Athabasca Oil Corporation · TSX:ATH
Athabasca Oil — Investor Presentation (July 2021)
38 slides from Athabasca Oil's investor presentation, July 2021
Slide 1: Athabasca Oil Corporation
ATHABASCA OIL CORPORATION FOCUSED | EXECUTING | DELIVERING JULY 2021
Slide 2: Premier Resource Exposure
PREMIER RESOURCE EXPOSURE LIGHT OIL ~35,000 boe/d THERMAL OIL MONTNEY ~90% liquids ~$800MM EV $153MM Cash HANGINGSTONE ~90 year 2P RLI 1,150 MMboe 2P 400 MMboe Proved LIGHT OIL CORNER DUVERNAY LEISMER ATHABASCA OIL (TSX:ATH) Footnotes and additional information included in the back as endnotes and r
Slide 3: Q2 2021 Highlights & 2021 Guidance
Q2 2021 HIGHLIGHTS & 2021 GUIDANCE Q2 2021 2021e Production 34,659 boe/d 32,000 ‐ 34,000 boe/d 90% liquids 90% liquids Operating Income & $93MM ~$375MM* Netback ~$34/boe Light Oil & ~$32/bbl Leismer ~$34/boe Light Oil & ~$31/bbl Leismer Adjusted Funds Flow $50MM ~$175MM* $0.09/share $0.33/share Cape
Slide 4: Historical Transformation of ATH
HISTORICAL TRANSFORMATION OF ATH $486MM $470MM Refinance $265MM Light Oil JV Contingent 2L Notes Infrastructure with Bitumen (to be Sale Resumption of Pre‐COVID completed) Murphy Oil Royalties FCF Generation Business Plan Resource Appraisal Disciplined 2016 2017 2018 2019 2020 2021 Operations Fundin
Slide 5: Macro Business Environment
MACRO BUSINESS ENVIRONMENT GLOBAL DEMAND BACK TO PRE‐COVID LEVELS Global Oil Supply / Demand Outlook (MMbbl/d) June Demand: o Global demand rose to ~97 MMbbl/d in mid‐June 105 ~97 Mbbl/d Global Oil Demand Global Oil Sup ply 100 o Goldman Sachs forecasting ~99 MMbbl/d demand by Q3/21 95 90 85 80 75 Q
Slide 6: Balance Sheet & Refinancing Objectives
BALANCE SHEET & REFINANCING OBJECTIVES EBITDA ($MM) & LEVERAGE SENSITIVITY FINANCIAL SNAPSHOT (Q2 2021) o $153MM unrestricted cash o $134MM restricted cash and deposits for long‐term obligations o US$450MM Second Lien Notes mature Feb. 2022 ~$70MM unhedged 2021 OUTLOOK (JULY 5 STRIP PRICING*) annual
Slide 7: 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 8: ESG – Carbon Capture
Athabasca Stated ESG Goal (May 2021) ESG – CARBON CAPTURE “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 ROAD MAP TO NET‐ZERO TECHNOLOGY OVERVIEW o Entropy Inc. (“Entropy
Slide 9: Athabasca Value Proposition & Strategy
ATHABASCA VALUE PROPOSITION & STRATEGY Low Decline High Margin Unparalleled Exposure to Strong Financial Thermal Oil Light Oil Oil Prices Capacity <10% decline rate Peer leading netback ~90% liquids weighting $153MM cash growing to ~1 billion bbl reserves at (~$34/boe Q2 2021) ~$210MM at y
Slide 10: Asset Overview
ASSET OVERVIEW
Slide 11: Leismer Overview
LEISMER OVERVIEW LEISMER CENTRAL PROCESSING FACILITY ASSET OVERVIEW o Located ~100 km south of Fort McMurray o Central Processing Facility (CPF); approved capacity of 40,000 bbl/d o On site lodge with ~500 person capacity; owned Aerodrome SUBSURFACE DATA & WELLS o 500+ delineation wells; 100% seismi
Slide 12: Leismer Sustaining Projects
