Obsidian Energy Ltd · TSX:OBE
Obsidian Energy — Investor Presentation (February 2023)
41 slides from Obsidian Energy's investor presentation, Feb 23, 2023
Slide 1: Obsidian Energy Ltd. Corporate Presentation
Obsidian Energy Ltd. Corporate Presentation February 2023 TSX:/NYSE American: OBE
Slide 2: Advisory
ADVISORY OVERVIEW This presentation should be read in conjunction with the Company’s audited consolidated financial statements, Management’s Discussion and Analysis (“MD&A”) for the year ended December 31, 2022. All dollar amounts contained in this presentation are expressed in millions of Canadian
Slide 3: Investment Highlights
INVESTMENT HIGHLIGHTS OVERVIEW An efficient producer with operational strength, providing growth potential PRODUCTION WILLESDEN GREEN & PEMBINA PEACE RIVER Low decline, oil-weighted asset base with Largest acreage holder in a world class, High-quality cold-flow, low decline heavy oil significant und
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 Q4 2022 Production 2022 30,682 boe/d Shares outstanding 82.4 million 31,742 boe/d YoY production growth* 25% Market ca
Slide 5: Considerable Future Value from Tax Pools
CONSIDERABLE FUTURE VALUE FROM TAX POOLS OVERVIEW $2.4 billion of tax pools in unrecognized value Amount of Pools Illustrative Value of Tax Pools TAX POOL COMPOSITION Utilized by Year1 @ 8% Discount Rate2 (December 31, 2022) $200 million $349 million $4.14/share $0.2 billion $300 million $400 millio
Slide 6: 2022 Highlights
2022 HIGHLIGHTS 2022 RESULTS Successful, active year provides new opportunities for strong FCF and value in 2023 and beyond ‣ Increased production by 25% with largest development program in years ‣ Willesden Green & Pembina: Continued strong drilling results with well performance at or above expecta
Slide 7: Delivering Results – 2022
DELIVERING RESULTS – 2022 2022 RESULTS Strategy and execution combined with improved commodity prices create momentum for long-term value FUNDS FLOW FROM 2021 2022E 2022 Results OPERATIONS ($ millions) Production 24,605 boe/d 30,800 – 31,200 boe/d 30,682 boe/d $451 Capital expenditures1 $140.9 milli
Slide 8: 2022 Reserves Highlights
2022 RESERVES HIGHLIGHTS 2022 RESULTS Growth in reserves values and volumes generating strong reserve replacement and recycle ratios ‣ 311 net 2P locations: ‣ 236 net Cardium locations, 22 net Bluesky locations, 2 net Clearwater locations, 49 net Viking locations, 1 net Devonian location and 1 net M
Slide 9: Obsidian Energy Strategy
OBSIDIAN ENERGY STRATEGY STRATEGY We focus on superior execution throughout to deliver results Drive per share growth Use FCF from Increase scale and Target Net Debt Provide return via asset development Cardium asset to invest manage cost of $225 million of capital with and debt reduction in Peace R
Slide 10: Focusing on 2023
FOCUSING ON 2023 STRATEGY Balanced strategy and plans with optionality to adjust in the year 2023 plans expected to deliver 7% production growth, solid FCF, debt reduction and return of capital to shareholders to maximize value OPERATIONS FINANCIAL ‣ Capital investment focused on $240 million in bas
Slide 11: Our Two-Year Corporate Performance
OUR TWO-YEAR CORPORATE PERFORMANCE STRATEGY Growth in free cash flow allocated to modest production growth, debt reduction and return of capital to shareholders PRODUCTION OUTLOOK (boe/d) 2023 guidance reflects higher production 33,500 32,000 30,682 24,605 2021 2022 2023E WTI US$68/bbl US$94/bbl US8
Slide 12: 2023 Development Program
2023 DEVELOPMENT PROGRAM ASSETS First half drilling program in progress across all areas PEACE RIVER 46 (44.2 NET) WELLS DRILLING PROGRAM ‣ Expected average production of ~32,750 boe/d, a 7% annualized production growth from 2022 ‣ Ability to alter program quickly in response to commodity prices ‣ F
Slide 13: Leading Cardium Play Areas
LEADING CARDIUM PLAY AREAS ASSETS Our core foundation with ~25 years of drilling opportunities for future development FIELD HISTORY CARDIUM PRODUCTION (Q4 2022) Q4 2022 Cardium production 23,076 boe/d ‣ One of North America’s most significant light oil fields 46% ‣ Development since the 1950’s; vari
