Journey Energy, Inc. · TSX:JOY
Journey Energy — Investor Presentation (May 2024)
32 slides from Journey Energy's investor presentation, May 2024
Slide 1: Corporate Presentation
JOURNEY Corporate Presentation TSX: JOY OTCQX: JRNGF @AlexVergeJOY May, 2024
Slide 2: Journey Today Is…
Journey Today Is… Sustainable Growing free cash flow with low maintenance capital Safe Low decline predictable base Stable revenue stream (power sales) to offset largest operating cost Reduced leverage levels now termed out to 2029 Trades below PDP NAV Low risk development in mature fiel
Slide 3: 2024 Snapshot
2024 SNAPSHOT 12,000 boe/d (April Estimate); 55% liquids (crude oil and NGL’s) Strategic relationship with AIMCo; term debt provider and largest shareholder. December amendment to agreements to amortize repayments to April 30, 2025 13% corporate decline go forward; waterfloods and other low decline
Slide 4: In Q4 2022, Journey Closed a Transformational Oil Weighted Acquisition
IN Q4 2022, JOURNEY CLOSED A TRANSFORMATIONAL OIL WEIGHTED ACQUISITION High value waterflood/EOR pools increased production 40% while lowering declines Key asset in Medicine Hat has compelling multi year development plan Reduced corporate ARO relative to cash flow Attractive acquisition price of $14
Slide 5: Medicine Hat Acquisition Key Asset
ACQUISITION KEYReserves Value HAT (WCS OIL) ASSET MEDICINE Flagship asset in Q4 2022 acquisition, 72% WI, operated Multi year development plan, already yielding favourable results 34 undrilled locations currently identified Drilled 4 wells in Q4 2023 and 4 wells in Q1 2024 Small portion of the pool
Slide 6: Corporate Growth Guidance
Corporate 2024 Growth GUIDANCE Returns in 2022 2021 2022 2023 2024 2024 Q1 Operating Highlights Actual Actual Actual Forecast Actual Production Average (boe/d) 8,004 9,778 12,415 11,500 – 12,000 11,906 Oil and NGLs (%) 47% 49% 54% 55% 56% Corporate Decline Rate (%) 14% 14% 13% 13% 13% Reference Pric
Slide 7: Price Sensitivity Chart
Reserves PRICE Value SENSITIVITY CHART WTI ($USD/BBL) Adjusted Funds Flow ($MM) $74.00 $76.00 $78.00 $80.00 $82.00 $84.00 $86.00 $88.00 $90.00 $1.85 58.8 63.2 67.7 72.1 76.3 80.8 85.0 89.1 93.3 $1.95 59.7 64.2 68.6 73.1 77.3 81.7 85.9 90.1 94.3 $2.05 60.7 65.1 69.6 74.0 78.3 82.7 86.9 91.1 95.2 AECO
Slide 8: Journey's Power Business Is Expanding from 4 MW to 35 MW in 2025
JOURNEY'S POWER BUSINESS IS EXPANDING FROM 4 MW TO 35 MW IN 2025 Countess (2020) 4 MW on stream September 2020 Fuel gas supplied by long life natural gas (Countess field) Connected to Alberta power grid Project has paid out original investment Gas price equivalent of $9.47/mcf for the first 9 months
Slide 9: Monthly Power and Fuel Costs vs. Forecast Power Generation Revenue
MONTHLY POWER AND FUEL COSTS VS. FORECAST POWER GENERATION REVENUE $6,000,000 Monthly Fuel & Power Cost/Power Generation Revenue $5,000,000 Dashed line represents the hypothetical revenues Journey would have realized if Mazeppa and Gilby Power Generation were online alongside Countess $4,000,000 in
Slide 10: Steps Taken in 2023 and 2024 Position Journey for 2025
STEPS TAKEN IN 2023 AND 2024 POSITION JOURNEY FOR 2025 Retired $40 million of debt in 2023; additional $20 million to be retired in 2024 Issued 3.0 million CDE flow through shares for $20 million to fund Q4 2023/Q1 2024 drilling program Issued $38 million in convertible debentures in March 2024 to t
Slide 11: Journey Duvernay Light Oil Joint Venture (May 7, 2024)
Reserves JOURNEY DUVERNAY LIGHT ValueVENTURE (MAY 7,2024) OIL JOINT 128 Section Joint Venture land block; 94 sections currently controlled JV land block is within the thick Duvernay oil fairway Journey initial WI in JV land block is 37.5% Spartan Delta Corp initial WI in JV land block is 62.5% Plan
