Tamarack Valley Energy Ltd. · TSX:TVE
Tamarack Valley Energy — Q3 2022 Earnings Presentation
30 slides from Tamarack Valley Energy's earnings presentation, October 2022
Slide 1: Creating Sustainable Value
TVE : TSX Creating Sustainable Value October 2022 See Disclaimers and Forward-Looking Statements attached
Slide 2: Corporate Snapshot
Corporate Snapshot Capital Structure Pro Forma Ticker Symbol TVE.TSX Shares Outstanding (MM) 556.9 Market Capitalization ($MM)(1) $2,717 Q4 2022 Guidance Pro Forma Production (Mboe/d)(2) 62 – 64 Capital Expenditures ($MM) $125 – $135 Royalties 20% - 22% Transportation ($/boe) $2.50 - $3.00 Operating
Slide 3: Q3 2022 Highlights
Q3 2022 Highlights Material Free • Generated adjusted funds flow(1) of $177.8MM and $0.40/share in Q3 Funds Flow(1) • Generated free funds flow(1) of $79.4MM in Q3 Financial • Exited Q3 with $286.8MM net debt(1), incl. $137.3MM equity financing proceeds Stability • Completed $100.0MM private placeme
Slide 4: Deltastream: Enhancing Clearwater Scale
Deltastream: Enhancing Clearwater Scale • 2023 estimated production of 23 Mboe/d(1) with over 500 net Enhances locations(2) in the most economic play in North America Clearwater Asset • Adds an additional 184 net sections of core Clearwater acreage at Quality and Scale Marten Hills, Nipisi and Canal
Slide 5: Deltastream Deal Structure: Accretion & Higher Dividends
Deltastream Deal Structure: Accretion & Higher Dividends • 16% accretive to 2023E adjusted funds flow per share(1,2) ACQUISITION METRICS Highly Accretive to • 25% accretive to 2023E adjusted free funds flow per share(1,2) Purchase Price Enterprise Value ($MM) $1,425 Financial Metrics • 5-year averag
Slide 6: New Capital Structure Provides Financial Flexibility
New Capital Structure Provides Financial Flexibility Amortization and Notable Maturities $700 million 3-Year • Covenant-based facility provides available capital Revolver Sustainability-Linked over the three-year term that is not subject to Covenant Based RCF semi-annual reviews Term Loan (Maturity
Slide 7: Risk Management – Increasing 2023 Floor Coverage
Risk Management – Increasing 2023 Floor Coverage(1) Enhancing certainty with flexibility to capture upside value Total Corporate Hedging Coverage (net of royalty) 100% 90% Active Risk Management % of Net of Royalty Production 80% • Increased hedging coverage underpins revenues 70% 75% 70% Incrementa
Slide 8: Return of Capital Program
Return of Capital Program Return of Capital Program Highlights Acquisitions Drive Greater Potential for Return of Capital Increased Base Dividend (Annual $/share) • Low corporate sustaining breakeven price results in Free Funds FFF(1) resilience across the commodity price cycle – Flow(1) provides RO
Slide 9: Updated Return of Capital Framework
Updated Return of Capital Framework Net Debt ($MM) $900 – $1,100 $500 – $900 Calculating Excess Funds Flow @ $500 & Debt Floor (~1.0x @ US$45 WTI)(2) Net Debt to LQA AFF(1) <1.0x <1.0x Up to 25% Shareholder Returns Adjusted Funds Flow(1) (NCIB and/or Enhanced Dividend) Up to 50% Shareholder Returns
Slide 10: 5-Year Plan Anchors Long-Term Sustainability
5-Year Plan Anchors Long-Term Sustainability 5-Year Plan Overview (2023-2027) At Strip ATAX Corporate FFF(2) of $2.5BN - $2.7BN Over 5 Years(1) (BTAX US$55/bbl WTI & $2.50/GJ AECO)(1) ATAX Free Funds Flow(2,4) Generation E&D Capital $1.8B - $2.0B $1,000 Annual Adjusted ATAX Funds Flow(3) ($MM) Spend
Slide 11: North American Payout Period & Half-Cycle Breakeven by Play
11 Payout (Years) 0.0 0.5 1.0 1.5 2.5 2.0 Clearwater Marten Hills Clearwater Nipisi Frobisher Dual Leg Charlie Lake Payout Period Conventional Heavy Oil Hz SK Mississippian Conventional Viking Dodsland Break-Even Delaware Wolfcamp A (Top Quartile) Eagle Ford Oil - East (Top Quartile) N. Dakota Bakke
Slide 12: Clearwater Production Growth
Clearwater Production Growth Industry acceleration in the play lifts total production to >100,000 boe/d Estimated Clearwater Location Inventory Tier 1 CNQ Tier 2 Tamarack is the dominant producer and retains the largest RBY Tier 3 inventory among publicly traded companies HWX TVE internal est. addit
Slide 13: Canadian Clearwater Advantage
Canadian Clearwater Advantage Alberta Clearwater demonstrates superior economics Marten Hills Clearwater Value Drivers Marten Hills Clearwater 250 • Higher and faster returns: Marten Hills wells will payout 3x in under two years vs. top quartile Delaware Payout 1 which take approximately five years
Slide 14: Significant Clearwater Holdings: 752 Net Sections
Significant Clearwater Holdings: 752 Net Sections Net Sections Tamarack Deltastream Pro Forma Peavine / Seal: 77.5 net sections acquired Marten Hills 96.9 96.9 in conjunction with the West Marten Hills 38.4 38.4 Peavine Metis Settlement strategic land arrangement Nipisi 162.3 52.7 215.0 Peavine 77.5
