Tamarack Valley Energy Ltd. · TSX:TVE
Tamarack Valley Energy — Investor Presentation (December 2021)
33 slides from Tamarack Valley Energy's investor presentation, December 2021
Slide 1: Creating Sustainable Value
TVE : TSX Creating Sustainable Value December 2021 See Disclaimers and Forward-Looking Statements attached
Slide 2: Disclaimers
Disclaimers Forward Looking Statements: 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”,
Slide 3: Disclaimers (Oil and Gas Advisories)
Disclaimers (Oil and Gas Advisories) FOFI Disclosure: This presentation contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about Tamarack’s five year plan, including generating sustainable long-term growth in free funds flow, dividends and share b
Slide 4: Disclaimers (Oil and Gas Advisories)
Disclaimers (Oil and Gas Advisories) Non-IFRS Measures: Certain financial measures referred to in this presentation, such as net debt, adjusted funds flow, free funds flow, free funds flow breakeven, field level free funds flow, year-end net debt to Q4 annualized adjusted funds flow, market capitali
Slide 5: Corporate Snapshot (TSX: TVE)
Corporate Snapshot (TSX: TVE) Corporate/Market Summary Tamarack Market Capitalization(1) ($mm) $1,478 Net Debt(1) ($mm) $520 Charlie Lake Enterprise Value(1) ($mm) $1,998 Light Oil Bank Line Capacity(2) ($mm) $700 Tax Pools ($mm)(3) $1,030 Clearwater Heavy Oil P+P Reserves (mmboe)(4) 164.8 2021 Capi
Slide 6: Strategic Consolidation in the Clearwater
Strategic Consolidation in the Clearwater Tamarack is now the largest operator in the Southern Clearwater area with over 166,000 net acres of land Pro Forma Greater Jarvie Assets Greater Jarvie Well Results Oil Production (bopd) 250 Crestwynd Clearwater Perryvale 14-21 Perryvale 14-21 IP30 235 bopd
Slide 7: Clearwater Acquisition – Crestwynd Exploration Ltd.
Clearwater Acquisition – Crestwynd Exploration Ltd. Further establishing Tamarack as a leading operator in the highly economic Clearwater oil play Sustainable, • Forecast 2022 production of ~4,500 boe/d(1) is expected to deliver $90 million of annualized operating field netback (2),(3) High Quality
Slide 8: Executing on Core Area Strategic Acquisitions
Executing on Core Area Strategic Acquisitions Improving sustainability and resiliency, while enhancing free funds flow(1) profile Sparky / Charlie Lake Clearwater Clearwater Clearwater Clearwater Light Oil December 2020 August 2021 December 2021 March 2021 June 2021 Acquisition Overview Purchase Pri
Slide 9: Sustainability Linked Lending Facility
Sustainability Linked Lending Facility Strengthening Our Commitment to Positive ESG Progress Tamarack transitioned the existing credit facility to a sustainability linked lending facility (SLL) in December 2021: • SLL facility incorporates sustainability linked pricing terms (+/- 5 bps based on meet
Slide 10: Tamarack Strategic Principles
Tamarack Strategic Principles Strategic Principles Tactical Execution BALANCE SHEET STRENGTH AND RISK MANAGEMENT Low Leverage & Balance Sheet • <1.0x 2021 YE net debt to Q4 annualized adjusted funds flow(1) decreasing to <0.6x at 2022 YE Strength • Consistent hedging policy to manage exposure to com
Slide 11: Framework for Returning Capital to Shareholders
Framework for Returning Capital to Shareholders Sustaining Capital & Base Dividend Protected Down to US$35/bbl WTI Free Funds Flow(1) Allocation Net Debt ≥$300MM Net Debt $250MM-$300MM(2) Base Base Dividend + Delivering Enhanced Returns to Dividend Debt Repayment Share Shareholders and/or Buybacks D
Slide 12: Return of Capital Strategy
Return of Capital Strategy Sustainable Base Dividend • Predicated on up to 25% of free funds flow(1) at US$55 WTI and $2.50/GJ AECO • Sustaining capital + base dividend is fully fundable down to US$35/bbl WTI and would represent only 37% payout on current strip • Up to 75% for debt repayment, strate
Slide 13: Illustrating Annual Shareholder Return Potential
