Obsidian Energy Ltd · TSX:OBE
Obsidian Energy — Investor Presentation (January 2023)
38 slides from Obsidian Energy's investor presentation, Jan 31, 2023
Slide 1: Obsidian Energy Ltd. 2023 Guidance Presentation
Obsidian Energy Ltd. 2023 Guidance Presentation January 31, 2023 TSX:/NYSE American: OBE
Slide 2: Advisory
ADVISORY OVERVIEW This presentation should be read in conjunction with the Company’s unaudited consolidated financial statements, Management’s Discussion and Analysis (“MD&A”) for the three and nine months ended September 30, 2022. All dollar amounts contained in this presentation are expressed in m
Slide 3: Investment Highlights
INVESTMENT HIGHLIGHTS OVERVIEW An efficient producer with operational strength, providing growth potential PRODUCTION WILLESDEN GREEN & PEMBINA PEACE RIVER Low decline, oil-weighted asset base with Largest acreage holder in a world class, High-quality cold-flow, low decline heavy oil significant und
Slide 4: 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 Q4 2022 Production 2022 30,682 boe/d Shares outstanding 82.4 million 31,742 boe/d YoY production growth* 25% Market ca
Slide 5: Obsidian Energy Strategy
OBSIDIAN ENERGY STRATEGY STRATEGY We focus on superior execution throughout to deliver results Drive per share growth Use FCF from Increase scale and Target Net Debt Provide return via asset development Cardium asset to invest manage cost of $225 million of capital with and debt reduction in Peace R
Slide 6: Focusing on 2023
FOCUSING ON 2023 STRATEGY Balanced strategy and plans with optionality to adjust in the year 2023 plans deliver 7% production growth, solid FCF, debt reduction and return of capital to shareholders to maximize value OPERATIONS FINANCIAL ‣ Capital investment focused on $240 million in base core busin
Slide 7: 2023 Guidance
2023 GUIDANCE STRATEGY Balancing production growth, exploration/appraisal, debt reduction from FCF generation and returning capital to shareholders 2023E Average production 32,000 – 33,500 boe/d Capital expenditures $260 – $270 million Decommissioning expenditures $26 – $28 million Net operating exp
Slide 8: 2022 Reserves Highlights
2022 RESERVES HIGHLIGHTS 2022 RESERVES Growth in reserves values and volumes generating strong reserve replacement and recycle ratios YEAR-END 2022 RESERVES SUMMARY Proved developed Total proved Total proved Sixth Year producing (PDP) (1P) plus probable (2P) of >100% reserve replacement (1P & 2P) Re
Slide 9: Reserves Underpin Our Current and Future Value
RESERVES UNDERPIN OUR CURRENT AND FUTURE VALUE 2022 RESERVES Obsidian Energy trading at substantial discount on booked reserves basis ‣ 311 net 2P locations: N E T A S S E T V A L U E ( N A V ) P E R S H A R E (1) ‣ 236 net Cardium locations, 22 net Bluesky locations, 2 net Clearwater locations, (C$
Slide 10: 2023 Development Program
2023 DEVELOPMENT PROGRAM ASSETS First half drilling program in progress across all areas PEACE RIVER 46 (44.2 NET) WELLS DRILLING PROGRAM ‣ Forecasted average production of ~32,750 boe/d, a 7% annualized production growth from 2022 ‣ Ability to alter program quickly in response to commodity prices ‣
