Obsidian Energy Ltd · TSX:OBE
Obsidian Energy — Investor Presentation (February 2022)
38 slides from Obsidian Energy's investor presentation, February 2022
Slide 1: Obsidian Energy Ltd. Corporate Presentation
Obsidian Energy Ltd. Corporate Presentation February 2022 TSX:/NYSE American: OBE
Slide 2: Advisory
ADVISORY OVERVIEW This presentation should be read in conjunction with the Company’s audited consolidated financial statements, Management’s Discussion and Analysis (“MD&A”) for the year ended December 31, 2021. All dollar amounts contained in this presentation are expressed in millions of Canadian
Slide 3: Investment Highlights
INVESTMENT HIGHLIGHTS OVERVIEW An efficient producer with operational strength, providing growth potential PRODUCTION WILLESDEN GREEN & PEMBINA PEACE RIVER Low decline, oil-weighted asset base with Largest acreage holder in a world class, High-quality cold-flow, low decline heavy oil significant und
Slide 4: Corporate Overview
CORPORATE OVERVIEW OVERVIEW World class assets and experienced team delivering value People, assets, discipline, return-focus and execution strength CORPORATE SUMMARY MARKET SUMMARY Production 2021 24,605 boe/d Shares outstanding 81.0 million Production mix (2021) 64% oil and liquids Market capitali
Slide 5: 2021 Highlights
2021 HIGHLIGHTS 2021 RESULTS Successful year provides strong foundation for growth in 2022 ‣ Acquired remaining 45% interest in the Peace River Oil Partnership ‣ Successful equity issue with oversubscribed subscription offering ‣ Completed 2021 development program with quick transition into 2022 ‣ R
Slide 6: Delivering Results – 2021
DELIVERING RESULTS – 2021 2021 RESULTS Strategy and focus continue momentum for long-term growth FUNDS FLOW FROM 2021E 2021 Results OPERATIONS ($ millions) Production 24,600 – 24,800 boe/d 24,605 $218 Capital expenditures $141 –$143 Million $140.9 Million Decommissioning $8 Million $8.1 Million $159
Slide 7: 2021 Reserves Highlights
2021 RESERVES HIGHLIGHTS 2021 RESULTS Strong growth in reserves values and volumes generating >200% reserve replacement and >2.4x recycle ratios YEAR-END 2021 RESERVES SUMMARY Proved developed Total proved Total proved producing (PDP) (1P) plus probable (2P) Reserves volume 71.3 MMboe 113.7 MMboe 14
Slide 8: Focusing on 2022
FOCUSING ON 2022 STRATEGY Building our strategy and plans for the year We will evaluate and determine the right balance between production growth, debt repayment and return of capital to maximize stakeholder value as we move forward through 2022 OPERATIONS FINANCIAL ‣ First-half weighted development
Slide 9: Our Two-Year Corporate Performance
OUR TWO-YEAR CORPORATE PERFORMANCE STRATEGY Significant growth in free cash flow accelerates debt reduction PRODUCTION OUTLOOK (boe/d) 2022 guidance reflects higher production and commodity prices 30,100 29,100 25,404 24,605 2020 2021 2022E WTI US$39/bbl US$75/bbl US70.00/bbl US$75.00/bbl US$80.00/b
Slide 10: Our 2022 Development Program
OUR 2022 DEVELOPMENT PROGRAM ASSETS First half drilling program started early in 2022, targeting Cardium and PROP areas PEACE RIVER 29 wells (28.0 net) front-half weighted drilling program ‣ Further demonstrates strength of asset base and 2-05 PAD operational excellence ‣ Four-rig continuous drill p
Slide 11: Leading Cardium Play Areas
