Obsidian Energy Ltd · TSX:OBE
Obsidian Energy — Investor Presentation (May 2024)
39 slides from Obsidian Energy's investor presentation, May 28, 2024
Slide 1: Obsidian Energy Ltd. Corporate Presentation
Obsidian Energy Ltd. Corporate Presentation May 28, 2024 TSX:/NYSE American: OBE
Slide 2: Advisory
ADVISORY OVERVIEW This presentation should be read in conjunction with the Company’s interim consolidated financial statements and MD&A for the three months ended March 31, 2024, and audited consolidated annual financial statements and MD&A for the year ended December 31, 2023. All dollar amounts co
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 36,400 boe/d Shares outstanding 76.6 million Q1 2024 34,238 boe/d YoY production growth* 13% Market c
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 TOP QUALITY ASSETS oil production with substantial growth upside. SOLI
Slide 5: Obsidian Energy Strategy
OBSIDIAN ENERGY STRATEGY STRATEGY We focus on superior execution to deliver results and create value for 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 boe/
Slide 6: Focus During 2024 - Highlights
FOCUS DURING 2024 - HIGHLIGHTS STRATEGY Strategy to unlock shareholder value through focus on growth by unlocking Peace River potential 2024 plans expected to deliver 13% production growth, FCF generation, stable debt levels, and share repurchase program to maximize shareholder value OPERATIONS 13%
Slide 7: Strategic Peace River Clearwater Acquisition
STRATEGIC PEACE RIVER CLEARWATER ACQUISITION STRATEGY Highly synergistic to existing land base and on trend with existing Dawson Clearwater development field ‣ Entered into a purchase and sale agreement for Peace River lands ‣ ~$76 million consideration (net of closing adjustments): ‣ ~$30 million f
Slide 8: Revised 2024 Guidance
REVISED 2024 GUIDANCE CORPORATE PERFORMANCE Value-added growth through the development of new and existing fields while further appraising our Peace River asset REVISED 2024 (POST ACQUISITION) HEAVY OIL LIGHT OIL Average production 35,650 – 37,150 boe/d Based on midpoint of guidance Capital expendit
Slide 9: Delivering Results
DELIVERING RESULTS CORPORATE PERFORMANCE Strategy and execution create momentum for long-term value 2022 2023 Q1 2024 GROWTH IN PRODUCTION (boe/d; boe/d per share) Production 30,682 boe/d 32,275 boe/d 34,238 boe/d 37,150 40,000 180 Capital expenditures $314.8 million $292.5 million $114.3 million 16
Slide 10: 2024 Capital Program
2024 CAPITAL PROGRAM CORPORATE PERFORMANCE Expanded development and exploration/appraisal program to add production and delineate assets 79 (77.7 NET) WELL OPERATED DRILLING PROGRAM ‣ Expected average production of ~36,400 boe/d, a 13% annualized production growth from 2023 ‣ Currently optimizing H2
Slide 11: 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 >680 average working interest sections with Bluesky and Clearwater
Slide 12: 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: 15 wells ‣ New development field ‣ Exploration/appraisal: 2 wells ‣ Major growth
Slide 13: 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 14: Light Oil Assets
LIGHT OIL ASSETS LIGHT OIL ASSETS History of highly economic returns with years of low-risk inventory Q1 2024 Cardium production 24,058 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
Slide 15: Cardium Resource Play – Consistent Robust Netbacks
CARDIUM RESOURCE PLAY – CONSISTENT ROBUST NETBACKS LIGHT OIL ASSETS History of highly economic returns with years of low-risk inventory Efficient and highly economic development Case Study: Open Creek 11-15 Well 80% ‣ Extensive acreage ‣ Proving up inventory in the average working interest ‣ Advance
Slide 16: 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 17: 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 (March 31, 2024) $0.3 billion Amount of Pools Illustrative V
Slide 18: Reserves Underpin Our Current and Future Value
RESERVES UNDERPIN OUR CURRENT AND FUTURE VALUE SUMMARY Trading at substantial discount on booked reserves basis; growing per share metrics to increase shareholder value NET ASSET VALUE (NAV) PER SHARE YEAR-END 2023 RESERVES SUMMARY (C$ per share) TOTAL TOTAL PROVED US$65 WTI US$75 WTI US$85 WTI $35
Slide 19: Why Invest in Obsidian Energy
WHY INVEST IN OBSIDIAN ENERGY SUMMARY Peace River growth area combined with established light oil production offers upside potential for shareholders ORGANIC GROWTH STRATEGY ‣ Strategy focused on growing Peace River production and per share metrics with expectation to continue to return capital to s
Slide 20: Appendix
Appendix TSX:/NYSE American: OBE
Slide 21: Hedging Production to Preserve Cash Flow
HEDGING PRODUCTION TO PRESERVE CASH FLOW APPENDIX Continuing to build on our hedge position at constructive levels Disciplined approach to WTI OIL HEDGES AECO GAS HEDGES risk management to ($, WTI/bbl) ($, mcf/d) Collars Swaps Swaps protect cash flows for 9,000 $110.10 - $116.99 Collars 50,000 capit
Slide 22: 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 23: 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 2,505 b
Slide 24: 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 25: 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) 9,600 boe/d 15,500 boe/d 24,000 boe/d ‣ Highlights: WG, Pembina, Viking (light oil) 2
Slide 26: 2023 Reserves Highlights
2023 RESERVES HIGHLIGHTS APPENDIX 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 repl
Slide 27: 2023 Reserves Locations
2023 RESERVES LOCATIONS APPENDIX 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) 350 129 343 425 300 311 250 236
Slide 28: 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 29: Endnotes
Endnotes TSX:/NYSE American: OBE
Slide 30: Endnotes
ENDNOTES ENDNOTES Slide 3: Corporate Overview Slide 7, Strategic Peace River Clearwater Acquisition, cont. Market capitalization determined with share price on the close of business on May 27, 2024, on the "Reserve Life Index" or "RLI" is calculated by dividing reserves volumes from the Vendor’s Res
Slide 31: Endnotes, Cont.
ENDNOTES, CONT. ENDNOTES Slide 8: Revised 2024 Guidance, cont. Slide 14: Light Oil Assets Net Debt figures estimated as at December 31, 2024. Revised 2024 Guidance includes the impact of Booked locations reflects locations as defined by our Independent, Qualified Reserves Evaluator in their approxim
Slide 32: Endnotes, Cont.
ENDNOTES, CONT. ENDNOTES Slide 19: Why Invest in Obsidian Energy Slide 25: Three-Year Growth Plan Financials, cont. Percentage of shares purchased and cancelled through the buyback program calculated based on 2024E estimates and assumptions as per endnote for ‘Slide 8: Revised 2024 Guidance’. shares
Slide 33: Underlying Assumptions
UNDERLYING ASSUMPTIONS ENDNOTES REVISED 2024 (POST ACQUISITION) 1 WTI4 US$/bbl 75.00 MSW Differential2 US$/bbl 3.00 The material budget and underlying WCS Differential2 US$/bbl 15.00 assumptions used by the Company in AECO2 $/GJ 2.25 preparation of its pro-forma guidance for Foreign Exchange Rate2 C
Slide 34: Definitions and Industry Terms
DEFINITIONS AND INDUSTRY TERMS ENDNOTES 2024E means the expected 2024 results, based on internal assumptions DCET stands for Drilling, Case, Equip and Tie-in capital, and represents all Mmcf and mmcf/d means million cubic feet and million cubic feet per day, and estimates necessary capital to drill
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 breach one or more of the financial covenants pursuant to our agreements with our lenders and the holders of our contained in this document,