Tamarack Valley Energy Ltd. · TSX:TVE
Tamarack Valley Energy — Investor Presentation (March 2016)
24 slides from Tamarack Valley Energy's investor presentation, March 2016
Slide 1: Creating a Sustainable Business
Creating a Sustainable Business March 2016 TVE : TSX www.tamarackvalley.ca 1
Slide 2: Forward Looking Information
Forward Looking Information Certain information included in this presentation constitutes forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “estimate”,
Slide 3: What Sets TVE Apart
What Sets TVE Apart Culture: Results: • Focus on delivering results • 2015 exceeded expectations • CUT COSTS! – low cost producer • Bankline held at $165 mm • Manage the down cycle (experience) • Only $100-$105 million drawn vs. guidance of • Hard targets for compensation $115-120 million • (ROR, co
Slide 4: 2016 Budget Principles
2016 Budget Principles Top priorities: • First – balance sheet and bank line liquidity • Second – modest per share growth • Third – build low cost inventory through land sales and tuck-ins in core areas; drill non-PUD locations to allow for reserve growth • Overall – retain flexibility to react to c
Slide 5: Tamarack Wells in the Top 10th Percentile
Tamarack Wells in the Top 10th Percentile Top 10th Percentile Top 25th Percentile Note: The above IRR calculations assume CIBC’s base commodity price forecast of US$45.00/Bbl WTI & C$2.78/Mcf AECO in 2016, and US$65.00Bbl WTI & C$3.40/Mcf AECO in 2017. Source: geoSCOUT, company reports, and CIBC Wor
Slide 6: Economic Sensitivity – Type Well Wilson Creek
Economic Sensitivity – Type 1 Well Wilson Creek 700% "1.0 mile well" "1.5 mile well" 600% TVE • Economics suggest elimination of "2.0 mile well" 2016 1-mile wells Hedging 500% Average • Land consolidation has resulted Current in most go-forward drills will be Oil 400% Price 1.5-mile wells • Now with
Slide 7: Quick Payback Drilling Inventory
TVE Drilling Inventory Total Inventory 350 @ $80/bbl, >25% ROR 355 Locations Other Cardium 300 PUD locations 136 250 108 Quick Payback Drilling Inventory 200 Payout 1.5 Years or Less 44 186 176 180 150 44 100 44 111 104 93 76 70 50 56 15 35 40 15 - 2 9 14 30 40 50 60 70 80 90 Edmonton Par Oil Price
Slide 8: Control What We Can Control - Costs
Control What We Can Control - Costs Capital Costs Savings in 2016 Budget CAPEX: 4,500 Equip+Tie-in Completions Drilling • Shift to sleeve from ball drop 4,000 • Eliminate nitrogen • Reduce flaring and conserve 3,500 3,373 • Shorten expensive test times 38% • Minimize frac water trucking by 393 2,945
Slide 9: The Evolution of a Core Area
The Evolution of a Core Area Alder Flats TVE land 2014 Acquisition land Entry in 2013 2015 Acquisition land Existing Cardium producers • 42 net sections Existing vertical Cardium oil wells Gas plant (10 sec with Cardium pay) Battery Pembina oil pipeline • 16 locations Nova gas pipeline Field gatheri
Slide 10: Wilson Creek Mannville – Competes for Capital
Wilson Creek Mannville – Competes for Capital TVE Target @ TVE Budget AECO Price ($2.45/GJ; 2016 avg.) Offset 100% WI @ 55% WI Capital ($mm) 3,050 3,050 1,693 Risking 100% 90% 90% Rate IP30 (mmscf/d) 4.8 2.9 1.6 Reserves (bcf) 5.03 3.03 1.68 Liquids (%) 4% 4% 4% F/C ($/boe) 2.95 4.90 4.90 ROR (%) 13
Slide 11: Reserves Summary – by FD Shares
Reserves Summary – by FD Shares P+P Reserves (mmboe) Proved Developed Production Reserves (BOE) 0.600 Gas Boe 16.0 45.00 Natural Gas NGL & Oil Boe 50.0 NGLs FD&A 14.4 Oil 45.0 0.500 14.0 40.00 39.63 Boe /sh FD 35.00 40.0 0.496 12.0 0.397 34.42 0.400 0.368 7.2 33.2 20.7 30.00 FD&A on PDP ($/BOE) 0.34
Slide 12: Tamarack Profile – TVE : TSX
Tamarack Profile – TVE : TSX Operational 2013 2014 2015e 2016B Production (boe/d) 3,276 5,717 8,425 8,700 – 9,700 Exit Q4 avg. production (boe/d) 4,718 7,681 9,870 9,600 – 9,800 % Liquids 60 62 59 51 – 57 Cash flow ($mm) 38.2 66.2 n/a n/a Capital ($mm) 57.5 153.9 58 – 65** 40 – 57 Exit debt to cash
