & West Marten Locations1 Clearwater C: 447 Clearwater B: 545 West Nipisi Marten Hills Locations1 Clearwater C: 466 Nipisi West Marten West Nipisi OOIP Marten Hills Clearwater D-G: 5-15 MMbbl/sec
Slide 13: West Marten: Stacked Pay Continuing To Outperform
West Marten: Stacked Pay Continuing To Outperform Deltastream Legacy Lands Generating Free Funds Flow1 With Multiple Quick Payouts West Marten 2023 Drills2 400 ‘B’ Sand (23 Wells) Including YE 2023 P+PDP Forecasts4 350 Booked Type Wells4,5 Clearwater ‘B’ Sand (Tier I) Clearwater ‘C’ Sand Production
Slide 14: West Marten: Stacked Pay Case Study
West Marten: Stacked Pay Case Study Development Efficiencies and Top Tier Lands Yielding Robust Free Funds Flow1 11-10-76-5W5 Pad $30 3,500 3,000 Cum. Free NOI1,2 ($MM) $20 Oil Production (bbl/d) 2,500 $10 2,000 $0 1,500 -$10 1,000 -$20 500 -$30 0 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Cumulative
Slide 15: Nipisi & West Marten: Waterflood
Nipisi & West Marten: Waterflood Activity Ramping Up Following Successful Pilot and Early Results West Marten Stacked ‘B’ and ‘C’ Waterfloods Nipisi 102/13-19 Pilot ‘B’ Sand Waterflood Development 2024 ‘C’ Sand Injector Underway 14
Slide 16: Nipisi 'B' Sand Pilot Exhibits Exceptional Response
Nipisi ‘B’ Sand Pilot Exhibits Exceptional Response Waterflood Success Indicative of Significant Asset Duration Nipisi 102/13-19-076-07W5 Pilot 700 Injection Start 600 500 Oil (bbl/d) 400 300 Quick Response: 200 Waterflood pilot substantially 100 outperformed offsetting primary producer shortly afte
Slide 17: Industry Waterflood Development at Nipisi
Industry Waterflood Development at Nipisi Successful EOR Implementation Realizing Consistent Incremental Recoveries 5 Industry Primary Industry Waterflood 4 Median Primary Oil Rate per 100m (bbl/d/100m) ‘B’ Sand Waterfloods at Nipisi Have Demonstrated Repeated Excellent Performance • Consistently ou
Slide 18: Marten Hills: Developing Top Tier Acreage In The Core
Marten Hills: Developing Top Tier Acreage In The Core Increasing Asset Duration By Advancing Secondary Recovery and Delineation Marten Hills Delineation by Offsetting Activity • Resource-In-Place: Up to 30m of pay in the heart of the Clearwater; OOIP of 15-60 MMbbls/section • Asset Duration: Over 45
Slide 19: Marten Hills: Prolific Ultimate Recovery Through Waterflood
Marten Hills: Prolific Ultimate Recovery Through Waterflood Strong Positive Correlation Between Injectivity and Oil Response Across The Clearwater Fairway Prolific Recovery: Marten Hills waterflood pilot represents highest Marten Hills 15-02-075-25W4 Pilot recovery of any Clearwater well (481 Mbbls
Slide 20: Marten Hills: Waterflood Designs
Marten Hills: Waterflood Designs Multi-Lateral Flexibility Provides Fit-For-Purpose Pattern Designs • Injectivity: Prioritizing injectivity due to correlation between injectivity and oil response • Flexibility: Multi-lateral drilling provides lateral placement and density flexibility • Stacked Desig
Slide 21: South Clearwater: Substantial Delineated Inventory
South Clearwater: Substantial Delineated Inventory Innovation Leads to Step Change in Economics South Clearwater • Dominant Position: Tamarack holds dominant land position across all core producing areas • Asset Duration: Considerable delineated inventory of 420 remaining locations1 identified in th
Slide 22: South Clearwater: Fan Well Design Case Study
South Clearwater: Fan Well Design Case Study Improving Capital Efficiencies Through Reduced Infrastructure and Increased Recovery Per Well Reduced Surface Footprint Lower Infrastructure Costs Higher Recovery Per Well Efficient Delineation of Pool Edges Previous Development Plan1,2 16 Wells – 3 Surfa
Slide 23: Clearwater Economics
Clearwater Economics Multiple Payouts Compound Free Funds Flow1 Growth West Marten “B” Sand West Marten “C” Sand 250 250 Booked Type Well2,3 11,200m Lateral – Tier I Booked Type Well2,3 11,200m Lateral 200 IP30 (bopd) 232 200 IP30 (bopd) 184 Oil Production (bbl/d) Oil Production (bbl/d) TPP (Mboe) 2
Slide 24: Clearwater Waterflood
Clearwater Waterflood Secondary Recovery Provides Additional Payouts and Free Funds Flow1 250 Waterflood Primary Waterflood Economics Primary3 – West Marten Waterflood Wedge4 – 200 Type Pattern2 “B” Sand Tier I Internal Estimate Total Project Oil EUR (Mbbl) 200 200 400 Cost per Pattern ($MM) $1.8 $1
