Birchcliff Energy Ltd. · TSX:BIR
Birchcliff Energy — Investor Day (January 2024)
44 slides from Birchcliff Energy's investor day presentation, Jan 30, 2024
Slide 1: Analyst Day
Pouce Coupe Gas Plant ANALYST DAY JANUARY 30, 2024
Slide 2: Presentation Agenda
ANALYST DAY 2024 PRESENTATION AGENDA CHRIS CARLSEN STRATEGIC OVERVIEW PRESIDENT & CHIEF EXECUTIVE OFFICER BRUNO GEREMIA FINANCIAL REVIEW EXECUTIVE VICE PRESIDENT & CHIEF FINANCIAL OFFICER THEO VAN DER WERKEN ASSET OVERVIEW CHIEF OPERATING OFFICER OPERATIONAL DUANE THOMPSON EXCELLENCE VICE PRESIDENT,
Slide 3: Birchcliff Energy Executive Team
BIRCHCLIFF ENERGY EXECUTIVE TEAM DECADES OF LEADERSHIP EXPERIENCE CHRIS CARLSEN BRUNO GEREMIA THEO VAN DER WERKEN President & Executive Vice President & Chief Operating Officer Chief Executive Officer Chief Financial Officer ROBYN BOURGEOIS DUANE THOMPSON HUE TRAN Vice President, Legal, General Vice
Slide 4: Corporate Snapshot
CORPORATE SNAPSHOT BIRCHCLIFF OVERVIEW SELECT 2024 GUIDANCE(1) BIRCHCLIFF IS A DIVIDEND-PAYING PURE ALBERTA MONTNEY/DOIG RESOURCE PLAY PRODUCER Average production 74,000 – 77,000 boe/d Adjusted funds flow(2) $340 million F&D capital expenditures $240 – $260 million Free funds flow(2) $80 – $100 mill
Slide 5: Why Invest in Birchcliff
CORPORATE SNAPSHOT WHY INVEST IN BIRCHCLIFF WORLD-CLASS ASSET OPERATIONAL BASE EXPERTISE FINANCIAL STRENGTH & ESG EXCELLENCE SHAREHOLDER RETURNS JANUARY 30, 2024 5
Slide 6: Reserves and Production Growth Since Inception
OUR HISTORY RESERVES AND PRODUCTION GROWTH SINCE INCEPTION In a low commodity price environment, Birchcliff prioritized its balance sheet and shareholder returns over growth RESERVES GROWTH(1)(2) PRODUCTION GROWTH 1,200,000 PDP Reserves $9,000 90,000 1P Reserves 1,100,000 2P Reserves 80,000 $8,000 P
Slide 7: Strategic Evolution to a Focused Alberta Montney Producer
OUR HISTORY STRATEGIC EVOLUTION TO A FOCUSED ALBERTA MONTNEY PRODUCER YEAR-END 2012 YEAR-END 2023 Over $410 million in common share dividends declared since Q1 2017(1) 568 gross Montney/Doig wells drilled YE2023 Montney Acreage: ~376 net sections 2012: 22,802 boe/d 2023E: ~75,750 boe/d 1) Includes t
Slide 8: ESG Excellence
CORPORATE RESPONSIBILITY ESG EXCELLENCE PEER EMISSIONS METRICS(1)(2)(3)(4)(5)(6) 3,500,000 0.060 3,000,000 0.050 2,500,000 0.040 Emissions Intensity Annual Emissions ( tCO₂e/boe/d) 2,000,000 (tCO₂e/year) 0.030 1,500,000 0.020 1,000,000 0.010 500,000 0 0.000 PEER 1 BIR 2022 PEER 2 PEER 3 PEER 4 PEER
Slide 9: Financial Overview
Birchcliff 16-17 Pad FINANCIAL OVERVIEW
Slide 10: Five-Year Outlook: Disciplined Production Growth and Capital Discipline
FIVE-YEAR OUTLOOK(1) DISCIPLINED PRODUCTION GROWTH AND CAPITAL DISCIPLINE ENHANCES PROFITABILITY MAINTAIN STRONG DELIVER SIGNIFICANT FULLY UTILIZE EXISTING KEY THEMES: BALANCE SHEET SHAREHOLDER RETURNS INFRASTRUCTURE F&D Capital Spending: $500 90,000 2024E – 2026E: $240 – $300 million 87,500 2027E –
Slide 11: Five-Year Outlook: Free Funds Flow Focused
FIVE-YEAR OUTLOOK(1) FREE FUNDS FLOW FOCUSED MAINTAIN STRONG DELIVER SIGNIFICANT FULLY UTILIZE EXISTING KEY THEMES: BALANCE SHEET SHAREHOLDER RETURNS INFRASTRUCTURE CUMULATIVE FREE FUNDS FLOW(2)(3) $1,000 ▪ Potential cumulative adjusted funds flow(2) of approximately $2.4 Potential cumulative free f
Slide 12: Five-Year Outlook: Higher Pricing Scenario
