Athabasca Oil Corporation · TSX:ATH
Athabasca Oil — Investor Presentation (January 2021)
37 slides from Athabasca Oil's investor presentation, January 2021
Slide 1: Athabasca Oil Corporation Corporate Overview - January 2021
ATHABASCA OIL CORPORATION FOCUSED | EXECUTING | DELIVERING CORPORATE OVERVIEW - JANUARY 2021
Slide 2: Premier Resource Exposure
PREMIER RESOURCE EXPOSURE LIGHT OIL ~32,000 boe/d THERMAL OIL MONTNEY ~90% liquids ~$500MM EV $152MM Cash HANGINGSTONE 95 year 2P RLI 1,300 MMboe 2P 455 MMboe Proved LIGHT OIL CORNER DUVERNAY LEISMER ATHABASCA OIL (TSX:ATH) Footnotes and additional information included in the back as endnotes 1
Slide 3: Q3 2020 Highlights
Q3 2020 HIGHLIGHTS 32,061 boe/d $2.2MM Free Cash Flow 86% liquids Netbacks $12MM Capex $152MM Cash $21/boe Light Oil Unrestricted 85% Thermal / 15% Light Oil $16/bbl Leismer ATHABASCA OIL (TSX:ATH) Footnotes and additional information included in the back as endnotes 2
Slide 4: The Transformation
THE TRANSFORMATION $486MM $400MM $265MM Light Oil JV Contingent Infrastructure FCF Generation with Bitumen Sale COVID19 Murphy Oil Royalty Resource Disciplined Manage Appraisal Operations Business 2016 2017 2018 2019 Strong Balance 2020 Momentum Funding Sheet Maintain not Secured Strong $560MM Futur
Slide 5: Operational Improvements
OPERATIONAL IMPROVEMENTS PRODUCTION (BOE/D) OPERATING EXPENSES ($/BOE) 50,000 $25 >100% Production Per Share Growth 40,000 (22% CAGR) $20 ~$10/boe reduction (‐14% CAGR) 30,000 $15 20,000 $10 10,000 $5 ‐ $‐ 2016 2017 2018 2019 2020F 2021F 2016 2017 2018 2019 2020F CAPITAL EXPENDITURES ($/BOE) 2P RESE
Slide 6: Response to COVID-19
RESPONSE TO COVID-19 Ensured the Safety of Staff Maximized Maintained Strong and Contractors Funds Flow Corporate Liquidity • Hangingstone shut‐in/restart • Reduced capital program • Enacted Business Continuity Plan (~$40MM reduction) • Developed site specific plans with • Voluntary curtailments at
Slide 7: Business Environment & COVID-19 Impact
BUSINESS ENVIRONMENT & COVID-19 IMPACT $15 WTI‐WCS DIFFERENTIAL (US$/BBL) COVID‐19 IMPACT $26 o WHO declared COVID‐19 a pandemic in March 2020 o Resulted in a material disruption to global economy $10 INVENTORIES CONTINUE TO DRAWDOWN Pipe o Global supply‐demand deficit of 1.5‐2mmbbl/d in H2 2020* $5
Slide 8: Outlook, Capitalization & Hedging
OUTLOOK, CAPITALIZATION & HEDGING WTI HEDGES (BBL/D; US$/BBL) 20,000 2020 OUTLOOK Collars o Production ~32,250 boe/d 3‐Ways 15,000 o Capital program ~$85MM $39.90/$45.63 2021 OUTLOOK 10,000 o Production 31,000 – 33,000 boe/d (90% liquids) o Capital program $75MM 5,000 o ~$70MM Thermal Oil & ~$5MM Li
Slide 9: ESG Commitment
ESG COMMITMENT ENVIRONMENT SOCIAL CORPORATE EMISSIONS INTENSITY o Community & stakeholder engagement 0.07 Air Quality o AOC supports many local causes o 34% reduction in corporate emissions Intensity (tonnes CO2e/boe) 0.06 0.05 o Optimized facilities to reduce emissions o Deployed technologies reduc
Slide 10: Athabasca Value Proposition
ATHABASCA VALUE PROPOSITION Certainty on Long Term Financial Capacity to Top Tier Assets with Long Unparalleled Torque to Egress to High Value Navigate Volatile Markets Term Reserves Oil Prices longer term Markets Through the Cycle Liquids weighted portfolio 7,200 bbl/d on Keystone +US$5 WTI g
Slide 11: Thermal Oil: Leismer, Hangingstone & Other Assets
THERMAL OIL LEISMER, HANGINGSTONE & OTHER ASSETS
Slide 12: Thermal Oil Portfolio
THERMAL OIL PORTFOLIO LEISMER – TOP TIER OIL SANDS PROJECT AOC THERMAL PROPERTIES o ~20,000 bbl/d productive capacity (~3x SOR) o 695 mmbbl 2P reserves; 95 year 2P RLI Fort McMurray o US$27 WCS operating break‐even (US$12.50 WCS diff) AOC Hangingstone HANGINGSTONE o ~9,500 bbl/d productive capacity
