Obsidian Energy Ltd · TSX:OBE
Obsidian Energy — Investor Presentation (October 2020)
34 slides from Obsidian Energy's investor presentation, October 2020
Slide 1: Obsidian Energy Corporate Presentation
Obsidian Energy Corporate Presentation October 2020
Slide 2: Important Notice to the Readers
Important Notice to the Readers This presentation should be read in conjunction with the Company’s unaudited interim consolidated financial statements, Management's Discussion and Analysis ("MD&A") for the three and six months ended June 30, 2020. All dollar amounts contained in this presentation ar
Slide 3: Corporate Overview
Corporate Overview Market Summary Ticker Symbol OBE Shares Outstanding MM 73 Peace River 2,132 boe/d Q2 2020 Market Capitalization MM $35 Cold flow heavy oil Manage base production Net Debt MM $496 Enterprise Value MM $531 Corporate Summary Reserves (2P YE 2019) mmboe 126 RLI (2P YE 2019) years 14 C
Slide 4: Short-term Strategic Priorities & H1 2020 Results
Short-term Strategic Priorities & H1 2020 Results Short-term Priorities • Pursue successful acquisition of Bonterra to create “The Cardium Champion” • Transformational opportunity for both companies shareholders • Continue operational momentum and cost reduction initiatives to improve the base busin
Slide 5: Long-term Strategic Priorities
Long-term Strategic Priorities Superior Shareholder Return Generate excess free cash flow while holding Drive per share growth via Create scale and decrease production flat with organic development and cost structure via Cardium growth optionality at debt pay down consolidation strategy increased co
Slide 6: Creating The Cardium Champion
Creating The Cardium Champion On September 21st 2020 Obsidian Energy commenced a formal offer to purchase all of the issued and outstanding common shares of Bonterra Energy Corp. • Obsidian Energy has offered 2 Obsidian Energy shares for each Bonterra share Central • Creates the Cardium Champion wit
Slide 7: 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 8: Corporate Cost Improvements
Corporate Cost Improvements Opex Commentary Operating Costs (Opex) • Total reduction in Opex/boe of 26% from 2017 to mid-point of 2020 Guidance ($11.30/boe) • Currently achieving better than 2020 Opex guidance despite lower production volumes • Increase in FY 2020 Opex/boe vs. H1 2020 driven by timi
Slide 9: Obsidian Energy Corporate Breakeven
Obsidian Energy Corporate Breakeven Historical and Projected Obsidian Breakeven WTI Select Intermediate and Junior Peer Breakeven WTI Unhedged Cash Flow (US$/bbl) 2021 Unhedged Cash Flow (US$/bbl) 2020 Breakeven Price $60 ~$US39 WTI including $60 Obsidian Hedge Positions $50 $50 $40 $40 $30 $30 $20
Slide 10: Investment Highlights
Investment Highlights • Largest acreage holder in the Cardium • Cardium is one of Canada’s lowest cost light oil resources, with strong IRR and recycle ratios • Recent work added has increased our inventory to over 900 gross Cardium locations • Strong well performance since the beginning of 2018 in
Slide 11: Cardium Development Program
Cardium Development Program Focused on Delivering Strong Capital Returns Willesden Green • Drilling prioritized to target highest return opportunities Focused Strong Economics • Light oil rich wells ranked by IRR, payout, and recycle ratios • Program is license ready and scalable with an inventory o
Slide 12: Execute Operationally
Execute Operationally H1 2020 Development Program Crimson Lake Commentary 3 kms INDEX MAP • Early deliverability results from the first half program to R8W5 date have been above our type curve 2 miles 12-26 Pad: 3 Wells (avg/well) IP10: 1,215 boe/d (82% oil) IP30: 1075 boe/d (74% oil) • Pad 12-26 on
Slide 13: Cardium Growth & Operational Improvements
Cardium Growth & Operational Improvements Total Cardium Production Commentary 25,000 • Our 2017-2020 drilling programs in Crimson Lake have delivered robust production growth with high- Average Daily Production (boe/d) Netbacks and low operating costs 20,000 34% • Cardium 35% 37% 15,000 36% • 25% Li
Slide 14: Optimization
Optimization Finding low cost, high value opportunities in our base Total Optimization Program Production Commentary Optimization at Obsidian 1,800 2019 Annual Average • Multi-year inventory of targeted, low 1,600 787 boe/d (71% Oil) cost projects to increase base 1,400 production, improve injection
Slide 15: Willesden Green Cost Reduction Trajectory
Willesden Green Cost Reduction Trajectory Drill, Complete, Equip & Tie-In Costs – (DCET) Commentary Drill cost increase driven by Construction optimization of well design • Utilization and expansion of existing pads $3,700 leading to increased well lengths to reduce construction and infrastructure c
Slide 16: Cardium Play Fairways
Cardium Play Fairways A Large High-Graded Inventory West Pembina Central Pembina 132 R10W5 INDEX MAP 680 Type Curve Locations Type Curve Locations • Well established • Individual fairways and productive trend unit boundaries in significantly de-risked by historically pressure major Cardium players W