LEISMER SUSTAINING PROJECTS NEAR‐TERM INFILL WELLS DEVELOPMENT MAP o Pad L7 sustaining well pair; first oil in July o Two Pad L6 infills; first oil July PAD 8N PAD 8S PAD 5 CPF PAD L8 PROJECT PAD 6 o D&C complete; facility construction commenced 4PAD 3 PAD 4PAD o Highest quality reservoir drilled to
Slide 13: Leismer Improvements
LEISMER IMPROVEMENTS TECHNOLOGY DRIVING RATES (BBL/D) LOWER WELL PAIR COSTS ($MM) $25 Avg. Facilities Cost Avg. Completion Cost Avg. Drilling Cost $20 $15 $10 Achieved through longer laterals and implementation of flow control devices $5 $0 L5 L6 L7 6xWPs L8 Full Pad 14 WP TECHNOLOGY IMPROVING SORS
Slide 14: Leismer Future Opportunities
LEISMER FUTURE OPPORTUNITIES STRATEGY LEISMER DEVELOPMENT (BBL/D) 25,000 o Maximize free cashflow and deliver strong netbacks o Focus on projects that improve the SOR 20,000 L6 infills + L7P6 Illustrative o Maintain agility and execution readiness Sustaining Pad 8 15,000 2021 BASE CAPITAL o L7P6 and
Slide 15: Hangingstone Overview
HANGINGSTONE OVERVIEW ASSET HIGHLIGHTS DEVELOPMENT MAP o Located ~20 km south of Fort McMurray o Central Processing Facility (CPF); approved capacity of 12,000 bbl/d o No camp; proximal to Fort McMurray SUBSURFACE DATA & WELLS o >250 delineation wells with good seismic coverage o First steam March 2
Slide 16: Hangingstone Recent Initiatives
HANGINGSTONE RECENT INITIATIVES STRONG RESERVOIR RESPONSE REDUCING NON‐ENERGY OPEX ($/BBL) $25 o Excellent facility run‐time following Summer 2020 turnaround o Current production ~9,400 bbl/d (June) $20 o NCG aiding in pressure build‐up and energy usage $15 o Start‐up of standing well pair underway
Slide 17: Light Oil Portfolio
LIGHT OIL PORTFOLIO PLACID MONTNEY – 70% WORKING INTEREST AOC LIGHT OIL PROPERTIES o ~80,000 gross acres; ~150 gross future locations o Q2 production ~4,350 boe/d (43% liquids) o ~$30/boe operating netback (June 2021) o Declines moderated with flexible future development KAYBOB DUVERNAY – 30% WORKIN
Slide 18: Placid Future Opportunities
PLACID FUTURE OPPORTUNITIES STRATEGIC OBJECTIVES 2021 CONDITIONAL DEVELOPMENT o Continued development flexibility and readiness o Focus on free cash flow generation FUTURE ACTIVITY o Minimal 2021 budget focused on maintenance capital to support base production Conditional: 12‐24 Pad Drill & Complete
Slide 19: Duvernay Future Opportunities
DUVERNAY FUTURE OPPORTUNITIES KAYBOB DUVERNAY STRATEGIC OBJECTIVES KAYBOB NORTH KAYBOB EAST o Continued development flexibility and readiness o Focus on free cash flow generation SIMONETTE KAYBOB WEST FUTURE DEVELOPMENT o Minimal 2021 budget focused on maintenance capital to SAXON support base produ
Slide 20: Light Oil Improvements
LIGHT OIL IMPROVEMENTS INDUSTRY LEADING NETBACK (Q1/21) High Liquids % $35 ~$34/boe in Q2 High Quality Product $30 Low Lifting Costs $25 $20 $15 $/boe $10 $5 $0 ATH LO TVE CVE Deep PIPE SGY POU BNE CPG Disctinction ARX/VII WCP NVA SRX KEL TOU BIR AAV CR Basin REDUCING OPEX AT PLACID ($/BOE) DUVERNAY
Slide 21: ESG Overview
mea ESG OVERVIEW
Slide 22: 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 23: 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 24: ESG – Carbon Capture