Slide 11: Leading Cardium Play Areas
LEADING CARDIUM PLAY AREAS ASSETS Our core foundation with ~25 years of drilling opportunities for future development FIELD HISTORY CARDIUM PRODUCTION (Q4 2022) Q4 2022 Cardium production 23,076 boe/d ‣ One of North America’s most significant light oil fields 46% ‣ Development since the 1950’s; vari
Slide 12: Willesden Green – Crimson Lake and East Crimson
WILLESDEN GREEN – CRIMSON LAKE AND EAST CRIMSON ASSETS Foundational asset with horizontal development proving strong returns and quick payouts CRIMSON LAKE ‣ Foundational asset providing highest initial IP rates in our Cardium portfolio ‣ Able to manage inventory to capitalize on commodity prices ‣
Slide 13: Pembina
PEMBINA ASSETS Low decline rate supports primary horizontal drilling and future growth through waterfloods ‣ Low decline, pressure-maintained development ‣ Existing wells and infrastructure allow growth in scale with reduced capital cost ‣ Ability to de-risk opportunities and add additional location
Slide 14: Peace River – Growth Asset
PEACE RIVER – GROWTH ASSET ASSETS Full ownership in high-quality cold-flow heavy oil Bluesky resource with Clearwater upside Q4 2022 Peace River production 6,758 boe/d ‣ Cold-flow heavy oil resource developed with multi-leg horizontal wells ‣ Large, contiguous ~500 sections with established Bluesky
Slide 15: Peace River Bluesky Growth
PEACE RIVER BLUESKY GROWTH ASSETS Solid growth upside through applying expertise and technology to the field ‣ Reliable and steady Bluesky production with shallow declines ‣ Shallow drilling ~660 metres sub-surface ‣ Long history of Bluesky development ‣ Established expertise in multi-leg heavy oil
Slide 16: Peace River Clearwater Potential
PEACE RIVER CLEARWATER POTENTIAL ASSETS Industry activity continues over emerging Clearwater formation play ‣ ~500 sections with Bluesky and Clearwater heavy oil rights ‣ Leverage Bluesky operational experience ‣ Clearwater formation just above Bluesky at ~450 metres sub- surface ‣ Substantial oppor
Slide 17: Viking – Significant Development Upside
VIKING – SIGNIFICANT DEVELOPMENT UPSIDE ASSETS Revitalizing light oil asset that provides highly economic returns ‣ Sweet, light oil development play with material degree of Q4 2022 Viking production 1,454 boe/d associated natural gas ‣ Significant drilling inventory, including both low risk infill
Slide 18: Sustainability Highlights Over the Past Five Years
SUSTAINABILITY HIGHLIGHTS OVER THE PAST FIVE YEARS CORPORATE RESPONSIBILITY Striving to make a difference to the environment, the community and for all stakeholders; published inaugural ESG report Environment Social Governance 40% REDUCTION IN GHG >10,500 WORKER 86% INDEPENDENT EMISSIONS SAFETY INIT
Slide 19: Hedging Production to Preserve Cash Flow
HEDGING PRODUCTION TO PRESERVE CASH FLOW SUMMARY Continuing to build on our hedge position at constructive levels HEDGED OIL (2022) HEDGED AECO GAS (2022/2023) ($, WTI/bbl) ($, mcf/d) Oil Swaps Oil Collars $3.63 $3.63 $116.75 - $132.26 44,073 44,073 2,451 $107.92 - $128.89 50% 50% hedge level hedge
Slide 20: Why Invest in Obsidian Energy?
