Obsidian Energy Ltd · TSX:OBE
Obsidian Energy — Shareholder Meeting (June 2022)
40 slides from Obsidian Energy's shareholder meeting presentation, Jun 16, 2022
Slide 1: Annual & Special Meeting Presentation
Obsidian Energy Ltd. Annual & Special Meeting Presentation June 16, 2022 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 months ended March 31, 2022. All dollar amounts contained in this presentation are expressed in millions of Ca
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 Production 2022E ~32,000 boe/d Shares outstanding 82.1 million Production mix (2022E) 66% oil and liquids Market capit
Slide 5: Obsidian Energy Strategy
OBSIDIAN ENERGY STRATEGY STRATEGY We focus on superior execution throughout to deliver results SUPERIOR SHAREHOLDER RETURN Generate excess free Increase scale and Drive per share growth Forecast target cash flow while acting on manage cost via asset development total debt growth opportunities at str
Slide 6: Our Two-Year Corporate Plan
OUR TWO-YEAR CORPORATE PLAN STRATEGY Significant growth in FCF accelerates debt reduction PRODUCTION OUTLOOK (boe/d) 2022 & 2023 reflect higher production and commodity prices 38,000 32,500 37,000 31,500 24,605 2021 2022E 2023E WTI (2022E: June – Dec. 2022) US$67.91/bbl US$90.00/bbl US$105.00/bbl US
Slide 7: Considerable Future Value from Tax Pools
CONSIDERABLE FUTURE VALUE FROM TAX POOLS OVERVIEW $2.6 billion of tax pools in unrecognized value Amount of Pools Illustrative Value of Tax Pools TAX POOL COMPOSITION Utilized by Year1 @ 8% Discount Rate2 $200 million $360 million $4.30/share $0.2 billion $300 million $415 million $4.96/share $400 m
Slide 8: Focusing on 2022
FOCUSING ON 2022 STRATEGY Executing on our strategy for 2022 and planning for future years Secured all services and equipment for 2022 program as we benefit from current strong commodity prices OPERATIONS FINANCIAL ‣ First-half development program utilized four rigs ‣ Expect continued strong commodi
Slide 9: Expanded 2022 Development Program
EXPANDED 2022 DEVELOPMENT PROGRAM ASSETS First half drilling program complete in all three areas PEACE RIVER 68 wells (65.0 net) drilling program ‣ Forecasted average production of 32,000 boe/d, a ~30% 30 wells (29.5 net) annualized production growth from 2021 wells drilled ‣ Ability to scale progra
Slide 10: Top Cardium Driller and Operator
TOP CARDIUM DRILLER AND OPERATOR ASSETS 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 (75) Yangarra (18) Entrada (215 Bonterra (10) InPlay (27) * Numbers i
Slide 11: Willesden Green – Crimson Lake
WILLESDEN GREEN – CRIMSON LAKE ASSETS Cornerstone for revitalized primary development on Cardium acreage ‣ Top quality reservoir with banked oil from historical pressure maintenance ‣ Historically under-developed due to challenges for vertical drilling 8-36 PAD ‣ Horizontal development proving stron
Slide 12: Willesden Green – East Crimson
WILLESDEN GREEN – EAST CRIMSON ASSETS Eastward extension of successful Crimson Lake development program ‣ Horizontal development proving strong returns and quick payouts ‣ Flexible, operated infrastructure shared with Crimson Lake 2-18 PAD ‣ Combination of pressure supported edge drilling and underd
Slide 13: Pembina
PEMBINA ASSETS Centre of low declines supports horizontal drilling and future growth through waterfloods ‣ Low decline, pressure-maintained development ‣ Ability to de-risk opportunities and add additional locations through geological and reservoir modelling ‣ Existing wells and infrastructure allow
Slide 14: Peace River – Revitalized Core Area
PEACE RIVER – REVITALIZED CORE AREA ASSETS Full ownership in high-quality cold-flow heavy oil Bluesky resource with Clearwater upside Q1 2022 Peace River production 6,469 boe/d ‣ Reliable and steady Bluesky production with shallow declines ‣ Large, contiguous 487 section cold-flow heavy oil resource
