Journey Energy, Inc. · TSX:JOY
Journey Energy — Investor Presentation (January 2023)
32 slides from Journey Energy's investor presentation, January 2023
Slide 1: Corporate Presentation
JOURNEY Corporate Presentation TSX: JOY OTCQX: JRNGF @AlexVergeJOY January, 2023
Slide 2: Journey Today Is…
Journey Today Is… Undergoing a transformational acquisition to become: A sustainably growing free cash flow generating business Unlocking value in under capitalized low decline assets Unhedged post Q1 Uninterested in: Anything that does not create or preserve stakeholder value 2
Slide 3: January 2023
January 2023 13,000 - 13,500 boe/d (1H 2023 Average) 54% liquids Hedges: 5,000 GJ/d of natural gas; for Q1 2023 at $7.19/GJ 500 BBL/d of MSW oil; for Q1 2023 at $112 CDN/BBL Strategic relationship with AIMCo; majority term debt provider and largest shareholder 12% corporate decline go forward; water
Slide 4: 2023 Goals
2023 Goals Reduce leverage created by 2022 transformational acquisition Add Inventory in repeatable plays Advance power business Manage ARO Continue to search for creative ways to expand our business Improve longer term corporate sustainability while satisfying near term obligations 4
Slide 5: Reserves Value 3 Consultants Average
Reserves 3 Consultants Average Value Pricing WTI Price ($US/bbl) $110 $105 $100 $95 2022 Estimate $90 $85 $80 $75 2023 Budget $70 $65 $60 $55 $50 2022 2023 2024 2025 2026 2027 2028 2029 Jan 2022 WTI $US/bbl July 2022 WTI $US/bbl January 2023 WTI $US/bbl Recent pull back in commodity price impacts ne
Slide 6: Q2 2023 Reserves Purchase Value of Power Plant
Q2 2023 Reserves PurchaseValue of Power Plant Purchased through open bid process in November 2022 for less than 20% of replacement value Purchase to close in Q2 2023 Purchase price included in 1H 2023 guidance Commissioned in 2015, ran for less than 1 year 16.5 MW 5x 3.3 MW Jenbacher Natural Gas Gen
Slide 7: Corporate Per Share Growth
Corporate Per ShareGrowth GrowthReturns Continuing in 2022 2019 2020 2021 2022 1H 2023 Operating Highlights Actual Actual Actual Estimate(1) Forecast Production Average (boe/d) 9,372 8,379 8,004 9,800 – 10,000 13,000 – 13,500 Oil and NGLs (%) 48% 46% 47% 49% 54% Corporate Decline Rate (%) 16% 17% 14
Slide 8: November 2022 Pro Forma Reserves Summary
November Stable Base1, -–2020 2022 2021YE Journey YEReserves Reserves Pro Summary Forma Summary Reserves Company Gross (WI) Reserves(1) / Value (July 1, 2022 3 Consultants Pricing) Oil Gas NGLs NPV10 ($million) Reserve Category Mboe RLI FDC ($ million)(2) (Mbbl) (Bcf) (Mbbl) Before Tax (1) Proved De
Slide 9: Top Tier Growth in Net Asset Value Per Share
Top Tier Growth in Net Asset Value Per Share $15.90/share P+P Over 100% annual increase in Net Asset Value per Share over the past two years $9.04/share $8.19/share P+PDP P+P $7.05/share PDP $3.86/share $3.77/share P+PDP P+P $2.85/share PDP $0.86/share P+PDP -$0.05/share PDP Period YE 2020 YE 2021 P
Slide 10: GLJ Forecasted Edmonton Light Value Price Reversing Trend
Reserves GLJ Forecasted Edmonton Light Value Price Reversing Trend Since January 2021 140.00 2015 130.00 2022 Estimate 120.00 110.00 2017 2020 MSW Price ($CDN/bbl) 100.00 1H 2023 Budget 2023 90.00 2022 2021 80.00 2021 70.00 60.00 50.00 40.00 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 203
Slide 11: New Acquisition Positions Journey Favorably in the Market
New Acquisition Positions Journey Favorably in the Market (Greater Scale, Increased Oil Weighting and Lower Declines) Increase pro forma production 45% High value waterflood/EOR oil pools enhance netbacks and sustainability Increases pro forma oil production by 70% and liquids weighting to 55% Modes
Slide 12: Attractive Acquisition Financing
Attractive Acquisition Financing $140,000,000 purchase price (May 1 Effective) $30,000,000 cash flow (May 1 – Close) $45,000,000 vendor take back (VTB) financing (10% interest rate) with scaled monthly repayments: Monthly WTI Payment Price $4,000,000/month >US$100/Bbl Price dependent $3,000,000/mont
Slide 13: Acquisition Overview; Steady Declines, Bias to Upward Reserve Revisions
Acquisition Overview; Steady Declines, Bias to Upward Reserve Revisions Journey and Vendor AB Assets W.I. Oil Production Ante Creek Gross Production Vs McDaniel Forecast 1600 12,000 Acquired assets add very 1400 Both the Ante Creek and Medicine Hat properties have stable, low decline oil 10,000 prod
Slide 14: Medicine Hat Glauconite C Pool (72.3% working interest)
Medicine Hat Glauconite C Pool (72.3% working interest) Medicine Hat EOR Project Summary Medicine Hat Glauc Pool Overview "C" Current Gross Oil Production (bbl/d) 2,710 Oil Quality (API°) 16 Cumulative Production (MMbbl) 39.2 (1) OOIP (MMbbl) 288 305.0 Acquired Lands Current Recovery (%) 13% 14% Pro
Slide 15: Ante Creek Montney Pool (100% working interest)
Ante Creek Montney Pool (100% working interest) Acquired Lands Producing wells Injection wells Montney producers Ante Creek Waterflood Project Summary Ante Creek Upper Pool Overview Montney Current Gross Oil Production (bbl/d) 855 Oil Quality (API°) 35 Cumulative Production (MMbbl) 6.7 OOIP (MMBbl)
Slide 16: 2022 High Impact Opportunity - Westerose Glauconitic Liquid Rich Gas
