Obsidian Energy Ltd · TSX:OBE
Obsidian Energy — Investor Presentation (February 2024)
39 slides from Obsidian Energy's investor presentation, Feb 22, 2024
Slide 1: Obsidian Energy Ltd. 2024 Corporate Presentation
Obsidian Energy Ltd. 2024 Corporate Presentation February 22, 2024 TSX:/NYSE American: OBE
Slide 2: Advisory
ADVISORY OVERVIEW This presentation should be read in conjunction with the Company’s audited annual consolidated financial statements and MD&A for the year ended December 31, 2023. All dollar amounts contained in this presentation are expressed in millions of Canadian dollars unless otherwise indica
Slide 3: Corporate Overview
CORPORATE OVERVIEW OVERVIEW World class assets and experienced team delivering value People, assets, discipline, return-focus and execution strength CORPORATE SUMMARY MARKET SUMMARY Production 2024E 36,000 boe/d Shares outstanding 77.3 million 2023 32,275 boe/d YoY production growth* 12% Market capi
Slide 4: Our Strategic Advantages
OUR STRATEGIC ADVANTAGES OVERVIEW Differentiating Obsidian Energy from peers to realize enhanced shareholder returns Diversified portfolio of low decline, oil-weighted assets with 14 years of reserves, generating light and heavy oil TOP QUALITY ASSETS production with substantial growth upside. FINAN
Slide 5: Obsidian Energy Strategy
OBSIDIAN ENERGY STRATEGY OVERVIEW We focus on superior execution to deliver results and sustainable value to shareholders STRATEGY TO DELIVER SUPERIOR SHAREHOLDER RETURNS Drive per share growth Use FCF from Grow production to Maintain prudent via production growth, light oil assets to invest 50,000
Slide 6: 2023 Highlights
2023 HIGHLIGHTS 2023 RESULTS Successful, active year provides new opportunities for strong FCF and value in 2024 and beyond ‣ Announced three-year corporate growth plan to increase production to 50,000 boe/d in 2026 ‣ Initiated return of capital to shareholders through share buyback program ‣ ~5.1 m
Slide 7: Delivering Results
DELIVERING RESULTS 2023 RESULTS Strategy and execution create momentum for long-term value 2021 2022 2023 GROWTH IN PRODUCTION (boe/d; boe/d per share) Production 24,605 boe/d 30,682 boe/d 32,275 boe/d 40,000 36,750 160 Capital expenditures $140.9 million $314.8 million $292.5 million 35,250 140 Dec
Slide 8: 2023 Reserves Highlights
2023 RESERVES HIGHLIGHTS 2023 RESULTS Growth in reserves volumes and improved efficiencies generating strong reserve replacement and recycle ratios YEAR-END 2023 RESERVES SUMMARY Proved developed Total proved Total proved 7th Consecutive Year producing (PDP) (1P) plus probable (2P) of >100% reserve
Slide 9: 2023 Reserves Locations
2023 RESERVES LOCATIONS 2023 RESULTS Replacing production by >120% and increasing booked locations with significant future inventory potential Substantial inventory for future growth OBE LAND BOOKED RESERVE LOCATIONS (sections prospective for formation) (number, 2P, net) 350 129 343 425 300 311 250
Slide 10: Focus During 2024 - Highlights
FOCUS DURING 2024 - HIGHLIGHTS 2024 STRATEGY Strategy to unlock shareholder value through focus on growth, accessing Peace River potential and returns 2024 plans expected to deliver 12% production growth, FCF generation, stable debt levels, and return of capital to shareholders to maximize value OPE
Slide 11: 2024 Guidance
2024 GUIDANCE 2024 STRATEGY Value-added growth through the development of new and existing fields while further appraising our Peace River asset 2024E HEAVY OIL LIGHT OIL Average production 35,250 – 36,750 boe/d Based on midpoint of guidance Capital expenditures $345 – $355 million Average productio
Slide 12: 2024 Capital Program
2024 CAPITAL PROGRAM 2024 STRATEGY Expanded development and exploration/appraisal program to add production and delineate assets 78 (77.3 NET) WELL OPERATED DRILLING PROGRAM ‣ Expected average production of ~36,000 boe/d, a 12% annualized production growth from 2023 ‣ Ability to alter program quickl
Slide 13: Peace River Growth Asset
PEACE RIVER GROWTH ASSET HEAVY OIL ASSETS (PEACE RIVER) Ownership in high-quality heavy oil resource with Bluesky and Clearwater upside Highly economic play and source of future growth 100% ‣ Large, contiguous, long-term land base of ~525 average working interest sections with Bluesky and Clearwater