FIVE-YEAR OUTLOOK(1) HIGHER PRICING SCENARIO MAINTAIN STRONG DELIVER SIGNIFICANT FULLY UTILIZE EXISTING KEY THEMES: BALANCE SHEET SHAREHOLDER RETURNS INFRASTRUCTURE CUMULATIVE FREE FUNDS FLOW(2)(3) $1,500 $5.00 AECO & NYMEX demonstrates the Higher pricing scenario contemplates significant torque to
Slide 13: Corporate Performance Management (CPM) System
CORPORATE PERFORMANCE MANAGEMENT (“CPM”) SYSTEM EXPECTATIONS OF CPM SYSTEM INTEGRATION EFFICIENCY Integrates Envision, PVR, Val Nav and Aucerna data Optimization of our people and assets Enables employees’ access to timely, consistent and accurate More employee time dedicated to value creation versu
Slide 14: Birchcliff CPM System Architecture
CORPORATE PERFORMANCE MANAGEMENT SYSTEM BIRCHCLIFF CPM SYSTEM ARCHITECTURE End-User Reporting Envision Capital Interactive Web Analysis Reporting Financial Reporting PVR Lease Excel Add-in Operations Data Mart Staging Area Val Nav Workspace Volumes Aucerna End-User Planning Report Consumption Essbas
Slide 15: Credit Facilities
CREDIT FACILITIES OVERVIEW Total Credit Facilities Limit: $850 million ▪ $750 million: Extendible revolving syndicated term credit facility (the “Syndicated Credit Facility”) ▪ $100 million: Extendible revolving working capital facility (the “Working Capital Facility”) Terms: ▪ Syndicated Credit Fac
Slide 16: Asset Overview
Pouce Coupe Gas Plant ASSET OVERVIEW
Slide 17: Montney Focused
ASSET OVERVIEW MONTNEY FOCUSED Land Zones Products Operations Montney Net Sections Montney Drilled Hz (Gross) 2023E Split Since 2017: 1.3MM Metres Drilled 376 568 18% 7,500 Total Wells Liquids Stages Placed 700,000 Tonnes Placed Pouce/Gordondale Elmworth Other D1 UM D2 C D4 Other Gas NGLs Oil/Cond G
Slide 18: Continuous Improvement Engrained in Our Culture
CONTINUOUS IMPROVEMENT ENGRAINED IN OUR CULTURE Striving to apply continuous improvement to all core areas of our business in order to drill better wells and efficiently spend capital OPERATIONAL Physics Based Continuous Operational Improvement Data Driven Execution Framework SUBSURFACE Business Fie
Slide 19: Mature Modeling Workflows
MATURE MODELING WORKFLOWS DATA DRIVEN & PHYSICS BASED Multi-disciplinary modeling workflows allow us to digitally optimize our assets and make confident decisions Machine Learning Final Machine DATA DRIVEN Workflow Learning Model Regional Scale Data ~5,000 wells Featurize Predict Inventory ASSET OPT
Slide 20: 2024 Capital Program
2024 CAPITAL PROGRAM MAJOR THEMES 01 Focused on locations with high rate-of-return, attractive F&D Capital Spending paybacks and high capital efficiencies $240-$260MM 02 Level-loaded program utilizing 2 rigs, bringing onstream 29 wells from 6 pads Production (boe/d) 03 Balanced drilling opportunitie
Slide 21: 2024 Capital Program Details
2024 CAPITAL PROGRAM CAPITAL PROGRAM DETAILS 01 Pouce Coupe • 4 pads targeting Lower Montney (D1 & C), Middle 2024 Program Montney (D4) and Basal Doig/Upper Montney 09-15 Pad (7) 2024 Pre-spend Pouce Coupe Gas Plant intervals Gordondale Gas Plant • Purposeful subsurface diagnostics to support furthe
Slide 22: Elmworth Overview
ELMWORTH OVERVIEW UNTAPPED POTENTIAL Elmworth land block includes approximately 140 net contiguous sections of prolific Montney/Doig inventory As part of Birchcliff’s future growth plans for Elmworth, it has initiated the formal planning for a proposed 100% owned and operated natural gas processing
