Tamarack Valley Energy Ltd. · TSX:TVE
Tamarack Valley Energy — Investor Presentation (November 2014)
26 slides from Tamarack Valley Energy's investor presentation, November 2014
Slide 1: Establishing Top Tier Sustainable Growth
TVE: TSX-V www.tamarackvalley.ca Establishing Top Tier Sustainable Growth November 2014 1
Slide 2: Key Points in this Presentation
Key Points in this Presentation • With recent oil price declines, TVE’s focus has been to continue to cut operating and capital costs to maintain one year payouts • TVE utilized corporate hedging policy: hedged maximum allowed volume at $100+/bbl to end Q2 2015 • Wilson Creek capital costs are down
Slide 3: The Tamarack Team
The Tamarack Team Management Board of Directors • Brian Schmidt, President & CEO • Floyd Price, Chairman Current: CAPP Vice-Chair, IOGC Board Member Current Directorships: Cimarex Energy, Former: Spearpoint Energy (President), Source Energy Apache Canada (President) Former: EVP - Apache Corp Shell C
Slide 4: 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 5: 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 current inventory • Clear trac
Slide 6: Tamarack Profile – TVE : TSX-V
Tamarack Profile – TVE : TSX-V Corporate Operational 2013 2014 Q1 % Guidance 2015 Change Increase #2 Guidance 2014-15 Shares outstanding (mm) 77.93 Production (boe/d) 3,276 Est. 5,800 9,500+ 64 Fully diluted (mm) 83.7 Exit production (boe/d) 4,718 9,500 10,000 5 Share price Nov 14/14 (2) $4.35 % Liq
Slide 7: Year Over Year Delivery
Year Over Year Delivery Approx. 30% 14000 Completed Wilson decline in oil $0.45 Completed Completed Creek acquisition & Oil & liquids Sure Energy $60 mm equity prices $125 mm equity $0.40 Natural gas acquisition financing 12000 financing Cash flow per share (debt adjusted) $0.35 Cash flow per share
Slide 8: Premier Oil Areas – Repeatable, Sustainable, Scalable
Premier Oil Areas – Repeatable, Sustainable, Scalable Viking Oil – greater Redwater area Existing TVE Core Areas Play 4 – Location confidential 40 net sections Q3/14 Production 1,230 boe/d 190 million barrels OOIP 2014 Netback $58-63/boe 60% chance of success with first well Inventory 186 locations
Slide 9: Why Wilson Creek is a Premier Acquisition
Why Wilson Creek is a Premier Acquisition 5000 $ millions Base Phase 1 Phase 2 Purchase price 168.5 4000 Phase 1 capex (14 wells Q4/14 & Q1/15) 42.0 Phase 2 Drilling Production (boe/d) Infrastructure value (20.0) 3000 (replacement value is over $80 million) Phase 1 Drilling $195.5 2000 Q1/15 average
Slide 10: West Central Cardium Summary
West Central Cardium Summary • Accretive Wilson Creek acquisition adds top tier drilling inventory and key facility infrastructure • 2014 Farm-in increased net prospective Greater Cardium sections by 900% (132 net Pembina sections) Area • Drilling results are exceeding area 120 miles performance and
Slide 11: Wilson Creek – Tamarack Activity and Acquisition Scope
Wilson Creek – Tamarack Activity and Acquisition Scope Tamarack Program Alder Flats 9-33 currently TVE land • Activity has been accelerated with producing at restricted Tuck-in land 9 wells drilled and 10 by end of Q3 rates; June test 750 boe/d Acquisition land – Cardium rights (6 wells are currentl
Slide 12: Wilson Creek – Acquisition Infrastructure
Wilson Creek – Acquisition Infrastructure TVE land Tuck-in land Acquisition land – Cardium rights Acquisition land – No Cardium rights • Legacy TVE wells and Existing Cardium producers acquired wells will enjoy Existing vertical Cardium oil wells Wilson Creek gas plant higher netbacks due to Wilson
Slide 13: Suncor Wilson Creek Acquisition
Suncor Wilson Creek Acquisition Lifting Costs Wilson Creek Production (Suncor only) 4-14 Battery Production Monthly Opex BOE/D $/BOE 100 300 Pre AQN $877,657 1,666 $17.56 90 TVE Q4e $755,369 2,212 $11.38 250 80 TVE 2015e $1,048,086 4,169 $8.38 70 • To be completed to end of 2014 200 Oil/ Water Rate(
Slide 14: Cutting Costs with Infrastructure Advantage
Cutting Costs with Infrastructure Advantage 21,000 m3 TDL Fresh Water Surface Irrigation TVE 6,000 m3 TDL Lines Fresh 4.5 km Water 1.0 km ??? km 15,000 m3 pit 0.8 km Battery Site Well Heads 0.4 km C Ring Well Heads Well Heads C Ring 10-16 lease 12-15 lease • Will utilize 12-15 pad flow-back • 400’s
Slide 15: Wilson Creek - Drilling & Completion – TVE Advantage
Wilson Creek - Drilling & Completion – TVE Advantage Drilling Cost Per Meter Completion Cost Per Stage 700 100 600 532 19% 33% 72 $000s per stage 500 469 75 431 64 $ per meter 400 376 48 50 300 38 200 1.5 mile 25 1.5 mile 1 mile 1 mile 1 mile 1 mile 1 mile 1 mile 100 - - Industry Avg H1/14 H2/14 H2/
Slide 16: 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 Both wells on Licensing Oil well spring break up 2014 prod’n mid-July Blue Rapids 15 &16-34 • No plant constraints in on prod’n late May/14 B
Slide 17: Growth in Cardium / Viking Drilling Inventory
Growth in Cardium / Viking Drilling Inventory Includes Only Low Risk Locations (>85% COS) 600 Wells booked in 2P reserves Total Risked Upside Drilling Locations Risked drilling locations • Over 6-8 years of development drilling 500 Suncor risked locations inventory (≈ $900+ million in CAPEX) Tuck-in
Slide 18: Building Credibility - Six Month Review
Building Credibility - Six Month Review What we said we would do What we did in Objectives for Q2’14 / Q3’14… Q2’14 / Q3’ 14 … Q4 2014 / Q1 2015 … Produce 4,700 boe/d average for H1/14; Averaged 4,696 boe/d H1/14; will Exit Q4 /14 9,500 boe/d; average Q1/15 exceed 5,100 boe/d average in Q3/14 exceed
Slide 19: Why Buy Tamarack?
Why Buy Tamarack? • Resilient in low commodity price environment • Preserve D/CF with capital discipline • ROR on drilling preserved by cost cutting – less than one year payback • Can grow production and strengthen balance sheet at current prices • Solid track record of per share growth • We deliver
Slide 20: 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 20
Slide 21: Appendix
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Slide 22: Current Hedges as at October 9, 2014
Current Hedges as at October 9, 2014 Term Hedge type Counterparty Volume Pricing October 1, 2014 to October 31, 2014 WTI fixed price Macquarie Bank 1,200 bbls/d Cdn $97.85/bbl November 1, 2014 to December 31, 2014 WTI fixed price Macquarie Bank 1,300 bbls/d Cdn $97.95/bbl January 1, 2015 to March 31
Slide 23: 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 24: 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 25: 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 26: Wilson Creek Transaction Rationale
Wilson Creek Transaction Rationale • Accretive capture of premier Cardium land position contiguous to existing Tamarack lands, creates seamless integration • Leveraging Tamarack advantage • Driven CAPEX per well down while achieving top well performance in Wilson Creek area • Tamarack had drilled 4
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