Tamarack Valley Energy Ltd. · TSX:TVE
Tamarack Valley Energy — Shareholder Meeting (August 2015)
18 slides from Tamarack Valley Energy's shareholder meeting presentation, Aug 27, 2015
Slide 1: Being Sustainable in this Low Price Environment
Being Sustainable in this Low Price Environment ANNUAL GENERAL MEETING August 27, 2015 TVE: TSX www.tamarackvalley.ca 1
Slide 2: Circa 2010 Strategy and Culture Holds Up in Tough Times
Circa 2010 Strategy and Culture Holds Up in Tough Times Key Points Out of Strategy Applicable Today • Full cycle ROR decision making • Still want 1 to 1.5 year paybacks or will divert capital • Manage the balance sheet • Ensure survival in low prices by pulling back capital and cutting costs • Only
Slide 3: Key Points in this Presentation
Key Points in this Presentation Tamarack Strategic Response Current Competitive in Jan/15 to Down Cycle Advantage • Stop spending when service costs • Sustainable growth at C$50/bbl (WTI are high and oil prices are low US$44/bbl) for 2 years or C$60/bbl (WTI US$52/bbl) for 4 years – without the need
Slide 4: Cardium Oil – TVE is Delivering the Best Economic Returns
Cardium Oil – TVE is Delivering the Best Economic Returns 60% 100 IRR (%) NPV 15 Break-even (C$/bbl) 90 89.87 50% 49% 80 70 71.04 40% 70.5 64.88 60 62.85 62.25 36% 58.98 33% 55.71 30% 50 51.74 51.73 48.49 47.45 40 29% 39.32 20% 26% 30 20% 19% 19% 19% 17% 20 10% 14% 14% 11% 10 0% 0 Tamarack Company A
Slide 5: Wilson Creek Land Position at End of Q1/15
Wilson Creek Land Position at End of Q1/15 Alder Flats • Construct 8” P/L connecting Alder Flats with TVE Wilson TVE land Creek ($5.2 mm) Existing Cardium producers Existing vertical Cardium oil wells Q4/14 Drills 2015 Drills Gas plant Battery • Construct oil battery and compression Pembina oil pipe
Slide 6: Wilson Creek After Tuck-in Acquisition
Wilson Creek After Tuck-in Acquisition Alder Flats • Reduce P/L length by 2/3, size by 2” ($3.5 mm savings) TVE land Acquisition land Existing Cardium producers Existing vertical Cardium oil wells Q4/14 Drills 2015 Drills Gas plant Battery • Eliminate battery and compression Pembina oil pipeline at
Slide 7: Additional Upside to 2014 Wilson Acquisition Plan
Additional Upside to 2014 Wilson Acquisition Plan Reduction in Opex 20 5000 • $11.40/boe to $8.00/boe Lifting Costs ($/boe) Monthly Expense ($K/Month) 18 4500 • NPV10 $29 million Production (boe/d) 16 4000 5 Reactivation / Recompletions • $1.7 million capex 14 3500 Opex $K/ Month or boe/d • 10 month
Slide 8: Wilson Creek - Drilling & Completion – TVE Advantage
Wilson Creek - Drilling & Completion – TVE Advantage Drilling Cost Per Meter Completion Cost Per Stage 700 100 600 532 31% 72 47% $000s per stage 75 $ per meter 500 443 400 368 376 340 53 50 42 43 300 35 1.5 mile 1.5 mile 200 1.5 mile 1.5 mile 25 1 mile 1 mile 1 mile 1 mile 1 mile 1 mile 100 - - Ind
Slide 9: Wilson Creek - Recycle Ratio
Wilson Creek - Recycle Ratio 1 mile well - C$60/bbl (US$52) 1.5 mile well - C$60/bbl (US$52) 4.0 4.0 Operating Current 3.5 3.5 expense economics Current 3.3 at $60/bbl cost cut Operating economics expense at $60/bbl 3.0 3.0 cost cut 2.7 20% 0.4 2.7 capital 20% cost cut 2.5 capital 2.5 0.3 Recycle Ra
Slide 10: Wilson Creek Cardium Oil Drilling Inventory
Wilson Creek Cardium Oil Drilling Inventory 160 Alder Flats 140 Wilson Creek PUDs booked @ Dec 31/14 120 # of Wells with Payout <1.5 Years 100 80 60 40 20 0 $50 $60 $70 $80 $90 Edmonton Par Price ($/bbl) ... Lightly booked high quality drilling inventory; exiting 2015 with 39% more high quality inve
Slide 11: Tamarack Profile – TVE : TSX-V
Tamarack Profile – TVE : TSX-V Corporate Operational 2013 2014 2015e Shares outstanding* (mm) 99.93 Production (boe/d) 3,276 5,717 8,000 - 8,200 Fully diluted* (mm) 104.53 Exit Q4 avg. prod’n (boe/d) 4,718 7,681 9,200 – 9,500 Share price August 27/15 mid morning $2.50 % Liquids 60 62 55 - 60 Market
Slide 12: Q2/15 Results – Financial Stats per BOE
Q2/15 Results – Financial Stats per BOE 2014 Actuals 2015 Budget 6 month 2015 Results Average pricing $49.15/bbl WTI Edm Par $94.09/bbl $56.75/bbl $60.59/bbl AECO (monthly index) $4.40/GJ $2.70/GJ $2.80/GJ $/boe Revenue 60.38 36.13 37.11 Royalties 7.78 (12.9%) 3.75 (10.4%) 3.63 (9.8%) Operating cost
Slide 13: Key 6 Month Objectives and Look-back
Key 6 Month Objectives and Look-back What we did in Objectives for What we said we would do Q1 2015 / Q2 2015… Q3 2015 / Q4 2015 … Deliver 8,000 boe/d in Q1/15. Q1/15 averaged 8,092 boe/d. Cautiously proceed with drilling program to exit @ 9,200 to 9,500 boe/d while protecting balance sheet Cut capi
Slide 14: Why Buy/Continue to Own Tamarack?
Why Buy/Continue to Own Tamarack? • Resilient assets in low commodity price environment • Preserves a solid balance sheet • As commodity prices improve, TVE high quality inventory will be economic earlier than most inventory • TVE has a plan to deal with lower commodity prices that was implemented i
Slide 15: TVE Contact Information
TVE Contact Information Tamarack Valley Energy 3100, 250 – 6th Avenue SW Calgary AB T2P 3Y7 Tel: 403.263.4440 www.tamarackvalley.ca info@tamarackvalley.ca 15
Slide 16: Break-even Economics
Break-even Economics What oil price do each company’s core plays need to achieve a 15% return? Oil plays by break-even price – mid-cycle, 15% hurdle rate (C$/bbl Edm Par) TVE $39 Note: Break-evens for heavy oil plays are to the Edm Par light oil benchmark and assumes a $12 differential to WCS (equiv
Slide 17: Internal Rates of Returns
Internal Rates of Returns Which companies and oil plays offer the best returns? Oil plays by IRR TVE 49% Source: geoSCOUT; company reports; CIBC World Markets Inc. 17
Slide 18: Key 6 Month Objectives and Look-back
Key 6 Month Objectives and Look-back What we did in Objectives for What we said we would do Q1 2015 / Q2 2015… Q3 2015 / Q4 2015 … Deliver 8,000 boe/d in Q1/15. Q1/15 averaged 8,092 boe/d. Cautiously proceed with drilling program to exit @ 10,000 boe/d while protecting balance sheet to Cut capital c
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