Athabasca Oil Corporation · TSX:ATH
Athabasca Oil — Investor Presentation (March 2023)
28 slides from Athabasca Oil's investor presentation, March 2023
Slide 1: Athabasca Oil Corporation
ATHABASCA OIL CORPORATION FOCUSED | EXECUTING | DELIVERING MARCH 2023
Slide 2: Corporate Snapshot
CORPORATE SNAPSHOT ~35,000 BOE/D / 93% LIQUIDS / 5% ANNUAL BASE DECLINE ATHABASCA ASSETS THERMAL OIL CAPITALIZATION (ATH‐TSX) THERMAL OIL Dover ~300,000 gross acres o Predictable, low decline projects West Basic Shares 586MM o Efficient brownfield SAGD development Hangingstone Market Cap. ($3/sh) ~$
Slide 3: Why Own Athabasca
WHY OWN ATHABASCA TOP TIER, LONG LIFE MANAGING FOR ASSET BASE SHAREHOLDER RETURNS • ~1.3 billion boe 2P reserves; 5% corporate decline • Return >75% of Excess Cash Flow to shareholders • Low sustaining capital (~$125MM annually) • Competive cost structure with tax‐free horizon and • 850 gross de‐ris
Slide 4: 2022 Year-End Results
2022 YEAR-END RESULTS 35,262 boe/d (92% Liquids) $308MM FFO & $161MM FCF 1.3 Billion boe 2P Reserves Exceeded Increased Guidance of Record Cash Flow Metrics Significant Reserve Value $4.6B ($7.89/sh) 34,000 – 35,000 boe/d $42/boe Corporate Netback $285MM Liquidity $35MM Net Debt Thermal Oil $40/bbl
Slide 5: 2022 Reserve Highlights
2022 RESERVE HIGHLIGHTS RESERVE OVERVIEW 2P RESERVES BY ASSET (MMBOE) o ~1.3 billion boe 2P reserves & ~950mmbbl contingent resource 170 o Corporate Reserve Life Index of ~100 years o Compelling value 698 • Proved Developed Producing (PDP): $2.38/share 353 • Total Proved (TP): $4.61/share • Proved p
Slide 6: Exposure to a Bullish Heavy Oil Thesis
EXPOSURE TO A BULLISH HEAVY OIL THESIS CANADIAN HEAVY DIFFERENTIALS WCS HEAVY DIFFERENTIALS (US$) AOC o Transient headwinds in the rearview mirror ACTUAL FORECAST $‐ • US heavy weighted strategic petroleum reserve releases $(5.00) • TC Energy Keystone pipeline leak $(10.00) • Russian sanctions impac
Slide 7: Robust Free Cash Flow Profile
ROBUST FREE CASH FLOW PROFILE PRODUCTION (BOE/D) BUSINESS OUTLOOK 50,000 Production 100 per MM share 90 o Low‐risk, sustainable capital projects 40,000 80 • Thermal Oil underpins growth and low decline 70 30,000 60 • Light Oil provides natural internal cost hedge 50 20,000 40 COMPETITIVE COST STRUCT
Slide 8: Buyback Focused Return of Capital Strategy
BUYBACK FOCUSED RETURN OF CAPITAL STRATEGY 2023 CAPITAL ALLOCATION GUIDANCE 2023 CAPITAL ALLOCATION ($MM) $500 o >75% Excess Cash Flow (“ECF”) returned to shareholders • Normal Course Issuer Bid (“NCIB”) program approved by Board $400 • NCIB application to be submitted to the TSX early March $300 •
Slide 9: Asset Overview
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Slide 10: Thermal Oil Division
THERMAL OIL DIVISION PREDICTABLE, LOW DECLINE HIGHLIGHTS THERMAL PROPERTIES 100% Working Interest Fort McMurray ~30,000 bbl/d 2023E Production AOC Hangingstone ~$380MM 2023E Operating Income 2023E Enbridge ~$120MM Capital Expenditures Hangingstone Cheecham 403 MMbbl & Gross Reserves Surmont 1,220 MM
Slide 11: Leismer – Overview
LEISMER – OVERVIEW DEVELOPMENT MAP TOP TIER OIL SANDS PROJECT o ~22,000 bbl/d & 2.9x SOR (Q4 2022) o Long reserve life; 85 year RLI • 698MMbbl 2P reserves; 395MMbbl Best Est. Contingent resource 2023 ACTIVITY o Pad L8 expansion • New 5 well pad commenced steaming in Q1 • Ramp‐up to ~6,000 bbl/d plat
Slide 12: Leismer – Compelling Economics
LEISMER – COMPELLING ECONOMICS ILLUSTRATIVE SUSTAINING PAD ECONOMICS FINANCIAL & ECONOMIC HIGHLIGHTS (US$85 WTI)* o Project underpins corporate cash flow and torque to oil L8 Mid Capital (lease edge) $MM $48 o Low Crown royalties Plateau Rate per project bbl/d 6,000 • 9% max (pre‐payout) vs. 40% (po
Slide 13: Hangingstone – Overview
