Birchcliff Energy Ltd. · TSX:BIR
Birchcliff Energy — Investor Presentation (November 2022)
39 slides from Birchcliff Energy's investor presentation, November 2022
Slide 1: Corporate Presentation November 2022
CORPORATE PRESENTATION NOVEMBER 2022
Slide 2: Corporate Snapshot: Birchcliff Overview
CORPORATE SNAPSHOT BIRCHCLIFF OVERVIEW SELECT 2022 GUIDANCE AND PRELIMINARY 2023 GUIDANCE(1) BIRCHCLIFF IS A PURE MONTNEY/DOIG RESOURCE PLAY PRODUCER 2022 2023(2) Average production 78,000 boe/d 81,000 – 83,000 boe/d Adjusted funds flow (3) $1.020 billion $855 million F&D capital expenditures(4) $35
Slide 3: Corporate Snapshot: Quarterly Results
CORPORATE SNAPSHOT QUARTERLY RESULTS SELECT Q3/22 RESULTS Average production 78,079 boe/d Light oil (% of production) 2,254 bbls/d (3%) Condensate (% of production) 4,601 bbls/d (6%) NGLs (% of production) 7,593 bbls/d (10%) Natural gas (% of production) 382 MMcf/d (81%) $267.4 million(1) Adjusted f
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: 2022 Capital Expansion Program
2022 OUTLOOK 2022 CAPITAL EXPANSION PROGRAM 14-06 3 Montney D1 2 Montney D2 04-23 1 Montney C 3 Surface Holes 1 Main Hole Drill and case in 2022. On production Q1 2023. 15-27 03-06 3 Surface Holes 3 Montney D1 1 Main Hole 3 Montney D2 2022 DCCET targeting higher liquids. On production in late Decemb
Slide 6: 2022 Capital Program Details
2022 OUTLOOK 2022 CAPITAL PROGRAM DETAILS(1) 2022 F&D Capital Expenditures by Classification 01-08 (10) 14-06 (6) 5 Montney D1 3 Montney D1 Classification Capital (millions) 1 Montney C 2 Montney D2 DCCET 4 Basal Doig/Upper 1 Montney C Pouce Coupe(2) $182 - $185 Montney Gordondale (2) $38 Drill and
Slide 7: 2022 Natural Gas Marketing: No Fixed Price Commodity Hedges
2022 OUTLOOK 2022 NATURAL GAS MARKETING(1) – FORECASTED AVERAGE PRICE PER HUB AECO $5.23 ($0.06) ($0.45) $4.72 NO FIXED 15% PRICE COMMODITY 42% HEDGES Dawn $7.89 ($0.40) 5% ($1.31) $6.18 Alliance Pricing Hub $5.72 Forecasted Realized Sales Price at Hub (CDN$/GJ) ($0.18) 38% ($0.43) Hedged Differenti
Slide 8: 2022/2023 Outlook: Focused on Profitability & Shareholder Returns
2022/2023 OUTLOOK(1) FOCUSED ON PROFITABILITY & SHAREHOLDER RETURNS FREE FUNDS FLOW VS F&D CAPEX SHAREHOLDER RETURNS CAPACITY $800 $655 – $3.00 $585 – $2.46 – $/basic common share $665 $2.20 – $615 $2.50 $600 $2.50 $2.31 $2.00 $ millions $355 – $400 $365 $1.50 $240 – $270 $1.00 $0.80 $200 $0.50 $0.2
Slide 9: 2023 Outlook: Stress Testing Sustainable 2023 Dividend
2023 OUTLOOK(1) STRESS TESTING SUSTAINABLE 2023 DIVIDEND Targeted annual common share dividend of $0.80 per share and F&D capital expenditures for 2023 is fully funded from adjusted funds flow at US$70.00/bbl WTI and CDN$3.00/GJ AECO $900 $855 MM $800 2023 excess free funds flow(2) – $700 budgeted c
Slide 10: 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 404.8 net sections prospective for the Montney/Doig as at December 31, 2021. Birchcliff has a contiguous land block at Pouce Coupe and Gordondale of approximately 214.2 net sections.
