Journey Energy, Inc. · TSX:JOY
Journey Energy — Investor Presentation (August 2022)
34 slides from Journey Energy's investor presentation, August 2022
Slide 1: Corporate Presentation
JOURNEY Corporate Presentation TSX: JOY OTCQX: JRNGF August, 2022
Slide 2: Journey Today Is…
Journey Today Is… Undergoing a transformational acquisition to become: A sustainably growing free cash flow business Unlocking value in under capitalized low decline assets Under 20% hedged Uninterested in: Anything that does not create or preserve stakeholder value 2
Slide 3: August 2022
August 2022 9,590 boe/d (Q2)(1) 14,200 – 14,600 boe/d (Q4 Pro Forma) 55% liquids JOY hedged 10,000 GJ of natural gas; for 2H 2022 at $7.28/GJ Strategic relationship with AIMCo; Sole lender and largest shareholder 12% corporate decline go forward; waterfloods and other low decline assets supports sus
Slide 4: Corporate Growth: Accelerating Returns in 2022
Corporate Corporate Growth Growth Accelerating Returns in 2022 in 2022 2019 2020 2021 2022 2022 Pro Forma Operating Highlights Actual Actual Actual Forecast(1) Q4(1) Production Average (boe/d) 9,372 8,379 8,004 10,400 – 11,000 14,100 – 14,600 Oil and NGLs (%) 48% 46% 47% 50% 55% Corporate Decline Ra
Slide 5: Pro Forma Q4 Adjusted Funds Flow Sensitivity
Pro Forma Q4 Cash Flow Adjusted Funds Flow Sensitivity WTI ($USD/BBL) Adjusted Funds Flow ($MM) $70.00 $75.00 $80.00 $85.00 $90.00 $95.00 $100.00 $105.00 $110.00 $5.40 26.0 29.4 32.8 36.1 39.4 42.8 46.1 49.4 52.6 $5.55 26.4 29.8 33.1 36.5 39.8 43.2 46.5 49.8 53.0 $5.70 26.7 30.1 33.5 36.9 40.2 43.6
Slide 6: 2021 YE Reserves Summary; Stable Base
2021 YE Reserves; Stable Base Low Declines -–2020 2021YE YEand Reserves Reserves Excess Summary Summary Tax Pools Preserve Value Company Gross (WI) Reserves(1) Oil Gas NGLs Reserve Category Mboe RLI (Mbbl) (Bcf) (Mbbl) Proved Developed Producing 8,022 82.3 2,300 24,032 7.8 Total Proved 12,509 105.0
Slide 7: 2021 YE Reserves Summary: Stable Base Acquisitions
Q2Stable 2022 Base Acquisitions -–2020 2021YE YEReserves Reserves (1) (Internal Summary Summary Estimate) Company Gross (WI) Reserves(1) / Value (YE 3 Consultants Pricing) Oil Gas NGLs NPV10 ($million) Reserve Category Mboe RLI FDC ($ million)(2) (Mbbl) (Bcf) (Mbbl) Before Tax (1) Proved Developed P
Slide 8: 2021 YE Reserves Summary: Enerplus Acquisition
Enerplus Stable Base -Acquisition –2020 2021YE YEReserves Reserves (1) (Internal Summary Summary Estimate) Company Gross (WI) Reserves(1) / Value (YE 3 Consultants Pricing) Oil Gas NGLs NPV10 ($million) Reserve Category Mboe RLI FDC ($ million)(2) (Mbbl) (Bcf) (Mbbl) Before Tax (1) Proved Developed
Slide 9: GLJ Forecasted Edmonton Light Price Reversing Trend for 2022
Reserves GLJ Forecasted Edmonton Value Light Price Reversing Trend for 2022(1) Forecast Year 2015 Q2 2022 2014 2016 2017 MSW Price ($CDN/bbl) 2019 2018, 2020 2022 2021 January 1, 2022 Pricing still lags current/strip pricing (1) GLJ published price forecasts January 1 of forecast year 9
Slide 10: Reserves Value: 3 Consultants Average Pricing; Upward Bias for 2023
