Athabasca Oil Corporation · TSX:ATH
Athabasca Oil — Investor Presentation (October 2021)
32 slides from Athabasca Oil's investor presentation, October 2021
Slide 1: Athabasca Oil Corporation
ATHABASCA OIL CORPORATION FOCUSED | EXECUTING | DELIVERING OCTOBER 2021
Slide 2: Why Own Athabasca
WHY OWN ATHABASCA PREDICTABLE, LOW DECLINE THERMAL OIL BUSINESS Low sustaining capital requirements (~$5/bbl) >1 billion 2P reserves at top quartile assets Athabasca is committed to DE‐RISKED LIGHT OIL BUSINESS WITH FLEXIBLE CAPITAL returning free cash flow to Peer leading operating netback; $34
Slide 3: Portfolio – 34,000 boe/d | 90% Liquids
PORTFOLIO – 34,000 BOE/D | 90% LIQUIDS THERMAL OIL ASSETS (~26,000 BBL/D) LIGHT OIL ASSETS (~8,000 BOE/D) LEISMER Top tier project that PLACID MONTNEY has been in operation HANGINGSTONE 70% WI Placid with for 11 years with a productive capacity of stable declines, high 20,000 bbl/d margins and flexi
Slide 4: Managing for Strong Free Cash Flow
MANAGING FOR STRONG FREE CASH FLOW FREE CASH FLOW AT US$70 WTI (C$MM) STRONG CASH FLOW >$600MM 3‐year cum FCF o Maintain production base of ~34,000 boe/d o Low annual sustaining capital of ~$125MM o Robust hedging reduces cash flow volatility and provides certainty on achieving deleveraging target o
Slide 5: Creating Significant Shareholder Value
CREATING SIGNFICANT SHAREHOLDER VALUE NET DEBT / EBITDA AT US$70 WTI (X) STRATEGIC PLAN o Reduce cash costs through a lower interest burden o Transition Enterprise Value to 100% Equity Net cash position o Evaluate the distribution of free cash flow across the capital structure once debt target is ac
Slide 6: Refinancing Overview and 2021 Guidance
REFINANCING OVERVIEW AND 2021 GUIDANCE CAPITAL STRUCTURE (2021E YEAR‐END) REFINANCING OVERVIEW o US$350MM Second Lien Notes • 9.75% coupon • 5‐year term to Q4 2026 o $150MM Credit Facilities ~$585MM Market • $110MM Reserve Based Facility for hedging & LC requirements Capitalization ~$70MM ($1.10/sha
Slide 7: Risk Management
RISK MANAGEMENT HEDGING (BBL/D) RISK MANAGEMENT OBJECTIVES Swaps protect base capital o Ensure multi‐year funding to protect sustaining capital Collars/puts maintain upside exposure o Reduce cash flow and earnings volatility Hedging target: o Provide certainty for achieving deleveraging target 7
Slide 8: Western Canadian Market Access
WESTERN CANADIAN MARKET ACCESS CANADIAN MARKET ACCESS IMPROVING CANADIAN EGRESS OUTLOOK (MMBBL/D) o Excess pipeline capacity for foreseeable future Enbridge L3R: +270,000 bbl/d in‐service TMX: +590,000 bbl/d in 2023 Keystone Base: +50,000 bbl/d o Lower WCSB supply growth expectations Produce
Slide 9: Integrated Sustainability
Athabasca Stated ESG Goal (May 2021) INTEGRATED SUSTAINABILITY “Prepare a technology roadmap for a lower carbon future evaluating carbon capture use and storage, cogeneration, solvent injection, and renewable energy” CARBON CAPTURE – AOC’S LOW‐CARBON BARREL TECHNOLOGY OVERVIEW o Entropy Inc. (Entrop
Slide 10: Athabasca Value Proposition & Strategy
ATHABASCA VALUE PROPOSITION & STRATEGY Thermal Oil Light Oil Strong Financial Capacity Predictable Low Decline De‐risked and Flexible Capital <10% decline rate Peer leading netback (~$34/boe Q2) $265MM liquidity (2021e year‐end) Low sustaining capital (~$5/bbl) Large inventory in the Montn
Slide 11: Asset Overview
ASSET OVERVIEW
Slide 12: The Thermal Business
THE THERMAL BUSINESS HIGHLIGHTS THERMAL PROPERTIES 100% Working Interest Fort McMurray ~26,000 bbl/d 2021E Production AOC Hangingstone US$43/bbl & WTI Breakeven* US$52/bbl (Operating & FCF) ~$285MM & 2021E Operating Income Enbridge Cheecham $29/bbl & Netback Hangingstone 2021E Surmont ~$85MM Capital
Slide 13: Thermal Oil – Leismer Future Opportunities
THERMAL OIL – LEISMER FUTURE OPPORTUNITIES DEVELOPMENT MAP STRATEGY o Maximize free cashflow and deliver strong netbacks PAD o Focus on projects that improve the SOR 8N PAD 8S PAD 5 Illustrative 2021 BASE CAPITAL Pad 8 CPF Sustaining o L7P6 and L6 Infills on production July 2021 PAD 6 o Pad L8 first
Slide 14: Thermal Oil – Hangingstone 2021 Initiatives
THERMAL OIL – HANGINGSTONE 2021 INITIATIVES DEVELOPMENT MAP STRONG RESERVOIR RESPONSE o Excellent facility run‐time following Summer 2020 turnaround o NCG aiding in pressure build‐up and energy usage o Start‐up of standing well pair underway (AA03) COST OPTIMIZATION o Low non‐energy operating expens
Slide 15: Thermal Oil – Operations Improvements
