Tamarack Valley Energy Ltd. · TSX:TVE
Tamarack Valley Energy — Investor Presentation (June 2014)
29 slides from Tamarack Valley Energy's investor presentation, June 2014
Slide 1: Establishing Top Tier Sustainable Growth
TVE: TSX-V www.tamarackvalley.ca Establishing Top Tier Sustainable Growth June 2014 1
Slide 2: Executive Summary & Current Message
Executive Summary & Current Message 2014 Q2/14 Update • Accelerated our drilling which resulted in most active quarter ever: • 3 to 4 rigs operating intermittently during spring break-up • 16 (15.4 net) wells have been drilled this quarter thus far • 9 (6.3 net) Cardium wells and 7 (6.7 net) Viking
Slide 3: The Tamarack Team
The Tamarack Team Management Board of Directors • Brian Schmidt, President & CEO • Floyd Price, Chairman Current: CAPP Chair, IOGC Board Member Current Directorships: Cimarex Energy, Former: Spearpoint Energy (President), Source Energy Apache Canada (President) Former: EVP - Apache Corp • Ron Hozjan
Slide 4: Tamarack Profile - TVE
Tamarack Profile - TVE Corporate Operational 2012 2013 2014 % Guidance Change 2013-14 Shares outstanding (mm) 60.2 Production (boe/d) 2,166 3,276 5,300-5,500 65 Fully diluted (mm) 65.2 Exit production (boe/d) 2,704 4,718 6,500-6,700 40 Share price June 2/14 (2) $5.90 % Liquids 46 60 60 - Market cap
Slide 5: Year Over Year Delivery
Year Over Year Delivery 7000 $0.45 Completed Natural gas Completed $60 mm equity $0.40 6000 Oil & liquids Sure acquisition financing Cash flow per share (debt adjusted) $0.35 Cash flow per share (debt adjusted) 5000 $0.30 Completed Production (boe/d) Echoex acquisition $0.25 4000 $0.20 3000 $0.15 20
Slide 6: Tamarack's Strategy
Tamarack’s Strategy 1. Select the Right Real Estate Non - • Select high hydrocarbon in place Resource Play Conventional (>4 mmboe or >25 bcf per section) Tamarack Tight Sands (Cardium, Viking, • Demonstrate success in analogs Deep Basin) Heavy Oil Emerging Shales (Horn River, Duvernay) • Repeatable
Slide 7: Tamarack Perspective and Culture
Tamarack Perspective and Culture 1. Build a sustainable, predictable and reliable growth company • Full cycle rate of return driven • Development inventory with payout 1 to 1.5 years maximum (top quartile in the industry) • Clear line of sight to production growth with inventory • Clear track record
Slide 8: Premier Oil Areas – Repeatable, Sustainable, Scalable
Premier Oil Areas – Repeatable, Sustainable, Scalable Existing TVE Core Areas Play 4 – Location confidential Viking Oil – greater Redwater area 23 net sections Q1/14 Production 1,015 boe/d 110 million barrels OOIP Netback $58-63/boe 60% chance of success with first well Inventory 200 wells Heavy Oil
Slide 9: Overview
Overview Large Top well Top tier cost undeveloped/ Sustainable results in core management un-booked growth model assets inventory Cardium (1 to 1.5 mile wells) • $3.25-4.4 mm/well • Avg. payback 8-14 mo. • Over 82,000 undeveloped (Drill/complete/tie-in) • IP30 avg. 350 boe/d acres • Forecasted IRR 4
Slide 10: Tuck-in Deals Have Replaced 2014 Drilling to Date
Tuck-in Deals Have Replaced 2014 Drilling to Date Acquisition Estimated Tuck-in Deals Capital / Gross Net Net Area Royalty % Liquids To May 30, 2014 Gross Locations Locations Reserves Acreage Size (mboe) Land acquisition Blue Rapids $0.5 mm Land acquisition Alder Flats $0.7 mm 12.0 6.2 1,100 80% Lan
Slide 11: Growth in Drilling Scope
Growth in Drilling Scope Risked Development Drilling Locations (>85% COS) Wells booked in 2P reserves Risked drilling locations 400 Total Risked Upside Drilling Locations 365 369.3 • Over 10 years of development drilling 350 inventory (≈ $850+ million in CAPEX) 24.5 28.8 2014 wells new 300 drilled t
Slide 12: West Central Cardium Summary
West Central Cardium Summary • Farm in increased net prospective Cardium sections by 900% (132 net sections) • Drilling results are exceeding area performance and budgeted Pembina expectations • TVE Cardium production is sent to 9 different facilities with only one 120 miles well currently curtailed
Slide 13: Greater Pembina Area Results
Greater Pembina Area Results Normalized Average Well Production (boe/d) 600 Budget type curve 500 Actual production ACTUAL PRODUCTION Unconstrained production UNCONSTRAINED PRODUCTION 400 120 day IP budget 252 boe/d Production (boe/d) 120 day actual / estimate 277 boe/d (+19%) 120 day unconstrained
Slide 14: Alder Flats & Wilson Creek
Alder Flats & Wilson Creek Alder Flats 9-33 producing at TVE farm-in lands • Activity has been accelerated restricted rates Increased working interest with 5 wells now drilled and 6 Hz well Licensing by Q3 (4 wells are currently Oil well producing) • Key tuck-in acquisitions have been made in this a
