Obsidian Energy Ltd · TSX:OBE
Obsidian Energy — Merger or Acquisition (September 2020)
36 slides from Obsidian Energy's merger presentation, Sep 8, 2020
Slide 1: Creating a Cardium Champion: The Proposed Combination of Obsidian Energy and Bonterra
Filed by Obsidian Energy Ltd. (Commission File No. 001-32895) Pursuant to Rule 425 under the Securities Act of 1933 Subject Company: Bonterra Energy Corp. Creating a Cardium Champion The Proposed Combination of Obsidian Energy and Bonterra September 8, 2020Filed by Obsidian Energy Ltd. (Commission F
Slide 2: Important Notice to the Readers
Important Notice to the Readers This presentation of Obsidian Energy Ltd. does not constitute an offer to buy or sell, or a solicitation of an offer to sell or buy, any securities. Full details of the proposed offer by Obsidian Energy to purchase all of the issued and outstanding common shares (“Bon
Slide 3: Obsidian Energy Corporate Overview
Obsidian Energy Corporate Overview Market Summary OBE (TSX)/ OBELF Ticker Symbol (OTCQX) Peace River MM Shares Outstanding 73 2,132 boe/d Q2 2020 Cold flow heavy oil MM Market Capitalization $42 Manage base production MM Net Debt $496 MM Enterprise Value $538 Corporate Summary Cardium mmboe Reserves
Slide 4: Key Characteristics of Obsidian Energy & Bonterra Combination
Key Characteristics of Obsidian Energy & Bonterra Combination The newly combined “Cardium Champion” will deliver significantly superior operational and financial performance than either company could achieve on a standalone basis Improved Base Exceptional Equity Production Through Appreciation Optim
Slide 5: Transaction Considerations
Transaction Considerations ✓ WTI 2021 break-even price of ~ US$37/bbl to keep production flat while maintaining Creates the best-in class, free-cash flow neutrality with further improvement in subsequent years due to lower Cardium focused light-oil interest expense from debt repayment and ongoing co
Slide 6: The Cardium Champion – At a Glance
The Cardium Champion – At a Glance Obsidian Energy is proposing an exchange of 2.0 OBE shares for every 1 share of BNE; Bonterra shareholders will own 48% of the Pro Forma Company’s equity Corporate Summary Obsidian Bonterra Combined MM Shares Outstanding 73.0 33.4 x 2 = 66.8 139.8 $MM Net Debt @ 6/
Slide 7: Obsidian Energy Strategic Priorities
Obsidian Energy Strategic Priorities A new Senior Management Team has overseen transformational improvement in operational and financial performance with a Cardium focused strategy H2 H2 Senior Management Team 2018 2019 Superior Shareholder Return Stephen Loukas Interim President and CEO Peter Scott
Slide 8: Demonstrated Strong Track Record
Demonstrated Strong Track Record Obsidian Energy has demonstrated the ability, over the last year, to reduce costs and rapidly adapt to the challenging environment (1) Change in Cash Costs Demonstrated Year Over Year (Through to Q2 2020) $2.00 $0.00 ($2.00) Obsidian Energy has proven the ability to
Slide 9: Potential to Realize Meaningful Synergies
Potential to Realize Meaningful Synergies Synergies achieved from G&A and operating expense reductions, capital cost savings, and reinvesting cash flow into Obsidian Energy’s higher-return Willesden Green inventory Synergies Summary ~$100MM Over First Three Years $100 FCF from Optimized Development
Slide 10: Significantly Improved Financial Resilience
Significantly Improved Financial Resilience The Pro Forma Company will be a best-in-class company on break-even costs, and meaningfully more resilient to a downturn in commodity prices US$ WTI/bbl Projected Breakeven Price Future improvement in breakeven from lower $42 interest and other cost $40 re
Slide 11: High Grade Development to Top Assets
High Grade Development to Top Assets Our business plan will use the free cash flow from low decline Pembina assets to reduce debt, while directing the combined development capital to Willesden Green (1) 2021 - 2024 Capex by Company and Asset Dominant Combined Cardium Footprint OBE BNE Assets Assets