Slide 14: Willesden Green – Crimson Lake and East Crimson
WILLESDEN GREEN – CRIMSON LAKE AND EAST CRIMSON ASSETS Foundational asset with horizontal development providing strong returns and quick payouts CRIMSON LAKE ‣ Foundational asset providing highest IP rates in our Cardium portfolio ‣ Able to manage inventory to capitalize on commodity prices ‣ Flexib
Slide 15: Pembina
PEMBINA ASSETS Low decline rate supports primary horizontal drilling and future growth through waterfloods ‣ Low decline, pressure-maintained development ‣ Existing wells and infrastructure allow growth in scale with reduced capital cost ‣ Ability to de-risk opportunities and add additional location
Slide 16: Peace River – Growth Asset
PEACE RIVER – GROWTH ASSET ASSETS Full ownership in high-quality cold-flow heavy oil Bluesky resource with Clearwater upside Q4 2022 Peace River production 6,758 boe/d ‣ Cold-flow heavy oil resource developed with multi-leg horizontal wells ‣ Large, contiguous ~500 sections with established Bluesky
Slide 17: Peace River Bluesky Growth
PEACE RIVER BLUESKY GROWTH ASSETS Solid growth upside through applying expertise and technology to the field ‣ Reliable and steady Bluesky production with shallow declines ‣ Shallow drilling ~660 metres sub-surface ‣ Long history of Bluesky development ‣ Established expertise in multi-leg heavy oil
Slide 18: Peace River Clearwater Potential
PEACE RIVER CLEARWATER POTENTIAL ASSETS Industry activity continues over emerging Clearwater formation play ‣ ~500 sections with Bluesky and Clearwater heavy oil rights ‣ Leverage Bluesky operational experience ‣ Clearwater formation just above Bluesky at ~450 metres sub- surface ‣ Ability to use Bl
Slide 19: Viking – Significant Development Upside
VIKING – SIGNIFICANT DEVELOPMENT UPSIDE ASSETS Revitalizing light oil asset that provides highly economic returns ‣ Sweet, light oil development play with material degree of Q4 2022 Viking production 1,454 boe/d associated natural gas ‣ Significant drilling inventory, including both low risk infill
Slide 20: Optimization Program Results in Strong Returns
OPTIMIZATION PROGRAM RESULTS IN STRONG RETURNS ASSETS Modest capital spend results in improved existing well performance, maintaining production across our asset portfolio ‣ Low-cost, high value growth opportunities with minimal capital expenditures ‣ Significant potential with >2,000 active wells t
Slide 21: Sustainability Highlights Over the Past Five Years
SUSTAINABILITY HIGHLIGHTS OVER THE PAST FIVE YEARS CORPORATE RESPONSIBILITY Striving to make a difference to the environment, the community and for all stakeholders; published inaugural ESG report Environment Social Governance 40% REDUCTION IN GHG >10,500 WORKER 86% INDEPENDENT EMISSIONS SAFETY INIT
Slide 22: Industry Leader in Asset Retirement Management
INDUSTRY LEADER IN ASSET RETIREMENT MANAGEMENT CORPORATE RESPONSIBILITY Our commitment to stakeholders includes responsible asset retirement as part of the full cycle of development 2019 – 2022: STRATEGY 989 Wells abandoned ‣ Committed to reducing environmental footprint 2,735 km Pipelines discontin
Slide 23: Hedging Production to Preserve Cash Flow
HEDGING PRODUCTION TO PRESERVE CASH FLOW SUMMARY Continuing to build on our hedge position at constructive levels HEDGED AECO GAS (2023 – 2024) ($, mcf/d) $3.55 $3.55 47,391 47,391 50% hedge level $3.56 $5.36 26,967 20,689 $3.57 16,587 Q1 Q2 Q3 Q4 Q1 2023 2024 POLICY ‣ Hedge up to 50% of net product
Slide 24: Reserves Underpin Our Current and Future Value
RESERVES UNDERPIN OUR CURRENT AND FUTURE VALUE 2022 RESERVES Obsidian Energy trading at substantial discount on booked reserves basis ‣ 311 net 2P locations: N E T A S S E T V A L U E ( N A V ) P E R S H A R E (1) ‣ 236 net Cardium locations, 22 net Bluesky locations, 2 net Clearwater locations, (C$
Slide 25: Why Invest in Obsidian Energy?
