Athabasca Oil Corporation · TSX:ATH
Athabasca Oil — Investor Presentation (November 2022)
30 slides from Athabasca Oil's investor presentation, November 2022
Slide 1: Athabasca Oil Corporation
ATHABASCA OIL CORPORATION FOCUSED | EXECUTING | DELIVERING NOVEMBER 2022
Slide 2: Why Own Athabasca
WHY OWN ATHABASCA • Strong netbacks; $47/bbl YTD THERMAL OIL DIVISION: • Low sustaining capital requirements (~$5/bbl) PREDICTABLE, LOW DECLINE • >1 billion boe 2P reserves underpins long reserve life • Strong netbacks; $51/boe YTD LIGHT OIL DIVISION: • Large inventory in the Montney & Duvernay DE‐R
Slide 3: Athabasca ~35,000 boe/d | 92% Liquids
ATHABASCA ~35,000 BOE/D | 92% LIQUIDS THERMAL OIL DIVISION (~29,000 BBL/D) LIGHT OIL DIVISION (~6,000 BOE/D) LEISMER Top tier project that has PLACID MONTNEY been in operation for 12 HANGINGSTONE years with current 70% WI Placid with production of stable declines, high >20,000 bbl/d PLACID margins a
Slide 4: Q3 2022 Highlights
Q3 2022 HIGHLIGHTS 37,240 boe/d (93% Liquids) $102MM Record Adj FFO $50MM FCF; $52MM Capex 2022e 34 – 35,000 boe/d 2022e ~$330MM 2022e $180MM FCF ~$278MM Liquidity Operating Netbacks $223MM Debt Retired YTD Light Oil $39/boe Q3 & $51/boe YTD Inclusive of $200MM Cash US$178MM Term Debt Outstanding Th
Slide 5: Strong Financial Capacity
STRONG FINANCIAL CAPACITY TERM DEBT (C$MM) $500 UNIQUE LOW LEVERAGE COMPANY o Direct 100% of Free Cash Flow to debt repayment near‐term $400 Net Cash position o Achieved 98% of Term Debt target of US$175MM $300 • US$178MM Debt outstanding; ~50% reduction from original issue C$MM • Retired US$172MM (
Slide 6: Managing for Strong Free Cash Flow
MANAGING FOR STRONG FREE CASH FLOW EBITDA & FCF (C$MM) STRONG FREE CASH FLOW $600 ~$900MM 3‐year cum FCF o ~35,000 boe/d can be maintained with low sustaining capital $500 • ~$125MM annual sustaining capital $400 o Pre‐payout royalties in Thermal Oil (max 9% royalty) C$MM $300 o 10+ year tax free ho
Slide 7: Creating Significant Shareholder Value
CREATING SIGNIFICANT SHAREHOLDER VALUE 2023 ADJUSTED FUNDS FLOW (C$MM) RETURN OF CAPITAL FRAMEWORK FOR 2023 $800 $700 o Maintain ultra low leverage $600 o Leismer debottleneck and Light Oil development opportunities $500 o Enhance returns through share buybacks given attractive C$MM $400 relative va
Slide 8: Integrated Sustainability
INTEGRATED SUSTAINABILITY TECHNOLOGY OVERVIEW CARBON CAPTURE – AOC’S LOW‐CARBON BARREL o Entropy Inc. (Entropy) modular carbon capture technology (CCS) • Provisional FID expected by year‐end 2022 • Detailed engineering underway; commercial model established • Horizontal injection well scheduled for
Slide 9: Asset Overview
ASSET OVERVIEW
Slide 10: Thermal Oil Division
THERMAL OIL DIVISION PREDICTABLE, LOW DECLINE HIGHLIGHTS THERMAL PROPERTIES 100% Working Interest Fort McMurray 31,023 bbl/d Q3/22 Production AOC Hangingstone ~$450MM 2022E Operating Income 2022E Enbridge ~$115MM Capital Expenditures Hangingstone Cheecham 414 MMbbl & Gross Reserves Surmont 1,230 MMb
Slide 11: Thermal Oil – Leismer
THERMAL OIL – LEISMER STRATEGIC POSITIONING DEVELOPMENT MAP o Maximize FCF and deliver strong netbacks (~$48/bbl YTD) 2022 ACTIVITY OVERVIEW o Pad L8 – 5 wells on‐stream in Q1; current production >5,500 bbl/d o Lad L6 – 2 infill wells on production in September o Pad L8 – 5 new wells rig released; o
Slide 12: Thermal Oil – Hangingstone
THERMAL OIL – HANGINGSTONE DEVELOPMENT MAP STRONG RESERVOIR RESPONSE o Excellent facility utilization o Improved SOR due to the field wide NCG co‐injection COST OPTIMIZATION o Competitive non‐energy op. expenses (~$8/bbl YTD) o 5,000 bbl/d third‐party truck‐in terminal o Amended transportation contr