Slide 12: Production Performance
Pro Forma Company Production Performance The Pro Forma Company will focus capital into Obsidian Energy’s higher return drilling inventory resulting in improved financial metrics (1) PDP and Development Production at US$50 WTI/bbl • Obsidian Energy has a OBE Base BNE Base superior portfolio of high O
Slide 13: Illustrative Business Model Outlook
Illustrative Business Model Outlook The Pro Forma Company will have a substantially improved ability to maintain production while generating excess free cash flow to pay down debt resulting in significantly improved credit metrics (1) Pro Forma Company Outlook at US$50 WTI/bbl Production Cash Flow a
Slide 14: Financial and Operational Metrics Contribution
Financial and Operational Metrics Contribution Key financial and operational metrics demonstrate a 2.0x exchange ratio is highly compelling to Bonterra Shareholders Contribution Analysis at US$50 WTI/bbl Operational / Combined Metrics (1) Financial Metric Implied Contribution (2) Obsidian Bonterra C
Slide 15: Public Trading Comparables
Public Trading Comparables Bonterra trades at an unsustainable premium to relevant comparables across all metrics Based on FactSet Median Consensus Estimates Capitalization As at September 4, 2020 Share Price EV / 2020E EV / 2021E EV / 2020E EV / 2021E Company Name (9/4/2020) Market Cap Enterprise V
Slide 16: Bonterra Outlook Meaningfully Improved
Bonterra Outlook Meaningfully Improved Bonterra Standalone BDC financing would fail to structurally improve Bonterra; a transaction Bonterra w/ BDC with Obsidian Energy creates a Cardium Champion with improved metrics Pro Forma 4.0x 3.0x (1) Bonterra Standalone vs. Pro Forma Company Outlook at US$50
Slide 17: Accretive to Bonterra Shareholders
Accretive to Bonterra Shareholders The proposed transaction significantly improves the financial position of Bonterra shareholders versus all standalone options (1) Financial Highlights at US$50 WTI/bbl (2) (3) Unhedged Funds Flow per Share (Bonterra Perspective) Senior Debt to LTM Unhedged EBITDA >
Slide 18: Potential for Meaningful BNE Share Price Increase
Potential for Meaningful BNE Share Price Increase At 4.5x Enterprise Value / 2021 EBITDA (US$50 WTI/bbl), consistent with peer multiples, Bonterra’s common shares would appreciate by ~375% to over $6.40 per share (1) Pro Forma Company Value Trading Summary - EV/EBITDA Multiple Sensitivity YE 2021 YE
Slide 19: Regaining Market Relevance
Regaining Market Relevance Pro Forma Company is poised to deliver a compelling overall investment thesis and to maximize value for all stakeholders of both Bonterra and Obsidian Energy Why Is This Transaction Compelling For Both Obsidian Energy and Bonterra? ✓ Top 20 WCSB oil producer with 35,000 bo
Slide 20: Appendix
AppendixAppendix
Slide 21: Successfully Reducing Decommissioning Liability
Successfully Reducing Decommissioning Liability Commentary Demonstrated Reduction in Well Abandonment Costs • Obsidian Energy has delivered a multi-year trend of Wainwright 2019 Cardium 2019 12 Wells 115 Wells decommissioning liability reduction - Q2 2020 $604 50% Decrease in $5.0 $0.8 35% million u
Slide 22: Capitalization and Ownership
Pro Forma Company Capitalization and Ownership The transaction results in Bonterra shareholders owning approximately 48% of the Pro Forma Company Capitalization and Ownership Obsidian Bonterra Pro Forma $MM Bank Debt $420 $278 $698 Senior Secured Notes $MM $65 $0 $65 $MM Due to Related Party $0 $12
Slide 23: Illustrative Business Model Outlook US$45 WTI/bbl
Illustrative Business Model Outlook US$45 WTI/bbl (1) Pro Forma Company Outlook at US$45 WTI/bbl Production Cash Flow and Capital Expenditures Oil and Liquids Natural Gas Cash Flow Capex $300 40,000 $250 30,000 $200 $150 20,000 $100 10,000 $50 0 $0 2021 2022 2023 2024 2021 2022 2023 2024 Net Debt an