THERMAL OIL – OPERATIONS IMPROVEMENTS HISTORY OF HIGH UTILIZATION RATES LEISMER LOWER WELL PAIR COSTS ($MM) $25 Leismer Avg. Facilities Cost Hangingstone partial Avg. Completion Cost Hangingstone shut‐in in 2020 Avg. Drilling Cost $20 98 % 96 % 98 % 100 % 90 % 93 % 93 % 96 % 94 % $15 60 % $10 $5 $0
Slide 16: The Light Oil Business
THE LIGHT OIL BUSINESS HIGHLIGHTS LIGHT OIL PROPERTIES ~8,000 boe/d 2021E Production Kaybob 2021E Net Capital ~$5MM Expenditures ~$100MM & 2021E Operating Income $36/bbl & Netback ~850 Gross Locations ~450,000 Gross Acres Placid 14 MMboe & Gross Reserves 37 MMboe (PDP & Proved) RLI o Joint Venture w
Slide 17: Light Oil – Future Opportunities
LIGHT OIL – FUTURE OPPORTUNITIES STRATEGIC OBJECTIVES PLACID MONTNEY o Maintain future optionality o Maximize netback and cash flow generation MONTNEY FUTURE ACTIVITY o 2022: 3‐well development pad to maintain production o ~150 gross future locations 12‐24 Pad 3‐well pad DUVERNAY FUTURE ACTIVITY o 2
Slide 18: Light Oil – Netbacks & Operations Improvements
LIGHT OIL – NETBACKS & OPERATIONS IMPROVEMENTS $45 INDUSTRY LEADING NETBACK (Q2/21) $40 High Liquids % Liquids Weighted Netback (>40% liquids) ~$34/boe in Q2 $35 High Quality Product Gas Weighted Netback (>60% gas) $30 Low Lifting Costs Costs (Operating, Transportation, Royalties) $25 $/boe $20 $15
Slide 19: ESG Overview
mea ESG OVERVIEW
Slide 20: ESG – Inaugural 2021 Report
ESG – INAUGURAL 2021 REPORT We believe that the responsible energy we produce here in Alberta makes people’s lives better. Our inaugural 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 d
Slide 21: ESG – 2020 Highlights
ESG – 2020 HIGHLIGHTS NET GHG EMISSIONS INTENSITY WATER RECYCLE RATIO 95% 0.08 20% Reduction 90% 0.07 tonnes Co2e/boe 85% 0.06 80% 0.05 75% 0.04 70% 2015 2016 2017 2018 2019 2020 Oil Sands Mining In Situ Enhanced oil Athabasca recovery Thermal Oil Athabasca has a longstanding history of consistently
Slide 22: ESG - Environmental
Athabasca Stated ESG Goal (May 2021) ESG - ENVIRONMENTAL “Prepare a technology roadmap for a lower carbon future evaluating carbon capture use and storage, cogeneration, solvent injection, and renewable energy” CARBON CAPTURE – AOC’S LOW‐CARBON BARREL TECHNOLOGY OVERVIEW o Entropy Inc. (Entropy) mod
Slide 23: ESG – Governance & Social
ESG – GOVERNANCE & SOCIAL GOVERNANCE SOCIAL o Technically‐focused, experienced management team o Contributed 66% of the Provincial Park Lands • Four most senior executives have managed current • Expanded the ecologically and culturally significant portfolio for an aggregate of 35 years Kitaskino Nuw
Slide 24: ESG – Commitment to Responsibility
ESG – COMMITMENT TO RESPONSIBILITY GOALS o Reduce emission intensity by 30% (2015 2025) o Top tier safety results (<0.5 TRIF in 2021); aspiration of no harm to people and no hydrocarbon spills o ESG to be a formal consideration in all capital allocation decisions o Prepare a roadmap for lower carb
Slide 25: Appendix
mea APPENDIX
Slide 26: 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 Rob Broen, P.E
Slide 27: Warrant Overview
WARRANT OVERVIEW TREASURY STOCK EXERCISE o Warrant holders have the option to exercise warrants on a cashless basis utilizing treasury stock methodology o Common shares are only issued for the “in‐the‐money” value of the warrant reducing the total number of shares issued upon exercise RATIONALE & BE
Slide 28: Historical Transformation of ATH
HISTORICAL TRANSFORMATION OF ATH $486MM $470MM $265MM US$350MM Light Oil JV Contingent Infrastructure New Notes & with Bitumen Sale $150MM Credit Resumption of Pre‐COVID Murphy Oil Royalties Facilities Managing for Business Plan Resource strong FCF Appraisal 2016 2017 2018 2019 2020 2021 Certainty f
Slide 29: 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 30: Reader Advisory Cont'd
READER ADVISORY CONT’D Additional Oil and Gas Information: Other Oil and Gas terms: This presentation contains certain other oil and gas metrics, including D&C (drilling and completion costs), F&D, steam oil ratio (or SOR), reserves life index, recycle ratio, capital efficiency and P/I, which do not
Slide 31: Reader Advisory Cont'd
READER ADVISORY CONT’D Non‐GAAP Financial Measures and Production Disclosure Cont’d The Operating Income (Loss) measures in Presentation are calculated by subtracting royalties, diluent expenses, operating expenses and cash transportation & marketing expenses from petroleum and natural gas sales and
Slide 32: Athabasca Oil Corporation
ATHABASCA OIL CORPORATION