Slide 25: Clearwater Providing Production and Funds Flow Growth
Clearwater Providing Production and Funds Flow Growth Leveraging Multiple Payouts To Achieve Free Funds Flow1 and Production Growth Clearwater Total Production 40 Efficient Growth Attained 15% Year-Over-Year Production Production (Mboe/d) 35 30% year over year growth Growth While Delivering >$300MM
Slide 26: Clearwater Resources Support Long-Term Development
Clearwater Resources Support Long-Term Development Top Tier Resource With Considerable Scale To Support Future Growth 2023 Clearwater Reserves & Resources1,2 350 300 Decades of TPP reserve life index of ~8 years3 and total resource size Development supports decades of additional development Total Pr
Slide 27: Conventional Undeveloped Reserves Demonstration
Conventional Undeveloped Reserves Demonstration Clearwater Provides Unconventional Scale In a Conventional Reservoir • Much tighter radius for booking undeveloped reserves in conventional plays like the Clearwater and Charlie Lake relative Illustrative Radius For Clearwater to unconventional plays (
Slide 28: Reserves and Resources Progression
Reserves and Resources Progression West Marten ‘B’ Sand Example: Significant Remaining Unbooked Upside • Conventional reserves bookings remain close in proximity to activity • Step-out locations efficiently progress resources into reserves through increased areal extent and delineated recovery estim
Slide 29: Large Scale Clearwater Resource
Large Scale Clearwater Resource Superior Economics Drive Long-term Shareholder Returns • Largest Public Clearwater Producer Asset Quality • Averaging ~41,000 boe/d in 20241 • 8.7 Billion Barrels of OOIP In The Clearwater • Decades of Development Inventory Asset Duration • Identified >2,100 Locations
Slide 30: Charlie Lake
hs tamarack valley eNercy Charlie Lake 29
Slide 31: High Quality Charlie Lake Light Oil
High Quality Charlie Lake Light Oil Optionality With Inventory Inventory • Top tier geology resulting in exceptional well performance • Inventory supports 16,000 boe/d1 for >10 years • Accumulated 247 net sections of land2 since 2021 Economics • Extended Reach Horizontal (“ERH”) wells and multi-well
Slide 32: Charlie Lake Stacked Resource
Charlie Lake Stacked Resource Multiple Targets Contributing to Over 10 Years of Inventory Top Tier Reservoir Classic Upper Charlie • Dominant position in the sweet spot of the fairway Lk. Development area • High oil weighted production (50% - 70%) • Light oil (35 – 42o API gravity) Longshore Lower C
Slide 33: Charlie Lake Stacked Resource
Charlie Lake Stacked Resource Stacked Reservoirs Leading To Strong Capital Efficiencies N S 1 2 3 4 5 6 7 NORDEGG N UPPER CH LK 1 2 3 LOWER CH LK 4 HALFWAY 5 BRAEBURN 6 DOIG 7 S 32
Slide 34: Optimizing Charlie Lake Development
Optimizing Charlie Lake Development Well Placement For Optimal Completions Improving Performance Braeburn • Tamarack lands each wellbore to maximize fracture propagation, ensuring all pay is stimulated • Two completion regimes based on total Braeburn pay thickness: West: Thickness of 20-40m East: Th
Slide 35: Charlie Lake Transformation
Charlie Lake Transformation Increased Asset Duration Through Small-Scale Consolidation Anchor & Optimize • Added 65 net sections of strategic land to establish a consolidated position Asset Position Capable of Supporting 16,000 boe/d For >10 years • Constructed strategic infrastructure and secured f
Slide 36: Charlie Lake: Superior Economics in the Heart of the Play
Charlie Lake: Superior Economics in the Heart of the Play Well Design and Program Execution Driving Continued Outperformance In Core Areas Deploying ERH Technology to Enhance Recoveries1 250 • Enviable Position: Results outperforming Charlie Lake industry averages • Low-Cost Production Additions: Ca
Slide 37: Charlie Lake Performance
Charlie Lake Performance Optimizing Top Tier Light Oil Resource Charlie Lake: Drill to Fill With Growth Optionality 20 Over 10 years of light oil development inventory in the heart of Runway the Charlie Lake fairway Drill to Fill Production (Mboe/d) 15 30% year over year growth Sustaining capital2 o
Slide 38: Operational Efficiencies: Driving Expanding Margins
Operational Efficiencies: Driving Expanding Margins 37
