Birchcliff Energy Ltd. · TSX:BIR
Birchcliff Energy — Investor Presentation (March 2023)
45 slides from Birchcliff Energy's investor presentation, March 2023
Slide 1: Corporate Presentation March 2023
CORPORATE PRESENTATION March 2023
Slide 2: Corporate Snapshot: Birchcliff Overview
CORPORATE SNAPSHOT BIRCHCLIFF OVERVIEW SELECT 2023 GUIDANCE(1)(2) BIRCHCLIFF IS A PURE ALBERTA MONTNEY/DOIG Average production 77,000 – 80,000 boe/d RESOURCE PLAY PRODUCER Adjusted funds flow(3) $475 million F&D capital expenditures $260 – $280 million Free funds flow(3) $195 – $215 million Excess f
Slide 3: Corporate Snapshot: 2022 Q4 and Annual Results
CORPORATE SNAPSHOT 2022 Q4 AND ANNUAL RESULTS SELECT Q4 2022 RESULTS Average production 79,799 boe/d Light oil (% of production) 2,413 bbls/d (3%) Condensate (% of production) 4,822 bbls/d (6%) NGLs (% of production) 7,963 bbls/d (10%) Natural gas (% of production) 387,604 Mcf/d (81%) $217.1 million
Slide 4: Why Invest in Birchcliff
CORPORATE SNAPSHOT WHY INVEST IN BIRCHCLIFF WORLD-CLASS ASSET BASE OPERATIONAL EXPERTISE Executive and management teams with a proven Focused, contiguous Montney land position track record Using scale to drive down costs and reduce Own, operate and control infrastructure environmental impact Multi-l
Slide 5: 2023 Outlook: Capital Program Details
2023 OUTLOOK 2023 CAPITAL PROGRAM DETAILS(1) 2023 F&D Capital Expenditures by Classification 2023 Pad Locations 09-04 (7) 02-27 (2) Classification Capital (millions) 3 Montney D1 Operational flexibility 1 Montney D1 DCCET(2)(3) $191 - $206 3 Montney D2 allows for the slowing 1 Montney D2 1 Montney C
Slide 6: Two-Year Outlook
TWO-YEAR OUTLOOK(1) SIGNIFICANT FLEXIBILITY IN THE 2023/2024 CAPITAL PROGRAMS $600 $600 $550 $550 Excess free funds 2024 excess free flow(2) generated in funds flow(2) $500 $475 $483 $500 2024 on current strip $82 MM pricing(6) Operational flexibility allows for $400 $400 nimble 2023 F&D 2024 F&D ca
Slide 7: 2023 Natural Gas Marketing
2023 OUTLOOK 2023 NATURAL GAS MARKETING(1) – FORECASTED AVERAGE PRICE PER HUB AECO AECO $3.01 ($0.07) 17% DIVERSIFIED ($0.37) $2.57 MARKET EXPOSURE Dawn 41% NO FIXED Dawn $3.91 PRICE ($0.23) Alliance ($1.28) COMMODITY $2.40 6% HEDGES Alliance $2.97 ($0.06) ($0.00) Pricing Hub Henry Hub Dif. Henry $2
Slide 8: Five-Year Outlook: Disciplined Production Growth
FIVE-YEAR OUTLOOK(1) DISCIPLINED PRODUCTION GROWTH ENHANCES PROFITABILITY GENERATE SUBSTANTIAL DELIVER SIGNIFICANT FULLY UTILIZE EXISTING FIVE-YEAR OUTLOOK SHAREHOLDER RETURNS INFRASTRUCTURE FREE FUNDS FLOW AND KEY THEMES: MAINTAIN CAPITAL AND ESTABLISH A CASH LEVERAGING EXTENSIVE DISCIPLINE POSITIO
Slide 9: Five-Year Outlook: Significant Drilling Inventory
FIVE-YEAR OUTLOOK(1) DECADES OF LOW-RISK BOOKED INVENTORY BEYOND FIVE-YEAR OUTLOOK SIGNIFICANT DRILLING INVENTORY: Future Total 2P Booked 2023 2024 2025 2026 2027 5 Year Total Years Locations 30 wells/yr 22 years of 2P Wells/yr 32 27 36 38 45 178 going locations(2) forward 5-year outlook annual well
Slide 10: Five-Year Outlook: Profitability and Shareholder Returns
FIVE-YEAR OUTLOOK(1) FOCUSED ON PROFITABILITY & SHAREHOLDER RETURNS GENERATING EXCESS FREE FUNDS FLOW SHAREHOLDER RETURNS CAPACITY $700 $67 $27 $97 $213 $1.40 $600 $82 $213 $213 $1.17 $213 $1.20 $1.11 $500 $213 $1.05 $/common share $385 $1.00 $0.90 $ millions $400 $260- $345 $0.77 $0.80 $0.80 $0.80