Slide 12: Joint Venture Lands Support Over 60 Net Well Locations
ReservesOVER JOINT VENTURE LANDS SUPPORT Value60 NET WELL LOCATIONS 2024 Duvernay Type Curve Well Economics(2) DCET(1) Capex ($,000) 13,000 11,000 Reserves (MBOE) 573 573 Oil Reserves (MBBL) 400 400 % Oil and NGLs 74% 74% IP30 (BOE/day) 722 722 IP365 (BOE/day) 420 420 F&D ($/BOE) 22.70 19.20 NPV(3)@
Slide 13: December 31, 2023 Year End Reserves Summary
DECEMBER Stable Base -–2020 2021 31, 2023 YE YEReserves Reserves YEAR END Summary Summary RESERVES Company Gross (WI) Reserves(1) / Value (January 1, 2024 3 Consultants Pricing) Oil Gas NGLs NPV10 ($million) Reserve Category Mboe RLI FDC ($ million)(2) (Mbbl) (Bcf) (Mbbl) Before Tax (1) Proved Devel
Slide 14: Pull Back in Commodity Price from 2022 High Impacts Near Term Cash Flow, Not Long Term Value
PULL BACK IN COMMODITY PRICE FROM 2022 HIGH IMPACTS NEAR TERM CASH FLOW, NOT LONG Reserves Value TERM VALUE $100 3 Consultants Average WTI Price ($US/bbl) $95 2022 Actual $90 Actual April 2024 $85 $80 2023 Actual 2024 Budget $75 $70 $65 $60 2022 2023 2024 2025 2026 2027 2028 Jan 2023 3ConAvg WTI USD
Slide 15: Growing Net Asset Value Per Share
GROWING NET ASSET VALUE PER SHARE $14.35/share P+P $12.84/share P+P $8.44/share $8.19/share P+PDP P+P $6.77/share $6.44/share PDP P+PDP $5.00/share $3.86/share PDP $3.77/share P+PDP JOY Shares P+P $2.85/share April 1 PDP $3.25/share $0.86/share P+PDP ‐$0.05/share PDP Period YE 2020 YE 2021 YE 2022 Y
Slide 16: Pathway to Shareholder Value Creation
PATHWAY TO SHAREHOLDER VALUE CREATION Corporate Production Decline Rates (%/year) Journey’s suite of low decline, waterflooded conventional 45% assets have an industry‐leading PDP Reserve Life Index 40% (RLI) of 8.4 years 35% 30% Peer Average: 29%/yr Base Decline Journey’s base corporate production
Slide 17: GLJ Forecasted Edmonton Light Price Reversing Trend Since January 2021
Reserves GLJ FORECASTED EDMONTON LIGHT Value PRICE REVERSING TREND SINCE JANUARY 2021 2015 Actual April 2024 2017 2020 2024 Budget 2024 2022 2021 2021 Increasing price favors companies with larger reserve bases (1) GLJ published price forecasts January 1 of forecast year 17
Slide 18: Extensive Drilling Inventory (Excludes Duvernay Inventory)
EXTENSIVE DRILLING INVENTORY (EXCLUDES DUVERNAY INVENTORY) Journey has identified 309 (254 net) horizontal drilling opportunities Drilling Locations(1) % Booked(2) in Total(1) Reserve Report Region Gross Net South 159 134 39% Central 150 120 39% Total 309 254 39% Unbooked Projects Booked Projects(2)
Slide 19: Development Potential: Strong Base, Even Stronger Future
Reserves STRONG BASE! EVEN STRONGER ValueDEVELOPMENT POTENTIAL FUTURE (As at December 31, 2023) Journey’s $247 million of P+P future development capital (FDC) is approximately $8.25/P+P boe 61% of Journey’s identified capital projects remain unbooked Journey’s P+P FDC adds $299 million of NPV@10%; t
Slide 20: How to Make a Low Decline Even Lower
HOW TO MAKE A LOW DECLINE EVEN LOWER 770 MM bbl on waterflood 38 MM bbl conventional 280 MM bbl 38 MM to JOY net barrels of future potential be delineated and flooded DOOIP by category for waterflood 1.1 Billion net bbl of DOOIP 770 MM bbl 355 MM bbl convert 280 MM bbl future on waterflood/Polymer c
Slide 21: But Wait! There's Still More to Come
BUT WAIT! THERE’S STILL MORE TO COME 1.1 Billion net barrels of DOOIP 3.0% of booked recovery 85.0% of oil left behind Ultimate 12.0% recovered to date Recovery 15.0% ultimate recovery Oil left behind becomes Target Resource Journey can double our P+P oil reserves by recovering 3.8% more of the oil