Illustrating Annual Shareholder Return Potential Base Dividend Fully Funded at US$35/bbl While Continuing to Reduce Debt At US$70/bbl Debt <$300MM by mid 2022 $350 12% 2022 funds flow at strip reduces debt <$300MM by H2/22, implies 8% yield with total dividends(1) $300 $250 Debt Target Achieved $166
Slide 14: 5-Year Plan Anchors Long Term Sustainability
5-Year Plan Anchors Long Term Sustainability Base Case 41,000 – 43,000 boe/d(2) $600 Total Annual Funds Flow ($MM) $500 5-Year Plan Overview $400 (assumes US$55/bbl WTI & $2.50/GJ AECO) $300 $200 $100 61% 45% 32% 62% 44% 33% E&D Capital $1.0B - $1.2B 59% 44% 32% 53% 38% 28% 54% 39% 29% $0 Spending (
Slide 15: Transformative 2021 Enhances Focused Inventory
Transformative 2021 Enhances Focused Inventory Balancing Duration with Free Funds Flow(1) Growth Inventory of Net Locations(2) HIGHLY ECONOMIC INVENTORY SUPPORTS LONG TERM SUSTAINABILITY (assumes payout <18 months) • Strategic inventory management 1,200 Total 1,092 • Retain multiple years of high-gr
Slide 16: North American Payout Period & Half-Cycle Breakeven by Play
16 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Years Clearwater Multi-Laterals Frobisher Dual Leg Charlie Lake SK Mississippian Conventional Payout Period Viking Dodsland Conventional Heavy Oil Hz. Delaware Wolfcamp A (Top Quartile) Eagle Ford Oil - East (Top Quartile) N. Midland Wolfcamp A (Top Quartile) North
Slide 17: Capital Allocation Optionality Delivers Sustainability
Capital Allocation Optionality Delivers Sustainability Portfolio that can deliver near-term and long-term free funds flow(1) Sustaining Capital Waterflood Management Economic Growth Modest Growth Highly Economic Inventory that Sustains Low Decline, Meaningful Production While Generating Highly Econo
Slide 18: Highly Economic Lower Charlie Lake Light Oil Locations
Highly Economic Lower Charlie Lake Light Oil Locations Production maintained between 12,000 – 13,000 boe/d(2) Two Mile Lateral Length Normalized Well Performance(1) 200 Cumulative Production (Mbbl) 13-19: ~45% of wells ≥ 2 miles(3) 150 890 bopd 1,060 boe/d(3) Tier10 100 Tier 9 12-19: Tier 8 931 bopd
Slide 19: Tamarack Clearwater Asset Overview
Tamarack Clearwater Asset Overview Drilling Inventory of >10 years on Primary Recovery NIPISI/MARTEN T78 15-29 West Stepout 14-26 West Stepout Type Curve(1) Payout Period ~300 bopd ~240 bopd 14 T77 5-13 Marten Stepout ~118 bopd 12 Payout (months) 14 API 10 T76 8 13-25 West 6 Stepout 15-17 West Main
Slide 20: Clearwater Waterflood Potential
Clearwater Waterflood Potential Tamarack will develop the play with a long-term view to the application of EOR Nipisi/Marten Hills EOR Pilots Evolution of Waterflooding Criteria/Applicability Spur Deltastream Headwater Spur • Other companies have initiated EOR pilot projects (both waterflood and pol
Slide 21: Clearwater Waterflood Potential
Clearwater Waterflood Potential Leveraging promising results from offsetting competitor pilots Upcoming Tamarack Nipisi EOR Pilots • 15-13 Pad Pilot Spur Waterflood Pilots • 2 x 8-leg producers onstream Q4 2021 • Staggered leg spacing (“two-step”) allows for water injection corridors while maintaini
Slide 22: Tamarack’s Waterflood Assets
Tamarack’s Waterflood Assets Improving corporate declines with increasing exposure to assets under waterflood Total Est. Est. Total Area Prod. Under Injection % of P+P Asset Asset Recovery Ultimate Current Initiatives Prod. Waterflood Start Reserves OOIP(1) to Date(2) Recovery(2) Veteran Adding ~8 n
Slide 23: Tamarack Waterflood Production
Tamarack Waterflood Production Improving corporate declines with increasing exposure to assets under waterflood Production (bopd) Net Waterflooded Oil – Includes 2021 Capital Program Penny Barons Veteran Viking Nipisi Slave Point Eyehill Sparky Historical Production 7,000 6,000 5,000 4,000 3,000 2,0
Slide 24: Tamarack Sustainability Results
Tamarack Sustainability Results Emissions Intensity Land Management 2020 GHG Scope 1 + 2 Intensity by Company (kgCO2e/boe) Net ARO Spend/Inactive Liability 14.0 10.50% 12.0% ARO Spend/Inactive Liability (%) Net ARO Spend/Grants Awarded 90.00 12.0 10.0% 80.00 1.3 70.00 10.0 8.0% (CAD$MM) 60.00 8.0 5.