Slide 39: Clearwater: Drilling Capital and Performance
Clearwater: Drilling Capital and Performance Well Design and Drilling Performance Offsetting Inflation Average Drill Length per Day & Average TLL Drilling Cost 1,300 17,000 $160 Drill KPI ($/mHZ) and Well Count (#) 1,200 16,000 $140 Avg Total Lateral Length (mHZ) Avg Drill Length (m/day) 1,100 15,00
Slide 40: Clearwater: Operational Excellence
Clearwater: Operational Excellence Scale and Efficiency Drives Improved Operating and Transportation Expense Clearwater Total Expense & Production Clearwater Operating & Transportation Forecast Expense Peer Benchmarking1 $16.00 45,000 $18 45,000 Operating and Transportation Expense ($/boe) Operating
Slide 41: Charlie Lake: Drilling Capital and Performance
Charlie Lake: Drilling Capital and Performance Well Design and Enhancements Continue To Improve Efficiencies Drill KPI and Average Drill Length Per Day $600 475 Drilling Performance • Q1/24 average metres per day increased 18% $500 450 relative to Q1/23 $400 425 Drilling Cost KPI (Total Drill Capita
Slide 42: Infrastructure: Benefitting From Ownership and Control
Infrastructure: Benefitting From Ownership and Control 41
Slide 43: Ownership and Control of Infrastructure
Ownership and Control of Infrastructure Enhancing Reliability, Improving Long-Term Cost Structure and Lowering Emissions Gas Plant Ownership, Crude Pipe Connections and Multi-Well Batteries Improves Control and Reduces Carbon Tax Expense Nipisi & Marten Hills South Clearwater • Marten Creek Gas Plan
Slide 44: Charlie Lake Processing: Underpinning Development Success
Charlie Lake Processing: Underpinning Development Success Capacity Drives Up Margins and Reliability Legend TVE Land Processing Capacity Expanded By 4x To Facilitate TVE Multi-well Oil Battery Growth of the Play and Enhance Reliability Gas Plant Alliance Pipeline 2 3 Aligning Firm Processing to Gas
Slide 45: Operational Efficiencies & Infrastructure Control
Operational Efficiencies & Infrastructure Control Maximizing Value From Drill Bit to Sales Point Capital Performance gains offsetting inflation Efficiencies Supports Access to firm capacity improves ability to undertake long-term planning Larger Scale Capture economies of scale through program execu
Slide 46: Marketing: Improved Realizations
Marketing: Improved Realizations 45
Slide 47: Marketing Evolution
Marketing Evolution Profitability Increasing With Scale 2022 2023 2024 Heavy Oil Deductions 2022 2023 2024 $0 Lease Marketers ($0.10-0.15US/bbl) In House Trading (65% of Production) In House Trading (75% of Production) Realized Price to WCS (C$/bbl) -$2 3 Oil Pipe Connections (5,700bpd) 3 Oil Pipe C
Slide 48: Competitor Clearwater Comparison
Competitor Clearwater Comparison Consistently Producing the Top Heavy Oil Price Among Clearwater Players 2022A 2023A 2024-Q1 Tamarack Tamarack Tamarack Peer 1 Peer 2 Peer 3 Peer 1 Peer 2 Peer 3 Peer 4 Peer 1 Peer 2 Peer 3 Peer 4 Peer 4 $0 Realized Heavy Oil Price to WCS (C$/bbl) Best-In-Class Clearw
Slide 49: Trading Advantage
Trading Advantage Delivering To The Premium Western Canadian Oil Hub Delivering To The Premium Western Canadian Oil Hub • 90% of Tamarack production flows into the Edmonton trading hub • Charlie Lake • Clearwater (Nipisi & Marten Hills) • Edmonton can access every major outlet in Alberta • Trans Mou
Slide 50: Canadian Heavy Oil Differential Narrowing
Canadian Heavy Oil Differential Narrowing WCS Differential Tightening With TMX Starting In May WCS Differential (US$/bbl) TMX Commercially In-Service Started in May Removing Pipeline Constraints For Canada, 2021 2022 2023 2024 2025 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Narrowin
Slide 51: Financial Outlook and Enhanced Return Framework
Financial Outlook and Enhanced Return Framework 50
Slide 52: Achieving Debt Floor Is Part Of The Strategy
Achieving Debt Floor Is Part Of The Strategy Balancing Shareholder Returns With Debt Reduction Balance Sheet Used To Complete Transformation; Meaningful Debt Reduction Achieved in 2023 • Post the Deltastream acquisition: debt reduced by $400MM or $0.70/share2 going from nearly 2x funds flow to 1.2x
Slide 53: Enhanced Return Framework
Enhanced Return Framework Stepping Up Returns To Shareholders Achieved: Q4/23 Expected: H2/24 Within 5 Yr. Plan Net Debt1 ($MM) $900 – $1,100 $500 – $900 ≤ $500 & & & & Net Debt / LTM EBITDA (x) ~ 1.0x Net Debt / EBITDA ~ 1.0x Net Debt / EBITDA ~ 1.0x Net Debt / EBITDA 20% 40% Strategic Capital Simp