Slide 24: Bonterra Outlook Meaningfully Improved at US$45 WTI/bbl
Bonterra Outlook Meaningfully Improved at Bonterra Standalone US$45 WTI/bbl Bonterra w/ BDC Pro Forma 4.0x 3.0x (1) Bonterra Standalone vs. Pro Forma Company Outlook at US$45 WTI/bbl 2.0x 1.0x 0.0x (2) Production per Debt Adjusted Share Debt / LTM EBITDA 2021 2022 2023 2024 800 5.0x >3.4x Increase f
Slide 25: Illustrative Business Model Outlook US$55 WTI/bbl
Illustrative Business Model Outlook US$55 WTI/bbl (1) Pro Forma Company Outlook at US$55 WTI/bbl Production Cash Flow and Capital Expenditures Oil and Liquids Natural Gas Cash Flow Capex $450 40,000 $400 $350 30,000 $300 $250 20,000 $200 $150 10,000 $100 $50 0 $0 2021 2022 2023 2024 2021 2022 2023 2
Slide 26: Bonterra Outlook Meaningfully Improved at US$55 WTI/bbl
Bonterra Outlook Meaningfully Improved at US$55 WTI/bbl Bonterra Standalone Bonterra w/ BDC Pro Forma 4.0x 3.0x (1) Bonterra Standalone vs. Pro Forma Company Outlook at US$55 WTI/bbl 2.0x 1.0x 0.0x (2) Production per Debt Adjusted Share Debt / LTM EBITDA 2021 2022 2023 2024 900 3.5x >1x Increase for
Slide 27: Potential for Meaningful BNE Share Price Increase
Potential for Meaningful BNE Share Price Increase (1) Pro Forma Company Equity Value Trading Summary - EV/EBITDA Multiple Sensitivity Pro Forma Trading Summary - EV / EBITDA Multiple and Commodity Price Sensitivity YE 2021 YE 2022 Assumed EV / EBITDA x 4.0x 4.5x 5.0x 4.0x 4.5x 5.0x Illustrative Impl
Slide 28: End Notes
End NotesEnd Notes
Slide 29: End Notes
End Notes Slide 3: Obsidian Energy Corporate Overview Slide 14: Financial and Operational Metrics Contribution Market Capitalization and Enterprise Value was determined at the close of business on September 4th, Bonterra forecast based on Obsidian Energy evaluation and forecast of Bonterra based on
Slide 30: Details on Intention to Make an Offer
Details on Intention to Make an Offer Other than in certain circumstances described below, Obsidian Energy intends to commence the Offer as soon as practicable. Once the Offer is formally launched, it will be open for acceptance by Bonterra shareholders for 105 days, unless the Offer is extended, ac
Slide 31: Definitions and Industry Terms
Definitions and Industry Terms FCF or Free Cash Flow, which is Funds Flow from Operations less Opex means operating costs PDP means proved developed producing reserves as per Oil and Total Capital Expenditures Gas Disclosures Advisory Opti means optimization projects 1P means proved reserves as per
Slide 32: Non-GAAP Measures Advisory
Non-GAAP Measures Advisory 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 measures
Slide 33: Oil and Gas Information Advisory
Oil and Gas Information Advisory 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 the burner
Slide 34: Reserves Disclosure and Definitions
Reserves Disclosure and Definitions Unless otherwise noted, any reference to Obsidian Energy reserves in this presentation are based on the report ( Sproule Report ) prepared by Sproule Associates Limited dated February 3, 2020 where they evaluated one hundred percent of the crude oil, natural gas a
Slide 35: Reserves Disclosure and Definitions - Continued
Reserves Disclosure and Definitions - Continued Notice to Shareholders in the United States Reserve information included in this presentation has been prepared in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (“NI 51-101”), which has been adopted by
Slide 36: Forward-Looking Information Advisory
Forward-Looking Information Advisory Certain statements contained in this presentation constitute forward-looking statements or information (collectively forward-looking statements). Forward-looking statements are typically identified by words such as anticipate , continue , estimate , expect , fore
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