Birchcliff Energy Ltd. · TSX:BIR
Birchcliff Energy — Investor Presentation (February 2023)
45 slides from Birchcliff Energy's investor presentation, February 2023
Slide 1: Corporate Presentation
CORPORATE PRESENTATION February 2023
Slide 2: Corporate Snapshot
CORPORATE SNAPSHOT BIRCHCLIFF OVERVIEW SELECT 2023 GUIDANCE(1)(2) BIRCHCLIFF IS A PURE ALBERTA MONTNEY/DOIG Average production 81,000 – 83,000 boe/d RESOURCE PLAY PRODUCER Adjusted funds flow(3) $570 million F&D capital expenditures $260 – $280 million Free funds flow(3) $290 – $310 million Excess f
Slide 3: Corporate Snapshot: 2022 Quarterly and Annual Results
CORPORATE SNAPSHOT 2022 UNAUDITED QUARTERLY AND ANNUAL RESULTS SELECT Q4/22 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%)
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) 14-06 (6) 3 Montney D1 3 Montney D1 Classification Capital (millions) (2)(3) 3 Montney D2 2 Montney D2 DCCET $191 - $206 1 Montney C 1 Montney C (4) Facilities and Infrastructure
Slide 6: 2023 Outlook: Fully Funded Capital Program and Dividend
2023 OUTLOOK(1) FULLY FUNDED 2023 CAPITAL PROGRAM + DIVIDEND AT WTI US$70/BBL AND AECO CDN$3/GJ Delivering Shareholder Returns $600 $570 MM • On January 18, 2023, Birchcliff announced a 10-fold increase to its common 2023 excess free funds share dividend for 2023 ($0.80/share annually) and the decla
Slide 7: 2023 Natural Gas Marketing
2023 OUTLOOK 2023 NATURAL GAS MARKETING(1) – FORECASTED AVERAGE PRICE PER HUB AECO AECO $3.30 ($0.05) 17% DIVERSIFIED ($0.31) $2.94 MARKET EXPOSURE Dawn 41% NO FIXED Dawn $4.51 PRICE ($0.20) Alliance ($1.25) COMMODITY $3.06 6% HEDGES Alliance $3.40 ($0.00) ($0.31) Pricing Hub Henry Hub Dif. Henry $3
Slide 8: Five-Year Plan: Disciplined Production Growth
FIVE-YEAR PLAN(1) DISCIPLINED PRODUCTION GROWTH ENHANCES PROFITABILITY DELIVER SIGNIFICANT FULLY UTILIZE EXISTING FIVE-YEAR PLAN GENERATE SUBSTANTIAL FREE FUNDS FLOW AND SHAREHOLDER RETURNS INFRASTRUCTURE KEY THEMES: MAINTAIN CAPITAL AND ESTABLISH A CASH LEVERAGING EXTENSIVE DISCIPLINE POSITION DRIL
Slide 9: Five-Year Plan: Significant Drilling Inventory
FIVE-YEAR PLAN(1) DECADES OF LOW-RISK BOOKED INVENTORY BEYOND FIVE-YEAR PLAN 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 44 45 32 29 182 going locations(2) forward 5-year plan annual well count Ma
Slide 10: Five-Year Plan: Profitability and Shareholder Returns
FIVE-YEAR PLAN(1) FOCUSED ON PROFITABILITY & SHAREHOLDER RETURNS GENERATING EXCESS FREE FUNDS FLOW SHAREHOLDER RETURNS CAPACITY $800 $177 $162 $237 $247 $700 $77 - $2.00 $600 $97 $213 $213 $1.69 $1.73 $213 $213 $213 $1.47 $1.41 $500 $1.50 $1.09 – $/common share $ millions $400 $260 - $355 $360 $1.17
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 February 14, 2023 10% New annual base dividend of $0.80 per common share(3) represents a 10-fold increase 8% over the previous base dividend yield. 6% 4% 2% 0% Peer 1 Peer
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 28% 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 09-04 (7) 14-06 (6) wells. Lower Montney, Lower Montney follow up to utilizing existing • Leverage interconnect
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: 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 19: 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 20: 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 FEBRUARY 2022 20
Slide 21: 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 88%. Proven asset in development phase. Wells show high initial deliverability, low terminal decline and stable long-term production. Predictable results with impro
Slide 22: 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 $6.00 321 355 389 426 2000 NPV 10%
Slide 23: Solid Results: 2022 Pads vs. Tier 0 Type Curve
SOLID RESULTS D&C CONTINOUS PERFORMANCE IMPROVEMENT 2022 PADS VS. DELOITTE TIER 0 TYPE CURVE(1) 13-29 01-08 2022 Pad Avg 13-29 04-04 04-04 06-35 01-08 06-35 * 2022 Pad Avg is limited to producing days where all wells are contributing The 2022 capital program is averaging the Tier 0 capped type curve