Slide 15: Peace River Drilling Update
PEACE RIVER DRILLING UPDATE ASSETS Successful return to Bluesky development H2 2021 DRILL PROGRAM PRODUCTION ‣ Drilled four Bluesky wells in late 2021 ‣ Four wells on production averaged 447 boe/d per well (bbl/d) (IP90 rate) 447 bbl/d ‣ Drilled four Bluesky wells in the first half of 2022 ‣ Two wel
Slide 16: Peace River Clearwater Potential
PEACE RIVER CLEARWATER POTENTIAL ASSETS Market excitement over emerging Clearwater formation play ‣ 487 sections with Bluesky and Clearwater heavy oil rights in total ‣ Leverage Bluesky operational experience ‣ Competitive royalty structure with low royalty rates ‣ Substantial opportunity for future
Slide 17: Viking – Quick Turnaround Development
VIKING – QUICK TURNAROUND DEVELOPMENT ASSETS Revitalizing light oil asset that provides highly economic returns ‣ Sweet, light oil development play with material Q1 2022 Viking production 690 boe/d degree of associated natural gas ‣ Significant drilling inventory, including both low risk infill and
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 Environment Social Governance 40% REDUCTION IN GHG >10,500 WORKER 86% INDEPENDENT EMISSIONS SAFETY INITIATIVES BOARD MEMBERS (2018 – 20
Slide 19: GHG Emissions – 40% Total Reduction Since 2018
GHG EMISSIONS – 40% TOTAL REDUCTION SINCE 2018 CORPORATE RESPONSIBILITY Multi-pronged approach focuses on reducing GHG emissions, using investment and technology to go beyond regulated requirements Largest focus to date: Peace River solution gas conservation and reduction GHG EMISSIONS BY SOURCE (20
Slide 20: GHG Reduction – Current Initiatives
GHG REDUCTION – CURRENT INITIATIVES CORPORATE RESPONSIBILITY Industry-leading innovation to capture fugitive emissions and initiate repairs quicker ‣ Research partnership in 2022 with the University of Calgary ‣ Incorporates two new pieces of technology: ‣ PoMELO: a roof top vehicle mounted system t
Slide 21: Water – Intensity and Usage
WATER – INTENSITY AND USAGE CORPORATE RESPONSIBILITY Minimizing the amount of fresh water used in operations to conserve this valuable resource WATER CONSERVATION (2019 – 2021) Injected Fresh Fresh Water Frac Water Water Use Intensity Use Per Well Down 40% Down 40% Down 20% Obsidian Energy uses fres
Slide 22: Industry Leader in Asset Retirement Management
INDUSTRY LEADER IN ASSET RETIREMENT MANAGEMENT CORPORATE RESPONSIBILITY Our commitment to stakeholders includes responsible asset retirement as part of the full cycle of development 2019 – 2022: STRATEGY ‣ Committed to reducing environmental footprint 1,033 Wells abandoned ‣ Active committee partici
Slide 23: Investing in Alberta Communities
INVESTING IN ALBERTA COMMUNITIES CORPORATE RESPONSIBILITY Committed to supporting the well-being of local communities where we work COLLABORATIVE COMMUNITY CITIZENSHIP We have made over $620,000 in Active participation in local synergy donations to local charities since 2017 and stakeholder groups ‣
Slide 24: Share-Based Compensation ('SBC')
SHARE-BASED COMPENSATION (‘SBC’) CORPORATE RESPONSIBILITY Significant increase in share price over past year result in higher SBC liability on books – but no cash paid until awards vest Compensation aligned with shareholders’ interest to increase in OBE value Directors Employees Total Cumulative Def
Slide 25: Reserves Underpin Our Current and Future Value
RESERVES UNDERPIN OUR CURRENT AND FUTURE VALUE SUMMARY Obsidian Energy trading at substantial discount on booked reserves basis YEAR-END 2021 RESERVES SUMMARY N E T A S S E T V A L U E ( N A V ) P E R S H A R E (1) (C$ per share) Proved developed Total Total proved US$75 WTI US$85 WTI STRIP producin
Slide 26: Why Invest in Obsidian Energy?