LEADING CARDIUM PLAY AREAS ASSETS Our growth foundation with >25 years of drilling opportunities for future development FIELD HISTORY CARDIUM PRODUCTION (2021) 2021 Cardium production ~20,182 boe/d ‣ One of North America’s most significant light oil fields 24% ‣ Development since the 1950’s; various
Slide 12: Top Cardium Driller and Operator
TOP CARDIUM DRILLER AND OPERATOR ASSETS Our development program produces leading Cardium well performance compared to peers LEADING CARDIUM WELL PERFORMANCE: WILLESDEN GREEN FIELD Cumulative production per well (bbl/well) Obsidian (58) Baccalieu (11) Entrada (21) Yangarra (25) InPlay (24) Bonterra (
Slide 13: Peace River
PEACE RIVER ASSETS Full ownership in high-quality cold-flow heavy oil Bluesky resource with Clearwater upside 2021 Peace River production ~3,152 boe/d* ‣ Reliable and steady Bluesky production with shallow declines ‣ Large, contiguous cold-flow heavy oil resource developed with multi-leg horizontal
Slide 14: Peace River Drilling Update
PEACE RIVER DRILLING UPDATE ASSETS Successful return to Bluesky development H2 2021 DRILL PROGRAM PRODUCTION (bbl/d) ‣ Drilled four Bluesky wells in late 2021 ‣ Four wells on production at >2,000 bbl/d ‣ Peak oil production of >2,700 boe/d 500 bbl/d ‣ Drilling assists in de-risking the play edge, wh
Slide 15: Peace River Clearwater Potential
PEACE RIVER CLEARWATER POTENTIAL ASSETS Market excitement over emerging Clearwater formation play ‣ 473 sections with Clearwater heavy oil rights ‣ 65+ Clearwater drilling opportunities currently identified in the Dawson field alone ‣ Leverage Bluesky operational experience ‣ Competitive royalty str
Slide 16: Optimization Program Results in Strong Returns
OPTIMIZATION PROGRAM RESULTS IN STRONG RETURNS ASSETS Modest capital spend results in improved existing well performance, maintaining production across our asset portfolio ‣ Low-cost, high value growth opportunities with minimal capital expenditures ‣ Significant potential with >2,000 active wells t
Slide 17: Dedicated to Sustainability
DEDICATED TO SUSTAINABILITY CORPORATE RESPONSIBILITY Responsible stewardship for all stakeholders We believe it is our responsibility to support our communities, contribute to the economy, minimize our environmental impact and act in the best interests of all our stakeholders ENVIRONMENT SOCIAL VALU
Slide 18: Responsibly Managing Our Decommissioning Liability
RESPONSIBLY MANAGING OUR DECOMMISSIONING LIABILITY CORPORATE RESPONSIBILITY Restoring the land Committed to reducing environmental footprint INACTIVE LEGACY WELL INACTIVE VS. ACTIVE ARO ‣ Active committee participation to improve industry practices INVENTORY REDUCTION (YE2019 TO YE2022) ($ millions)
Slide 19: Hedging Production to Preserve Cash Flow
HEDGING PRODUCTION TO PRESERVE CASH FLOW SUMMARY Continuing to build on our hedge position at constructive levels HEDGED OIL ($, WTI/BBL) 2022 YTD* $102.50 $98.82 $108.72 9% WTI @ 8,634 50% hedge level 8,016 7,500 C$103.45/bbl $115.00 9% @ 500 C$4.46/mcf Jan Feb Mar Apr HEDGED AECO GAS ($, MCF) 82%
Slide 20: Reserves Underpin Our Current and Future Value
RESERVES UNDERPIN OUR CURRENT AND FUTURE VALUE SUMMARY Obsidian Energy trading at substantial discount on booked reserves basis YEAR-END 2021 RESERVES SUMMARY N E T A S S E T V A L U E ( N A V ) P E R S H A R E (1) (C$ per share) Proved developed Total Total proved US$65 WTI US$75 WTI producing (PDP
Slide 21: Why Invest in Obsidian Energy?
