Athabasca Oil Corporation · TSX:ATH
Athabasca Oil — Investor Presentation (September 2022)
31 slides from Athabasca Oil's investor presentation, September 2022
Slide 1: Athabasca Oil Corporation
ATHABASCA OIL CORPORATION FOCUSED | EXECUTING | DELIVERING SEPTEMBER 2022
Slide 2: Why Own Athabasca
WHY OWN ATHABASCA • Strong netbacks; $56/bbl in Q2/22 THERMAL OIL DIVISION: • Low sustaining capital requirements (~$5/bbl) PREDICTABLE, LOW DECLINE • >1 billion boe 2P reserves underpins long reserve life • Strong netbacks; $65/boe in Q2/22 LIGHT OIL DIVISION: • Large inventory in the Montney & Duv
Slide 3: Athabasca ~35,000 boe/d | 92% Liquids
ATHABASCA ~35,000 BOE/D | 92% LIQUIDS THERMAL OIL DIVISION (~29,000 BBL/D) LIGHT OIL DIVISION (~6,000 BOE/D) LEISMER Top tier project that has PLACID MONTNEY been in operation for 12 HANGINGSTONE years with current 70% WI Placid with production of stable declines, high >20,000 bbl/d PLACID margins a
Slide 4: Strong Financial Capacity
STRONG FINANCIAL CAPACITY TERM DEBT (C$MM) $500 UNIQUE LOW LEVERAGE COMPANY Net Cash position o Direct 100% of Free Cash Flow to debt repayment near‐term $400 • Repaid US$131MM (C$167MM) in debt year‐to‐date (July) • US$219MM term debt outstanding $300 C$MM US$175MM target o Term Debt target of US$1
Slide 5: Managing for Strong Free Cash Flow
MANAGING FOR STRONG FREE CASH FLOW EBITDA & FCF (C$MM) STRONG FREE CASH FLOW $600 ~$950MM 3‐year cum FCF o ~35,000 boe/d can be maintained with low sustaining capital $500 • ~$125MM annual sustaining capital $400 o Pre‐payout royalties in Thermal Oil (max 9% royalty) C$MM $300 o 10+ year tax free ho
Slide 6: Creating Significant Shareholder Value
CREATING SIGNIFICANT SHAREHOLDER VALUE 2023 ADJUSTED FUNDS FLOW (C$MM) RETURN OF CAPITAL FRAMEWORK $800 $700 o Maintain ultra low leverage $600 o Significant 2023 Free Cash Flow to be allocated $500 o Committed to further enhance shareholder returns by C$MM $400 utilizing free cash flow and cash bal
Slide 7: Integrated Sustainability
INTEGRATED SUSTAINABILITY TECHNOLOGY OVERVIEW CARBON CAPTURE – AOC’S LOW‐CARBON BARREL o Entropy Inc. (Entropy) modular carbon capture technology (CCS) • Finalized Letter of Intent; FID expected by year‐end 2022 • Detailed engineering underway; commercial model established o Sequestration into regio
Slide 8: Asset Overview
ASSET OVERVIEW
Slide 9: Thermal Oil Division
THERMAL OIL DIVISION PREDICTABLE, LOW DECLINE HIGHLIGHTS THERMAL PROPERTIES 100% Working Interest Fort McMurray 26,768 bbl/d Q2/22 Production AOC Hangingstone ~$500MM 2022E Operating Income 2022E Enbridge ~$115MM Capital Expenditures Hangingstone Cheecham 414 MMbbl & Gross Reserves Surmont 1,230 MMb
Slide 10: Thermal Oil – Leismer
THERMAL OIL – LEISMER STRATEGIC POSITIONING DEVELOPMENT MAP o Maximize FCF and deliver strong netbacks (~$57/bbl Q2/22) 2022 ACTIVITY OVERVIEW o Turnaround completed on schedule & within budget in May o Pad L8 – 5 wells on‐stream; current production ~5,500 bbl/d o Drilling – 2 infill wells Pad L6; +
Slide 11: Thermal Oil – Hangingstone
THERMAL OIL – HANGINGSTONE DEVELOPMENT MAP STRONG RESERVOIR RESPONSE o Excellent facility utilization o Improved SOR due to the field wide NCG co‐injection COST OPTIMIZATION o Competitive non‐energy op. expenses ($7.70/bbl Q2/22) o 5,000 bbl/d third‐party truck‐in terminal o Amended transportation c
Slide 12: Thermal Oil – Crown Royalty Advantage
THERMAL OIL – CROWN ROYALTY ADVANTAGE CROWN ROYALTY OVERVIEW OIL SANDS ROYALTY RATES o Royalties vary depending on whether a project is in Gross revenue less opex & capex pre‐payout or post‐payout phase • Pre‐payout royalty rates are lower to account for the initial cost of investment • Post‐payout
Slide 13: Light Oil Division
LIGHT OIL DIVISION DE-RISKED, FLEXIBLE CAPITAL HIGHLIGHTS LIGHT OIL PROPERTIES 6,479 boe/d Q2/22 Production Kaybob 2022E Net Capital ~$13MM Expenditures ~$120MM 2022E Operating Income ~850 Gross Locations ~280,000 Gross Acres Placid 27 MMboe & Gross Reserves 72 MMboe (Proved & 2P) o Joint Venture wi
Slide 14: Light Oil – 2022 Activity
LIGHT OIL – 2022 ACTIVITY STRATEGIC OBJECTIVES PLACID MONTNEY o Maintain future optionality o Maximize netback & cash flow generation (~$65/boe Q2/22) 2022 ACTIVITY o Kaybob Duvernay: 3 Two Creeks wells on stream in Q1 FUTURE ACTIVITY o ~150 gross Montney development locations o ~700 gross Duvernay
Slide 15: ESG Overview
mea ESG OVERVIEW
Slide 16: ESG – 2021 Report
ESG – 2021 REPORT We believe that the responsible energy we produce here in Alberta makes people’s lives better. Our ESG report is an opportunity for us to showcase the positive impacts we have made and explain how sustainability and responsibility are being embedded into every decision we make. “Ou