WHY INVEST IN OBSIDIAN ENERGY? SUMMARY Obsidian Energy offers upside potential for shareholders ‣ Dominant Cardium land position and deep opportunity inventory of high-return wells that can be used to accelerate development at appropriate WTI levels ‣ Revitalized core area at Peace River with compel
Slide 27: Appendix
Appendix TSX:/NYSE American: OBE
Slide 28: Experienced Team with Strong Technical Skills
EXPERIENCED TEAM WITH STRONG TECHNICAL SKILLS APPENDIX Working together to build a top tier developer that provides solid returns to stakeholders ‣ ~250 employees EMPLOYEES FINANCIAL AND COMMERCIAL ‣ Management team: Deeply experienced with long track Strong financial, commercial and capital record,
Slide 29: Hedging Production to Preserve Cash Flow
HEDGING PRODUCTION TO PRESERVE CASH FLOW APPENDIX Continuing to build on our hedge position at constructive levels HEDGED OIL ($, WTI/BBL) 2022 YTD* $104.53 14% WTI @ 8,633 $129.68 50% hedge level C$114.94/bbl 6,118 15% @ Q1 Q2 Q3 Q4 C$4.68/mcf HEDGED AECO GAS 71% ($, MCF) $4.63 $4.65 $4.74 50% hedg
Slide 30: 2021 Reserves Highlights
2021 RESERVES HIGHLIGHTS APPENDIX Strong growth in reserves values and volumes generating >200% reserve replacement and >2.4x recycle ratios YEAR-END 2021 RESERVES SUMMARY Proved developed Total proved Total proved producing (PDP) (1P) plus probable (2P) Reserves volume 71.3 MMboe 113.7 MMboe 147.8
Slide 31: Endnotes
Endnotes TSX:/NYSE American: OBE
Slide 32: Endnotes
ENDNOTES ENDNOTES Slide 4: Corporate Overview Market capitalization and enterprise value was determined with share price on the close of business on Slide 6: Our Two-year Corporate Plan, cont. June 14, 2022. Common shares outstanding was determined at close of business May 31, 2022. Net Pricing assu
Slide 33: Endnotes (Cont.)
ENDNOTES (CONT.) ENDNOTES Slide 15: Peace River Drilling Update Readers are cautioned that initial production rates and/or production test results disclosed herein, Slide 22: Industry Leader in Asset Retirement Management particularly those short in duration, may not necessarily be indicative of lon
Slide 34: Endnotes (Cont.)
ENDNOTES (CONT.) ENDNOTES Slide 29: Hedging Production to Preserve Cash Flow Current Hedge Position and the weighted average price, or the “Exercise Price” is current as of June 15, 2022. All financial hedges have been executed in Canadian dollars. The Board of Directors has approved an increase to
Slide 35: Definitions and Industry Terms
DEFINITIONS AND INDUSTRY TERMS ENDNOTES 2022E meant the expected 2022 results, based on internal Decommissioning means decommissioning expenditures Oil IP365 means total barrels of oil produced over the first 365 days assumptions and estimates of well production, excluding any required cleanup time
Slide 36: 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 37: 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 ratio of six thousand cubic feet of natural gas to one barrel of crude oil is based on an energy equivalency conversion method primarily applicable at th
Slide 38: 2021 Reserves Disclosure and Definitions
2021 RESERVES DISCLOSURE AND DEFINITIONS ENDNOTES Unless otherwise noted, any reference to 2021 reserves in this presentation are based on the report (“Sproule Reserve Definitions, cont. Report”) prepared by Sproule Associates Limited dated January 28, 2022 where they evaluated one hundred percent o
Slide 39: 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 40: 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 repayment of our senior notes and limited recourse debt in connection with the PROP acquisition when they mature contained in this document,