Slide 11: 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 12: 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 NOVEMBER 2022 12
Slide 13: 2021 Capital Program
2021 CAPITAL PROGRAM MONTNEY/DOIG RESOURCE PLAY LOOKING BACK AT THE SUCCESSFUL 2021 CAPITAL PROGRAM 2021 Locations & Well Rates (IP60) 2021 Capital Program Major Themes • 2021 capital program was focused on low-risk drilling opportunities to generate free funds flow. • Majority of capital spent on D
Slide 14: 2022 Initial Production Results
2022 CAPITAL PROGRAM MONTNEY/DOIG RESOURCE PLAY 2022 INITIAL PRODUCTION RESULTS 2022 Locations & Well Rates (IP60) 2022 Capital Program Major Themes • Balanced drilling opportunities of prolific gas and liquids-rich wells. • Focused on scale and repeatability. • DCCET costs reflect inflation averagi
Slide 15: DCCET Cost Review
PROVEN TRACK RECORD D&C CONTINOUS PERFORMANCE OF CONTINUOUS IMPROVEMENT IMPROVEMENT DCCET COST REVIEW Top-tier capital expenditures $6.0 2022E DCCET costs performance driven by $5.9 reflect cost inflation large pad development $5.8 averaging 15% – 20%. providing scale and efficiencies. $5.6 DCCET Co
Slide 16: Pouce Coupe Overview
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY POUCE COUPE OVERVIEW 2021 average production of 50,025 boe/d(1) with a natural gas weighting of 89%. Proven asset in development phase. Wells show high initial deliverability, low terminal decline and stable long-term production. Predictable results with impro
Slide 17: Pouce Coupe Type Curve
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY POUCE COUPE TYPE CURVE(1) Rate of Return (%) WTI (US$/bbl) $70.00 $80.00 $90.00 $100.00 $5.00 265 296 328 362 (CDN$/GJ) AECO $6.00 321 355 389 426 $7.00 378 414 451 490 $8.00 441 480 520 562 NPV 10% ($MM) WTI (US$/bbl) $70.00 $80.00 $90.00 $100.00 $5.00 23.3 2
Slide 18: Exceeding Expectations: 2022 Wells vs. Tier 0 Type Curve
D&C CONTINOUS PERFORMANCE IMPROVEMENT EXCEEDING EXPECTATIONS 2022 WELLS VS. TIER 0 CAPPED TYPE CURVE 04-04 Pad 13-29 Pad 01-08 Pad Birchcliff’s 2022 capital program successfully utilized greenfield and brownfield development strategies, validating Birchcliff’s deep, high-quality inventory 04-04 Pad
Slide 19: Gordondale Overview
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY GORDONDALE OVERVIEW 2021 average production of 28,492 boe/d(1) with an oil & NGLs weighting of 37%. Strategic infrastructure. Low base production decline. Exploration success in the Montney C in 2021 added another commercial development interval to the Montney
Slide 20: Gordondale Type Curve
BIRCHCLIFF’S MONTNEY/DOIG RESOURCE PLAY GORDONDALE TYPE CURVE(1) D1 & D2 Halo High GOR - Rate of Return (%) WTI (US$/bbl) $70.00 $80.00 $90.00 $100.00 $5.00 225 258 293 330 (CDN$/GJ) AECO $6.00 268 304 341 380 $7.00 311 349 389 430 $8.00 359 399 441 484 D1 & D2 Halo High GOR - NPV 10% ($MM) WTI (US$
Slide 21: Focused on ESG Excellence: Peer Emissions Metrics
CORPORATE RESPONSIBILITY FOCUSED ON ESG EXCELLENCE PEER EMISSIONS METRICS(1)(2)(3)(4)(5)(6) 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 Intensit
Slide 22: 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 23: 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 24: Appendix
BIRCHCLIFF ENERGY APPENDIX NOVEMBER 2022 24
Slide 25: Production History
PRODUCTION HISTORY SIGNIFICANT GROWTH SINCE INCEPTION 90,000 81,000 – 83,000 77,977 78,520 78,000 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 26: Corporate Reserves
CORPORATE RESERVES CONSISTENT RESERVES VOLUME AND VALUE GROWTH 1,200,000 $7,000 PDP - Reserves On a per share basis PDP, TP 1,100,000 TP - Reserves and 2P reserves have 2P - Reserves increased at a compound $6,000 1,000,000 annual growth rate of 11%, PDP - NPV10 16% and 16% per year since 900,000 TP
Slide 27: Historical Profitability
HISTORICAL PROFITABILITY PROVEN TRACK RECORD AS A LOW-COST PRODUCER Profitability Breakdown: 5 Year 2017 2018 2019 2020 2021 Average Average AECO (CDN$/GJ) $2.04 $1.42 $1.67 $2.11 $3.44 $2.14 Average WTI (US$/bbl) $50.95 $64.77 $57.03 $38.91 $68.70 $56.07 P&NG Revenue ($/Mcfe)(1)(2) $3.74 $3.68 $3.5
Slide 28: 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 29: 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 30: 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 31: Advisories: Non-GAAP and Other Financial Measures
ADVISORIES WTI West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma, for crude oil of standard grade $000s thousands of dollars NON-GAAP AND OTHER FINANCIAL MEASURES This presentation uses various “non-GAAP financial measures”, “non-GAAP ratios”, “supplementary fina
Slide 32: Advisories
ADVISORIES Birchcliff has disclosed full year 2022 and 2023 guidance for adjusted funds flow, free funds flow and excess free funds flow, which are forward-looking non-GAAP financial measures. See “Outlook and Guidance”. The most directly comparable financial measure for these measures, as disclosed
Slide 33: Advisories
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 34: 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 35: Advisories
ADVISORIES Reserves life index is calculated by dividing PDP, proved or proved plus probable reserves, as the case may be, as estimated by Birchcliff’s independent qualified reserves evaluator at December 31, 2021, by the Corporation’s average annual production guidance for the period indicated. Res
Slide 36: Advisories
ADVISORIES To-date, no pressure transient or well-test interpretation has been carried out on any of the wells. The natural gas volumes represent raw natural gas volumes as opposed to sales gas volumes. F&D CAPITAL EXPENDITURES Unless otherwise stated, references in this presentation to “F&D capital
Slide 37: Advisories
ADVISORIES • the information set forth on the slide “Corporate Reserves” and elsewhere in this presentation relating to the Corporation’s reserves, including: estimates of reserves; reserves life index; and estimates of the net present values of future net revenue associated with Birchcliff’s reserv
Slide 38: Advisories
ADVISORIES • With respect to Birchcliff’s preliminary guidance for 2023 (as provided on October 13, 2022): o The following commodity prices and exchange rate are assumed: an average WTI price of US$80.00/bbl; an average WTI-MSW differential of CDN$5.00/bbl; an average AECO price of CDN$4.80/GJ; an a
Slide 39: Advisories
ADVISORIES While Birchcliff anticipates approval by the board of directors of the proposed increase to the annual common share dividend to $0.80 per share in 2023, the payment of such dividend remains subject to the approval of the board of directors. In addition, the proposed increase to the common
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