Slide 23: Operational Excellence
Birchcliff 06-35 Pad OPERATIONAL EXCELLENCE
Slide 24: Liability Management Rating (LMR)
LIABILITY MANAGEMENT RATING (“LMR”) EXCEEDING THE INDUSTRY AVERAGE YEAR-END LMR RATING 20 18.0 17.8 18 17.3 Total Deemed Assets 16.7 LMR = 16 Total Deemed Liabilities 14 12 10 8 Birchcliff’s most recent liability 6 5.2 5.3 4.9 5.0 management rating of 16.52 (as at 4 January 15, 2024) compares to the
Slide 25: AER Compliance
AER COMPLIANCE EXCEEDING THE INDUSTRY AVERAGE ANNUAL AER INSPECTION COMPLIANCE 2023 Quarterly AER Inspections 100% 100% 95% Satisfactory Low Risk High Risk 90% 90% 86% 80% Q1 3 0 0 80% 76% 73% 71% 70% Q2 7 0 0 60% Q3 2 0 0 50% 40% Q4 2 0 0 30% 20% Number of AER Inspections 10% 2020 2021 2022 2023 0%
Slide 26: Water Storage
WATER STORAGE PEER LEADING WATER STORAGE INFRASTRUCTURE Approximately 1,180,000 m3 of water storage capacity at 11 strategically located reservoirs, providing water security and availability for fracking operations Five 10-year term water licenses, including three non-saline/non-potable water source
Slide 27: Marketing Overview
Rendering of Ksi Lisims LNG MARKETING OVERVIEW
Slide 28: NGLs & C5+ Marketing Overview
C2+ & C3+ MARKETING OVERVIEW NGLs & C5+ PRODUCTION Gordondale Gas Plant Production & Pouce Gas Plant Production & Transportation for 2024E Transportation for 2024E 10,000 6,000 C2+ 8,000 4,000 C3+ 6,000 bbls/d bbls/d 4,000 2,000 2,000 - - BIRCHCLIFF NGLs & C5+ Firm Service NGLs & C5+ Firm Service PR
Slide 29: Liquids Marketing Overview
LIQUIDS MARKETING OVERVIEW 2023E GORDONDALE CRUDE OIL 2023E POUCE COUPE GAS PLANT C5+/CONDENSATE PRODUCTION & TRANSPORTATION PRODUCTION & TRANSPORTATION 12,000 12,000 10,000 10,000 8,000 8,000 bbls/d bbls/d 6,000 6,000 4,000 4,000 Third-Party Third-Party Blend Blend 2,000 2,000 BIR BIR - - Crude Oil
Slide 30: Liquids Marketing Diversification
LIQUIDS MARKETING DIVERSIFICATION ▪ Sold as a premium to AECO benchmark ETHANE pricing BIRCHCLIFF ▪ West Coast export to Asian Markets Far PRODUCTION C2+ PROPANE East Index (FEI) pricing JAPAN/KOREA ▪ Remainder sold at spot Edmonton Hub (FEI) C3+ PRINCE RUPERT Crude Oil/C5+ EDMONTON ▪ Sold at spot E
Slide 31: Natural Gas Marketing and Diversification
CURRENT AND FUTURE OUTLOOK NATURAL GAS MARKETING AND DIVERSIFICATION 2024E NATURAL GAS MARKETING(1) NATURAL GAS REALIZATION - BENCHMARKING AND FUTURE LNG PROJECTS $8.00 Due to Birchcliff’s market diversification strategy, its $6.00 effective natural gas price has Future West Coast LNG Projects histo
Slide 32: Canadian West Coast LNG Opportunity: Western Canadian LNG Landscape
CANADIAN WEST COAST LNG OPPORTUNITY(1) WESTERN CANADIAN LNG LANDSCAPE Birchcliff’s participation in the Ksi Lisims/Rockies LNG Ksi Lisims LNG (Floating) project provides future direct exposure to global LNG 12 MTPA (1.7 Bcf/d) Environmental Assessment pricing Phase Canada West Coast LNG Projects (Pr
Slide 33: Canadian West Coast LNG Opportunity
CANADIAN WEST COAST LNG OPPORTUNITY BIRCHCLIFF’S ACTIVE ROLE SUPPLYING THE WORLD WITH CLEAN LNG Environmental Benefits of Canadian LNG LNG is critical in the transition to a low-carbon economy, as it displaces higher carbon fuels like coal and oil and provides a backstop to intermittent renewables s
Slide 34: Closing Remarks
Birchcliff 16-17 Pad CLOSING REMARKS
Slide 35: Summary: The Birchcliff Advantage