Slide 14: Peace River 2024 H1 Program
PEACE RIVER 2024 H1 PROGRAM HEAVY OIL ASSETS (PEACE RIVER) Strong technical work provides foundation for substantial future development opportunities and growth 2024 H1 program (wells rig released) WALRUS ‣ Development: 11 wells ‣ New development field ‣ Exploration/appraisal : 2 wells ‣ Major growt
Slide 15: Clearwater Growth – Dawson Area
CLEARWATER GROWTH – DAWSON AREA HEAVY OIL ASSETS (PEACE RIVER) New development area established at Dawson field through drilling and technology ‣ Industry activity continues over emerging Clearwater formation play ‣ First Clearwater development field established in 2023 ‣ Strong reservoir and fluid
Slide 16: Light Oil Assets
LIGHT OIL ASSETS LIGHT OIL ASSETS History of highly economic returns with years of low-risk inventory 2023 Cardium production 23,437 boe/d PEMBINA Cardium (Willesden Green/Pembina) ‣ One of North America’s most significant light oil fields with the dominant land position among peers ‣ Significant re
Slide 17: Cardium Resource Play – Consistent Robust Netbacks
CARDIUM RESOURCE PLAY – CONSISTENT ROBUST NETBACKS LIGHT OIL ASSETS Long-term, low decline, stable production providing strong returns and quick payouts for years Sustainable, efficient and highly economic development Case Study: Open Creek 11-15 Well 80% ‣ Extensive acreage ‣ Outperforming the aver
Slide 18: Willesden Green/Pembina 2024 H1 Program
WILLESDEN GREEN/PEMBINA 2024 H1 PROGRAM LIGHT OIL ASSETS Economic returns with years of low-risk inventory providing strong returns and quick payouts 2024 H1 program (wells rig released) PEMBINA ‣ 12 (11.4 net) wells ‣ Low decline, pressure-maintained development PEMBINA ‣ Existing wells and infrast
Slide 19: Considerable Future Value from Tax Pools
CONSIDERABLE FUTURE VALUE FROM TAX POOLS SUMMARY $2.4 billion of tax pools in unrecognized value to be leveraged in our three-year growth plan Our significant tax pool position is estimated to save TAX POOL COMPOSITION ~$35 million in 2024 (December 31, 2023) $0.3 billion Amount of Pools Illustrativ
Slide 20: Reserves Underpin Our Current and Future Value
RESERVES UNDERPIN OUR CURRENT AND FUTURE VALUE SUMMARY Trading at substantial discount on booked reserves basis; growing per share metrics to increase shareholder value NET ASSET VALUE (NAV) PER SHARE YEAR-END 2023 RESERVES SUMMARY (C$ per share) TOTAL TOTAL PROVED US$65 WTI US$75 WTI US$85 WTI $35
Slide 21: Why Invest in Obsidian Energy
WHY INVEST IN OBSIDIAN ENERGY SUMMARY Peace River growth area combined with established light oil production offers upside potential for shareholders ORGANIC GROWTH STRATEGY ‣ Strategy focused on growing Peace River production and per share metrics with expectation to continue to return capital to s
Slide 22: Appendix
Appendix TSX:/NYSE American: OBE
Slide 23: Hedging Production to Preserve Cash Flow
HEDGING PRODUCTION TO PRESERVE CASH FLOW APPENDIX Continuing to build on our hedge position at constructive levels OIL HEDGES ‣ WCS differentials: AECO GAS HEDGES ($, mcf/d) ‣ April to June 2024: 750 bbl/d @ $18.80/bbl (US$14.10/bbl) 50,000 $2.52 $2.52 AECO GAS COLLARS 40,000 $3.35 43,365 43,365 50%
Slide 24: Three-Year Growth Plan Financials
THREE-YEAR GROWTH PLAN FINANCIALS APPENDIX Compelling value proposition with accelerated production, and both free cash flow and funds flow growth for strong /share metrics 2024E 2025F 2026F Peace River (heavy oil) 8,500 boe/d 15,500 boe/d 24,000 boe/d ‣ Three-year plan forecast reflects 2023 NCIB W
Slide 25: Peace River Multi-Zone Opportunities
PEACE RIVER MULTI-ZONE OPPORTUNITIES APPENDIX Creating value applying multi-zone development across our Peace River asset ‣ Bluesky: ‣ Multi-stacked drilling Apply learnings from ‣ 4 – 8 wells per section, Bluesky and Clearwater FORMATION depending on zone thickness COLORADO SHALE exploration/apprai
Slide 26: Viking – Significant Development Upside
VIKING – SIGNIFICANT DEVELOPMENT UPSIDE APPENDIX Revitalizing light oil asset that provides high IP rates, highly economic return and quick payouts 100% average working interest History of unlocking reserves and production value ‣ Sweet, light oil development play with associated natural gas 1,939 b