Slide 15: Marten Hills: Adding Tier 1 Derisked Acreage in the Core
Marten Hills: Adding Tier 1 Derisked Acreage in the Core Marten Hills Deltastream 05-26 Peak Monthly Rate: 430 – 460 bopd • Current Production : >12,500 bopd(1) • Area Activity: Over 160 Deltastream and over 500 industry wells have Deltastream 14-02 Peak Monthly Rate: been drilled in the region that
Slide 16: Nipisi & West Marten Hills: Enhancing Inventory
Nipisi & West Marten Hills: Enhancing Inventory Adding top tier lands in support of long-term sustainable development West Marten Hills • Deliverability: IP30 of 135 – 275 bopd; ~19○ API • Increased Activity: Peers testing multiple sands offsetting TVE lands Spur 3-35 • Stepping Out: Derisk drilling
Slide 17: Nipisi Waterflood Design
Nipisi Waterflood Design Substantial fairway has been delineated and is ready for development 9 Leg Modified Pattern Waterflood Pilot Potential Waterflood Development Area Nipisi Waterflood Production 100/14-19-076-07W5/00 600 102/13-19-076-07W5/00 Injection 500 Start 400 Oil (bbl/d) 300 T76 200 100
Slide 18: Southern Clearwater: Stepping Out Post Consolidation
Southern Clearwater: Stepping Out Post Consolidation(1) Achieving payout(2) in ~6 months at US$85/bbl to drive free funds flow(3) Rate-Time Normalized to 11,000m Well Length 355 net locations (4) Stepping Out 300 141 booked & 214 unbooked TVE 13-21 TVE 14-21 at Perryvale IP30: 212 bopd IP30: 197 bop
Slide 19: Charlie Lake Development
Charlie Lake Development Continuing to Increase Our Presence With Added Lands & Prolific Wells Recent M&A Charlie Lake • Expanded Footprint: 2021 tuck-ins added 35.9 net sections and 63 net Hz locations(1) T78 Longshore 08-06 • Unlocking Inventory: First Upper Charlie Lake well at Saddle Hills drill
Slide 20: Charlie Lake Execution & Economics
Charlie Lake Execution & Economics Delivering top tier results with wells paying out in <1 year Well Payout Periods 1.4 Base Case Type Curve Tamarack operates 16 of the top 25 Charlie Lake wells 1.2 Top Quartile Type Curve Since acquiring Anegada Tamarack has drilled ~30 wells 1.0 Base Case + 10% We
Slide 21: Charlie Lake Infrastructure Strategy
Charlie Lake Infrastructure Strategy Building robust infrastructure and egress solutions Infrastructure Access & Expansion T76 • Plant Ownership: Working interests in four major plants where we deliver gas CNRL Valhalla Ovintiv Sexsmith • Firm Service: Firm service agreement in place for additional
Slide 22: Sustainability
SUSTAINABILITY 22 w w w . t a m a r a c k v a l l e y. c a 22
Slide 23: Sustainability-Linked Lending & Notes
Sustainability-Linked Lending & Notes Strengthening Our Commitment to Responsible Energy Production All of Tamarack’s debt has been converted to sustainability-linked debt and includes: • $700 million covenant-based revolving sustainability-linked lending facility (SLL) with a lending syndicate • $3
Slide 24: Tamarack Sustainability Results
Tamarack Sustainability Results Emissions Intensity Indigenous Engagement GHG Emissions Intensity Workforce Metrics 45 41.40 25% 300 6% 40 2.12 37.53 decrease over 3.48% 4.43% Indigenous Workforce Participation (%) 2020 baseline Emissions Intensity (kg CO2e/boe) 33.58 32.96 3.43 250 from 2020 base
Slide 25: Investment Summary
Investment Summary Track record of meeting and exceeding estimates Sustainable Returns Focused Strategy to Grow Production and Free Funds Flow(1) per Share Management team that has demonstrated its ability to execute and capitalize on opportunities Stable Base Economic Oil Balance Sheet Leading ESG
Slide 26: Appendix
APPENDIX 26 w w w . t a m a r a c k v a l l e y. c a 26
Slide 27: Corporate Information
Corporate Information Executive Independent Reserve Evaluator Brian Schmidt (Aakaikkitstaki) President & Chief Executive Officer GLJ Petroleum Consultants Steve Buytels VP Finance & Chief Financial Officer Kevin Screen Chief Operating Officer Auditors Lynne Chrumka VP Exploration KPMG LLP Christine
Slide 28: 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 29: Disclaimers (Oil and Gas Advisories)
Disclaimers (Oil and Gas Advisories) Reserves Disclosure: All reserve references in this presentation are to gross reserves as at the effective date of the applicable evaluation. Gross reserves are Tamarack's total working interest reserves before the deduction of any royalties and including any roy
Slide 30: Disclaimers (Oil and Gas Advisories)
Disclaimers (Oil and Gas Advisories) Specified Financial Measures: 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 me
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