SUMMARY THE BIRCHCLIFF ADVANTAGE REMAINING FOCUSED ON OUR VALUES AND PRIORITIES ▪ Simple, repeatable business model with owned and operated infrastructure leveraging our history of operational excellence ▪ Strong balance sheet with significant upside to commodity prices ▪ Pouce Coupe & Gordondale as
Slide 36: Advisories: Definitions
ADVISORIES DEFINITIONS “Birchcliff”, “Corporation”, “our”, “us” and “we” mean Birchcliff Energy Ltd. “Deloitte” means Deloitte, independent qualified reserves evaluator. “COGE Handbook” means the Canadian Oil and Gas Evaluation Handbook maintained by the Society of Petroleum Evaluation Engineers (Ca
Slide 37: Advisories: Non-GAAP and Other Financial Measures
ADVISORIES NON-GAAP AND OTHER FINANCIAL MEASURES This presentation uses various “non-GAAP financial measures”, “non-GAAP ratios” and “capital management measures” (as such terms are defined in NI 52-112), which are described in further detail below. Non-GAAP Financial Measures NI 52-112 defines a no
Slide 38: Advisories
ADVISORIES Birchcliff has disclosed in this presentation forecasts of adjusted funds flow and free funds flow for 2024 and adjusted funds flow, free funds flow and excess free funds flow for the period from 2024 to 2028, which are forward-looking non-GAAP financial measures. The equivalent historica
Slide 39: Advisories: Presentation of Oil and Gas Reserves
ADVISORIES PRESENTATION OF OIL AND GAS RESERVES Certain terms used herein are defined in NI 51-101, CSA Staff Notice 51-324 and/or the COGE Handbook and, unless the context otherwise requires, shall have the same meanings in this presentation as in NI 51-101, CSA Staff Notice 51324 or the COGE Handb
Slide 40: Advisories: Production
ADVISORIES PRODUCTION With respect to the disclosure of Birchcliff’s production contained in this presentation: (i) references to “light oil” mean “light crude oil and medium crude oil” as such term is defined in NI 51-101; (ii) references to “liquids” mean “light crude oil and medium crude oil” and
Slide 41: Advisories: Forward-Looking Statements
ADVISORIES • statements with respect to dividends, including: that the annual base dividend for 2024 will be $107 million in aggregate; and that the Corporation’s five-year outlook contemplates potential cumulative shareholder returns of $535 million through common share dividends; • the information
Slide 42: Advisories: Forward-Looking Assumptions
ADVISORIES With respect to the forward‐looking statements contained in this presentation, assumptions have been made regarding, among other things: prevailing and future commodity prices and differentials, exchange rates, interest rates, inflation rates, royalty rates and tax rates; the state of the
Slide 43: Advisories
ADVISORIES o Birchcliff’s forecasts of cumulative adjusted funds flow and cumulative free funds flow assume that: the Corporation’s capital programs will be carried out as currently contemplated and the level of capital spending for each year set forth herein is met; and the forecasts of production,
Slide 44: Advisories: Dividends
ADVISORIES The declaration and payment of any future dividends are subject to the discretion of the Board and may not be approved or may vary depending on a variety of factors and conditions existing from time to time, including commodity prices, free funds flow, current and forecast commodity price