Athabasca Oil Corporation · TSX:ATH
Athabasca Oil — Investor Presentation (July 2023)
26 slides from Athabasca Oil's investor presentation, July 2023
Slide 1: Athabasca Oil Corporation
ATHABASCA OIL CORPORATION FOCUSED | EXECUTING | DELIVERING JULY 2023
Slide 2: Corporate Snapshot
CORPORATE SNAPSHOT ~35,000 BOE/D / 93% LIQUIDS / 5% ANNUAL BASE DECLINE ATHABASCA ASSETS Q2 2023 CAPITALIZATION THERMAL OIL THERMAL OIL Dover ~300,000 gross acres o Predictable, low decline projects West Basic Shares (ATH‐TSX) 586MM o Efficient brownfield SAGD development Hangingstone Market Cap. ($
Slide 3: Why Own Athabasca
WHY OWN ATHABASCA TOP TIER, LONG LIFE MANAGING FOR ASSET BASE SHAREHOLDER RETURNS • ~1.3 billion boe 2P reserves; 5% corporate decline • Return >75% of Excess Cash Flow to shareholders • Low sustaining capital (~$125MM annually) • Competive cost structure with tax‐free horizon and • 850 gross de‐ris
Slide 4: 2023 Q2 Results
2023 Q2 RESULTS $82MM Adj. Funds Flow; 33,971 boe/d (93% Liquids) ~$41MM Capital $40MM Free Cash Flow 2023e 34,500 – 36,000 boe/d 2023e $145MM ~$33/bbl Thermal Oil; ~$30/boe Light Oil $61MM Buybacks YTD $220MM Liquidity $62MM Net Debt 20MM Shares (34% of Annual NCIB) $132MM Cash + $88MM Credit Avail
Slide 5: Exposure to a Bullish Heavy Oil Thesis
EXPOSURE TO A BULLISH HEAVY OIL THESIS CANADIAN HEAVY DIFFERENTIALS WCS HEAVY DIFFERENTIALS (US$) AOC o Transient headwinds in the rearview mirror $‐ ACTUAL FORECAST • US heavy weighted strategic petroleum reserve releases $(5.00) • TC Energy Keystone pipeline leak $(10.00) o Tailwinds expected $(15
Slide 6: Robust Free Cash Flow Profile
ROBUST FREE CASH FLOW PROFILE PRODUCTION (BOE/D) BUSINESS OUTLOOK 50,000 Production 100 per MM share 90 o Low‐risk, sustainable capital projects 40,000 80 • Thermal Oil underpins growth and low decline 70 30,000 60 • Light Oil provides natural internal cost hedge 50 20,000 40 COMPETITIVE COST STRUCT
Slide 7: Return of Capital Strategy
RETURN OF CAPITAL STRATEGY 2023 CAPITAL ALLOCATION GUIDANCE 2023 CAPITAL ALLOCATION FRAMEWORK o >75% Excess Cash Flow (“ECF”) returned to shareholders • Normal Course Issuer Bid (“NCIB”) program commenced in April ~34% completed to date on annual • $61MM of share repurchases to July 26 (20MM common
Slide 8: Asset Overview
ASSET OVERVIEW
Slide 9: Thermal Oil Division
THERMAL OIL DIVISION PREDICTABLE, LOW DECLINE THERMAL PROPERTIES HIGHLIGHTS Fort McMurray 100% Working Interest AOC ~30,500 bbl/d 2023E Production Hangingstone 2023E ~$120MM Capital Expenditures Enbridge Cheecham Hangingstone 403 MMbbl & Gross Reserves 1,220 MMbbl (Proved & 2P) Surmont ~40 years & R
Slide 10: 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 pre‐ Gross revenue less opex & capex payout or post‐payout phase • Pre‐payout royalty rates are lower to account for the initial cost of investment • Post‐payout
Slide 11: Leismer – Overview
LEISMER – OVERVIEW TOP TIER OIL SANDS PROJECT DEVELOPMENT MAP o Long reserve life; 85 year RLI • 698MMbbl 2P reserves; 395MMbbl Best Est. Contingent resource o Excellent reservoir • <3x long‐term steam oil ratio 2023 ACTIVITY o Pad L8 expansion • New five well pad on‐stream in Q2 • Ramp‐up to ~6,000