Slide 27: Well Economics
WELL ECONOMICS APPENDIX Strong returns across areas despite pressure in the current commodity price environment HALF CYCLE RESERVE TYPE CURVE ECONOMICS PEACE RIVER WILLESDEN GREEN PEMBINA VIKING Formation Bluesky1 Clearwater2 Cardium2 Cardium2 W. Viking (Esther)2 Well Length 11 legs 8 legs 2.0 mile
Slide 28: Sustainability Highlights
SUSTAINABILITY HIGHLIGHTS APPENDIX Striving to make a difference to the environment, the community and for all stakeholders Environment Social Governance 9% REDUCTION IN GHG >11,000 WORKER 86% INDEPENDENT EMISSION INTENSITY SAFETY INITIATIVES BOARD MEMBERS (2021 – 2022 ) (2022) (6.4-year average ten
Slide 29: Experienced Team with Strong Technical Skills
EXPERIENCED TEAM WITH STRONG TECHNICAL SKILLS APPENDIX Working together to build a top tier developer that provides solid returns to stakeholders EMPLOYEES FINANCIAL AND COMMERCIAL ‣ ~285 staff & contractors Deep experience in professions, representing the top tier of light Strong financial, commerc
Slide 30: Endnotes
Endnotes TSX:/NYSE American: OBE
Slide 31: Endnotes
ENDNOTES ENDNOTES Slide 3: Corporate Overview Slide 8, 2023 Reserves Highlights, cont. Market capitalization determined with share price on the close of business on February 20, 2024, on Booked reserve locations reflects locations as defined by our Independent, Qualified Reserves Evaluator in the TS
Slide 32: Endnotes, Cont.
ENDNOTES, CONT. ENDNOTES Slide 11: 2024E Guidance, cont. Slide 17: Cardium Resource Play – Consistent Robust Netbacks Pricing assumptions outlined are forecasted for the full year of 2024 and include risk management Booked reserve locations reflects locations as defined by our Independent, Qualified
Slide 33: Endnotes, Cont.
ENDNOTES, CONT. ENDNOTES Slide 23: Hedging Production to Preserve Cash Flow Slide 26: Viking – Significant Development Upside In accordance with policies approved by our Board of Directors, the Company may, from time to time, Booked reserve locations reflects locations as defined by our Independent,
Slide 34: Definitions and Industry Terms
DEFINITIONS AND INDUSTRY TERMS ENDNOTES 2024E means the expected 2024 results, based on internal ESG means environmental, social and governance MSW means Mixed Sweet Blend crude oil assumptions and estimates EUR means expected ultimate recovery, which is the total MWh/d means megawatt hour per day P
Slide 35: Non-GAAP Measures Advisory
NON-GAAP MEASURES ADVISORY ENDNOTES Throughout this presentation and in other materials disclosed by the Company, we employ certain measures to analyze financial performance, financial position and cash flow. These non-GAAP and other financial measures do not have any standardized meaning prescribed
Slide 36: Oil and Gas Information Advisory
OIL AND GAS INFORMATION ADVISORY ENDNOTES Barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. A boe conversion Test Results and Initial Production Rates ratio of six thousand cubic feet of natural gas to one barrel of crude oil is based on an energy Readers are ca
Slide 37: 2023 Reserves Disclosure and Definitions
2023 RESERVES DISCLOSURE AND DEFINITIONS ENDNOTES Unless otherwise noted, any reference to 2023 reserves in this presentation are based on the report (the “Reserves Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories: Report”) prepared by GL
Slide 38: Forward-Looking Information Advisory
FORWARD-LOOKING INFORMATION ADVISORY ENDNOTES Certain statements contained in this document constitute forward-looking statements or information (collectively With respect to forward-looking statements and FOFI contained in this document, the Company has made "forward-looking statements") within the
Slide 39: Forward-Looking Information Advisory (Cont.)
FORWARD-LOOKING INFORMATION ADVISORY (CONT.) ENDNOTES Although the Company believes that the expectations reflected in the forward-looking statements and FOFI to our agreements with our lenders and the holders of our senior unsecured notes; the possibility that we are forced contained in this docume
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