Tamarack Valley Energy Ltd. · TSX:TVE
Tamarack Valley Energy — Investor Presentation (March 2022)
32 slides from Tamarack Valley Energy's investor presentation, March 2022
Slide 1: Creating Sustainable Value
TVE : TSX Creating Sustainable Value March 2022 See Disclaimers and Forward-Looking Statements attached
Slide 2: Disclaimers
Disclaimers Forward Looking Statements: Certain information included in this presentation constitutes forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as “anticipate”, “believe”, “expect”, “plan”, “intend”,
Slide 3: Disclaimers
Disclaimers FOFI Disclosure: This presentation contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about Tamarack’s updated five year plan, including generating sustainable long-term growth in free funds flow, dividends and share buybacks, 2022 cap
Slide 4: Disclaimers (Oil and Gas Advisories)
Disclaimers (Oil and Gas Advisories) Specified Financial Measures: This presentation includes various specified financial measures, including non-IFRS financial measures, non-IFRS financial ratios, capital management measures and supplementary financial measures as further described herein. These me
Slide 5: Corporate Snapshot (TSX: TVE)
Corporate Snapshot (TSX: TVE) Corporate/Market Summary Tamarack Market Capitalization ($MM) $2,242 Net Debt(2) ($MM) $563 Charlie Lake Enterprise Value(1) ($MM) $2,805 Light Oil Tax Pools(3) ($MM) $1,004 Clearwater Heavy Oil 2022 Capital Budget and Guidance(4) 2022 Full Year Average Production (boe/
Slide 6: Q4 & Year End 2021 Highlights
Q4 & Year End 2021 Highlights Strategic • Closed $0.7 billion in acquisitions across 2021 Acquisitions • Added >1,000 quality locations, including Clearwater & Charlie Lake plays Financial • Increased credit facilities to $600 million and transitioned to an SLL(2) Flexibility • Delivered 0.9x debt t
Slide 7: Tamarack Strategic Principles – Original
Tamarack Strategic Principles – Original Strategic Principles Tactical Execution BALANCE SHEET STRENGTH AND RISK MANAGEMENT Low Leverage & Balance Sheet • <0.7x 2022 YE net debt to Q4 annualized adjusted funds flow at US$70 WTI budget pricing(1) Strength • Consistent hedging policy to manage exposur
Slide 8: Capital Allocation Optionality Delivers Sustainability
Capital Allocation Optionality Delivers Sustainability Portfolio that can deliver near-term and long-term free funds flow(1) Sustaining Capital Waterflood Management Economic Growth Modest Growth Highly Economic Inventory that Sustains Low Decline, Meaningful Production While Generating Highly Econo
Slide 9: Positioned for Strong Financial Flexibility
Positioned for Strong Financial Flexibility Net Debt(1) Profile ($ millions) Liquidity and Debt Utilization ($ millions) US$75 WTI $800 $900 $800 $600 US$45 WTI $700 237 $400 $600 490 $200 $500 600 600 600 $0 US$55 WTI $400 2020 2021 2022 2023 2024 2025 $300 -$200 $200 -$400 $100 -$600 $0 US$70 WTI
Slide 10: Sustainability-Linked Lending & Notes
Sustainability-Linked Lending & Notes Strengthening Our Commitment to Responsible Energy Production All of Tamarack’s debt has been converted to sustainability-linked debt and includes: • A $600 million revolving sustainability-linked lending facility (SLL) with a lending syndicate – 3 KPIs with pot
Slide 11: 5-Year Plan Anchors Long Term Sustainability
5-Year Plan Anchors Long Term Sustainability Base Case 46,000 - 49,000 boe/d(2) $800 Total Annual Funds Flow ($MM) 5-Year Plan Overview $600 (BTAX US$55/bbl WTI & $2.50/GJ AECO) $400 $200 E&D Capital $1.1B - $1.3B 51% 45% 41% 63% 45% 36% 59% 42% 35% 59% 41% 35% 59% 42% 35% Spending ($240MM - $270MM/
Slide 12: Transformative 2021 Enhances Focused Inventory
Transformative 2021 Enhances Focused Inventory Balancing Duration with Free Funds Flow(1) Growth Inventory of Net Locations(2) HIGHLY ECONOMIC INVENTORY SUPPORTS LONG TERM SUSTAINABILITY (assumes payout <18 months) • Strategic inventory management 1,400 Total • Retain multiple years of high-graded d