Slide 15: Brazeau & Blue Rapids
Brazeau & Blue Rapids • Pad drilling in Blue On prod’n Apr/14 TVE farm-in lands Increased working interest Rapids enabled fracing Hz well and drilling through Currently Licensing Oil well spring break up drilling Blue Rapids 15 &16-34 • No plant constraints in start-up late May/14 Blue Rapids 5-23 s
Slide 16: Viking Oil Trend
Viking Oil Trend • Trend is characterized by: Virginia Hills TVE • High OOIP / sec 100% North Redwater / Westlock • Successful step out well • Shallow depth JV with a major drilled in late 2012 • Will drill in 2014 without • Low gas oil ratios (TVE 50%) requirement for frac (GOR) • 200 net low risk
Slide 17: Redwater
Redwater • 2014 program was accelerated one quarter due to better spring break-up conditions • No additional costs were incurred due to weather in the 2nd quarter • 2014 program has 13 (12.2 net) wells drilled to date and drilling last 3 wells from a 4-well pad TVE land Existing wells on production
Slide 18: Redwater Area Results
Redwater Area Results Normalized Average Well Production (boe/d) – Includes Three 1-mile Wells 160 Budget 140 Current forecast CURRENT FORECAST 120 120 day IP budget 61 boe/d 120 day actual/estimate 90 boe/d (+48%) Gross production (boe/d) 100 Liquids weighting 93% 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10
Slide 19: Upcoming Catalysts
Upcoming Catalysts • TVE finished its most active quarter (Q2/14) in the history of the company; results will be the topic in August / September, 2014 • 9 (6.3 net) Cardium wells and 7 (6.7 net) Viking wells were put on production to date in Q2 • 9 (7.3 net) Viking wells to come on in June • 4 (3.6
Slide 20: Building Credibility - Six Month Review
Building Credibility - Six Month Review What we said we would do What we did in Objectives for Q4’13 / Q1’14… Q4 2013 … Q2 / Q3 2014 … Produce 4,050+ boe/d average Achieved 2013 production guidance and Produce 4,700 boe/d average for H1/14; for Q4/13 & Q1/14 achieved Q4/13 average of 4,336 boe/d Exc
Slide 21: Summary
Summary • Tamarack is growing production and reserves with a repeatable predictable program in both the Cardium and Viking plays • Well results are better than budgeted on both the Cardium and Viking plays • Guidance is unchanged at 4,700 boe/d for the first half and 5,300 to 5,500 boe/d average for
Slide 22: Appendix
yyy \\ tamarack valley ENERGY 791 4Ven te. % a rool ee oo
Slide 23: Reserves Summary
Reserves Summary 25,000 P+P Reserves (mboe) 345.0 0.600 Reserve Value PV10 ($millions) 9.00 0.559 Natural Gas Natural Gas 8.17 NGLs 295.0 Oil & Associated Products 8.00 0.500 $/WASO 273.2 (+62%) 20,000 Oil 18,685 (+67%) 0.433 6.58 7.00 Boe/WASO 245.0 6.39 59.7 0.381 0.400 6.00 0.364 15,000 7,314 5.0
Slide 24: Booked Farm-in Reserves
Booked Farm-in Reserves Will Increase with Production History Alder Flats 9-33 Current Booking – 760 mboe • 2.8 mmboe of reserves were booked on the farm-in lands PUD • Only 6.75 net wells were booked PDP out of the identified 120 locations in P3 inventory • Booked 2013 reserves TVE land Hz well con
Slide 25: Current Hedges as at May 30 2014
Current Hedges as at May 30 2014 Term Hedge type Counterparty Volume Pricing January 1, 2014 to March 31, 2014 WTI fixed price Macquarie Bank 1,100 bbls/d Cdn $95.70/bbl April 1, 2014 to June 30, 2014 WTI fixed price Macquarie Bank 1,000 bbls/d Cdn $93.71/bbl 2014 average July 1, 2014 to September 3
Slide 26: Building Credibility - Six Month Review
Building Credibility - Six Month Review What we said we would do What we did Objectives for Q2/Q3 2013… Q2/Q3 2013… Q4’13 / Q1’14… Live within means, keep debt/CF Achieved YE target: Debt/CF dropped to Produce 4,050+ boe/d average for Q4/13 & at acceptable levels; reduce to 1.6 times in Q2/13 from 2
Slide 27: Building Credibility - Six Month Review
Building Credibility - Six Month Review What we said we’d do for Q4/12 to Q1/13… What we did Q4/12 to Q1/13 … “Live within means” – keep debt at acceptable levels Focused drilling on wells with <14 month payouts to given current commodity prices; Focus on reduce debt to cash flow levels to approx. 2
Slide 28: Farm-in Analysis
Farm-in Analysis • Land cost is approximately $1,200/acre (excluding benefit of TVE processing fee advantage) • Pay only for land on what you drill, when you drill; efficient way to gain access to a large block of land • Using drilling dollars to earn land creates better tax pools • Pay 100% for 70%
Slide 29: TVE Contact Information
TVE Contact Information Tamarack Valley Energy 3100, 250 – 6th Avenue SW Calgary AB T2P 3Y7 Tel: 403.263.4440 www.tamarackvalley.ca info@tamarackvalley.ca 29
Tamarack Valley Energy — Investor Presentation (June 2014) on 6ix