Slide 22: In 2024, Journey Will…
In 2024, Journey Will… Pay off $20 million of its outstanding term debt… …defer remaining principle payments to 2029 Advance power projects with combined NPVs of $60‐$80 million… … material increase in PDP Net Asset Value per Share for 2024 Begin Duvernay development drilling on our joint venture bl
Slide 23: Energized and Engaged Team
Energized and Engaged Team Alex G. Verge, P.Eng., M.Eng. President and Chief Executive Officer, and Director – Previously President and CEO of NuVista Energy, VP Engineering at Bonavista, and senior positions at Poco Petroleums, Rising Resources, Shell, and Gulf. Gerry N. Gilewicz, CPA, CMA Chief Fi
Slide 24: Directors – Strong Governance
Directors – Strong Governance Craig Hansen Chairman of the Board – Independent businessman, Former President and Chief Executive Officer of Zargon Oil & Gas Ltd. and its predecessor, Zargon Energy Trust. Thomas Mullane Reserves Committee Chair – Independent businessman and former President and Chief
Slide 25: Appendix
Appendix 25
Slide 26: Value of Inventory Appreciates with Pricing
Value of Inventory Appreciates with Pricing Comparative Economics Versus Oil Price ‐ IRR% 180 Matziwin HZ (MSW) AECO $3.75/Mmbtu(1) 160 Crystal HZ (MSW) 140 Cherhill HZ (MSW) Westerose HZ (MSW) 120 Skiff 2 HZ WF Pattern (WCS) 100 Medicine Hat HZ (WCS) IRR % 80 60 40 20 0 $60/bbl WCS, $80/bbl MSW $70
Slide 27: Journey Has Over Years of Drilling Inventory
Journey Has Over 15 Years of Drilling Inventory Comparative Economics Versus Oil Price ‐ Payout (Years) 4.5 AECO $3.75/Mmbtu(1) Skiff 2 HZ WF Pattern (WCS) 4.0 Westerose HZ (MSW) AECO $3.75/Mmbtu(1) Cherhill HZ (MSW) 3.5 Crystal HZ (MSW) Matziwin HZ (MSW) 3.0 Medicine Hat HZ (WCS) Payout Years 2.5 2
Slide 28: Environment, Social and Governance: Environmental
Environment, Social and Governance Environmental Journey is striving to reduce direct emissions intensity from year end 2022 levels for scope 1 and 2 emissions. We chose this time period for this target to focus on new reductions rather than accounting for reductions already achieved. We reuse 99.9%
Slide 29: Environment, Social and Governance (Continued): Social
Environment, Social and Governance (Continued) Social Journey takes pride in maintaining its operations with the highest of standards and ensures its suppliers of goods and services do so as well. Journey operates in nine key areas in the province of Alberta and is very active in the communities in
Slide 30: Environment, Social and Governance (Continued): Governance
Environment, Social and Governance (Continued) Governance In recognition of the key role that sustainability plays in our business, Journey has mandated that the Board of Directors (the “Board”) take an active role in evaluating our corporate sustainability strategy, improving our risk management pr
Slide 31: Forward-Looking Statements and Financial Measures
Forward-Looking Statements and Financial Measures This presentation contains “forward‐looking statements” including estimates of future production, cash flows and reserves, business plans for drilling and exploration, the estimated amounts and timing of capital expenditures, the assumptions upon whi
Slide 32: Oil and Gas Advisory
Oil and Gas Advisory The crude oil, natural gas and natural gas liquid reserves and related future net revenue of Journey presented herein were evaluated by GLJ, Journey’s independent reserves evaluators, in accordance with the requirements of National Instrument 51‐101 (“NI 51‐101”) and the Canadia