2022 High Impact Opportunity - Westerose Glauconitic Liquid Rich Gas(1) 04-06 Vertical Discovery offsetting Drilling Plan Legend Deep Wells Glauc Pool 2022 Location Inventory New Vertical Gas Tests Location JOY Land Pl a nned hz well path 2022 • 3 additional glauconite tests; 2 vertical/1 horizontal
Slide 17: Countess Power; New for 2023: 15.5 MW Power Project
Countess Power (on stream Q4 2020) New for 2023; 15.5 MW Power Project Journey holds 100% WI in the Countess power plant 4 MW power generation; fuel gas supplied by long life, natural gas Connected to the Alberta Power grid; sold on the spot market Flexibility to sell gas or produce power depending
Slide 18: How to make a Low Decline even LOWER
How to make a Low Decline even LOWER 763 MM bbl on waterflood 40 MM bbl conventional 260 MM bbl to 40 MM to JOY net barrels of be flooded be delineated and flooded DOOIP by category 1.1 Billion net bbl of DOOIP 763 MM bbl 340 MM bbl convert 260 MM bbl on waterflood conventional conventional to be lo
Slide 19: Reserves Value: Strong Base! Even Stronger Value
Reserves Strong Base! Even Stronger Value Future Development Potential (As at October 31, 2022) Journey’s $270 million of P+P future development capital (FDC) is only $3.40/P+P boe 60% of Journey’s identified capital projects remain unbooked Journey’s P+P FDC adds $400 million of NPV@10%; this trans
Slide 20: Post Acquisition Extensive Drilling Inventory; in Existing Pools!
Post Acquisition Extensive Drilling Inventory; in Existing Pools! Journey has identified 283 (244 net) horizontal drilling opportunities Drilling Locations(1) % Booked(2) in Total(1) Reserve Report Region Gross Net South 150 137 40% Central 133 107 37% Total 283 244 39% Unbooked Projects $373MM in C
Slide 21: But Wait! There’s Still More To Come
But Wait! There’s Still More To Come 1.1 Billion net barrels of DOOIP 3.0% of booked recovery 85.0% of oil left behind Ultimate 12.0% recovered to date Recovery 15.0% ultimate recovery Oil left behind becomes Target Resource Journey can double our P+P oil reserves by recovering 3.3% more of the oil
Slide 22: Value of Inventory Appreciates with Pricing
Value of Inventory Appreciates with Pricing AECO $4.00/MMbtu (1) Based upon 2022 drilling rates 22
Slide 23: Journey Has Over 15 Years of Drilling Inventory, Let’s Get After It!
Journey Has Over 15 Years of Drilling Inventory, Let’s Get After It! (1) (1) Based upon 2022 drilling rates 23
Slide 24: In 2023, Journey Could…
In 2023, Journey Could… … at $75 US/bbl WTI Pricing Pay off a significant portion of its outstanding debt Add a power project with an NPV of $40-$50 million… … resulting in a material increase in Net Asset Value per Share … at $85 US/bbl WTI pricing Grow production 5%-10% from current levels 24
Slide 25: Energized and Engaged Team
Energized and Engaged Team Alex G. Verge, P.Eng., M.Eng. President and Chief Executive Officer, and Director – Previously President and CEO of NuVista Energy, VP Engineering at Bonavista, and senior positions at Poco Petroleums, Rising Resources, Shell, and Gulf. Gerry N. Gilewicz, CPA, CMA Chief Fi
Slide 26: Directors – Strong Governance
Directors – Strong Governance Craig Hansen Chairman of the Board – Independent businessman, Former President and Chief Executive Officer of Zargon Oil & Gas Ltd. and its predecessor, Zargon Energy Trust. Thomas Mullane Reserves Committee Chair – Independent businessman and former President and Chief
Slide 27: Appendix
Appendix 27
Slide 28: Environment, Social and Governance: Environmental
Environment, Social and Governance Environmental Journey is striving to reduce direct emissions intensity from year end 2022 levels for scope 1 and 2 emissions. We chose thi s time period for this target to focus on new reductions rather than accounting for reductions already achieved. We reuse 99.9
Slide 29: Environment, Social and Governance (Continued): Social
Environment, Social and Governance (Continued) Social Journey takes pride in maintaining its operations with the highest of standards and ensures its suppliers of goods and services do so as well. Journey operates in nine key areas in the province of Alberta and is very active in the communities in
Slide 30: Environment, Social and Governance (Continued): Governance
Environment, Social and Governance (Continued) Governance In recognition of the key role that sustainability plays in our business, Journey has mandated that the Board of Directors (the “Board”) take an active role in evaluating our corporate sustainability strategy, improving our risk management pr
Slide 31: Forward-Looking Statements and Financial Measures
Forward-Looking Statements and Financial Measures This presentation contains “forward-looking statements” including estimates of future production, cash flows and reserves, business plans for drilling and exploration, the estimated amounts and timing of capital expenditures, the assumptions upon whi
Slide 32: Oil and Gas Advisory
Oil and Gas Advisory The crude oil, natural gas and natural gas liquid reserves and related future net revenue of Journey presented herein were evaluated by GLJ, Journey’s independent reserves evaluators, in accordance with the requirements of National Instrument 51-101 (“NI 51-101”) and the Canadia
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