Obsidian Energy Ltd · TSX:OBE
Obsidian Energy — Peters & Co. Energy Conference 2021
37 slides from Obsidian Energy's conference presentation, Sep 14, 2021
Slide 1: Obsidian Energy Ltd. Peters & Co. Energy Conference
Obsidian Energy Ltd. Peters & Co. Energy Conference September 14 – 16, 2021 TSX: OBE OTCQX: OBELF
Slide 2: Advisory
ADVISORY OVERVIEW This presentation should be read in conjunction with the Company’s unaudited consolidated financial statements, Management’s Discussion and Analysis (“MD&A”) for the three months and six months ended June 30, 2021. All dollar amounts contained in this presentation are expressed in
Slide 3: Investment Highlights
INVESTMENT HIGHLIGHTS OVERVIEW An efficient producer with operational strength, providing growth potential PRODUCTION CARDIUM ASSETS OPTIONALITY Low decline, oil-weighted asset base with Largest acreage holder in a world class, Flexible and responsive to commodity price significant underlying reserv
Slide 4: Corporate Overview
CORPORATE OVERVIEW OVERVIEW World class assets and experienced team delivering value People, assets, discipline, return-focus and execution strength CORPORATE SUMMARY MARKET SUMMARY Production 2021E 24,000 – 24,400 boe/d Shares outstanding 74.9 million Production mix (2021E) 64% oil and liquids Mark
Slide 5: Obsidian Energy Strategy
OBSIDIAN ENERGY STRATEGY STRATEGY We focus on superior execution to deliver results SUPERIOR SHAREHOLDER RETURN Generate excess free Increase scale and Drive per share growth Forecast target leverage cash flow while restoring maintain or reduce cost via asset development <1.5x Net Debt/ production a
Slide 6: Our Two-Year Corporate Plan
OUR TWO-YEAR CORPORATE PLAN STRATEGY Significant growth in free cash flow accelerates debt reduction PRODUCTION OUTLOOK (boe/d) 2021 updated guidance reflects higher production, 7% increase in capital spending and higher commodity prices 26,400 24,400 25,400 25,404 24,000 2020 2021E 2022F WTI US$39/
Slide 7: Delivering Results – Q2 2021
DELIVERING RESULTS – Q2 2021 OVERVIEW Strategy and focus continue momentum for long-term growth Q4 2020 Q1 2021 Q2 2021 2020 NETBACK ($/boe) Production 23,644 boe/d 23,225 boe/d 24,651 boe/d Capital expenditures $11.6 million $29.5 million $21.5 million $15.59 Decommissioning $2.3 million $3.3 milli
Slide 8: Leading Cardium Play Areas
LEADING CARDIUM PLAY AREAS ASSETS Our growth foundation with ample development locations for years to come FIELD HISTORY CARDIUM PRODUCTION (Q2 2021) Q2 2021 Cardium production ~20,400 boe/d ‣ One of North America’s most significant light oil fields 25% ‣ Development since the 1950’s; various phases
Slide 9: Peace River Oil Partnership (PROP) and Viking
PEACE RIVER OIL PARTNERSHIP (PROP) AND VIKING ASSETS Proven assets with significant optionality in current price environment PROP Q2 2021 PROP production ‣ Reliable and steady base production ~2,900 boe/d ‣ 55% working interest, operator and managing partner of asset ‣ Large, contiguous cold-flow he
Slide 10: Our 2021 Development Program
OUR 2021 DEVELOPMENT PROGRAM OPERATIONS H2 drilling program started earlier than anticipated and increased production guidance 35 wells (gross): 28 expected on production CRIMSON in 2021 and 7 in Q1 2022 LAKE 3-03 PAD 4-35 PAD H1 2021 13-19 PAD 02-32 well: 154 boe/d (81% oil; IP30) 12-33 well: 538 b
Slide 11: Delivering Stronger Wells at Lower Capital Costs
DELIVERING STRONGER WELLS AT LOWER CAPITAL COSTS OPERATIONS Top tier execution in our core Cardium assets Our 2021 program delivered improvements over 2018: DRILLING COSTS ($ per lateral metre) COMPLETION COSTS ($ per tonne) ‣ 27% longer laterals to access more reservoir at 23% Reduction 21% Reducti
Slide 12: Top Cardium Driller and Operator