Slide 24: Gordondale Overview
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY GORDONDALE OVERVIEW 2022 average production of 25,631 boe/d(1) with an oil & NGLs weighting of 37%. Strategic infrastructure with deep-cut liquids recovery enhancing netbacks. Low base production decline requires less incremental wells to keep infrastructure f
Slide 25: Gordondale Deloitte Low GOR Halo Oil Type Curve
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY GORDONDALE DELOITTE LOW GOR HALO OIL TYPE CURVE(1) 500 D1 Halo Low GOR - Rate of Return (%) WTI (US$/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 26: Focused on ESG Excellence: Environmental
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 27: Focused on ESG Excellence: Social and Governance
CORPORATE RESPONSIBILITY FOCUSED ON ESG EXCELLENCE SOCIAL $4.25 million donated to more than 100 local community groups and organizations in the last 5 years. Continued partnerships with local communities through educational, cultural, and economic development initiatives. Major supporter of STARS A
Slide 28: Canadian West Coast LNG Opportunity
CANADIAN WEST COAST LNG OPPORTUNITY BIRCHCLIFF’S ACTIVE ROLE SUPPLYING THE WORLD WITH CLEAN LNG Environmental Benefits of Canadian LNG LNG is critical in the transition to a low-carbon economy, as it displaces higher carbon fuels like coal and oil and provides a backstop to intermittent renewables s
Slide 29: Appendix
BIRCHCLIFF ENERGY APPENDIX FEBRUARY 2022 29
Slide 30: Production History
PRODUCTION HISTORY SIGNIFICANT GROWTH SINCE INCEPTION 90,000 81,000 – 83,000 77,977 78,520 76,925 80,000 77,096 76,401 70,000 67,963 Average Production (boe/d) 60,000 49,236 50,000 38,950 40,000 33,734 30,000 25,829 22,802 20,000 18,136 13,079 10,148 11,216 10,000 6,711 5,368 2,793 0 2005 2006 2007
Slide 31: Historical Profitability
HISTORICAL PROFITABILITY PROVEN TRACK RECORD AS A LOW-COST PRODUCER Profitability Breakdown: 5 Year 2018 2019 2020 2021 2022 Average(5) Average AECO (CDN$/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 32: 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 33: 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 34: 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 35: 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 36: 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 37: 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 38: Advisories: 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 39: 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 40: 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 41: 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 42: Advisories: Forward-Looking Statements
ADVISORIES • the information set forth on the slide “2023 Outlook – 2023 Capital Program Details” and elsewhere in this presentation regarding Birchcliff’s 2023 capital program and its exploration, production and development activities and the timing thereof, including: the focus of, the objectives
Slide 43: Advisories
ADVISORIES o Birchcliff’s production guidance assumes that: the 2023 capital program will be carried out as currently contemplated; no unexpected outages occur in the infrastructure that Birchcliff relies on to produce its wells and that any transportation service curtailments or unplanned outages t
Slide 44: Advisories
ADVISORIES o The Five-Year Plan disclosed herein supersedes Birchcliff’s previous five-year plan for 2022 to 2026 (the “Previous Plan”) as disclosed by the Corporation on May 11, 2022. Primarily as a result of a lower than anticipated commodity price forecast, the new Five-Year Plan now forecasts lo
Slide 45: Advisories
ADVISORIES Management has included the above summary of assumptions and risks related to forward-looking statements provided in this presentation in order to provide readers with a more complete perspective on Birchcliff’s future operations and management’s current expectations relating to Birchclif
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