Athabasca Oil Corporation · TSX:ATH
Athabasca Oil — Investor Presentation (June 2024)
30 slides from Athabasca Oil's investor presentation, Jun 20, 2024
Slide 1: Athabasca Oil Corporation
ATHABASCA OIL CORPORATION FOCUSED | EXECUTING | DELIVERING JUNE 2024
Slide 2: Corporate Snapshot
CORPORATE SNAPSHOT ~35,000 BOE/D / 98% LIQUIDS / ~5% ANNUAL BASE DECLINE ATHABASCA ASSETS CAPITALIZATION THERMAL OIL THERMAL OIL Dover ~300,000 gross acres o Predictable, low decline projects West Basic Shares (ATH‐TSX) 558MM o Efficient brownfield SAGD development Hangingstone Market Cap. ($5/sh) ~
Slide 3: Why Own Athabasca
WHY OWN ATHABASCA TOP TIER, LONG LIFE MANAGING FOR ASSET BASE SHAREHOLDER RETURNS • ~1.2 billion boe 2P reserves; ~1 billion bbl cont. resource • $1.2 Billion Free Cash Flow (2024‐26) • Top‐tier Thermal Assets with regulatory approval in • Top Tier CFPS Growth; Return 100% of Free Cash Flow place fo
Slide 4: Exposure to a Bullish Heavy Oil Thesis
EXPOSURE TO A BULLISH HEAVY OIL THESIS WCS HEAVY DIFFERENTIALS (US$) AOC / STRIP CANADIAN HEAVY DIFFERENTIALS ACTUAL FORECAST o Positive structural changes for Canadian heavy oil • Trans Mountain Expansion (+590 mbbl/d); May 1st start‐up • New global heavy refining capacity (+340 mbbl/d Mexico) o St
Slide 5: Robust Free Cash Flow Profile
ROBUST FREE CASH FLOW PROFILE NET PRODUCTION (BOE/D)1 BUSINESS OUTLOOK Production 50,000 3‐year CAGR per MM share (RHS) 100 o Thermal Oil assets with low base decline ~7% production 90 ~15% production per share • Low annual sustaining capital of ~$125MM 45,000 80 70 o Duvernay Energy enhances growth
Slide 6: Return of Capital Strategy
RETURN OF CAPITAL STRATEGY FULLY DILUTED SHARE COUNT 2023 SHAREHOLDER RETURNS o Fully completed first Normal Course Issuer Bid (“NCIB”) 12% reduction • $225MM share repurchases (April 2023 – March 2024) since Q1 2023 • 58MM common shares at $3.88/sh avg. price o Exceeded commitment to return >75% of
Slide 7: Thermal Oil – Asset Overview
» pT ae THERMAL OIL - ASSET OVERVIEW
Slide 8: Thermal Oil Division
THERMAL OIL DIVISION PREDICTABLE, LOW DECLINE HIGHLIGHTS THERMAL PROPERTIES 100% Working Interest Fort McMurray ~31,500 bbl/d Q1 2024 Production AOC Hangingstone 2024e Capital $135MM Expenditures Enbridge 404 MMbbl & Gross Reserves Hangingstone Cheecham 1,216 MMbbl (Proved & 2P) Surmont ~35 years &
Slide 9: Leismer – Overview
LEISMER – OVERVIEW TOP TIER OIL SANDS PROJECT DEVELOPMENT MAP Pad 10 o Long reserve life; ~80 year Reserve Life Index • 697MMbbl 2P reserves; 384MMbbl Best Est. Contingent resource o Excellent reservoir • ~3x long‐term steam oil ratio Pad 8 South 4 well pairs 2024 ACTIVITY (~$105MM) Pad 4 Redrills 3
Slide 10: Leismer – Compelling Economics
LEISMER – COMPELLING ECONOMICS FINANCIAL & ECONOMIC HIGHLIGHTS ILLUSTRATIVE SUSTAINING PAD ECONOMICS o Project underpins corporate cash flow and torque to oil L8 Mid Capital (lease edge) $MM $48 o Low pre‐payout Crown royalties of 5‐9% (Slide 23) Plateau Rate per project bbl/d 6,000 o Compelling inv