Reserves 3 Consultants Average Value Pricing; Upward Bias for 2023 3 Cons Average 2022 Oil Price Comparables $135 $130 $125 $120 $115 $110 $105 $100 $95 $90 $85 $80 $75 $70 $65 $60 2022 2023 2024 2025 2026 2027 2028 2029 Jan 2022 EDM Light $CAN/bbl July 2022 EDM Light $CAN/bbl Reserve report pricing
Slide 11: Enerplus Positions Journey Favorably in the Market
Enerplus Positions Journey Favorably in the Market with (Greater Scale, Increased Oil Weighting and Lower Declines) Increase pro forma production 45%. 14,200 - 14,660 boe/d for Q4 High value oil pools under waterflood/EOR enhances netbacks and sustainability Increases pro forma oil production by 70%
Slide 12: Attractive Acquisition Financing
Attractive Acquisition Financing $140,000,000 purchase price (May 1 Effective) $25,000,000 cash flow (May 1 – Close) $45,000,000 vendor take back (VTB) financing (10% interest) Monthly WTI Payment Price $4,000,000/month >US$100/Bbl Price dependent $3,000,000/month US$85 – US$100/Bbl Payment structur
Slide 13: Acquisition Overview; Steady Declines, Bias to Upward Reserve Revisions
Acquisition Overview; Steady Declines, Bias to Upward Reserve Revisions Ante Creek Gross Production Vs McDaniel Forecast Journey and Vendor AB Assets W.I. Oil Production 1600 12,000 Acquired assets add very 1400 Both the Ante Creek and Medicine Hat properties have stable, low decline oil 10,000 prod
Slide 14: Medicine Hat Glauconite C Pool (72.3% working interest)
Medicine Hat Glauconite C Pool (72.3% working interest) Medicine Hat EOR Project Summary Medicine Hat Glauc Pool Overview "C" Current Gross Oil Production (bbl/d) 2,710 Oil Quality (API°) 16 Cumulative Production (MMbbl) 39.2 (1) OOIP (MMbbl) 288 305.0 Acquired Lands Current Recovery (%) 14% 13% Pro
Slide 15: Ante Creek Montney Pool (100% working interest)
Ante Creek Montney Pool (100% working interest) Acquired Lands Producing wells Injection wells Montney producers Ante Creek Waterflood Project Summary Ante Creek Upper Pool Overview Montney Current Gross Oil Production (bbl/d) 855 Oil Quality (API°) 35 Cumulative Production (MMbbl) 6.7 OOIP (MMBbl)
Slide 16: Pre Acquisition Extensive Drilling Inventory in Existing Pools
Pre Acquisition Extensive Drilling Inventory; in Existing Pools! Journey has identified 232 (211 net) horizontal drilling opportunities Drilling Locations(1) % Booked(2) in Total(1) Reserve Report Region Gross Net South 112 107 36% Central 120 104 41% Total 232 211 38% Unbooked Projects $357MM in Ca
Slide 17: Value of Inventory Appreciates with Pricing
Value of Inventory Appreciates with Pricing Comparative Economics Versus Oil Price - IRR% 400 Matziwin HZ AECO $4.00/MMbtu Peters & Co 2022 Price 350 Crystal HZ Forecast Cherhill HZ 300 Westerose HZ Skiff 3 HZ WF Pattern 250 IRR % 200 150 100 50 AECO $3.15/MMbtu 0 $70/bbl WCS, $80/bbl EDML $80/bbl W
Slide 18: Over Years of Drilling Inventory: Payout Years
Journey Has Over 15 Years of Drilling Inventory, Let’s Get After It! (1) Comparative Economics Versus Oil Price - Payout (Years) 2.5 Skiff 3 HZ WF Pattern AECO $4.00/MMbtu Peters & Co 2022 Price Westerose HZ Forecast Cherhill HZ 2.0 Crystal HZ Matziwin HZ Payout Years 1.5 1.0 0.5 AECO $3.15/MMbtu 0.