WHY INVEST IN OBSIDIAN ENERGY? SUMMARY Obsidian Energy offers upside potential for shareholders ‣ Dominant Cardium land position and deep opportunity inventory of high-return wells that can be used to maintain strong FCF generation ‣ Compelling ~500 section Peace River area with established Bluesky
Slide 21: Appendix
Appendix TSX:/NYSE American: OBE
Slide 22: Considerable Future Value from Tax Pools
CONSIDERABLE FUTURE VALUE FROM TAX POOLS OVERVIEW $2.4 billion of tax pools in unrecognized value Amount of Pools Illustrative Value of Tax Pools TAX POOL COMPOSITION Utilized by Year1 @ 8% Discount Rate2 (September 30, 2022) $200 million $350 million $4.15/share $0.2 billion $300 million $401 milli
Slide 23: 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 ‣ ~270 employees EMPLOYEES FINANCIAL AND COMMERCIAL ‣ Management team: Deeply experienced with long track Strong financial, commercial and capital record,
Slide 24: Viking – Step-Out Well Provides Future Potential
VIKING – STEP-OUT WELL PROVIDES FUTURE POTENTIAL APPENDIX 2022 step-out well effectively delineates area STEP-OUT WELL VERSUS AVERAGE AREA PRODUCING WELL ‣ 2022 Viking wells performed within expectations ‣ 8-well program exceeded ~1,000 boe/d in October 200 boe/d ‣ High economic return wells Produci
Slide 25: Top Cardium Driller and Operator
TOP CARDIUM DRILLER AND OPERATOR APPENDIX Our development program produces leading Cardium well performance compared to peers LEADING CARDIUM WELL PERFORMANCE: WILLESDEN GREEN FIELD Cumulative production per well (bbl/well) Obsidian (78) Yangarra (18) Entrada (28) Bonterra (10) InPlay (34) * Numbers
Slide 26: Optimization Program Results in Strong Returns
OPTIMIZATION PROGRAM RESULTS IN STRONG RETURNS ASSETS Modest capital spend results in improved existing well performance, maintaining production across our asset portfolio ‣ Low-cost, high value growth opportunities with minimal capital expenditures ‣ Significant potential with >2,000 active wells t
Slide 27: Well Economics
WELL ECONOMICS APPENDIX Strong returns across areas despite pressure in the current commodity price environment Half Cycle Type Curve Economics1 Willesden Green Pembina Viking Peace River Formation Cardium Cardium W. Viking (Esther) Bluesky (Seal) Well Length 2.0 mile 1.75 mile 1.25 mile 10 leg DCET
Slide 28: Endnotes
Endnotes TSX:/NYSE American: OBE
Slide 29: Endnotes
ENDNOTES ENDNOTES Slide 4: Corporate Overview Slide 7: 2023 Guidance Market capitalization and enterprise value was determined with share price on the close of business on Mid-point of guidance range: 12,330 bbl/d light oil, 6,885 bbl/d heavy oil, 2,565 bbl/d NGLs and 65.8 January 27, 2023. Common s
Slide 30: Endnotes (cont.)
ENDNOTES (CONT.) ENDNOTES Slide 9: Reserves Underpin our Current and Future Value Slide 18: Sustainability Highlights Over the Past Five Years Reserves evaluation excludes inactive ARO. Our YE2022 reserves evaluation conforms to the GHG emission reduction is measured in tCO2e/year as a total of all
Slide 31: Endnotes (cont.)
ENDNOTES (CONT.) ENDNOTES Slide 25: Top Cardium Driller and Operator Cumulative Light Oil since Rig Release. Shown on a gross basis. Not adjusted for well length. Data set: Horizontal Cardium wells Rig Released in the Willesden Green Field 2019 to 2022, showing licensees with greater than or equal t
Slide 32: Definitions and Industry Terms
DEFINITIONS AND INDUSTRY TERMS ENDNOTES 2022E meant the expected 2022 results, based on internal Capital Efficiency is a metric that approximates cash flow G&A means general and administrative costs assumptions and estimates generated for each investment dollar, and measures the ratio of how much a
Slide 33: Definitions and Industry Terms (cont.)
DEFINITIONS AND INDUSTRY TERMS (CONT.) ENDNOTES Payout means the time it takes to cover the return of the tCO2e is tonnes per year of carbon dioxide equivalent initial cash outlay Total IP365 means total barrels of oil equivalent produced Reserves references are based on the report prepared by over
Slide 34: 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 35: 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 36: 2022 Reserves Disclosure and Definitions
2022 RESERVES DISCLOSURE AND DEFINITIONS ENDNOTES Unless otherwise noted, any reference to 2022 reserves in this presentation are based on the report (the “2022 Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories: Reserves Report”) prepared
Slide 37: 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 38: 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 terms or at all and/or obtain debt and/or equity financing to replace one or all of our credit facilities and notes; the contained in this do
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