Slide 13: Framework for Returning Capital to Shareholders
Framework for Returning Capital to Shareholders Sustaining Capital & Base Dividend Protected Down to US$35/bbl WTI Free Funds Flow(1) Allocation Net Debt ≥$375MM Net Debt $325MM-$375MM(2) Base Base Dividend + Debt Dividend Delivering Enhanced Returns to Repayment Share Shareholders Debt and/or Buyba
Slide 14: Illustrating Annual Shareholder Return Potential
Illustrating Annual Shareholder Return Potential Strip Pricing Enables Enhanced Return in mid-2022 At US$70/bbl Debt Allocating Free Funds Flow(3) <$375MM by H2 2022 $400 8% $350 Debt Target Achieved $300 2023(1) Debt Reduction Prioritized to $190 Free Funds Flow (1) $MM Reach $375MM Initial Thresho
Slide 15: North American Payout Period & Half-Cycle Breakeven by Play
Payout (Years) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 15 Clearwater Marten Hills Clearwater Nipisi Frobisher Dual Leg Charlie Lake Payout Period SK Mississippian Conventional Conventional Heavy Oil Hz Delaware Wolfcamp A (Top Quartile) Viking Dodsland Break-Even ND Bakken/Three Forks (Top Quartile) Eagle Ford
Slide 16: Clearwater Fairway
Clearwater Fairway Tamarack Clearwater Land Holdings 29.5 net section in conjunction with the Peavine Metis Peavine Settlement strategic land arrangement Nipisi 162.3 net sections through corporate and asset acquisitions in 2020 and 2021 West Marten Hills 38.4 net sections in West Marten Hills in th
Slide 17: Nipisi & West Marten Hills
Nipisi & West Marten Hills Derisking acreage to enhance development inventory West Marten Hills Spur 16-20 Deltastream Spur 15-19 Spur 2-9 HWX 13-7 RR: Dec/21 RR: Oct/21 Spud: Jan 13/22 Spud: Jan 12/22 IP30: 215 bopd T78 Increased Multiple sands tested by TVE & TVE 13-25 (3 legs) IP30: 70 bopd HWX 1
Slide 18: Southern Clearwater
Southern Clearwater Steadily improving IP30 rates over past 6 months TVE 14-21 TVE 4-19 IP30: 197 bopd Southern Clearwater RHE/TVE 16-25 IP30: 162 bopd IP30: 198 bopd T64 Dominant TVE is the largest Producer area producer T63 Active 47 drills planned Development For 2022 T62 Legend TVE Lands Clearwa
Slide 19: Clearwater Waterflood Potential
Clearwater Waterflood Potential Leveraging promising results from offsetting competitor pilots Upcoming Tamarack Nipisi EOR Pilots 15-13 Pad Pilot Spur Waterflood Pilots • 2 x 8-leg producers onstream Q4-2021 • Staggered leg spacing (“two-step”) allows for water injection corridors while maintaining
Slide 20: Nipisi Waterflood Design
Nipisi Waterflood Design Substantial fairway has been delineated and is ready for development Spur Waterflood Pilot (1 Injector) “Two Step” Waterflood Design Potential Waterflood Development Area Nipisi 103/11-31-076-06W5/0 Two Step Producer Oil (bbl/d) 160 140 120 100 80 60 40 20 0 Oct-20 Dec-20 Ap
Slide 21: Charlie Lake Development
Charlie Lake Development Continuing to Increase Our Presence With Added Lands & Prolific Wells TVE 13-19 Charlie Lake IP30: 970 bopd TVE 12-19 Expanded 2021 tuck-ins added 35.9 net sections IP30: 900 bopd T76 Footprint and 63 net Hz locations(1) Unlocking Drilling our first Upper Charlie Lake well T
Slide 22: Tamarack’s Waterflood Assets
Tamarack’s Waterflood Assets Improving corporate declines with increasing exposure to assets under waterflood Total Est. Est. Total Area Prod. Under Injection % of P+P Asset Asset Recovery Ultimate Current Initiatives Prod. Waterflood Start Reserves OOIP(1) to Date(2) Recovery(2) Veteran Focus on ne
Slide 23: Tamarack Sustainability Results
Tamarack Sustainability Results Emissions Intensity Land Management 2020 GHG Scope 1 + 2 Intensity by Company (kgCO2e/boe) Net ARO Spend/Inactive Liability 14.0 10.50% 12.0% ARO Spend/Inactive Liability (%) Net ARO Spend/Grants Awarded 90.00 12.0 10.0% 80.00 1.3 70.00 10.0 8.0% (CAD$MM) 60.00 8.0 5.