Slide 11: Hangingstone – Overview
HANGINGSTONE – OVERVIEW DEVELOPMENT MAP PROJECT HIGHLIGHTS o Long reserve life; ~65 year Reserve Life Index • 167 MMbbl 2P reserves o Improved SOR due to the field wide NCG co‐injection • ~3.5x 2023 average 2024 ACTIVITY (~$30MM) o Two well pairs to spud in Q3 2024 • Utilizing ~1,400 meter laterals
Slide 12: Corner – Overview
CORNER – OVERVIEW REGIONAL MAP TOP TIER OIL SANDS PROJECT o Large De‐risked Asset • 351 MMbbl 2P reserves and 520 MMbbl Contingent Resource (Best Est.) • 304 delineation wells with ~80% 3D seismic coverage o High Quality Reservoir • Up to ~45 m of pay in initial development with high quality sands •
Slide 13: Duvernay Energy Corporation
DUVERNAY ENERGY CORPORATION
Slide 14: Duvernay Energy – Corporate Snapshot
DUVERNAY ENERGY – CORPORATE SNAPSHOT CREATION OF NEW PRIVATE COMPANY DUVERNAY ENERGY ASSETS o Athabasca and Cenovus combine Duvernay assets Halo Energy • Athabasca to operate Duvernay Energy (“DEC”) GMT Exploration o Unparalleled exposure to Kaybob Duvernay oil window Hitic Energy o Debt‐free entity
Slide 15: Duvernay Energy – Strategic Positioning
DUVERNAY ENERGY – STRATEGIC POSITIONING PRIVATE DUVERNAY LONG TERM GROWTH COMPANY STRATEGY • Athabasca 70% Equity Interest; Cenovus 30% Interest • Self‐funded development plan with growth to ~25,000 boe/d (75% Liquids) in late 2020s • AOC and DEC positioned as two separate companies with independent
Slide 16: Duvernay Energy – Kaybob Activity Map
DUVERNAY ENERGY – KAYBOB ACTIVITY MAP APL Oil & Gas Bounty CNRL Cenovus Chevron Crescent Point Cygnet Enercapita GMT HWN Halo Hammerhead (CPG) Hitic Kiwetinohk Oil Paramount Window PetroChina Sinopec Spartan Delta Whitecap Liquids Rich Yoho Gas Window Duvernay Hz Wells DEC 30% JV ASSETS Duvernay Lic
Slide 17: Duvernay Energy – Development Plans
DUVERNAY ENERGY – DEVELOPMENT PLANS KAYBOB EAST ILLUSTRATIVE ECONOMICS 2024 ACTIVITY 4,000M LATERAL & 1,000 LB/FT (US$85 WTI) o $82MM capital budget (gross) 2‐WELL 4+ MULTI PAD WELL PAD Capital (DCET) per well $MM $14 $10 o Four multi‐well pads IP365 boe/d 618 618 o 100% working interest operated ac
Slide 18: Appendix
APPENDIX
Slide 19: Management Team
MANAGEMENT TEAM o President and Chief Executive Officer since 2015; 12 Years at Athabasca Rob Broen, P.Eng. o Over 30 years of exploration and production experience including 18 years with Talisman Energy with roles as President & Chief Executive President, Talisman Energy USA Inc. and Senior Vice P
Slide 20: Q1 2024 Results
Q1 2024 RESULTS 33,470 boe/d (98% Liquids) $88MM Adj. Funds Flow $36/bbl Thermal Op. Netback 2024e 35,000 – 36,000 boe/d Strong Cash Flow Metrics; 2024e ~$550MM $27/boe Duvernay Op. Netback $42MM AOC Capex ~$435MM Liquidity $120MM Return of Capital YTD $34MM DEC Capex ~$305MM Cash 24.3 million Share
Slide 21: Capitalization & Hedging