Slide 12: Leismer – Compelling Economics
LEISMER – COMPELLING ECONOMICS ILLUSTRATIVE SUSTAINING PAD ECONOMICS FINANCIAL & ECONOMIC HIGHLIGHTS (US$85 WTI)* o Project underpins corporate cash flow and torque to oil L8 Mid Capital (lease edge) $MM $48 o Low Crown royalties Plateau Rate per project bbl/d 6,000 • 9% max (pre‐payout) vs. 40% (po
Slide 13: Hangingstone – Overview
HANGINGSTONE – OVERVIEW DEVELOPMENT MAP PROJECT HIGHLIGHTS o Long reserve life • 170 MMbbl 2P reserves • ~60 year 2P RLI o Improved SOR due to the field wide NCG co‐injection • ~3.6x average first half of 2023 COST OPTIMIZATION o Third‐party truck‐in terminal o Amended transportation contract comple
Slide 14: Light Oil Division
LIGHT OIL DIVISION DE-RISKED, FLEXIBLE CAPITAL LIGHT OIL PROPERTIES HIGHLIGHTS Kaybob ~5,000 boe/d 2023E Production 2023E Net Capital ~$25MM Expenditures ~850 Gross Locations ~275,000 Gross Acres 29 MMboe & Gross Reserves Placid 70 MMboe (Proved & 2P) ~13 years & Reserve Life Index ~31 years (Proved
Slide 15: Light Oil – 2023 Activity
LIGHT OIL – 2023 ACTIVITY STRATEGIC OBJECTIVES PLACID MONTNEY o Maintain optionality for future development program 2023 ACTIVITY o ~3 development wells to spud in H2 2023 • Maximize netbacks and cash flow generation FUTURE ACTIVITY o Land held and de‐risked o Deep inventory: ~150 Montney & ~700 Duv
Slide 16: ESG Overview
ESG OVERVIEW
Slide 17: ESG – Annual Report
ESG – ANNUAL 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 to our stakeholders, explain how sustainability and responsibility are embedded into every decision we make, and
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) • Project to be sanctioned once government fiscal and regulatory policy for CCS projects are fully in place o Sequestration into regional disp
Slide 19: ESG – Commitment to Responsibility
ESG – COMMITMENT TO RESPONSIBILITY ATHABASCA OIL (TSX:ATH) 18
Slide 20: Appendix
APPENDIX
Slide 21: 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 22: Corporate Capitalization
CORPORATE CAPITALIZATION CAPITAL STRUCTURE (Q2 2023) SENIOR SECOND LIEN NOTES o US$162MM Notes Enterprise Value ~$2.1B • US$350MM issued October 2021 @ 9.75%; due Q4 2026 • Retired ~US$188MM since inception using Free Cash Flow $220MM Liquidity redemption feature and proactive open market purchases
Slide 23: Tax Pools – Material Value
TAX POOLS – MATERIAL VALUE TAX POOL SUMMARY (2022) ILLUSTRATIVE TAX POOL VALUATION (NPV10) $250MM annual deduction ~$390MM ~$0.65/sh $500MM annual ~$3B deduction ~$500MM ~$0.85/sh $750MM annual deduction ~$530MM ~$0.90/sh Fully Maximized ~$590MM ~$1.00/sh ~$2.3B Non‐Capital Loss & Canadian Explorati
Slide 24: 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 25: 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, 2022. There are num
Slide 26: Reader Advisory Cont'd
READER ADVISORY CONT’D Production Athabasca’s 2023 forecasted total average daily production is between 34,500 – 36,000 boe/d. Athabasca expects that approximately 86% of that production will be comprised of bitumen, 6% shale gas, 4% tight oil, 2% condensate natural gas liquids and 2% other natural