Slide 11: Enhanced Shareholder Returns
ENHANCED SHAREHOLDER RETURNS NEW BASE DIVIDEND IS ONE OF THE HIGHEST YIELDS AMONG PEERS ANNUAL BASE DIVIDEND YIELD(1)(2) 12% at March 14, 2023 New annual base dividend of 10% $0.80 per common share(3) represents a 10-fold increase over the previous base 8% dividend yield. 6% 4% 2% 0% Peer 1 Peer 2 P
Slide 12: Birchcliff Assets
BIRCHCLIFF ASSETS
Slide 13: Corporate Reserves: Volume and Value Growth
CORPORATE RESERVES(1) SIGNIFICANT RESERVES VOLUME AND VALUE GROWTH 1,200,000 $9,000 PDP Reserves Birchcliff added 35.6 MMboe 1,100,000 1P Reserves of PDP reserves in 2022, $8,000 2P Reserves 1,000,000 which reflects a PDP PDP NPV10 reserves replacement of $7,000 900,000 1P NPV10 127%(2) 2P NPV10 800
Slide 14: Historical Profitability: Low-Cost Producer
HISTORICAL PROFITABILITY PROVEN TRACK RECORD AS A LOW-COST PRODUCER 5-YEAR ADJUSTED FUNDS FLOW PDP RECYCLE RATIOS 3.5x 3.3x 3.2x AFF Recycle Ratios 3.0x 2.5x 2.0x 1.9x 1.5x 1.3x 1.4x Track record of 1.0x 0.6x profitable 0.5x full-cycle 0.0x 2018 2019 2020 2021 2022 5-Yr Avg production additions Corp
Slide 15: Corporate Reserves: Value at Current Valuation
CORPORATE RESERVES(1) SIGNIFICANT VALUE AT CURRENT VALUATION RESERVES SUMMARY – AT DECEMBER 31, 2022 2022YE NET ASSET VALUE PER COMMON SHARE(2) $30.00 Proved Total Proved $28.37 Total Developed Plus $25.00 Proved Birchcliff’s PDP NAV per Producing Probable common share is 35% higher than its closing
Slide 16: 2023 Capital Program
2023 CAPITAL PROGRAM MONTNEY/DOIG RESOURCE PLAY MAJOR THEMES 2023 Capital Program Major Themes 2023 Pad Locations • Balanced drilling opportunities of prolific natural gas and liquids-rich wells. • Leverage interconnectivity between Pouce Coupe and Gordondale processing 09-04 (7) 02-27 (2) facilitie
Slide 17: 2022 Capital Program
2022 CAPITAL PROGRAM MONTNEY/DOIG RESOURCE PLAY IP60 PRODUCTION RESULTS 2022 Locations & Well Rates (IP60)(1) 2022 Capital Program Major Themes • Balanced drilling opportunities of prolific natural gas and liquids-rich wells. • Focused on scale and repeatability. • Significant capital spend on succe
Slide 18: 2022 Pad Average: Natural Gas Pad Rates
2022 PAD AVERAGE D&C CONTINOUS PERFORMANCE IMPROVEMENT AVERAGE NATURAL GAS PAD RATES(1) VS. TIER 0 CAPPED TYPE CURVE(2) 13-29 01-08 13-29 04-04 04-04 06-35 01-08 06-35 The 2022 program average is meeting the Tier 0 capped type curve and continues to show sustained, flat production 1) 2022 Pad Averag
Slide 19: 2022 Pad Average: Condensate Pad Rates
2022 PAD AVERAGE D&C CONTINOUS PERFORMANCE IMPROVEMENT AVERAGE CONDENSATE PAD RATES(1) VS. LOW GOR HALO TYPE CURVE(2) 5 well average Cumulative Raw Condensate Rate (bbl/d) condensate production rate Raw Condensate Rate (bbl/d) 03-06 03-06 03-06 pad results show strong condensate production driving r
Slide 20: Birchcliff's Montney/Doig Resource Play
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY LOCATED IN THE HEART OF THE WORLD-CLASS MONTNEY Large focused land base with 373.7 net sections prospective for the Montney/Doig as at December 31, 2022. Birchcliff has a contiguous land block at Pouce Coupe and Gordondale of approximately 214.2 net sections.