CAPITALIZATION & HEDGING SENIOR SECOND LIEN NOTES AOC CAPITAL STRUCTURE o US$157MM Notes (S&P BB‐ issue rating) • US$350MM issued October 2021 @ 9.75%; due Q4 2026 • Retired ~US$193MM since inception using Free Cash Flow ~$2,800MM redemption feature and proactive open market purchases Market Cap ($5
Slide 22: Differentiated Long-Life Reserves
DIFFERENTIATED LONG-LIFE RESERVES 2023 RESERVE OVERVIEW 2P RESERVES BY ASSET (MMBOE) o Deep resource inventory 167 • ~1.2 billion boe 2P reserves; ~100 year reserve life • ~1 billion bbl contingent resource 351 • 113 of ~500 gross estimated Duvernay locations booked 697 o Significant intrinsic value
Slide 23: Valuable Tax Pools
VALUABLE TAX POOLS TAX POOL SUMMARY (Q1 2024) ILLUSTRATIVE TAX POOL VALUATION (NPV10) $250MM annual deduction ~$320MM ~$0.57/sh $500MM annual deduction ~$450MM ~$0.80/sh ~$2.6B $750MM annual deduction ~$500MM ~$0.90/sh Fully Maximized ~$560MM ~$1.00/sh ~$2.1B Tax pool valuations as at March 31, 2024
Slide 24: Thermal Oil – Crown Royalty Advantage
THERMAL OIL – CROWN ROYALTY ADVANTAGE CROWN ROYALTY OVERVIEW OIL SANDS ROYALTY RATES o Royalty structure depends on whether a project is in 25‐40% Royalty on Gross Revenue less Opex & Capex pre‐payout or post‐payout phase o Pre‐payout advantage designed to support the recovery of the initial investm
Slide 25: Duvernay Energy – Infrastructure
DUVERNAY ENERGY – INFRASTRUCTURE INFRASTRUCTURE ADVANTAGE o Operated strategic infrastructure o Underutilized capacity with flexibility for future expansions o Oil infrastructure directly connected to the Pembina Peace liquids system o Gas infrastructure dually connected to Pembina Gas Infrastructur
Slide 26: Kaybob Duvernay >1,000 Industry Wells
KAYBOB DUVERNAY >1,000 INDUSTRY WELLS 2010‐2014 HISTORICAL SPUDS BY OPERATOR ~240 WELLS 150 Athabasca/Murphy Crescent Point 125 Chevron/KUFPEC Kiwetinohk & PetroChina Whitecap 100 75 2015‐16 ~500 WELLS CTD 50 25 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2017‐18 ~750 WEL
Slide 27: Kaybob Duvernay – Evolving Well Design
KAYBOB DUVERNAY – EVOLVING WELL DESIGN LATERAL LENGTH LATERAL LENGTH BY YEAR o Industry trend of increasing lateral length in resource plays o Recent Kaybob Duvernay laterals between 3,500 – 4,500m o DEC targeting ~4,000m to optimize land usage and improve capital efficiencies Source: McDaniel & Ass
Slide 28: Reader Advisory
READER ADVISORY Forward Looking Statements This Presentation contains forward‐looking information that involves various risks, uncertainties and other factors. Within this Reader Advisory and Forward Looking Statements, references to the “Company” means Athabasca and Duvernay Energy, as and where ap
Slide 29: 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, 2023. There are num
Slide 30: Reader Advisory Cont'd
READER ADVISORY CONT’D The Cash Financing and Interest Expense financial measures contained in the Presentation are calculated by subtracting the net non‐cash financing and interest expense as reported in the Consolidated Statement of Cash Flows from the financing and interest expense as reported in