Athabasca Stated ESG Goal (May 2021) ESG – CARBON CAPTURE “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 ROAD MAP TO NET‐ZERO TECHNOLOGY OVERVIEW o Entropy Inc. (“Entropy
Slide 25: ESG – Environmental Highlights
ESG – ENVIRONMENTAL HIGHLIGHTS NET GHG EMISSIONS INTENSITY GREEN HOUSE GAS EMISSIONS 0.08 o Tracking our performance and setting targets 20% Reduction o 20% reduction in emission intensity since 2015 0.07 tonnes Co2e/boe o 30% total reduction target by 2025 0.06 o New technologies integral to reduci
Slide 26: ESG – Social & Governance Highlights
ESG – SOCIAL & GOVERNANCE HIGHLIGHTS MEANINGFUL SOCIAL IMPACT STRONG GOVERNANCE IS CORE TO OUR BUSINESS o Accountability for ensuring a safe working environment o Independent Board oversight for long‐term strategy o 2020 0.1 TRIF, no lost time injuries & 0 reportable spills o Board oversight to ESG
Slide 27: 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 28: Appendix
mea APPENDIX
Slide 29: 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 30: Capitalization & Hedging
CAPITALIZATION & HEDGING WTI HEDGES (BBL/D; US$/BBL) 25,000 Swaps Sold Calls Collars 3‐Ways 20,000 $62.50 $62.50 15,000 $39.90/$45.63 CAPITALIZATION OVERVIEW (ATH‐TSX) 10,000 $55.00 $55.90 $55.90 Basic Shares Outstanding 531 MM 5,000 $40/$45/$57 $40/$45/$57 Market Capitalization ($0.80/sh) $425 MM ‐
Slide 31: Endnotes
ENDNOTES Slide Endnotes 1 (1) 2021 guidance product breakdown provided below: Product 2021 Production Split Bitumen 78% Natural Gas* 10% Condensate NGLs 4% Other NGLs 2% Oil** 6% * comprised of 99% or greater of shale gas, with the remaining being conventional natural gas ** comprised of 99% or grea
Slide 32: Endnotes
ENDNOTES Slide Endnotes 3 (1) Historical annual and 2021e Corporate volumes by product are provided below: Product 2016 2017 2018 2019 2020 Product 2021 Production Split Bitumen bbl/d 7,384 27,900 27,900 26,058 22,745 Bitumen 78% Natural Gas mcf/d 13,858 20,890 33,104 28,281 23,229 Natural Gas* 10%
Slide 33: Endnotes
ENDNOTES Slide Endnotes 8 (1) Break‐evens economics based on 2021 forecasted production and 0.8FX, 0% C5 diff and C$2.90 AECO pricing assumptions. Break‐even reflects the estimated WCS oil price per barrel required to generate an asset level operating income of Cdn $0. Break‐even is used to assess t
Slide 34: Endnotes
ENDNOTES Slide Endnotes 17‐18 (1) Placid Montney future production forecasts are ~50‐55% shale gas, ~35‐40% condensate NGLs and ~10% other NGLs (2) Placid Montney IP365 rates are ~40% shale gas, ~50% condensate NGLs and ~10% other NGLs; EURs are ~50% shale gas, ~40% condensate NGLs and ~10% other NG
Slide 35: 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 36: 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 37: Reader Advisory Cont'd
READER ADVISORY CONT’D Non‐GAAP Financial Measures and Production Disclosure Cont’d Net Debt is a non‐GAPP measure and is defined as face value of term debt plus accounts payable and accrued liabilities plus current portion of provisions and other liabilities. Adjusted EBITDA is defined as Net incom
Slide 38: Athabasca Oil Corporation
ATHABASCA OIL CORPORATION