Slide 24: Sustainability Initiatives at Tamarack
Sustainability Initiatives at Tamarack Indigenous Engagement Environmental Initiatives Tamarack is committed to the principles of UNDRIP and participating in reconciliatory activities. 2021 year-to-date projects include: To ensure achievement of long-term goals and targets, • Furthered workforce par
Slide 25: Investment Summary
Investment Summary Track record of meeting and exceeding estimates Sustainable Returns Focused Strategy to Grow Production and Free Funds Flow(1) per Share Management team that has demonstrated its ability to execute and capitalize on opportunities Stable Base Economic Oil Balance Sheet Leading ESG
Slide 26: APPENDIX
APPENDIX 26 w w w . t a m a r a c k v a l l e y. c a 26
Slide 27: Risk Management – Current Hedges
Risk Management – Current Hedges(1) Enhancing certainty with flexibility to capture upside value 53% Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 WTI Put Oil price protection in 2022(2) Volume (bbls/d) Average Put/Premium (USD/bbl) $68.76 19,750 $3.97 $63.21 7,750 $4.15 $55.75 4,750 $3.00 $56.43 4,250 $3
Slide 28: 2022 Budget Highlights
2022 Budget Highlights Capital Spending ($260MM) Focused • Investing $250MM to $270MM of annual capital Capital • Drilling 126 (116 net) wells targeting the Clearwater, Charlie Lake & $35 Clearwater Deployment Waterflood projects Charlie Lake $37 $111 • Drilling activity drives volumes of 45,000 – 4
Slide 29: Return of Capital Strategy
Return of Capital Strategy Sustainable Base Dividend • Predicated on up to 25% of free funds flow(1) at US$55 WTI and $2.50/GJ AECO • Sustaining capital + base dividend is fully fundable down to US$35/bbl WTI and would represent only 37% payout on current strip • Up to 75% for debt repayment, strate
Slide 30: Corporate Information
Corporate Information Executive Independent Reserve Evaluator Brian Schmidt (Aakaikkitstaki) President & Chief Executive Officer GLJ Petroleum Consultants Steve Buytels VP Finance & Chief Financial Officer Kevin Screen Chief Operating Officer Auditors Scott Reimond VP Exploration KPMG LLP Martin Mal
Slide 31: Notes
Notes Page 5 1. See Disclaimers – “Specified Financial Measures”; free funds flow and free funds breakeven were formerly referred to as free adjusted funds flow and free adjusted funds flow breakeven respectively 2. Year-end 2021 pro forma the cash costs of the Crestwynd acquisition 3. Tax pools as
Slide 32: Notes
Notes Page 13 1. See Disclaimers – “Specified Financial Measures”; free funds flow was formerly referred to as free adjusted funds flow Page 14 1. At US$55/bbl WTI & $2.50/GJ AECO 2. Annual yield is calculated as (base dividend plus partial year special dividend where relevant) divided by current ma
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