Slide 13: Leismer Overview
LEISMER OVERVIEW DEVELOPMENT MAP ASSET OVERVIEW o Located ~100 km south of Fort McMurray o Central Processing Facility (CPF); approved capacity of 40,000 bbl/d PAD 8N PAD 8S o On site lodge with ~500 person capacity; owned Aerodrome PAD 5 CPF PAD 6 SUBSURFACE DATA & WELLS 4PAD 3 PAD 4PAD o 500+ deli
Slide 14: Leismer Pad Overview
LEISMER PAD OVERVIEW HIGHLIGHTS PADS 1‐4 (BBL/D) 20,000 Forecast 15,000 Actuals o Pads 1 – 4 have well developed chambers 10,000 ~27% annual decline since 2018 5,000 ‐ Seismic shows connected pairs and pads 2010 2012 2014 2016 2018 2020 2022 2024 2026 PADS 5‐6 (BBL/D) 12,500 o Pads 5 – 6 are lat
Slide 15: Leismer Improvements
LEISMER IMPROVEMENTS TECHNOLOGY DRIVING RATES (BBL/D) LOWER WELL PAIR COSTS ($MM) 1,200 $25 Avg. Facilities Cost Pad 1‐6 Avg. Completion Cost Pad 7 Avg. Drilling Cost $20 900 $15 600 $10 Achieved through longer 300 laterals and implementation of flow control devices $5 0 $0 1 13 25 37 49 61 73 L5 L6
Slide 16: Leismer Future Opportunities
LEISMER FUTURE OPPORTUNITIES STRATEGY LEISMER DEVELOPMENT (BBL/D) 25,000 o Maximize free cashflow and deliver strong netbacks o Focus on projects that improve the SOR 20,000 L6 infills + L7P6 Illustrative o Maintain agility and execution readiness Sustaining Pad 8 15,000 2021 BASE CAPITAL o L7P6 & L
Slide 17: Hangingstone Overview
HANGINGSTONE OVERVIEW ASSET HIGHLIGHTS DEVELOPMENT MAP o Located ~20 km south of Fort McMurray o Central Processing Facility (CPF); approved capacity of 12,000 bbl/d o No camp; proximal to Fort McMurray SUBSURFACE DATA & WELLS o >250 delineation wells with good seismic coverage o First steam March 2
Slide 18: Hangingstone Future Opportunities
HANGINGSTONE FUTURE OPPORTUNITIES REDUCING NON‐ENERGY OPEX ($MM) STRATEGY $60 ~$27MM reduction through o Focused on base production staffing, camp and disposal (~$9.25/bbl reduction) o Continued cost management $45 o Minimize capital spend $30 2020 2021 EXPECTATIONS shut‐in opex o Production ramping
Slide 19: Light Oil: Placid & Kaybob
LIGHT OIL PLACID & KAYBOB
Slide 20: Light Oil Portfolio
LIGHT OIL PORTFOLIO PLACID MONTNEY – 70% WORKING INTEREST AOC LIGHT OIL PROPERTIES o ~80,000 gross prospective acres o ~150 gross future locations o $19/boe operating netback (Q3/20) KAYBOB DUVERNAY – 30% WORKING INTEREST o ~220,000 gross prospective acres Keyera Simonette Fox Creek o ~700 gross fut
Slide 21: Placid Montney Overview
PLACID MONTNEY OVERVIEW PLACID ACTIVITY PLACID MONTNEY ASSET – OPERATED o Located ~140 km southeast of Grande Prairie o ~80 mmcf/d & 10,000 bbl/d infrastructure capacity o Field operations located in Fox Creek Ovintiv SUBSURFACE DATA & WELLS o Targeting multiple Montney intervals o ~55 horizontal pr
Slide 22: Kaybob Duvernay Overview
KAYBOB DUVERNAY OVERVIEW KAYBOB DUVERNAY KAYBOB DUVERNAY ASSET – NON OP KAYBOB NORTH KAYBOB EAST o Located ~160 km southeast of Grande Prairie o Two batteries; ~100 mmcf/d & 25,000 bbl/d o $1 billion invested over past 4 years ($75MM net to AOC) SIMONETTE KAYBOB WEST SUBSURFACE DATA & WELLS SAXON TW
Slide 23: Light Oil Improvements
LIGHT OIL IMPROVEMENTS $25 INDUSTRY LEADING NETBACK (Q3/20) Liquids Weighted Netback (>40% liquids) Gas Weighted Netback (>60%Liquids gas) Weighted Netback (>40% liquids) High Liquids %Costs (Operating, Transportation, Gas Weighted Royalties) Netback (>60% gas) $20 High Quality Product Costs (Operat
Slide 24: Placid Future Opportunities
