Athabasca Oil Corporation · TSX:ATH
Athabasca Oil — Q2 2024 Earnings Presentation
29 slides from Athabasca Oil's earnings presentation, Jul 24, 2024
Slide 1: Athabasca Oil Corporation
ATHABASCA OIL CORPORATION FOCUSED | EXECUTING | DELIVERING JULY 24, 2024 – Q2 2024 RESULTS
Slide 2: Corporate Snapshot
CORPORATE SNAPSHOT ~37,000 BOE/D / 98% LIQUIDS / ~5% ANNUAL BASE DECLINE ATHABASCA ASSETS CAPITALIZATION THERMAL OIL THERMAL OIL Dover ~300,000 gross acres o Predictable, low decline projects West Basic Shares (ATH‐TSX) 548MM o Efficient brownfield SAGD development Hangingstone Market Cap. ($5.50/sh
Slide 3: Why Own Athabasca
WHY OWN ATHABASCA TOP TIER, LONG LIFE MANAGING FOR ASSET BASE SHAREHOLDER RETURNS • ~1.2 billion boe 2P reserves; ~1 billion bbl cont. resource • $1.4 Billion Free Cash Flow (2024‐27) • Top‐tier Thermal Assets with regulatory approval in place • Top Tier CFPS Growth; Return 100% of Free Cash Flow fo
Slide 4: Q2 2024 Results
Q2 2024 RESULTS 37,621 boe/d (98% Liquids) $166MM Adj. Funds Flow $53/bbl Thermal Op. Netback 2024e upwardly revised guidance $51/boe Duvernay Op. Netback Strong Cash Flow Metrics; 2024e ~$590MM +1,000 boe/d to 36,000 – 37,000 boe/d $34MM AOC Capex $125MM Net Cash $173MM Return of Capital YTD $14MM
Slide 5: Exposure to a Bullish Heavy Oil Thesis
EXPOSURE TO A BULLISH HEAVY OIL THESIS WCS HEAVY DIFFERENTIALS (US$) AOC CANADIAN HEAVY DIFFERENTIALS ACTUAL FORECAST o Positive structural changes for Canadian heavy oil • Trans Mountain Expansion (+590 mbbl/d); May 1st start‐up o Stronger and less volatile WCS heavy pricing expected o Excess pipel
Slide 6: Robust Free Cash Flow Profile
ROBUST FREE CASH FLOW PROFILE NET PRODUCTION (BOE/D)1 BUSINESS OUTLOOK o Thermal Oil assets with low base decline 3‐year CAGR (2024‐2027) • Leismer brownfield growth to 40,000 bbl/d 13% production 23% production per share o Duvernay Energy enhances growth • Self‐funded & independent capital allocati
Slide 7: Return of Capital Strategy
RETURN OF CAPITAL STRATEGY FULLY DILUTED SHARE COUNT 2023 SHAREHOLDER RETURNS o Fully completed first Normal Course Issuer Bid (“NCIB”) ~14% reduction since Q1 2023 • $225MM share repurchases (April 2023 – March 2024) • 58MM common shares at $3.88/sh avg. price o Exceeded commitment to return >75% o
Slide 8: Thermal Oil – Asset Overview
» pT ae THERMAL OIL - ASSET OVERVIEW
Slide 9: Thermal Oil Division
THERMAL OIL DIVISION PREDICTABLE, LOW DECLINE HIGHLIGHTS THERMAL PROPERTIES 100% Working Interest Fort McMurray 33,765 bbl/d Q2 2024 Production AOC Hangingstone 2024e Capital $193MM Expenditures Enbridge 404MMbbl | ~30 yr Proved Reserves & RLI Hangingstone Cheecham 1,216MMbbl | ~70 yr 2P Reserves &
Slide 10: Leismer – Overview
LEISMER – OVERVIEW TOP TIER OIL SANDS PROJECT DEVELOPMENT MAP Pad 10 o Long reserve life; ~70 year current reserve life index • 697MMbbl 2P reserves; 384MMbbl Best Est. Contingent resource • ~50 year 2P RLI at 40,000 bbl/d o Excellent reservoir underpins low corporate decline Pad 8 South 4 well pair
Slide 11: Leismer – 40,000 bbl/d Expansion
LEISMER – 40,000 BBL/D EXPANSION GROWTH TRAJECTORY (YEAR‐END EXIT; BBL/D) PROJECT OVERVIEW Project Cost ~$300MM Incremental Rate 12,000 bbl/d Capital Efficiency ~$25,000/bbl IRR >35% Leismer NPV10 @ 40,000 bbl/d $3.3 Billion Q2 2024 Q2 2025 2026 2027 H1 2028 Project Sanctioned ~3 week planned turnar
Slide 12: Hangingstone – Overview
HANGINGSTONE – OVERVIEW DEVELOPMENT MAP PROJECT HIGHLIGHTS o Long reserve life; ~65 year reserve life index • 167 MMbbl 2P reserves o Improved SOR due to the field wide NCG co‐injection • 3.4x H1 2024 average 2024 ACTIVITY (~$30MM) o Two well pairs spud in July • Utilizing ~1,400 meter laterals • Co
Slide 13: Corner – Overview
CORNER – OVERVIEW REGIONAL MAP TOP TIER OIL SANDS PROJECT o Large De‐risked Asset • 351 MMbbl 2P reserves and 520 MMbbl Contingent Resource (Best Est.) • 304 delineation wells with ~80% 3D seismic coverage o High Quality Reservoir • Up to ~45 m of pay in initial development with high quality sands •
Slide 14: Duvernay Energy Corporation
DUVERNAY ENERGY CORPORATION
Slide 15: Duvernay Energy – Corporate Snapshot
DUVERNAY ENERGY – CORPORATE SNAPSHOT CREATION OF NEW PRIVATE COMPANY DUVERNAY ENERGY ASSETS o Athabasca and Cenovus combine Duvernay assets • Athabasca to operate Duvernay Energy (“DEC”) Halo Energy GMT Exploration o Unparalleled exposure to Kaybob Duvernay oil window Hitic Energy o Debt‐free entity