Slide 19: 2022 High Impact Opportunity - Westerose Glauconitic Liquid Rich Gas
2022 High Impact Opportunity - Westerose Glauconitic Liquid Rich Gas(1) 04-06 Vertical Discovery offsetting Drilling Plan Legend Deep Wells Glauc Pool 2022 Location Inventory Location Planned hz well path JOY Land 2021 Acquired JOY Land (1) Natural Gas Liquids 45 bbl/mmscf C3+ 19
Slide 20: Crystal Viking - 2 Wells Drilling Q2 2022
Crystal Viking - 2 Wells Drilling Q2 2022 Legend Journey operated wells and infrastructure JOY Wells OOIP: 153 MMbbl, 16% recovered to date Viking Pool Oil: 40° API 2022 Location Inventory 4 successful HZ analog wells drilled to date Location GOR land Over 30 drillable well locations - GLJ has 6 boo
Slide 21: Skiff – 3 Wells Drilled Q1 2022
Skiff – 3 Wells Drilled Q1 2022 Journey operated wells and infrastructure OOIP: 28 MMbbl, 17% recovered to date GLJ booked 2P total recovery of 38% Unbooked potential for further recovery Oil: ~20° API Cumulative Voidage Ratio to date: 0.80 Two highly successful horizontal waterflood patterns 2-8 In
Slide 22: Countess Power; New for 2023: 15.5 MW Power Project
Countess Power (on stream Q4 2020) New for 2023; 15.5 MW Power Project Journey holds 100% WI in the Countess power plant 4 MW power generation; fuel gas supplied by long life, natural gas Connected to the Alberta Power grid; sold on the spot market Flexibility to sell gas or produce power depending
Slide 23: Energized and Engaged Team
Energized and Engaged Team Alex G. Verge, P.Eng., M.Eng. President and Chief Executive Officer, and Director – Previously President and CEO of NuVista Energy, VP Engineering at Bonavista, and senior positions at Poco Petroleums, Rising Resources, Shell, and Gulf. Gerry N. Gilewicz, CPA, CMA Chief Fi
Slide 24: Directors – Strong Governance
Directors – Strong Governance Craig Hansen Chairman of the Board – Independent businessman, Former President and Chief Executive Officer of Zargon Oil & Gas Ltd. and its predecessor, Zargon Energy Trust. Thomas Mullane Reserves Committee Chair – Independent businessman and former President and Chief
Slide 25: Journey Today Is…
Journey Today Is… Undergoing a transformational acquisition to become: A sustainably growing free cash flow business Unlocking value in under capitalized low decline assets Under 20% hedged Uninterested in: Anything that does not create or preserve stakeholder value 25
Slide 26: Appendix
Appendix 26
Slide 27: How to make a Low Decline even LOWER
How to make a Low Decline even LOWER 415 MM bbl on waterflood 40 MM bbl conventional 415 MM on 40 MM to waterflood be delineated and flooded JOY net barrels of 260 MM bbl to DOOIP by category be flooded 755 MM net bbl of DOOIP 415 MM bbl 340 MM bbl convert 260 MM bbl on waterflood conventional conve
Slide 28: Reserves: Strong Base! Even Stronger Value
Reserves Strong Base! Even Stronger Value Future Development Potential (As at December 31, 2021) Journey’s $203 million of P+P future development capital (FDC) is only $3.70/P+P boe 65% of Journey’s identified capital projects remain unbooked Journey’s P+P FDC adds $206 million of NPV@10%; this tran
Slide 29: But Wait! There's Still More To Come
But Wait! There’s Still More To Come 755 MM net barrels of DOOIP 2.6% of booked recovery 84.6% of oil left behind Ultimate 12.8% recovered to date Recovery 15.4% ultimate recovery Oil left behind becomes Target Resource Journey can double our P+P oil reserves by recovering 3% more of the oil left be
Slide 30: Environment, Social and Governance: Environmental
Environment, Social and Governance Environmental Journey has established a target to reduce direct emissions intensity by 20% from 2019 levels by 2023. We chose 2019 as a base for this target to focus on new reductions rather than accounting for reductions already achieved. We reuse 99.9% of our wat
Slide 31: Environment, Social and Governance (Continued): Social
Environment, Social and Governance (Continued) Social Journey takes pride in maintaining its operations with the highest of standards and ensures its suppliers of goods and services do so as well. Journey operates in nine key areas in the province of Alberta and is very active in the communities in
Slide 32: Environment, Social and Governance (Continued): Governance
Environment, Social and Governance (Continued) Governance In recognition of the key role that sustainability plays in our business, Journey has mandated that the Board of Directors (the “Board”) take an active role in evaluating our corporate sustainability strategy, improving our risk management pr
Slide 33: Forward-Looking Statements and Financial Measures
Forward-Looking Statements and Financial Measures This presentation contains “forward-looking statements” including estimates of future production, cash flows and reserves, business plans for drilling and exploration, the estimated amounts and timing of capital expenditures, the assumptions upon whi
Slide 34: Oil and Gas Advisory
Oil and Gas Advisory The crude oil, natural gas and natural gas liquid reserves and related future net revenue of Journey presented herein were evaluated by GLJ, Journey’s independent reserves evaluators, in accordance with the requirements of National Instrument 51-101 (“NI 51-101”) and the Canadia