WHY INVEST IN OBSIDIAN ENERGY? SUMMARY Obsidian Energy offers upside potential for shareholders ‣ Dominant Cardium land position and deep opportunity inventory of high- return wells that can be used to accelerate development at appropriate WTI levels ‣ New core area at Peace River with compelling Bl
Slide 22: Appendix
Appendix TSX:/NYSE American: OBE
Slide 23: 2022 Guidance
2022 GUIDANCE APPENDIX Balancing production growth, debt reduction from FCF generation and the potential for returns of capital 2022E Average production1 29,100 – 30,100 boe/d Capital expenditures $143 – $149 million Decommissioning expenditures2 $14 million Net operating expenses $12.00 – $12.90/bo
Slide 24: Willesden Green – Crimson Lake
WILLESDEN GREEN – CRIMSON LAKE APPENDIX Cornerstone for revitalized primary development on Cardium acreage ‣ Top quality reservoir with banked oil from historical pressure maintenance ‣ Historically under-developed due to challenges for vertical drilling ‣ Horizontal development proving strong retur
Slide 25: Willesden Green – East Crimson
WILLESDEN GREEN – EAST CRIMSON APPENDIX Eastward extension of successful Crimson Lake development program ‣ Horizontal development proving strong returns and quick payouts ‣ Flexible, operated infrastructure shared with Crimson Lake ‣ Combination of pressure supported edge drilling and underdevelope
Slide 26: Central Pembina
CENTRAL PEMBINA APPENDIX Centre of low declines supports horizontal drilling and future growth through waterfloods ‣ Low decline, pressure-maintained development ‣ Ability to de-risk opportunities and add additional locations through geological and reservoir modelling ‣ Existing wells and infrastruc
Slide 27: Experienced Team with Strong Technical Skills
EXPERIENCED TEAM WITH STRONG TECHNICAL SKILLS APPENDIX Working together to build a top tier developer that provides solid returns to stakeholders ‣ ~240 employees EMPLOYEES FINANCIAL AND COMMERCIAL ‣ Management team: Deeply experienced with long track Strong financial, commercial and capital record,
Slide 28: Endnotes
Endnotes TSX:/NYSE American: OBE
Slide 29: Endnotes
ENDNOTES ENDNOTES Slide 4: Corporate Overview Slide 7: 2021 Reserve Highlights Market capitalization and enterprise value was determined with share price at the close of business on Reserves evaluation excludes inactive ARO. Our YE2021 reserves evaluation conforms to the February 22, 2022. Common sh
Slide 30: Endnotes (cont.)
ENDNOTES (CONT.) ENDNOTES Slide 10: Our 2022 Development Program Slide 16: Optimization Program Results in Strong Returns No locations have been assigned to land where Obsidian Energy is not the operator. Production and capital costs are both based on internal estimates and excludes non-operated dev
Slide 31: Endnotes (cont.)
ENDNOTES (CONT.) ENDNOTES Slide 20: Reserves Underpin our Current and Future Value Reserves evaluation excludes inactive ARO. Our YE2021 reserves evaluation conforms to the requirements of National Instrument 51-101 and uses definitions and guidelines contained in the COGE Handbook. Obsidian Energy
Slide 32: Definitions and Industry Terms
DEFINITIONS AND INDUSTRY TERMS ENDNOTES 2021E meant the expected 2021 results, based on internal Company, Obsidian Energy or OBE means Obsidian Energy Ltd.; OPEX means operating expenses assumptions and estimates as applicable PROP means Peace River Oil Partnership 2022E means forecast expectations
Slide 33: Non-GAAP Measures Advisory
NON-GAAP MEASURES ADVISORY ENDNOTES In this presentation, we refer to certain financial measures that are not determined in accordance with IFRS. These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar
Slide 34: Non-GAAP Measures Reconciliations
NON-GAAP MEASURES RECONCILIATIONS ENDNOTES NET OPERATING COSTS NET DEBT (in $ millions) 2020 2021 FFO and FCF (in $ millions) 2021 (in $ millions, per boe) 2021 Long-term debt Cash flow from operating activities $198.7 Operating costs $129.5 Syndicated credit facility $395.0 $321.5 Change in non-cas
Slide 35: Oil and Gas Information Advisory
OIL AND GAS INFORMATION ADVISORY ENDNOTES Barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of crude oil is based on an energy equivalency conversion method primarily applicable at th
Slide 36: 2021 Reserves Disclosure and Definitions
2021 RESERVES DISCLOSURE AND DEFINITIONS ENDNOTES Unless otherwise noted, any reference to 2021 reserves in this presentation are based on the report (“Sproule Reserve Definitions Report”) prepared by Sproule Associates Limited dated January 28, 2022 where they evaluated one hundred percent of the c
Slide 37: Forward-Looking Information Advisory
FORWARD-LOOKING INFORMATION ADVISORY ENDNOTES Certain statements contained in this document constitute forward-looking statements or information (collectively With respect to forward-looking statements and FOFI contained in this document, the Company has made "forward-looking statements") within the
Slide 38: Forward-Looking Information Advisory (cont.)
FORWARD-LOOKING INFORMATION ADVISORY (CONT.) ENDNOTES Although the Company believes that the expectations reflected in the forward-looking statements and FOFI refinance our credit facilities on acceptable terms or at all and/or finance the repayment of our senior notes and contained in this document
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