Slide 13: 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 14: Light Oil Division
LIGHT OIL DIVISION DE-RISKED, FLEXIBLE CAPITAL HIGHLIGHTS LIGHT OIL PROPERTIES 6,217 boe/d Q3/22 Production Kaybob 2022E Net Capital ~$12MM Expenditures ~$110MM 2022E Operating Income ~850 Gross Locations ~280,000 Gross Acres Placid 27 MMboe & Gross Reserves 72 MMboe (Proved & 2P) o Joint Venture wi
Slide 15: Light Oil – 2022 Activity
LIGHT OIL – 2022 ACTIVITY STRATEGIC OBJECTIVES PLACID MONTNEY o Maintain future optionality o Maximize netback & cash flow generation (~$51/boe YTD) 2022 ACTIVITY o Kaybob Duvernay: 3 Two Creeks wells on stream in Q1 FUTURE ACTIVITY o ~150 gross Montney development locations o ~700 gross Duvernay de
Slide 16: ESG Overview
om : 3 ee Se a \ ‘iN Pee 3 ESG OVERVIEW
Slide 17: ESG – 2021 Report
ESG – 2021 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. “Ou
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) • Provisional FID expected by year‐end 2022 • Detailed engineering underway; commercial model established • Horizontal injection well schedule
Slide 19: ESG – Technology Roadmap to Decarbonization
ESG – TECHNOLOGY ROADMAP TO DECARBONIZATION Decarbonization Roadmap HIGHLIGHTS o Track record of utilizing new technologies to improve environmental performance o Evaluate and implement new technologies focused on reducing both intensity and total emissions o Developed a Technology Roadmap to Decarb
Slide 20: 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 ~40 years Kitaskino Nu
Slide 21: ESG – Commitment to Responsibility
ESG – COMMITMENT TO RESPONSIBILITY “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 on our ESG journey as we continue to grow and responsibly produce energy in A
Slide 22: Appendix
om : 3 ee Se a \ ‘iN APPENDIX
Slide 23: 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 24: Capital Structure & Guidance
CAPITAL STRUCTURE & GUIDANCE CAPITAL STRUCTURE CAPITAL STRUCTURE OVERVIEW o US$178MM Second Lien Notes • 9.75% coupon & 5‐year term to Q4 2026 • Semi‐annual Free Cash Flow redemption feature at 105 • US$172MM (~C$223MM) principal reduction year to date (redemptions & FCF sweep) ~$1,600MM Market • Ac
Slide 25: Market Egress and Risk Management
MARKET EGRESS AND RISK MANAGEMENT CANADIAN MARKET ACCESS IMPROVING CANADIAN EGRESS OUTLOOK (MMBBL/D) o Excess pipeline capacity for foreseeable future • Enbridge L3R: +270,000 bbl/d in‐service • Trans Mountain Expansion (“TMX”): +590,000 bbl/d late 2023 o Lower WCSB supply growth expectations • Prod
Slide 26: Historical Transformation of ATH
HISTORICAL TRANSFORMATION OF ATH $486MM $470MM Significant Deleveraging; Light Oil JV Contingent $265MM Achieved 98% of with Bitumen Infrastructure US$175MM Debt Murphy Oil Royalties Sale Reduction Target Resource Resumption of Pre‐COVID Managing for Appraisal Business Plan strong FCF 2016 2017 2018
Slide 27: 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 28: 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, 2021. There are num
Slide 29: Reader Advisory Cont'd
READER ADVISORY CONT’D Production Athabasca’s 2022 forecasted total average daily production is between 34,000 ‐ 35,000 boe/d. Athabasca expects that approximately 82% of that production will be comprised of bitumen, 8% shale gas, 5% tight oil, 3% condensate natural gas liquids and 2% other natural
Slide 30: Athabasca Oil Corporation
ATHABASCA OIL CORPORATION
Athabasca Oil — Investor Presentation (November 2022) on 6ix