Slide 25: Sustainability Initiatives at Tamarack
Sustainability Initiatives at Tamarack Indigenous Engagement Environmental Initiatives Tamarack is committed to the principles of UNDRIP and participating in reconciliatory activities. 2021 year-to-date projects include: To ensure achievement of long-term goals and targets, • Furthered workforce par
Slide 26: Investment Summary
Investment Summary Track record of meeting and exceeding estimates Sustainable Returns Focused Strategy to Grow Production and Free Funds Flow(1) per Share Management team that has demonstrated its ability to execute and capitalize on opportunities Stable Base Economic Oil Balance Sheet Leading ESG
Slide 27: APPENDIX
APPENDIX 27 w w w . t a m a r a c k v a l l e y. c a 27
Slide 28: Repositioning During the Downturn
Repositioning During the Downturn Theme: Generate Long-term Sustainable Free Funds Flow(1) Objectives 2020 Status Transformational Action Outcomes Align compensation with long- Long-term focus: 5-year DAFFF(1), Revamp Incentive Plan 1-year focused goals & TSR(1) term FFF(1) growth decline rate, PIR(
Slide 29: Risk Management – Tamarack’s Current Hedges
Risk Management – Tamarack’s Current Hedges(1),(2) Enhancing certainty with flexibility to capture upside value 48% Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 WTI Put Volume (bbls/d) 4,750 19,250 7,750 750 750 Oil price protection in 2022 Average Put/Premium (USD/bbl) $51.59 $2.18 $68.76 $3.97 $52.71 $
Slide 30: Corporate Information
Corporate Information Executive Independent Reserve Evaluator Brian Schmidt (Aakaikkitstaki) President & Chief Executive Officer GLJ Petroleum Consultants Steve Buytels VP Finance & Chief Financial Officer Kevin Screen Chief Operating Officer Auditors Scott Reimond VP Exploration KPMG LLP Martin Mal
Slide 31: Notes
Notes Page 5 1. See Disclaimers – “Non-IFRS Measures”; free funds flow and free funds breakeven were formerly referred to as free adjusted funds flow and free adjusted funds flow breakeven respectively 2. Includes available bank line of $100 million that will be available at the close of the Crestwy
Slide 32: Notes
Notes Page 12 1. See Disclaimers – “Non-IFRS Measures”; FFF – Free Funds Flow; AFF – Adjusted Funds Flow; D/AFF – Net debt to annual adjusted funds flow; free funds flow and free funds breakeven were formerly referred to as free adjusted funds flow and free adjusted funds flow breakeven respectively
Slide 33: Notes
Notes Page 19 1. See “Oil and Gas Advisories” Page 222 1. See “Oil and Gas Advisories” 2. Internal estimates and forward-looking Development Summary based on internal management projections Page 24 1. ARO spend/inactive liability includes only net ARO spend (TVE funded and grant funded) during the p
Tamarack Valley Energy — Investor Presentation (December 2021) on 6ix