PLACID FUTURE OPPORTUNITIES STRATEGIC OBJECTIVES 2021 CONDITIONAL DEVELOPMENT o Continued development flexibility and readiness o Focus on free cash flow generation FUTURE ACTIVITY o Minimal 2021 budget focused on maintenance capital to support base production Conditional: 12‐24 Pad Drill & Complete
Slide 25: Duvernay Future Opportunities
DUVERNAY FUTURE OPPORTUNITIES KAYBOB DUVERNAY STRATEGIC OBJECTIVES KAYBOB NORTH KAYBOB EAST o Continued development flexibility and readiness o Focus on free cash flow generation SIMONETTE KAYBOB WEST FUTURE DEVELOPMENT o Minimal 2021 budget focused on maintenance capital to SAXON support base produ
Slide 26: Appendix
mea APPENDIX
Slide 27: 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 28: Market Egress
MARKET EGRESS THERMAL OIL EGRESS LONG TERM EGRESS SECURED Current Egress o 7,200 bbl/d on Keystone LT Egress AOC Thermal o 10,000 bbl/d on Keystone XL Leases o 20,000 bbl/d on TMX Expansion CANADIAN PIPELINES UNDER CONSTRUCTION o Trans Mountain Expansion – Government of Canada owned Enbridge South o
Slide 29: Canadian Energy Makes a Global Difference
CANADIAN ENERGY MAKES A GLOBAL DIFFERENCE THE WORLD NEEDS CANADA’S ENERGY WORLD ENERGY MIX (2016 – 2040) o Energy Demand to grow by 27% by 2040 o ALL forms of energy are needed CANADA IS A GLOBAL LEADER IN INNOVATION & ENVIRONMENTAL STEWARDSHIP o If Canadian Energy standards were applied across the
Slide 30: Track Record of Transaction Execution
TRACK RECORD OF TRANSACTION EXECUTION HIGHLIGHTS o ~$2.25 billion of strategic and creative transactions completed through the down cycle o Transactions focused on managing risk and building scale while minimizing dilution to shareholders C$486MM Light Oil Joint Venture C$560MM Leismer Acquisition C
Slide 31: Light Oil Joint Venture with Murphy Oil
LIGHT OIL JOINT VENTURE WITH MURPHY OIL STRATEGIC RATIONALE o Corporate • Reduce development risk profile while maintaining upside potential • Strengthen balance sheet and facilitate debt refinancing o Montney • Material operated land position with flexibility to control pace of development o Duvern
Slide 32: Contingent Bitumen Royalty
CONTINGENT BITUMEN ROYALTY $70MM UPSIZED ROYALTY o Upsized Royalty only applies to the Hangingstone, SLIDING SCALE ROYALTY Leismer and Corner Leismer, Corner & US$ WCS Hangingstone o Total cash proceeds of $467MM <$60 0.0% $60 2.5% ROYALTY OVERVIEW $80 8.8% >$100 15.0% o US$ Western Canadian Select
Slide 33: Statoil Purchase: Transformational Acquisition
STATOIL PURCHASE: TRANSFORMATIONAL ACQUISITION 2 510km2 Assets Total Acreage 838 Delineation Wells ~24,000 bbl/d 2P Reserves 856 mmbbl $165MM Cash Flow at Current Production Resource 628 mmbbl US$60/bbl WTI ~70 year Infrastructure 80,000 bbl/d Leismer 2P RLI Dilbit/Diluent Pipes Regulatory Approval
Slide 34: Leismer Infrastructure Transaction
LEISMER INFRASTRUCTURE TRANSACTION STRATEGIC TRANSACTION WITH ENBRIDGE Unlocking Value Bolstered Liquidity o $265MM cash consideration o 30 year term with an annual toll of ~$26MM o Priority service on pipelines & dilbit/diluent tanks (2x 150mbbl) Proceeds ~50% of ~$550MM o Excess volumes above firm
Slide 35: Endnotes
ENDNOTES Slide Endnotes 1 (1) Liquidity = cash & equivalents + available credit facilities as of September 30, 2020 (2) Consolidated reserves as at December 31, 2019 evaluated by McDaniel & Associates Consultants Ltd. (3) Reserve life index calculated on corporate 2P reserves of 1,300 mmboe and ~37,
Slide 36: 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 37: Athabasca Oil Corporation
ATHABASCA OIL CORPORATION