Slide 17: Crimson Lake – Near Term Focus
Crimson Lake – Near Term Focus Summary Economics • Q2 2020 average production of 10,134 boe/d DCET Capex($MM) $3.2 • Obsidian Energy cornerstone for revitalized primary EUR (Mboe) 229 development on our Cardium acreage • Banked oil from historical pressure maintenance in Oil IP365 (bbl/d) 157 WGCU#9
Slide 18: East Crimson – Mid Term Focus
East Crimson – Mid Term Focus Summary Economics • Q2 2020 average production of 3,609 boe/d DCET Capex ($MM) $2.9 • Continued Eastward extension of the successful EUR (Mboe) 203 Crimson Lake development program Oil IP365 (bbl/d) 136 • Area has been de-risked by recent peer drilling results supportin
Slide 19: West Pembina – Mid Term Focus
West Pembina – Mid Term Focus Summary Economics • Q2 2020 average production of 4,290 boe/d DCET Capex ($MM) $3.0 • Proven oil rich Cardium trend with undeveloped EUR (Mboe) 196 primary development acreage Oil IP365 (bbl/d) 148 • Significant offsetting production from established Cardium players thr
Slide 20: Central Pembina – Long Term Focus
Central Pembina – Long Term Focus Summary Economics • Q2 2020 average production of 4,679 boe/d DCET Capex ($MM) $2.3 • The epicenter of low decline and pressure maintained EUR (Mboe) 184 development Oil IP365 (bbl/d) 101 • Recent technical work led to over 500 additional identified locations in Cen
Slide 21: AB Viking – Mid Term Focus
AB Viking – Mid Term Focus Summary Economics • Q2 2020 average production of 880 boe/d DCET Capex($MM) $1.2 • Sweet, light oil development play with significant EUR (Mboe) 74 drilling inventory, including both low risk infill and step- out development Oil IP365 (bbl/d) 57 • Low DCET well costs, comb
Slide 22: Peace River Oil Partnership (PROP)
Peace River Oil Partnership (PROP) Summary PROP • Q2 2020 average production of 2,132 boe/d, with an R25 R20 R15W5 average of 1,701 boe/d shut-in during quarter in response to low commodity prices T90 • 85% of previously shut-in production has been returned to production as of July 1, 2020 • Large c
Slide 23: Reducing Decommissioning Liability
Reducing Decommissioning Liability Commentary Demonstrated Reduction in Well Abandonment Costs Compelling Decommissioning Liability reductions Wa inwright 2019 C a rdium 2019 • Multi-year trend of decommissioning liability reduction 115 Wells 12 Wells 50% Decrease in Q2 2020: $604MM undiscounted $5.
Slide 24: Undeveloped Reserves
Undeveloped Reserves 2019 PDP/1P Ratio 2019 2P Locations/Section 1.60 100% 90% 1.40 80% 1.20 70% 1.00 60% 50% 0.80 40% 0.60 30% 0.40 20% 0.20 10% 0% 0.00 Peer 1 OBE Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 1 OBE Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Commentary •
Slide 25: Current Hedge Strategy and Position
Current Hedge Strategy and Position Hedging Strategy • Hedge up to 50% of production volumes after royalty • Hedge at price levels to: • Protect FFO • Support economic capital program • Potential debt repayment • Hedges are done on a $CAD basis to avoid FX management Hedged Oil Position & Exercise P
Slide 26: Environmental, Social & Governance
Environmental, Social & Governance Environmental Social Governance Obsidian Energy is committed to Obsidian Energy is committed to Obsidian Energy makes it a minimizing the impact of our making a positive impact in the priority to ensure all operations on the environment. communities in which we sta
Slide 27: Experienced management and strong technical team
Experienced management and strong technical team Stephen E. Loukas, Interim President and Chief Executive Officer Financial and commercial • Vast experience in corporate transactions, capital markets, corporate finance Strong financial, and leadership $$ commercial and capital • Mr. Loukas is a part
Slide 28: Appendix & Endnotes
Appendix & Endnotes 28
Slide 29: End Notes
End Notes Slide 3: Corporate Overview Slide 16: Cardium Play Fairways Market Capitalization and Enterprise Value was determined at the close of business on September 30, Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological 2020. Net Debt, Tax Pools
Slide 30: Definitions and Industry Terms
Definitions and Industry Terms PDP means proved developed producing reserves as per Oil and G&A means general and administrative expenses Spud means the process of beginning to drill a well Gas Disclosures Advisory GOR means gas oil ratio Unbooked means locations that are internal estimates based on
Slide 31: 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 32: 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 33: Reserves Disclosure and Definitions
Reserves Disclosure and Definitions Unless otherwise noted, any reference to 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 and natural gas l
Slide 34: 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",
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