Slide 21: Montney/Doig Hexastack
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAYRESOURCE PLAY MONTNEY/DOIG BIRCHCLIFF MONTNEY/DOIG HEXASTACK • Resource density: Stacked resource up to 300 metres thick. • Large areal extent: Extends over 50,000 square miles. • Exceptional “fracability”: Low clay content, low Poisson’s Ratio and high Young’s
Slide 22: Located in the Heart of the World-Class Montney
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAYRESOURCE PLAY MONTNEY/DOIG LOCATED IN THE HEART OF THE WORLD-CLASS MONTNEY MARCH 2023 22
Slide 23: Pouce Coupe Overview
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY POUCE COUPE OVERVIEW 2022 average production of 51,217 boe/d(1) with a natural gas weighting of 90%. Proven asset in development phase. Wells show high initial deliverability, low terminal decline and stable long-term production. Predictable results with impro
Slide 24: Pouce Coupe Deloitte Tier 0 Type Curve
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY POUCE COUPE DELOITTE TIER 0 TYPE CURVE(1) 4000 Rate of Return (%) WTI (US$/bbl) 3500 $70.00 $80.00 $90.00 $100.00 $3.00 162 187 213 241 (C$/GJ) Sales Gas Rate (Mcf/d) AECO 3000 $4.00 212 240 269 300 $5.00 265 296 328 362 2500 $6.00 321 355 389 426 2000 NPV 10%
Slide 25: Gordondale Overview
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY GORDONDALE OVERVIEW 2022 average production of 25,631 boe/d(1) with an oil, condensate & NGLs weighting of 37%. Strategic infrastructure with deep-cut liquids recovery enhancing netbacks. Low base production decline requires less incremental wells to keep infr
Slide 26: Gordondale Deloitte Low GOR Halo Oil Type Curve
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY GORDONDALE DELOITTE LOW GOR HALO OIL TYPE CURVE(1) 500 D1 Halo Low GOR - Rate of Return (%) WTI (US$/bbl) 450 $70.00 $80.00 $90.00 $100.00 $3.00 195 248 305 366 400 (C$/GJ) AECO $4.00 223 279 339 403 350 $5.00 251 310 373 439 $6.00 279 340 406 475 300 Oil Rate
Slide 27: Corporate Responsibility: Focused on ESG Excellence
CORPORATE RESPONSIBILITY FOCUSED ON ESG EXCELLENCE PEER EMISSIONS METRICS(1)(2)(3)(4)(5) ENVIRONMENTAL 2,500,000 Producer GHG Emissions Metrics 0.050 Waste heat recovery units at the Pouce Coupe Gas Plant take the 2,000,000 0.040 equivalent of >5,000 cars off the road annually. Emissions Intensity(7
Slide 28: Corporate Responsibility: Social and Governance
CORPORATE RESPONSIBILITY FOCUSED ON ESG EXCELLENCE SOCIAL $4.25 million donated to more than 100 local community groups and organizations in the last 5 years. Continued partnerships with local communities through educational, cultural, and economic development initiatives. Major supporter of STARS A
Slide 29: Canadian West Coast LNG Opportunity
CANADIAN WEST COAST LNG OPPORTUNITY BIRCHCLIFF’S ACTIVE ROLE SUPPLYING THE WORLD WITH CLEAN LNG Environmental Benefits of Canadian LNG LNG is critical in the transition to a low-carbon economy, as it displaces higher carbon fuels like coal and oil and provides a backstop to intermittent renewables s
Slide 30: Appendix
BIRCHCLIFF ENERGY APPENDIX MARCH 2023 30
Slide 31: Production History
PRODUCTION HISTORY SIGNIFICANT GROWTH SINCE INCEPTION 90,000 77,000 – 77,977 78,520 76,925 80,000 80,000 77,096 76,401 70,000 67,963 Average Production (boe/d) 60,000 49,236 50,000 38,950 40,000 33,734 30,000 25,829 22,802 20,000 18,136 13,079 10,148 11,216 10,000 6,711 5,368 2,793 0 2005 2006 2007
Slide 32: Historical Profitability
HISTORICAL PROFITABILITY PROVEN TRACK RECORD AS A LOW-COST PRODUCER Profitability Breakdown: 5 Year 2018 2019 2020 2021 2022 Average(5) Average AECO (CDN$/GJ) $1.42 $1.67 $2.11 $3.44 $5.04 $2.74 Average WTI (US$/bbl) $64.77 $57.03 $38.91 $68.70 $94.31 $64.74 P&NG Revenue ($/Mcfe)(1)(2) $3.68 $3.59 $
Slide 33: Corporate Information
CORPORATE INFORMATION EXECUTIVE DIRECTORS BANK SYNDICATE Jeff Tonken Jeff Tonken The Bank of Nova Scotia Chief Executive Officer and Chairman of the Board Chief Executive Officer and Chairman of the Board HSBC Bank Canada National Bank of Canada Christopher Carlsen Dennis Dawson Canadian Imperial Ba