HANGINGSTONE – OVERVIEW DEVELOPMENT MAP PROJECT HIGHLIGHTS o ~8,500 bbl/d & 3.7x SOR (Q4 2022) o Long reserve life • 170 MMbbl 2P reserves • ~60 year 2P RLI o Improved SOR due to the field wide NCG co‐injection COST OPTIMIZATION o Third‐party truck‐in terminal o Amended transportation contract compl
Slide 14: Light Oil Division
LIGHT OIL DIVISION DE-RISKED, FLEXIBLE CAPITAL HIGHLIGHTS LIGHT OIL PROPERTIES ~5,500 boe/d 2023E Production Kaybob ~$80MM 2023E Operating Income 2023E Net Capital ~$25MM Expenditures ~850 Gross Locations ~275,000 Gross Acres Placid 29 MMboe & Gross Reserves 70 MMboe (Proved & 2P) o Joint Venture wi
Slide 15: Light Oil – 2023 Activity
LIGHT OIL – 2023 ACTIVITY STRATEGIC OBJECTIVES PLACID MONTNEY o Maintain optionality for future development program 2023 ACTIVITY o 3 Placid Montney development wells • Maximize netbacks and cash flow generation FUTURE ACTIVITY o Land held and de‐risked o Deep inventory: ~150 Montney & ~700 Duvernay
Slide 16: ESG Overview
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Slide 17: ESG – Annual Report
ESG – ANNUAL REPORT We believe that the responsible energy we produce here in Alberta makes people’s lives better. Our ESG report is an opportunity for us to showcase the positive impacts we have made and explain how sustainability and responsibility are being embedded into every decision we make. “
Slide 18: ESG – Integrated Sustainability
ESG – INTEGRATED SUSTAINABILITY TECHNOLOGY OVERVIEW CARBON CAPTURE – AOC’S LOW‐CARBON BARREL o Entropy Inc. (Entropy) modular carbon capture technology (CCS) • Project to be sanctioned once government fiscal and regulatory policy for CCS projects are fully in place o Sequestration into regional disp
Slide 19: ESG – Governance & Social
ESG – GOVERNANCE & SOCIAL GOVERNANCE SOCIAL o Technically‐focused, experienced management team o Contributed 61% of the Provincial Park Expansion Lands to • Four most senior executives have managed current Create the World’s Largest Boreal Forest portfolio for an aggregate of ~40 years • Expanded th
Slide 20: ESG – Commitment to Responsibility
ESG – COMMITMENT TO RESPONSIBILITY ✔ 2022 TRIF of 0.08 and ongoing target <0.50 ✔ Completed in the Fall of 2022 “As we progress, Athabasca will focus on transparency and continuous advancement as we deliver on our commitments to our stakeholders, communities, and employees. We invite you to join us
Slide 21: Appendix
APPENDIX
Slide 22: 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 and Rob Broen,
Slide 23: Thermal Oil – Crown Royalty Advantage
THERMAL OIL – CROWN ROYALTY ADVANTAGE CROWN ROYALTY OVERVIEW OIL SANDS ROYALTY RATES o Royalties vary depending on whether a project is in Gross revenue less opex & capex pre‐payout or post‐payout phase • Pre‐payout royalty rates are lower to account for the initial cost of investment • Post‐payout
Slide 24: Corporate Capitalization
CORPORATE CAPITALIZATION CAPITAL STRUCTURE (2022 YEAR‐END) SENIOR SECOND LIEN NOTES o US$175.2MM Notes Enterprise Value $1.8B • US$350MM issued October 2021 @ 9.75%; due Q4 2026 • Retired ~US$175MM in 2022 using FCF redemption feature at $285MM Liquidity 105 and proactive open market purchases • S&P
Slide 25: Tax Pools – Material Value
TAX POOLS – MATERIAL VALUE TAX POOL SUMMARY (2022) ILLUSTRATIVE TAX POOL VALUATION (NPV10) $250MM annual deduction ~$390MM ~$0.65/sh $500MM annual ~$3B deduction ~$500MM ~$0.85/sh $750MM annual deduction ~$530MM ~$0.90/sh Fully Maximized ~$590MM ~$1.00/sh ~$2.3B Non‐Capital Loss & Canadian Explorati
Slide 26: 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 27: 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, 2022. There are num
Slide 28: Reader Advisory Cont'd
READER ADVISORY CONT’D Production Athabasca’s 2023 forecasted total average daily production is between 34,500 – 36,000 boe/d. Athabasca expects that approximately 84% of that production will be comprised of bitumen, 7% shale gas, 4% tight oil, 3% condensate natural gas liquids and 2% other natural