Slide 17: ESG – Integrated Sustainability
ESG – INTEGRATED SUSTAINABILITY TECHNOLOGY OVERVIEW CARBON CAPTURE – AOC’S LOW‐CARBON BARREL o Entropy Inc. (Entropy) modular carbon capture technology (CCS) • Finalized Letter of Intent; FID expected by year‐end 2022 • Detailed engineering underway; commercial model established o Sequestration into
Slide 18: ESG – Technology Roadmap to Decarbonization
ESG – TECHNOLOGY ROADMAP TO DECARBONIZATION Decarbonization Roadmap HIGHLIGHTS o Track record of utilizing new technologies to improve environmental performance o Evaluate and implement new technologies focused on reducing both intensity and total emissions o Developed a Technology Roadmap to Decarb
Slide 19: ESG – Governance & Social
ESG – GOVERNANCE & SOCIAL GOVERNANCE SOCIAL o Technically‐focused, experienced management team o Contributed 66% of the Provincial Park Lands • Four most senior executives have managed current • Expanded the ecologically and culturally significant portfolio for an aggregate of ~40 years Kitaskino Nu
Slide 20: ESG – Commitment to Responsibility
ESG – COMMITMENT TO RESPONSIBILITY “As we progress, Athabasca will focus on transparency and continuous advancement as we deliver on our commitments to our stakeholders, communities, and employees. We invite you to join us on our ESG journey as we continue to grow and responsibly produce energy in A
Slide 21: Appendix
mea APPENDIX
Slide 22: Management Team
MANAGEMENT TEAM o Joined Athabasca in 2012 as Senior Vice President Light Oil. Promoted to Chief Operating Officer in 2013 and President and Chief Executive Officer in 2015 o 30 years of exploration and production experience including 18 years with Talisman Energy in various technical and Rob Broen,
Slide 23: Capital Structure & Guidance
CAPITAL STRUCTURE & GUIDANCE CAPITAL STRUCTURE (Q2 2022) CAPITAL STRUCTURE OVERVIEW o US$219MM Second Lien Notes Equity Indexation Added to S&P/TSX Composite • 9.75% coupon & 5‐year term to Q4 2026 Index on June 20, 2022 • Semi‐annual Free Cash Flow redemption feature at 105 • US$131MM (~C$167MM) pr
Slide 24: Q2 2022 Highlights
Q2 2022 HIGHLIGHTS 33,247 boe/d (92% Liquids) $85MM Record Adj FFO $34MM FCF; $51MM Capex Q2 inclusive of Leismer turnaround 2022e $220MM FCF 2022e ~$350MM 2022e 34 ‐ 35,000 boe/d (+1,000 boe/d) ~$232MM Liquidity Record Operating Netbacks C$167MM Debt Reduction ~$65/boe Light Oil Inclusive of $154MM
Slide 25: Market Egress and Risk Management
MARKET EGRESS AND RISK MANAGEMENT CANADIAN MARKET ACCESS IMPROVING CANADIAN EGRESS OUTLOOK (MMBBL/D) o Excess pipeline capacity for foreseeable future • Enbridge L3R: +270,000 bbl/d in‐service • TMX: +590,000 bbl/d in 2023 o Lower WCSB supply growth expectations • Producers focused on return of capi
Slide 26: Thermal Oil – Unparalleled Cash Flow Opportunity
THERMAL OIL – UNPARALLELED CASH FLOW OPPORTUNITY TECHNICAL HIGHLIGHTS FINANCIAL HIGHLIGHTS o Low decline o High torque to oil with operating leverage o Long‐life reserves • Q2/22 Thermal Oil netback of ~$56/bbl • 1.2 billion 2P reserves; >100 years RLI o Low Crown royalties • Land held • 9% (pre‐pay
Slide 27: Historical Transformation of ATH
HISTORICAL TRANSFORMATION OF ATH $486MM $470MM Significant Deleveraging; Light Oil JV Contingent $265MM Infrastructure US$131MM Redeemed with Bitumen YTD (July 2022) Murphy Oil Royalties Sale Resource Resumption of Pre‐COVID Managing for Appraisal Business Plan strong FCF 2016 2017 2018 2019 2020 20
Slide 28: Reader Advisory
READER ADVISORY Forward Looking Statements This Presentation contains forward‐looking information that involves various risks, uncertainties and other factors. All information other than statements of historical fact is forward‐looking information. The use of any of the words “anticipate”, “plan”, “
Slide 29: Reader Advisory Cont'd
READER ADVISORY CONT’D Reserves Information The McDaniel Report was prepared using the assumptions and methodology guidelines outlined in the COGE Handbook and in accordance with National Instrument 51‐101 Standards of Disclosure for Oil and Gas Activities, effective December 31, 2021. There are num
Slide 30: Reader Advisory Cont'd
READER ADVISORY CONT’D Production Athabasca’s 2022 forecasted total average daily production is between 34,000 ‐ 35,000 boe/d. Athabasca expects that approximately 82% of that production will be comprised of bitumen, 8% shale gas, 5% tight oil, 3% condensate natural gas liquids and 2% other natural
Slide 31: Athabasca Oil Corporation
ATHABASCA OIL CORPORATION
Athabasca Oil — Investor Presentation (September 2022) on 6ix