Slide 34: Corporate Information: Management Team
CORPORATE INFORMATION MANAGEMENT TEAM HEAD OFFICE Gates Aurigemma Jeff Rogers Suite 1000, 600 – 3rd Avenue S.W. Manager, General Accounting Facilities Manager Calgary, Alberta T2P 0G5 Phone: 403-261-6401 Jesse Doenz Randy Rousson Controller and Investor Relations Manager Drilling and Completions Man
Slide 35: Advisories: Definitions
ADVISORIES DEFINITIONS Deloitte Deloitte LLP, independent qualified reserves evaluator Gordondale Gas Plant AltaGas’ deep-cut sour gas processing facility in Gordondale NI 52-112 National Instrument 52-112 – Non-GAAP and Other Financial Measures Disclosure Pouce Coupe Gas Plant Birchcliff’s 100% own
Slide 36: Advisories: Non-GAAP and Other Financial Measures
ADVISORIES NON-GAAP AND OTHER FINANCIAL MEASURES This presentation uses various “non-GAAP financial measures”, “non-GAAP ratios”, “supplementary financial measures” and “capital management measures” (as such terms are defined in NI 52-112), which are described in further detail below. These measures
Slide 37: Advisories
ADVISORIES Birchcliff anticipates the forward-looking non-GAAP financial measures for adjusted funds flow and free funds flow disclosed herein to generally be lower than their respective historical amounts for the twelve months ended December 31, 2022, primarily due to lower anticipated benchmark oi
Slide 38: Advisories: Total Cash Costs
ADVISORIES Total Cash Costs Birchcliff defines “total cash costs” as total expenses adjusted for other gains (losses), dividends on capital securities, non-cash finance expense, other compensation, net, depletion and depreciation, marketing revenue and royalty expense. Management believes that total
Slide 39: Advisories: Total Cash Costs Per Mcfe
ADVISORIES Total Cash Costs Per Mcfe Birchcliff calculates “total cash costs per Mcfe” as aggregate total cash costs divided by the production (Mcfe) in the period. Management believes that total cash costs per Mcfe assists management and investors in assessing Birchcliff’s efficiency and overall ca
Slide 40: Advisories: Presentation of Oil and Gas Reserves
ADVISORIES PRESENTATION OF OIL AND GAS RESERVES Certain terms used herein are defined in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”), CSA Staff Notice 51-324 Revised Glossary to NI 51-101 – Standards of Disclosure for Oil and Gas Activities (“CSA Sta
Slide 41: Advisories: Oil and Gas Metrics
ADVISORIES OIL AND GAS METRICS This presentation contains metrics commonly used in the oil and natural gas industry, including F&D costs, reserves life index, reserves replacement, recycle ratio, net asset value and netbacks, which have been determined by Birchcliff as set out below. These oil and g
Slide 42: Advisories: Initial Production Rates
ADVISORIES INITIAL PRODUCTION RATES Any references in this presentation to initial production rates or other short-term production rates are useful in confirming the presence of hydrocarbons; however, such rates are not determinative of the rates at which such wells will continue to produce and decl
Slide 43: Advisories: Forward-Looking Statements
ADVISORIES • the information set forth on the slides “Two-Year Outlook – Significant Flexibility in the 2023/2024 Capital Programs”, “Five-Year Outlook –Disciplined Production Growth Enhances Profitability” and “Five-Year Outlook –Focused on Profitability & Shareholder Returns” and elsewhere in this
Slide 44: Advisories
ADVISORIES o Birchcliff’s forecast of year end total debt assumes that: (i) the forecasts of adjusted funds flow, free funds flow and excess free funds flow are achieved, with the level of capital spending for 2023 met and the payment of an annual base dividend of $213 million; (ii) any free funds f
Slide 45: Advisories
ADVISORIES Birchcliff’s actual results, performance or achievements could differ materially from those anticipated in the forward-looking statements as a result of both known and unknown risks and uncertainties including, but not limited to: the risks posed by pandemics (including COVID-19), epidemi
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