Slide 16: Duvernay Energy – Kaybob Activity Map
DUVERNAY ENERGY – KAYBOB ACTIVITY MAP Chevron Cygnet GMT Oil Halo Hitic Window Kiwetinohk Paramount PetroChina Veren Liquids Rich Whitecap Gas Window DEC 30% JV ASSETS Duvernay Hz Wells 2024 Duv. spuds DEC 100% NEW OPERATED ASSETS 2023 Duv. spuds ATHABASCA OIL (TSX:ATH) 15
Slide 17: Duvernay Energy – Development Plans
DUVERNAY ENERGY – DEVELOPMENT PLANS KAYBOB EAST ILLUSTRATIVE ECONOMICS 2024 ACTIVITY ($82MM CAPITAL BUDGET) 4,000M LATERAL & 1,000 LB/FT (US$80 WTI) o 100% working interest operated activity 2‐WELL 4+ MULTI PAD WELL PAD • Two‐well pad (03‐18‐64‐17W5) on‐stream in late April Capital (DCET) per well $
Slide 18: Appendix
APPENDIX
Slide 19: Management Team
MANAGEMENT TEAM o President and Chief Executive Officer since 2015; 12 Years at Athabasca Rob Broen, P.Eng. o Over 30 years of exploration and production experience including 18 years with Talisman Energy with roles as President & Chief Executive President, Talisman Energy USA Inc. and Senior Vice P
Slide 20: Capitalization & Hedging
CAPITALIZATION & HEDGING SENIOR SECOND LIEN NOTES AOC CAPITAL STRUCTURE o US$157MM Notes (S&P BB‐ issue rating) • US$350MM issued October 2021 @ 9.75%; due Q4 2026 • Retired ~US$193MM since inception using Free Cash Flow ~$3,000MM redemption feature and proactive open market purchases Market Cap ($5
Slide 21: Differentiated Long-Life Reserves
DIFFERENTIATED LONG-LIFE RESERVES 2023 RESERVE OVERVIEW 2P RESERVES BY ASSET (MMBOE) o Deep resource inventory 167 • ~1.2 billion boe 2P reserves; ~100 year reserve life • ~1 billion bbl contingent resource 351 • 113 of ~500 gross estimated Duvernay locations booked 697 o Significant intrinsic value
Slide 22: Valuable Tax Pools
VALUABLE TAX POOLS TAX POOL SUMMARY (Q2 2024) ILLUSTRATIVE TAX POOL VALUATION (NPV10) $250MM annual deduction ~$320MM ~$0.57/sh $500MM annual deduction ~$450MM ~$0.80/sh ~$2.5B $750MM annual deduction ~$500MM ~$0.90/sh Fully Maximized ~$560MM ~$1.00/sh ~$2.1B Tax pool valuations as at June 30, 2024
Slide 23: Thermal Oil – Crown Royalty Advantage
THERMAL OIL – CROWN ROYALTY ADVANTAGE CROWN ROYALTY OVERVIEW OIL SANDS ROYALTY RATES o Royalty structure depends on whether a project is in 25‐40% Royalty on Gross Revenue less Opex & Capex pre‐payout or post‐payout phase o Pre‐payout advantage designed to support the recovery of the initial investm
Slide 24: Duvernay Energy – Infrastructure
DUVERNAY ENERGY – INFRASTRUCTURE INFRASTRUCTURE ADVANTAGE o Operated strategic infrastructure o Underutilized capacity with flexibility for future expansions o Oil infrastructure directly connected to the Pembina Peace liquids system o Gas infrastructure dually connected to Pembina Gas Infrastructur
Slide 25: Kaybob Duvernay >1,000 Industry Wells
KAYBOB DUVERNAY >1,000 INDUSTRY WELLS 2010‐2014 HISTORICAL SPUDS BY OPERATOR ~240 WELLS 150 Athabasca/Murphy Crescent Point 125 Chevron/KUFPEC Kiwetinohk & PetroChina Whitecap 100 75 2015‐16 ~500 WELLS CTD 50 25 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2017‐18 ~750 WEL
Slide 26: Kaybob Duvernay – Evolving Well Design
KAYBOB DUVERNAY – EVOLVING WELL DESIGN LATERAL LENGTH LATERAL LENGTH BY YEAR o Industry trend of increasing lateral length in resource plays o Recent Kaybob Duvernay laterals between 3,500 – 4,500m o DEC targeting ~4,000m to optimize land usage and improve capital efficiencies Source: McDaniel & Ass
Slide 27: Reader Advisory
READER ADVISORY Forward Looking Statements This Presentation contains forward‐looking information that involves various risks, uncertainties and other factors. Within this Reader Advisory and Forward Looking Statements, references to the “Company” means Athabasca and Duvernay Energy, as and where ap
Slide 28: Reader Advisory Cont'd
READER ADVISORY CONT’D Reserves Information The McDaniel Report was prepared using the assumptions and methodology guidelines outlined in the COGE Handbook and in accordance with National Instrument 51‐101 Standards of Disclosure for Oil and Gas Activities, effective December 31, 2023. There are num
Slide 29: Reader Advisory Cont'd
READER ADVISORY CONT’D The Cash Financing and Interest Expense financial measures contained in the Presentation are calculated by subtracting the net non‐cash financing and interest expense as reported in the Consolidated Statement of Cash Flows from the financing and interest expense as reported in