TOP CARDIUM DRILLER AND OPERATOR OPERATIONS Our development program produces leading Cardium well performance compared to peers LEADING CARDIUM WELL PERFORMANCE: WILLESDEN GREEN FIELD Cumulative production per well (bbl/well) Obsidian (58) Baccalieu (11) Entrada (21) Yangarra (25) Prairie Storm (12)
Slide 13: Strong Reserves Provide Drilling Inventory for Years
STRONG RESERVES PROVIDE DRILLING INVENTORY FOR YEARS OPERATIONS Over 25 years of drilling inventory to hold production at current levels ‣ Obsidian Energy remains conservatively booked versus our peers $1.2 billion ‣ Our booked undeveloped locations over the 2P RESERVE VALUE (NPV10%, AFTER TAX) next
Slide 14: Dedicated to Sustainability
DEDICATED TO SUSTAINABILITY CORPORATE RESPONSIBILITY Responsible stewardship for all stakeholders We believe it is our responsibility to support our communities, contribute to the economy, minimize our environmental impact and act in the best interests of all our stakeholders ENVIRONMENT SOCIAL VALU
Slide 15: Responsibly Managing Our Decommissioning Liability
RESPONSIBLY MANAGING OUR DECOMMISSIONING LIABILITY CORPORATE RESPONSIBILITY Restoring the land Committed to reducing environmental footprint INACTIVE LEGACY WELL DECOMMISSIONING LIABILITY* ‣ Active committee participation to improve industry practices INVENTORY REDUCTION (YE2019 TO YE2022) ($ millio
Slide 16: Hedging Production to Preserve Cash Flow
HEDGING PRODUCTION TO PRESERVE CASH FLOW SUMMARY Building out our hedge position as appropriate Target: up to 50% of net production volume after royalty Q2 2021 2021 YTD* 18% WTI @ 27% WTI @ C$75.25/bbl C$79.70/bbl 16% @ C$2.83/mcf 55% 66% 18% @ C$2.73/mcf Oil Gas Unhedged Oil Gas Unhedged * Hedged
Slide 17: Our Value in the Market Compared to Peers
OUR VALUE IN THE MARKET COMPARED TO PEERS SUMMARY We are significantly undervalued in the market: OBE would trade at $5.93 per share using comparable peer multiples Trading multiples based on Leverage metrics based on YTD SHARE PRICE PERFORMANCE Capitalization FactSet median consensus estimates Fact
Slide 18: Reserves Underpin Our Current and Future Value
RESERVES UNDERPIN OUR CURRENT AND FUTURE VALUE SUMMARY Obsidian Energy trading at substantial discount on booked reserves basis YEAR-END 2020 RESERVES SUMMARY N E T A S S E T V A L U E ( N A V ) P E R S H A R E (1) (C$ per share) Proved developed Total Total proved US$60 WTI US$70 WTI producing (PDP
Slide 19: Why Invest in Obsidian Energy?
WHY INVEST IN OBSIDIAN ENERGY? SUMMARY Obsidian Energy offers upside potential for shareholders ‣ Dominant Cardium land position and deep inventory of high-return wells that can be used to accelerate development at appropriate WTI levels ‣ Low decline production profile and strong Free Cash Flow gen
Slide 20: Appendix
Appendix TSX: OBE OTCQX: OBELF
Slide 21: 2021 Guidance - Revised
2021 GUIDANCE - REVISED APPENDIX Focused on steadily restoring production while paying down debt 2020 (Actual) 2021E (Guidance) 2021E Revised (Guidance) Production 25,404 boe/d 23,300 – 23,800 boe/d 24,000 – 24,400 Capital expenditures $67 million $125 – $130 million $133 – $138 million Decommission
Slide 22: Crimson Lake
CRIMSON LAKE APPENDIX Cornerstone for revitalized primary development on Cardium acreage ‣ Top quality reservoir with Economics* banked oil from historical DCET capex $3.2 million pressure maintenance EUR 229 Mboe ‣ Historically under-developed due IRR 157% to challenges for vertical drilling Payout
Slide 23: East Crimson
EAST CRIMSON APPENDIX Eastward extension of successful Crimson Lake development program ‣ Horizontal development proving Economics* strong returns and quick payouts DCET capex $2.9 million ‣ Flexible, operated infrastructure EUR 203 Mboe shared with Crimson Lake IRR 124% ‣ Combination of pressure Pa
Slide 24: West Pembina
WEST PEMBINA APPENDIX Undeveloped proven Cardium trend offers future upside for growth ‣ Proven oil rich Cardium trend Economics* with undeveloped primary and DCET capex $3.0 million under-developed waterflood EUR 190 Mboe acreage IRR 89% ‣ Strong offsetting production Payout 1.1 years from establis