Slide 13: 2016 Realistic Budgets on Realistic Prices
2016 Realistic Budgets on Realistic Prices AECO - Gas $/GJ Edmonton Par - Oil $/bbl $4.00 $70 $3.50 $60 $3.00 $50 $2.50 $40 $2.00 $30 Assumptions: $1.50 WTI / Edm Par Diff - $4.00 USD/bbl Assumptions: AECO Basis- $1.06/GJ $20 Exchange Rate- $0.70-$0.72 CAD $1.00 Exchange Rate- $0.70-$0.72 CAD TVE Pl
Slide 14: Debt to CF Sensitivity at 9,500 boe/d & 55% Liquids
Debt to CF Sensitivity at 9,500 boe/d & 55% Liquids 2.5 2.3 2.0 1.8 Debt to CF (trailing year) 1.5 1.3 1.0 0.8 2016 year end trailing 0.5 0.3 0.0 30 40 50 60 70 WTI Prices ($US/bbl) ... Even at $30/bbl WTI 2016 yearend debt to cash flow is <2.25 times and at $40/bbl WTI is <1.3 times. 14
Slide 15: Free Cash Flow Sensitivity
Free Cash Flow Sensitivity 60 At 9,000 boe/d At 9,500 boe/d 50 Free Cash Flow ($ millions) 40 30 20 Assumes: - $2.00/GJ AECO 10 - $0.72 Cdn dollar - $4.00/bbl WTI / Edm par differential 0 -10 30 40 50 60 70 WTI Prices ($US/bbl) ... Tamarack’s resilient assets generate free cash flow at $38/bbl WTI a
Slide 16: 2016 Sensitivities to Lower Oil Prices
2016 Sensitivities to Lower Oil Prices Downside Scenario Strip March 3/16 Budget Oil (US$ WTI) $30/bbl WTI $39.25/bbl WTI $33-40/bbl WTI Edmonton par (C$/bbl) $36.25/bbl $49.05/bbl $41.00-51.45/bbl AECO (C$/GJ) $1.60/GJ $1.60/GJ $2.00-2.45/GJ Operating netback ($/boe) $5.85/boe $11.50/boe $8.35 - $1
Slide 17: 2015 - 2016 Budget – Financial Stats per BOE
2015 - 2016 Budget – Financial Stats per BOE 2014 Actuals 2015 Est 2016 Budget Average pricing $48.80/bbl WTI $33.00-40.00/bbl WTI Edm Par $94.09/bbl $57.10/bbl $41.00-51.45/bbl AECO (monthly index) $4.40/GJ $2.56/GJ $2.00-2.45/GJ $/boe Revenue 60.38 34.00 – 34.50 25.00 – 32.00 Royalties 7.78 (12.9%
Slide 18: Current Hedges as at January 15, 2016
Current Hedges as at January 15, 2016 Term Hedge Type Volume Cdn Pricing January 1, 2016 to March 31, 2016 WTI fixed price 2,000 bbls/d Cdn $76.58/bbl April 1, 2016 to June 30, 2016 WTI fixed price 2,400 bbls/d Cdn $76.21/bbl 2016 average Cdn July 1, 2016 to September 30, 2016 WTI fixed price 1,600
Slide 19: Building Per Share Growth While De-levering
Building Per Share Growth While De-levering Achieving Production Per Share Growth Well Inventory (Payback <1.5 years) Oil & liquids 180 12,000 12.0 CompletedNatural gas Completed $60 WTI Production per share (boe/d per million shares) Suremm Production per share $60 160 10,000 Energy equity 10.0 $50
Slide 20: Key 6 Month Objectives and Look-back
Key 6 Month Objectives and Look-back What we did in Objectives for What we said we would do Q3 2015 / Q4 2015… Q1 2016 / Q2 2016 … Cautiously proceed with drilling program to Production approx. 9,870 boe/d (up 5.5%), Spend approx. $33.5 million on capex in H1/16 and exit @ 9,200 to 9,500 boe/d while
Slide 21: Why Buy/Continue to Own Tamarack?
Why Buy/Continue to Own Tamarack? • Resilient assets in low commodity price environment • Preserves a solid balance sheet • As commodity prices improve, TVE high quality inventory will be economic earlier than most inventory • TVE has a plan to deal with lower commodity prices that was implemented i
Slide 22: APPENDIX
Ye yy” oat tamarack valley ENERGY APPENDIX
Slide 23: Tamarack Wells in the Top 10 Percentile
Tamarack Wells in the Top 10 Percentile Source: CIBC Resource Play Watch: January 2016 Report 23
Slide 24: What Sets TVE Apart From Its Peers
What Sets TVE Apart From Its Peers • Motivated, experienced team • Been through 5 downturns and realize great opportunities arise from these times • Management and staff compensation tied to performance measured by: full-cycle ROR; lifting costs, per share metrics, must out perform peers • Downside
Tamarack Valley Energy — Investor Presentation (March 2016) on 6ix