Slide 54: 5-Year Plan: Compounding Returns
5-Year Plan: Compounding Returns 53
Slide 55: 5-Year Plan Supported By Highly Economic Development
5-Year Plan Supported By Highly Economic Development Decades of Top Tier Inventory Supports Long-Term Development Drilling Locations (as at 2023YE; Net)1 2,800 2,400 5-Year Plan: Organic Annual Production Growth of 3% - 5% 2,000 • ~25% of total premium primary locations drilled over five years 1,600
Slide 56: Waterflood Furthering Free Funds Flow Growth
Waterflood Furthering Free Funds Flow1 Growth Shallowing Decline and Reduced Capital Requirements Through Continued Waterflood Investment Sustaining + Waterflood Capital ($MM) $450 5-Year Plan Illustrates Reduced Sustaining Capital2 and Corporate Decline • Waterflood production forecast to grow by >
Slide 57: Growth + Long Term Buybacks = Compounding Returns
5-Year Plan Growth + Long Term Buybacks = Compounding Returns Annual Per Share Growth (FFFPS & DAPPS Growth) $1.50 120% 5-Year Production Growth CAGR1 3-5% 4 Debt Adj. Production Per Share Growth (boe/d / MM Debt Adj. Shares) Cumulative After-Tax Free Funds Flow of ~$1.8 billion $1.30 100% Long Term
Slide 58: Return of Capital To Shareholders
Return of Capital To Shareholders Balancing Debt Repayment and Share Buybacks Total Shareholder Value of ~$1.8B or ~$3.25/Sh. Including Debt Balanced Approach of Debt Reduction vs. Return of Capital Relative to Reduction Over Next 5 Years at Flat US$75/bbl WTI Trading Value • Pay ~$420MM of base div
Slide 59: Five Year Plan – Key Takeaways
Five Year Plan – Key Takeaways Resilient and Profitable Per Share Growth Significant Resource With Decades of Top Tier Inventory Supports Long Term Development Defined Enhanced Oil Recovery Strategy That Reduces Production Declines and Sustaining Capital Capital Efficiency and Margin Enhancement Ach
Slide 60: Closing Remarks
hs tamarack valley eNercy Closing Remarks 59
Slide 61: Delivering Outsized Returns
Delivering Outsized Returns Leveraging Scale & Asset Quality To Deliver Sustainable Long-Term Returns Per Share Asset Transformation Complete: Focused, Large Scale, Highly Economic Asset Portfolio Rate of Change: Lower Costs and Enhanced Capital Efficiencies Drives Higher Margins Balanced Capital Ap
Slide 62: Q&A Session
TSX: TVE Tamarack Valley Energy Q&A Session Clearwater Sites at West Marten Hills
Slide 63: Corporate Information
Corporate Information Executive Legal Counsel Brian Schmidt (Aakaikkitstaki) President & Chief Executive Officer Stikeman Elliott LLP Steve Buytels Chief Financial Officer Kevin Screen Chief Operating Officer Banking Syndicate Co-Leads Rocky Baker VP Marketing National Bank of Canada Royal Bank of C
Slide 64: Disclaimers
Disclaimers Forward Looking Statements: Certain information included in this presentation constitutes forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend",
Slide 65: Disclaimers (Cont.)
Disclaimers (Cont.) industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration, development projects, capital expenditures, or the implementation of the Company’s corporate strategy, objectives, strength, focus and
Slide 66: Disclaimers (Oil and Gas Advisories)
Disclaimers (Oil and Gas Advisories) FOFI Disclosure: This presentation contains future-oriented financial information and financial outlook information (collectively, "FOFI") about Tamarack's five year plan and guidance, including generating sustainable long term growth in free funds flow, dividend
Slide 67: Disclaimers (Oil and Gas Advisories)
Disclaimers (Oil and Gas Advisories) This presentation includes various specified financial measures, including non-IFRS financial measures, non-IFRS financial ratios, capital management measures and supplementary financial measures as further described herein. These measures do not have a standardi
Slide 68: Disclaimers (Oil and Gas Advisories)
Disclaimers (Oil and Gas Advisories) Drilling Locations: This presentation discloses drilling locations two categories: (i) booked locations; and (ii) unbooked locations. Booked locations are Abbreviations proved and probable locations derived from reserves assessments and evaluations prepared by Mc