Slide 25: Central Pembina
CENTRAL PEMBINA APPENDIX Centre of low declines supports horizontal drilling and future growth through waterfloods ‣ Low decline, pressure- Economics* maintained development DCET capex $2.1 million ‣ Ability to de-risk inventory EUR 193 Mboe and add additional locations IRR 109% through geological a
Slide 26: Optimization Program Results in Strong ROI
OPTIMIZATION PROGRAM RESULTS IN STRONG ROI APPENDIX Modest capital spend results in improved existing well performance, maintaining production in Central Pembina ‣ Low-cost, high value growth opportunities with minimal capital expenditures ‣ Multi-year inventory of low-cost projects to increase base
Slide 27: Experienced Team with Strong Technical Skills
EXPERIENCED TEAM WITH STRONG TECHNICAL SKILLS APPENDIX Working together to build a top tier developer that provides solid returns to stakeholders ‣ ~240 employees ‣ Management team: Stephen E. Loukas Interim President and Chief Executive Officer Peter D. Scott Senior Vice President, Chief Financial
Slide 28: Endnotes
Endnotes TSX: OBE OTCQX: OBELF
Slide 29: Endnotes
ENDNOTES ENDNOTES Slide 3: Investment Highlights Slide 7: Delivering Results – Q2 0201 Inventory locations unrisked internal estimates shown on a gross basis and are subject to change Netback calculated as revenue (net of hedging) less royalties, operating and transportation expenses. without notice
Slide 30: Endnotes (Cont.)
ENDNOTES (CONT.) ENDNOTES Slide 12: Top Cardium Driller and Operator Slide 15: Responsibly Managing our Decommissioning Liability Cumulative Light Oil since Rig Release. Shown on a gross basis. Not adjusted for well length. Year end 2019 inactive well inventory used for expected reduction in active
Slide 31: Endnotes (Cont.)
ENDNOTES (CONT.) ENDNOTES Slide 21: 2021 Guidance – Revised Slide 22 – 25: Cardium Asset Slides, cont. Estimates based on WTI forecasts of US$55/bbl, US$60/bbl, US$65/bbl and US$70/bbl. Original 2021E Q2 2021 Asset Production is broken down as follows: guidance based on AECO C$2.66/mcf; revised 2021
Slide 32: Definitions and Industry Terms
DEFINITIONS AND INDUSTRY TERMS ENDNOTES 2021E means expectations for 2021 based on internal assumptions Free Cash Flow is funds flow from operations less capital and Netback is the per unit of production amount of revenue less and estimates decommissioning expenditures royalties, net operating expen
Slide 33: Non-GAAP Measures Advisory
NON-GAAP MEASURES ADVISORY ENDNOTES 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
Slide 34: Oil and Gas Information Advisory
OIL AND GAS INFORMATION ADVISORY ENDNOTES 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 th
Slide 35: 2020 Reserves Disclosure and Definitions
2020 RESERVES DISCLOSURE AND DEFINITIONS ENDNOTES Unless otherwise noted, any reference to 2020 reserves in this presentation are based on the report (“Sproule Reserve Definitions Report”) prepared by Sproule Associates Limited dated February 1, 2021 where they evaluated one hundred percent of the c
Slide 36: Forward-Looking Information Advisory
FORWARD-LOOKING INFORMATION ADVISORY ENDNOTES Certain statements contained in this document constitute forward-looking statements or information (collectively With respect to forward-looking statements contained in this document, the Company has made assumptions "forward-looking statements") within
Slide 37: Forward-Looking Information Advisory (Cont.)
FORWARD-LOOKING INFORMATION ADVISORY (CONT.) ENDNOTES Although the Company believes that the expectations reflected in the forward-looking statements contained in this all and/or finance the repayment of our senior notes when they mature on acceptable terms or at all and/or obtain document, and the
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