WHY INVEST IN OBSIDIAN ENERGY? SUMMARY Obsidian Energy offers upside potential for shareholders ‣ Dominant Cardium land position and deep opportunity inventory of high-return wells that can be used to maintain strong FCF generation ‣ Compelling ~500 section Peace River area with established Bluesky
Slide 26: Appendix
Appendix TSX:/NYSE American: OBE
Slide 27: 2023 Guidance
2023 GUIDANCE APPENDIX Balancing production growth, exploration/appraisal, debt reduction from FCF generation and returning capital to shareholders 2023E Average production 32,000 – 33,500 boe/d Capital expenditures $260 – $270 million Decommissioning expenditures $26 – $28 million Net operating exp
Slide 28: Top Cardium Driller and Operator
TOP CARDIUM DRILLER AND OPERATOR APPENDIX 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 (83) Yangarra (18) Entrada (30) Bonterra (10) InPlay (35) * Numbers
Slide 29: Viking – Step-Out Well Provides Future Potential
VIKING – STEP-OUT WELL PROVIDES FUTURE POTENTIAL APPENDIX 2022 step-out well effectively delineates area STEP-OUT WELL VERSUS AVERAGE AREA PRODUCING WELL ‣ 2022 Viking wells performed within expectations ‣ 8-well program exceeded ~1,000 boe/d in October 200 boe/d ‣ High economic return wells Produci
Slide 30: Well Economics
WELL ECONOMICS APPENDIX Strong returns across areas despite pressure in the current commodity price environment Half Cycle Type Curve Economics1 Willesden Green Pembina Viking Peace River Formation Cardium Cardium W. Viking (Esther) Bluesky (Seal) Well Length 2.0 mile 1.75 mile 1.25 mile 10 leg DCET
Slide 31: 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 ‣ ~270 employees EMPLOYEES FINANCIAL AND COMMERCIAL ‣ Management team: Deeply experienced with long track Strong financial, commercial and capital record,
Slide 32: Endnotes
Endnotes TSX:/NYSE American: OBE
Slide 33: Endnotes
ENDNOTES ENDNOTES Slide 4: Corporate Overview Slide 8: 2022 Reserve Highlights Market capitalization and enterprise value was determined with share price on the close of business on Reserves evaluation excludes inactive ARO. Our YE2022 reserves evaluation conforms to the February 21, 2023. Common sh
Slide 34: Endnotes (cont.)
ENDNOTES (CONT.) ENDNOTES Slide 12: 2023 Development Program Slide 21: Sustainability Highlights Over the Past Five Years, cont. No locations have been assigned to land where Obsidian Energy is not the operator. Total economic contribution is the sum of capital investment, operating expenditures, ro
Slide 35: Endnotes (cont.)
ENDNOTES (CONT.) ENDNOTES Slide 24: Reserves Underpin our Current and Future Value Slide 27: 2023 Guidance, cont. Reserves evaluation excludes inactive ARO. Our YE2022 reserves evaluation conforms to the Pricing assumptions outlined are forecasted for the full year of 2023 and includes risk manageme
Slide 36: Definitions and Industry Terms
DEFINITIONS AND INDUSTRY TERMS ENDNOTES 2022E meant the expected 2022 results, based on internal COGE Handbook stands for the Canadian Oil and Gas Evaluation mmcf means million cubic feet assumptions and estimates Company, Obsidian Energy or OBE means Obsidian Energy Ltd.; mmcf/d means million cubic
Slide 37: Non-GAAP Measures Advisory
NON-GAAP MEASURES ADVISORY ENDNOTES Throughout this presentation and in other materials disclosed by the Company, we employ certain measures to analyze financial performance, financial position and cash flow. These non-GAAP and other financial measures do not have any standardized meaning prescribed
Slide 38: 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 Test Results and Initial Production Rates ratio of six thousand cubic feet of natural gas to one barrel of crude oil is based on an energy Readers are ca
Slide 39: 2022 Reserves Disclosure and Definitions
2022 RESERVES DISCLOSURE AND DEFINITIONS ENDNOTES Unless otherwise noted, any reference to 2022 reserves in this presentation are based on the report (the “2022 Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories: Reserves Report”) prepared
Slide 40: 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 and FOFI contained in this document, the Company has made "forward-looking statements") within the
Slide 41: Forward-Looking Information Advisory (cont.)
FORWARD-LOOKING INFORMATION ADVISORY (CONT.) ENDNOTES Although the Company believes that the expectations reflected in the forward-looking statements and FOFI perform their contractual obligations the possibility that the revolving period and/or term out period of our credit facility contained in th
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